RECENT DEVELOPMENTS IN MEDICAID AND HEALTH
CARE PLANNING2010
BY
ROBERT J. LONGSTREET, ATTORNEY AT LAW
MEDICAID VS. MEDICAREMEDICAID VS. MEDICARE
MEDICAID IS A LARGE GOVERNMENT HEALTH INSURANCE PROGRAM
DIFFERENT FROM MEDICARE IN THAT MEDICAID ELIGIBILITY REQUIRES AGED OR DISABLED + STRICT FINANCIAL ELIGIBILITY REQUIRMENTS
COOPERATIVE FEDERAL & STATE PROGRAM
FEDERAL LAW PROVIDES BROAD PARAMETERS, STATE PROVIDES SPECIFIC RULES AND ADMINISTERS ELIGIBILITY
MEDICAID
• In Michigan, Medicaid implemented by county DHS (Department of Human Services) Offices.
• Many Medicaid Programs for various populations.
• Medicaid Long Term Care Programs: Nursing Home (NH) Medicaid MI Choice Waiver
• MEDICAID DOES PAY FOR LONG TERM NURSING HOME STAYS FOR SENIORS WHO QUALIFY
• BUT MEDICAID IS ‘MEANS TESTED’, MEANING THE STATE WILL LOOK AT ASSETS AND INCOME
(FOUR TESTS TO PASS… WE’LL DISCUSS IN A FEW MINUTES)
WHY DO WE CARE ABOUT MEDICAID ELIBILITY?
• 0ver 6,000 people turn 65 every day, and 40% of these people will spend time in a nursing home.
• The average cost in 2009 for 1 month in a nursing home in the State of Michigan?
$6,362
• 66% of all single people will be "broke" after 13 weeks in a nursing home.
• 90% of married couples with one spouse in a nursing home will be "broke" after two years.
MEDICAID QUALIFICATION REQUIREMENTS
• Must be 65 years or older or disabled, blind or receiving SSI
• Must be a resident of the State of Michigan
• Income must be below the monthly private pay cost of the nursing home ($7,000)
• An applicant cannot own more than $2,000 of countable assets (individually or with spouse)
AND IF YOU QUALIFY…
• The nursing home patient is allowed to keep $60.00 per month for ‘personals’
• The remainder of the patient’s income goes to the nursing home
• MEDICAID will pay the remainder of the nursing home bill
THIS SOUNDSHORRIBLE!!!!
SOME GOOD NEWS
• NOT ALL ASSETS ARE “COUNTABLE”
• THESE ARE ASSETS A PERSON CAN OWN AND STILL RECEIVE MEDICAID BENEFITS
HOMESTEAD
ONE AUTOMOBILE
PERSONAL PROPERTY
PREPAID FUNERAL CONTRACTS
HOMESTEAD EXEMPTION
• HOMESTEAD INCLUDES HOME AND ANY CONTIGUOUS LAND• CAN BE SEPARATED BY ROAD OR RIVER, BUT NOT BY
ANOTHER’S LAND• NEED NOT BE IN MICHIGAN• FOR A SINGLE PERSON: LESS THAN $500,000 IN EQUITY VALUE• NO VALUE CAP IF OCCUPIED BY SPOUSE, DISABLED CHILD, OR
CHILD UNDER 21.
• OF ANY VALUE
ONE AUTOMOBILE
PERSONAL PROPERTY
CLOTHING
JEWELRY
HOME APPLIANCES
FURNITURE
PRE-PAID FUNERALCONTRACTS
MUST BE IRREVOCABLEFOR HUSBAND AND WIFE
CAN INCLUDE BURIAL PLOTSFOR ENTIRE FAMILY
EVERYTHING ELSE IS A “COUNTABLE ASSET”
• CHECKING ACCOUNTS
• SAVINGS ACCOUNTS
• CERTIFICATE OF DEPOSITS
• OTHER REAL ESTATE (BESIDES HOMESTEAD)
• STOCKS, BONDS, ETC.
VALUING COUNTABLE ASSETS
Joint Assets• Joint with Spouse = All counts• Joint with Non-Spouse
For Bank Accounts = All counts unless demonstrate contribution Real Estate, Stocks and Mutual Funds = valued in proportion to ownership
Valuing Countable Assets
• Joint Assets may have $0 value if:
– Nature of joint ownership requires all joint owners to sell, and
– One or more joint owners refuse to sell.
Valuing Countable Assets
• Retirement Funds and Annuities– If the owner can make a withdraw, the value is the
amount that can be withdrawn, reduced by any withdrawal penalty (but not reduced for taxes owing).
– Annuity in pay status or pension that pay monthly benefit (with no right of withdrawal) in treated as income.
EXTRA EXEMPTIONFOR “COMMUNITY” SPOUSEOF REMAINING ASSETS, SPOUSE IS
ENTITLED TO KEEP:
½ THE COUNTABLE ASSETS
UP TO A MAXIMUM OF $109,500
EXAMPLE: Mr. Brown is entering a long term care facility. Mr. and Mrs. Brown own the following assets:
• HOME ($180,000)
• ONE CAR
• PERSONAL PROPERTY
• PRE-PAID FUNERAL
• $100,000 IRA (Mr. Brown)
• $20,000 savings (Mrs. Brown)
• $35,000 CDs (joint)
• $7,000 checking (joint)
IF MR. BROWN APPLIED FOR MEDICAID:
• MR. BROWN COULD KEEP $2,000• MRS. BROWN (THE COMMUNITY SPOUSE)
COULD KEEP:
THE HOUSETHE CAR
THE PREPAID FUNERALPERSONAL PROPERTY
$80,000 IN CASH
WHAT ABOUT INCOME?
• MR. BROWN GETS TO KEEP $60.00 PER MONTH
• IF MR. BROWN WERE SINGLE, THE REMAINDER OF HIS INCOME WOULD GO TO THE NURSING HOME BILL
• MRS. BROWN GETS TO KEEP ALL OF HER INCOME
• PLUS, ENOUGH OF MR. BROWN’S INCOME TO PAY HER MONTHLY BILLS (APPOX. $1,500 - $2,500 PER MONTH)
WHAT ABOUT THE REMAINING $80,000 THE BROWNS OWN?
WHAT ABOUT THE REMAINING $80,000 THE BROWNS OWN?
• THEY COULD SPEND IT ON THE THEY COULD SPEND IT ON THE NURSING HOME (APPROX. 1 YEAR)NURSING HOME (APPROX. 1 YEAR)
• OR THEY MIGHT BE TEMPTED TO OR THEY MIGHT BE TEMPTED TO GIFT THE MONEY TO RELATIVES…..GIFT THE MONEY TO RELATIVES…..
MEDICAID PENALIZES GIFTS
• ON MEDICAID APPLICATION, ASKED IF MEDICAID APPLICANT HAS GIVEN AWAY ASSETS IN LAST 60 MONTHS
• FOR TRANSFERS BEFORE FEBRUARY 8, 2006, ONLY ASKED ABOUT LAST 36 MONTHS
• IF YES, APPLICANT PENALIZED FOR AMOUNT OF TIME GIFTED MONEY COULD HAVE PAID FOR NURSING HOME STAY
• GIFT AMOUNT / $6,362 = Penalty Time
IF MR. BROWN GIFTS REMAINING $80,000 TO CHILD
• AND MR. BROWN APPLIES FOR MEDICAID WITHIN 60 MONTHS OF GIFT
• $80,000 / $6,362 = 12.57 MONTH PENALTY
• RESULT: MR. BROWN WILL NEED TO GET THE MONEY BACK TO PAY FOR NURSING HOME STAY!
SO WHAT IS LEFT FOR CLIENTS SO WHAT IS LEFT FOR CLIENTS TO DO?TO DO?
FOR A SINGLE CLIENT
CONVERSION: TRANSFER COUNTABLE ASSETS INTO EXEMPT ASSETS
EX: $25,000 IN CASH PUT INTO HOME FOR NEW ROOF, AIR CONDITIONING AND KITCHEN. $8,000 SPENT ON PRE-PAID FUNERAL ARRANGMENT.
FOR A SINGLE CLIENT
• “HALF-A-LOAF” METHOD
• GIFT APPROXIMATELY 60% OF ASSETS
• REMAINING 40% USED TO COVER THE PENALTY PERIOD
• EX: MR. X HAS $100,000 IN COUNTABLE ASSETS. WE HELP HIM GIFT $60,000 AND USE $40,000 TO COVER THE 10 MONTH PENALTY PERIOD.
FOR MARRIED CLIENT
• TAKE ADVANTAGE OF FULL COMMUNITY SPOUSE ALLOWANCE (1/2 OF COUNTABLE ASSETS)
• WE THEN DRAFT AN “IRREVOCABLE ANNUITY TRUST” TO HOLD REMAINING ASSETS FOR SPOUSE
• TRUST PAYS OUT REMAINING FUNDS TO SPOUSE BASED ON LIFE EXPECTANCY
AS A AS A REVIEW… REVIEW…
REMEMBER REMEMBER MR. AND MRS. MR. AND MRS.
BROWN?BROWN?
EXAMPLE: Mr. Brown is entering a long term care facility. Mr. and Mrs. Brown own the following assets:
• HOME ($180,000)
• ONE CAR
• PERSONAL PROPERTY
• PRE-PAID FUNERAL
• $100,000 IRA (Mr. Brown)
• $20,000 savings (Mrs. Brown)
• $35,000 CDs (Jointly)
• $7,000 checking (Jointly)
WE CAN GET MR. BROWN ON MEDICAID IMMEDIATELY!
MR. BROWN
• GETS TO KEEP $2,000
• $60 PER MONTH OF HIS INCOME FOR MISCELLANEOUS
MRS. BROWN
• HOUSE, CAR, PRE-PAID FUNERAL AND PERSONAL PROPERTY
• COMMUNITY SPOUSE ALLOWANCE (1/2 COUNTABLE ASSETS) $80,000
• REMAINING $80,000 IN IRREVOCABLE TRUST PAID TO HER ANNUITY STYLE
• ALL OF HER INCOME, PLUS ENOUGH OF MR. BROWN’S INCOME TO PAY MONTHLY BILLS
MR. AND MRS. BROWN MR. AND MRS. BROWN SAVE 100% OF THEIR SAVE 100% OF THEIR
SAVINGS AND ESTATE SAVINGS AND ESTATE ASSETSASSETS
ESTATE RECOVERYESTATE RECOVERY
• Signed on October 1, 2007 at 2:14 a.m. by Granholm• Based on the language, will only apply to a Medicaid
recipient’s “probate estate”• It is likely that the only assets most people would
own, and still have been eligible for Medicaid coverage, would be their homes.
• The state will only seek to recover a portion of the value of the home: based on the average price of a home in the county where located.
• WE KNOW NOTHING MORE AT THIS TIME!
IF YOU HAVE A NURSING HOME ISSUE….
• ROBERT J. LONGSTREET
• GEE & LONGSTREET, LLP
• 269-945-3495
• 607 N. BROADWAY, HASTINGS
• [email protected] or www.longstreetlegalservices.com
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