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Elder Law Perspectives

Updates and Commentary on Developments in Elder Law

Back to Basics: Medicaid Eligibility Rules

By Mary Browning on Posted in Medicaid, Medically Needy

In our practice, we often have clients and/or family members of clients who have done extensive research on Medicaid.  This research (whether accurate or inaccurate) often leaves our clients with more questions than answers and with more confusion than clarity.  Some clients have a tendency to delve into the more complicated issues related to qualifying for Medicaid and skip the basics.

Before any plan can be put in place for a client who is interested in qualifying for Medicaid, it is important to understand the basic eligibility rules that must first be met before Medicaid will pay for long-term care expenses.  Although each state’s rules vary, below are the five basis rules for Medicaid eligibility:

  1. The applicant must be a citizen of the United States or a “qualified alien.”  A permanent resident is a “qualified alien.”
  2.  The applicant must also be deemed a resident of the state in which he or she would like to qualify for Medicaid.  This test is simple in most states, including New Jersey.  All that is required is physical presence in the state with no intent to move out.
  3. The applicant must be medically needy.  In New Jersey, this means you have to be determined disabled either by the Social Security Administration or by the New Jersey Department of Medical Assistance and Health Services.  Disability is typically scored by looking at how much assistance is required for activities of daily living.
  4. The applicant must meet the resource requirement.  In New Jersey, this requirement for long-term care Medicaid is $2,000 for a single person and $3,000 for a married applicant.  For the New Jersey “Medically Needy Program,” the resource requirement is $4,000.
  5. The applicant must meet the income requirement.  InNew Jerseyfor 2013, the an applicant for long-term care Medicaid cannot have more than $2,130 of income per month.  An applicant with income in excess of this cap will not qualify for the long-term care Medicaid.  He or she may qualify for the “Medically Needy” Medicaid if a majority of the applicant’s income is being used to pay for his or her medical care.

Emergency Contact Information: Attorneys’ Cell Phone Numbers

By Joe Koshar on Posted in Uncategorized

We apologize, but our New Jersey telecommunication systems remain adversely affected and are currently not functioning.  This includes phone, voicemail and fax communication.  Thus, if you need to contact anyone at our NJ office, please click here for an attachment containing all of our attorneys’ mobile phone numbers. 

 You may also access our attorneys’ phones numbers on our website.

 Alternatively, you may also dial 212-752-8000 for our New York main line, where our Client Service Representative will direct your call accordingly.

 All of our offices are open and operational.

 Again, and most importantly, we truly wish our best to everyone.

Perhaps We Can Help During These Difficult Times

By Joe Koshar on Posted in Uncategorized

Dear clients, friends and neighbors,

We realize that in this difficult aftermath of the storm, many of our clients, friends and neighbors are dealing with issues where we may be able to present some relief.

We are very fortunate to have power and Internet in our New Jersey, New York, Delaware and Maryland offices.  For anyone who needs it, we would like to offer you the ability to use our conference rooms to charge your devices, check email or other important areas of your life that you are unable to access.

We very much realize that these are tumultuous times.  It is our utmost hope that we may be able to help alleviate some of the pain and trouble experienced by the people and families we care about.  Please do not hesitate to contact Gayle Englert, Director of Human Resources, at genglert@coleschotz.com or 201-320-2766, if you would like to make use of our facilities.  We will do our very best to accommodate everyone we possibly can.

Also, we hope that you may find the below list of important numbers and services to be helpful.

Lastly, we realize that many of you may have been trying unsuccessfully to contact us over the previous several days.  We deeply apologize for this as our systems were adversely affected and were not restored until today.

Again, we wish our absolute best to everyone affected.  During these times, we are reminded of the paramount importance of health, safety and family and hope that all are as strong for you as possible.  We hope you know that you are in our thoughts and we hope to help you as we surmount the obstacles ahead of us.

Major Overhaul to Veterans’ Benefits May Be on the Horizon

By Mary Browning on Posted in Veteran's Benefits

As a result of a year long investigation, the Government Accountability Office (GAO) released a report recommending major changes to the current eligibility requirements for Veterans to obtain certain pension and aid and attendance benefits.

First, the GAO is recommending that Congress give the Veterans Administration authority to implement a look-back period for eligibility similar to the five year look-back period currently in effect for Medicaid applicants.  Currently, Veterans can divest themselves of assets one day and apply for pension benefits the next day.  If a look-back period is established, Veterans who divested themselves of assets would not be eligible to receive benefits for some set period of time.

The New York Times reports that the GAO also blamed the Department of Veterans Affairs for having unclear eligibility rules and for not requiring applicants to report asset transfers or other financial information.  The Department of Veterans Affairs agrees with the GAO’s recommendations and is currently drafted new regulations to clarify the types of asset transfers that will disqualify a person from receiving pension benefits.  The regulations could be in effect as early as 2013.

Truth to Power: Falsely Claiming a Power of Attorney For Someone Can Render You Personally Liable For Their Healthcare-Related Debts

By Kenneth Baum on Posted in Legislation

While time may be critical in admitting an ailing relative into a healthcare facility, acting quickly is no substitute for acting prudently when claiming to have a power of attorney, as the Appellate Division of the Superior Court of New Jersey recently confirmed in Royal Suites Healthcare and Rehabilitation Center v. Palladino.  

In Royal Suites, Theodore Fusco (“Fusco”) admitted his aunt, Dora Palladino (“Palladino”), who was suffering from dementia and medical problems, into the Royal Suites Healthcare and Rehabilitation Center (“Royal Suites”), a residential nursing home facility.  The admission agreement that Fusco signed included, among other things, the following provision:

If a Responsible Party and not the Resident signs this agreement, and the Responsible Party is the Resident’s Power of Attorney and/or Legal Guardian, legal proof of such should be furnished to the facility….

The admission agreement also stated that if the Responsible Party managed the Resident’s finances, he or she would be responsible for making payments owed to Royal Suites from the Resident’s funds.  Fusco signed the admission agreement on the line indicating “Signature of Responsible Party.”  Under his signature, Fusco wrote “P.O.A.,” signifying a purported power of attorney.  In reality, however, Fusco did not have a power of attorney for Palladino.

Although Medicare initially covered the cost of Palladino’s stay at Royal Suites, those benefits expired after two months, at which time Royal Suites offered Palladino the option of remaining at the facility as a “private pay” patient or leaving.  Palladino remained at Royal Suites for an additional month before being discharged but did not pay for the cost of her stay.  At the time of her discharge, Palladino owed Royal Suites the sum of $7,755. 

Following Palladino’s death two months later, Royal Suites sued Fusco for the balance owed.  The trial court found, among other things, that Fusco signed the admission agreement under a claimed power of attorney despite the fact that he failed to provide Royal Suites with an actual power of attorney or produce one at trial.  The trial court held Fusco liable for Palladino’s debt, and Fusco appealed.

The Appellate Division affirmed the lower court’s decision, specifically adopting the following reasoning of the trial court:

With a power of attorney you’re acting as the person’s agent.  Without that power of attorney you’re simply acting on your own.  You’re guaranteeing anything you sign.

The court in Royal Suites also cited to Fusco’s admission at trial that he handled Palladino’s finances at the time of her stay at Royal Suites.  Given that fact, and Palladino’s receipt of checks totaling more than $160,000, which were deposited into accounts to which the Fuscos had access in the months preceding her death, the Appellate Division held that Fusco was responsible for payment pursuant to the admission agreement.  Accordingly, the court affirmed the trial court’s judgment against Fusco.

The court’s decision in Royal Suites is instructive for anyone admitting a relative into a nursing home or other healthcare facility.  While claiming a power of attorney in a boilerplate admission agreement may help expedite the admission process, it can also lead to liability for the patient’s debt to the facility if an actual power of attorney does not exist. 

 

Powers of Attorney and Health Care Directives Can Help In Carrying Out Your Desires

By Patrick J. McCormick on Posted in Medicaid

Health Care Directives and Powers of Attorney are important documents to have in place to ensure that your wishes are carried out if you become unable to act for yourself, and that your affairs are carried on as smoothly as possible under these circumstances.  While having to contemplate situations where you cannot make your own decisions can be difficult, doing so in advance can provide invaluable assistance to those who may someday be required to act on your behalf.

Health Care Directive

Health care directives (also sometimes termed “living wills” or “health care proxies”) serve two primary purposes.  First, they allow you to assert your desire to be free from the use of life-sustaining or prolonging procedures and medications, if you become irreversibly or terminally ill (if this is in line with your wishes).  Second, these documents direct a surrogate appointed by you to make a wide range of medical and health care decisions for you, if you are unable to articulate your own preferences. Although health care directives are typically drafted to maximize a health care agent’s powers under state law, they can be modified to narrow the agent’s scope in accordance with your wishes.

            The party you appoint as your health care representative typically acts in situations where you have become unable to express your desires regarding health care treatments.  In your health care directive, you may specify types of treatments which you wish to have withheld under certain circumstances.  For example, you can direct your agent to only authorize medications which relieve pain and increase comfort if you are facing a terminable condition.  A standard health care directive also contains a release, allowing the disclosure of individually identifiable health information to your health care agent.

            You are given the ability to select anyone you choose as your health care agent – many parties will choose their spouse as their initial agent.  You are also given the ability to appoint successor health care agents, if your initial agent is unable or unwilling to serve on your behalf. 

            As stated above, your health care agent is given discretion in making a wide range of medical decisions on your behalf.  To this end, it is highly advisable to discuss your specific wishes regarding health care treatment with your designated health care agent (and any successor health care agents you appoint). 

Power of Attorney

Power of Attorney documents allow a person appointed by you to manage your assets and make investment decisions on your behalf.  Having such a document avoids the necessity of having to go to court to get someone appointed as your guardian if you cannot manage your own affairs.

Your attorney-in-fact is essentially given the power to conduct your activities for you – he or she can sell property in which you maintain an interest, collect funds owed to you, defend suits against you, make gifts on your behalf, and generally act in a manner which allows them to manage your affairs.  Given the significant power granted to your attorney-in-fact, a decision on who to appoint in this role requires considerable thought.  If desired, you can also provide certain limitations on the powers granted to your attorney-in-fact.

As with your health care directive, you are given the ability to choose anyone you want as your attorney-in-fact (and, as with the health care directive, the typical first choice is a person’s spouse).  Successor attorneys-in-fact can be appointed, and multiple parties may serve simultaneously as co-attorneys-in-fact.

Your Power of Attorney can either be effectively immediately upon executing the document or can be effective only in the event of your disability or incapacity (termed a “springing” power of attorney).  A “hybrid” format can also be used, where the power of attorney becomes effective immediately for your initial attorney-in-fact, but only becomes effective upon your incapacity or disability as to any successor.

Qualifying for Medicaid in New Jersey Can Be More Difficult Than Qualifying in Other States

By Lori Wolf on Posted in Medicaid

When families come to our office to discuss their options to become eligible for government assistance for themselves or their parents, oftentimes the meeting is not the beginning of their research on this topic.  Family members attend seminars, read articles and search the internet for information on government benefit programs and how to become eligible for these programs.  They then come to our office armed with questions and thoughts on how to proceed.  Unfortunately, many of the options that individuals learn about before reaching our office are not available in the State of New Jersey.  New Jersey has a very restrictive approach to Medicaid planning.

For example, New Jersey, like many states, is an income cap state.  In an income cap state, the state imposes a limit on the income that a Medicaid applicant can receive monthly without compromising eligibility for government assistance.  The income cap in New Jersey currently is $2,094 per month in gross income.  If an individual has income in excess of that, they are no longer eligible for Medicaid in New Jersey.

Many income cap states permit the use of a Miller Trust (also known as an income-only trust, a QIT or a D4(b) trust) to permit an applicant to become eligible for Medicaid where his or her income exceeds the income cap.  A Miller Trust is an irrevocable trust where the applicant for Medicaid deposits his or her income on a monthly basis into the trust.  Medical expenses for the applicant can be paid out of this trust.   There is a lien on trust assets to the state for expenses the state paid on the applicant’s behalf.  This lien is paid off at the death of the applicant with the trust assets that remain.  However, if this trust is utilized in the correct fashion, the balance in the trust should be $-0- at the end of each month.  A monthly deposit is made into the trust for all income above the income cap amount in order to maintain Medicaid eligibility for the applicant.  The minimum to deposit is the difference between the applicant’s gross income and the income cap (currently $2,094 in New Jersey).  The applicant can, however, choose to deposit all income into the trust.  The trustee will pay medical bills from the trust each month and can deplete trust assets. 

While this is a useful technique that is permissible in many income cap states, New Jersey does not permit the use of a Miller Trust.  If an individual’s income exceeds the income cap, they are simply ineligible for Medicaid.  In some such cases, the Medically Needy program is available to provide lesser benefits to an applicant.

In some states, IRAs are not counted as an available resource if the applicant or spouse is in pay-out mode.  New Jersey, however, counts IRAs of the applicant or his or her spouse as available, countable resources in determining eligibility for benefits.

In some states, annuities and promissory notes can be utilized as a planning technique to obtain eligibility for government assistance.  New Jersey does not permit the use of annuities or promissory notes in connection with Medicaid planning. 

As a final example, some states, such as New York, allow the use of spousal refusals to permit an applicant to become eligible for Medicaid.  Using that technique, a spouse can refuse to utilize their assets to pay the bills of a disabled spouse and the disabled spouse is not deemed ineligible for benefits based on amounts in the healthy spouse’s name.  New Jersey does not accept spousal refusal as an option; and, if a spouse has more assets than is permitted under the community spouse allowance, then the disabled individual is ineligible for Medicaid.

Although the internet is a useful tool for gathering information about topics such as Medicaid planning, it is important to ultimately seek the advice of an attorney to determine which techniques and options are available.

New Jersey Medicaid Programs

By Mary Browning on Posted in Medicaid, Medically Needy

Although Medicaid is a federal program, each state is charged with administering the program for its residents.  Because of this, each state’s rules and requirements for qualifying for Medicaid can vary drastically from state to state.  The following is a brief summary of New Jersey’s Medicaid programs.  More information on these programs can be obtained from the New Jersey Department of Health and Human Services.

Institutional (Nursing Home) Medicaid

Requirements

The following requirements must be met in order for an individual to qualify for Nursing Home Medicaid in New Jersey:

  • At least 65 years of age or disabled.
  • Citizen of United States or non-citizen in lawful immigration status.
  • Must provide or file for a Social Security number.
  • Resident of New Jersey.  Anyone residing in a nursing home or assisted living facility certified for Medicaid is considered a resident of New Jersey.
  • Medical need for care.
  • Must be appropriately placed in a Medicaid facility that is able to provide the needed level of care, and must be actually receiving the needed services.
  • Assets of less than $2,000.00 at least one day of each month of Medicaid eligibility.
  • Spouse’s assets of no more than $113,640.00 at time of Medicaid application, unless increased by a judge’s order.
  • Monthly GROSS available income not to exceed $2,094.00 as of 2012.
  • Under no penalty for transfer of assets.

Patient Responsibility

“Patient responsibility” is the amount that the Medicaid recipient pays to the nursing home for each month of Medicaid coverage.  It is equal to the recipient’s gross income with the following deductions:

  • A “personal needs allowance” of $35.00 each month to pay for any extras not covered by Medicaid.
  • Health insurance premium, if recipient is paying the premium.
  • If married, an amount for the spouse’s needs, based on the spouse’s monthly income and the Minimum Monthly Maintenance Needs Allowance (MMMNA), up to $2,841.00.

Gross income is the amount of income from the following sources, before deductions (such as the Medicare Part B premium of $96.40 (2011) and the Medicare Part D premium deductions from Social Security, income tax deductions, life or health insurance premiums deductions, etc.):

  • Social Security.
  • Pensions.
  • Civil Service.
  • Railroad Retirement.
  • IRA distributions.
  • VA pension.
  • Rental income.
  • Wages.
  • Alimony.
  • Interest and dividends

The Minimum Monthly Maintenance Needs Allowance (MMMNA) may allow the Medicaid recipient to allocate a portion of income to meet the needs of the spouse, depending on the amount of monthly income available to the spouse, plus excess shelter costs of the spouse.

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New Jersey Medicaid Qualification

By Lori Wolf on Posted in Medicaid, Social Security, Veteran's Benefits

To qualify for Medicaid in New Jersey, an applicant needs to prove both financial need and medical need.  This article will focus on the financial need component of qualifying for benefits.  With some exceptions, in order to qualify, an individual cannot have assets in excess of $2,000 and income in excess of $2,094 per month.  This article explains how these amounts are calculated and what types of assets and income are included and excluded in this calculation.

Treatment of Income

Most types of income are included in the $2,094.00 income limit for Medicaid qualification purposes, for example:

  • Social Security
  • Civil Service
  • Pension, including Veterans Administration (VA) pension
  • Annuity payments
  • Retirement accounts
  • Interest
  • Dividends
  • Alimony
  • Rental income
  • Life insurance proceeds

However, there are some limited exclusions from income, including VA allowance for Aid and Attendance or Housebound Allowance (but VA pension is included as income).

Treatment of Assets

In order to qualify for Medicaid, an applicant can have no more than $2,000.00 worth of countable assets.  If married, the applicant’s spouse can have up to an additional $113,640.00 of countable assets, unless increased by a judge’s order.  Available assets are counted toward these limits and excluded (or exempt) assets are not, as discussed below.

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Treatment of the Primary Residence for New Jersey Medicaid Purposes

By Mary Browning on Posted in Medicaid, Medicaid Lien

In New Jersey, a person applying for Medicaid can have no more than $2,000 of assets.  This presents a problem for those applicants who own a home.  The Medicaid applicant’s primary residence will be an excluded asset if the applicant is living in the home or intends to return home and the equity in the home is less than or equal to $786,000.00.  The home will also be excluded if the applicant’s spouse resides in the home, or if a minor, blind, or disabled child resides in the home.  This exclusion only applies if the property served as the recipient’s primary residence prior to nursing home admission.

Home equity is calculated by subtracting any debt, such as a mortgage, from the current market value, which is calculated by taking the assessed value of the property and applying the equalization ratio. 

Applicants with an equity interest greater than $786,000 .00 are not eligible for long term care Medicaid (this is known as the home equity cap).  The home equity cap may be waived when denial of benefits would result in demonstrated hardship to the applicant.

Exceptions to the home equity cap apply if any of the following individuals reside in the home:

  • The Medicaid recipient’s spouse.
  • The Medicaid recipient’s child under age 21 (biological or adopted, without regard to marital status).
  • The Medicaid recipient’s blind or disabled child of any age.

If the home is sold during the Medicaid recipient’s lifetime, the proceeds of the sale become an available asset.  After the Medicaid recipient’s death, if the home is included in the probate estate, then it will be a probate asset subject to creditor claims, including a claim by New Jersey for reimbursement of Medicaid benefits.  Further, New Jersey has the right to place a lien on the Medicaid recipient’s home to recover the value of benefits paid, which will be satisfied if the home is sold, whether during the recipient’s lifetime or after death.

Certain planning strategies may be employed prior to application for Medicaid benefits (and after application for Medicaid benefits in the case of spouses) in order to avoid Medicaid’s claim for recovery against the home after the death of the Medicaid recipient, and to prevent the sale of the home from disqualifying the Medicaid recipient from benefits.  Clients should consult an attorney experienced in elder law to discuss the strategies that may help a family preserve the family home.