Elder Law and Medicaid Planning:
Everything you need to knowA 2-Day Practical Course
Types, Costs, and Funding
Aubrey Harry Ducker, Jr.Law Offices of Aubrey Harry Ducker, Jr. PLC2020 Mizell AvenueWinter Park, FL [email protected]
Long-Term Care Planning:
Client Age Health
Marital Status Heirs
Long-term Care Desires Facilities – Home v. ALF/ICP
Age, Family Dynamics and Projected Medical Needs
Client Age and Health 55
65
75
85
95
Health:◦ Self sufficient, earning
income, fully insured, building assets
◦ Retired, using assets
◦ Medicare Plan ◦ Supplemental Insurance
◦ Resource loss
Health concerns:
•Immediate Concerns•Long term prognosis•Cost of Care•Level of need
Different needs, Different Resources
How to tell?
Marital Status: WHY?
Nothing complicates planning so much as:
Multiple Decision Makers
Married
Widowed
Divorced
Remarried
Divorced again
What are your concerns for her husband?
What are your concerns for his children?
Who cares about the former spouse?
Seriously?
Complications Arise.
Heirs:
Who decides what you recommend?
Who decides how or whether to follow your advice?
Natural Heirs Spouse Children Second Spouse? Stepchildren? Adopted Heirs
Decision Makers◦ Spouse◦ Children◦ Healthcare Surrogate◦ Power of Attorney◦ Trustee◦ Guardian◦ Investment advisor◦ Doctor
What do you see? What are you looking for?Old Woman? Young Woman?
What are you looking for when you meet a client?
Levels of Care
Care Need and Assets are the driving factors
Home care:
◦ Visiting Assistant
◦ Short term nurse
◦ Live in caregiver
◦ Private Duty Nurse
◦ Hospice
ICP – Institutional Care Program
Nursing home
Assisted Living Facility
Hospice
Long Term Care
The Client’s desires, may
or may not be doable.
Wants◦ Stay home ◦ Die in sleep◦ Pass on assets to heirs◦ Nursing care only if
incompetent
Needs◦ In-home care plan◦ Assets to support◦ Family support◦ Continued good health
Median national cost of services, 2012
Homemaker: $18/hourHome health aide: $19/hourAdult day health care: $61/day
Assisted living: $3,300 per month
Nursing home: $200-$220/daySource: Genworth Financial 2012 Cost of Care Survey.
Challenges of Aging in Place
*Changing needs—A house that was ideal 30 years ago may now be too difficult to handle alone. Older houses often need a lot of costlymaintenance, improvements, or repairs.
*Safety—A house with cluttered furniture or steep stairs is an accidentwaiting to happen. Unsafe neighborhoods may make you afraid to goshopping or attend social activities.
*Isolation—A trip to the grocery store, pharmacy, or place of worshipcan be a problem when you cannot drive. It is easy to feel lonely ortrapped when family and friends are far away.
*Ease of use—If you need a walker or a wheelchair, it helps to have abedroom on the first level, grab bars in the bathroom, and ramps forthe entrance of the house.
Challenges of Aging in Place
Medicare Advantage Plans and Long Term Care Insurance
Other Insurance may apply
Other insurance may apply
Medicare Part A: Coverage of inpatient hospital care
Medicare Part B: Medical Insurance – Outpatient Care
Medicare Part D: Prescription drug plans
Long Term Care Insurance:
Medicare: 100 Days when transferred from hospital for Rehabilitation
Insurance:
Medicare & You Handbook
Medicare: http://medicare.gov/
Compare Nursing homes
Medigap: Medicare
Supplement State Health
Insurance Assistance Program (SHIP)
Medicaid: LTC/ICP Programs
Agency for Health Care Administration: AHCA http://ahca.myflorida.com
Florida Department of Children and Families www.myflfamilies.com
Medicare.govThe official U.S. Government Site for Medicare
• Sign up/change plans
• Your Medicare Costs
• What Medicare Covers
• Drug Coverage (Part D)
• Supplements & Other Insurance
• Claims & Appeals
• Manage Your Health
• Forms, Help, & Resources
• Is my test, item, or service covered? ______________
Medicaid Nursing Facility Provider Information
The Department of Children and Families (DCF) district offices staff determines eligibility for Institutional Care Program (ICP) services.
To begin the ICP application process, a nursing facility refers the resident to the DCF by completing a Client Referral Notice [199 KB PDF], CF-ES Form 2506A.
Providers must use the Client Discharge and Change Notice [187 KB PDF], CF-ES Form 2506, to advise public assistance specialists of the placement status of institutional Medicaid applicants and recipients.
Copies of these forms are also available from the Department of Children and Families, Office of Economic Self Sufficiency.
Questions Every Elder Advisor Wants Answered:
Eligibility Standards for SSI-related Programs – July 2014
ICP/HCBS/Hospice/HCDA Individual $ 2,163 $ 2,000 ICP/HCBS/Hospice/HCDA Couple $ 4,326 $ 3,000 Spousal Impoverishment
Minimum Monthly Maintenance Needs Allowance (MMMNA)** $1,966
Excess Shelter Standard** $590
Maximum Community Spouse Income Allowance (MMMNA plus excess shelter allowance cannot exceed this figure) $2,931
Community Spouse Asset Allocation Standard $117,240
Home Equity Interest Limit $543,000
A Guide to the Institutional Care Program
Medical assistance for low income individuals in or entering a Nursing Home
http://www.dcf.state.fl.us/programs/access/docs/icp_brochure.pdf
•What is Institutional Care Program (ICP)? When Level of Care requires intermediate & skilled care, Medicaid pays for
those qualified for an unlimited time period
•Who may apply? Individual, Guardian or Designated Representative
•Main Eligibility requirements: • 65 or Disabled, • In Need of Facility Services, • In participating home, • Qualifying Assets/Income
•Asset limit: $2,000 • Types of Assets that count:
• Real Estate – not homestead• Any Liquid assets:
• Bank accounts, CDs, Money Market funds, • Stock and Bonds accounts• Trusts• Life Insurance – Face Value more than $2,500 - Cash
Value• Types of Assets that do NOT count:
• Homestead • First Car• Pre-paid Burial Contracts:
• Revocable up to $2,500• Irrevocable contract – Unlimited
• Certain other special exceptions
A Guide to the Institutional Care Program
•Income Limit:3xSSI limit – currently $2,163 (Excess QIT)
•How Much does the Patient Pay? All patient’s monthly income, except for $35 (with certain set-asides)
•How Much does Medicaid Pay? The Balance of the Allowable Rate
•Changes in income, assets or facility, Must be
Reported ASAP
•Reviews Annually – by patient, guardian, Designated Rep
A Guide to the Institutional Care Program
Qualified Income Trust: • Income over the ICP income limit - $2,163 • Eligible if they set up a “qualified income trust”
and • Deposit all excess funds every month• Income is less than the income limit
QIT must: *Be irrevocable; *Be comprised of income only; and, *Designate the state will receive any funds
remaining upon the death of the recipient, up to the amount of Medicaid payments paid on behalf of
the individual.
A Guide to the Institutional Care Program
•Transfers of Income and Assets: Income or assets transferred for less than fair market value May create a period of ineligibility Varying depending on the value of that transferred
Allowable Transfers: Any resource to a spouse or disabled adult child. The homestead, without penalty, to His/her spouse, or, minor or disabled child
His/her sibling w/equity interest and resided there at least one year prior to institutionalization.
His/her ADULT son or daughter who resided at least two years immediately before institutionalization and who provided care that
delayed the institutionalization.
A Guide to the Institutional Care Program
How to Apply:
Individuals can apply for benefits:
From any computer with internet access by visiting our web site: http://www.myflorida.com/accessflorida or,
At one of the Department’s ACCESS Florida community partners. A listing of community partners can be found online at: http://www.dcf.state.fl.us/access/CPSLookup/search.aspx or,
At a DCF ACCESS Florida Customer Service Center. A list of Customer Service Centers can be found online at: http://www.dcf.state.fl.us/ess/ or,
By requesting a paper application by calling 1-866-762-2237 and submitting it in person, by mail or fax.
Florida’s Long-term Care Partnership Program
•Partnership program between Medicaid and private long-term care insurers
•Designed to encourage individuals to purchase private long-term care insurance.
•Long-term Care Partnership policies are tax qualified (a portion of premiums paid may be claimed as a tax deduction) under federal law;
•Provide policyholders with inflation protection;
•Provide dollar-for-dollar asset protection in the event the policyholder needs to apply for long-term care Medicaid assistance.
KEY: For every dollar that a partnership policy pays out in benefits, a dollar of assets can be protected from Medicaid spend-down requirements.
Florida Statutes:
Chapter 409.9102 Qualified state LTC Insurance Partnership Program in Florida
Chapter 627.94075 A qualified state LTC Insurance Partnership Program in Florida
Chapter 627.94076 Time limit on certain defenses
Chapter 627.9403 Scope, Insurance Rates and Contracts
Chapter 627.9407 Disclosure, advertising, and performance standards for long-term care insurance
Chapter 641.2018 Limited coverage for home health care authorized
Florida Long-term Care Partnership (LTCP) Program by the Agency for Health Care Administration
Florida Administrative Code:
Chapter 69O-157.201 Standards For Approved Long-term Care Partnership Program Policies
Chapter 69O-157.1155 Producer Training
Chapter 65A-1.712 SSI-Related Medicaid Resource Eligibility Criteria
Reverse Mortgages and Intrafamily loans
Do you need the money?How long will it last?Is Repayment Secure?
Reverse Mortgages
Government Insured Financial Tool allowing Equity conversion to tax-free Cash
Live in the home without making payments, on death, loan must be repaid
You OWN the home as long as you live in and can pay the Taxes and Insurance, and comply with the loan terms
No payments Financial Freedom, control, security and
dignity To Qualify: 62, owner occupied
Reverse Mortgages:
Reverse Mortgages
Reverse Mortgage Tips» You should never pay an application fee.» You should never be asked to pay for information.» A legitimate lender should never downplay the
importance of pre-loan counseling.
» A legitimate lender should encourage questions and provide clear, direct answers.
» No legitimate lender will ever claim affiliation with the government.» No legitimate lender will ever claim to be a non-profit organization.
» We have been serving America since 1967.» You can get confidential advice from professional
advisors.» You will not be pressured to do anything.
Taxes must be paid annually
Insurance must be maintained
Homeowners assessments must be paid
On Death or Move (nursing home placement)
Payment is Expected in a reasonable time
Reverse Mortgages:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmhome
Go to HUD.GOVHome Equity Conversion Mortgages for Seniors
Rev. Mort. Cont’d.
HUD Requirements
Borrower Requirements You must: Be 62 years of age or older Own the property outright or paid-down
a considerable amount Occupy the property as your principal
residence Not be delinquent on any federal debt Have financial resources to continue to
make timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.
Participate in a consumer information session given by a HUD- approved HECM counselor
Property Requirements The following eligible
property types must meet all FHA property standards and flood requirements:
Single family home or 2-4 unit home with one unit occupied by the borrower
HUD-approved condominium project
Manufactured home that meets FHA requirements
Financial Requirements
Income, assets, monthly living expenses, and credit history will be verified.Timely payment of real estate taxes, hazard and flood insurance premiums will be verifiedFor adjustable interest rate mortgages, you can select one of the following payment plans:
Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term - equal monthly payments for a fixed period of months selected.
Line of Credit - unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.
More HUD Requirements:
Modified Tenure - combination of line of credit and scheduled monthly payments for as long as you remain in the home.
Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan.
Mortgage Amount Based OnThe amount you may borrower will depend on:
Age of the youngest borrower or non-borrowing spouse Current interest rateLesser of appraised value or the HECM FHA mortgage limit of
$625,500 or the sales price; andInitial Mortgage Insurance Premium
More HUD Requirements:
Intra Family Loans –
My sister/brother borrowed my mommy/daddy’s last red cent
Wall Street Journal Report: Benefits to Borrowers: Minimum interest rates Internal Revenue Service
requires on intrafamily loans close to all-time lows. Known as the Applicable Federal Rate, or AFR,
currently just 0.2% for loans of three years or less, 1.27% for loans of more than three but less than nine years, and 2.8% for loans of a longer duration.
Benefits to Lenders: Example: married couple in their early 60s—plan to
lend $150,000 to their son and daughter-in-law to purchase a "starter home." In return, the parents will receive a 4% interest rate.
By Anne Tergesen, Dec. 18, 2011
ABA lists 13 significant specific uses
Inadvertent loans – planned and unplanned
Estate Planning Tools -
Intra Family Loans:
1. Loans to children with significant net worth; 2. Loans to children without significant net worth; 3. Non-recourse loans to children or to trusts 4. Loans to grantor trusts; 5. Sales to children or grantor trust for a note; 6. Loans between related trusts (e.g., from a bypass trust to
a marital trust, from a marital trust to a GST exempt trust, such as transactions to freeze the growth of the marital trust and transfer appreciation to the tax-advantaged trust);
7. Loans to an estate; 8. Loans to trusts involving life insurance (including split
dollar and financed premium plans);5 9. Home mortgages for family members;
ABA List:
10. Loans for consumption rather than for acquiring investment assets (these may be inefficient from an income tax perspective because the interest payments will be personal interest that does not qualify for an interest deduction);
11. Loans as vehicles for gifts over time by forgiveness of payments in some years, including forgiveness of payments in 2012 as a method of utilizing $5.0 million gift exemption available in 2012;
12. Loan from young family member to client for note at a higher interest rate (to afford higher investment returns to those family members than they might otherwise receive) (In a different context, the Tax Court has acknowledged the reasonableness of paying an interest rate higher than the AFR6); and
13. Client borrowing from a trust to which client had made a gift in case the client later needs liquidity (and the resulting interest may be deductible at the client’s death if the note is still outstanding at that time7).
More on ABA List:
Treated as a bona fide loan
Market rate of interest (Applicable Federal Rates ‘AFR’-published monthly by IRS)
Proper payments of interest and principal
Documentation
Mortgage must be properly recorded against the property
Valid Loan:
Children create Problems, Aubrey 2014
Married with Children
Married with children from previous marriage
Married with children from multiple previous
My child, your child, his child, her child
Planning for Blended Families:
Marital Status: WHY?
Nothing complicates planning so much as:
Multiple Decision Makers
Married
Widowed
Divorced
Remarried
Divorced again
What are your concerns for her husband?
What are your concerns for his children?
Who cares about the former spouse?
Seriously?
Complications Arise.
Get help when needed
Protect yourself: use multiple attorneys
http://medicare.gov/
www.Medicaid.gov
http://ahca.myflorida.com/
http://www.dcf.state.fl.us/programs/access/docs/icp_brochure.pdf
www.health.gov.bce.ca/pharmacare
www.minimental.com
www.Depressionguide.com
www.Alzheimers.org
www.Aarp.com
http://ahca.myflorida.com/Medicaid/ltc_partnership_program/pdfs/Florida_LTCP_FAQs_7-26-11.pdf
http://www.dcf.state.fl.us/programs/access/docs/esspolicymanual/a_09.pdf
◦ http://www.dcf.state.fl.us/programs/access/docs/esspolicymanual/1630.pdf
Helpful Links and Websites:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmabou
http://www.ncoa.org/news-ncoa-publications/publications/ncoa_reverse_mortgage_booklet_073109.pdf
http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_13006.pdf
http://www.americanbar.org/content/dam/aba/publishing/rpte_ereport/2014/1_february/te_akers.authcheckdam.pdf
https://www.nationalfamilymortgage.com www.irs.gov
More Helpful Links: