Debra Rahmin Silberstein

Attorney and Counsellor at Law

 

69 Park Street

Tel 1-978-474-4700

Andover, MA 01810

Fax 1-978-474-4701

Debra@debrasilberstein.com

 

MEDICAID

 

1. Asset Rules

 

Medicaid is a joint federal-state program for long term care expenses. Unlike Medicare, Medicaid is a need-based program; applicants become eligible by demonstrating that their assets are limited to $2,000. In general, everything owned by the Medicaid applicant is counted for this $2,000 limit except "non-countable" and "inaccessible assets".

 

Non-countable assets include: (1) the applicant's principal place of residence if it is in Massachusetts and the nursing home resident intends to return home. (As part of the Medicaid application process, a Medicaid applicant may be asked to sign a form regarding the applicant's "intent to return home". This form should not be signed without the advice of counsel.); (2) household and personal belongings; (3) business and non-business property essential to self-support; (4) a burial plot for the applicant and family members; (5) a separate burial/funeral savings account of up to $1,500 for each member of the filing unit; (6) the cash surrender value of a prepaid noncancelable burial and funeral contract (generally unlimited under $8,000, however contract must provide amounts paid over funeral costs be refundable to applicant); (7) a car of any value if the applicant or any family member can demonstrate a need to own the vehicle; and (8) life insurance with a face value of $1,500 or less (if the face value is more than $1,500, the cash value will be counted against the $2,000 limit).

 

"Inaccessible assets" are assets to which the recipient or Medicaid applicant has no legal access, such as property subject to legal proceedings, property which the Medicaid applicant cannot sell because there is no market, and "A and B" bank accounts where the co-holder refuses to consent to a withdrawal.

 

2. Trust Rules

 

a. Trusts Created On or Before August 10, 1993

 

If the Medicaid applicant is a beneficiary of such a trust (other than a Medicaid Qualifying Trust), the trust assets or income are deemed available to the applicant to the extent that the applicant has the right to withdraw the funds or the Trustee has an obligation to distribute the trust funds. The rules regarding deeming of assets or income from Medicaid Qualifying Trusts are much broader. A Medicaid Qualifying Trust is a trust created by the applicant or the applicant's spouse (other than a trust created or funded by a Will) where the applicant is a beneficiary of all or part of the trust payments, and the distribution of trust payments is determined according to the Trustee's discretion. In the case of a Medicaid Qualifying Trust, the greatest amount that the Trustee has

discretion to distribute under any circumstance is the amount that is deemed available to the beneficiary when determining whether the beneficiary qualifies for Medicaid.

 

b. Trusts Created After August 10, 1993

 

Congress made major changes to the federal Medicaid statute as part of the Omnibus Budget Reconciliation Act of 1993 (OBRA 93). The Medicaid rules are especially complicated for a variety of reasons. First, Massachusetts has yet to adopt many of the federal changes. Thus, in some cases, current Massachusetts regulations are superseded by the federal law. Second, where the language of the statute is ambiguous, it is unclear how the Division of Medical Assistance will interpret it.

 

OBRA 93 applies to trusts created by a Medicaid applicant or applicant's spouse, or by anyone acting on behalf of an applicant or spouse, including a court. With two exceptions below, all trusts in which the prospective Medicaid applicant is a beneficiary, except those created by will, are considered available to the Medicaid applicant. The first is a trust for a disabled applicant under the age of 65 that is created by the applicant's parent, grandparent, legal guardian or court, but not by the applicant. However, any trust assets remaining on the applicant's death must first go towards reimbursing the state for Medicaid benefits paid on the applicant's death must first go towards reimbursing the state for Medicaid benefits paid on the applicant's behalf. The second is a pooled trust for disabled beneficiaries managed by non-profit associations. Any trust assets remaining on the applicant's death must remain in the trust for other disabled beneficiaries.

 

3. Transfer Penalties

 

If an applicant or an applicant's spouse transfers assets for less than fair market value after August 10, 1993, the applicant will be ineligible for Medicaid for a period of time from date of the transfer. The law imposes one month of ineligibility for every $5,010 transferred for less than fair market value within three years of the date of the applicant's original Medicaid application. (The time period for certain trusts is five years). Thus, if someone applies for Medicaid within three years of a transfer, is denied eligibility, and reapplies after three years from the time of the transfer, the applicant will still be ineligible because the applicant made a transfer within three years of the original Medicaid application. Furthermore, an applicant's spouse may also be subject to a period of ineligibility if the spouse applied for Medicaid within three years after the transfer (or within five years after a transfer in trust). For example, if you had a home worth $240,000, no other countable assets, and you gifted your home within three years of the date of your Medicaid application, you would be ineligible for Medicaid for a period of 47.9 months or over 3.9 years. ($240,000 amount transferred divided by $5,010=47.9 months.)

 

For transfers made on or before August 10, 1993, there is a thirty (30) month limit for the transfer penalty.

4. Exceptions to the Transfer Penalties

 

OBRA 93 provides several exceptions to the transfer penalty rules. No period of ineligibility will apply to asset transfers to: (1) a spouse; (2) a blind or disabled child; (3) a trust for the benefit of a disabled individual under age 65; and (4) a trust for the benefit of a blind or disabled child. No period of ineligibility will apply to transfers of the principal residence to: (1) a spouse; (2) a blind or disabled child; (3) a trust for the benefit of a disabled individual under age 65; (4) a child under age 21; (5) a sibling who has lived in the principal residence during the year prior to the applicant's institutionalization and who already owns part of the home; and (6) a child of the applicant who has lived in the house for at least two years prior to the applicant's institutionalization and who provided care during this period such that the applicant did not need nursing home care.

 

Additionally, OBRA 93 permits transfers to be "cured" if the recipient returns everything that was transferred in its entirety. Returning anything less than what was transferred will not cure the transfer.

 

5. Criminal Penalties

 

The Kennedy-Kassebaum Bill, effective as of January 1, 1997, originally made it a federal crime to transfer assets in order to qualify for Medicaid if the transfer resulted in "the imposition of a period of ineligibility." The crime was classified as a misdemeanor that is punishable by a fine of up to $10,000 and/or imprisonment of up to one year. There were several ambiguities in the law and on August, 1997 said law was modified so that the threat of criminal liability is shifted from seniors to "anyone who, for a fee, counsels or assists a Medicaid applicant to make certain transfers for purposes of becoming eligible for Medicaid". (The Balanced Budget Act of 1997, P.L. 105-33 (H.R. 2015)). Thus, only the counseling or assisting is a crime. The law has since been challenged again.

 

6. Income Rules

 

When an applicant becomes eligible for Medicaid he or she will only be allowed to keep a personal needs allowance of $60.00 per month plus any other monthly expenses for health care. If the applicant is married, the spouse living at home may be entitled to some of the applicant's monthly income. Any monthly income greater than the personal needs allowance, any monthly health expenses, and any payments to the spouse living at home (as described below) must be paid to the nursing home. Medicaid would then pay the balance due the nursing home.

 

7. Community Spouse Protections

 

All spousal countable assets are pooled at the time of institutionalization and a "snapshot" of the spousal assets are taken at that time. Institutionalization occurs on the first day of a stay in a long-term care facility which lasts for at least 30 consecutive days.

After this pooling, the spouse of a nursing home resident (the community spouse) will be allowed to keep a community spouse resource allowance (CSRA) equal to the total countable assets up to limit of $81,960 (this amount is adjusted annually for inflation). Any excess over this amount must be spent-down within 30 days of the notice of Medicaid eligibility. The law allows couples 90 days after receipt of the notice of Medicaid eligibility in order to transfer assets between spouses. For example, if a couple owns $100,000 in countable assets on the date of institutionalization, the applicant will be eligible for Medicaid once their assets have been reduced to leave the nursing home resident with $2,000 and the community spouse with $81,960. If the couple owns $200,000 in countable assets on the date of institutionalization, the applicant would be eligible for Medicaid once their assets have been reduced to leave the spouse in need of care with $2,000 and the community spouse with $81,960.

 

The community spouse will not have to use his or her income to support the nursing home resident spouse receiving Medicaid. In addition, in some instances, community spouses also have the right to take enough of the nursing home spouse's monthly income so that the community spouse's monthly income comes up to the current floor of the Minimum Monthly Maintenance Needs Allowance (MMMNA). The MMMNA is an income floor for community spouses (adjusted annually for inflation) which is calculated based on housing costs. Thus, if the community spouse's monthly income is less than his or her MMMNA, the shortfall may be recovered from the nursing home spouse's monthly income.

 

However, instead of receiving the shortfall from the nursing home spouse's income, the community spouse can appeal the determination of his or her CSRA at a fair hearing by showing that he or she needs to keep more assets to generate income in order to raise his or her monthly income to the MMMNA. This procedure not only enables couples to preserve substantially more of their assets, but also maintains the community spouse's MMMNA and standard of living.

 

8. Estate Recovery

 

The state has the right to recover any benefits it paid for the Medicaid recipient's care from the recipient's probate estate (property in the recipient's name alone). OBRA 93 significantly expanded the state's recovery powers. Massachusetts must now seek recovery of all Medicaid benefits paid from the estates of those recipients who received coverage after age 55. Additionally, OBRA 93 permits the estate recovery to reach both probate and non-probate property such as joint property, life estates, trusts. The Massachusetts legislature to date has rejected the possibility of estate recovery beyond the probate estate.

 

9. Other Estate Planning Options

 

Conservative planning options available to an elder citizen include durable powers of attorney, a homestead declaration, and long term care insurance. Durable powers of attorney allow you to authorize someone to manage your property if you

become incapacitated. A homestead declaration for your home protects your home against creditors. Generally the homestead protects the first $200,000 (for senior citizens) of equity in your home against creditors except for Medicaid (other exceptions exist as well M.G.L. c. 188 Sec. A). Protections against long term care expenses can be achieved through the purchase of a long term care insurance policy.

 

Long term care insurance helps not only to protect the Medicaid applicant's home against estate recovery but also helps to avoid problems with transfers of assets which would otherwise result in ineligibility. An individual must be covered under individual, group, or employment based group policy issued on or after March 15, 1999, which meets the individual policy minimum standards of 211 CMR 65.05 and such policy may protect the Medicaid recipient's home from estate recovery for any Medicaid payments the state may make on his or her behalf. Furthermore, the long-term care policy should contain an inflation rider and home care coverage. Long-term care insurance policies have differing elimination periods (the period of time spent in a nursing home before which benefits will start). In many cases, the Medicaid applicant may have Medicare coverage for this period, and thus not need insurance (Medicare pays the first 20 days in full and days 21-100 less your co-payment). Furthermore, if the applicant can afford the long-term care policy, he or she may be able to pay for this period on their own. If the primary goal is to protect the Medicaid applicant's home, a minimum benefit level of $125/day for 2 years is all that is necessary. Although this may not eliminate the need for Medicaid, it will nevertheless protect the applicant's home from estate recovery.

 

Premiums for tax-qualified policies are normally fully deductible and benefits are fully excludable from gross income, but there are limits. Deductible premiums may not exceed annual caps based on the insured's age; for 1998, these caps range from $210 per year for an individual age 40 or younger to $2,570 per year for an individual age 71 or older. (I.R.C. Sec. 213(d)(10)(A).) In addition, benefits paid may not exceed the actual costs of care unless payable in the form of a daily indemnity. (I.R.C. Sec. 7702B(d).) The benefits limit for 1998 is $180 per day or $65,700 annually. Finally, the ability to deduct premium charges will benefit only those insureds who itemize their deductions and whose premium charges, together with their other medical expenses, exceed 7.5 percent of adjusted gross income.

 

Conclusion

 

Applying for Medicaid can be a lengthy and complicated process. Once eligibility is determined, it must be re-determined every six months. Given the transfer penalties, and the DMA's lack of interpretive guidance, elder citizens should not transfer assets without consulting an experienced elder law attorney.

Factors to Consider in Selecting a Nursing Home

 

1. Facility certification and financial matters: Is the facility certified by Medicare and Medicaid? How long has it been certified? Ask to see the two most recent Medicare and Medicaid surveys.

 

2. Specialty care available: Does the facility have an Alzheimer's unit or other area restricted to patients with special care needs? Is the specialty unit separated from other areas of the facility?

 

3. Location: How convenient is the location to family members and friends? What are visiting hours? Location and accessibility are important because they can affect how often the patient is visited by family and friends. Frequent visits generally will improve the patient's mental and emotional well-being, as well as ensure that quality-of-care issues can be addressed as problems arise.

 

4. Physical considerations: Is the facility well lit, clean, safe, and welcoming? What is the ratio of staff to residents during each shift? What diagnostic treatment facilities are available at the facility? What bathing facilities are available and how is bathing handled when a resident needs assistance?

 

5. Mental and emotional well-being of patients: What kinds of activities are planned each day for the residents? A good activities program should include regularly scheduled events, such as a weekly movie, weekly or monthly musical events (even if it is just a sing-along), religious services, physical exercise activities (exercise classes or even dancing), bingo, educational classes, and other social events. Is there a library available for residents with large-print and audio books? Is there a small "store" that stocks personal items, such as shaving cream, hair care products, and snacks? Is there a safe place for residents to enjoy the outdoors, such as an enclosed garden? Are plants, pets, and other natural elements a part of the residents' environment? Are residents taken to special community events and cultural activities?

 

6. Room sharing and furnishings: Will the resident share a room or bathroom with one or more other residents? How are roommates and rooms selected? If the resident is dissatisfied with a roommate can the assignment be changed; how is this accomplished? Can the resident bring some of his or her own furniture?

 

7. The resident's care plan: Individual care plans should be implemented for each resident. How often is the care plan reviewed and changed? What is the protocol for handling problems? A resident of a nursing home must be under the care of a licensed physician who must evaluate the resident's needs and prescribe a program of medical care including therapy, diet, restraints, and medications.

 

8. Employees: How are employees selected? How are they screened for drug use, criminal records, and other potential problems? What is the turnover rate of CNAs (certified nursing assistants), RNs, and other patient caregivers? What is the turnover rate for employees who perform ancillary services such as meal preparation and financial record keeping? Are these rates higher or lower than the local norm?

 

9. Physician: If one particular physician is used by most residents what are her qualifications? How often is the doctor on the premises? What is her bedside manner with residents?

 

10. Meals: Are meals served in a communal dining room or is each resident served in her room? If communal, how are tables assigned in the dining room? How long does it take for a meal to be delivered to a bedridden resident? How does the food taste and how is it presented to the resident? Is there a way, within a reasonable walking distance from the patient's room, to heat food that has become cold?

 

11. Admissions requirements: What financial information does the facility require during the admissions process? Can the patient or her representative have copies in advance of all admissions documents and contracts for review? How long does the admissions process take?

 

12. Cost of care: What is included in the cost of care? How are "extra" items billed? Can laundry be taken off the premises and does this save the resident some costs? How are prescription drugs handled? What is the cost difference between a private room and a semiprivate room?

 

13. Transportation services: If required non-emergency medical services (such as dialysis) are not available on the premises how is transportation arranged? What about transportation to other destinations such as local stores and religious services?

 

 How To Finance Care At Home

 

I. Medicare

 

II. MassHealth (Medicaid) (material attached)

 

III. Massachusetts Home Care Program (material attached)

 

 

 

I. Medicare

A. Home Medical Services

 

1. Skilled Nursing Care

2. Physical Therapy

3. Occupational Therapy

4. Speech Pathology

5. Home Health Aide Services

6. Medical Social Services

7. Durable medical equipment can also be offered under the home health benefit

 

B. Services Not Covered

 

1. Housekeeping

2. Grocery Shopping

3. Cooking

4. Transportation

 

Home Health Services must be "hands on" personal care, i.e., assistance with such tasks as bathing, dressing, feeding and mobility. Light housekeeping tasks may be performed by home health aides only when "incidental to direct patient care".

 

C. Eligibility

 

1. Home Health Services must be ordered by a physician and provided by a home health agency that participates in the Medicare program.

 

2. The Medicare beneficiary must be: (i) confined to the home; (ii) under a physicians treatment plan; (iii) in need of skilled level nursing care or skilled rehabilitation therapy.

 

D. Definitions

 

1. Homebound - If due to a "medical condition" you have a normal inability to leave home except with the assistance of another person or with medical equipment such as a walker or cane.

 

2. Skilled Level Care - Care given or supervised by a qualified professional (i.e., registered nurse or physical therapist).

 

E. Amount/Hours of Care Offered

 

1. Part-Time Care - Care provided for fewer than eight (8) hours per day.

 

2. Intermittent Care - Care provided less than seven (7) days per week 

The treatment plan must reasonable and medically necessary.

 

F. Out of Pocket Expenses for Medicare Covered Home Health Services

 

1. Medicare covers home visits at 100% (no deductible and no co-insurance amount)

 

2. Durable medical equipment is considered a Medicare Part B servicefor which a 20% co-insurance payment is charged.

 

 


Copyright D.R.Silberstein 2003, All Rights Reserved