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

Returning From a Nursing Home to the Home

Senior woman sitting on the wheelchair aloneWhat are the options available to a long-term care resident who wants to return home? Consider using the Home and Community Based Services (HCBS) centered planning rules to help the resident transition back into the community. The care plan can be written in a manner to facilitate the resident’s discharge to the community.  If the individual experiences delay on the part of the Managed Care Organization (MCO) in updating the planning, the individual has a right to a service plan at her request and then annually, or upon a change in condition. Should the individual encounter delays by the MCO’s or if the individuals requested by the resident fail or decline to attend important meetings, one solution may be to involve an Omsbudsman and/or the Managed Long Term Services and Supports (MLTSS) offices, which can enforce a service plan. Generally, the initial meeting should be used to generate a list of action items, including the identification of the Medicare cutoff date and the filing of a MLTSS Medicaid application, obtaining therapies to strengthen the individual for her return to the community. A second meeting may be necessary to draft the plan. Any plan adopted must differentiate between paid and unpaid services to the individual. For instance, if a grandchild is not willing to provide free care and services on a Saturday evening, this should be stated in the plan.

Under the HCBS person-centered planning rules, the MCO must hold a care conference at the time and place selected by the resident.  A care conference is a meeting held by social worker, nurse and other long term care professionals to discuss the best care plan for the resident. The care needs and preferences of the resident are discussed and a written plan of care is documented. The care plan must reflect the goals and objectives for care. For instance, if the resident who is unable to move without assistance, needs to be provided with an air mattress and needs to be turned every two hours to prevent bedsores, this should be stated in the care plan. The cultural affinities of the resident may also be stated in the care plan.

The resident is entitled to have a representative in the care planning process. This can, but does not need to be, his or her financial power of attorney. The resident should not wait for the providers to initiate the process. The MCO must provide the resident with enough information so that he or she can make an informed decision.  If the resident is being discharged back into the community, and will require care 24/7, the post-discharge plan of care must provide whether any unpaid services is going to be performed on a volunteer versus paid basis. The MCO cannot require family members or friends who are not willing to commit to providing free care on a continuing basis to provide the care without compensation.  If various therapies will be needed to strengthen the individual so that she may return to the community, a physician’s order for skilled therapy should be incorporated into the care plan.

The written service plan prepared and implemented through the MCO must spell out how the individual will transition from care in a facility to care in the community and should identify specific goals and services. What funding is available to facilitate an individual’s transition back to the community?  Under the post-eligibility treatment of income rules found at 42 C.F.R. § 435.72, the individual may keep all of her income up to a limit of $2,005.00 per month for up to six months, which can be used to pay rent for an apartment in the community.

The discharge service plan should be prepared taking into consideration the unique abilities and preferences of the disabled and whatever decision –making capacity the soon-to-be discharged resident has retained.  Where the resident is unable to make and implement care-related decisions independently, one possibility is to empower the resident by involving him or her in a collaborative, or supportive decision making (SDM), process.  In this model, the resident awaiting discharge helps define the post-charge plan of care through the assistance of “supporters,” who can help the resident plan the he or she will receive in the community. The SDM decision-making model works best when the “supporters” remain available and cooperative in assisting with the implementation of the decision selected by the disabled or incompetent individual. SDM can be incorporated into the in the discharge planning process for an individual with limited or diminishing capacity. If this is not feasible, where there is not already a power of attorney, alternatives may include obtaining a limited guardianship order (as opposed to a plenary guardianship order) and using the limited guardianship process to define and constrain the authority of the facility’s representative in the discharge process, so that the discharge plan optimally furthers the best interests of the resident returning to the community. Finally, the resident department from a nursing home has a right to seek a Fair Hearing upon transfer or discharge and the service plan itself should incorporate appeal/Fair Hearing rights incorporate within the plan.

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.