Long Reher Hanson Minnesota Elder Law Attorneys MEDICAL ASSISTANCE: A SUMMARY OF THE BASIC...

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Long Reher Hanson Minnesota Elder Law Attorneys

MEDICAL ASSISTANCE: A SUMMARY OF THE BASIC

ELIGIBILITY REQUIREMENTS Laurie Hanson

Long, Reher & Hanson, P.A.

www.mnelderlaw.com 2008 Long, Reher & Hanson, P.A.

Course Overview

Long-term care payment sources

Basic Medical Assistance Eligibility

Assets Spousal Impoverishment

Course Overview

Income Transfers Appeals/hardship waivers MA Waiver programs

Why does this Matter?

Planning for persons who are living with disabilities who must maintain or obtain eligibility for public benefits to meet basic needs and use. To enhance quality of life – to live as

independently as possible for as long as possible

To ensure that assets can be protected to supplement and not supplant government benefits.

WHAT IS LONG-TERM CARE?

A person who needs assistance with activities of daily living, such as bathing, dressing, eating, transferring, is a person who needs long-term care.

Long-term care settings

Home Health Care Adult Day Services Assisted Living Skilled Nursing Facilities Board and Care Homes Group Residential Housing Hospice Care

•Private pay/private insurance

•Medicare and supplemental insurance

•Long-term care insurance

•Veterans Benefits/ Veterans Home

Long-Term Care payment sources.

Medicaid

State and Federal program Minnesota’s Medicaid Program is

called Medical Assistance Basic Medical Assistance Medical Assistance for the nursing

home Home and Community-Based

waivers Long Reher Hanson Minnesota Elder Law Attorneys

Home and Community Based Medical Assistance programs* for persons under age 65: *Also known as “waiver” programs. Mental Retardation or Related

Conditions (MR/RC) Community Alternative Care (CAC) Community Alternatives for Disabled

Individuals (CADI) Traumatic Brain Injury (TBI)

Home And Community Based Medical Assistance Programs for people 65 and Older:

Elderly Waiver Program (EW)

Special Income Standard Elderly Waiver program (SIS EW)

Alternative Care program (AC) (not MA)

Medical Assistance Services

Medical Assistance benefits include:

Hospitalization, physician services, some dental and eye care, medical supplies and treatments, etc

Mental health services for adults and children

Nursing homes

Home health care.

MA ELIGIBILITY GENERAL REQUIREMENTS

Minnesota resident Categorical Basis of Eligibility

65 and older Blind or Disabled Pregnant woman Under 21 Parent or caretaker of

dependent child Financially Eligible

Basic Financial Eligibility

Single $3,000 in available assets Income spenddown

Married Community spouse asset

allowance + $3,000 Income spenddown

WHICH ASSETS COUNT TOWARD THE $3,000?

Excluded Assets (no) Unavailable assets (no

– but used on asset assessment)

Available Assets (yes)

Available assets Assets are available if the owner has both

legal authority and actual ability to use them for self-support and assets are not excluded or unavailable.

Include savings and checking accounts, stocks, bonds, CDs, contracts for deed, IRAs, certain real property, collections, cash surrender value of life insurance policies, etc.

Premarital agreement has no effect.

Excluded assets

Homestead subject to limit in some circumstances (eff. 1/1/06)

Household goods and personal effects

Assets of trade or business One motor vehicle

Excluded assets

Insurance payments to repair or replace lost, damaged, or destroyed property

CSV of certain insurance policies Revocable burial fund: limit is $1,500 Irrevocable funeral trust:

Services limited to $2,000 No limit for burial spaces and space items

Prepayment of funeral

Life insurance or annuity: Itemized agreement with funeral home Amount paid same as in agreement Irrevocable primary beneficiary: “any

funeral home as its interest may appear”

Irrevocable contingent beneficiary: “estate”

Unavailable assets

Unavailability proved by showing legal or actual barrier to disposal of asset that cannot be overcome. Unavailable assets may include:

Next four slides…

Unavailable assets

Share of an estate that has not been probated

Property involved in a pending legal action

Non-homestead real property

Considered unavailable as long as applicant is making reasonable effort to sell

Asking price is no more than estimated market value on real property tax statement

Reasonable offer: no less than 2/3 EMV

Jointly held assets

General rule: Presumption that joint tenants own pro rata share

Exception: Checking or savings account, time deposits owned by MA applicant

Savings bonds: Unavailable if owned jointly and in possession of person who is not applying for MA

Life Estates and Joint Tenants

Life tenant has the right to: Live in the property throughout lifetime Receive all profits from the property

Life tenant has continuing obligation to: Pay property taxes, fire insurance,

maintenance Life estate is extinguished at

death unless after August 1, 2003

Trusts: available?Depends on:

(1) Kind of trust involved

(2) Who established the trust

(3) Whose assets were used to fund the trust…and

Trusts: available?

(4) Whether the trust is revocable or irrevocable

(5) Whether trust was established during lifetime or through a will

(6) Provisions of the trust agreement

Kinds of trusts Revocable trust

Irrevocable Trust

Trust with springing provisions

Supplemental needs trust

Special needs trust

Pooled trust

Other assets Annuities Continuing Care Communities

Bob’s and Kate’s assets

Certificates of deposit $125,000 Kate’s IRA $65,000 Bob’s IRA $35,000 Homestead $300,000 Automobile $ 20,000 Household stuff $15,000 1/2 lake property $50,000

Certificates of deposit $125,000 Available

Kate’s IRA $65,000 Bob’s IRA $35,000 Homestead $300,000 Automobile $ 20,000 Household stuff $15,000 1/2 lake property $50,000

Kate’s IRA $65,000 Available Bob’s IRA $35,000 Homestead $300,000 Automobile $ 20,000 Household stuff $15,000 1/2 lake property $50,000

Kate’s IRA $65,000 Available Bob’s IRA $35,000 Available Homestead $300,000 Automobile $ 20,000 Household stuff $15,000 1/2 lake property $50,000

Kate’s IRA $65,000 Available Bob’s IRA $35,000 Available Homestead $300,000 Excluded Automobile $ 20,000 Household stuff $15,000 1/2 lake property $50,000

Kate’s IRA $65,000 Available Bob’s IRA $35,000 Available Homestead $300,000 Excluded Automobile $ 20,000 Excluded Household stuff $15,000 1/2 lake property $50,000

Kate’s IRA $65,000 Available Bob’s IRA $35,000 Available Homestead $300,000 Excluded Automobile $ 20,000 Excluded Household stuff $15,000 Excluded 1/2 lake property $50,000

Certificates of deposit $125,000 Available Kate’s IRA $65,000 Available Bob’s IRA $35,000 Available Homestead $300,000 Excluded Automobile $ 20,000 Excluded Household stuff $15,000 Excluded 1/2 lake property $50,000 Unavailable

TERMINOLOGY: Married Couples

Community Spouse Ill Spouse (long-term Care Spouse) Asset Assessment Date Community Spouse Asset

Allowance Community Spouse Income

Allocation.

Community spouse asset allowance

CSAA = 1/2 of non-excluded assets on asset assessment date with a

Minimum of $29,389

Maximum of $104,400 assets at time of MA application =

CSAA + $3,000

Date of Institutionalization

Protected Assets: CSAA $29,389 MA limit $ 3,000

Excess Assets: $ 2,611

Date of MA application, if in 2008:$29,389 $3,000

$35,000

Excess Assets: $ 47,000

Date of MA application:$50,000 $3,000

$100,000

Excess Assets: $112,400

Date of MA application, if in 2008:$104,400 $3,000

$220,000

Kate’s and Bob’s community spouse asset allowance

Total non-excluded assets CDs $125,000 Kate’s IRAs $ 65,000 Bob’s IRAs $ 35,000 1/2 interest in lake property $ 50,000

Total $275,000

1/2 of total is $137,500, which is greater than $104,400, so CSAA = $104,400. Excess assets to be reduced = $167,600.

MEDICAL ASSISTANCE:

DISCUSSION OF INCOME RULES

Types of income

Excluded income Reverse mortgages Payments form low-income home

energy programs In-kind income Cash from sale of property Tax refunds Reimbursement of expenses

Types of income

Available income Received by individual or on her

behalf Earned Income Unearned Income

Annuity payment RSDI, SSI Trust disbursments Regularly received gifts Lump sums

Income Rules for Recipients in the Community

MA recipient is required to pay portion of income towards cost of services

Income standards for persons living in community: 100% FPG, currently $851 OR Spending down to 75% FPG ($639).

Income Spenddown for Single Person in Community:

Income of Individual $2,000.00 less Medicare Part B -

96.00 less standard -650.00 less insurance premium -100.00

Income applied to care $1,154.00 Cost of Care $5440.00

less -1,154.00MA pays: $4,286.00

Income Spenddown for Single Person in Nursing home:

Income of Individual $2,000.00 less Medicare Part B -96.00 less personal needs allowance -

84.00 less insurance premium -100.00

Income applied to care $1,720.00 Cost of Care $5,440.00

less - 1,720.00MA pays: $3,720.00

Long Reher Hanson Minnesota Elder Law AttorneysC

SPECIAL INCOME RULES FOR MARRIED COUPLES

Community spouse is eligible for a spousal income allocation if his or her income does not meet a minimum income level

Minimum of $1,751 up to Maximum of $2,610 Calculation takes into account

ONLY excess shelter costs.

SPECIAL INCOME RULES FOR MARRIED COUPLES

This amount changes every year Otherwise spenddown is the same

as for single person Only applies to long term care MA

(LTC MA) or EW

Income Spenddown for Married Person in Nursing home:

Income of Ill Spouse $2,000.00 less Medicare Part B -96.00 less personal needs allowance - 84.00 Less community spouse allocation -1,500.00 less insurance premium -100.00

Income applied to care $ 220.00

Assets

Eligible?

Income

Is reduction of assets necessary?

REDUCING ASSETS Paying monthly expenses Purchase of excluded assets Paying debts Prepaying funeral expenses Repairs to house Transferring assets??

Transfer warnings Federal law 1997: Makes it a

misdemeanor for paid advisor to counsel or assist in transfers if results in penalty period. Found to be unconstitutional.

Deficit Reduction Act of 2005: Affects transfers on or after February 8, 2006

Loss of ownership and control: once given away, assets are no longer yours.

What is a transfer?

Gift Sale Reduction in ownership interest Waiving the right to an

inheritance or income Refusing or failing to take

action to obtain a PI settlement

Whose transfers matter?

Transfers made by: Applicant, Recipient, Spouse, or Any person, court or administrative body on

behalf of applicant or spouse

Must be reported and may affect eligibility IF THE TRANSFER IS FOR LESS THAN FAIR MARKET VALUE

What is an uncompensated transfer? Uncompensated value of transferred (or

refused) asset =Fair market value less encumbrances and

compensation received.

Fair Market Value $250,000Sale Price $200,000

TRANSFER ($50,000)

Transfer rules, in general

Transfers of assets or income For less than FMV Within the “lookback period” (36

months for transfers before 2/8/06 and until 2/09, then gradually increasing to 60 months by 2/11)

Ineligible for LTC coverage for a specific period of time

Services to which transfer penalty applies

During a PERIOD OF INELIGIBILITY, Medical Assistance will not cover “institutional care.”

Nursing facility services

Level of care in any institution equivalent to nursing facility services

Home or community-based services including EW, AC, CADI, TIB, CAC, and DD

Transfers: Presumption

Any transfer of assets or income is presumed to be for the purpose of establishing or maintaining MA eligibility.

Applies to transfers by CS after MA eligibility established for LTC spouse.

Any transfer to preserve estate, avoid probate, or reduce taxes is deemed “improper.”

Calculation of period of ineligibility

Divide the amount transferred by the Statewide Average Payment for Skilled Nursing Facility care (SAPSNF)

As of the date of the application Currently $4,772 from 7/1/08

through 6/30/09

Transfers before Feb. 8, 2006

Add total uncompensated transfers in any one month of the 36 months preceding the MA application

Divide by the SAPSNF, currently $4,772

Penalty period begins the month after the first transfer

Transfer of $200 or less OK except during pre-existing period of ineligibility

EXAMPLE

TRANSFER $50,000 October 2005

$50,000 ÷ $4,772 = 10.48 months

PERIOD OF INELIGIBILITY

Transfer made in October, 2005

11/05 ----------------------------------9/06 (.48)

EXAMPLE TRANSFER $200,000 June 2005

$200,000 ÷ $4,772 = 41.91 months

If apply before July 2008 (within 36 months), full POI is imposed.

If wait to apply until after 36 months:

June 2005 --------------- July 2008The effective waiting period is 36 months.

APPLY JULY 1, 2008at the earliest

Transfers on or after 2/8/06

Lookback period of 60 months will be phased in

Period of ineligibility is calculated by dividing total assets transferred within 60 months by SAPSNF

Transfers on or after 2/8/06

Period of ineligibility begins: For recipient: the month for which

county can give 10 days advance notice, not to exceed three months after report/discovery of transfer

For applicant: the month in which individual is receiving long-term care services, applies for MA, and would be eligible except for transfer

SAME EXAMPLE

TRANSFER $50,000 October 2006

$50,000 ÷ $4,772 = 10.47 months

•10.47 MONTHS FROM

•Date of application for Medical Assistance AND

•When otherwise eligible but for the period of ineligibility

Transfers on or after 2/8/06 There is no cap to the period of

ineligibility. No minimum allowable transfer. Can have a snowball effect Ineligibility begins when individual

applies and is otherwise eligible Care costs can exceed amount

transferred 67

EXAMPLE 1: Monthly Charitable Gifts

$500/month x 4 yrs = $24,000

TRANSFER of $24,000

POI: $24,000 ÷ $4,772 = 5.03 months

EXAMPLE 1 (cont’d)

POI is 5.03 months

|____________________________________________|August ‘08 January (.03)Month of Application Ends 5.03 months later

EXAMPLE 1 (cont’d)

Monthly long-term care cost = $6,000

Cost of care during POI:

$6,000 x 5 = $30,000.00$4,772 x .16 = $ 763.52$30,763.52

Types of

Transfers

Promissory notes, loans, and mortgages must:

Have repayment term that is actuarially sound

Provide for payments to be made in equal amounts during term of loan, with no deferral and no balloon payments made

Prohibit the cancellation of the balance upon the death of the lender

If terms are not met, balance is a transfer.

Purchase of life estate interest

The full amount that a person pays for a life estate in someone else’s home will be considered a transfer UNLESS the purchaser resides in the home for a period of at least one year after the date of the purchase.

Paying a relative can be an uncompensated transfer

Payment for services by a relative is a transfer unless:

The parties have a notarized written agreement dated at or before time of service, requiring paymentOR

Payment for services is made with sixty days of when services given

Transfer of real estate The transfer is complete when:

Deed is executed AND Deed is delivered.

Date of delivery is earlier of: Date of recording Date of delivery as stated in affidavit Date of judicial order creating the

interest Date upon which interest devolves at

person’s death

PURCHASE OF ANNUITIES AS TRANSFERS

See Bulletin No. 08-21-04 dated May 27, 2008 on DHS

web site

ALLOWABLE TRANSFERS:

Exceptions to the transfer rules

Allowable transfers of home To spouse, disabled or blind child of

any age, child under age 21

To sibling with equity interest

To caretaker child (not grandchild)

For value

Denial would cause undue hardship

Other exceptions to transfer rules To spouse at any time, or to 3rd

person for sole benefit of spouse To disabled or blind child or sole

benefit trust Transfer into trust for any disabled

person under age 65 (or a pooled trust for people of any age)

Return of assets

Return Assets: Example Eleanor transfers $200,000 to her son

in August and applies for MA in August.

POI is 41.91 months, beginning in August

Eleanor’s cost of care is $6,000 each month which her son returns to her and she uses to pay for care.

Example (cont.) The period of ineligibility is reduced

each time money is returned. After six months, $36,000 will have

been returned; thus the total amount transferred to son is reduced to $164,000.

New POI = 34.38 months. At this rate, POI will be reduced to

18.5 months; $88,282 protected.

Other exceptions to transfer rules (cont.)

Individual intended to dispose at FMV Transfer of excluded assets other

than homestead

Denial of eligibility would cause undue hardship

Undue hardship waiver: MN

Based on imminent threat to individual’s health and well-being

Evaluation criteria: Whether the individual was the victim of

financial exploitation Whether the individual has made reasonable

efforts to recover transferred property Other factors relevant to determination of

hardship Cause of action against transferee if granted

Undue hardship waiver: DRA

State develops procedures in accordance with standards specified by Secretary of HHS

NF can file application on behalf of individual 30-day bedhold payment to NF: NOT IN MN!! Undue hardship exists when denial would deprive

individual -- of medical care such that individual’s health or life

would be endangered; or of food, clothing, shelter, or other necessities of life

Criteria for determining if cause of action exists

C/A exists if transferee knew or should have known:

Transferor was resident of LTC facility or receiving that level of care in community

Transfer was being made to obtain or maintain MA eligibility

Transferee actively solicited transfer with intent to assist person obtain or maintain MA eligibility

Cause of action against transferee

Transfers made by applicant and not reported on application

Transfers by recipient during ongoing eligibility and reported too late to create period of ineligibility

If undue hardship waiver is granted to transferee

Liens Medical Assistance lien

against non-homestead real property

Notice of potential claim against life estate and joint tenancy interests

Estate recovery County may place claim against

estate for MA when: Person was over 55 and received MA/AC. Persons resided in medical institution for

6 months or longer and could not have been expected to return home.

Claim is against estate: of recipient, if single of surviving spouse, if married.

Estate recovery (cont.) If claim is against estate of surviving spouse,

claim limited to assets that were marital assets or held jointly during marriage (But, Barg may change this!)

Estate includes: Probate assets Some non-probate assets (joint tenancy,

POD and TOD accounts) Life estate or joint tenancy interest in RE

created on or after August 1, 2003

In the Estate of Francis E. Barg

Opinion issued by MN Supreme Court on May 30, 2008, which held:

1. Federal Medicaid law does not preclude all recovery from estate of surviving spouse of MA recipient.

2. Federal law limits scope of recovery to only those assets in which deceased MA recipient had a legal interest at the time of death and only to extent of MA recipient’s interest.

Thank you for your attention!

Long, Reher & Hanson, P.A.

www.mnelderlaw.com(952) 929-0622

Long Reher Hanson Minnesota Elder Law Attorneys MEDICAL ASSISTANCE: A SUMMARY OF THE BASIC...

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