Pennsylvania (like many other states) has a filial responsibility law that generally requires children with means to support an indigent parent. While it may seem unfair, a Pennsylvania court recently enforced the law to hold a son liable for his mother’s $93,000 nursing home bill despite the son’s claim that he couldn’t afford to pay. Health Care & Retirement Corporation of America v. Pittas (Pa. Super. Ct., No. 536 EDA 2011, May 7, 2012).

However, it didn’t have to be this way if only the family consulted elder law attorneys such as FriedmanLaw when the mother first needed care. Elder care lawyers could have helped the mother qualify for Medicaid to pay for her care instead of leaving the son to be saddled with a high nursing home bill for his mom. The moral of this story is pretty simple; consulting elder law counsel early on can yield major savings down the road.

Further information on funding long term care without going broke and other subjects is available throughout SpecialNeedsNJ.com. To subscribe to our frequent blog updates, click on “Subscribe to this Blog” in the Meta box to the left and then click on “subscribe to this feed.”

[While this article focuses on guardianship for special needs children, similar considerations arise when a spouse, parent, or other loved one's ability to make important decisions is impaired by dementia, traumatic brain injury, or other condition. We address such guardianships throughout SpecialNeedsNJ.com, particularly in the elder law articles and practice area pages. We also plan a future blog post on that topic.]

Why should you consider putting time and money into applying for guardianship over your son or daughter with disabilities? After all, you are the parent; isn’t that enough? In a word, no.

Parents have the right to make major decisions for the child and obtain confidential information regarding a child’s health, finances, education, etc. while the child is a minor (typically under age 18). However, once your son or daughter becomes an adult (18 and over in most states), you no longer are entitled to most information subject to privacy laws, and health care providers may require your child’s consent to provide non-emergency medical treatments. While this dichotomy is understandable as children without disabilities become adults, how can you protect your child if he/she can’t make significant decisions or give informed consent to medical care or release of records? That’s where guardianship comes in.

A guardian controls health care, residence, and other major concerns of a person for whom he is guardian (“ward”) in similar manner to a parent’s authority over a minor child. However, to become guardian, a parent must prove the child can’t make important decisions. In New Jersey and New York (as well as most other states) a parent who seeks guardianship must apply to the courts and support his/her guardianship claim with doctor/psychologist evaluations. While the child has an opportunity to contest the application, opposition is uncommon and the court typically appoints the applicant as guardian. As court appointed guardian, you can make important decisions to further the safety and welfare of your child with serious disabilities.

Nevertheless, guardianship isn’t for everyone. If your child has only physical disabilities or otherwise can make major decisions guardianship would not be appropriate. If you are unsure whether your child with disabilities needs a guardian, we can guide you through this crucial concern. FriedmanLaw has helped countless families obtain guardianship over a loved one with diminished capacities.

To qualify husband or wife for Medicaid, a couple must reduce ["spend down" in Medicaid parlance] money and most other valuables (not counting principal residence, a vehicle, and certain jewelry) owned by either spouse to the smaller of about $110,000 or half the total countable assets of husband and wife. However, rather than spend down all excess resources for long term care, families often can protect excess resources through various Medicaid planning techniques discussed in greater detail in the articles and practice area tabs of SpecialNeedsNJ.com. [CAUTION- because Medicaid planning is complex and often counter-intuitive, do it yourself Medicaid planning can waste opportunities to save assets and delay the start of Medicaid.]

Medicaid qualified annuities are sometimes used to preserve excess resources by providing additional income to a spouse who doesn’t need long term care. However, annuity planning is not the best approach for all situations and isn’t favored by some Medicaid administrators. Nevertheless, a recent ruling from North Dakota lends support to Medicaid annuity planning.

In Geston v. Olson (U.S. Dist. Ct. N.D., No. 1:11-cv-044, April 24, 2012), the United States District Court for the District of North Dakota, Southwestern Division precludes the state from limiting the size of permissible annuities. In discussing Medicaid annuity planning, the Court says, “If there is a ‘loophole’ under federal law as to the treatment of irrevocable and nonassignable annuities under the Medicaid program, “the closing of that ‘loophole’ is best left for Congress to address.”

While a United States District Court ruling from North Dakota isn’t binding in New Jersey or New York, the Court’s logic accords with various similar rulings in other states. Thus, it may prove persuasive toward supporting Medicaid annuity planning outside North Dakota, which bodes well for families that employ Medicaid planning annuities in our area.

For the sixteenth consecutive year, attorney Lawrence Friedman will moderate the New Jersey State Bar Foundation’s Senior Citizens Law Day conference. He also will speak on will, trust, and long term care planning. With nursing homes charging around $10,000 per month for a decidedly institutional setting, care may suffer and families face impoverishment unless they explore all options when long term care is needed, particularly in light of recent changes to Medicaid. The conference will be held 10:00 a.m. on May 10, 2012 at the New Jersey Law Center in New Brunswick. Register for free at www.njsbf.org or call 1-800-FREE-LAW

Originally, Medicare had two parts: Part A covered hospitalizations and related services while Part B covered phsysician and other services. Later on, Part C Medicare Advantage was added to permit private all in one plans as an alternative to Parts A and B. Finally, a few years ago, Congress added Part D to Medicare to cover some prescription costs, although some Medicare Advantage plans are bundled with prescription coverage.

Medicare Part A is provided without a premium beyond the Medicare payroll tax but persons who enroll in Medicare Parts B, C, and D, must pay additional premiums. For this reason, some folks are tempted to save some premium dollars and wait until they are older and sicker to sign up for Medicare Parts B and D or a Part C Medicare Advantage plan. However, this strategy can backfire severely.

In the first place if you get sick, you could be hit with major medical and drug bills, and nobody can be certain that an unexpected illness or accident won’t strike.

To prevent people from unduly shifting health care costs to Medicare, Medicare charges an additional premium or penalty when an individual enrolls in Part B, C, or D after first becoming eligible unless an exception applies. The Part B penalty is 10% for each year Part B enrollment is delayed. The Part D penalty is based on the base Part D premium in effect each year increases for each month a Medicare participant goes without drug coverage. For instance, a Medicare participant who delays enrolling in Part D for three and a half years might have a roughly $14.00 penalty added to each month’s Part D premium when she finally does enroll. Part C penalties depend on the particular Medicare Advantage plan.

Exceptions to the penalties apply when an individual has alternate coverage recognized by Medicare. This can arise as a result of certain employer or union medical and prescription plans. However, not all plans will avoid Medicare penalties and the rules may vary depending on whether the Medicare participant or spouse is employed.

In addition to premium penalties, persons who are eligible for Medicare but don’t enroll may find employer coverage limited as a result. For instance, an employer plan may refuse to cover costs that Medicare would fund if the employee or employee’s spouse had elected full Medicare coverage.

In short, Medicare rules are quite complicated and errors and misunderstandings can prove costly. Therefore, before deciding to forego any Medicare Part, it is important to understand the penalties that may arise. FriedmanLaw helps clients navigate the maze of government benefit programs and make sense of their options.

When Mitt Romney turned 65 on March 12, 2012, he joined nearly all Americans in becoming eligible for Medicare, but Romney declined to enroll. Was this a smart move aside from any political advantage?

You can apply for Medicare three months before turning age 65. If you receive Social Security, you should automatically be enrolled in Medicare Part A (which covers hospitalizations and certain less common care) and Part B (which funds most Medicare covered acute and preventive care other than hospitalizations) unless you elect not to take Part B coverage to avoid the premium or you choose a Medicare Part C comprehensive plan in lieu of Parts A and B. In addition to Medicare Parts A and B or Medicare Part C, many Medicare participants opt for Medicare Part D prescription coverage. Some Medicare Part C plans include Medicare Part D drug coverage.

Since Romney isn’t on Social Security, he must apply in order to obtain Medicare and Romney hasn’t done so. Instead he is relying on private health insurance. Aside from possibly incurring higher health care costs than charged for Medicare, Romney may face a late enrollment penalty if he later opts for Medicare.

Where health coverage is part of a group retiree plan offered by a former employer, no penalty is charged when a retiree later enrolls in Medicare Part B. However, most other folks face a stiff late enrollment penalty [10% premium increase for each year of enrollment delay] for turning down Medicare Part B when first eligible [unless, of course, a Part C plan was purchased in place of signing up for Part B].

Because Medicare is complicated, it is important to consider your options early. As health needs change, it can prove beneficial to change from one plan to another. However, Medicare enrollment options are limited except during the short term annual open enrollment period.

FriedmanLaw can help you evaluate Medicare options to make choices that best serve your needs.

EDITOR’S NOTE- This article is by guest blogger Stephanie Lopez of HomeInsurance.org, and FriedmanLaw thanks Stephanie for taking the time to address this important topic.

If you have a special needs child, you should take the time to prepare a letter of intent for your child. This will help any caregivers your child may have determined how to properly care for your child, and will remove confusion about your child’s specific needs. Rather than waiting to prepare a letter of intent, make it a priority to prepare one now.

Letter of Intent Definition

For a special needs child, a letter of intent provides guidance for anyone acting as a caretaker for your child in the future. Although you probably wish that you could be there to attend to your child’s specific needs, there will be times when someone not as familiar with your child will need to take over your role as caretaker.

A letter of intent typically includes information about your child’s medical history and education. If your child receives Supplemental Security Income (SSI) or Medicaid because of his or her disability, outline the nature of these benefits in the letter of intent. The final purpose of a letter of intent for your special needs child is explaining your goals for your child. Do you feel that your child will eventually be able to live alone? Do you hope that your child finds employment after completing school? Talk about these hopes candidly in the letter.

Special Needs Attorneys

To draw up a letter of intent for your special needs child, you may want to consult a special needs attorney such as Lawrence A. Friedman of FriedmanLaw. A special needs attorney can help you with estate planning as well as special needs concerns. The letter of intent for your special needs child would be included in this planning.

However, since a letter of intent is not a formal document, you will need to draft one on your own if you do not want to go through the process of estate planning. While a letter of intent is not a formal legal document, it will be used to discover more about your child’s needs and assure that your desires pertaining your child’s future are taken into consideration.

Letter Details

The letter of intent will start by talking about what kind of special needs your child has because of his or her medical condition. Below is more detailed information about the content that should be contained in the letter of intent.

Medical Information

This includes the name of your child’s condition and any relevant information pertaining to this condition that a potential caretaker would not know. Include medical history and any unique symptoms your child may have.

Education

Write not only about your child’s past education, but also about any future plans you have for your child’s education. Discuss learning disabilities and which teaching methods work for your child.

Finances

Government assistance and savings put aside for your child should be mentioned.

Family Beliefs

Make your family’s beliefs clear so that caretakers can do their best to reflect these beliefs when taking care of your special needs child. This guide can help you draft a letter of intent.
Caring for your special needs child can be complicated. To prepare for the future when you may not be able to care for your child, write a letter of intent to guide your child’s caretakers.

Getting Started

A letter of intent is most effective when coordinated with special needs planning as wills and trusts may be important tools to implement your intent. FriedmanLaw stands ready to help develop an effective plan to carry out your wishes and meet the needs of your loved one with special needs.

About the Author: Stephanie Lopez’s passion for people and the environment has lead her to pursue a career in writing. At this time, Stephanie is working as a part-time writer for HomeInsurance.org specializing in home insurance.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 exempts from federal estate tax the first $5 million of a decedent’s taxable estate. In 2012, inflation adjustments increased the exemption to $5,120,000. However, the exemption is scheduled to drop to $1 million after 2012 unless Congress intervenes.

Because each decedent has his/her own exemption, couples can leave twice the individual exemption (i.e. $10 million if the individual exemption is $5 million) to children or other beneficiaries without federal estate tax. However, the exemption of the spouse who dies first typically will be wasted without careful tax planning. To take advantage of both spouses’ federal estate tax exemptions, couples can leave the first spouse’s exemption to persons other than the surviving spouse or a trust that isn’t includible in the surviving spouse’s estate (often called a credit shelter trust). Credit shelter trusts are a popular estate planning technique because they can save state as well as federal estate tax and serve as a rainy day fund for a surviving spouse. Still, some couples prefer to leave amounts to the surviving spouse outright.

Until the 2010 tax act, amounts left to a surviving spouse outright would forfeit the first spouse’s exemption. After the 2010 act, the unused federal estate tax exemption of the spouse who dies first may be used by the surviving spouse provided portability applies. For instance if a husband dying in 2011 leaves a $4 million estate and his wife dies with a $7 million estate at a time when the federal estate tax exemption is $5 million, the wife’s estate would pay tax on $2 million without portability but only $1 million if portability applies.

Portability is available to a surviving spouse only if the estate of the spouse who dies first elects it on a properly filed federal estate tax return. Estate tax returns are due nine months from the date of death but an extension can be taken to extend the filing date an additional six months. IRS has granted estates of decedents who died during the first six months of 2011 an extension to elect portability provided the estate files IRS Form 4768 requesting an extension no later than fifteen months after the decedent’s date of death.

Portability can save substantial potential federal estate tax when the second spouse dies. Therefore, it usually will be desirable for the estate of a first spouse to die to elect portability. However, this would entail the expense to prepare and file a federal estate tax return, which may not be required otherwise.

While portability is beneficial for sure, it isn’t a panacea. For instance, portability won’t save state estate tax unless so provided in state law. Thus, a portability election may reduce potential federal estate tax when a second spouse dies but as of this writing it won’t protect against New Jersey estate tax. To minimize New Jersey estate tax as well as federal estate tax, couples should execute credit shelter trust wills while both are able and elect portability when the first spouse dies. In addition, most people should have powers of attorney and health care advance directives to avoid the need for guardianship down the road. Once the first spouse dies, it is too late to engage in credit shelter trust will planning.

Estate tax planning is complicated, and one size fits all estate plans rarely serve users well. At FriedmanLaw, we seek to develop effective estate plans to meet your non-tax goals and reduce potential tax. Contact us if you’d like to discuss your particular situation.

Further information on this and other subjects is available throughout SpecialNeedsNJ.com. To subscribe to our frequent blog updates, click on “Subscribe to this Blog” in the Meta box to the left and then click on “subscribe to this feed.”

There is no easy answer to this deceptively simple question. Like other insurance, long term care insurance (“LTCI”) comes with many options and can prove surprisingly complex. For instance, many consumers are uncertain what their LTCI does and doesn’t cover.

First, it’s important to understand that medical insurance rarely covers long term care, and LTCI doesn’t cover routine medical costs. Thus, while Medicare may pay for preventive care and to treat illnesses, it won’t cover long term care in a nursing home or other setting. Neither will most employee and other health insurance. Therefore, if you need long term care, you must look to private resources, Medicaid, or LTCI.

Medicaid’s coverage and availability of facilities varies widely from state to state. In addition, choices of care settings and amenities can be more limited for Medicaid patients than for individuals with quality LTCI. Articles http://specialneedsnj.com/articles.php and Q&As http://specialneedsnj.com/elder_law.php throughout SpecialNeedsNJ.com, further explain Medicaid eligibility requirements and planning options. FriedmanLaw frequently helps families qualify for Medicaid without exhausting life savings.

Second, you should recognize that LTCI only covers care within the policy terms. LTCI usually pays a fixed daily benefit for a limited period of time after the insured has been unable to care for him/herself for a set period of time. Once the insured satisfies the elimination period, LTCI pays the daily rate toward long term care costs. For instance, LTCI with a $100 daily benefit and 90 day elimination period would pay up to $100 per day for long term care once the insured has met the policy’s benefit criteria (typically needing assistance with enumerated activities of daily living) for 90 days. The greater the daily benefit and maximum benefit term and the shorter the elimination period, the greater the LTCI premium. However with New Jersey nursing homes often charging over $10,000 per month, LTCI will be of little use unless it is sufficient to cover monthly LTCI costs less Social Security and other available private funds.

LTCI boosters tout the peace of mind that can come with knowing your care costs should be covered. But, the operative word is “should” because depending on the policy, LTCI can be very broad or fraught with limitations. Generally, when purchasing LTCI from a quality insurer, you get what you pay for. In other words broader coverage typically leads to higher prices and policies with low ball premiums probably won’t meet your needs. LTCI premiums vary with age, sex, health, and policy options.

LTCI usually can’t be purchased once an individual needs long term care and LTCI premiums are more manageable if you buy your insurance while younger. Therefore, you may want to consider buying LTCI while in your fifties or sixties instead of waiting until your seventies.

LTCI comes in many flavors, all of which impact benefits and costs. For instance, LTCI may be available with compound inflation protection, simple inflation protection, or no inflation protection. Compound protection is worth more and costs more than simple cost of living increases, but the benefit may be very valuable for younger purchasers. Thus, some consumers may do well to trade a longer elimination period for greater inflation protection. Other options may combine life insurance with LTCI, provide refundable premiums, or integrate husband and wife coverage.

When comparing LTCI options, your top concerns should be to understand the coverages and limitations offered by each policy; whether, when, and why premium can rise; whether the insurer is sound; and the insurer’s reputation for paying or denying reasonable claims. Finally, you also may want to consider a public/private partnership LTCI policy. [See “Public-Private Long Term Care Insurance Medicaid Program Protects Savings & Funds Long Term Care” at http://specialneedsnj.com/article.php?id=26]

Because LTCI can be so complex, professional advice can be crucial. FriedmanLaw has helped many families unravel the complexities of LTCI.

Further information on this and other subjects is available throughout SpecialNeedsNJ.com. To subscribe to our frequent blog updates, click on “Subscribe to this Blog” in the Meta box to the left and then click on “subscribe to this feed.”

When a Medicaid recipient passes away, the state can recover Medicaid expenditures from the individual’s probate estate and perhaps from other assets in which the individual once had an interest. As explained in greater detail throughout SpecialNeedsNJ.com, individuals may employ various planning techniques to preserve savings and qualify for Medicid to fund long term care. For instance changing a will or title to a home and other assets may shelter assets against Medicaid estate recovery.

An unusual story in the December 26, 2011 Eagle Tribune of North Andover, Massachusettes illustrates how expensive estate recovery can be. Massachusettes courts ruled that close to $200,000 found in a safe on a vacant lot could be taken to repay Medicaid provided to the safe’s former owner. While the state may be more deserving of this money than potential claimants, like the person who dumped the safe in the lot, it seems a shame that the owner’s relatives lost so much money to Medicaid. Perhaps the moral of this story is that consulting an elder law attorney early regarding options to fund long term care may permit families to protect substantial savings and still obtain quality long term care.