Basics of Medicaid, Special Assistance, and VA Benefits

Transcription

1 Basics of Medicaid, Special Assistance, and VA Benefits Daniel A. Jenkins, J.D., LL.M. (Tax) Law Office of Daniel A. Jenkins 2015 Ayrsley Town Blvd., Ste. 202 Charlotte, NC

2 Paying for Long Term Care Lots of misconceptions Lots of confusing, conflicting, and misleading information out there

3 Medicare Medicare does not pay for long term care. If certain requirements are met, Medicare will cover up to 100 days in a skilled nursing facility. Days 1-20 Medicare pays 100% Days Patient pays a copayment of $ per day. After day 100, Medicare pays nothing. Receiving 100 days of benefits is not guaranteed.

4 Medicare, cont. Admission to skilled nursing facility must follow a hospitalization of at least 3 days. Hospitalization must be inpatient observation status doesn t count. Your doctor must determine that you need daily skilled care. These skilled services must be related to your hospitalization or a condition that arose at the SNF while receiving care for a hospital related condition.

5 Medicaid We are concerned with paying for long term care and will be discussing Long Term Care (LTC) Medicaid, a program that pays for care in a nursing home. There are other Medicaid programs that pay for other health related expenses, and may have different eligibility requirements. The basic rules we will cover today apply to LTC Medicaid only.

6 Common Misconceptions About Medicaid 1. We need to sell mom s house. 2. We need to get mom s name off of the house. 3. Mom can give away $14,000 per year without penalty. 4. My spouse is in a nursing home, so Medicaid only cares about her assets. 5. My assets don t count because we have a prenuptial agreement. 6. We have to private pay until we spenddown all of our assets paying for long term care in order to qualify.

7 LTC Medicaid Eligibility 1. Assets 2. Transfer of Assets 3. Income

8 ASSETS Assets can be countable or non-countable. Applicants can have unlimited non-countable assets. Unmarried Medicaid applicants can have up to $2,000 in countable assets. For married applicants: 1. The applicant can have up to $2,000 in countable assets. 2. If both the applicant and the spouse reside in the facility, they can have up to $3,000 in countable assets. 3. If the applicant s spouse resides at home, we call him/her the community spouse.

9 Community Spouse Resource Allowance The community spouse can keep one-half (1/2) of the countable assets, subject to a minimum and maximum amount. The minimum CSRA is $24,180.* The maximum CSRA is $120,900. * * (as of 1/1/2017)

10 CSRA Example 1 Henry and Wilma, a married couple, have $25,000 worth of countable assets. Henry goes into a nursing home and applies for Medicaid. Wilma can keep one-half of the countable assets (25,000/2 = $12,500). However, because that amount is less than the minimum CSRA ($24,180), Wilma can keep the minimum, $24,180 of the countable assets. Henry is allowed to have up to $2,000 in countable assets. Therefore, H&W can keep all of the countable assets.

11 CSRA Example 2 Henry and Wilma, a married couple, have $500,000 worth of countable assets. Henry goes into a nursing home and applies for Medicaid. Henry is allowed to have up to $2,000 in countable assets. Wilma can keep one-half of the countable assets (500,000/2 = $250,000). However, because that amount exceeds the maximum CSRA ($120,900), Wilma is limited to the maximum and may only keep $120,900 of the remaining countable assets. H&W will have to spend down the excess countable assets.

12 Countable Assets Countable assets include cash, bank accounts, stocks, bonds, retirement accounts, vacation property, timeshares, motor vehicles (if more than one is owned), annuities (with exceptions), cash value of life insurance (if the total face value of all policies exceeds $10,000), etc.

13 Non-Countable Assets Personal property such as clothing, jewelry, furniture, art. One vehicle. If more than one is owned, the most valuable vehicle is non-countable. The home and contiguous land. If the applicant is unmarried, then up to $560,000 in equity is non-countable. If the applicant is married, then unlimited. Irrevocable pre-paid burial arrangements. Assets used in a business.

14 Non-Countable Assets, cont. Income producing property (with limitations). Assets that are inaccessible. For example, if the applicant is incompetent, his/her assets may be non-countable until a guardian can be appointed. Tenant-in-common interest in real property. For example, the applicant owns a one-third (1/3) interest in parents former home with brother and sister.

15 Henry and Wilma s Assets H & W own their home outright, with a tax value of $400,000. H owns a 2016 Ram pickup with a tax value of $25,000. W owns a 2005 Honda with a tax value of $2,500. H owns a fishing boat with a tax value of $20,000. H owns a 1/2 interest in his deceased fathers home. His brother owns the other half. The property is worth $250,000. H & W have $200,000 in a joint savings account. W has an original Monet worth $1 million.

16 Which Assets are Countable? W s 2005 Honda with a tax value of $2,500. H s fishing boat with a tax value of $20,000. H & W s joint savings account with $200,000. Their total countable assets are $222,500.

17 Which Assets are Non-Countable? H & W s home, regardless of equity. H s 2016 Ram pickup with a tax value of $25,000 (this is the most valuable motor vehicle). H s 1/2 interest in his deceased fathers home. W s original Monet worth $1 million (even valuable art is still personal property).

18 How Much do H&W Get to Keep? All of the non-countable assets. Of the $222,500 in countable assets: H can keep $2,000. W s CSRA will protect 1/2: 222,500/2 = 111,250. Because 111,250 is less than the CSRA maximum ($120,900), W can keep $111,250. The remaining countable assets, $109,250, will have to be spent down.

19 Spenddown Plan Use countable assets to purchase non-countable assets Vehicle upgrade sell the boat, trade in the cars, and purchase a new Cadillac Escalade Prepaid burial contract must be irrevocable Purchase tenant-in-common interest in real property Home improvements Kitchen/bathroom remodel New roof Reduce debt Medicaid compliant annuity

20 Transfer of Assets - Gifts Rules intended to prevent applicants from giving away their assets to qualify for Medicaid. Medicaid will impose a penalty period of one month for each $6,300 of assets that are given away during the lookback period. The lookback period is 5 years from the date of application. The penalty period begins when the applicant has applied for Medicaid and is otherwise eligible. Example: If applicant made a total of $63,000 in gifts during the 5 year period prior to applying for Medicaid, the penalty period will be 10 months.

21 Transfers, cont. The transfer penalty applies to transfers of both countable and noncountable assets. This is why you shouldn t transfer the house out of mom s name when she is going into a nursing home. There is no transfer penalty for gifts to a spouse or to a child who has been determined to be blind or disabled by the Social Security Administration.

22 Transfers, cont. Also, the home may be transferred without penalty to a child under the age of 21 or to a child who lived in the home for at least two years and provided care to the parent that prevented the parent from going into a nursing home (the caretaker child exception). If the home is co-owned with a sibling who also lived there for at least a year prior to the applicant entering a nursing home, the home can be transferred without penalty to the sibling.

23 Income There is no set income limit for LTC Medicaid. The applicant s income must be less than the cost of care. Only the applicant s income counts. Income that belongs to the applicant s spouse is ignored.

24 Income, cont. How do you determine whether an item of income belongs to the applicant or the spouse? Name of the Check rule. If income is in both names, impute 1/2 to each. For example, interest earned on a joint savings account will be divided between the applicant and spouse.

25 Minimum Monthly Maintenance Needs Allowance If the community spouse s monthly income is less than $2,030, the community spouse will be able to keep enough of the institutionalized spouse s income to bring it up to $2,030. The base amount of $2,030 can be increased in certain circumstances to a maximum of $3, Increase for excess shelter costs that exceed $609. Shelter costs include rent or mortgage, taxes, insurance, homeowner fees, and utilities.

26 Patient Monthly Liability (PML) This is the amount that the Medicaid beneficiary must pay each month toward their nursing home expenses. Start with the patient s gross income. Subtract the following: Personal needs allowance $30 Medicare supplement policy premium MMMNA income that is diverted to the community spouse Whatever is left is paid to the nursing home.

27 Medicaid Summary LTC Medicaid pays for care in a skilled nursing facility. Medicaid does not cover room and board expenses in an assisted living facility. Medicaid applicant will be evaluated for eligibility based on: Assets Transfer of Assets Income

28 Special Assistance North Carolina State and County Special Assistance helps pay for assisted living for those who qualify. This program is often referred to as Medicaid or Assisted Living Medicaid but it is not Medicaid. Special Assistance is a separate program with its own rules and eligibility requirements.

29 Special Assistance Many assisted living facilities do not accept Special Assistance (SA). Why don t these facilities accept SA? It s about the money. Max rate for assisted living: $1,182 per month Max rate for a special care unit : $1,515 per month A special care unit is for patients with Alzheimer s or a related condition

30 Special Assistance - Eligibility Applicant must have less than $2,000 in countable assets. For regular assisted living, the applicant s income may not exceed $1, per month. For special care unit, the applicant s income may not exceed $1, per month.

31 Special Assistance Eligibility, cont. Asset rules are similar to Medicaid, with some key differences. Only assets belonging to the applicant are considered. Assets belonging to the applicant s spouse are ignored. Therefore, it is possible to transfer the applicant s assets to the spouse in order to become eligible. There is no penalty for transfers to a spouse. Transfers of assets will be evaluated for penalty. The lookback period is 3 years.

32 Special Assistance vs. Medicaid If an SA recipient moves to a skilled nursing facility, he or she will have to apply for Medicaid. Assets belonging to a spouse may now have to be spent down to qualify. Also beware of Medicaid s longer lookback period. A transfer that didn t trigger a penalty for SA could become a problem when applying for Medicaid. Again, just because you are receiving SA does not mean that you are automatically eligible for Medicaid. People are often confused by this as SA is so often wrongly referred to as a Medicaid program.

33 Special Assistance Pitfalls Strict income limit. Income that exceeds the limit by any amount will result in a denial. Some people may qualify for both SA and VA Aid and Attendance. Beware! If the applicant receives Aid and Attendance, some portion of that benefit is considered a pension and will count as income for SA purposes. That additional income may cause the applicant to be over the SA income limit.

34 Veterans Benefits There are several types of benefits available to veterans or the eligible survivors of deceased veterans. Many of these benefits require that the veteran have a service-connected disability or that the service member died on active duty or whose death after service resulted from a service-connected disability. We will be discussing a benefit called Pension or Death Pension. This benefit is frequently called Aid and Attendance, though as we will see, Aid and Attendance is actually an additional monetary allowance provided with Pension if the recipient qualifies.

35 Veterans Benefits, cont. The VA offers benefits to veterans and the surviving spouses of deceased veterans who qualify that can be used to help pay for long term care. These benefits can be used at any facility or to pay for care at home. Only veterans and the surviving spouses of deceased veterans can qualify. The spouse of a living veteran is NOT eligible. The eligibility rules may change in the near future! Experts anticipate that the new rules will make it harder to qualify.

36 Veterans Benefits, cont. Pension and Death Pension These benefits provide cash payments to veterans who served during a period of war or to their single surviving spouses. Pension is for veterans. Death Pension is for the surviving spouses of deceased veterans. Aid and Attendance An additional monetary allowance provided with Pension or Death Pension if the recipient needs the regular aid and attendance of another person or is considered housebound.

37 Veterans Benefits, cont. How much is the benefit? (these are the maximum rates) Pension Base, single $1,075 Base, married $1,408 A&A, single $1,794 A&A, married $2,127 Death Pension Base $721 A&A $1,153 In order to receive the maximum benefit, the recipient must have Income for VA purposes (IVAP) of $0.

38 VA Benefits - Eligibility Eligibility requirements for Pension and Death Pension 1. The veteran had to have served on active duty at least 90 days with one of those days during a period of war. Service in combat is not required, only that the veteran was in the service during wartime. 2. The veteran was discharged with a discharge that was not dishonorable. 3. The veteran is 65+ years old or totally disabled. For a single surviving spouse applying for Death Pension, the deceased veteran did not have to meet any age or disability test. 4. A surviving spouse had to be married to the veteran, they had to be living together at the veteran s death, and the surviving spouse must be single at the time of application and cannot have remarried after 11/1/1990.

39 Periods of War Period of War Beginning and Ending Dates World War II 12/7/ /31/1946 Korean Conflict 6/27/1950 1/31/1955 Vietnam 8/5/1964 5/7/1975* *for veterans who served in country before 8/5/1964, the dates are 2/28/1961 5/7/1975

40 VA Benefits Eligibility, cont. 5. The income test. 6. The asset test.

41 VA Benefits Income Test The claimant s household income must be less than the Maximum Annual Pension Rate (MAPR). The MAPR is the max benefit listed above. The household income can be reduced by future predictable monthly medical costs to meet the income test under certain conditions. This adjusted income is called Income for VA Purposes or IVAP. In order to receive the max benefit, the claimant s IVAP must be $0.

42 VA Benefits Income Test, cont. Future, predictable monthly medical costs that can reduce the claimant s household income can include expenses for in-home care, assisted living, and nursing homes. Typically, the claimant must be receiving assistance with activities of daily living (ADLs) for the VA to deduct those expenses from the claimant s household income.

43 VA Benefits Asset Test There is no specific amount. YET. The final decision is up to the VA representative who evaluates the application. There is a common misconception that the limit is $80,000. The VA representative must justify his or her decision to approve an application if the claimant has greater than $80,000 worth of countable assets. They are extremely unlikely to do that. Many applications are denied even though the total assets are less than $80,000.

44 VA Benefits Asset Test, cont. What assets are non-countable? 1. A personal residence, and a reasonable amount of land on which it sits. The VA takes the position that the veteran or the veteran s spouse must occupy the residence for it to be exempt. 2. Personal property. 3. Automobile for personal use. There is no lookback period for transfers of assets. YET! There is no penalty for gifting assets in order to qualify for Pension or Death Pension. YET!

45 Aid and Attendance Rating Obtaining a rating for A&A is important both for receiving a higher benefit and for deducting your long term care expenses from your income to reduce IVAP to $0. Definition: Need for aid and attendance means helplessness or being so nearly helpless as to require aid and attendance of another person. 38 CFR

46 A&A How to Qualify 1. Blind or nearly blind (corrected visual acuity of 5/200 or less, in both eyes, or concentric contraction of the visual field to 5 degrees or less). 2. Patient in a nursing home because of mental or physical incapacity. 3. Evaluation under the following criteria: A. Assistance with bathing/showering B. Assistance with toileting C. Assistance with feeding D. Assistance with dressing/undressing

47 A&A How to Qualify, cont. E. Assistance with transferring in/out of bed/chair F. Assistance with incontinence G. Assistance with ambulating H. Assistance with keeping oneself ordinarily clean and presentable I. Assistance with frequent need of adjustment or special prosthetic or orthopedic device J. Having an incapacity (mental or physical) requiring care/assistance on a regular basis to protect patient from hazards or dangers incident to his/her daily environment K. Is totally bedridden, a condition which, through its essential character, actually requires that the claimant remain in bed

48 A&A How to Qualify, cont. For the criteria in 3.A-K above, there does not need to be a certain number of these in order to determine a rating for aid and attendance. The VA representative simply must determine from the evidence whether the claimant is so helpless as to require the regular aid and attendance of another. It is widely believed that the claimant should have a need for and be receiving at least two of the services listed in A-H or at least one of the services listed in I-K.

49 VA Benefits the 2015 Regulations Changes to the eligibility requirements are coming. VA issued proposed regulations in January 2015 that would change the eligibility requirements for Pension and Death Pension. The proposed changes included: Establishing a clear net worth limit Creating a 36-month look-back period regarding asset transfers The imposition of a penalty period should the claimant have been found to make gifts during the look-back period Defining and clarifying deductible medical expenses

50 VA Benefits the 2015 Regulations, cont. More than two years later, we are still waiting to learn when the final rule will be published, and when the proposed changes will take effect. Publication of the final rule has been delayed multiple times due to the complexity of rule and the large amount of comments received regarding the initial proposal. Rumor has it that the final rule is complete and undergoing the final steps for publication.

51 VA Benefits Important tip for recipients of Pension or Death Pension!! Keep the VA informed of any changes to income, expenses, or assets. Failure to keep the VA informed can lead to overpayment of benefits. The VA will come after you, aggressively, to recover any overpayments. Remember to notify the VA if the residence is no longer occupied by the veteran or the veteran s spouse.

52 Conclusion Medicaid helps pay for care in a nursing home. Applicant must meet income and asset tests. 5 year lookback for transfers. Special Assistance helps pay for assisted living and memory care. Similar asset test to Medicaid but a much stricter income test. 3 year lookback for transfers. VA Pension with rating for A&A cash payment that can be used anywhere. Claimant must meet income and asset tests. No lookback for transfers. YET!

53 Questions?