What is Elder Law?
Elder law is not necessarily defined by any specific technical legal distinctions. Rather, elder law is more accurately defined by the people that it serves—older individuals, most commonly referred to as seniors or elders.
Attorneys who concentrate their practice in elder law focus on the legal needs of seniors and work with a wide variety of legal directives and planning techniques to meet the stated goals and objectives of the older client.
Elder law is generally approached from a holistic perspective and the elder law attorney will generally counsel his or her clients on issues related to maintaining control of assets during lifetime, disability planning, and estate planning (after death). Areas of concern will also include asset protection to meet long-term care needs, home care, assisted living and possible nursing home care.
Why is Elder Law Important?
Elder law is not a new area of law, there’s just been a greater focus on it. Our changing demographics and aging trends are primarily responsible. The National Academy of Elder Law Attorneys, Inc. (NAELA) report that the current number of Baby Boomers in America is estimated to be 78.2 million. The first Baby Boomers will be turning 65 in 2011 and by the year 2020, the over-65 population is expected double.
When Should I Contact an Elder Law Attorney?
You should contact an elder law attorney anytime you have questions or concerns about the aging process and its legal interactions. You should absolutely contact an elder law attorney if you have never done any estate planning or if you have not updated your estate plan in the last three (3) to five (5) years. Many individuals wait until it’s too late to do planning—they are no longer competent—and unable to complete the planning process. An elder law estate planning process is essential to ensure you have the proper legal directives for disability planning. These include both financial and healthcare powers of attorney, living wills and preneed guardian declarations. You’ll also want to plan for what happens when you die—either with a will or a trust—and you’ll want to make sure your memorial/funeral instructions have been made known to your family.
If you have family members who are disabled or have special needs, an estate plan will be especially important for the protection of government benefits they may be receiving. If you are single and considering remarriage, a consultation with an elder law attorney may be in order to discuss the affect on your Social Security benefits, retirement plans and taxes. A pre-marital agreement may be necessary to protect family assets for children from a previous marriage.
Family members should contact an elder law attorney if they have concerns about a parent’s competency, want to discuss long-term care planning options including the protection of assets from the rising cost of nursing home care, or if they believe a family member or friend is taking advantage of a senior individual.
How do I find an Elder Law Attorney?
A Florida elder law attorney will be a member of the Florida Bar. They may also be Board Certified in Elder Law which means they’ve met a rigorous set of standards and taken an advanced course of study along with an examination. The elder law attorney will have a special interest in those issues which affect seniors and their families as the practice of elder law requires a broad understanding of a myriad of legal issues, social and medical concerns. An elder law attorney must also be familiar with both Federal and Florida laws which can affect a senior’s well-being and personal goals.
You can locate an Elder Law attorney who has been Board Certified as an expert in Elder Law by contacting the Florida Bar or by visiting its website at www.flabar.org. Elder Law attorneys may also be found through organizations like AFELA (The Academy of Florida Elder Law Attorneys), NAELA (The National Academy of Elder Law Attorneys, Inc.) and the Florida Bar’s Elder Law Section.
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Medicaid Qualification Criteria
In order to qualify for Medicaid nursing home (or in some cases assisted living) benefits, you have to meet certain eligibility requirements. Important among these are income and asset restrictions listed below.
2009 Asset and Income Eligibility Levels*
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Medicaid Recipient
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Community Spouse
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Assets
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Maximum: $2000
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Assets
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Maximum: $109,560
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Minimum: N/A
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Minimum: N/A
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Income
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Maximum: $2,022/month
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Income
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Maximum: Unlimited
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Minimum: N/A
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**Minimum: $1,750/month
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*Effective July 1, 2009
** For purposes of determining spousal diversion amount
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The Medicaid qualification process can be complex and there are a number of possible pitfalls. This is not something you should attempt without the assistance of a qualified legal professional. There are a number of organizations that purport to provide Medicaid planning services. These organizations may not be lawyers and should not be providing legal advice.
If you would like to learn more about options in long-term care asset protection planning and Medicaid, without any obligation or requirement for a one-on-one meeting with an attorney, we invite you to attend our complimentary Truth About Medicaid Planning Workshop. A complete schedule of workshop listings can be found on our website at by clicking here.
Florida’s New Medicaid Law Became Effective November 1, 2007!
On February 8, 2006, the Deficit Reduction Act of 2005 (known as the DRA) signed by President Bush become effective. The DRA represents the most significant change to federal Medicaid rules in 17 years and dramatically impacts the rules governing Medicaid qualification and gifting. The DRA required that all states implement their own regulations—Florida’s become effective on November 1, 2007.
There were 11 major changes to the law that affect seniors:
1. The “look-back” period was changed to five years for all transfers
Under the previous law, when applying for Medicaid benefits the Department of Children and Families (Florida’s State Medicaid Agency) reviewed all financial transactions of the applicant that occurred within a 3-year period preceding the application (referred to as the “look-back” period), unless transfers were made to or from a trust, when they were subject to a 5-year look-back.
Under the new law, any financial transactions that occur on or after its effective date will be subject to a single 5-year look-back because the new law does not distinguish between transfers from individuals or trusts. Transactions that are relevant during the look-back period include not only transfers of assets (gifts), but also the sale of real property, personal property, stocks, bonds, and mutual funds, closing accounts and all other financial transactions.
2. The penalty start date for transfers within the five-year look-back was postponed
When an individual gives away something of value without receiving something of equal value in return (which does not include love and affection), they will be deemed to have made an “uncompensated transfer,” commonly known as a gift. If a gift occurred within the relevant look-back period, an individual will be penalized—resulting in a period of ineligibility (a/k/a “penalty period”) for Medicaid benefits. The penalty period is calculated by dividing the amount of the uncompensated transfer by the average cost of one month nursing home care at the private pay amount.
In the State of Florida, the average cost of nursing home care is approximately $6,000 to $6,500 per month. However, Florida’s Department of Children and Families assigned the average cost of care at $5,000 per month, which is the divisor for determining the penalty period.
Here’s an example of how this works. Let’s assume an individual makes a gift of $100,000. (Remember, this gift can be a transfer of cash, securities or real property—any uncompensated transfer is a gift). Take the $100,000 gift amount and divide by the average cost of care ($5,000). The resulting penalty period is 20 months. That means an individual applying for Medicaid today would not be eligible until 20 months had elapsed. Under the old law, the penalty period started on the date of the gift—so if I made my gift on January 1, 2007, the penalty period would expire 20 months later and I could apply for Medicaid on September 1, 2008. Under the new law, the penalty period doesn’t start until an individual who is “otherwise qualified” applies for Medicaid. So, if I made a gift on January 1, 2008, of $100,000 and I’m otherwise eligible for Medicaid and apply on September 1, 2009—20 months later—the penalty period has not expired. It begins on the date I apply—September 1, 2009 and does not expire until April 1, 2011!
The postponement of the penalty start date for transfers that occurred within the 5-year look-back period is likely to be the harshest of the new rules for many reasons. Will you be able to remember every transaction that occurred within 5 years of your application for Medicaid benefits? What about gifts made to charity, are they treated differently? How will the nursing home be paid during the prospective penalty period when the Medicaid applicant only has $2,000 in assets? The bottom line is it is imperative to implement planning as early as possible, that you keep good financial records and keep those records for at least 5 years in case Medicaid is needed.
3. Elimination of the “rounding-down” technique for monthly transfers
This change, in combination with the prospective application of the penalty period discussed above, will have the biggest impact on the way we currently plan for Medicaid in Florida. Under the old law, as long as the gift made did not exceed $4,900 no penalty would be imposed because we were permitted to “round-down” the transfer to the nearest whole number. $4,900 ÷ $5,000 = 0.96, which would be rounded down to zero – no penalty. Similarly, a transfer of $9,900 would result in a one-month penalty period ($9,900 ÷ $5,000 = 1.96, which is rounded down to 1).
This rounding down permitted monthly, serial gifting that when used in combination with the application of the old penalty period discussed above would allow us to gift $9,900 per month for as many consecutive months as were necessary, without incurring a penalty beyond the month the gift was made.
Under the new law, however, rounding down of gifts is now prohibited. In addition, the new law also requires the aggregation of gifts that result in less than a one-month penalty. Consequently, gifting of $4,900 in March will not be disregarded, but will instead be added to any gifts that occur in the next month (or any of the next 59 months in the 60 month look-back). The resulting penalty for the total amount of the gifts would be applied prospectively after the date of application.
As a result of these changes in the law, there is no longer any benefit of monthly gifting – whether the gift is $4,900 or $9,900. In fact, such monthly gifting will now likely be more detrimental to eligibility than lump sum gifting.
4. Restriction on the use of annuities
There are generally two broad categories of annuities: deferred annuities and immediate annuities. A deferred annuity is an investment you purchase from a life insurance company that permits your investment to grow income tax deferred. Although the annuity contract can have deferred surrender charges that will result in a penalty if you terminate the annuity too soon, under the terms of the annuity contract you have the ability to terminate the annuity any time you want. As a result, the money invested in the deferred annuity is considered an available asset for Medicaid purposes.
An immediate annuity, on the other hand, is not considered an asset for Medicaid purposes. An immediate annuity is similar to a pension you might receive after retirement. With an immediate annuity you are only eligible to receive the income stream and you do not have any ability to reach the principal. As a result, an immediate annuity is not considered an asset for Medicaid eligibility purposes, but the income derived from the annuity is counted as an income resource.
The new law does not do anything to change deferred annuities—they are still considered assets for purposes of Medicaid eligibility. What has changed is the treatment of immediate annuities.
Under the old law, immediate annuities that were "actuarially sound" would not be considered an asset for purposes of Medicaid eligibility when they were also irrevocable and non-assignable. When determining actuarial soundness, the State of Florida only required the annuity to pay out in full over a period that does not exceed the actuarial life expectancy of the annuitant. The manner of the payments was not specified in the law. As a result, several states, including Florida, permitted what became known as “balloon annuities.”
A balloon annuity is an immediate annuity that pays interest, plus a nominal amount of principal each month (typically between $10.00 to $100.00) over all but one month of the life expectancy of the annuitant, with the final month’s payment being a balloon payment of the unpaid principal balance. In other words, an individual with a 60 month life expectancy could purchase a $100,000 balloon annuity that would pay $150 per month during months 1 through 59, with month 60 paying the balloon of $99,410.
Under the new law, if a balloon annuity is created on or after November 1, 2007, the Medicaid applicant will be deemed to have made a transfer of assets that will result in a period of ineligibility based on the amount invested in the annuity. As a result, balloon annuities are no longer viable under the new law.
It is important to remember, however, that although balloon annuities are abolished under the new law, traditional immediate annuity planning remains viable. As such, if an immediate annuity makes equal periodic payments over the actuarial life expectancy of the annuitant (or a shorter period), it will not be considered a transfer of assets. It will, however, be required to meet the new beneficiary designation requirements discussed below.
So, what about annuities (balloon or equal periodic payments) that were created PRIOR to November 1, 2007? Those annuities will generally be grandfathered in and will not be affected by the new law, with one caveat. Under the new law, all immediate annuities created by the Medicaid applicant or the applicant’s spouse must name the State of Florida as the irrevocable beneficiary of the annuity to the extent of Medicaid payments made for the benefit of the Medicaid recipient. The only exception to this irrevocable beneficiary designation is when the Medicaid applicant is survived by a spouse, minor child or a disabled child.
As a result of this new requirement, the preparation of customized beneficiary designation forms will be of critical importance to be sure no more is paid back to the State than necessary. If any immediate annuity does not name the State of Florida as the irrevocable beneficiary, the annuity will be considered an available asset for Medicaid purposes.
5. Limitations on the value of Medicaid Applicant’s homestead
One of the long-time hallmarks of homestead protection in Florida has been the unavailability of the primary residence as an asset for Medicaid qualification purposes. Under both federal and state law, the homestead property was exempt, regardless of its value, as long as the Medicaid applicant had the intent to return home (which was generally presumed) or a spouse or minor/disabled child of the Medicaid applicant lived in the home.
Under the new federal law, however, the homestead property will only be treated as exempt—or unavailable—for Medicaid qualification purposes when the equity in the property is $500,000 or lower. If the equity in the home is in excess of the $500,000 limitation, the applicant will be denied Medicaid even if he meets all other eligibility requirements. The only exception to the new law is when the Medicaid applicant’s spouse, minor child or disabled child continues to actually live in the home.
6. Requiring the income-first rule in providing support to the Community Spouse
Under the old law, if the spouse of a Medicaid applicant still lived at home (referred to as the “Community Spouse”) and received income that was below the minimum amount permitted by federal law, we could raise her income through one of two methods known as the “income first” and “resource first” tests. When using the “income first” technique, we simply pulled income from the nursing home spouse and gave it to the Community Spouse to raise her income to the amount permitted by Medicaid regulations.
However, by using the “resource first” technique, we were able to exempt assets in excess of the Community Spouse’s asset limitation that were necessary to produce income to raise the Community Spouse’s income to the amount permitted by Medicaid regulations. By using this technique, it was not unusual to allow the Community Spouse to keep $300,000 or more in assets, while still obtaining Medicaid benefits for her spouse.
The federal law does not abolish either the “income first” or “resource first” techniques. Instead, the federal law mandates the use of the “income first” technique. If the Community Spouse can raise her income to the amount permitted by Medicaid regulations by utilizing income of the nursing home spouse, then she will not be able to keep any assets in excess of the $109,560 limitation. However, if the Community Spouse’s income still does not meet the amount permitted under Medicaid regulations after full utilization of the nursing home spouse’s income, we may still be able to exempt assets in excess of the $109,560 limitation to the extent they are needed to produce income.
7. New rules on the treatment of the “buy-in” at Continuing Care Retirement Communities
For people who are residents in a Continuing Care Retirement Community (“CCRC”), these next two changes may catch some families by surprise. A Continuing Care Retirement Community is a retirement community that provides the full continuum of care for its residents: independent living, assisted living and nursing home care. Typically, residents in a CCRC pay a lump sum “buy-in”/entrance fee when they move in to the community, which among other things, guarantees their right to live in the facility for the remainder of their lifetime—regardless of whether they run out of money before their death.
When an individual applies for residency in a CCRC, the application typically requires financial disclosure of the applicant’s assets. Although the CCRC has always had the ability to consider the assets disclosed in the application when making its decision on admission, the CCRC was generally prohibited from taking any adverse action against the individual if they later engaged in long-term care asset protection planning and applied for Medicaid. In other words, if an individual disclosed $300,000 of assets in an application to the CCRC and then implemented one or more asset protection strategies following admission in an effort to preserve assets and obtain Medicaid benefits, the CCRC could not take any adverse action against them, despite the disclosure of $300,000 on the original application.
Because most CCRC’s were counting on being paid at their private pay rates based on the assets disclosed, many attempted to change their admission contracts to prohibit asset protection planning after admission to the CCRC. Fortunately, most of these attempts were found to be in violation of federal law and, therefore, were not successfully enforced. That will likely change as a result of the Deficit Reduction Act.
The new law now specifically grants authority for a CCRC to include a provision in their admission contract that will REQUIRE residents to spend resources declared in their application for admission on their care before they may apply for Medicaid benefits. This contractually required spend-down will likely greatly limit protection of assets disclosed in the application and underscores the importance of meeting with an elder law attorney PRIOR to submitting the application for admission to review what assets should be disclosed.
Once admitted, the CCRC entrance fee/”buy-in” may be refundable, partially refundable or not refundable at the death of the resident (or if the resident decides to leave the community prior to their death). Under the old law, whether the entrance fee was refundable or not, it was not considered an asset for purposes of Medicaid eligibility—even when the CCRC contract permitted the use of the entrance fee toward the monthly cost of care at the facility, thereby reducing the amount refundable at the death of the resident.
However, under the new law the lump sum entrance fee paid upon admission to a CCRC will be considered an available asset for Medicaid eligibility purposes when three criteria are met: (1) the individual may use the entrance fee to help subsidize his care in the CCRC; (2) the individual is eligible for a refund of any remaining entrance fee when he dies or leaves the community; and (3) the entrance fee does not confer an ownership interest in the CCRC.
Because refundable entrance fees will now be considered available assets for purposes of Medicaid eligibility, it will be important to consider alternatives for the utilization of entrance fees when implementing a long-term care asset protection plan.
8. Restricting the use of notes, loans and mortgages
Under prior federal law, neither statutes nor regulations provided any specific guidelines on the terms of notes, loans or mortgages for Medicaid eligibility. As a result, some states permitted notes, loans and mortgages that were actuarial sound (as described under the annuity discussion above), and some did not.
In Florida, we were able to use actuarially sound notes, loans and mortgages for many years as an asset protection planning technique. However, in March 2005, the State of Florida abolished the use of notes, loans and mortgages, by deeming almost all notes, loans and mortgages as available assets, notwithstanding their irrevocability or actuarial soundness.
The new federal law, however, now provides specific guidelines on the issuance of notes, loans and mortgages in determining whether they will be deemed available for Medicaid eligibility purposes. Under the new law, notes, loans and mortgages will generally be considered as available assets when determining eligibility for Medicaid benefits unless the note, loan or mortgage is actuarially sound, provides for equal, periodic payments and is not self-canceling. Notwithstanding this change in the federal law, unless Florida changes its position on notes, loans and mortgages, they will continue to be treated as either an available resource or available income depending on their payment status.
9. Permitting the purchase of a life estate in real property
This change to the federal law is another area that may actually increase planning opportunities in Florida. Although the old law contained provisions for the valuation of life estates in real property (the right to live in a home and/or enjoy the benefits of that property for the rest of one’s life, with the remainder interest passing to a third party—typically a family member), it was somewhat ambiguous about how the purchase of life estates would be treated for Medicaid eligibility. As a result of the ambiguity, states implemented the rules regarding life estates very differently.
In Florida, we were able to exempt the value of a life estate in real property for Medicaid purposes, as long as the Medicaid applicant owned the underlying property in fee simple before they gave away the remainder of the property, retaining the life estate interest. However, if the individual attempted to buy a life estate in their child’s home (or the home of any other person), that purchase, regardless of its actuarial soundness, would be deemed as a transfer of assets with a corresponding penalty period for Medicaid purposes.
The new federal law, however, now specifically addresses the treatment of life estate interests in real property that are purchased in the home of another individual. Under the new law, the Medicaid applicant can purchase a life estate in a family member’s home and that purchase will NOT be considered a gift for Medicaid purposes, as long as the purchase of the life estate is actuarially sound (does not exceed the life expectancy of the Medicaid applicant) and the Medicaid applicant lives in the home for at least one year after the date of purchase.
10. Expansion of the Long-Term Care Partnership Program
Again, this change to the federal law will actually create another opportunity for long-term care asset protection planning that did not exist under the old law. The Long-Term Care Partnership Program is actually being resurrected after nearly 13 years of dormancy. Before the passage of OBRA 1993, the last federal change to the Medicaid eligibility law, only four states implemented a long-term care partnership plan. However, any state that did not implement a partnership program prior to 1993 was precluded from implementation at a later date.
The Long-Term Care Partnership Program is a joint effort between the government and individuals to share the cost of
long-term care in a way that will be mutually beneficial for both parties. In short, the partnership program permits individuals to purchase certain qualified long-term care insurance policies to help pay for their long-term care needs. In exchange, the federal government will raise the asset limitations for Medicaid eligibility purposes to allow the individual to keep more assets and qualify for Medicaid benefits.
Specifically, the new law provides that any individual who purchases a qualified long-term care insurance policy in a state that implements a Long-Term Care Partnership Plan will be able to maintain assets in an amount equal to the insurance benefit payments that are made to or on behalf of that individual over the term of the insurance policy. For example, although the normal asset limitation for Medicaid eligibility for a single person is $2,000, if that individual has a long-term care insurance policy that pays out $180,000 over a 3-year period, that individual will be permitted to maintain the $182,000 in assets and still qualify for Medicaid benefits.
There are several specific criteria that are required for the insurance policy to be qualified for the partnership program. However, these policies will be one of the best ways we can help plan for our long-term care needs and can be used in conjunction with other long-term care asset protection planning techniques to reach the maximum possible benefit.
11. Requiring States to implement a “hardship waiver” policy
The final change to the federal law is the specific requirement that states must implement a “hardship waiver” policy to address the potential denial of Medicaid benefits because of an uncompensated transfer made during the 5-year look-back period when the imposition of a penalty period would cause an “undue hardship” to the Medicaid applicant. The federal law defines an undue hardship as a hardship that would deprive the individual of food, clothing, shelter or other necessities of life, or would deprive the individual of medical care such that the individual’s life or health would be endangered.
Each state is required by the new law to create a formal hearing procedure to process the requests for a hardship waiver. Because nursing homes may have the most at risk with the denial of Medicaid of someone who no longer has any assets to pay the nursing home bill, the new law permits nursing home representatives to file for and represent the nursing home resident at the hearing for the hardship waiver determination.
Although the hardship waiver policy is a step in the right direction, the new law does not do anything to change current law that any transfer within the look-back period will be presumed to have been made with the intent to qualify for Medicaid benefits—whether that transfer was made to a charity, for a child’s medical expenses, a grandchild’s schooling or any other purpose. In addition, based on the definition of “hardship” quoted above, if the individual is in a nursing home and that nursing home cannot discharge the resident because he/she is not well enough to be discharged to their home and no other facility will take them (who would take a non-paying resident?), it is unlikely that the individual will meet the deprivation of food, clothing, shelter or medical care such that their life or health would be in danger as required by federal law.
As a result, we are not overly optimistic that the hardship waiver policy – even after implementation in Florida – will provide much of a saving grace for Medicaid applicants who make gifts for purposes other than to qualify for Medicaid.
Conclusion
This brief summary covers all the major changes contained in the Deficit Reduction Act of 2005, now effective in Florida. Although the new law does eliminate some of the planning opportunities previously available, it also opens up other opportunities previously permitted under Florida law. The biggest message sent by the new law is that planning in advance of need is now more important than ever and working with a qualified expert in long-term care asset protection planning is essential.
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Other Senior Concerns
Can an Employer Cut Retiree Health Benefits?
Some fortunate employees belong to employer-provided health care plans that carry over to retirement. But how secure are those benefits after retirement? Under what circumstances may the company reduce or terminate them?
In fact, nothing in federal law prevents employers who offer retiree health benefits from cutting or eliminating them—unless they have made a specific promise to maintain the benefits.
The key to understanding your particular rights lies in the Summary Plan Description (SPD), which employers are required to provide within 90 days after you become a participant in the plan, or other plan documents. If your employer has reserved the right in the SPD and controlling plan document to change the terms of the plan, you may lose coverage at any time during your retirement. If your employer made a clear promise that you will have specific health care benefits for a definite period of time or for life, and did not reserve the right to change the plan, you should be covered. But benefit plan documents are often difficult to interpret. To help employees or retirees evaluate their plan documents, the U.S. Department of Labor has prepared a brief that explains, among other things, what to look for in such documents, the implications of conflicting or ambiguous language, and special cautions for early retirees.
Nursing Homes
Choosing and Evaluating a Nursing Home:
Can there be a more difficult job than finding a nursing home for a parent or spouse? No one wants to live in a nursing home. They serve as institutions of last resort when it's impossible to provide the necessary care in any other setting. And, typically, the search takes place under the gun—when a hospital or rehabilitation center is threatening discharge or it's no longer possible for the loved one to live at home. Finally, in most cases, finding the right nursing home is a once-in-a-lifetime task, one you're taking on without the experience of having done it before. That said, there are a few rules of thumb that can help you:
1. Location, location, location. No single factor is more important to quality of care and quality of life of a nursing home resident than visits by family members. The quality of care is often better if the facility staff knows that someone who cares is watching and involved. Visits can be the high point of the day or week for the nursing home resident. So, make it as easy as possible for family members and friends to visit.
2. Get references. Ask the facility to provide the names of family members of residents so you can ask them about the care provided in the facility and the staff's responsiveness when the resident or relatives raise concerns.
3. Talk to the nursing home administrator or nursing staff about how care plans are developed for residents and how they respond to concerns expressed by family members. Make sure you are comfortable with the response. It is better that you meet with and ask questions of the people responsible for care and not just the person marketing the facility.
4. Tour the nursing home. Try not to be impressed by a fancy lobby or depressed by an older, more rundown facility. What matters most is the quality of care and the interactions between staff and residents. See what you pick up about how well residents are attended to and whether they are treated with respect. Also, investigate the quality of the food service. Eating is both a necessity and a pleasure that continues even when we're unable to enjoy much else. It is also advisable to try and get a tour of the facility that is not prearranged. While this is not always possible, it does give you the opportunity of seeing an unrehearsed atmosphere.
When you visit, ask for the admissions coordinator, who will introduce to the features of the facility and give you a formal tour. Afterwards, you may ask to return and view the facility at your own pace.
Questions to Ask the Nursing Home:
· Is the nursing home Medicare certified?
· Is the nursing home Medicaid certified?
· How many Medicaid beds are certified?
· How many Medicaid beds are currently available?
· What is the monthly or daily base rate and what services does it cover?
· What services are not covered in the base rate, such as telephone, toiletries, salon, activities and what is the cost of each charge?
· What is the procedure to pay for the add-on charges?
· Is the nursing home accepting new patients?
· Is there a waiting period for admission?
· Is the licensing and certification for the nursing home current?
· Is the license of the nursing home administrator current?
· Does the nursing home have any specialty care units?
· Are residents able to make choices about their daily routine, such as when to go to bed and what to eat?
· How is the interaction between staff and resident?
· Does the nursing home meet your cultural, religious and/or language needs?
· Does the nursing home smell and look clean?
· Can residents have personal articles and furniture in their rooms?
· Are there a variety of activities to choose from?
· Does the nursing home have volunteer groups?
· Does the nursing home have outdoor areas for resident use?
· Did the facility correct any Quality of Care deficiencies that they received on their most recent survey?
· Can residents continue to see their personal physicians?
· Are the residents clean, appropriately dressed and well groomed?
· How well does the administrator interact with staff and residents?
· Does the nursing home have a resident and family council that meets independently of the nursing home’s management?
· Are care plan meetings held at times that are convenient for residents and family members to attend?
· Is there enough staff to assist each resident who requires help eating?
· Does the food smell and look good?
· Are residents offered choices of food at mealtimes?
· Are nutritious snacks offered?
· Does the dining room environment encourage residents to relax, socialize and enjoy their food?
· Are there handrails in the hallways and grab bars in the bathrooms for safety?
· Are the exit doors clearly marked and clear of impediments?
· Does the nursing home have a disaster plan to move residents in emergencies?
· Are spills cleaned up quickly?
There are also two online resources available to find out a little more about the facilities' history and track record:
1. Go to www.medicare.gov. Toward the bottom of the page under “search tools” there will be a link to "Compare Nursing Homes in your Area." Click on the link and it will bring you to a page that will allow you to sort by zip code and the distance you want to travel from the zip code. Check the facilities you want to compare and then click "next step" at the bottom of the page. You'll get a summary of the facilities you've chosen with the ability to get more details for each individual facility.
2. Florida's Agency for Health Care Administration provides a Nursing Home Guide (http://ahcaxnet.fdhc.state.fl.us/nhcguide/) that allows you to search for nursing homes in Florida by geographic region or by the characteristics of the facilities. Click the search option you prefer. If you choose geographic region, a map of the State of Florida will appear and you will then click on the appropriate region. If you choose to search by characteristics, you will receive a multiple drop down questions to answer. Either way, you will then receive a list of facilities to choose from. Within the search results, click on the facility you want more details on and you’ll receive a summary report, which will rate the nursing home based on a star system. If you want the specific inspection details for the facility, click on “Inspection Details for this Facility” to see a list of a facility's citations (failure to meet established standards) from the past 45 months.
The Agency for Health Care Administration also provides a Nursing Home Watch List (http://ahca.myflorida.com/Nursing_Home_Guide/index.shtml) that provides details on facilities in Florida that were cited for deficiencies (failure to meet established standards) during their inspection and if and when these problems were corrected.
Talking With Family About Placement
Few decisions are more difficult than the one to place a spouse or parent in a nursing home. Since nursing homes are seen as a last resort, the decision is generally accompanied by a sense of guilt. Most families try to care for loved ones at home for as long as (or longer than) possible, only accepting the inevitable when no other alternative is available.
The difficulty of making the decision can be compounded when family members disagree on whether a nursing home is necessary. This is true whether the person disagreeing is the person who needs assistance, his or her spouse, or a child.
A nursing home placement decision can be less difficult if, to the extent possible, all family members are included in the process, including the senior in question, and if everyone is comfortable that all other options have been explored. This will not ensure unanimity in the decision, but it should help.
We recommend the following steps: 1. Include all family members in the decision. Let them know what is happening to the person who needs care and what providing that care involves. If possible, have family meetings, whether with the family alone or with medical and social work staff where available. If you cannot meet together, or in between meetings, use the telephone, the mail, or the Internet.
2. Research what types of care can be provided at home, what kind of day care options are available outside of the home, and whether local agencies provide respite care to give family member care providers a much-needed rest. Also, look into other residential care options, such as assisted living and congregate care facilities. Local agencies, geriatric care managers, and elder law attorneys can help answer these questions.
3. Follow the steps above for finding the best nursing home placement available. If you and other family members know you've done your homework, the guilt factor can be reduced (at least to some extent).
4. When necessary, hire a geriatric care manager to help in this process. While hospitals and public agencies have social workers to help out, they are often stretched too thin to provide the level of assistance you need. In addition, they can have dual loyalties—to the hospital that wants a patient moved as well as to the patient. A social worker or nurse working as a private geriatric care manager can assist in finding a nursing home, investigating alternatives either at home or in another residential facility, in evaluating the senior to determine the necessary level of care, and in communicating with family members to facilitate the decision. To find a geriatric care manager in your area, visit the Web site of the National Association of Professional Geriatric Care Managers at www.findacaremanager.org.
Resident Rights
While residents in nursing homes have no fewer rights than anyone else, the combination of an institutional setting and the disability that put the person in the facility in the first place often results in a loss of dignity and the absence of proper care.
As a result, in 1987, Congress enacted the Nursing Home Reform Law that has since been incorporated into the Medicare and Medicaid regulations. In its broadest terms, it requires that every nursing home resident be given whatever services are necessary to function at the highest level possible.
The law gives residents a number of specific rights:
● Residents have the right to be free of unnecessary physical or chemical restraints. Vests, hand mitts, seat belts and other physical restraints, and antipsychotic drugs, sedatives, and other chemical restraints are impermissible, except when authorized by a physician, in writing, for a specified and limited period of time.
● To assist residents, facilities must inform them of the name, specialty, and means of contacting the physician responsible for the resident's care. Residents have the right to participate in care planning meetings.
● When a resident experiences any deterioration in health, or when a physician wishes to change the resident's treatment, the facility must inform the resident, and the resident's physician, legal representative or interested family member.
● The resident has the right to gain access to all his or her records within one business day, and a right to copies of those records at a cost that is reasonable in that community. The facility must explain how to examine these records, or how to transfer the authority to obtain records to another person.
● The facility must provide a written description of legal rights, explaining state laws regarding living wills, durable powers of attorney for health care and other advance directives, along with the facility's policy on carrying out these directives.
● At the time of admission and during the stay, nursing homes must fully inform residents of the services available in the facility, and of related charges. Nursing homes may charge for services and items in addition to the basic daily rate, but only if they already have disclosed which services and items will incur an additional charge, and how much that charge will be.
● The resident has a right to privacy, which is a right that extends to all aspects of care, including care for personal needs, visits with family and friends, and communication with others through telephone and mail. Residents thus must have areas for receiving private calls or visitors so that no one may intrude and to preserve the privacy of their roommates.
● Residents have the right to share a room with a spouse, gather with other residents without staff present, and meet state and local nursing home ombudsperson or any other agency representatives. They may leave the nursing home, or belong to any church or social group. Within the home, residents have a right to manage their own financial affairs, free of any requirement that they deposit personal funds with the facility.
● Residents also can get up and go to bed when they choose, eat a variety of snacks outside meal times, decide what to wear, choose activities, and decide how to spend their time. The nursing home must offer a choice at main meals, because individual tastes and needs vary. Residents, not staff, determine their hours of sleep and visits to the bathroom. Residents may self-administer medication.
● Residents may bring personal possessions to the nursing home such as clothing, furnishings and jewelry. Residents may expect staff to take responsibility for assisting in the protection of items or locating lost items, and should inquire about facility policies for replacing missing items. Residents should expect kind, courteous, and professional behavior from staff. Staff should treat residents like adults.
● Nursing home residents may not be moved to a different room, a different nursing home, a hospital, back home or anywhere else without advance notice, an opportunity for appeal and a showing that such a move is in the best interest of the resident or necessary for the health of other nursing home residents. The resident has a right to be free of interference, coercion, discrimination, and reprisal in exercising his or her rights. Being assertive and identifying problems usually brings good results, and nursing homes have a responsibility not only to assist residents in raising individual concerns, but also to respond promptly to those concerns.
Resolving Disputes
Disagreements with a nursing home can come up regarding any number of topics, and almost none is trivial because they involve the day-to-day life of the resident. Among other issues, disputes can arise about the quality of food, the level of assistance in feeding, troublesome roommates, disrespect or lack of privacy, insufficient occupational therapy, or a level and quality of activities that doesn't match what was promised.
The nursing homes that live up to the ideal of what we would want for our parents or ourselves are few and far between. The question is how far you can push them towards that ideal; what steps should be taken in that process; and at what stage does the care becomes not only less than ideal, but so inadequate as to require legal or other intervention. This can be a hard determination to make and in some cases needs the involvement of a geriatric care manager who can make an independent evaluation of the resident and who has a sufficient knowledge of nursing homes to know whether the one in question is meeting the appropriate standard of care.
Following is a list of the interventions a family member may take, in ascending order of degree. Move down the list as the severity of the problem increases or the facility does not respond to the less drastic actions you take. In all cases, take detailed notes of your contacts with facility staff and descriptions of your family member and his or her care. Always note the date and the full name of the person with whom you communicate.
1. Talk to staff. Let them know what you expect, what you care about and what your family member cares about. This may easily solve the problem.
2. Talk to a supervisor, such as the director of nursing or an administrator. Explain the problem as you see it. Do this with the expectation that the issue will be favorably resolved, and it may well be.
3. Hold a meeting with the appropriate nursing home personnel. This can be a regularly scheduled care planning meeting or you can ask for a special meeting to resolve a problem that wasn't resolved more informally.
4. Contact the ombudsperson assigned to the nursing home. He or she should be able to intervene and get an appropriate result. Contact information for the Ombudsman Program in your state can be found at: www.ltcombudsman.org.
5. If the problem constitutes a violation of the resident rights described above, report it to the state licensing agency. This should put necessary pressure on the facility.
6. Hire a geriatric care manager to intervene. An advocate for you who is not personally involved and who understands how nursing homes function as institutions can help you determine what is possible to accomplish and can teach the facility to make the necessary changes.
7. Hire a lawyer. While a lawyer may be necessary to assert the resident's rights, the involvement of an attorney may also escalate the dispute to a point where it is more difficult to resolve. This is why we have listed this as the second-to-last option. A lawyer has the tools to make the facility obey the law.
8. When all else fails, move your family member to a better facility. This may be difficult, depending on the situation, but it may be the only solution. It does not prevent you from pursuing legal compensation for any harm inflicted on the nursing home resident while at the earlier facility.
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Supplemental Security Income (SSI)
SSI is the basic federal safety net program for the elderly, blind and disabled, providing them with a minimum guaranteed income. Effective January 1, 2009, the maximum federal SSI benefit is $674.00 per month (the amounts go up every January 1).
Although the Social Security Administration (SSA) administers the program, eligibility for SSI benefits is based on financial need, not on how long you have worked or how much you have paid into the Social Security system. However, the financial eligibility rules are quite stringent. If you are seeking SSI benefits because you are disabled, the program’s criteria for determining disability are the same as those outlined in the Social Security disability section.
About 6.6 million persons were receiving SSI payments in December 2000. Fifty-seven percent of these recipients were between the ages of 18 and 64, 30 percent were aged 65 or older, and 13 percent were under age 18. Many older persons who are not eligible for Social Security retirement benefits because they have not accumulated enough work credits may nevertheless be eligible for SSI, and even many of those receiving Social Security retirement benefits may be able to supplement their benefits with SSI payments. It is estimated that 1.5 million elderly who are potentially eligible for benefits never apply for them.
SSI Benefits
The idea of the SSI program is to provide a floor income level. If you are receiving income from another source, your potential SSI benefit will likely be cut dollar for dollar. In addition, the SSA deems food and shelter you receive from another source to be "in kind" income. As a result, actual SSI benefit payments will vary depending on your income, living arrangements, and other factors.
While the SSI program’s benefits are meager, in most states SSI recipients are also automatically eligible to receive Medicaid, which can pay for hospital stays, doctor bills, prescription drugs, nursing home care, and other health costs. SSI recipients may also be eligible for food stamps and in some cases for special programs for the developmentally disabled.
Who Is Eligible for SSI?
To be eligible for SSI:
You must be either age 65 or older, blind or disabled; You must be a citizen of the U.S., or be a long-time resident who meets certain strict requirements; Your monthly income must be less than the maximum SSI benefit; and You must have less than $2,000 in assets ($3,000 for a couple), although certain resources are excluded in the eligibility determination (see below).
If your income falls below the maximum SSI benefit amount (and you meet the other eligibility criteria), you will likely be eligible for some SSI benefits. The actual amount of your benefit will be the difference between your income and the maximum SSI benefit, with the potential for other minor reductions depending on who provides food and shelter for the disabled individual. For example, if your own income is $400 a month, and the SSI benefit for a single individual in your state is $674 a month, you may receive an SSI check of $274 a month.
At some level, it may not appear worth the trouble to apply and stay eligible for SSI given its relatively low income benefit, but, as mentioned above, the ancillary benefits, especially Medicaid, may make it worthwhile to maintain SSI even if the financial payment is only a few dollars a month. If you are unsure whether your income is low enough, apply anyway. Certain sources of income and support are not counted in determining eligibility, and what may appear to you to be income may not be counted as such by your local Social Security or welfare office. Therefore, if you are living on a small fixed income and you have few resources (assets), it’s worth applying for benefits.
In determining whether your income is low enough to qualify you for benefits, the SSA counts the money you earn in wages or from self-employment, as well as any investment income, pensions, annuities, gifts, rents and interest. Social Security and Veterans benefits are also considered income. Free housing received from friends or relatives may be counted as income as well, based on what such housing would cost in your area.
However, in totaling your income the SSA does not count:
The first $20 per month you receive from most income; The first $65 a month you earn from wages or self-employment, and only half of the amount you earn above $65; Irregular earned or unearned income of not more than $10 and $20 a month, respectively; Food stamps, home energy assistance, and most food, clothing or shelter received from non-profit organizations.
Resource Limits
As noted above, you can have no more than $2,000 in countable resources ($3,000 for a married couple living together) to be eligible for SSI. Countable resources (assets) include bank accounts, investments, real estate (other than your residence), and personal property. Also included is any money or property that you hold jointly with someone else. The SSA determines how much your partial ownership is worth and counts that as a resource.
However, certain property is not counted in determining eligibility for SSI, including: Your primary residence, regardless of its value; Your personal and household goods; One car of any value if it is used for transportation for you or a member of your household; Wedding and engagement rings; Property for self-support, such as tools, up to $6,000 in value; Burial plots; Life insurance and burial funds up to $1,500 for each person.
Transferring Resources to Qualify for SSI
If your resources are still above these limits, you may be able to "spend down" to qualify for SSI, similar to the process to qualify for the Medicaid program. After you apply for benefits, you have a short time period to sell or spend your excess resources for fair market value and come under the benefit limits.
If you give away a resource or sell it for less than it is worth in order to get under the SSI resource limit, you may be ineligible for SSI for up to 36 months. The SSA looks at whether or not you have transferred a resource within the previous three years. If you have, it computes a penalty period by dividing the amount of the transfer by your monthly benefit amount.
Thus, if you give your son a $6,000 gift and then apply for a monthly SSI benefit of $600 within three years of the gift, you will not be eligible for SSI for 10 months (6,000/600=10). That 10-month period will begin on the date of the transfer and end 10 months later. In other words, although you can be ineligible for up to 36 months due to a transfer, that is only a cap. The actual period of ineligibility is based on the value of what you transferred divided by the monthly benefit in your state. You should be aware that transfers may be "cured" by the person to whom you made a gift returning it to you. And, finally, there are certain exceptions to the transfer penalty. These include gifts to a spouse (or anyone else for the spouse's benefit); a blind or disabled child; a trust for the sole benefit of a blind or disabled child; a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the applicant, under certain circumstances).
In addition, special exceptions apply to the transfer of a home. The SSI applicant may freely transfer his or her home to the following individuals without incurring a transfer penalty: The applicant's spouse; A child who is under age 21 or who is blind or disabled; into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the applicant, under certain circumstances); a sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home; or a "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.
In addition, the Medicaid applicant will be permitted to transfer their assets to a Special Needs Trust for their benefit (what is often referred to as a self-settled special needs trust or first party special needs trust) and have those assets not counted for purposes of SSI/Medicaid eligibility qualification, but have those assets available to supplement their care during their lifetime.
How to Apply for SSI Benefits
If you think you may qualify for SSI benefits, you can call or visit your local SSA office and apply. You will need to provide the SSA with proof of age and citizenship or legal residence, as well as provide detailed information about your financial situation. Usually, an SSA claims representative interviews you and completes the forms using the information you supply.
You should apply as soon as possible so that you do not lose benefits. If you call SSA to make an appointment to apply, SSA will use the date of your call as your application filing date. If your application is denied, you can appeal. The appeals process is similar to that for appealing Social Security claims denials.
Once you begin receiving benefits, the SSA reviews your SSI eligibility once every one to three years.
Social Security Disability Income (SSDI)
Social Security Disability Insurance (SSDI) is a federal assistance program that provides income to people no longer able to work because of a disability. To qualify for disability benefits, your health must prevent you from sustaining any form of “substantial gainful activity” (SGA) and be expected to last for at least twelve months or result in death. Also, applicants must have earned sufficient work credits. You must have worked five of the last ten years and have forty (40) quarters of credit. The employment requirement may be waived for individuals who became disabled before age twenty-two, as they are entitled to use their parents’ work history to qualify. SSDI has no income or resource limitations—even Bill Gates can qualify for SSDI if he meets the disability criteria and has the appropriate work history.
The Social Security Administration (SSA) employs a five-step to process to determine whether an applicant meets the criteria necessary to be considered “disabled.”
1. Are you currently employed?
If you are working presently, you cannot qualify for Social Security Disability. If your medical condition prevents you from sustaining any form of gainful employment, continue to Step 2.
2. Is your condition “severe?” Your condition must “interfere with basic work-related activities.” If this is true, continue to Step 3.
3. Is your condition listed in Social Security’s List of Disabling Conditions?
If your condition can be found in SSA’s recognized list of Disabling Conditions, you automatically qualify for Social Security Disability. If not, proceed to Step 4.
4. Can you perform the work you did previously?
Even if your condition is not listed on the SSA’s list of Disabling Conditions, your condition will be deemed of equal severity if you can no longer perform your previous occupation. If this is so, continue to Step 5.
5. Can you adjust to another line of work?
If the SSA determines you could adjust to another occupation, your application for Social Security Disability will be denied. However, if the SSA finds you are unable to change occupations because of age, past work experience, and/or education, you will be awarded disability benefits.
If you believe you qualify for SSDI, please consult with a qualified attorney to assist you with your SSDI application. The process can be complex, is designed to result in early denials and can take an extraordinary amount of time.
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Trusts
Supplemental Needs Trusts
Americans are
living longer than they did in years past, including those with disabilities. According to one count, 480,000 adults with mental retardation are living with parents who are 60 or older. This figure does not include adult children with other forms of disability nor those who live separately, but still depend on their parents for vital support.
When these parents can no longer care for their children due to their own disability or death, the responsibility often falls on siblings, other family members, and the community. In many cases, expenses increase dramatically when care and guidance provided by parents must instead be provided by a professional for a fee. Planning by parents can make all the difference in the life of the child with a disability, as well as that of his or her siblings who may be left with the responsibility for caretaking (on top of their own careers and caring for their own families and, possibly, ailing parents). Any plan should include the following elements:
1. A Plan of Care. Where is the disabled person going to live when he or she can no longer live with you or one their own? Is another family member willing/able to take him or her in? A group home? Who will make the decision? Who will monitor the care received? It’s never too soon to begin answering these questions and making sure that the living and support arrangements are in place. In some cases, it can ease the transition for all concerned if the disabled person moves to the new living arrangement while his parents or caregivers can still help with the process. In many parts of the country, non-profit organizations and private consultants can help set up the plan, research available options, and assist in the move.
It will help everyone involved if parents/caregivers create a written statement of their wishes for the disabled person’s care—called a Letter of Intent of Special Letter of Instruction. As parents/caregivers, you know him better than anyone else. You can explain what helps, what hurts, what scares, and what reassures him. When you’re gone, your knowledge goes with you unless you intentionally and specifically create a plan to pass it on.
In almost all cases where anyone wishes to leave funds at death to a disabled person, this should be done in the form of a trust. Trusts set up for the care of a disabled person generally are called "supplemental" or "special" needs trusts, which are described in more detail below.
Money should not go outright to the disabled person, both because her or she may not be able to manage it properly but also because receiving the funds directly may cause him to lose public benefits, such as Supplemental Security Income (SSI) and Medicaid. Often, these programs also serve as the entry point for receiving vital community support services.
Some individuals choose to avoid the complication of a trust by leaving their estates to one or more of their healthy children or another relative, relying on them to use the funds for the benefit of the disabled individual. Except in the case of a very small estate, this is generally not a good idea. It puts the disabled person at risk—there are no guarantees the recipient will be able to perform as intended. The assets left to someone other than the disabled individual may be subject to claims by creditors and at risk in the event of divorce or bankruptcy. Finally, the individual who receives the funds may die before the disabled child without proper planning for the disabled person in their own estate plan.
2. Life Insurance. A parent with a disabled child should consider buying life insurance to fund the supplemental needs trust set up for the child’s benefit. What may look like a substantial sum to leave in trust today may run out after several years of paying for care the parents had previously provided. The more resources available, the better the quality of life that can be provided for the child. And if both parents are alive, the cost of "second-to-die" insurance—payable only when the second of the two parents passes away—can be surprisingly low. The good news is that advance planning for a disabled child can make a significant difference in the child’s life. You just have to take the first step.
Special Needs Trusts
Special needs trusts (also sometimes referred to as "supplemental needs" trusts) allow a disabled beneficiary to receive gifts, lawsuit settlements, or other funds and still be eligible for certain government programs. Special needs trusts are drafted so the funds are not an “available resource” in determining eligibility for public benefits. As their name implies, special or supplemental needs trusts are not designed to provide basic support, but instead to pay for comforts and “luxuries” that are not available from public assistance. These trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life. (However, the trustee can use trust funds for food, clothing and shelter if the trustee decides doing so is in the beneficiary’s best interest despite a possible loss or reduction in public assistance.)
Most often, special needs trusts are created by a parent or other family member for the benefit of a disabled loved one,
whether that person is a minor or adult. Such trusts also may be set up in a will or living trust as a way for an individual to leave assets to a disabled relative. Sometimes, the disabled individual can create the trust himself, depending on the program for which he or she seeks benefits.
Special needs trusts generally fall into two categories—first party (or self-settled) trusts and third party trusts. Within each of these categories are subcategories of trusts.
First Party Trusts
A first party or "self-settled" trust is one that is established with the trust beneficiary’s own money. Generally this money will be received as the result of an accident or medical malpractice lawsuit, or unexpected gift or inheritance.
Each public benefits program has restrictions that special needs trusts must meet so the beneficiary’s continued eligibility for public benefits is not jeopardized. Medicaid and SSI both have stringent income and resource restrictions making it difficult for a beneficiary to have substantial assets and still retain eligibility for benefits. But, both programs have "safe harbors" permitting the creation of a special needs trust. These safe harbor trusts fall into 3 primary types; Disability or d4A trusts, Qualified Income or d4B trusts and Pooled or d4C trusts.
All first party trusts have mandatory “payback” provisions which require the trust to reimburse the governmental agency for benefits provided by Medicaid. This is their primary disadvantage.
Disability or (d)(4)(A) Trust
The first of the self-settled trusts is called a Disability or d4A trust referring to the authorizing Federal statute. This trust will be established with the assets of a disabled individual under age 65 by a parent, grandparent, legal guardian or by court order. The trust assets may be used for the sole benefit of the beneficiary and requires a payback to Medicaid at the end of the beneficiary’s lifetime.
Qualified Income or (d)(4)(B)Trust
The next safe harbor trust is the Qualified Income or d4B trust. This trust is sometimes also referred to as a Miller Trust. Primarily the Qualified Income Trust or (QIT) is used for those benefit programs where the applicant is over the income limitation. The excess income is placed in the QIT and the individual remains eligible for their government benefits. A QIT may be created by the beneficiary, the beneficiary’s spouse (without a power of attorney), another individual under the authority of a power of attorney or by court order. This trust requires Medicaid payback at the end of the beneficiary’s lifetime.
Pooled or (d)(4)(C) Trust
The last of the safe harbor trusts is the Pooled or d4C trust. These trusts pool the resources of many disabled beneficiaries, and the trusts assets are managed by a non-profit organization. Unlike individual disability trusts (d4A), which may be created only for those under age 65, under current law pooled trusts may be created for beneficiaries of any age and may even be created by the beneficiary, if competent. In addition, although technically a “payback” trust, at the beneficiary's death Medicaid does not have to be repaid as long as the funds are retained by the trust for the benefit of other disabled beneficiaries.
Pooled trusts have recently come under attack for over age 65 beneficiaries and the law regarding older individuals may be changing.
Third Party Trusts
Third party trusts are trusts created with the assets of someone other than the trust beneficiary—a third party. Third party trusts can be created as “stand-alone” trusts of as “stand-by” trusts. A primary benefit of a third party trust is there is no payback provision at the end of the beneficiary’s lifetime.
Stand-alone Trust
A stand-alone trust is created as a form of living trust—while the trustmaker (also referred to as a settlor, trustor or grantor) is living. A stand-alone trust can be revocable (capable of being amended or revoked) or irrevocable (cannot be amended or revoked). The type of stand-alone trust that is best will depend on the needs and circumstances of the individual trustmaker. Each stand-alone trust can be customized to the needs and desires of the trustmaker to ensure that the beneficiary is getting the best possible quality of life. Another possible benefit of the stand-alone trust is if the law were to change and the trust was already in existence, the likelihood is it would still be effective despite the change to the law.
Stand-by Trust
A stand-by trust, also known as a testamentary trust, is created as part of a will or living trust, generally of a parent or family member of the disabled individual. Like the stand-alone trust, it can be customized to meet the needs and desires of the trustmaker regarding the quality of life of the beneficiary. Possible drawbacks to stand-by trusts include the delays associated with probate for those created in a will and there are no assurances the laws won’t change in a way that affect the viability of a stand-by trust.
Trustees
Choosing a trustee is very important as part of the creation of a special needs trust. Most individuals do not have the expertise to manage a trust, with all of its requirements, responsibilities and potential liabilities. An alternative to choosing a family member or friend as trustee is to retain the services of a professional fiduciary, such as a certified public accountant or corporate trustee. In some instances, it may be appropriate to have a family member and professional fiduciary serve as co-trustees.
In addition, a trust may contain a provision for a “trust protector" who has the power to review accountings and to hire and fire trustees. Trusts may also contain provisions for “trust advisors” who instruct the trustee on the beneficiary’s needs.
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H&B New Medicaid Changes
Exploring Medicaid/Long-Term Care Asset Protection Planning Changes.
On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005. Among other changes, this law significantly changes the landscape of Medicaid/Long-Term Care Asset Protection Planning. The most significant changes have to do with annuities, transfers of assets and the application of the penalty period for gifts. We have prepared a detailed article outlining each of the changes and have placed it below for your viewing.
This article is best viewed with the free Adobe Acrobat Reader.
Click below to download our H&B New Medicaid Changes article. (NOTE: This file is 204KB and it may take a few minutes to download this file if you have a dial-up connection)
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