We just won another Medical Assistance appeal issue. In this case, Medical Assitance was initially denied for nursing home benefits and the son of the Medical Assistance applicant was handed an invoice from the nursing home for over $100,000. Needless to say, he was upset. We were able to successfully argue that that the transactions at issue were not Medicaid Penalty transfers and that full Medical Assistance benefits should have been granted from day 1. We received the Administrative Law Judge opinion today removing approximatley 98% of the penalty. Client is happy.
Archive for the ‘Medicaid Planning’ Category
The issue of whether or not an IRA asset is a countable asset is an interesting issue from a Maryland Medical Assistance perspective. For individuals and their spouses, when an ill spouse goes into a nursing home and reviews the issue of applying for Medical Assistance for the ill spouse, the issue that routinely comes up is the issue of what is a countable asset towards the Medical Assistance threshold for the community spouse and ill spouse (i.e. how much can the ill spouse and community spouse own and still be eligible for Medical Assistance benefits). From a Maryland perspective, and IRA account and other forms of retirement accounts are fully countable assets. This is specifically addressed in the Maryland Medical Assistance Manual and all of the caseworkers are processing Medical Assistance applications counting IRA and other forms of retirement assets as countable assets. The real question is whether or not Maryland is correct in treating the IRA and other forms of retirement assets as countable assets. The answer is Maryland may well indeed be incorrect. We are looking for the right client scenario to push this issue and clarify and correct this fundamental determination that IRA and other retirement assets should not be countable assets.
From a Maryland perspective, once an individual is eligible for long term care Medical Assistance, all of his or her income must go to the nursing home except for certain deductions. Notably, the deductions are health insurance, personal needs allowance (currently at $71/month), and possibly a spousal allowance. While there may be other needs for the nursing home resident, a question often poised is can the resident’s income be used to pay for private nurses? The answer here in Maryland is “no.” If private duty nurses or aids are going to be employed they must be paid for by other resources, typically, the surviving spouse or other family members.
So, it came as no surprise that in a recent out-of-state case, that this court also held that private nurse costs could not be deducted from the nursing home resident’s income (once they were on Medicaid). In Re Pitman v. Daines (N.Y. Sup. Ct., App., Div., No. 2011 NY Slip Op 08681, Dec. 1, 2011). In that case, the nursing home resident paid for private nurses to provide 24-hour care. After the resident died, the resident’s executor sought to have the decedent’s net available monthly income reduced for Medicaid eligibility purposes by the amount the decedent paid for
the nurses, but the state refused.
After a hearing, New York State Department of Health found for the state, and the executor appealed.
The New York Supreme Court, Appellate Division, held that the amount the resident paid for private nurses could not be subtracted from his monthly income for Medicaid eligibility purposes. According to the court, “private 24-hour nursing care may have provided the deceased with ‘optimal care’ but was not ‘essential’ care that was ‘medically necessary’ for purposes of Medicaid reimbursement.”
If this same case were heard here in Maryland, it is my opinion that the court here would come to the same conclusion.
For Medical Assistance (i.e. Medicaid) eligibilty, Maryland will examine the amount of assets held by the applicant and by the applicant’s spouse (if any). The most the applicant may have at the time of filing is $2,500 and the most a spouse may have (currently) is $109,560. The bigger question is what is a counable asset? This may seem to be very straightforward but is absolutely not an easy question to answer. For example, we often are asked if automobiles are countable assets. The answer is no, so long as it is not a luxury automobile (however, there is no set defination of a luxury automobile). Some assets are relatively straightfoward and it is easy to see how they are countable assets. This includes bank accounts in the applicant’s name. But what about burial plots? The applicant is allowed to have 2 burial plots. But, what if he has his name on 3 burial plots, then what? That’s when you call your elder law attorney. What happens if I jointly hold my account with mom and I contributed my own money into mom’s account. Is “my money” part of her countable asset. That is when you call your elder law attorney. What happens if my mom has a reverse mortgage on her house, is this a countable asset? Again, you need to call your elder law attorney. The point is, this area of elder law is confusing, it changes, and the deteermination of what is a countable asset does vary state to state. And, most importantly, the determination of a countable assets will be absolutely critical when filing the Medical Assistance application and determining which assets can be saved.
A good portion of our clients engaged in virtually no planning (before they came to our office) when faced with a parent or loved one entering a nursing home. Even in this late stage of the game, there are plenty of opportunities to protect a parent’s or loved ones’ assets from nursing home related costs. The key document to this process is the financial power of attorney for the nursing home resident. Without a doubt, this document will be key to the asset protection process. Ideally, this power of attorney was drafted by an attorney and, if recently executed, conforms with the new Maryland provisions relating to financial powers of attorney. Without this document, the next question is whether or not the nursing home resident can sign a new financial power of attorney. Even if this person cannot sign (or should not sign), then seeking court authorization will be neccessary. The absolute key is that just because one enters the nursing home do not assume that you can’t save assets at that point. That assumption is totally incorrect.
One of the most often used techniques to protect assets for a single individual is the use of the Reverse Half a Loaf technique. With this technique the higher the fixed income and lower the nursing home costs the greater the savings. This technique involves controlled gifting and most likely the use of a financial power of attorney. Where the financial power of attorney is insufficient (for a variety of reasons) court intervention may be the only method by which to protect the assets.
The amount of assets that can be protected may well be significant but is usually in the range of 40%-60% of the exposed assets. This technique is complicated and must be done under the supervision of an elder law attorney familiar with this technique.
We often retain clients in situations where the client’s parent is in rehabilitation at a local nursing home. Often, Medicare has just run out and the client just received the first nursing home bill equal to the current month and the next month. Clients are often stunned and realize quite quickly that all of the assets will be gone very soon. Using the Reverse Half a Loaf even under this scenario may well be an attractive route to take to protect the assets at issue and to set them aside to pay for the wide range of items and services that Medical Assistance will not pay. Remember, once on Medical Assistance, the recipient can only have $71/day for his/her needs.