Law Offices of D. Victor Pellegrino
Attorney at Law
2627 Genesee Street
Utica, New York 13501
Phone (315) 733-0417
Fax (315) 792-8075
Email: DPellegri@aol.com
"Protecting The Assets of Seniors and Their Families for Over Thirty-five Years"
"Skilled" nursing care is really like extended hospital care, which is very different from "custodial care". Custodial care is that level of care which is merely assistance with what are known as the Activities of Daily Living (ADL's). This type of personal care, such as assistance with eating, bathing, dressing, toileting, transferring in and out of bed and supervision of medications usually do not require the assistance of professionally trained and licensed personnel. The Medicare program does not cover custodial care. Medicare does not provide protection for expenses of long-term health care such as:
A. The only government program that will pay for long-term care is Medicaid which is a jointly financed federal and state medical welfare program for the poor. If you qualify, Medicaid can cover nursing home costs, hospital care, home care, doctor bills and drug prescriptions. Medicaid can also cover Medicare deductibles and certain services that Medicare won't pay for.
A. The strategy most frequently used to protect and
save the senior's assets is called the "impoverishment" strategy. Over a
period of time, the senior gradually transfers (either outright or in Trust)
and protects all or nearly all of his or her assets for the purpose of
qualifying for the Medicaid Program. The "impoverishment" strategy or
what is sometimes called "planned poverty" aims to:
A. No. To determine the eligibility of the spouse who is going into the nursing home to receive Medicaid, all of the non-exempt assets held by the husband or wife are added together and then the total divided equally between the spouses. To the extent the healthy spouse's half exceeds $74,820, in New York State, the Community Spouse Resource Allowance, (CSRA), the excess is attributed to the spouse going into the nursing home, thereby disqualifying the spouse going into the nursing home from receiving Medicaid.
The spouse outside of the nursing home can retain $74,820 in
New York State, the CSRA, in otherwise non-exclude able assets, plus
homestead, plus personal property, plus a burial reserve, plus an
automobile and set up certain burial space agreements for children, their
spouses. brothers, sisters and their spouses, etc. pursuant to strict rules
set forth in an Administrative Directive issued in July, 2011, which must be
carefully followed. You can protect a substantial amount of
your assets if burial space agreements for family members are used
correctly. Interest on burial accounts is also exempt for
Medicaid purposes.
While the Community Spouse Resource Allowance
(CSRA) can be as high as $109,560 for seniors with a large
amount of assets, this higher CSRA results in the payment of more of
your assets for nursing home costs.
It is important to understand
that under New York law:
1. A spouse is
charged with legal responsibility for the other spouse's nursing home costs.
This means that the income and resources of the healthy spouse are
considered as available to the Medicaid applicant spouse who is going into a
nursing home and will be considered in determining if that spouse qualifies
for Medicaid, and
2. If the
healthy spouse has assets in excess of $74,820, those excess assets must be
spent on medical care until the healthy spouse's assets are down to $74,820,
and
3. If the
healthy spouse's monthly income is more than $2,739 per month, the local
Social Services Department will normally require 25% of the excess income to
be spent on the nursing home costs of the spouse in the nursing
home.
4. If the total income of both spouses does not exceed $2,739 per month,
all of the total income can go to the healthy spouse, even if their spouse is
in a nursing
home.
5.
The healthy spouse can refuse to support the spouse in the nursing home, but
then the Department of Social Services has the right to sue the healthy spouse
to recover money it pays for the nursing home costs of the spouse in the
nursing home. Doing what is called a "spousal refusal" may make
sense in certain situations because the Medicaid rate is less than the private
pay rate.
5. Q. HOW MUCH INCOME CAN I MAKE AND QUALIFY FOR
MEDICAID
A. Any person over 64 whose
net income is less than $767 per month, plus an unearned income credit of $20
($1,117 for a couple) per month, plus an unearned income credit of
$20 for some couples) has satisfied the income means test for SSI
related Medicaid. A single individual residing in a nursing home is permitted
only $50 per month as a personal needs allowance, plus assets of
$13,800 ($20,100 for a couple) plus a burial reserve.
(Caution: under New York's new Estate Recovery law, passed April 1, 2011,
if the person on Medicaid has this $13,800 exempt amount or any lesser amount
of money in a joint account at the time of death, Medicaid can get a lien on
those funds at the time of the Medicaid recipients death. Therefore planning
needs to be done after the Medicaid recipient is on Medicaid and before the
Medicaid recipient passes away to protect even the $13,800 exempt amount from
Medicaid's lien under the new law.) You can set up a trust with a
funeral director to prepay funeral expenses and the money in the trust will
not be counted as a resource for Medicaid as long as any money not spent on
the funeral is turned over to the Medicaid upon the senior's death.
Caution, at the current time, only the cost of the
vault, burial container, opening and closing of the grave, plot,
stone and casket are treated as exempt for the community spouse, as opposed to
the Medicaid applicant. (Car and personal residence may be exempt.) The law
provides that the spouse of an individual who has established his or her
eligibility for Medicaid is entitled to a monthly income not to exceed $2,739
per month.
6.Q. CAN I TRANSFER MY ASSETS TO MY CHILDREN OR OTHER
FAMILY MEMBERS JUST BEFORE I GO INTO A NURSING
HOME?
A. LAW IN EFFECT AFTER
FEBRUARY 8, 2006. There is a new law in effect after February 8th,
2006 that will change previous law drastically. The bottom line is
that under the new law there is a five year look back period and any assets
transferred within 5 years of you going into a nursing home and making a
Medicaid application will disqualify you from receiving Medicaid until
that penalty period has run. Under the old law before February
8th, 2006, there was a Thirty Six Month Rule (applicable to
outright transfers) and a Sixty Month Rule (applicable to certain transfers in
trust). Eligibility for medical benefits is denied for a period of time if the
person going into the nursing home transferred assets for less than fair
market value within thirty six or sixty months before his or her application
for Medicaid benefits. Under the old law which applies to transfers made
before February 8, 2006, the period of ineligibility begins the first day
of the month following the month in which the resources were transferred and
lasts for a number of months equal to the total value of the transferred
property divided by the average cost of nursing home care to a private patient
in that region of the state. (Currently $7,688 per month in central New York
State and higher in other areas of New York). Under the new
law, the penalty period doesn't start to run the first day of the
month after the month of the transfer, it starts to run much later, in
essence, the penalty period starts to run on
the date you are both: 1. in the nursing home
and 2. would otherwise qualify for Medicaid, if you
hadn't made the transfers. So any transfers within 5 years of applying for
Medicaid result in a penalty period preventing you from qualifying for
Medicaid, calculated by taking the amount you transferred within 5 years and
dividing it by $7,688 (in central NY). ********* UNDER THE NEW
LAW ASSETS YOU TRANSFER 5 YEARS BEFORE YOU GET SICK CAN RESULT IN
DISQUALIFICATION FOR MEDICAID!!! Under certain limited circumstances,
some recent fair hearing decisions allow gifts within the 5 year look
back period to avoid creating a penalty period. Note: yours
facts may allow gifts within the 5 year period to be treated as gifts not made
for the purpose of qualifying for Medicaid, if you fit under the facts of
these recent fair hearing
decisions.
Under
the Medicaid transfer rules, certain resources and transfers are exempt. A
home is exempt if transferred to one of the
following:
1. a
spouse,
2.
a minor (under 21 child), or a blind or disabled child of the Medicaid
applicant,
3.
a brother or sister with an equity interest in the home who resided in the
home one year before
institutionalization,
4.
a son or daughter who resided in the home two years and provided care
that kept the Medicaid applicant from being
institutionalized,
Certain
other transfers of any resource are also exempt. For example: a transfer
is exempt if the resource was transferred to a spouse or to another for
the sole benefit of the spouse, or to a disabled child. A recent
fair hearing decision held that a transfer of a residence to a trust
established solely for the benefit of the disabled child would not
qualify for this exemption and that the house had to be transferred directly
to the disabled child.
7. Q. DOES IT MAKE A
DIFFERENCE WHEN I APPLY FOR MEDICAID?
A.
Extreme caution must be used is deciding when to file the
Medicaid application, because there is no longer a "cap" on the waiting period
equal to the look back period. If you apply for Medicaid too soon after a
transfer, you may create a penalty period or period of ineligibility for
Medicaid longer than 60 months. This means that if you apply one day too
early, you could be prevented from qualifying for Medicaid for 5 or
10 years or more. If you applied at the appropriate time, which could be one
day later, you could qualify immediately for Medicaid! What a difference a day
can make?
8. Q. WHAT CAN BE DONE IF THE SENIOR IS
ALREADY IN A NURSING HOME?
A. If the
senior is already in a nursing home or about to go into one, he or she can
retain enough assets to pay for sixty months care, transfer the balance
and not apply for Medicaid until sixty months after the date on which the
last asset transfers are completed. If the assets total less than the cost of
60 months of care, no transfers will help you. However use of a
gift and promissory note between a senior and a family member, usually a
child, can avoid the harsh new 5 year rule as discussed below under question
9.
9. Q. HOW CAN I AVOID THE NEW FIVE YEAR RULE ON
GIFT TRANSFERS AFTER FEBRUARY 8, 2006?
A.
One technique to avoid the new harsh 5 year rule on gift
transfers after February 8th, 2006 is the use of a "Service Contract" between
the senior and a child or other family member.
Most children help
their mom and dad in numerous ways as they age by performing the services of a
Geriatric Care Manager. It is very common for a child to handle their
parents' finances if the parents become unable to handler their own
finances by becoming their parents' Power of Attorney. These duties often
include paying bills, dealing with the parents' banker, lawyer, tax
return preparer and financial planner. In addition, most children manage their
parents' health care as their Health Care Proxy by taking their parents to the
doctors, communicating with the doctors, hospitals, social workers
and home health care aides. Many times the children arrange for
supervision of the parents by home health care aides and visit their parents
on a regular basis whether at home and during hospital visits. Many
children also provide home care services themselves for their
parents.
These valuable services are usually provided free of charge
because of the love and affection we have for our parents. That presumption
can be over come under certain court decisions, Administrative
Directives and fair hearing decisions. Seniors can actually hire their
children to provide these services on a contractual basis and pay the children
substantial amounts of money to perform these Geriatric Care services. If the
"Service Agreement" is properly drawn, meets all of Medicaid's legal
requirements and is substantiated per Medicaid rules, then money paid
to children for documented services pursuant to a binding written
agreement entered into at the time of the rendition of the services can
completely avoid the new harsh 5 year rule and those payments can be protected
immediately upon payment to the children without any penalty period imposed.
Extreme caution should be used when employing this technique
because DSS will disallow the use of service agreements when parents
are in a nursing home. The use of a service agreement should only be
considered if a parent is not in a nursing
home.
Please note that the New York State Department of Health has
issued a ruling that it will give credit for amounts paid to children for
certain services rendered under a service agreement entered
into prior to entry into a nursing home, which means these payments will
be allowed and not treated as a gift transfer, thus escaping the 5
year rule. I have won favorable fair hearing decisions using this
technique, which has protected a substantial amount of money and avoided the 5
year rule for compensation for services rendered to parents prior to entry
into a nursing home. It makes sense because the children are in fact
providing valuable services to the parents anyway. This is an excellent
planing tool that I recommend if used properly.
Another technique used in an emergency, where little or
no planning has been done, is the use of a gift and a promissory note,
where a parent makes a gift transfer of money to a child and then loans the
child money that will be repaid to the parent over a short period of time.
Without going into detail, the bottom line is that if done properly, about 1/2
of the parents assets can be protected in this type of emergency planning,
sometimes much more. There have been three Fair Hearing Decisions out of
Albany County that have allowed this planning technique and I have used it
several times to protect substantial assets.
The key is planning and
with proper planning there are avenues to use that can avoid the
imposition of the new 5 year rule. Of course that depends on the facts of
your situation, but without proper planning, assets transferred by gift within
5 years of entering a nursing home will usually result in disqualification
from receiving Medicaid for a certain period of time, which usually can be
financially devastating to the senior and their family.
10. Q.
WHY SHOULD I USE A TRUST TO PROTECT MY
ASSETS?
A. Assets
are usually transferred to children or other family members either outright or
in trusts. A trust is more desirable than an outright transfer to a child in
many situations
because:
a) You may
have a bad relationship now or in the future
with:
1.
your child
or
2. your
son-in-law or daughter-in-law
b) Your child may:
Please feel free to give me a call at (315) 733-0417 to schedule an appointment.
PLEASE NOTE THAT THIS DOCUMENT IS NOT MEANT TO GIVE LEGAL ADVICE, BUT ONLY TO ANSWER CERTAIN FREQUENTLY ASKED QUESTIONS CONCERNING HOW TO PROTECT ASSETS FROM BEING WIPED OUT TO PAY FOR NURSING HOME COSTS. YOU ARE STRONGLY URGED TO CONSULT WITH AN ATTORNEY WHO IS COMPETENT IN THE AREA OF ELDER LAW, TAX AND ESTATE PLANNING PRIOR TO TAKING ANY STEPS TO PROTECT ASSETS SO THAT YOU WILL UNDERSTAND ALL OF THE RAMIFICATIONS OF YOUR ACTIONS, INCLUDING BUT NOT LIMITED TO ESTATE TAX, GIFT TAX, INCOME TAX, FINANCIAL AND ESTATE PLANNING CONSIDERATIONS.
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useful estate planning information. 
Email: Dpellegri@aol.com