A Word About Caregiver Contracts
Mary called because her mom is currently in a nursing facility in Florida. She wants to bring her up north to be closer to Mary. She then told me that a Florida attorney prepared a personal services contract in which Mom paid Mary a sum of $100,000 to provide her with various care services. Her question to me was simple. “Will New Jersey Medicaid treat the money paid by parent to child as a transfer for value or will they treat it as a transfer for less than fair value?” The answer to that question is critical to her decision whether to move her mom, she told me. That’s because if the contract is not an equal value transfer it will carry a Medicaid transfer penalty. Mary told me the Florida attorney assured her it would not pose a problem for Medicaid eligibility in Florida. She wanted to know if that was also true in New Jersey. My initial reaction was skepticism. Then I started asking a few more questions. Mary told me she lives in New Jersey. I reviewed the contract which provides for various services such as laundry, bill paying, and assistance with activities of daily living (ADLs). I
An Update on an Important Medicare Decision
In 2013 I wrote on this blog about an important court decision that impacted many seniors discharged from hospitals to subacute facilities for rehabilitation. (See my posts on March 25 and April 1, 2013.) Up to 100 days of rehabilitative services are covered by Medicare but many seniors receive well short of 100 days of coverage because of a misapplied standard. The decision to stop Medicare coverage has been based on a determination that the senior is not improving as a result of the treatment received, despite the fact that nowhere is this actually written in the Medicare regulations. Medicare advocacy organizations filed a lawsuit to stop the practice. A settlement was reached in the case of Jimmo v. Sebelius in which the federal government agreed to stop applying an “Improvement Standard”. Federal officials agreed to rewrite Medicare manuals to insure that this standard would no longer be used. 4 years later, however, the federal government hasn’t complied so the advocacy groups went back to court. In February, the Jimmo court approved a corrective statement which the Center for Medicare and Medicaid Services (CMS) must now use to disavow the “Improvement Standard”. The statement is intended to remind the
Irrevocable vs. Revocable Trusts – Is One Better than the Other? (Part 2)
Last week I explained that the initial reaction to irrevocable trusts vs. revocable ones is generally negative. People perceive there to be a loss of control or really a loss of the use of the funds transferred to irrevocable trusts. But, is that really true? No, it isn’t because irrevocability is not synonymous with loss of control. It all depends on the purpose and the terms of the trust. If, for example, I want to transfer assets out of my name in order to reduce the value of my estate for estate tax purposes and I have sufficient other assets so that I won’t ever need the assets transferred to the trust, then an irrevocable trust would be drafted to accomplish the tax benefit. I would never be able to get the assets back but that’s OK. My purpose is to get the tax benefit and I’m not worried about using the assets for my own personal needs. On the other hand, the clients for whom we set up irrevocable trusts for long term care planning very well may need to use the funds in those trusts. They hope they won’t need to but we just can’t be sure.
Irrevocable vs. Revocable Trusts – Is One Better than the Other? (Part 1)
When I talk about trusts – and specifically irrevocable ones – many people quickly reply that they don’t like irrevocable trusts because they don’t like the idea that they are losing control of their assets. They much prefer a revocable trust. Each type of trust has its uses but first, let’s look at what revocability actually means. A trust is established by a grantor, sometimes referred to as a trustor, by way of a written agreement. Revocability means the trust can be revoked by the grantor who can basically “tear up” the trust agreement and take all the assets back. Revocability also means the trust can be amended by the grantor (ie. the terms of the trust can be changed). Revocable trusts are typically used to avoid probate. Assets held in the trust are not subject to state probate proceedings, making for immediate unrestricted access to the trust assets when the grantor dies. Revocable trusts also may be created to minimize or in some cases avoid estate taxes by creating other trusts into which assets pour over after the grantor’s death. Revocable trusts, however, do not protect assets from the cost of long term care, which is a primary
Assisted Living Medicaid Isn’t Necessarily Forever (Part 2)
Last week I was telling you about Joe’s dad. He had qualified for Medicaid in an assisted living facility (ALF) and been assigned one of the facility’s 10% of its beds that are set aside for Medicaid residents. Everything was fine until he fell and broke his hip. When the hospital was ready to discharge him, the ALF said they couldn’t take him back. The reason is because dad needed a hoyer lift to move him. A hoyer lift allows a person to be lifted and transferred with a minimum of physical exertion. The ALF told Joe that it was not equipped with a hoyer lift. He offered to purchase one but the facility said they couldn’t accept that. Joe’s situation highlights the potential problem with ALF Medicaid. Because an ALF is not a nursing home - meaning it isn’t licensed to provide nursing home level care – there are instances where a resident’s health is such that the ALF cannot care for that resident, despite the fact that he/she qualified for Medicaid. In other words, being approved for Medicaid is not a guarantee that every resident can stay for the rest of his/her life. That will depend in
Assisted Living Medicaid Isn’t Necessarily Forever – Part 1
Dad is in an assisted living facility (ALF) and is close to running out of money. I would like him to stay in that facility rather than moving him to a nursing home. In the past I have discussed the hurdles of getting assisted living Medicaid, which is different than nursing home Medicaid in many respects. ALFs have to make 10% of their beds available for New Jersey Medicaid if they agree to become a “Medicaid facility”. Most ALFs limit their Medicaid beds to that 10% number so even if you are approved by New Jersey’s Medicaid office you might end up on the ALFs waiting list until a bed opens up and may have to continue to private pay. I have also talked in the past about the need to medically qualify as needing nursing home level care. Not all ALF residents meet that test so a Medicaid application can fail even though the financial requirements have been met. Joe’s recent call highlights another important issue with assisted living Medicaid. Joe had gotten past the hurdles I just mentioned. His dad had spent down his assets and had applied for and was now receiving Medicaid. Everything was fine