Saturday, January 26, 2008

Use of Personal Care Contracts for Medicaid Qualification

Personal Care Contracts

Millions of Americans are currently caring for an elderly family member or friend, without receiving compensation. Depending on the circumstances, however, it may actually be beneficial for both parties to enter into a care contract wherein the caregiver accepts payment for the care they are providing their loved one and also formally assumes responsibility for that care.

If the loved one you are caring for reaches a point where nursing home placement is the only option, all of their money will be considered available to pay for their care at the nursing home and they will not be eligible for Medicaid assistance until all of their assets have been depleted. Certainly the care they were provided by you, while they remained in the community, is just as valuable to them and worthy of payment as that they will be provided in the nursing home. With a care contract in place, they can pay their caregiver, and every penny spent will count towards their “Medicaid spend down” should they apply for benefits.

It is important to note that without a proper contract in place, Medicaid will assume the money paid is a “gift” or a “transfer of assets” and will impose penalties resulting in ineligibility for Medicaid benefits.

While most of you may already be aware that Medicaid allows care contract payments for caring for loved ones living at home, you may not be aware that payments made via personal care contracts for providing care services for nursing home residents are also an allowable spend down.

Let's give an example: Imagine that daughter agrees to perform a number of services for her mother, including but not limited to preparing meals, cleaning, laundry, assistance with grooming, bathing, personal shopping; monitoring her mother’s physical and mental conditional and nutritional needs in cooperation with health care providers; arranging for transporting; visiting weekly and encouraging social interaction; interacting with and/or assisting in interacting with health care professionals, etc. for her mother’s lifetime, in exchange for a lump sum of $30,000 via a care contract.

Now, whether this will be allowed will be dependent upon the state determining that the Contract in place had fair and valuable consideration. While a personal care contract may not be appropriate in everyone’s situation, if you are caring for your loved one at home or in a nursing home, it is something that you may want to discuss with a knowledgeable Elder Law Attorney who can advise on possible tax consequences and/or Medicaid and estate planning issues.

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Thursday, January 24, 2008

Estate Recovery More Agressive Than Ever

Estate Recovery Law More Aggressive Than Ever

Your mother is in a nursing home and has qualified for Medicaid. She’s been able to keep her home because it is an exempt asset so long as she is living and “intends to return home.” But what happens to the house after she dies? What if it was your spouse on Medicaid and the state has paid thousands in benefits? Will they attempt to recover benefits upon your spouse’s death?

After a Medicaid recipient dies, the state has the right to recover any assets remaining in order to reimburse itself for Medicaid benefits paid out. This process is called estate recovery.

Certainly, it makes sense from a public policy standpoint----if the state is going to help pay for a resident’s care while they are living, then the state should be reimbursed, as fully as possible, by any assets remaining at the resident’s death. But while this policy may make sense, families are never happy to learn that the state may try and take your/your parent’s home after your spouse/parent dies.

At one time, Texas was only pursuing certain real and personal property the Medicaid recipient had titled in their name, alone. But now, Texas is taking advantage of the Federal law’s expanded definition of “estate” that allows the state to recover most assets in which the Medicaid recipient has an ownership interest.

Fortunately, the state Medicaid Estate Recovery Program (MERP) does not have the authority to put a lien on property, but may file a claim in probate.

There are still, in certain circumstances, perfectly legal ways of avoiding estate recovery. For example, if mom is the Medicaid recipient, and she has a child with a qualifying disability, she may be able to give her home to that child penalty free and avoid estate recovery at her death.

Also, if mom had an unmarried child who moved into her home with her, cared for her for at least one year, then mom can transfer her home to that child, penalty free, and avoid estate recovery. This is called the caretaker/child exception.

There may also be other strategies to consider for avoiding estate recovery including purchase of the home by family members or, perhaps, even using a reverse mortgage.

Medicaid estate recovery rules are complicated. You should consult an Elder Law Attorney who practices in the area of Medicaid before drafting your estate plan with the intent of qualifying for Medicaid, with the hopes of avoiding estate recovery.

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Wednesday, January 23, 2008

DRA Changes The Way We Think About Elder Law

I'm still dumbfounded that Congress determined it was necessary to take away much of the Medicaid Planning that was available to the public.

What is Medicaid you ask? Well, it's complicated.

This is a federal and state funded and state administered medical benefit program which can pay for the cost of the nursing home if certain asset and income tests are met.

There are basically four ways to pay for nursing home care:

1. Private Pay. This is the method many people are required to use at first. Quite simply, it means paying for the cost of a nursing home out of your own pocket. Unfortunately, with nursing home bills averaging between $4,000 and $4,500 per month in our area, few people can afford a long term stay in a nursing home.

2. Long Term Care Insurance. If you are fortunate enough to have this type of coverage, it may go a long way toward paying the cost of the nursing home. Unfortunately, long term care insurance has only started to become popular in the last few years and most people facing a nursing home stay do not have this coverage

The first two methods of private pay (i.e. using your own funds) and long term care insurance are self-explanatory, our discussion will concentrate on Medicare and Medicaid.

3. Medicare - This is the national health insurance program primarily for people 65 years of age and older, certain younger disabled people, and people with kidney failure. Medicare provides short term assistance with nursing home costs, but only if you meet the strict qualification rules.

4. Medicaid - This is a federal and state funded and state administered medical benefit program which can pay for the cost of the nursing home if certain asset and income tests are met. Since the first two methods of private pay (i.e. using your own funds) and long term care insurance are self-explanatory, our discussion will concentrate on Medicare and Medicaid.

Medicaid has traditionally been the way many people paid for long term stays in skilled nursing facilities. For instance, if a loved on is facing a nursing home stay due to an illness such as Alzheimer's, Medicaid may pay for these costs. But the rules are much tougher now than they have ever been, due to changes in the law that occurred in 2006 under the Deficit Reduction Act (DRA)

The main thing to note is that there are many ways to still qualify for Medicaid paid nursing home care, and many planning techniques that may still be avaialbe, even under these tough new laws. But you need a qualified Elder Law Attorney to help you navigate through the ever rising riptides...

More on this later.

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