When you were young your parents found ways to protect and provide for you. As your parents age they increasingly need your care. You need answers including legal realities. This article and the audio content describes the type of information you need to receive. It also provides practical tips to create open communication.
Dynamics of Communicating with the “Silent Generation”
People born before 1946 are known as the “Silent Generation”. Their world was shaped by the Great Depression, WWII, The Cold War and the Civil Rights Movement. They are often described as less open with personal issues including health and finances. They value simple concepts and rarely view themselves of wealthy regardless of their net worth. “Waste not want not” means much to them. Listen Here
Nursing homes are expensive. Medicaid (called SoonerCare in Oklahoma) covers the cost of Nursing Home expenses for those who qualify. Unfortunately, many myths surround how to apply or become eligible.
You cannot own anything
You have to give everything away
You can only have $2,000
You cannot be eligible for 5 years
Medical:The person applying for Medicaid must need services provided either in home or in a skilled nursing facility.
Financial: The rules surrounding Medicaid eligibility are very complex. Medicaid is a federal program that states administer. There are rules regarding assets, however there are many exceptions and exemptions from those rules. In short, a person applying may have far more than $2,000 and still be eligible. Married couples can protect large portions of their life’s savings.
Citizenship: Applicants must be United States citizens. Certain exceptions apply to certain non-citizens residing here legally.
Medicaid Application and DHS
The Medicaid application process can be simple but many people fail to become qualified if they do not provide the correct information. The caseworker looks at the income and current assets. Perhaps the most troublesome requirement is the production of 60 months of records, including cancelled checks, from all financial institutions. These are required for any account even if it has closed during the 60 months.
Why does Medicaid Want 60 Months of Records?
The 60 months is called the “Look Back Period”. Transactions are examined to see if property was given away for sold for less than its fair market value. If such a transaction is found, the caseworker may impose a “Penalty Period”.
What is a Penalty Period?
The Penalty Period is amount of time the applicant must wait before Medicaid will begin paying for the care.
Penalty Period Examples:
Example 1: It may be possible to explain the transfer to the satisfaction of the caseworker. However, it is likely that the transfers will be penalized.
Applicant gave grandchildren $10,000 over the past 60 months (birthday or Christmas presents)
Medicaid divides that amount by the daily divisor The 2017 rate is $144.67
10,000 ÷ 144.67 = 69
Example 2: In a recent case, a penalty period was imposed on church tithing. The applicant appealed to a Fair Hearing and was able to show that the giving was a pattern that had not changed in decades. The Appeal wiped away the penalty period.
Applicant gave Church $10,000 over the past 60 months as a pattern of tithing or giving.
Medicaid divides that amount by the daily divisor The 2017 rate is $144.67
10,000 ÷ 144.67 = 69
69 days reduced to zero on appeal
Example 3: Father deeds $400,000 farm to son and applies for Medicaid 4.5 years later. This example demonstrates two points. First, if the date of application was delayed 6 months, then the transfer of the farm would not be considered at all. The second point is that there is no limit to the amount of the Penalty Period.
Applicant deeded son a farm valued at $400,000 4.5 years ago
Medicaid divides that amount by the daily divisor The 2017 rate is $144.67
400,000 ÷ 144.67 = 2765
2765 days (7.5 years)
What is a Fair Hearing?
A Fair Hearing is a process where the decision of a caseworker can be challenged. Denials of applications and imposition of Penalty Periods are good reasons that such an action may be considered. A notice of disagreement is filed. It is a good idea to prepare a brief stating the applicant’s side of the case. In the brief, the factual or legal conclusions behind the casework’s denial or penalty period can be fully challenged. At the hearing itself, the parties are allowed to present their sides. The Administrative Hearing Officer takes the matter to a committee that then issues an order which may agree with, overturn or modify the caseworker’s decision.
How an Elder Law Attorney Can Help:
It is never too late to plan even in crisis. Among the things Elder Law Lawyer can do includes:
Presenting the application for benefits in a way that explains the exceptions or rules for the caseworker.
Identify troublesome transactions that may cause penalties. Once identified, there are ways to cure the penalties, delay applications or take some other course to avoid or minimize the Penalty Period.
Developing permissible transfers that preserve assets while minimizing penalty periods.
File a Fair Hearing Request and represent you at the hearing.
While no attorney can guarantee results, applicants typically benefit from the services of an Elder Law attorney knowledgeable with the workings of Medicaid.
Marian joined her church in 1990. From that time on, she made tithed 10% of her income and other contributions to support her church. Her giving of first fruits continued even after she became ill. When she could no longer remain home, she sold her house and donated 10% of the proceeds to the Church.
Need for Medicaid / SoonerCare
Marian was out of money by the end of 2016. Medicare does not pay for long-term nursing home care. Her income was insufficient to cover the cost of her nursing home. In fact, she the cost exceeded her income by about $4,000 per month. She had no choice but to file for Medicaid. Medicaid, a separate program from Medicare, pays the difference between her income and the nursing home’s reimbursement rate. SoonerCare is Oklahoma’s version of Medicaid.
Medicaid Application and Examination
Medicaid is needs based program. A person with too many countable assets will be denied. In the past, people gave away property in order to qualify for this benefit. In order to prevent intentional impoverishment, strict rules were adopted. Now when anybody applies for Medicaid, the Department of Human Services (DHS) case worker is required to obtain financial records for the past 60 months. The purpose is to attempt to determine whether assets were given away to become qualified to receive Medicaid or without receiving something of equal value in return. Unfortunately, DHS is likely to treat all donations as improper gifts.
Church Giving Treated and Improper
In Marian’s case, she had given about $14,000 to her church over the past 60 months. DHS used that amount to calculate a “penalty period”. The penalty period is the length of time an applicant must wait before benefits are paid. It is calculated by dividing the value of the property given away by $144.67[i] to determine the number of penalty period days. This meant that she would not be eligible for benefits until 96 days after she was broke. Either the family must come up with the difference; the facility eats the cost or the resident faces eviction.
Appeal to Fair Hearing Judge
Fortunately, the caseworker’s decision is appealable. A Fair Hearing allows an applicant to file a request a hearing if DHS denies an application or imposes penalty period. Marian requested a hearing because the rule say:
A penalty would not apply if the individual can show satisfactorily that the intent was to dispose of assets at fair market value or that the transfer was exclusively for a purpose other than eligibility.
Because of Marian’s faithful pattern of tithing the Fair Hearing Judge agreed that no penalty should be imposed. However, if Marian suddenly began giving as her health declined, the decision may have gone against her.
Planning is the best tool to avoid a bad result. In fact, many families can save a significant amount of resources just by knowing the rules. Having an attorney experienced in Medicaid laws can help avoid denials and penalties.
Mother Fails to Plan for Care of Daughter After Her Death
A recent case[i] highlights the way that a Special Needs Trust and a Guardianship could have protected a vulnerable adult child. At age 30, the daughter[ii] overdosed on alcohol and methamphetamine while partying with her boyfriend Jesse. She suffered a cardiac arrest and brain damage due to lack of oxygen. After release from the hospital, she moved in with her mother and required 24-hour care. The injury left her with only the ability brush her own teeth and prepare simple meals. She processed information slowly and had a severe memory deficit. The daughter ended up on disability. The mother did not set up a Special Needs Trust or seek a Guardianship.
Mother Dies, Predator Pounces
Not actual photograph of Jesse
The mother suddenly died and left her daughter $450,000. Jesse quickly married the daughter. The daughter apparently did not realize she was married because she only referred to him as a friend that she trusts. Jesse failed to follow medical advice to hire a speech and occupational therapist because it was expensive and might not work. He failed to make or keep the daughters doctor appointments or even take advantage of free or low-cost options. Jesse thought that doctors or other family members should be making these arrangements. Most alarming, drug tests revealed showed that the daughter used increasing amounts of methamphetamine under Jesse’s care. This caused her to lose weight and become gaunt.
Predator Uses Daughter’s Money
When not working at a liquor store, Jesse lived with his mother apparently leaving the daughter to fend for herself. Jesse diverted at least $30,000 of the daughters social security benefits to himself. Instead of providing for her care, he used the daughters disability benefits for a road trip, jewelry and a new wardrobe. Recover of the money from Jesse was hopeless because he had no assets and was responsible for five children.
The court eventually appointed the daughter’s aunt as the guardian.
A Special Needs Trust Would have Protected Daughter
Predators smell money. The daughter was the perfect target for Jesse because she was trusting and incapable of managing her own affairs. Jesse was in a perfect position to exploit and controlled her with drugs and alcohol. The marriage was Jesse way to gain more control over her resources. A Special Needs Trusts (SNT) could have placed a Trustee in charge of the daughters money. Such an arrangement makes it more difficult for predators to exploit individuals. A SNT can also prevent the loss of SSI disability benefits.
A Guardianship Could have Prevented Exploitation and Provided Care
In addition to a SNT, a guardianship would have offered the daughter additional protection. In this case, the mother could have been named as a guardian. She then could have named a successor guardian in her own will. Generally speaking, a parent, spouse or child, who is serving as a guardian, can nominate an individual to serve as their successor guardian. The law and courts generally treats the person so nominated with priority over others who wish to be the guardian. In this case, it would have been better if her mother became a guardian then name the daughters aunt to be the successor guardian in mothers will.
Planning Key to Better Outcomes
This case illustrated how prevention of predator abuse can be greatly diminished through planning. Other considerations are continued qualification for programs such as Medicaid and SSI disability. Choosing trusted individuals to be in charge as a Trustee or Guardian is also vital. Had these protections been in place, the daughter would have been a less attractive target for predators. It would have also enabled her to receive the needed care.
VA Increases Wartime Veteran Aid & Attendance Benefits for 2017
Veterans of WWII, Korean War, Vietnam and the Gulf Wars can qualify for various pensions designed to assist them due to medical expenses that they, their spouse or widows they incur.
Aid & Attendance: This benefit is typically available when a veteran or veteran’s spouse is in a nursing home. It is also available for those in an assisted living or memory care facility for medical purposes.
Housebound: This benefit is available for a veteran or his spouse with mobility issues caused by a medical condition. Persons applying for this benefit must be substantially confined to their home.
Can Somebody with Dementia or Alzheimer’s Make a Will?
Yes, but there may be a point where this becomes impossible.
Families often face a difficult situation when they receive a Alzheimer’s or dementia diagnosis. Often, the signs preceded the diagnosis. Whether an individual is dealing with a suspicion or “official” diagnosis, there may still be an opportunity to create an estate plan. In fact, there is a great need to do so.
Good News, Estate Planning is Possible
Everybody over the age of 18, even those with a disease affecting their brain, is presumed to be competent to create a will. This means that they have “testamentary capacity”. Even if somebody has been determined by a court to be incompetent, there may be times when the person may have lucid intervals when he knows the extent of his estate and who should receive the inheritance.
Nature of Dementia, Windows of Opportunity
Most of us who have been around suffers of dementia realize that it is not an all or nothing condition. For example, the term “sundowners” refers to the worsening of dementia in the late afternoon or evening. At those time, individuals may hallucinate, become agitated or paranoid. See http://sundownerfacts.com/symptoms/ Strangely, for some of these people the conditions disappear or lessen the next morning.
Generally, dementia such as Alzheimer’s is progressive. However, the rate that it progresses varies. According to Alz.org.[i]
The symptoms of Alzheimer’s disease worsen over time, although the rate at which the disease progresses varies. On average, a person with Alzheimer’s lives four to eight years after diagnosis, but can live as long as 20 years, depending on other factors.
From a planning perspective, it is best to draft and sign essential estate and asset planning documents early. These may include:
Powers of Attorney
Advanced Healthcare Directives (Living Wills)
Concerns about Long Term Care
In addition, this is an ideal time to make plans for governmental programs that can help pay for care. For example, Medicare does not pay for long-term care in a facility. However, Medicaid can be an option to explore. Also, veterans, their spouses and widows can be eligible for certain pensions such as the VA Wartime Pension also know as Aid and Attendance. However, both Medicaid and certain VA benefits are needs based. This means that those with too much income and or too much in net worth may not be eligible for these programs. However, individuals can become eligible without losing their life savings.
In short, when a diagnosis occurs, it is a good idea to consult with an elder law attorney who has knowledge about the disease, the needs of the family and how to navigate through the Medicaid and VA eligibility requirements. However, failure to take advantage of the opportunity to plan may result in the need of guardianship or other court administered processes.
Advanced healthcare directives sometimes called “Living Wills” are legal documents which instruct health care providers of the level of care you desire if you are unable to speak for yourself. Generally three conditions are anticipated 1) terminal condition, 2) persistently unconscious and 3) end-stage condition. If the patient is unable to communicate the Living Will provides health care providers with instructions. Oklahoma’s statutory form suggests three levels of treatment to chose from:
Do everything possible to extend life including artificially administering nutrition and hydration if I unable to take these by mouth.
Do not provide any life extending treatments but do artificially provide nutrition and hydration if I unable to take these by mouth.
Do not provide any life extending treatments and do not artificially provide nutrition of hydration is I am to by take these by mouth.
Patients are no limited to these options and can provide detailed instructions such as time limits.
Time Limit on Decision: What if I live too long based on my decision?
Many people choose the “Do Everything” or “Hydration & nutrition only” options. The reasoning is rational, they don’t just want to die without some efforts being made. But what what if these measures only keep you alive without any chance of recovery? It may be smart to include provisions to limit the duration of such treatment. It might be good to include a statement that such measures should be withdrawn after _____ days.
It is important that your doctors, hospitals and close family members have a copy this record. Also it is good to have these records available online at a moment’s notice. An In Case of Emergency Card is a service Winblad Law offers See my DocuBank Page for more information.
Health Care Proxy
You may also chose a Health Care Proxy to make medical treatment decisions for you in the event that you are unable to make such decisions. Your proxy can make decisions to the extent that they do not conflict with your Living Will. Communication with persons selected as a health care proxy is important.
Organs and Tissue Donation
Oklahoma’s form provides an area that allows for the donation of selected organs, tissue or the entire body. These may be donated for another recipient, research or teaching.
Medical Power of Attorney
A Medical Power of Attorney is similar to the Living Will in that it grants powers to a trusted individual. However, the Living Will does not address conditions that are not considered to be end of life. A common example is granting authority to make health and living decisions in case of dementia. The Medical Power of Attorney permits the person selected to become an attorney-in-fact to make medical decisions. The power can be granted immediately or it can “spring” into existence if two doctors determine that you are incapacitated. You may, but are not required to, grant this person the power to issue a do-not-resuscitate order or DNR.
A “Living Will” is not the same as a Do-Not Resuscitate form. This form isn’t for everyone. It is intended for use by a person who is near death. An advance directive doesn’t go into effect until two physicians certify your condition as terminal. But the DNR consent form goes into effect immediately. Therefore, it should be signed only by someone who is terminal in his or her own mind and has made an informed decision that he or she does not want to be resuscitated in any circumstance.
Specific Care Instructions if You Become
Federal Patient Self-Determination Act requires that all Medicare-participating healthcare facilities inquire about and provide information to patients on Advance Directives; it also requires these facilities to provide community education on Advance Directives. See 42 C.F.R. § 489.102. All healthcare facilities are required to: • Provide information about health care decision-making rights. • Ask all patients if they have an advance directive. • Educate their staff and community about advance directives. • Not discriminate against patients based on an advance directive status.
The U.S. Agency for Healthcare Research and Quality (www.ahrq.gov), in a 2003 article, “Advance Care Planning: Preferences for Care at the End of Life,” found the following: • Less than 50 percent of the severely or terminally ill patients studied had an advance directive in their medical record. • Only 12 percent of patients with an advance directive had received input from their physician in its development. • Between 65 and 76 percent of physicians whose patients had an advance directive were not aware that it existed.
More Americans Discussing – and Planning – End-of-Life Treatment. The Pew Research Center, January 2006. Article • 42% of Americans have had a friend or relative suffer from a terminal illness or coma in the last five years and for a majority of these people and 23% of the general public, the issue of withholding life sustaining treatment came up. • An overwhelming majority of the public supports laws that give patients the right to decide whether they want to be kept alive through medical treatment. • By more than eight-to-one (84%-10%), the public approves of laws that let terminally ill patients make decisions about whether to be kept alive through medical treatment. • One of the most striking changes between 1990 and 2005 is the growth in the number of people who say they have a living will – up 17 points, from 12% in 1990 to 29% now.
Effective September 1, 2016 DHS Will Now Treat a Home in a Revocable Trust as a Countable Asset:
This could mean that current residents will lose Medicaid benefits.
On September 1, 2016, DHS changed the rules about how it treats assets in a Revocable Trust. As a result, more applicants will be denied benefits. Also, current recipients will lose their benefits.
Before The Change:
DHS treated a home in a Revocable Trust as an Exempt or Non-countable asset. This means that the home’s value would not be used as an element to disqualify an Medicaid applicant from benefits. This made sense because a home in a Revocable Trust retains homestead rights. A couple or an individual could qualify even though the home was in the name of a trust.
After the Change:
Now DHS treats the family home as a countable resource if it is in a Revocable Trust. What does this mean?
Potential loss or denial of Medicaid benefits if the home, together with other countable assets, exceed the certain limits.
Loss or denial of benefits as an individual is only allowed $2,000 in countable resources.
DHS’s Action Required:
Deed the property from trust to individuals or couples.
But how is the property venerable after restoration?
If property is deeded to both individuals and the non-institutionalized spouse dies first, then DHS can place liens on the home for the cost that it incurred.
After 12 months of the stay in a nursing home there is a strong presumption that the individual will not return to the home and resume residency.
DHS will treat the home as a countable resource. This will require the sale of the home and spending down the funds to regain Medicaid eligibility.
What can be done to protect the home or it’s value?
Steps to prevent liens:
The healthy spouse should maintain the home as his or her primary residence.
In addition, considerations should be taken to further protect the home. This may involve making the healthy spouse the sole owner and Estate Planning to prevent the property from reverting to the nursing home bound spouse.
Care should be taken to determine how deeds are created. There may be a need to have the healthy spouse place the property into an Irrevocable Trust to avoid probate and for Medicaid Asset Planning.
If the individual in facing liquidation of the home, there are two choices.
1. Sell the home then use the proceeds to pay for care until the resources dip below $2,000; or
2. Sell the home, give some of the cash to a family member. This creates a penalty period and some of the funds will be used to fund a Medicaid qualified promissory note or annuity to pay through the penalty period.
Result of option 2?
35-45% of the proceeds might be saved for the family.
What can be done in our case?
Risk to Nursing Homes:
There is substantial risk that an individual in Medicaid payment status will become ineligible. The directive to the caseworkers is to give the family a 10-day notice and if the home remains in the Revocable Trust, then an individual will become disqualified and a couple may exceed their resource allowances.
What Should a Nursing Home Should Do Today?
The worst case is to wait for the 10 day notice.
If it is known that the client’s property is in a Revocable Trust, the family should be contacted to inform them of the risk of loss of the benefits.
Include announcements in their statements.
Have them attend an OnLine Class discussing what can be done.
This can likely mean that the nursing home resident will become ineligible for benefits. A recent email from the DHS’s top attorney, said:
For several years OAC 317-35-41.1 said that home property held in a revocable trust retains its exempt character. As of 9/1/16, this is no longer true, with OAC 317-35-41.1 being amended to conform to 42 U.S.C. § 1396p(3)(A)(i). DHS Medicaid eligibility workers have been given the following instructions:
Effective September 1, 2016, home property in a revocable trust is considered an available resource. When a client’s (Medicaid recipient’s) home property is in a revocable trust, the worker informs the client, or his or her representative, that the home property exemption does not apply unless the property is removed from the revocable trust. The worker provides the client or his or her representative with Form 08AD092E, Client Contact and Information Request, giving the client 10-calendar days to provide proof the property was removed from the trust.
(1) When the client does not remove the property from the trust and the value exceeds the resource limit per Schedule VIII.D of the Oklahoma Department of Human Services Appendix C-1, Maximum Income, Resource, and Payment Standards, the worker denies or closes the SoonerCare (Medicaid) benefit.
(2) When the client:
(A) lives in the home and provides proof the home was removed from the revocable trust, it is excluded as home property;
(B) does not live in the home or a nursing facility and does not plan to return home, the client must take steps to convert the property for use in meeting his or her current needs per (b)(1) of this Section; or
(C) lives in a nursing facility, refer to Oklahoma Administrative Code 317:35-5-41.8 for the home property exemption time frame
A Child’s Husband or Wife if Often a Concern During Estate Planning
Let’s face it, not everyone is crazy about their in-laws. Whether it is greed, money problems, maturity, substance abuse or a possible divorce; these things create concerns when deciding how to pass along an inheritance.
How is an Inheritance Treated During Divorce? In Oklahoma.
Theoretically, things or money your kid inherits is their separate property. However, this can change if assets are co-mingled. One example is an inheritance deposited into a joint account. Transmutation is the act of changing separate property into joint property by gift, use or titling. In a divorce setting these assets should not be included in a property division. In reality, the ownership often becomes blurred when the other spouse gains title, has access or helps maintain the property.
Manipulative, Demanding, or Stealing In-Laws
Sometime the worry is not divorce but a continued marriage with a spouse who’s need for resources never runs dry. In these situations a Trustee can prevent wasting of an inheritance.
A Trust splits the legal and beneficial ownership from property. The Trustee is the person or company that holds title. However, the Trustee can only use the property for the beneficiary.
Example 1: The Smith Trust purchases a home for the benefit of Sally. Sally lives in the home but her name is not on the title to the property. If Sally’s is legally unable to sell, mortgage or give it to anybody else because only the Trustee has this power. Sally’s husband cannot force her to do anything with regard to that asset. The Trustee can sell the property if Sally’s needs change.
Example 2: The Smiths want leave money to their son. His demanding wife had credit, gambling, and/or alcohol problems. The funds a placed in Trust so that the Trustee can manage the money. The Trustee has sole discretion on how and when money is released for son’s benefit.
In both examples the assets in the Trust are not available to the divorcing spouse. This is because the assets are not “owned” but the child.