Don’t File For Medicaid Too Soon!

Most people assume that they will age in place at home and never need long-term 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, nursing home care can cost more than $12,000 per month in New Jersey.  And that is only the average monthly cost of care; many facilities charge a higher rate.  That translates to at least $144,000, which is an awful lot of money to pay out-of-pocket.  That is why many seniors who can no longer remain at home turn to Medicaid, which is a joint federal and state public benefits program, to help fund their care in a nursing home or an assisted living facility.

As part of the process of transitioning from hospital care to long-term care, you will probably be asked whether you have filed a Medicaid application. This is a routine part of the long-term care admissions process.  It is very important to avoid filing for Medicaid before it is needed, for at least two reasons. 

You cannot give away your assets and go directly on Medicaid.  Generally, any gifts made during the lookback period and not fully repaid, will be penalized. while there are a few exceptions, most uncompensated gifts made during the five year Medicaid lookback period will likely result in a Medicaid penalty period, which is the denial of payment through Medicaid for care in a nursing home or an assisted living facility for a period of time corresponding to the total of all the gifts made during the five year Medicaid lookback period.  However, Medicaid generally cannot take into account gifts made before the lookback period began. So if there is going to be gifting in large amounts, it is best for the gifts to be made before the beginning of the Medicaid lookback period. 

How do you know when the five year Medicaid lookback period is?  Actually, the term “five year” Medicaid lookback can be misleading.  Filing the first Medicaid application triggers the Medicaid lookback, which is a period of time running retroactively from the date of filing of the first Medicaid application.  For example, if Eric Early files a Medicaid application on June 1, 2021, and this is his first Medicaid application, then the lookback period will be from June 1, 2016 to June 1, 2021 (five years) and potentially continuing into the future. 

However, there are circumstances when the Medicaid lookback period can extend beyond five years.  In Eric’s case, if he withdraws his first Medicaid application and does not file another Medicaid application until January 1, 2022, the lookback period for his second Medicaid application will still run from June 1, 2016 through to June 1, 2021, but will continue thereafter until the date of filing of the second Medicaid application on January 1, 2022.  So if Eric (or his wife, if he is married) made large gifts in 2016, those gifts will be considered on his 2022 Medicaid application and will probably result in a gifting penalty which Eric could have avoided had he simply waited to file the Medicaid application.

If Eric is married, the first Medicaid application sets the “snapshot.” Medicaid looks at the assets of the husband, the wife and the assets in their joint names, totals the assets and that total is the snapshot.  The amount of the snapshot limits the amount the healthy spouse can keep.  You only get one Medicaid snapshot, so it is very important to get the highest snapshot possible.  Here is an example showing what can happen if you don’t do proper planning before filing a Medicaid application.  

For instance, if Jim was hospitalized in 2017, and the hospital social worker filed a Medicaid application for Jim thinking Jim might have to go into a nursing home, but it turns out that Jim was actually able to return to the home after all.  Jim’s Medicaid snapshot is permanently set in 2017.  His snapshot is set in stone and it is never going to change.  Suppose in 2017, Jim and his wife own a home and a joint checking account with $100,000 in 2017, the home is exempt, but the checking account is not. Jim’s snapshot is $100,000 based on the checking account balance. Jim can keep no more than $2,000 and his wife can keep $50,000 without additional planning or legal advocacy and representation. 

Suppose Jim never completed his Medicaid application in 2017 and his wife cares for him at home for another year and in 2018, re-files for Medicaid for Jim.  In 2018, she also sells the house which was jointly owned with Jim, for the sum of $150,000. If the deed to the house was left in Jim’s name, in 2018, Jim will be disqualified for Medicaid due to being over the $2,000 Medicaid resource limit, because he is entitled to half the house sale proceeds. Now Jim has to spend down an additional $75,000 that could have been saved, had the 2017 Medicaid application not been filed and had Jim and his wife consulted with an elder care attorney.  If you have questions about a Medicaid application, please feel free to contact me to discuss your unique situation.  

Questions? Let Jane know.

Getting a Spousal Waiver for Medicaid Isn’t as Easy as You May Think in New Jersey 

This blog post is intended to help educate your family regarding the limited instances in which a spousal waiver may be available and help guide you through the tedious process of obtaining one in a suitable case. 

The Managed Long Term Services and Supports (MLTSS) Medicaid Program offers valuable benefits, which can provide for long term services and supports in the home, in an assisted living setting or in a nursing home.  However, federal Medicaid law and policy requires the states to evaluate all of the resources available to the Medicaid applicant during the five years immediately preceding the date of filing of the Medicaid application.  This requirement can make it very difficult to obtain a MLTSS approval, particularly if the Medicaid applicant has been separated from a spouse, has a obtained a divorce from bed and board, or has been divorced in the past five years.

Medicaid law and policy provides for Medicaid eligibility as a last resort, requiring the applicant to spend down any excess resources available over the $2,000 countable asset limit.  Under New Jersey common law, spouses can be held liable for necessary expenses (i.e., the cost of medical care) of their spouse and if their assets are in excess of the maximum community spouse reserve allowance (currently set at $130,380), even if the Medicaid applicant has less than $2,000, his or her Medicaid eligibility can be jeopardized by the funds in the name of the healthy spouse. 

Consequently, in determining eligibility for Medicaid, the County Welfare Office (CWO) will ask an applicant’s marital status, and will consider the applicant and his or her spouse legally married until the entry of a final judgment of divorce.  If the CWO determines that you are still married (which can happen even if you have been separated for years or have a divorce from bed and board), it will typically take a “what’s your’s is mine” approach in determining Medicaid eligibility.  This policy is typically enforced by requiring the Medicaid application to provide the spouse or former spouse’s social security number, if the Medicaid applicant has been married at any point during the five year Medicaid lookback period.  The social security number may be used to conduct an asset search, which will probably enable the CWO to identify and consider the current assets of the healthy current or former spouse.   This verification process places the Medicaid applicant in a Catch-22, because banking privacy laws block access to the healthy spouse’s statements, and the healthy spouse is unlikely to spend down assets under his or her sole control for the care of the sick former partner. 

What is spousal refusal? In some other states, especially New York, the strategy of “spousal refusal” is commonly used.  Under this strategy, the healthy spouse refuses to pay the nursing home bills of the spouse applying for Medicaid.  In response, the CWO in “spousal refusal” states evaluates Medicaid eligibility on the basis of the sick spouse’s own assets and income.  This result is referred to as a spousal waiver

New Jersey’s Strict Policy Regarding Spousal Waivers.  For years, the Garden State had a policy against awarding spousal waivers, in all but the most extreme cases, such was where spouses had lived separate and apart for many years.   As a result, spouse waivers were a rarity, making it best to obtain a final judgment of divorce and then wait more than five years to file a Medicaid application. 

How I was able to obtain spousal waiver for one of my recent clients:

In a nut shell, New Jersey was refusing to recognize federal law which provided for spousal refusal. Other states, including NY, do recognize spousal refusal. A little over a year prior to this case, another attorney’s application for a spousal waiver was denied by the New Jersey Department of Human Services, which prompted the case to be taken to the appellate division and the policy against spousal refusal/spousal waivers was overturned. Par for the course, New Jersey was very reluctant to grant the applications.

In my case, the spouses were still married.  The sick spouse was well-educated, extremely bright and conversant. However, their marriage was so difficult that the healthy spouse obtained a domestic violence restraining order against the other spouse, who nine years later became my client.  From that date forward, the two spouses lived separate and apart.  Eventually, one of the spouses needed long term care, and the spousal waiver was obtained largely on the basis of the restraining order.  It was critical to obtain all of that documentation.  Having the spousal waiver meant that the sick spouse was able to get the skilled nursing care needed, without the cooperation of the healthy spouse in the Medicaid application process.

Jane Fearn-Zimmer is a shareholder in the Elder and Disability LawTaxation, and Trusts and Estates Groups. 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.

Master Your Finances Radio Show Appearance

Special thanks to Kurt Baker, host of the radio show “Master Your Finances,” for inviting me on his show to discuss how recent legal, economic and social changes, including the COVID-19 pandemic, can impact the finances of the elderly and disabled and their families, what you can do to protect your life savings. The segment aired on Sunday, September 13, 2020 at 9:00 AM on 107.7 FM TheBronc and is now available on demand on the Master Your Finances website.

Other topics we discussed during the segment on practical financial issues include:

  • How the SECURE Act really impacts your retirement plan and why it is very important to update estate planning for your tax-qualified retirement accounts (i.e., individual retirement accounts, 401(k)’s, 403(b)’s, 457(b)’s) 
  • Why life insurance and long term care policies are important investments in your family’s future
  • Estate planning strategies you might not have thought of, including a ROTH IRA conversion
  • How to ensure that your estate plan accomplishes what you intended 
  • Tips and traps for retirement income planning, including how the new individual retirement rollover rules affect your bottom line 
  • Health insurance tips and traps (and how to avoid them) in the event of a job loss
  • How to protect your home and your life savings while getting your loved one the best long-term care
  • How to navigate the changes to the long term care and Medicaid application process landscapes brought about by the COVID-19 pandemic
  • How the COVID-19 pandemic is exacerbating the mental health crisis and the important steps you can take to protect yourself and your finances if you are faced with an involuntary commitment

For more information on the “Master Your Finances” radio show, click here.

Jane Fearn-Zimmer is a shareholder in the Elder and Disability LawTaxation, and Trusts and Estates Groups. 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.

New PACE Program Regulations: Six Important Changes You Need to Know

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On June 3rd, the Centers for Medicare and Medicaid Services released a final rule that updates the program requirements for the PACE program (Program for All-Inclusive Care for the Elderly), a cost-effective program that helps keep frail, elderly individuals over the age of 55 in the home using Medicare or Medicaid dollars.  PACE organizations, also referred to as Living Independence for the Elderly (LIFE) organizations, are government or nonprofit entities delivering comprehensive care and services via an interdisciplinary team (IDT) to elderly and frail individuals ages 55 and over who are clinically assessed as needing nursing home care.

The new rule reflects 21st century service-delivery practices, communications and technology.

Here are six of the most impactful changes:

  1. Thirty (30) day deadline to complete the interdisciplinary plan of care. In rare circumstances, it may not be possible to make a timely assessment and care plan. In such cases, the PACE organization must document the specific circumstances why the initial assessment cannot be completed within the thirty-day period, and must detail the steps taken to provide immediate care as needed and to complete the assessment process and the plan-of-care as soon as feasible.
  2. Care delivery by non-physician primary care providers. Primary care and care management may now be provided by a nurse practitioner, physician assistant or a community physician duly licensed in accordance with state law, without having to obtain a waiver.
  3. Interactive remote technologies may be used to perform unscheduled reassessments. Video conferencing, live instant messaging, chat software and other media may be used by IDT members to perform an unscheduled reassessment in response to a request for a change in PACE services, where clinically appropriate and necessary to improve or maintain the patient’s overall health status. In order for the remote technology to be used, the patient or her representative must consent to its use.  In-person follow up may be warranted. Using remote technologies to perform reassessments may not be appropriate for medically complex patients.
  4. Mandatory attendance of the semi-annual reassessment meeting by the primary care provider, a registered nurse, and a Master’s-level social worker, with team members from other disciplines participating as needed in the professional judgment of the primary care provider, the registered nurse, and the Master’s-level social worker.
  5. Disenrollment for “disruptive behavior” on the part of either the participant or caregiver. In order to justify involuntary disenrollment, the disruptive behavior must jeopardize the patient’s health or safety or the safety of others. For instance, if a PACE participant who is able to make her own medical decisions repeatedly refuses to follow her plan of care, or if her caregiver exhibits threatening behavior which jeopardizes the participant’s health or safety, or the safety of the caregiver or others, involuntary disenrollment may be an option, after the PACE organization has ruled out alternative arrangements.
  6. PACE organizations offering qualified prescription drug coverage must comply with Medicare Part D prescription drug program requirements.

There are other major changes to the PACE program rules that may not directly impact the elderly and disabled. For more information, contact Jane at 856.661.2283 or by emailing jane.zimmer@flastergreenberg.com.

Jane Fearn-Zimmer is a shareholder in the Elder and Disability LawTaxation, and Trusts and Estates Groups. 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.

Once A Caregiver Child, Always A Caregiver Child

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In general, one cannot give away her assets and go on Medicaid within the next five years. If an individual who gives away assets (donor) applies for Medicaid within the sixty month period following the date of the last completed gift, the individual will usually be subject to a period of time during which Medicaid will not pay for their long-term care. The length of this period is related to the amount of the total gifts during the five year Medicaid look back period, and is referred to as a Medicaid penalty period.

An exception to the Medicaid penalty period and any Medicaid liens is the transfer of a home by an ill parent to a caregiver child.  If the child moves into the home of the parent, and provides such care to the parent for a continuous, two year period as will keep the parent from entering into a nursing home, then the parent may transfer the home to the child without any penalty period.  This authority for this exception comes from the federal Medicaid statute and is black letter federal law.

Since 2015, I have heard of several instances where a parent applying for Medicaid was awarded the caregiver child exemption while the parent was alive, and pursuant to the exemption, the home was transferred out of the parent’s name to the child.

After the parent’s death, the child is notified that the house is nevertheless subject to a Medicaid lien.

This should not be the case for several reasons. First, when the parent gives up any interest in the home by giving the home away to the caregiver child, the home is now beyond the parent’s future Medicaid estate and it cannot be subjected to a Medicaid lien.

In addition, any attempted claw back of the home into the deceased parent’s Medicaid estate, after the parent was previously determined eligible for Medicaid without any penalty imposed for the home transfer, denies the parent, the child and all subsequent third party bona fide purchasers of the home for value from the child, of due process without notice and an opportunity to be heard.  As a policy matter, these reports are very troubling because of the loss of evidence over the passage of years and because the new “policy,” which was not enacted with public rule-making, will seriously undermine the stability of real estate transactions statewide.

Options may include challenging the new notice in the Chancery Courts. For an assessment of your options, consult an experienced and knowledgeable elder law attorney.

Questions? Let Jane know.

Jane Fearn-Zimmer is a shareholder in the Elder and Disability LawTaxation, and Trusts and Estates Groups. 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.