November, 2016, Friedman Law

Archive for November, 2016

Medicaid Gifts, Look Back Period, and Nursing Home & Assisted Living Long Term Care

Posted on: November 28th, 2016 by Lawrence A. Friedman

Long term care can be provided in a nursing home, assisted living facility, or at home with aides. While each setting has its advantages and drawbacks, they all have high cost in common. With care often costing over $10,000 per month long term care could wipe out your life savings. However, we often help clients qualify for Medicaid to fund care in all three settings without going broke.

While New Jersey Medicaid can fund long term care in all three settings, qualifying for Medicaid is not easy. Because eligibility is governed by complex rules that sometimes defy common sense, individuals who don’t work with an elder law attorney are not likely to protect much. Fortunately, FriedmanLaw’s elder law team can help you use gifts, prepaid funerals, qualified income trusts, annuities, and other tools to qualify for Medicaid without impoverishing your family.

You may have heard that once you need long term care it is too late for Medicaid planning, but that simply is not true. Even though Medicaid may impose penalties for most gifts made within five years before applying for Medicaid, in many cases, gifts, annuities, maximizing family allowances, and other Medicaid planning techniques can save a lot despite the five year look back period. However, planning must take account of complicated Medicaid laws and regulations. Gifting too much or too little or applying for Medicaid too soon can be very costly.

For Medicaid purposes, a gift is any transfer for less than market value to friend, family, charity, religious organization, school, etc. Most gifts (whether or not taxable) made within five years of applying for Medicaid trigger a penalty period that delays Medicaid eligibility. However, some gifts are exempt– such as certain gifts for a spouse or disabled person and some gifts of a home– provided the gift meets various technicalities. For instance, a gift of mom’s house to a child avoids penalties where the child qualifies as a caregiver child but may trigger penalties otherwise.

Perhaps the biggest Medicaid planning issue is timing. To minimize the impact of Medicaid gift penalties, it usually is important to start the penalty period as soon as possible unless gifts are extremely large. For instance, your $120,000 gift to your grandchildren in January 2017 would trigger a roughly 12 month penalty period so you might assumes the penalty would end January 2018. However because a penalty doesn’t start until you otherwise are eligible for Medicaid and apply, the penalty period might not even begin until 2018 or later unless you work with elder law attorneys like FriedmanLaw to accelerate the penalty start date.

Sometimes we help clients protect assets by funding long term care in a nursing home, assisted living facility, or at home without incurring a Medicaid penalty period. This may involve gifts to or in trust for a disabled child, spousal annuities, prepaid funeral accounts or other techniques. Yet savings won’t occur unless these techniques follow Medicaid law, which can be tricky. In addition, unless wills and powers of attorney are coordinated with Medicaid planning, anticipated savings may never arise. Therefore, like other elder law attorneys, FriedmanLaw strongly advises against do it yourself Medicaid planning especially since technicalities and exceptions apply to all the planning techniques discussed in this post.

Other complex issues that can arise in Medicaid planning include minimizing estate recovery, maximizing spousal allowances, qualifying as a caregiver child, placing excess income in a qualified income trust (also called Miller Trust), and using special needs trusts to protect settlements and inheritances. Space limitations prevent us from addressing these topics here but we do discuss them in other blog posts or elsewhere on SpecialNeedsNJ.com, and check our blog frequently for more timely articles on Medicaid planning.

Scared, Stressed and Exhausted: What I Learned from My Elder Law Experience

Posted on: November 21st, 2016 by Mark R. Friedman

Recently, I had to take a family member to the hospital for what turned out to be a long-term stay. From there, my family member was transferred to in-patient rehabilitative care, for an even longer stay.

Eventually, my family member was discharged and returned home. Many of my clients experience a similar sequence of events, except that often, instead of going home, their family members are transferred into nursing homes or other long term care facilities. I didn’t experience that. But nonetheless, this experience made me realize how important it is to have a professional advisor to guide you.

This series of events was completely unexpected, and we were not prepared for it. My family member was scared and in pain, and I was stressed and exhausted. Under these conditions, it’s very difficult to make a rational, calm decision.

As an elder law attorney, part of my job is to view my clients’ situations through a clinical lens and make a logical assessment based on my legal knowledge. But what this situation drove home, is that when you’re on the other side of the table, facing fear, stress and uncertainty, it’s very hard to perform that logical analysis and evaluate your options. I’ve seen this plenty of times, people making rash decisions when they’re scared and upset. But I now realize how easy it is to make a rash decision when you’re thrust unprepared into a difficult situation.

So, I’ve come to the conclusion that the advantages of working with an elder law attorney or other professional advisor are two-fold. First, we have knowledge that you probably don’t, about Medicaid regulations, healthcare laws, trusts and estate planning considerations, etc. Second (and this is what I just realized), we can view your situation through a distance. We can advise you and help you analyze your options. And we can do it in a way that may be difficult to do when you’re scared, stressed and exhausted.

How does the Presidential Election Affect Special Needs Law?

Posted on: November 4th, 2016 by Mark R. Friedman

The President of the United States is the leader, executive and commander in chief of the most powerful nation in human history. Who serves as president, and the policies and vision he or she brings to the job, directly affects your life in myriad ways. You can find some of those ways in the many, many articles and reports that have been written about this presidential election thus far. But I want to focus on one aspect of the election near and dear to FriedmanLaw: how the next president will affect our special needs clients.

Hillary Clinton has made representing people with disabilities a visible part of her campaign, while Donald Trump has had well-publicized spats with the community. But beyond their personalities, each candidate brings different policy visions to the table. The most obvious and important one is their differing views on the Affordable Care Act (aka, ObamaCare).

I have written extensively about how the Affordable Care Act affects people with disabilities. There are winners and losers to the Affordable Care Act (“ACA”), and some of the biggest winners are people with disabilities who need a lot of medical care. People with long-term disabilities benefit immensely from the pre-existing condition requirement – that insurers can’t refuse to insure someone because they have a pre-existing condition. Likewise, they also benefit from the ACA’s prohibition on insurers setting a maximum limit on lifetime care. That’s because some people born with disabilities need an enormous amount of medical care over their lifetimes, such that from a commercial perspective, insurers would never be willing to insure them. The ACA requires that insurers cover these folks. This means that private insurance is an option for many people with disabilities where it wasn’t before, which opens up a variety of benefits and planning opportunities. Instead of relying on Medicaid and its limited network, a person with disabilities might be able to see a world-renowned doctor covered by insurance.

The ACA is essentially the healthy subsidizing the sick and the young subsidizing the old. The reason premiums have increased so much is that millions of people with pre-existing conditions have signed up for insurance, and America is aging and more of the population has age-related health problems. Insurers have to spend more to cover their customers’ costs, and they pass that on to all of us in the form of higher premiums.

Now, where do the candidates stand on the ACA? Hillary Clinton has said she wants to build on the ACA and expand it. Her vision likely includes a public option for health insurance, similar to Medicare. Donald Trump has said he wants to repeal and replace the ACA. He hasn’t been specific of what he wants to replace it with, but he has said that he wants to keep the ban on insurers refusing to insure pre-existing conditions. More broadly, he said during one of the Republican primary debates that we can’t have a system that allows people to die in the streets.

The problem with Trump’s plan is that, in order for insurers to insure people with pre-existing conditions without going bankrupt, they need a lot of healthy and young people to sign up. So far, not enough healthy young people have signed up, which is why the ACA has had problems. So if Trump wants to keep the ACA provision about pre-existing conditions (which is broadly popular), whatever he replaces the ACA with will have to include a similar mandate that everyone must sign up for insurance. (Otherwise, the health insurance companies will never support his plan.) And ultimately, we’ll end up with something similar to the ACA.

So, each candidate has a different vision regarding the Affordable Care Act, which will affect people with disabilities. Whoever you support, make sure you vote on Tuesday, November 8! You can find your New Jersey polling place here:

https://voter.njsvrs.com/elections/polling-lookup.html