Smooth Sailing In Your Golden Years

Life is smooth sailing, until it’s not. Don’t jeopardize your independence and quality of life, or your loved ones’ freedom, by waiting for a crisis to plan your elder care and your estate.

The COVID-19 pandemic showed us the importance of being prepared. Failing to plan for death, taxes, long-term care and disability can create hardship and stress. Medicare only pays for a limited amount of long-term care under limited circumstances. Private pay long-term care can cost you and your spouse more than $13,000 per month at the private pay rate in New Jersey. At that rate, your life savings can be quickly dissipated without advance planning. Even the cost of part-time paid care at home can add up quickly. For an idea of the costs you may be facing, check out the Genworth long-term care study at https://www.genworth.com/aging-and-you/finances/cost-of-care.html.

Here are some tips that can help you remain at home as long as possible, avoid an elder care crisis and preserve a legacy for your heirs.

  • Your MVP team should include a tax and estates and elder law attorney, an accountant or enrolled agent, and a financial advisor. They can help you define your goals and the right plan to achieve them.   They can also vet others to help protect you from elder financial and other forms of abuse.
  • Execute a valid Will, a power of attorney and a health care proxy.   Work with your attorney to do this.
  • Discuss your completed estate plan with your attorney and your accountant or financial planner. Understand how your estate will be funded.   
  • Work with an elder care attorney to understand your options for long-term care.
  • Explain your wishes and preferences with your health care proxy and the person who will serve under your power of attorney.    
  • Trusts can protect your life savings, a special needs child or grandchild, and can leverage a charitable gift.  A trust can protect an inheritance from bankruptcy, divorce, disability, addiction and/or some taxes.
  • A revocable trust with a “pour over” will can provide privacy and ease of administration.
  • Periodically review your finances. Update your retirement account and insurance beneficiary designations.
  • Purchase long-term care insurance if you can qualify medically for a policy. Your financial planner can evaluate your disability, long-term care and life insurance needs.  Your elder care attorney can evaluate the policy provisions.
  • Periodically review your legal documents.  If they are outdated, or misplaced, how can they be useful?  
  • Don’t add payable on death or transfer on death designations to all your financial accounts without speaking to an attorney.   
  • Consider a prepaid burial.  Your loved ones and your funeral representative will be grateful that you did.

For questions, contact Jane at Archer Brogan – Elder Law Attorney – Trenton – Princeton – Somerville – Brick – Jamesburg

Featured man in blue sweater sitting on brown chair near the window

Avoiding a Medicaid Penalty Period

What is the Medicaid penalty period?

During the Medicaid look back period, you can’t give away your money (without receiving equal value in return) and go on Managed Long Term Services and Supports (MLTSS) Medicaid. If you do, a Medicaid penalty period will result. During the Medicaid penalty period, the Medicaid applicant is treated as if she still had the gifted funds. During this period, Medicaid will not pay for long-term care.

How long with the Medicaid penalty period be?

The sum of all the gifts made during the look back period is added. Then the total of those gifts is divided by the applicable Medicaid divisor. The result of this equation is the Medicaid penalty period.

Example. The Medicaid penalty divisor is $374.39 per day, or $11,387.69 per month. If I give away the sum of $11,387.69 during the look back period, the total gifts ($11,387.69) are divided by the Medicaid divisor of $374.39 per day. The resulting penalty is just over 30 days. A penalty period of about one month will apply on my Medicaid application, without an exemption.

Why can even a short Medicaid penalty period be a big problem? During the Medicaid penalty period, Medicaid will not pay for my long-term care. If I am already poor and living in a nursing home, how will I get the money to pay my nursing home bill? This can be a real challenge. No nursing home or assisted living facility will provide free care.

Increase in the Medicaid penalty divisor.

The higher the divisor, the shorter the penalty period will be. On May 24, 2022, the State of New Jersey increased the Medicaid penalty divisor to a rate of $374.39 per day. The new divisor applies to Medicaid applications filed on or after April 1, 2022.  https://www.state.nj.us/humanservices/dmahs/info/resources/medicaid/2022/22-05_Increase_in_the_Penalty_Divisor_Effective_4-1-2022.pdf.

Medicaid Penalty Traps

Unfortunately, the Medicaid penalty period can be a trap for the unwary. A penalty period can be imposed even with no gifts during the Medicaid look back period. The recent decision of H.L. v. Division of Medical Assistance and Health Services et als. shows what can go wrong. The Final Agency Decision is available online at https://www.state.nj.us/humanservices/dmahs/info/decisions/2022/H.L.vDMAHS&MonmouthCty.pdf.

In that case, a Medicaid application was filed on behalf of H.L. with the Monmouth County Medicaid office. The Medicaid office reviewed H.L.’s bank records. H.L. withdrew about $58,000 during the Medicaid look back period. No gifts were made. The cash was spent on everyday living expenses, including rent. Some of the withdrawals were made after H.L. moved into a nursing home.

The Medicaid office computed a 162 day Medicaid penalty period. H.L. was now in a difficult situation. Unless the Medicaid penalty period was removed, H.L. would have an unpaid long-term care bill of approximately $60,000.

Reducing the Penalty with a Medicaid Fair Hearing.

The solution in H.L.’s case was to file for a Fair Hearing. On Fair Hearing, the Medicaid penalty period was reduced by the amount of the rent. The penalty period might have been avoided with better documentation of H.L.’s expenses.

How An Elder Law Attorney Can Help You.

Applying for Medicaid may appear simple, until it’s not. Doing it yourself or using a non-attorney Medicaid advisory service) can be like wading through quicksand. You may not realize you are in trouble until it is too late. Once assessed, a. Medicaid penalty can be difficult to remove. Fortunately, a seasoned elder law legal team can help obtain Medicaid coverage with as little stress as possible.

For more information on how we can help you with your New Jersey Medicaid planning and application, contact Archer Brogan, LLP at telephone number (609) 842-9200 or visit our firm’s website at https://archerbrogan.com.

Back to School: Medicaid & 529 Plans

Most people assume that they will not ever need skilled nursing care, but statistics show that that is not the case.  Medicare may be available to pay for a limited period of care under limited circumstances, but if an individual does not have long-term care insurance, care in a skilled nursing facility care can cost more than $12,000 per month in New Jersey. That is an awful lot of money to pay out-of-pocket, so more often than not, the client or his or her responsible caregiver turn to the Managed Long Term Services and Supports (MLTSS) Medicaid program as a source of funding, combined with the elderly resident’s income, for long-term care. 

MLTSS Medicaid is a joint federal/state means-tested welfare program. In New Jersey, for single individuals, the countable asset limit is $2,000. Countable assets are available resources, i.e., resources that are available to pay for your car.  In other words, if you have an asset that can be liquidated within 30 days, you can’t simply chose to do nothing to take the cash out of the assets and simply go on Medicaid, expecting Medicaid to pay for your care.  In New Jersey, this general rule applies to an individual’s (or a spouse’s) accessible retirement accounts as well as any educational savings accounts, including IRC 529 accounts, that can be converted to cash within a relatively short period of time. 

It can be a shock to family members to learn that the funds on deposit in a IRC 529 educational savings plan account may have to be returned to the contributor and spend down for the contributor’s long-term care or may be subject to a Medicaid penalty period, which is a period of time during which payment for long –term care is unavailable due to assets given away for less than fair market value during the Medicaid five year lookback period.  A seasoned elder lawyer can provide solutions. Depending on the circumstances, this might include purchasing a Medicaid friendly annuity to offset any Medicaid penalty period from the transfer of assets into a 529 plan or planning years in advance with an educational trust.

QuestionsLet Jane know

Do You Know How To Protect Yourself From Catfishing and Financial Abuse?

A version of this article ran in the April 2021 edition of The Elder Law Report, Including Special Needs Planning

Senior citizens and members of the disabled community have always been a major target for catfishing schemes, but since the pandemic hit last year it’s at an all-time high.  According to the Elder Justice Center, fraud increased to over $3.3 billion in 2020, well above the 2019 report. This blog post is intended to warn of catfishing schemes, which are no joke, especially when the most vulnerable members of our community could be victimized. That is why it is so important to remain on high-alert in the event you encounter financial and other forms of abuse. 

Internet friendly seniors need to be vigilant for cat fishers.  Catfishing involves schemes in which the perpetrator creates and holds out to the victim an offer which is too good to be true, to entice the victim into giving up personal information, money, or something of value for fraudulent purposes.  Catfishing comes in various degrees of sophistication and can involve the creation of a false identity which is held out to the public.  In one local catfishing scheme, the perpetrator held himself out as a lonely man working on an isolated oil rig looking for long distance love online.  The isolation of an oil rig is a convenient excuse for providing limited photos and for declining to meet in person or talk on the telephone. Communication tends to be via instant message or in online hang outs and chatrooms or via text messages.  Red flags for a catfishing scheme can include:  poor English, lack of communication by video, FaceTime, or any method which allows you to see who are talking with, a rapid paced romance, requests for you to use a particular type of software or program, requests for you to download a computer program (which may contain malware or ransomware), and requests for your social security number, Medicare number, bank account or credit card number or for you to purchase gift cards and to send them the gift card numbers.  Often the perpetrators of catfishing schemes are overseas. 

Another financial abuse scheme is unemployment fraud.  In these schemes, the perpetrator files an unemployment claim based on the victim’s work record and then opens up a new bank account into which the victim’s fraudulently claimed unemployment benefits are deposited.  Earmarks of unemployment fraud include receiving a letter from the unemployment office confirming the filing of a claim based on the victim’s work record.   Sometimes, the victim may be unaware of the scheme until he or she receives income tax forms in January of the following year, reporting unemployment income which the victim did not receive. File a complaint with the local police department and report the matter to your local unemployment office, which typically will have a fraud hotline.  

Then there are COVID-19 financial abuse schemes, which include: 

  • An offer for COVID-19 treatment, a vaccine or a booster shot from anyone other than a medical professional or a government health department
  • Being offered the chance to “jump the line” for the COVID-19 vaccine by paying a fee
  • Being offered quicker utility service restoration by paying a fee, particularly using a gift card, or a payment app such as Venmo, PayPal or Zelle 

Here are some general precautions you can take to minimize the risk of elder financial abuse:

  • Review your mail and bank statements regularly and contact your credit card company or the merchant regarding any unfamiliar transactions 
  • Do not let others access your money. Put your bank and financial statements away in a locked cabinet or drawer out of sight. Do not leave them in your car or in plain view in your house.  Refrain from carrying a lot of cash. 
  • Keep in regular contact with friends and family who can help you. 
  • Order a copy of your credit report and review it. 
  • Do not keep passwords or ATM or telephone passwords in writing in your wallet, purse, glove compartment or anywhere easily accessible in your home. 
  • Don’t ever give a power of attorney to someone you don’t know very well and trust.  Your power of attorney should be trustworthy, available, and respectful and should put your interests before their own. 

If you still have questions, there is a helpful senior financial safety risk assessment tool offered free to the public by the Center for Elder Law and Justice, a New York organization, in collaboration with the Pro Bono Net.  The online tool can be used to assess whether there are red flags for elder financial abuse and what you can do in response.  The tool is available online at https://elderjusticeny.org/.

Additional support and resources may be available through your local Adult Protective Services office, the county Office on Aging, local law enforcement and the county prosecutors offices. Resources at the state level include the Office of the Public Guardian, and the Office of the Ombudsman for the Institutionalized Elderly. 

Questions? Let Jane know. 

National Caregiver’s Day: A Look at Elder Care in the Age of COVID-19

It’s National Caregiver’s Day, and another year filled with countless and unimaginable changes has passed. This year especially, my heart goes out to caregivers and their loved ones everywhere! Even before the COVID-19 pandemic, caregiving was no bed of roses. But this year, caregivers are facing an onslaught of new challenges, not the least of which are combatting senior isolation and reduced access to face-to-face therapies and delayed medical examinations. 

How has the COVID-19 pandemic changed care options?  Adult medical day care centers are not providing in person care at their customary location but may deliver services via telehealth and in person visits in the home. This leaves care in the home and care in a long-term care facility as the remaining options for senior care.  

The long-term care industry has been hard hit by the pandemic. From a medical standpoint, until the pandemic subsides, full-time care in the home is probably the safest option. A good option for private care in the home would be hiring a home health aide through an agency.  Benefits of a full-time caregiver (whether hired or by a loved one) include stronger protection of the vulnerable senior, since the caregiver is not moving from home to home (or from home to a nursing home) caring for multiple patients in multiple settings. It can also give the family members or friends who are overseeing the care an opportunity to recharge, which is important to prevent burn out. The right caregiver can provide social companionship to the senior.  

Families considering this option will want to keep in mind that the cost of private, hired live in care will include the cost of groceries for the home health aide, as well as worker’s compensation insurance if the caregiver is providing only companion and housekeeping care. . In such cases, the homeowner’s carrier should be put on notice of the arrangement and the family should work with an accountant to ensure that an accountant or payroll company to ensure compliance with withholding and state insurance requirements. The home’s layout should include a private area with a door that closes for the caregiver, who will need to rest and recharge while the senior is sleeping.  An employment agreement with the caregiver can protect the homeowner and the employer’s rights and ensure that minimum wage and hour requirements are met. If the senior needs care from a certified home health aide, keep in mind that such care can only be provided through a licensed home health care agency with a nurse supervising the implementation of the doctor’s plan of care. Hiring a caregiver to provide such comprehensive care outside of an agency is illegal and potentially places the senior’s well-being at risk.  Agencies do screen their prospective employees, and may be able to identify unsuitable caregivers.  If the caregiver is willing to break state law, how amenable will the caregiver be to calling 9-1-1 if the senior needs emergency medical care of doing so means the caregiver is risking getting caught breaking the law?  The family may expect to save money with an unlicensed, under the table caregiver arrangement, but in addition to being illegal, the fallout from such arrangements tends to be extremely expensive and can take a terrible toll on the senior’s health.  

Another option is care in the home financed through the Veteran’s Special Improved pension/Aid and Attendance, which is a government benefits program for eligible United States military veterans or their surviving spouses to help defray the cost of care.  In cases where the senior qualifies for Medicaid, and is able to remain in the home, programs such as the Personal Preferences Program (PPP), “can provide a source of funding for the senior to choose and hire their preferred caregivers, which can include relatives and friends.” Under the PPP program, the senior chooses the services and schedule they desire. 

The remaining option is care in a long term facility. This may be the best option where the care recipient is a two person assist, has behavioral quirks, or requires a team of trained medical professionals to stabilize and maintain their condition.  In some situations, Medicare dollars can be used for limited periods of time as “key” money to admit the senior to the best facility possible, with the goal of later transitioning to payment for the best care through the   Medicaid program and the senior’s income. 

These are just a few important considerations. For help sorting through your options, consultation with an elder law attorney is recommended.  

For more information about elder care in the age of COVID-19, please feel free to reach out.

Jane Fearn-Zimmer is an Elder and Disability Law, Taxation, and Trusts and Estates attorney. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.