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Understanding the Medicaid Transfer Penalty

Monday, September 17th, 2012

In a previous entry, we examined the asset and income rules for Medicaid, the joint federal and state program that many seniors rely on for nursing home care or, in the state of New York, home health care.  Here, we look at the details of another important Medicaid rule: limitations on the transfer of assets.

The transfer penalty exists to prevent someone from entering a nursing home and attempting to meet the Medicaid eligibility requirements by transferring assets to, for instance, a close relative, for less than the true value of those assets.  To prevent this, there is a “look-back” period of 60 months, when a Medicaid applicant’s transfers of assets will be examined to determine if they were for less than fair value.

The penalty is a period of ineligibility, and it is calculated by dividing the total of the amount transferred by the estimated monthly cost of nursing home care.  In the state of New York, that amount is determined on a county-by-county basis, and ranges from $7,688 to $11,445.  If one is found to have made a transfer for less than fair value during the look-back period, then that person will be ineligible for the number of months that the assets would have paid for nursing home care.

Another factor is when the period of ineligibility begins.  Under previous rules, the period began when the transfer occurred.  Under the Deficit Reduction Act (DRA) of 2005, the period begins when the person has moved into a nursing facility and has spent down to the level of Medicaid eligibility.

Certain transfers for less than fair value do not trigger the penalty, including transfers to a spouse or a child who is blind or has another disability.  Special rules apply for transfers of the applicant’s home and transfers to trusts for the support of a person with a disability.  No one should make a transfer of assets that may affect Medicaid eligibility without consulting with an attorney.

For more information about New York Medicaid rules, visit http://www.health.ny.gov/health_care/medicaid/. For more information about our elder law services, visit www.elderlawnewyork.com.

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Understanding Medicaid Rules: the Deficit Reduction Act of 2005 (DRA)

Thursday, August 23rd, 2012

Understanding Medicaid Rules: the Deficit Reduction Act of 2005 (DRA)

In previous postings, we examined the asset rules and transfer penalty rules for Medicaid, which many seniors rely on for nursing home care or, in New York, home health care.  In 2006, significant changes to the program went into effect, and we review them here.

In 2006, President George W. Bush signed the Deficit Reduction Act of 2005 (DRA), cutting approximately $40 billion from Medicaid, Medicare and other programs over five years.  The effect on Medicaid has been to tighten eligibility rules.

The primary impact of the DRA on Medicaid was to change the rules regarding the transfer penalty, which we examined in detail in a previous posting.  The DRA lengthened the “look-back” period from three years to five years, and changed the transfer penalty start date from the date of the transfer to the date an applicant enters a nursing home and would otherwise be eligible for Medicaid.

Another key change is in the application of stricter home equity limits.  In New York, Medicaid applicants cannot have more than $786,000 of equity in their homes, unless a spouse or other dependent relative resides there.

The DRA also affects certain estate planning tools that some Medicaid applicants have found useful.  The rules have been tightened on the use of annuities, promissory notes and life estates.

Annuities can provide income to nursing home residents, provided they are considered “noncountable” toward Medicaid asset limits.  To meet this requirement, they must be irrevocable, non-transferable and actuarially sound.  The DRA added a new requirement: the state must be named the remainder beneficiary, up to the amount of Medicaid benefits the applicant receives.

Prior to the passage of the DRA, a Medicaid applicant could avoid the transfer penalty by showing that a transfer of assets was not a countable gift, but a noncountable loan, by producing a promissory note or mortgage contract.  The DRA imposed restrictions on such loans: the term of the loan must not be longer than the anticipated life of the lender, deferred payments and balloon payments are not permitted, and the debt cannot be canceled upon the lender’s death.

Another strategy to avoid the transfer penalty is for the applicant to purchase a life estate in the home of another person, for instance a child.  This is still permitted, but the applicant must actually reside in the home for at least one year.

These estate planning tools can still be useful to Medicaid applicants, but they require the assistance of a qualified estate planning attorney.


For more information about New York Medicaid rules, visit http://www.health.ny.gov/health_care/medicaid/.For more information about our elder law services, visit www.elderlawnewyork.com.

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Understanding Asset Rules for Medicaid

Friday, August 17th, 2012

Many seniors take advantage of Medicaid for health insurance coverage, nursing home care, or, in the state of New York, home health care.  Because Medicaid is a joint program between the federal government and the states, it is important to understand the rules that apply where you live.  Here we will review the resource or asset rules that apply to the program for nursing home or home health care recipients, both generally and in the state of New York.

Individuals who have a disability, are blind or are age 65 or over, or who require nursing home care, must pass a resource test to be eligible for Medicaid.  In New York, in order to be eligible for Medicaid, a person’s assets must be $14,250 or less.  Income is restricted to $792 per month if the person continues to reside in the community.  Nursing home residents are permitted a small monthly income for personal needs.

Asset rules also apply to a nursing home resident’s spouse, known as the “community spouse.”  In New York, the Community Spouse Resource Allowance (CSRA) is $74,820, or half of the joint assets of the couple, up to $113,640 in countable assets.

The community spouse is also entitled to a small amount of income, what is known as a minimum monthly maintenance needs allowance (MMMNA).  For income in excess of the MMMNA, 25 percent may go to the cost of the nursing home resident’s care.

Assets that do not count against the resource limits are those defined as “noncountable,” including personal possessions like furniture and clothing.  A primary residence and an automobile can be considered noncountable, with certain restrictions.  Prepaid funeral arrangements, some life insurance, and assets that are “inaccessible” can also be considered noncountable.

For more information about New York Medicaid rules, visit http://www.health.ny.gov/health_care/medicaid/. For more information about our elder law services, visit www.elderlawnewyork.com.

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Seniors Should Be Aware of Benefits Available to Them

Thursday, July 26th, 2012

As people approach their golden years, they should be aware of public benefits that can improve their quality of life.  The Brookdale Center for Healthy Aging and Longevity has produced a helpful Benefits Checklist for Older Adults.  The Center is associated with Hunter College, of the City University of New York.

The first item on the list is Medicare, which guarantees access to medical insurance for Americans over the age of 65.  Medicare Part A covers hospital care and provides limited coverage for hospice and in-home care.  Part B provides limited coverage for outpatient services, physicians and durable medical equipment, while Part D covers prescription drugs.

Another important benefit is Supplemental Security Income (SSI), which provides monthly cash benefits to individuals age 65 or older, and to persons who are blind or disabled.  To receive the benefits, individuals must meet certain income and resource limits, and must submit an application.

There are also benefits that apply specifically to older New Yorkers, such as the New York State School Tax Relief Program (STAR).  New York state residents who meet certain income limits can receive a reduction in school property taxes.  A real property tax credit and the Senior Citizens Homeowners Exemption (SCHE) are also available to those who qualify.

There are many public benefits that can provide assistance to seniors, and it is important to be aware of the help that is available.

The checklist is available here: http://www.co.genesee.ny.us/docs/OfficefortheAging/Benefits_Checklist_2011__rev_2_18_11_.pdf


To learn more about our estate planning services, visit www.elderlawnewyork.com.

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Planning to Retire Soon? Create a Retirement Checklist

Monday, July 16th, 2012

If you are considering retiring within the next five years, now is the time to create a retirement plan.  Many seniors say they wish they had planned more carefully for retirement.  There are several things you can do now to make sure your legal and financial affairs are in order when you retire.

Define Your Financial Goals

Naturally, one of the most important considerations in planning for retirement is safeguarding your financial security.  That means defining what you expect your lifestyle to be during retirement, and how your financial goals will be met.  You will want to consider factors such as how you will allocate money from your savings to supplement your retirement income, the possibility of rising health care expenses, and the effect that inflation may have on your purchasing power.

Your retirement plan will need to include a budget and an asset allocation strategy, and you will need to consider how to balance different sources of income and benefits, including Social Security, Medicare, and your own assets.  If you are employed, one thing you can do to maximize your savings is to invest as much as you can in your 401(k) before you retire.  Your employer can be a valuable source of information on how best to make use of your 401(k), and what benefits you will receive in retirement.  If you are married, then you and your spouse should create a joint retirement plan.

Create an Estate Plan

If you do not already have an estate plan, now is the time to create one.  Before retirement, you will want to be sure that you have taken the necessary steps to ensure that your assets will be distributed according to your wishes, through the execution of a will, and the establishment of any trusts that would benefit you and your family.  It is also important to establish a durable power of attorney, designating a person to make decisions for you in the event you become incapacitated.  Through a living will, you can issue specific instructions for what is to be done in certain medical situations.  An estate planning attorney can help you create a holistic plan for the management of your assets.

Retirement is something to look forward to, and something to plan for carefully.

To learn more about our elder law services, visit www.elderlawnewyork.com.

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Posted in Asset Protection, Elder Law, Estate Planning, Long Term Care, Medicaid, Social Security, Tax Planning, Trusts | Comments Off on Planning to Retire Soon? Create a Retirement Checklist

The Supreme Court’s Affordable Care Act Ruling is Good for Senior Citizens

Thursday, July 5th, 2012

The U.S. Supreme Court case Florida v. Department of Health and Human Services, which challenged the constitutionality of the Patient Protection and Affordable Care Act has been covered heavily by mainstream and online media outlets. The Court heard arguments on the case in a historical three day session March 26-28, 2012.

The U.S. Supreme Court has upheld the individual mandate and most provisions of the Affordable Care Act. A federal penalty on states not cooperating with the Medicaid expansion provision of the law was deemed unconstitutional, but Chief Justice John Roberts gave Congress a constitutional antidote with his opinion.

While most news outlets have focused on the political outcome of the Court’s decision, they have failed to cover an issue that genuinely matters to a large portion of Americans:  how the ruling affects the lives of senior citizens. Had the Court overturned the law in its entirety, senior citizens would have lost many benefits.

Under the law, Medicare recipients are entitled to a free annual physical and can receive screenings for colorectal cancer and breast cancer without paying a deductible or co-pay.

One of the most popular aspects of the health-care reform bill is the Money Follows the Person program (MFP). With MFP, Medicaid will provide funding for alternative living options for adults that require assisted living. It is with this benefit that seniors can enjoy comfortable, familiar, environments rather than being forced to live in a nursing home. New York is one of 43 states participating in the Money Follows the Person program.

The law also strengthens the Medicare Trust Fund making it solvent through 2029.

For more information, visit www.medicaid.gov. For information on elder law, visit www.littmankrooks.com or www.elderlawnewyork.com.

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Retirement Communities Are Going Green

Monday, July 2nd, 2012

As seniors plan for retirement, a new option has emerged: the “green” retirement community.  One such facility, Birches at Chambers Senior Community, has opened in Ulster, New York.  The community not only features state-of-the-art accessible housing, but was built with energy efficiency in mind.

Joseph Malcarne, a contractor involved in the construction of the facility, said that the design was intended to be environmentally friendly and healthy for the residents.  The facility accommodates seniors in various stages of aging, and it was designed as an age-in-place community.  This type of design is popular, but also creates challenges.  The air circulation system had to be designed in such a way that airborne germs could not circulate from one area to another, and senior sensitivity to temperature was also a concern.

The solution was a separate ventilator system for each individual unit, which regularly exchanges fresh outside air.  The community also features solar thermal and photovoltaic panels, which came from a local source, further reducing the carbon footprint.  The energy efficiency measures earned the development a platinum rating from Leadership in Energy and Environmental Design (LEED).

The development comprises 66 units and includes a fitness studio, computer lab, and community room.  The entire community is wheelchair-accessible, including a gazebo and patios.

The community’s first resident, Cindy Grill, took up residence in 2010.  Grill had lived in another Birchez facility, but after a stroke confined her to a wheelchair, she needed an accessible home.  Vinnie Organtini, a subcontractor who helped build the development, organized his crew to help her move in.

To learn more about our elder law services, visit www.littmankrooks.com.

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How can Families get Started in Planning a Nursing Home Placement for a Loved One?

Wednesday, June 27th, 2012

Guestblogger: Ginalisa Monterroso, Entitlement Analyst, Archcare at Mary Manning Walsh Home

How can families get started in planning a nursing home placement for a loved one?

  • Families really need to do lots of research. Use the internet, visit the neighborhoods and facilities and look for reviews that are done by people that have had their family members in the nursing home. Search for a facility where your loved one’s immediate needs are met, ask questions, see if they have an available rehabilitation center, what foods they will serve, how they can cater to your loved ones, what insurance the nursing home will take.
  • Always visit and ask questions.

What is the New York Patient Review and how and where can it be completed?

  • It is a “quick” medical assessment of the patient’s needs – it states what the patient is being treated for, the diagnosis, any symptoms, medications, needs and requirements medically per the doctor’s orders,(as opposed to going through an entire medical chart it is a 7-page summary of all the medical needs of a patient (type of care, type of equipment needed, etc.) so that nursing homes can make a quick assessment).  It can be completed

What is the admissions agreement?

  • This is an agreement that is generated by the facility stating all the requirements of what the facility offers for the resident as far as the needs, insurance (required), payments needed, it is a breakdown of what is included in regards to services, room and board, rehabilitation, insurance, notification on insurance being discontinued, the guidelines for where to go if your insurance is discontinued. Everyone should always read the agreement, it is important to know what is going to go on in a facility when you admit your family member.

How does one pay for nursing home care? Can it be subsidized?

  • There are a lot of options to pay for care. There are short-term options and long-term options. Medicare covers a short-term stay, it also covers assistance in-state nursing facilities (up to 100 days); if you need an extension, or a longer stay, there are other insurances that may cover the extra duration of the stay, for example, a long-term care policy, or medicaid. Paying out-of-pocket is very, very costly.

How do you complete the Medicaid or Medicare application?

  • Call the Social Security Administration and get your family member on Medicare. You should have the Medicare before you go into a nursing home. Medicaid can always be done once the family member enters the nursing home if the need for an extended stay is necessary. There is a financial person on site who can assist with applying for Medicaid. You should always have long-term care insurance set up before your nursing home placement.

What happens if I am a long distance caregiver or when the patient lives out of state?

  • The process of searching is still the same. Ask questions! Technology today has expanded – – do they have an online site? You can view the facility and take a tour online. Ask to speak to the directors of each department (especially admissions).

What legal assistance is required (or preferred) when dealing with a nursing home?

  • Emergency situations where people haven’t planned in advance are surprisingly common in nursing home placements.  You always want to have a power of attorney; go to a certified elder law attorney (CELA®) when dealing with your loved one. A CELA® member knows all the rules and regulations and will know what needs to be done or prepared in regards to entering a nursing home. Guardianships and financial planning are also important to discuss with a CELA® member to ensure that your loved one’s stay is comfortable.

What rights do patients have while they reside in a nursing home?

  • Patients have the same rights as they would as if they were not living in a nursing home: the right to privacy, to not be discriminated against, they have all the same rights as they would as if they were living at home. No one can make any decisions without asking a resident or confirming with a guardian or social worker (who are always on-site).  The family member has a right to find out what is going on (medically, financially) with their family member or loved one.  They are to be notified of any emergencies or needs that their loved one may have as they change.

What is the best advice you can give to family members on how to place your loved one in a nursing home?

  1. Be prepared– Plan Ahead
  2. Look for symptoms in family members who are becoming frail or ailing
  3. Keep paperwork in one place (medical, financial and legal records)
  4. Make sure that you have discussed the needs and wants of your loved one so you are prepared if an emergency takes place (in regards to finances, health and legal matters)
  5. Speak to a certified elder law attorney (CELA®) to ensure your family members’ needs are met – it always helps down the road.

To learn more about elder law, elder care or nursing home placements, visit www.elderlawnewyork.com.

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What Jim Morrison Can Teach Us About Estate Planning

Monday, June 18th, 2012

Perhaps surprisingly, looking at the life and death of a 1960s rock star can teach us a few things about estate planning.  Actually, it’s a lesson in what not to do.

When Jim Morrison died in 1971, he left a simple will bequeathing his entire estate to his girlfriend, Pamela Courson, provided she survived him by more than three months.  If she did not, then his estate would pass to his brother and sister.  Courson was Morrison’s primary beneficiary and his siblings his secondary beneficiaries.  Courson did survive Morrison by more than three months, but she died in 1974, and her estate then passed to her own parents.  Morrison’s parents unsuccessfully challenged the will, and Morrison’s brother and sister were left with nothing.  This may have been Morrison’s intention, but probably not.

At the heart of this problem is the question of what happens to a bequest when the beneficiary dies, and that depends on whether one has left a simple will, or engaged in more careful estate planning to create a trust or trusts.

In the case of a simple will, when the person who made the will, the “testator,” dies, the estate passes to the primary beneficiary, provided the primary beneficiary has survived the testator by the specified amount of time, and met any conditions specified in the will.  Once the primary beneficiary or beneficiaries receive the money, it is theirs to do with as they please.  They need not take the original testator’s wishes into account in drafting their own wills, or they may fail to draft a will at all.  Generally speaking, a secondary or contingent beneficiary will not receive anything from a simple will unless the primary beneficiary is ineligible to inherit.

Creating a trust provides a way to control the distribution of one’s estate much more carefully.  For instance, rather than transferring a significant sum directly to certain beneficiaries, the principal can be held in trust for the benefit of those persons until their death, at which time the principal can be diverted to other uses, such as the benefit of another beneficiary.  Many more potential future events can be taken into account by a well-designed trust, such as the marriage or parenthood of the beneficiaries.  Careful estate planning entails confronting these potential future situations, to be sure that your estate is put to the good use you intend.  Contact an attorney to learn more.

To learn more about our estate planning services, visit www.littmankrooks.com.

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New Federal Department to Help Seniors and Disabled

Monday, May 21st, 2012

On April 16, the federal government announced the formation of the Administration for Community Living (ACL), a new agency dedicated to helping seniors and persons with disabilities gain access to supports in their communities.

“All Americans – including people with disabilities and seniors – should be able to live at home with the supports they need, participating in communities that value their contributions – rather than in nursing homes or other institutions,” said Kathleen Sebelius, Secretary of Health and Human Services, in announcing the change.

The Administration for Community Living will focus on the special needs of specific groups of people, such as seniors who have dementia and children who have developmental disabilities.  The agency’s goal is to provide access to the supports needed for seniors and the disabled to live with dignity as full participants in their communities.  This includes not only ensuring access to health care services, but also helping with access to employment, education, and housing.  Beyond those basic needs, the agency will also assist the people it serves in making and maintaining the community relationships and social connections necessary for full participation in community life.

The change consolidates the Administration on Aging, the Administration on Developmental Disabilities and the Office on Disability into one entity, which Sebelius said would be stronger and more focused.  Sebelius said “the ACL will pursue improved opportunities for older Americans and people with disabilities to enjoy the fullest inclusion in the life of our nation.”

To learn more about the new agency, visit http://hhs.gov/acl.

For assistance with questions regarding your child’s special needs visit our website at http://www.specialneedsnewyork.com/. To learn more about New York elder law or New York estate planning, visit http://www.elderlawnewyork.com.

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