Attorneys from across the country gathered this past weekend to discuss issues that affect their clients: seniors and their families facing the legal and financial concerns of aging. Among the topics discussed were:
· the latest news on Veteran’s benefits
· unique niche planning techniques such as the Family Cabin Trust
· how to set up Foundations for the charitably-inclined
· breaking legal decisions regarding nursing home cases
· how to communicate more effectively with clients using technology
· thoughts about changes in the estate tax and capital gains laws next year
The American Association of Trusts, Estates and Elder Law Attorneys (AATEELA) is an invitation-only, professional association of estate planning and elder law attorneys from across the United States. Members are selected on the basis of their professional reputation, ability and creativity in the fields of trusts, estates and elder law. Each has made substantial contributions to these fields through lecturing, writing, and continuing education instruction.
Attorneys Thom Cooper, Chris Lavin and Mitch Adel represented the Thom L. Cooper Company. Thom Cooper is a past president of AATEELA.
Check back, we will discuss many of these issues over the next few weeks in our Blog.
A family recently visited our office to find out how to pay for home health care.
George and Sarah* have been married for 55 years. Sarah suffers severe rheumatoid arthritis that is so severe she must use a walker. To make matters worse, she recently fell and broke two ribs. George is doing his best to keep Sarah at home, but at age 79, Sarah’s care is beginning to take its toll on him. George is trying to find home health care aides to assist him with her care. He does not want to put Sarah, the love of his life, in a nursing home.
At wits end, George visited a local County Agency to inquire about benefits for Sarah. They informed George that although Sarah qualified for care medically, he had too much money to qualify. The county suggested that George spend down his retirement account to $20,000 and buy a new car to replace his 5-year-old car and he should qualify.
George asked what we could do to help. He told us that it would be very difficult to maintain his quality of life if he only had $20,000, and perhaps the thought of a new car would be appealing if he were sixteen years old, but his Buick only had 37,000 miles on it – he liked it just fine.
We began with a review of their assets using the same criteria the County used. They have a nice home, the 5-year-old Buick Century, a few CDs, and a large retirement account from George’s former employer.
In reviewing George’s dilemma, we determined that if we would create income, or a pension, with his retirement account – one he could not outlive – he would qualify for benefits and keep his Buick. We knew that if George turned his lump sum IRA into a guaranteed income stream, the State of Ohio would look at this as income, not as an asset; this income would be George’s and therefore not counted in determining Sarah’s eligibility for benefits.
We converted George’s IRA to income so that he could maintain his lifestyle while qualifying Sarah qualified for Home Health Care benefits the following month. We are happy to report that George is able to keep Sarah at home, right where they want her to be.
*(not their real names)
By Attorney Thom L. Cooper
In our practice we have a number of farm clients. A consistently high priority for these clients is making sure that the farm stays in the family. Typical characteristics of our farm clients: (1) They have worked hard all of their lives and plowed most of the profits from the farming operation back into improvements, equipment and purchasing additional ground. (2) They tend to be asset rich and cash poor. (3) They are good businessmen with respect to their farming operations. (4) They have also given a great deal of thought about how the farm should be passed to their heirs.
HOWEVER, one of the things many farmers rarely consider is the impact to the farm of a catastrophic health situation, like a nursing home stay. Many times our farmers have heard that the farm is “an exempt asset” and therefore not subject “sale” or “spend down”.
While it is true that the farm is an exempt asset if it is associated with the home, the farm is not protected from Ohio Estate Recovery Liens. Estate Recovery Liens are placed on a farm for the amount the government pays for any nursing home care or in-home medical care and related services. For example, if the farmer’s wife would go into a nursing home and the government pays $6,000 per month for four years for her care, a $288,000 lien is attached to the farmer’s property.
There are ways to avoid these liens but preplanning is essential now more than ever. If you are interested in learning more about how to make sure your farm is not subject to one of these liens and stays in your family, you are invited to come in for a free consultation where we will discuss the techniques available to save your farm.
A recent article in the Wall Street Journal gives a great case study on how “millions of families are struggling with new financial realities.” The article mentions one solution might be to “leave less to your heirs, or even nothing at all.”
But there are solutions. Find out how you can have your cake and eat it too at the Thom L. Cooper Co.
Let us show you how you can have:
- a guaranteed pension amount
- an option to leave it to the kids if you don’t need it, and,
- Nursing home protection for your money if you or your spouse go to a nursing home.
Read the original article
By Daneen Cline
Louise is 78 and has been a resident in a nursing home for 18 months. Her daughter, Pat, has spent all of Louise’s assets to pay for her care and knows that she now must make a medicaid application for her mother. The nursing home provides Pat with the application form and a list of documents she will need, but she must attend the face to face interview with the caseworker at the Department of Job & Family Services. She assembles the required documents, meets with the caseworker and is surprised to find that she is pleasant, seems to understand the situation Louise is in and wants to help. After the caseworker gathers all the information about Louise’s assets she asks about any asset transfers Louise made in the past 5 years. Pat tells her that almost 3 years ago her mother gave each of her 4 grandchildren $30,000 as a gift. At the end of the appointment the caseworker told Pat that her mother was financially eligible for public assistance but the gifts she had made were considered to be improper transfers and because of them, the State of Ohio wouldn’t pay her nursing home bill for 24 months.
As a result, Pat was forced to move Louise to the County Home with the cost being covered by Louise and her daughter Pat.
Louise made one of the most common mistakes there is, she gifted money without knowing what the consequences would be if a health situation occurred. Public Assistance regulations do allow for gifting, but there are penalties associated with them. To gift assets successfully it is important to know what those penalties are and how and when they will be applied. Before gifting is done, a qualified Elder Law Attorney should be consulted to implement a plan that takes into consideration the possibility of a health crisis as well as one that conforms to the necessary regulations.
In a June 4, 2009 Cleveland Plain Dealer Article, Ohio Speaker of the House Armond Budish advocates that Ohioans utilize nursing home planning to save their assets. Budish likens nursing home planning to tax planning as a way for seniors to save their assets. Budish states that, “It puts a greater burden on the government, but there is nothing wrong with doing it because the law allows it. . . . Congress recognized that people shouldn’t lose their savings before being covered by Medicaid and that’s why it created the options to move assets. People should be able to avail themselves of the protections that Congress has set up.”
Read full article
If you would like to follow Speaker Budish’s advice to preserve your assets, our firm can help.
The attorneys at The Thom L. Cooper Co. have the experience and expertise to answer all of your questions relating to Elder Law and Estate Planning, including:
- Will I outlive my money if I need nursing home or assisted living care?
- How can I get veterans benefits or other benefits to pay nursing home costs / assisted living costs?
- Do I need long-term care insurance?
- How can I avoid paying too much in taxes?
- What are the best ways to preserve my assets?
- How can I leave the most to my children and grandchildren without losing control of my finances?
Margaret and Sam have always taken care of their daughter, Elizabeth. She is 45, has never worked, and has never left home. She is “developmentally disabled” and receives SSI (Supplemental Security Income). They have always worried about who would take care of her after they die. Some years ago, Sam was diagnosed with dementia. His health has deteriorated to the point that Margaret can no longer take care of him. Now she has placed Sam in a nursing home and is paying $4,000 per month out of savings. Although Margaret is satisfied with the nursing home Sam is in, she is worried that there will not be any money left to care for Elizabeth. The facility has a Medicaid bed available for Sam if he were financially eligible. However, according to the information Margaret received from the social worker, Sam is $48,000 away from Medicaid eligibility. Margaret wishes there was a way to save the $48,000 for Elizabeth after she and Sam are gone. There is. Margaret can consult an Elder Law attorney to set up a “special needs trust” with the $48,000 to provide for Elizabeth. As soon as Margaret transfers the money to the trust, Sam will be eligible for Medicaid. Elizabeth won’t lose her benefits, and her security is assured. Of course, all trusts must be reviewed for compliance with Medicaid rules. Failure to report assets is fraud, and when discovered, will cause loss of eligibility, repayment of benefits, and perhaps even criminal penalties.
Medicaid is a benefits program which is primarily funded by the federal government and administered by each state. Sometimes the rules can vary from state to state. One primary benefit of Medicaid is that, unlike Medicare (which only pays for skilled nursing), the Medicaid program will pay for long term care in a nursing home once you’ve qualified. Remember, Medicare does not pay for treatment for all diseases or conditions. For example, a long term stay in a nursing home may be caused by Alzheimer’s or Parkinson’s disease. Although the patient receives medical care, the treatment will not be paid for by Medicare. These stays are called custodial nursing stays. Medicare does not pay for custodial nursing home stays. In that instance, you’ll either have to pay privately (i.e. use long term care insurance or your own funds), or you’ll have to qualify for Medicaid.
Why Seek Advice for Medicaid?
As life expectancies and long term care costs continue to rise, the challenge quickly becomes how to pay for these services. Many people cannot afford to pay $6,000 per month or more for the cost of a nursing home, and those who can pay for a while may find their life savings wiped out in a matter of months, rather than years. Fortunately, the Medicaid Program is there to help. In fact, in our lifetime, Medicaid has become the long term care insurance of the middle class. But the eligibility to receive Medicaid benefits requires that you pass certain tests on the amount of income and assets that you have. The reason for Medicaid planning is simple. First, you need to provide enough assets for the security of your loved ones — they too may have a similar crisis. Second, the rules are extremely complicated and confusing. The result is that without planning and advice, many people spend more than they should and their family security is jeopardized.
There is a great deal of confusion about Medicare and Medicaid. Medicare is the federally funded and state administered health insurance program primarily designed for older individuals (i.e. those over age 65). There are some limited long term care benefits that can be available under Medicare. In general, if you are enrolled in the traditional Medicare plan, and you’ve had a hospital stay of at least three days, and then you are admitted into a skilled nursing facility (often for rehabilitation or skilled nursing care), Medicare may pay for a while. (If you are a Medicare Managed Care Plan beneficiary, a three day hospital stay may not be required to qualify.) Keep in mind, Medicare does not pay for treatment of several diseases and other medical conditions.
If you qualify, traditional Medicare may pay the full cost of the nursing home stay for the first 20 days and can continue to pay the cost of the nursing home stay for the next 80 days, but with a deductible of $133.50 per day. Some Medicare supplement insurance policies will pay the cost of that deductible. For Medicare Managed Care Plan enrollees, there is no deductible for days 21 through 100, as long as the strict qualifying rules continue to be met. So, in the best case scenario, the traditional Medicare or the Medicare Managed Care Plan may pay up to 100 days for each “spell of illness.” In order to qualify for this 100 days of coverage, however, the nursing home resident must be receiving daily “skilled care” and generally must continue to “improve.” (Note: Once the Medicare and Managed Care beneficiary has not received a Medicare covered level of care for 60 consecutive days, the beneficiary may again be eligible for the 100 days of skilled nursing coverage for the next spell of illness.)While it’s never possible to predict at the outset how long Medicare will cover the rehabilitation, from our experience, it usually falls far short of the 100 day maximum. Even if Medicare does cover the 100 day period, what then? What happens after the 100 days of coverage have been used? At that point, in either case you’re back to one of the other alternatives… long term care insurance, paying the bills with your own assets, or qualifying for Medicaid.
One of the things that concerns people most about nursing home care is how to pay for that care. There are basically four ways that you can pay the cost of a nursing home:
1. Long Term Care Insurance – If you are fortunate enough to have this type of coverage, it may go a long way toward paying the cost of the nursing home. Unfortunately, long term care insurance has only started to become popular in the last few years and most people facing a nursing home stay do not have this coverage.
2. Pay with Your Own Funds – This is the method many people are required to use at first. Quite simply, it means paying for the cost of a nursing home out of your own pocket. Unfortunately, with nursing home bills averaging between $5,000 and $6,600 per month in our area, few people can afford a long term stay in a nursing home.
3. Medicare – This is the national health insurance program primarily for people 65 years of age and older, certain younger disabled people, and people with kidney failure. Medicare provides short term assistance with nursing home costs, but only if you meet the strict qualification rules.
4. Medicaid – This is a federal and state funded and state administered medical benefit program which can pay for the cost of the nursing home if certain asset and income tests are met. Since the first two methods of private pay (i.e. using your own funds) and long term care insurance are self-explanatory, our discussion will concentrate on Medicare and Medicaid.
