Recent Developments In Medicaid And Health Care Planning 2009
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Transcript of Recent Developments In Medicaid And Health Care Planning 2009
RECENT DEVELOPMENTS IN MEDICAID AND HEALTH
CARE PLANNING2010
BY
ROBERT J. LONGSTREET, ATTORNEY AT LAW
MEDICAID VS. MEDICAREMEDICAID VS. MEDICARE
MEDICAID IS A LARGE GOVERNMENT HEALTH INSURANCE PROGRAM
DIFFERENT FROM MEDICARE IN THAT MEDICAID ELIGIBILITY REQUIRES AGED OR DISABLED + STRICT FINANCIAL ELIGIBILITY REQUIRMENTS
COOPERATIVE FEDERAL & STATE PROGRAM
FEDERAL LAW PROVIDES BROAD PARAMETERS, STATE PROVIDES SPECIFIC RULES AND ADMINISTERS ELIGIBILITY
MEDICAID
• In Michigan, Medicaid implemented by county DHS (Department of Human Services) Offices.
• Many Medicaid Programs for various populations.
• Medicaid Long Term Care Programs: Nursing Home (NH) Medicaid MI Choice Waiver
• MEDICAID DOES PAY FOR LONG TERM NURSING HOME STAYS FOR SENIORS WHO QUALIFY
• BUT MEDICAID IS ‘MEANS TESTED’, MEANING THE STATE WILL LOOK AT ASSETS AND INCOME
(FOUR TESTS TO PASS… WE’LL DISCUSS IN A FEW MINUTES)
WHY DO WE CARE ABOUT MEDICAID ELIBILITY?
• 0ver 6,000 people turn 65 every day, and 40% of these people will spend time in a nursing home.
• The average cost in 2009 for 1 month in a nursing home in the State of Michigan?
$6,362
• 66% of all single people will be "broke" after 13 weeks in a nursing home.
• 90% of married couples with one spouse in a nursing home will be "broke" after two years.
MEDICAID QUALIFICATION REQUIREMENTS
• Must be 65 years or older or disabled, blind or receiving SSI
• Must be a resident of the State of Michigan
• Income must be below the monthly private pay cost of the nursing home ($7,000)
• An applicant cannot own more than $2,000 of countable assets (individually or with spouse)
AND IF YOU QUALIFY…
• The nursing home patient is allowed to keep $60.00 per month for ‘personals’
• The remainder of the patient’s income goes to the nursing home
• MEDICAID will pay the remainder of the nursing home bill
THIS SOUNDSHORRIBLE!!!!
SOME GOOD NEWS
• NOT ALL ASSETS ARE “COUNTABLE”
• THESE ARE ASSETS A PERSON CAN OWN AND STILL RECEIVE MEDICAID BENEFITS
HOMESTEAD
ONE AUTOMOBILE
PERSONAL PROPERTY
PREPAID FUNERAL CONTRACTS
HOMESTEAD EXEMPTION
• HOMESTEAD INCLUDES HOME AND ANY CONTIGUOUS LAND• CAN BE SEPARATED BY ROAD OR RIVER, BUT NOT BY
ANOTHER’S LAND• NEED NOT BE IN MICHIGAN• FOR A SINGLE PERSON: LESS THAN $500,000 IN EQUITY VALUE• NO VALUE CAP IF OCCUPIED BY SPOUSE, DISABLED CHILD, OR
CHILD UNDER 21.
• OF ANY VALUE
ONE AUTOMOBILE
PERSONAL PROPERTY
CLOTHING
JEWELRY
HOME APPLIANCES
FURNITURE
PRE-PAID FUNERALCONTRACTS
MUST BE IRREVOCABLEFOR HUSBAND AND WIFE
CAN INCLUDE BURIAL PLOTSFOR ENTIRE FAMILY
EVERYTHING ELSE IS A “COUNTABLE ASSET”
• CHECKING ACCOUNTS
• SAVINGS ACCOUNTS
• CERTIFICATE OF DEPOSITS
• OTHER REAL ESTATE (BESIDES HOMESTEAD)
• STOCKS, BONDS, ETC.
VALUING COUNTABLE ASSETS
Joint Assets• Joint with Spouse = All counts• Joint with Non-Spouse
For Bank Accounts = All counts unless demonstrate contribution Real Estate, Stocks and Mutual Funds = valued in proportion to ownership
Valuing Countable Assets
• Joint Assets may have $0 value if:
– Nature of joint ownership requires all joint owners to sell, and
– One or more joint owners refuse to sell.
Valuing Countable Assets
• Retirement Funds and Annuities– If the owner can make a withdraw, the value is the
amount that can be withdrawn, reduced by any withdrawal penalty (but not reduced for taxes owing).
– Annuity in pay status or pension that pay monthly benefit (with no right of withdrawal) in treated as income.
EXTRA EXEMPTIONFOR “COMMUNITY” SPOUSEOF REMAINING ASSETS, SPOUSE IS
ENTITLED TO KEEP:
½ THE COUNTABLE ASSETS
UP TO A MAXIMUM OF $109,500
EXAMPLE: Mr. Brown is entering a long term care facility. Mr. and Mrs. Brown own the following assets:
• HOME ($180,000)
• ONE CAR
• PERSONAL PROPERTY
• PRE-PAID FUNERAL
• $100,000 IRA (Mr. Brown)
• $20,000 savings (Mrs. Brown)
• $35,000 CDs (joint)
• $7,000 checking (joint)
IF MR. BROWN APPLIED FOR MEDICAID:
• MR. BROWN COULD KEEP $2,000• MRS. BROWN (THE COMMUNITY SPOUSE)
COULD KEEP:
THE HOUSETHE CAR
THE PREPAID FUNERALPERSONAL PROPERTY
$80,000 IN CASH
WHAT ABOUT INCOME?
• MR. BROWN GETS TO KEEP $60.00 PER MONTH
• IF MR. BROWN WERE SINGLE, THE REMAINDER OF HIS INCOME WOULD GO TO THE NURSING HOME BILL
• MRS. BROWN GETS TO KEEP ALL OF HER INCOME
• PLUS, ENOUGH OF MR. BROWN’S INCOME TO PAY HER MONTHLY BILLS (APPOX. $1,500 - $2,500 PER MONTH)
WHAT ABOUT THE REMAINING $80,000 THE BROWNS OWN?
WHAT ABOUT THE REMAINING $80,000 THE BROWNS OWN?
• THEY COULD SPEND IT ON THE THEY COULD SPEND IT ON THE NURSING HOME (APPROX. 1 YEAR)NURSING HOME (APPROX. 1 YEAR)
• OR THEY MIGHT BE TEMPTED TO OR THEY MIGHT BE TEMPTED TO GIFT THE MONEY TO RELATIVES…..GIFT THE MONEY TO RELATIVES…..
MEDICAID PENALIZES GIFTS
• ON MEDICAID APPLICATION, ASKED IF MEDICAID APPLICANT HAS GIVEN AWAY ASSETS IN LAST 60 MONTHS
• FOR TRANSFERS BEFORE FEBRUARY 8, 2006, ONLY ASKED ABOUT LAST 36 MONTHS
• IF YES, APPLICANT PENALIZED FOR AMOUNT OF TIME GIFTED MONEY COULD HAVE PAID FOR NURSING HOME STAY
• GIFT AMOUNT / $6,362 = Penalty Time
IF MR. BROWN GIFTS REMAINING $80,000 TO CHILD
• AND MR. BROWN APPLIES FOR MEDICAID WITHIN 60 MONTHS OF GIFT
• $80,000 / $6,362 = 12.57 MONTH PENALTY
• RESULT: MR. BROWN WILL NEED TO GET THE MONEY BACK TO PAY FOR NURSING HOME STAY!
SO WHAT IS LEFT FOR CLIENTS SO WHAT IS LEFT FOR CLIENTS TO DO?TO DO?
FOR A SINGLE CLIENT
CONVERSION: TRANSFER COUNTABLE ASSETS INTO EXEMPT ASSETS
EX: $25,000 IN CASH PUT INTO HOME FOR NEW ROOF, AIR CONDITIONING AND KITCHEN. $8,000 SPENT ON PRE-PAID FUNERAL ARRANGMENT.
FOR A SINGLE CLIENT
• “HALF-A-LOAF” METHOD
• GIFT APPROXIMATELY 60% OF ASSETS
• REMAINING 40% USED TO COVER THE PENALTY PERIOD
• EX: MR. X HAS $100,000 IN COUNTABLE ASSETS. WE HELP HIM GIFT $60,000 AND USE $40,000 TO COVER THE 10 MONTH PENALTY PERIOD.
FOR MARRIED CLIENT
• TAKE ADVANTAGE OF FULL COMMUNITY SPOUSE ALLOWANCE (1/2 OF COUNTABLE ASSETS)
• WE THEN DRAFT AN “IRREVOCABLE ANNUITY TRUST” TO HOLD REMAINING ASSETS FOR SPOUSE
• TRUST PAYS OUT REMAINING FUNDS TO SPOUSE BASED ON LIFE EXPECTANCY
AS A AS A REVIEW… REVIEW…
REMEMBER REMEMBER MR. AND MRS. MR. AND MRS.
BROWN?BROWN?
EXAMPLE: Mr. Brown is entering a long term care facility. Mr. and Mrs. Brown own the following assets:
• HOME ($180,000)
• ONE CAR
• PERSONAL PROPERTY
• PRE-PAID FUNERAL
• $100,000 IRA (Mr. Brown)
• $20,000 savings (Mrs. Brown)
• $35,000 CDs (Jointly)
• $7,000 checking (Jointly)
WE CAN GET MR. BROWN ON MEDICAID IMMEDIATELY!
MR. BROWN
• GETS TO KEEP $2,000
• $60 PER MONTH OF HIS INCOME FOR MISCELLANEOUS
MRS. BROWN
• HOUSE, CAR, PRE-PAID FUNERAL AND PERSONAL PROPERTY
• COMMUNITY SPOUSE ALLOWANCE (1/2 COUNTABLE ASSETS) $80,000
• REMAINING $80,000 IN IRREVOCABLE TRUST PAID TO HER ANNUITY STYLE
• ALL OF HER INCOME, PLUS ENOUGH OF MR. BROWN’S INCOME TO PAY MONTHLY BILLS
MR. AND MRS. BROWN MR. AND MRS. BROWN SAVE 100% OF THEIR SAVE 100% OF THEIR
SAVINGS AND ESTATE SAVINGS AND ESTATE ASSETSASSETS
ESTATE RECOVERYESTATE RECOVERY
• Signed on October 1, 2007 at 2:14 a.m. by Granholm• Based on the language, will only apply to a Medicaid
recipient’s “probate estate”• It is likely that the only assets most people would
own, and still have been eligible for Medicaid coverage, would be their homes.
• The state will only seek to recover a portion of the value of the home: based on the average price of a home in the county where located.
• WE KNOW NOTHING MORE AT THIS TIME!
IF YOU HAVE A NURSING HOME ISSUE….
• ROBERT J. LONGSTREET
• GEE & LONGSTREET, LLP
• 269-945-3495
• 607 N. BROADWAY, HASTINGS
• [email protected] or www.longstreetlegalservices.com