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Category Archives: Elder Law

It’s Now Harder for Veterans to Qualify for Long-Term Care Benefits

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The Department of Veterans Affairs (VA) has finalized new rules that make it more difficult to qualify for long-term care benefits. The rules establish an asset limit, a look-back period, and asset transfer penalties for claimants applying for VA pension benefits that require a showing of financial need. The principal such benefit for those needing long-term care is Aid and Attendance.

The VA offers Aid and Attendance to low-income veterans (or their spouses) who are in nursing homes or who need help at home with everyday tasks like dressing or bathing. Aid and Attendance provides money to those who need assistance.

Currently, to be eligible for Aid and Attendance a veteran (or the veteran’s surviving spouse) must meet certain income and asset limits. The asset limits aren’t specified, but $80,000 is the amount usually used. However, unlike with the Medicaid program, there historically have been no penalties if an applicant divests him- or herself of assets before applying. That is, before now you could transfer assets over the VA’s limit before applying for benefits and the transfers would not affect eligibility.

Not so anymore. The new regulations set a net worth limit of $123,600, which is the current maximum amount of assets (in 2018) that a Medicaid applicant’s spouse is allowed to retain. But in the case of the VA, this number will include both the applicant’s assets and income. It will be indexed to inflation in the same way that Social Security increases. An applicant’s house (up to a two-acre lot) will not count as an asset even if the applicant is currently living in a nursing home. Applicants will also be able to deduct medical expenses — now including payments to assisted living facilities, as a result of the new rules — from their income.

The regulations also establish a three-year look-back provision. Applicants will have to disclose all financial transactions they were involved in for three years before the application. Applicants who transferred assets to put themselves below the net worth limit within three years of applying for benefits will be subject to a penalty period that can last as long as five years. This penalty is a period of time during which the person who transferred assets is not eligible for VA benefits. There are exceptions to the penalty period for fraudulent transfers and for transfers to a trust for a child who is unable to “self-support.”

Under the new rules, the VA will determine a penalty period in months by dividing the amount transferred that would have put the applicant over the net worth limit by the maximum annual pension rate (MAPR) for a veteran with one dependent in need of aid and attendance. For example, assume the net worth limit is $123,600 and an applicant has a net worth of $115,000. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $145,000, which exceeds the net worth limit by $21,400. The penalty period will be calculated based on $21,400, the amount the applicant transferred that put his assets over the net worth limit (145,000-123,600).

The new rules go into effect on October 18, 2018. The VA will disregard asset transfers made before that date. Applicants may still have time to get through the process before the rules are in place.

Veterans or their spouses who think they may be affected by the new rules should contact their attorney immediately.

Fear of Losing Home to Medicaid Contributed to Elder Abuse Case

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A daughter and granddaughter’s fear of losing their home to Medicaid may have contributed to a severe case of elder abuse. If the pair had consulted with an elder law attorney, they might have figured out a way to get their mother the care she needed and also protect their house.

Amanda Havens was sentenced to 17 years in prison for elder abuse after her grandmother, Dorothy Havens, was found neglected, with bedsores and open wounds, in the home they shared.  The grandmother died the day after being discovered by authorities.  Amanda’s mother, Kathryn Havens, who also lived with Dorothy, is awaiting trial for second-degree murder. According to an article in the Record Searchlight, a local publication, Amanda and Kathryn knew Dorothy needed full-time care, but they did not apply for Medicaid on her behalf due to a fear that Medicaid would “take” the house.

It is a common misconception that the state will immediately take a Medicaid recipient’s home. Nursing home residents do not automatically have to sell their homes in order to qualify for Medicaid. In some states, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home; in other states, the nursing home resident must prove a likelihood of returning home. The state may place a lien on the home, which means that if the home is sold, the Medicaid recipient would have to pay back the state for the amount of the lien. Continue reading →

Promissory Notes and Medicaid

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A promissory note is normally given in return for a loan and it is simply a promise to repay the amount. Classifying asset transfers as loans rather than gifts can be useful because it sometimes allows parents to “lend” assets to their children and still maintain Medicaid eligibility.

Before Congress enacted the Deficit Reduction Act (DRA) in 2006, a Medicaid applicant could show that a transaction was a loan to another person rather than gift by presenting promissory notes, loans, or mortgages at the time of the Medicaid application. The loan would not be counted among the applicant’s assets, unlike a gift. Congress considered this to be an abusive planning strategy, so the DRA imposed restrictions on the use of promissory notes, loans, and mortgages.

In order for a loan to not be treated as a transfer for less than fair market value (and therefore not to interfere with Medicaid eligibility) it must satisfy three standards: (1) the term of the loan must not last longer than the anticipated life of the lender, (2) payments must be made in equal amounts during the term of the loan with no deferral of payments and no balloon payments, (3) and the debt cannot be cancelled at the death of the lender. If these three standards are not met, the outstanding balance on the promissory note, loan, or mortgage will be considered a transfer and used to assess a Medicaid penalty period.

It’s good practice when lending money to use a promissory note, whether or not the loan is related to Medicaid. To learn more about using promissory notes in Medicaid planning, contact your elder law attorney.

More States Asking to Eliminate Retroactive Medicaid Benefits

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Arizona and Florida are the latest states to request a waiver from the requirement that states provide three months of retroactive Medicaid coverage to eligible Medicaid recipients.

Medicaid law allows a Medicaid applicant to be eligible for benefits for up to three months before the month of the application if the applicant met eligibility requirements at the earlier time. This helps people who are unexpectedly admitted to a nursing home and can’t file (or are unaware that they should file) a Medicaid application right away. Preparing an application for Medicaid nursing home coverage may take many weeks; the retroactive coverage gives families a window of opportunity to apply and get coverage dating back to when their loved one first entered the nursing home. “Retroactive coverage is one of the long-standing safeguards built into the program for low-income Medicaid beneficiaries and their healthcare providers,” says the Kaiser Family Foundation.

Now Arizona and Florida are joining a growing list of states that are asking the federal Centers for Medicare and Medicaid Services (CMS) to eliminate the retroactive benefits. CMS has already approved similar requests by Iowa, Kentucky, Indiana, and New Hampshire to waive retroactive coverage. A lawsuit challenging Kentucky’s waiver, which also imposes work requirements for Medicaid recipients, is currently pending.

Advocates argue that if Medicaid applicants cannot get coverage before the month of application, they may be saddled with uncovered medical bills or fail to receive needed health care because they cannot afford it. According to Justice in Aging, which filed a brief in the Kentucky lawsuit, Medicaid applicants often do not file an application right away because of the complexity of the Medicaid application process or a false belief that Medicare would cover the cost of nursing home care.

What Happens When a Nursing Home Closes?

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A nursing home closure can be traumatic for residents who are forced to move. While there may not be much that can be done to prevent a closure, residents do have some rights.

Moving into a nursing home can be a stressful experience on its own. If that nursing home closes, residents can experience symptoms that include depression, agitation, and withdrawn behavior, according to The Consumer Voice, a long-term care consumer advocacy group. Nursing homes may close voluntarily because the owners decide to close up shop or involuntarily if the state or federal government shutters the facility for care or safety issues.

When a nursing home is closing, it must provide notice to the state and any residents at least 60 days before the closure. The notice must include the following: Continue reading →

Seniors Often Must Fight for Medicare Home Health Benefits

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Medicare is mandated to cover your home health benefits with no limit on the time you  are covered. Unfortunately, few Medicare beneficiaries get the level of service they are entitled to, and many find their services cut off prematurely. Getting these benefits can be critically important as Medicare home health care benefits can mean the difference between being able to stay at home with a difficult medical problem or ending up in the hospital or a nursing home.

As a Medicare recipient, you are entitled to full home health benefits if you meet the following requirements:

  • You must be confined to your home (i.e., leaving your home to receive services would be a “considerable and taxing effort”);
  • Your doctor must have ordered home health services for you;
  • At least some element of the services must be skilled, skilled nursing care, physical therapy, or speech therapy (which will also entitle you to Medicare coverage of social services and home health aide services); and
  • You must receive the services from a certified home health agency.

Under the law, you are entitled to 35 hours of service a week, but few Medicare beneficiaries who meet the home health care criteria actually get this level of service. If your services are terminated prematurely, you will need to appeal.

If you can, you should continue to pay privately for care during the appeals process. Remember, the issue you are appealing is not the termination of service, but the denial of Medicare payment for the service.

In order to mount a successful campaign to get your services back, you should:

  • Ask your home health agency to explain the cutback and write the information down;
  • Ask your physician to call the agency urging them not to cut back the services and have the physician send a letter detailing the level of care you need; and
  • Immediately consult with your attorney to determine the likelihood of a successful appeal.

New Brokerage Account Safeguards Aim to Protect Seniors from Financial Scams

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New rules have been put in place to protect seniors with brokerage accounts from financial scams that could drain the accounts before anyone notices.

As the population ages, elder financial abuse is a mounting problem. Vulnerable seniors can become victims of scammers who convince them to empty their investment accounts. According to the Financial Industry Regulatory Authority (FINRA), the organization that regulates firms and professionals selling securities in the United States, its Securities Helpline for Seniors has received more than 12,000 calls and recovered more than $5.3 million for seniors whose investment funds were illegally or inappropriately distributed since the helpline opened in April 2015.

Now, FINRA has issued two new rules designed to help investment brokers or advisors better protect seniors’ accounts from financial exploitation. The rules, which went into effect in February 2018, apply when opening a brokerage account or updating information for an existing account.

First, the broker or investment advisor must ask the investor for the name of a trusted contact person the broker can contact if there are questions about the account. The trusted contact is intended to be a resource for the broker to address possible financial exploitation and to obtain the customer’s current contact information and health status or learn about any legal guardian, executor, trustee or holder of a power of attorney.

The second rule allows a broker to place a temporary hold on disbursements from an account if those disbursements seem suspicious. This rule applies to accounts belonging to investors age 65 and older or investors with mental or physical impairments that the broker reasonably believes make it difficult for the investor to protect his or her own financial interests. Before disbursing the funds, the brokerage firm will be able to investigate the disbursement by reaching out to the investor, the trusted contact, or law enforcement.

Prior to the new rules, issues of privacy prevented a broker from contacting family members when suspicious activity was detected, and under previous FINRA rules brokerage firms risked liability for halting suspicious transactions.

How Will the New Tax Law Affect You?

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While most of the new tax law – the Tax Cuts and Jobs Act – has to do with reducing the corporate tax rate from 35 percent to 21 percent, some provisions relate to individual taxpayers. Before we get into the details, be aware that almost everything listed below sunsets after 2025, with the tax structure reverting to its current form in 2026 unless Congress acts between now and then. The corporate tax rate cut, however, does not sunset. Here are the highlights for our readership:

  • Estate Taxes.If you weren’t worried about federal estate taxes before, you really don’t need to worry now. With the federal exemption already scheduled to increase in 2018 to $5.6 million for individuals and $11.2 million for couples, the Republicans in Congress and President Trump have now nearly doubled this to $11.18 million (estimate) and $22.36 million (estimate), respectively, indexed for inflation. The tax rate for those few estates subject to taxation remains at 40 percent.
  • Tax Rates. These are slightly reduced and the brackets adjusted, with the top bracket dropping from 39.6 percent to 37 percent.
  • Standard Deduction and Personal Exemption. The standard deduction increases to $12,000 for individuals, $18,000 for heads of household and $24,000 for joint filers, all adjusted for inflation. Personal exemptions largely disappear.
  • State and Local Tax Deduction. Now referred to as “SALT,” this is now subject to a cap of $10,000,
  • Home Mortgage Interest Deduction. The limit on deducting interest on up to $1 million of mortgage interest stays in effect for existing mortgages. New mortgages taken on after December 15, 2017, are subject to a $750,000 limit. The deduction for interest on home equity loans disappears.
  • Medical Expense Deduction. After much outcry in response to the House version of the tax bill, which would have eliminated the medical expense deduction, it survived. And, in fact, it was enhanced by permitting medical expenses in excess of 7.5 percent of adjusted gross income to be deducted in 2017 and 2018, after which it reverts to the 10 percent under existing law.
  • 529 Plans. These accounts permitting tax-free accumulation of capital gains and dividends to pay college expenses can now be used for private school tuition of up to $10,000 a year.

Continue reading →

Two Popular Medigap Plans Are Ending.

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Should You Enroll While You Can?

If you will soon turn 65 and be applying for Medicare, you should carefully consider which Medigap policy to enroll in because two of the most popular plans will be ending soon. In 2020, Medicare beneficiaries will no longer be able to enroll in Plans F and C.

Between copayments, deductibles, and coverage exclusions, Medicare does not cover all medical expenses. Offered by private insurers, Medigap (or “supplemental”) plans are designed to supplement and fill in the “gaps” in Medicare coverage. There are 10 Medigap plans currently being sold, identified by letters. Each plan package offers a different combination of benefits, allowing purchasers to choose the combination that is right for them.

Plans F and C are popular Medigap plans in part because they both offer coverage of the Medicare Part B deductible. Enrollees in Plans F and C do not have to pay the deductible. Plan F, the most comprehensive Medigap plan currently available, also pays for all doctor, test, and hospital fees. Plan C is similar, but it does not cover the excess fees that doctors charge over Medicare’s limits. According to the Kaiser Family Foundation, 53 percent of Medigap enrollees have either plan F or plan C. Continue reading →

Spending Down Assets to Qualify for Medicaid

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Medicaid has strict asset rules that compel many applicants to “spend down” their assets before they can qualify for coverage. It is important to know what you can spend your money on without endangering Medicaid eligibility.

In order to be eligible for Medicaid, applicants must have no more than $2,000 in “countable” assets (the dollar figure may be slightly more, depending on the state). In addition, Medicaid also has strict asset transfer rules. If an applicant transfers assets for less than market value, the applicant will be ineligible for Medicaid for a period of time. Applicants for Medicaid and their spouses may protect savings by spending them on non-countable assets.

A Medicaid applicant can spend down money on anything that would benefit the applicant. Following are examples of what a Medicaid applicant may be able to spend money on: Continue reading →

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