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Category Archives: Elder Law

Getting Paid as a Family Caregiver Through Medicaid

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Caring for an ailing family member is difficult work, but it doesn’t necessarily have to be unpaid work. There are programs available that allow Medicaid recipients to hire family members as caregivers.

All 50 states have programs that provide pay to family caregivers. The programs vary by state, but are generally available to Medicaid recipients, although there are also some non-Medicaid-related programs.

Medicaid’s program began as “cash and counseling,” but is now often called “self-directed,” “consumer-directed,” or “participant-directed” care. The first step is to apply for Medicaid through a home-based Medicaid program. Medicaid is available only to low-income seniors, and each state has different eligibility requirements. Medicaid application approval can take months, and there also may be a waiting list to receive benefits under the program.

The state Medicaid agency usually conducts an assessment to determine the recipient’s care needs—e.g., how much help the Medicaid recipient needs with activities of daily living such as bathing, dressing, eating, and moving. Once the assessment is complete, the state draws up a budget, and the recipient can use the allotted funds to pay for goods or services related to care, including paying a caregiver. Each state offers different benefits coverage.

Recipients can choose to pay a family member as a caregiver, but states vary on which family members are allowed. For example, most states prevent caregivers from hiring a spouse, and some states do not allow recipients to hire a caregiver who lives with them. Most programs allow ex-spouses, in-laws, children, and grandchildren to serve as paid caregivers, but states typically require that family caregivers be paid less than the market rate in order to prevent fraud.

In addition to Medicaid programs, some states have non-Medicaid programs that also allow for self-directed care. These programs may have different eligibility requirements than Medicaid and are different in each state. Family caregivers can also be paid using a “caregiver contract,” increasingly used as part of Medicaid planning.

In some states, veterans who need long-term care also have the option to pay family caregivers. In 37 states, veterans who receive the standard medical benefits package from the Veterans Administration and require nursing home-level care may apply for Veteran-Directed Care. The program provides veterans with a flexible budget for at-home services that can be managed by the veteran or the family caregiver. In addition, if a veteran or surviving spouse of a veteran qualifies for Aid & Attendance benefits, they can receive a supplement to their pension to help pay for a caregiver, who can be a family member.

All of these programs vary by state. Contact your attorney to find out what is available in your state.

For more information about these programs and other ways to be paid as a family caregiver, click here and here.

Guns and Dementia: Dealing With A Loved One’s Firearms

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Having a loved one with dementia can be scary, but if you add in a firearm, it can also get dangerous.  To prevent harm to both the individual with dementia and others, it is important to plan ahead for how to deal with any weapons.

Research shows that 45 percent of all adults aged 65 years or older either own a gun or live in a household with someone who does. For someone with dementia, the risk for suicide increases, and firearms are the most common method of suicide among people with dementia. In addition, a person with dementia who has a gun may put family members or caregivers at risk if the person gets confused about their identities or the possibility of intruders. A 2018 Kaiser Health News investigation that looked at news reports, court records, hospital data and public death records since 2012 and found more than 100 cases in which people with dementia used guns to kill or injure themselves or others.

The best thing to do is talk about the guns before they become an issue. When someone is first diagnosed with dementia, there should be a conversation about gun ownership similar to the conversation many health professionals have about driving and dementia. Framing the issue as a discussion about safety may help make it easier for the person with dementia to acknowledge a potential problem. A conversation about guns can also be part of a larger long-term care planning discussion with an elder law attorney, who can help families write up a gun agreement that sets forth who will determine when it is time to take the guns away and where the guns should go. Even if the gun owner doesn’t remember the agreement when the time comes to put it to use, having a plan in place can be helpful.

What to do with the guns themselves is a difficult question. One option is to lock the weapon or weapons in a safe and store the ammunition separately. Having the guns remain in the house–even if they are locked away–can be risky. Another option is to remove the weapons from the house altogether. However, in some states, there are strict rules about transferring gun ownership, so it isn’t always easy to simply give the guns away. Families should talk to an attorney and familiarize themselves with state and federal gun laws before giving away guns.

For more information about dementia and guns, click here and here.

Costs of New Long-Term Care Insurance Policies Vary Considerably

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We’ve all heard the advice “It pays to shop around,” but this has never been more true than with the current market for long-term care insurance.

According to the latest industry figures, the spread between the lowest and highest cost for virtually identical coverage was as high as 243 percent.  “This is the largest spread I can recall in recent years,” said Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI), an industry group that issues an annual Long Term Care Insurance Price Index. “It’s rare to see one policy costing more than twice another policy when both are large insurers but each company gets to set their own pricing and each has their own target market.”

Slome was referencing the results of AALTCI’s 2019 price index, which found that a married couple who are both 55 years old would pay an average of $3,050 a year combined for a total of $386,500 each of long-term care insurance coverage when they reach age 85. But the percentage difference between the lowest-priced and highest-priced policies for such a couple is 243 percent, meaning that a consumer could wind up paying more than triple what they might have paid for similar coverage. Slome said that the quoted premiums ranged from $2,898 to $9,932.

The price differences between policies for single people were lower but still significant, according to the index.  A single 55-year-old man can expect to pay an average of $2,050 a year (up from $1,870 in 2018) for $164,000 worth of coverage. But there is a 123 percent difference between the lowest-priced and highest-priced policies.  The same policy for a single woman averages $2,700 a year, down from $2,965 in 2018, although again the spread between the least and most expensive policies tops 100 percent.

For the first time, the index suggests ways for couples to save on their premium by electing less coverage or a “shared care” option.  Couples purchase 65 percent of policies, according to the AALTCI.  But clearly one of the best ways to save is to review the offerings of a number of different insurance companies.  “We really recommend the importance of talking to a specialist who is ‘appointed’ with multiple insurers,” Slome said.

For the association’s 2019 index showing average prices for common scenarios, go here: http://www.aaltci.org/news/wp-content/uploads/2019/01/2019-Price-Index-LTC.pdf

Medicaid Home Care

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Traditionally, Medicaid has paid for long-term care in a nursing home, but because most individuals would rather be cared for at home and home care is cheaper, all 50 states now have Medicaid programs that offer at least some home care. In some states, even family members can get paid for providing care at home.

Medicaid is a joint federal-state program that provides health insurance coverage to low-income children, seniors, and people with disabilities. In addition, it covers care in a nursing home for those who qualify. Medicaid home care services are typically provided through home- and community-based services “waiver” programs to individuals who need a high level of care, but who would like to remain at home.

Medicaid’s home care programs are state-run, and each state has different rules about how to qualify. Because Medicaid is available only to low-income individuals, each state sets its own asset and income limits. For example, in 2019, in New York an applicant must have income that is lower than $845 a month and fewer than $15,150 in assets to qualify. But Minnesota’s income limit is $2,250 and its asset limit is $3,000, while Connecticut’s income limit is also $2,250 but its asset limit is just $1,600.

States also vary widely in what services they provide. Some services that Medicaid may pay for include the following:

  • In-home health care
  • Personal care services, such as help bathing, eating, and moving
  • Home care services, including help with household chores like shopping or laundry
  • Caregiver support
  • Minor modifications to the home to make it accessible
  • Medical equipment

In most states it is possible for family members to get paid for providing care to a Medicaid recipient. The Medicaid applicant must apply for Medicaid and select a program that allows the recipient to choose his or her own caregiver, often called “consumer directed care.” Most states that allow paid family caregivers do not allow legal guardians and spouses to be paid by Medicaid, but a few states do. Some states will pay caregivers only if they do not live in the same house as the Medicaid recipient.

To find out your Medicaid home care options, you should check with your elder law attorney.

Window Closing for Couples to Use ‘Claim Now, Claim More Later’ Social Security Strategy

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Spouses who are turning full retirement age this year are the last group who can choose whether to take spousal benefits or to take benefits on their own record. The strategy, used by some couples to maximize their benefits, will not be available to people turning full retirement age after 2019.

The claiming strategy — sometimes known as “Claim Now, Claim More Later” — allows a higher-earning spouse to claim a spousal benefit at full retirement age by filing a restricted application for benefits. While receiving the spousal benefit, the higher-earning spouse’s regular retirement benefit continues to increase. Then at 70, the higher-earning spouse can claim the maximum amount of his or her retirement benefit and stop receiving the spousal benefit. To use this strategy, the lower-earning spouse must also be claiming benefits. Workers cannot claim spousal benefits unless their spouses are also claiming benefits.

A 2015 budget law began phasing out the strategy. If you were 62 or older by the end of 2015, you are still able to choose which benefit you want at your full retirement age. You do not have to make the election in the year you turn full retirement age. If your spouse is still working, you can wait to collect benefits until your spouse begins collecting. For example, if your spouse does not begin collecting benefits until you are 68, you can wait to collect benefits and file a restricted application at age 68. However, when workers who were not 62 by the end of 2015 apply for spousal benefits, Social Security will assume it is also an application for benefits on the worker’s record. The worker is eligible for the higher benefit, but he or she can’t choose to take just the spousal benefits and allow his or her own benefits to keep increasing until age 70.

The budget law’s phase-out of the claiming strategy does not apply to survivor’s benefits. Surviving spouses will still be able to choose to take survivor’s benefits first and then switch to retirement benefits later if the retirement benefit is larger.

Understanding Medicare’s Hospice Benefit

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Medicare’s hospice benefit covers any care that is reasonable and necessary for easing the course of a terminal illness. It is one of Medicare’s most comprehensive benefits and can be extremely helpful to both the terminally ill individual and his or her family, but it is little understood and underutilized. Understanding what is offered ahead of time may help Medicare beneficiaries and their families make the difficult decision to choose hospice if the time comes.

The focus of hospice is palliative care, which means helping people who are terminally ill and their families maintain their quality of life. Palliative care addresses physical, intellectual, emotional, social, and spiritual needs while also supporting the terminally ill individual’s independence, access to information, and ability to make choices about health care.

To qualify for Medicare’s hospice benefit, a beneficiary must be entitled to Medicare Part A, and a doctor must certify that the beneficiary has a life expectancy of six months or less. If the beneficiary lives longer than six months, the doctor can continue to certify the patient for hospice care indefinitely. The beneficiary must also agree to give up any treatment to cure his or her illness and elect to receive only palliative care. This can seem overwhelming, but beneficiaries can also change their minds at any time. It’s possible to revoke the benefit and reelect it later, and to do this as often as needed.

Medicare will cover any care that is reasonable and necessary for easing the course of a terminal illness. Hospice nurses and doctors are on-call 24 hours a day, 7 days a week, to give beneficiaries support and care when needed. Services are usually provided in the home. The Medicare hospice benefit provides for:

  • Physician and nurse practitioner services
  • Nursing care
  • Medical appliances and supplies
  • Drugs for symptom management and pain relief
  • Short-term inpatient and respite care
  • Homemaker and home health aide services
  • Counseling
  • Social work service
  • Spiritual care
  • Volunteer participation
  • Bereavement services

Services are considered appropriate if they are aimed at improving the beneficiary’s life and making him or her more comfortable.

Because the beneficiary is electing palliative care over treatment, there are things the hospice benefit will not cover:

  • Treatment to cure the beneficiary’s illness.
  • Prescription drugs other than for symptom control or pain relief.
  • Care from a provider that wasn’t set up by the hospice team, although the beneficiary can choose to have his or her regular doctor be the attending medical professional.
  • Room and board. If the beneficiary is in a nursing home, hospice will not pay for room and board costs. However, if the hospice team determines that the beneficiary needs short-term inpatient care or respite care services, Medicare will cover a stay in a facility.
  • Care from a hospital, either inpatient or outpatient, or ambulance transportation unless it arranged by the hospice team. The beneficiary can use regular Medicare to pay for any treatment not related to the beneficiary’s terminal illness.

To download Medicare’s booklet on the hospice benefit, click here.

The Best and Worst States for Protection Against Elder Abuse

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The older the population gets, the greater the potential for elder abuse. States have laws in place designed to combat elder abuse, but some states are doing a better job than others. The consumer finance website WalletHub researched the protections in place in all 50 states and the District of Columbia to determine which states have the best protections against elder abuse.

The prevalence of elder abuse is hard to calculate because the crime is underreported, but according to the National Council on Aging, approximately 1 in 10 Americans age 60 or older have experienced some form of elder abuse. In 2011, a MetLife study estimated that older Americans are losing $2.9 billion annually to elder financial abuse.

To determine its rankings, WalletHub compared the 50 states and the District of Columbia across three key areas:
•    Prevalence of elder abuse in the state
•    Resources spent on preventing elder abuse and offering legal assistance
•    Protection against elder abuse through laws, the availability of eldercare organizations and services, the quality of nursing homes and assisted living facilities, and other factors

The survey found that Massachusetts, Wisconsin, and Nevada had the best protections overall while New Jersey, Wyoming, and South Carolina had the worst. Massachusetts, Wisconsin, and Nevada, along with Rhode Island and Arizona, all ranked high in total expenditures on elder abuse prevention. However, the states with the lowest rates of elder abuse, neglect, and exploitation complaints were Louisiana, New York, New Hampshire, Pennsylvania, and Michigan.

WalletHub consulted with a panel of experts in social work, psychology, law, and gerontology on how to best protect seniors from abuse. Recommendations included incentivizing banks to report suspicious activity, requiring credit checks and background checks on caregivers, and providing more support to seniors to help them remain independent and be on the lookout for people trying to harm them.

To see how your state compares in the WalletHub survey, click here.

Why Not Just Use an Off-the-Shelf Power of Attorney Form?

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A durable power of attorney is one of the most important estate planning documents you can have. It allows you to appoint someone to act for you (your “agent” or “attorney-in-fact”) if you become incapacitated. Without a power of attorney, your loved ones would not be able to make decisions for you or manage your finances without asking the court to appoint a guardian or conservator, which is an expensive and time-consuming process.

There are many do-it-yourself power of attorney forms available; however, it is a good idea to have an attorney draft the form for you. There are many issues to consider and one size does not fit all.

The agent’s powers

The power of attorney document sets out the agent’s powers. Powers given to an agent typically include buying or selling property, managing a business, paying debts, investing money, engaging in legal proceedings, borrowing money, cashing checks, and collecting debts. They may also include the power to consent to medical treatment. Some powers will not be included unless they are specifically mentioned. This includes the power to make gifts and the power to designate beneficiaries of your insurance policies.

The power to make gifts of your money and property is a particularly important power. If you want to ensure your agent has the authority to do Medicaid planning on your behalf in the event you need to enter a nursing home, then the power of attorney must give the agent the power to modify trusts and make gifts. The wording in a power of attorney can be significant, so it is necessary to consult an attorney.

Springing or immediate

The power of attorney can take effect immediately or it can become effective only once you are disabled, called a “springing” power of attorney. While a springing power seems like a good idea, it can cause delays and extra expense because incapacity will need to be determined. If the power of attorney is springing, it is very important that the method for determining incapacity is clearly spelled out in the document.

Joint agents

While it is possible to name more than one person as your agent, this can lead to confusion. If you do have more than one person named, you need to be clear whether both parties need to act together or whether they can each act independently. It might make more sense and be less confusing to name an alternative agent to act in case the first agent is unable to.

Appointing a guardian

Another use of a power of attorney can be to nominate a guardian in case guardianship proceedings become necessary. Including your preference for a guardian can allow you to have some say over who will be managing your affairs. Usually, the court decides who will be chosen as a guardian, but in most circumstances, the court will abide by your nomination in the durable power of attorney.

Executing the power of attorney

To be valid a power of attorney must be executed properly. Some states may require a signature, others may require the power of attorney to be notarized, and still others may require witnesses. It is important to consult with an estate planning attorney in your state to ensure your power of attorney is executed properly.

Accepting a power of attorney

Even if you do everything exactly right, some banks and other institutions are reluctant to accept a power of attorney. These institutions are afraid of a lawsuit if the power of attorney is no longer valid. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute the forms offered by the institutions with which you have accounts. But be careful that you don’t sign a bank’s document that inadvertently restricts a power of attorney’s ability to deal with other assets, and you should check that any documents you sign with a bank match the original power of attorney.

Have Private Insurance and Are Turning 65? You Need Sign Up for Medicare Part B

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If you are paying for your own insurance, you may think you do not need to sign up for Medicare when you turn 65. However, not signing up for Medicare Part B right away can cost you down the road.

You can first sign up for Medicare during your Initial Enrollment Period, which is the seven-month period that includes the three months before the month you become eligible (usually age 65), the month you are eligible and three months after the month you become eligible. If you do not sign up for Part B right away, you will be subject to a penalty. Your Medicare Part B premium may go up 10 percent for each 12-month period that you could have had Medicare Part B, but did not take it. In addition, you will have to wait for the general enrollment period to enroll. The general enrollment period usually runs between January 1 and March 31 of each year.

There are exceptions to the penalty if you have insurance through an employer or through your spouse’s employer, but there is no exception for private insurance. The health insurance must be from an employer where you or your spouse actively works, and even then, if the employer has fewer than 20 employees, you will likely have to sign up for Part B.

If you don’t have an employer or union group health insurance plan, or that plan is secondary to Medicare, it is extremely important to sign up for Medicare Part B during your initial enrollment period. Note that COBRA coverage does not count as a health insurance plan for Medicare purposes. Neither does retiree coverage or VA benefits.

For a New York Times column about a man with private insurance who didn’t realize he needed to sign up for Part B, click here.

5 Things to Know to Reduce Your Tax on Capital Gains

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Although it is often said that nothing is certain except death and taxes, the one tax you may be able to avoid or minimize most through planning is the tax on capital gains. Here’s what you need to know to do such planning:

  • What is capital gain? Capital gain is the difference between the “basis” in property — usually real estate or stocks, but also including artwork and collectibles — and its selling price. The basis is usually the purchase price of property. So, if you purchased a house for $250,000 and sold it for $450,000 you would have $200,000 of gain ($450,000 – $250,000 = $200,000). However, the basis can be adjusted if you spend money on capital improvements. For instance, if after buying your house you spent $50,000 updating the kitchen, the basis would now be $300,000 and the gain on its sale for $450,000 would be $150,000 ($450,000 – ($250,000 + $50,000) = $150,000). Just make sure you keep good records of any capital improvements in order to prove them in the event of an audit. (The residence exclusion and the step-up in basis are discussed below.)
  • How much is the tax? It depends, but assume 15 percent federally unless you have either very low or very high income, and whatever your state’s tax is (let’s assume 5 percent, for a total of about 20 percent). Using those assumptions, the tax on $200,000 of gain would be about $40,000. There are three exceptions. First, if you owned the property for less than a year, you would be subject to short-term capital gains tax rates, which are essentially the same rates as for income tax. Second, if your taxable income, including the capital gains, $38,600 or less for a single person and $77,200 for a married couple (in 2018), there’s no federal tax on capital gain. But beware that the capital gains will be included in the calculation and could put you over the threshold. Third, if your income is more than $425,800 for a single person and $479,000 for a married couple (in 2018), the federal capital gains tax rate is 20 percent, bringing the combined federal and assumed state rate up to just over 25 percent.
  • The personal residence exclusion. You may exclude up to $250,000 of gain on the sale of your personal residence and if you’re married you can exclude $500,000. To qualify, you (or your spouse) must have lived in and owned the house for at least two out of the five years prior to the sale. Those two years don’t have to be the same. For instance, if you lived in the house from 2012 to 2014 and owned it from 2014 to 2016, but rented it out, you could still qualify for the exclusion. If you are a nursing home resident, the two-year requirement is reduced to one year.
  • Carry-over basis. If you give property such as a family heirloom or real estate to someone else, they receive it with your basis. So, if your parents bought a vacation home many years ago for $25,000 and now its fair market value is $500,000, if they give it to you, your basis will also be $25,000. If you sell it, you’ll have a gain of $475,000 and no personal residence exclusion, unless you move in for two years first. The combined state and federal tax would be $118,750.
  • Step-up in basis. On the other hand, the basis in inherited property gets adjusted to the value on the date of death. In the example of the vacation home, if your parents passed it on to you at death rather than giving it to you during life, the basis would be adjusted to $500,000, potentially saving you $118,750 on its sale. On the other hand, depending on the size of your parents’ estate, it may be subject to estate tax, which would be payable within nine months of their death, while the tax on capital gain would not be due until you sold the property, perhaps decades in the future. Some have proposed getting rid of this so-called “step-up” in basis. The reasoning is that it is regressive, benefiting people with property, and the more property they have, the more tax they save. But an argument for retaining the step-up rules is that they can save a tremendous amount of administrative hassle. If you inherited stock from your father that he inherited from his mother, it may be impossible to establish what it was she paid for it. It’s much easier to determine what it was worth at your father’s death.
  • Offsetting losses. If during the tax year you realized capital gain through the sale of property, you can offset it with capital losses. Say, for example, you sell your home and realize a lot of gain. You could also sell some stock that has gone down in value, creating a loss that offsets some of the gain on the house sale. In some instances, you can carry over loss from one tax year to the next to offset future gains.

By understanding and considering these rules, you can save on capital gains taxes and avoid a number of possibly expensive mistakes. Talk to your attorney or financial planner today about ways to lower or eliminate your capital gains tax.

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