Long Term Care and Nursing Home Facts for Florida

• By : Randy Coleman
• September 8, 2018 October 2, 2018
• elder care, elder law attorney, long term care, Medicaid, Medicaid planning, nursing home care, nursing home costs
• No Comments

Interesting Facts About Long Term Care In Florida

Florida nursing homes are serving increasingly diverse patient base and providing a greater variety of acute care, rehabilitative and convalescent services that cannot be delivered elsewhere.

Key Facts

• There are 683 licensed nursing homes in Florida, representing approximately 83,587 beds (Souce: Agency for Health Care Administration)
• The estimated number of residents is 73,000 (roughly 85% occupancy at any given time)
• There are 3,089 licensed ALFs in Florida, representing approximately 92,000 beds. (Souce: Agency for Health Care Administration)
• The median annual cost of care for a private room in a Florida nursing center is $94,900*
• The median annual cost for care for a private room in a Florida assisted living facility is $37,200.*
• Nearly 40 percent of long term care spending is paid for by private funds.
• Medicare, which covers rehabilitation services after an individual is discharged from a hospital, pays for 19 percent of all long term care spending.
• Medicaid, which covers health care costs for low-income individuals, pays for approximately 60 percent of all long-term care spending.
• Accounting for about 40 percent of total expenditures on nursing centers, Medicaid’s payments cover the care of more than half of all nursing home residents.
• Medicare patients have short rehabilitative stays – 33 days average
• Medicaid and private pay patients have long lengths of stay – 386 days average
• Florida has one of the lowest over-65 population to nursing home population ratio in the country

Quality Trends

• Kaiser Family Foundation Report: Florida is a Leader in Nursing Home Staffing
• Florida centers staff Above the National Average – 4.6 hours per patient per day
• Florida nursing centers rank 8th in total reported Certified Nursing Assistant (CNA) hours per patient per day
• Florida nursing centers rank 12th for total reported Nurse staffing hours per patient per day
• Since 2001, staffing in Florida nursing centers has increased from 1.6 to 2.6 CNA-to-Resident hours per day

According to the Florida Agency for Health Care Administration…

• “Since the end of 2011, the use of antipsychotic drugs in Florida has fallen by nearly 10 percent. According to federal Centers for Medicare and Medicaid Services (CMS), Florida has not only moved ahead of the national average overall, but also experienced one of the biggest declines in the use of these medications in the country. (March 23, 2018)
• Since 2011, Florida nursing homes have shown strong results and/or improvement in a host of quality measures, including those related to infections, falls, pressure ulcers, wandering, physical restraints and the use of antipsychotic medicines. (March 12, 2018)

Economic Role of Long Term Care Facilities in Florida

• Support an estimated $20.2 billion (2.7%) of Florida’s economy
• Contribute to nearly 259,250 jobs and support $9.1 billion in labor income through employment of both direct caregivers and support staff (i.e, food service, maintenance, social workers)
• Generate over $2.3 million in state and federal tax revenue
• Long term care centers contribute to other businesses through a ripple effect, with each nursing home job resulting in two additional jobs or nearly $5 of added economic activity within a local community.

Future Needs for Long Term Care

• 2017 Profile of Older Americans, Administration for Community Living/Administration on Aging (April 2018)
• By 2026, the population of Americans ages 65 and older will double to 71.5 million.
• Between 2007 and 2015, the number of Americans ages 85 and older is expected to increase by 40 percent.
• Among people turning 65 today, 69 percent will need some form of long-term care, whether in the community or in a residential care facility.
• By 2020, 12 million older Americans will need long term health care. (HIAA, “A Guide to Long-Term Care Insurance”, 2002)

Above information provided by the Florida Healthcare Association.

Four Reasons Why Giving Your Home to Your Children Isn’t the Best Way to Protect It From Medicaid

• By : Randy Coleman
• June 16, 2018 October 2, 2018
• elder care, elder law, elder law attorney, Homestead property, long term care, Medicaid, Medicaid planning, nursing home care, nursing home costs
• No Comments

You may be afraid of losing your house to the nursing home, the State, or otherwise, if you must enter a nursing home and apply for Medicaid benefits to pay for the nursing home. While this fear may be well-founded in the vast majority of states, transferring the home to your children is usually not the best way to protect it, and that’s especially true in Florida.

Although you generally do not have to sell your home in order to qualify for Medicaid coverage of nursing home care, the state could file a claim in your probate estate against the house after you die. If you get help from Medicaid to pay for the nursing home, the state must attempt to recoup from your estate whatever benefits it paid for your care. This is called Medicaid “estate recovery.” If you want to protect your home from Medicaid estate recovery, you may be tempted to give it to your children. In Florida, that could be a costly mistake.  Even for states other than Florida, there are at least three reasons not to transfer your home to your children.

Reason No. 1:  Florida Homestead Protection.

The first reason you probably will not want to transfer your home to your children in Florida, is that in Florida your homestead property is protected from claims of creditors, including Medicaid estate recovery. The Florida Constitution specifically provides that creditors (including Medicaid) cannot attach a lien to your homestead property. In Florida, even if you go into a nursing home, there is a presumption that you have an “intent to return” to your homestead property which continues the protection from creditors even if you move into a nursing home. Medicaid estate recovery, therefore, is not an issue in Florida for your homestead property, so long as it retains its homestead character.

The homestead protection from creditors continues through the probate estate in Florida, unless you have no legal heirs at the time of your death.  “Legal heirs” are defined in the Florida Statutes, Chapter 732.  If there is a chance that you won’t have legal heirs, or if you want certain specified heirs to receive your homestead property at your death, an enhanced life estate deed (sometimes called a “lady bird” deed), can be used to provide for the automatic transfer of your homestead immediately upon your death.  The transfer of the ownership of the home will not be subject to probate or to the claims of your creditors (including the State of Florida Medicaid estate recovery). Florida is one of just a few states that recognize the enhanced life estate deed. The transfer by an enhanced life estate deed also avoids the other three reasons for not transferring your home to your children that are listed below.

Reason No. 2:  Medicaid ineligibility.

Most people do not realize that transferring your house to your children (or someone else) may make you ineligible for Medicaid for a period of time. The Florida Medicaid agency looks at any transfers made within five years of the Medicaid application. If you made a transfer for less than market value within that time period, the Florida Medicaid agency will impose a penalty period during which you will not be eligible for any Medicaid benefits. Depending on the house’s value, the period of Medicaid ineligibility could stretch for years. The right to receive Medicaid benefits would not begin until the Medicaid applicant has almost completely spent down all of their money and other assets.

There are certain circumstances which can allow you to transfer a home without penalty. You should consult a qualified and experienced elder law attorney before making any transfers. The exceptions that might allow you may freely transfer your home to the following individuals without incurring a transfer penalty include:

(a) to your spouse;

(b) to a child who is under age 21 or who is blind or disabled;

(c) into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances);

(d)  a sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home;

(e)  a “caretaker child,” who is defined as a child of the person applying for Medicaid benefits, who lived in the house for at least two years prior to the applicant’s institutionalization in a nursing home, and who during that period provided care that allowed the applicant to avoid or delay moving into a nursing home stay.

Reason No. 3:  Loss of Control.

In addition to the potential loss of Medicaid benefits to pay for nursing home care caused by a transfer to your children, after transferring your house to your children, you will no longer own the house.  That means you will not have control of it. Your children can do what they want with the house. In addition, if your children are sued or get divorced or die, the house will be vulnerable to their creditors.

Reason No. 4:  Adverse Tax Consequences.

Adverse tax consequences. Inherited property receives a “step up” in tax basis when you die, which means the tax basis is the current value of the property. However, when you give property to a child, the tax basis for the property is the same price that you purchased the property for. If your child sells the house after you die, he or she would have to pay capital gains taxes on the difference between the tax basis and the selling price. The only way to avoid some or all of the tax is for the child to live in the house for at least two years before selling it. In that case, the child can exclude up to $250,000 ($500,000 for a couple) of capital gains from taxes.

There are several other ways to protect your house, and other assets, from Medicaid estate recovery, including putting the home in a trust. To find out the best option for your circumstances, consult with an experienced elder law attorney. We can help you make the best decision for your family and circumstances, preserve the value of your home for your loved ones, and otherwise help you qualify for Medicaid benefits to pay for your nursing home stay.  Call us and schedule an appointment to see how we can help you.

What Financial Protections Are Available for My Spouse When I Enter a Nursing Home and Receive Medicaid Benefits?

• By : Randy Coleman
• March 11, 2018 October 2, 2018
• elder care, elder law, elder law attorney, long term care, Medicaid, Medicaid planning, nursing home care
• No Comments

Often our clients seeking Medicaid benefits to help pay for nursing home care, or other long term care, are concerned about financial protections available to the stay at home spouse. They want to know how many assets or how much income the healthy spouse will be allowed to keep to ensure the financial well-being of the non-Medicaid spouse.  Medicaid rules allow the healthy spouse to retain a certain level of assets, as well as provide for the healthy spouse to receive sufficient income, to maintain basic financial protections for the healthy spouse.

Medicaid Protections for Financial Assets for the Healthy Spouse

Medicaid law provides special protections for the spouses of Medicaid applicants to make sure the spouses have the minimum support needed to continue to live in the community while their husband or wife is receiving long-term care Medicaid benefits, usually in a nursing home.

One of the most important protections is the “community spouse resource allowance” or CSRA. It works this way: if the Medicaid applicant is married, the countable assets of both the community spouse and the institutionalized spouse are totaled as of the date of “institutionalization,” the day on which the ill spouse enters either a hospital or a long-term care facility in which he or she then stays for at least 30 days. (This is sometimes called the “snapshot” date because Medicaid is taking a picture of the couple’s assets as of this date.)

In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in assets (an amount may be somewhat higher in some states). In general, the community spouse may keep one-half of the couple’s total “countable” assets up to a maximum of $123,600 (in 2018). This is the community spouse resource allowance (CSRA), the most that a state may allow a community spouse to retain without a hearing or a court order. The least that a state may allow a community spouse to retain is $24,720 (in 2018).

Example: If a couple has $100,000 in countable assets on the date the applicant enters a nursing home, he or she will be eligible for Medicaid once the couple’s assets have been reduced to a combined figure of $52,000 — $2,000 for the applicant and $50,000 for the community spouse.

Some states, including Florida, however, are more generous toward the community spouse. In these states, the community spouse may keep up to $123,600 (in 2018), regardless of whether or not this represents half the couple’s assets. For example, if the couple had $100,000 in countable assets on the “snapshot” date, the community spouse could keep the entire amount, instead of being limited to half.

Medicaid Income Protection for the Healthy Spouse

Although Medicaid limits the assets that the spouse of a Medicaid applicant can retain, the income of the “community spouse” is not counted in determining the Medicaid applicant’s eligibility. Only income in the applicant’s name is counted. Thus, even if the community spouse is still working and earning, say, $5,000 a month, she will not have to contribute to the cost of caring for her spouse in a nursing home if he is covered by Medicaid. In some states, however (not including Florida), if the community spouse’s income exceeds certain levels, he or she does have to make a monetary contribution towards the cost of the institutionalized spouse’s care. The community spouse’s income is not considered in determining eligibility, but there is a subsequent contribution requirement.

But what if most of the couple’s income is in the name of the institutionalized spouse and the community spouse’s income is not enough to live on? In such cases, the community spouse is entitled to some or all of the monthly income of the institutionalized spouse. How much the community spouse is entitled to depends on what the local Medicaid agency determines to be a minimum income level for the community spouse. This figure, known as the minimum monthly maintenance needs allowance or MMMNA, is calculated for each community spouse according to a complicated formula based on his or her housing costs. The MMMNA may range from a low of $2,030 to a high of $3,090 a month (in 2018). If the community spouse’s own income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse’s income.

Example: Joe and Sally Smith have a joint income of $2,400 a month, $1,700 of which is in Mr. Smith’s name and $700 is in Ms. Smith’s name. Mr. Smith enters a nursing home and applies for Medicaid. The Medicaid agency determines that Ms. Smith’s MMMNA is $2,000 (based on her housing costs). Since Ms. Smith’s own income is only $700 a month, the Medicaid agency allocates $1,300 of Mr. Smith’s income to her support. Since Mr. Smith also may keep a $105-a-month personal needs allowance, his obligation to pay the nursing home is only $295 a month ($1,700 – $1,300 – $105 = $295).

In exceptional circumstances, community spouses may seek an increase in their MMMNAs either by appealing to the state Medicaid agency or by obtaining a court order of spousal support.  Your elder law attorney can explain these options to you.

Medicaid Exempt Assets

Medicaid also provides for certain assets to be exempt, or non-countable resources. Exempt assets vary from state to state.  In Florida, exempt assets include the homestead that is used as the primary residence of the community spouse; an automobile, certain types of real estate, and other assets with special circumstances. The exempt assets are not counted in determining Medicaid eligibility, and typically the stay at home spouse can retain these assets to provide financial support for him or her.

Conclusion

There are many financial protections built into the Medicaid rules and statutes that help to ensure the community spouse who remains in the home has sufficient assets and income to avoid impoverishment.  We can help you determine what assets are exempt and can be retained, as well as how many other assets can be protected from nursing home spend down, and how to ensure that the healthy spouse has the maximum income allowed by law.

If  you, your spouse or loved one, needs only a Qualified Income Trust to qualify for Medicaid benefits to help pay for nursing home care, you can prepare a qualified income trust, online, by clicking this button:

Home Health Care Patients With Chronic Conditions Are Having Trouble Getting Medicare

• By : Randy Coleman
• February 4, 2018 October 2, 2018
• elder care, elder law, elder law attorney, long term care, Medicare
• No Comments

How Will Tax Reform Impact Seniors and Persons with Disabilities?

• By : Randy Coleman
• January 21, 2018 January 22, 2018
• elder law, elder law attorney, Estate Planning, Tax Planning
• No Comments

The Tax Cut and Jobs Act (TCJA) is now officially law. Both the House and Senate passed the new tax reform bill in December with straight party-line votes and no support from Democrats. President Trump signed it into law right before Christmas. It is the first overhaul of the tax code in more than 30 years.

It’s Good News for Most Americans

Retirees, most of whom are on relatively fixed incomes, are probably the most concerned about what the new tax law will mean for them. But, generally, they will be less affected than others because the changes do not affect how Social Security and investment income are taxed. In fact, many will benefit from the doubling of the standard deduction and, with the new individual tax brackets and rates, will be paying less in taxes when they file their tax returns in April, 2019. (Most of the changes will apply to 2018 income, not 2017 income.)

Key Individual Provisions to Know

Here are main provisions in the tax law that could particularly affect retirees and persons with disabilities. These individual provisions are set to expire at the end of 2025 so Congress will need to act before then if they are to continue.

(Mostly) Lower Individual Income Tax Rates and Brackets

There are still seven individual tax brackets and rates, but most are lower. Current rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. Here are the new rates and how much income will apply to each:

Rate                 Individuals                               Married, filing jointly

10%                 Up to $9,525                           Up to $19,050
12%                 $9,526 to $38,700                   $19,051 to $77,400
22%                 $38,701 to $82,500                 $77,401 to $165,000
24%                 $82,501 to $157,500               $165,001 to $315,000
32%                 $157,501 to $200,000             $315,001 to $400,000
35%                 $200,001 to $500,000             $400,001 to $600,000
37%                 $500,001 and over                  $600,001 and over

Standard Deduction is Almost Doubled

For single filers, the standard deduction is increased from $6,350 to $12,000. For married couples filing jointly, it increases from $12,700 to $24,000. Under the new law, fewer filers would choose to itemize, as the only reason to continue to itemize is if deductions exceed the standard deduction.

Personal and Elderly Exemptions

Currently, you can claim a $4,050 personal exemption for yourself, your spouse and each dependent, which lowers your taxable income and resulting taxes. The new law eliminates these personal exemptions, replacing them with the increased standard deduction.

The blind and elderly deduction has been retained in the new law. People age 65 and over (or blind) can claim an additional $1,550 deduction if they file as single or head-of-household. Married couples filing jointly can claim $1,250 if one meets the requirement and $2,500 if both do.

Medical Expenses Deduction

Currently, people with high medical expenses can deduct the portion of those expenses that exceeds 10% of their income. For example, a couple with $50,000 in income and $10,000 in medical expenses can deduct $5,000 of those medical expenses.

The new law increases this to medical expenses that exceed 7.5% of income. In the example above, the couple would be able to deduct $6,250 of their expenses. Note that this part of the new law applies to medical expenses for 2017 and 2018.

State and Local Tax (SALT) Deduction

The amount you pay in state and local property taxes, income and sales taxes can be deducted from your Federal income taxes—and the amount you can currently deduct is unlimited. The new law limits the deduction for these local and state taxes to $10,000.

Residents in the vast majority of counties in the U.S. claim an average SALT deduction below $10,000. Most low- and middle-income families who currently itemize because of their SALT deduction will likely take the much higher standard deduction unless their total itemized deductions (including SALT) are more than $12,000 if single and $24,000 if married filing jointly.

Originally lawmakers in the House and Senate wanted to repeal SALT entirely, to help pay for the tax cuts, but lawmakers in high-tax states (specifically CA, IL, NY and NJ) fought to keep it in. Those in higher income households in high-tax states will benefit from the SALT deduction.

Lower Cap on Mortgage Interest Deduction

Currently, if you take out a new mortgage on a first or second home, you can deduct the interest on up to $1 million of debt. The new law puts the cap at $750,000 of debt. (If you already have a mortgage, you would not be affected.) The new law also eliminates the deduction for interest on home equity loans, which is currently allowed on loans up to $100,000.

Temporary Credit for Non-Child Dependents

Under the new law, parents will be able to take a $500 credit for each non-child dependent they are supporting. This would include a child age 17 or older, an ailing elderly parent or an adult child with a disability. It is temporary because it is set to expire at the end of 2025 along with the other individual provisions.

Higher Exemptions for Alternative Minimum Tax (AMT)

The AMT was created almost 50 years ago to prevent the very rich from taking so many deductions that they paid no income taxes. It requires high-income earners to run their numbers twice (under regular tax rules and under the stricter AMT rules) and pay the higher amount in taxes. But because the AMT wasn’t tied to inflation, it has gradually been affecting a growing number of middle-class earners. The new tax law reduces the number of filers who would be affected by the AMT by increasing the current income exemption levels for individuals from $54,300 to $70,300 and for married couples from $84,500 to $109,400.

Federal Estate Tax Exemptions Doubled

The new law does not repeal the Federal estate tax, but it eliminates it for almost everyone by doubling the estate tax exemption to $11.2 million for individuals and $22.4 million for married couples. Amounts over these exemptions will be taxed at 40%. The new rates are effective starting January 1, 2018 through December 31, 2025.

Eliminates Individual Mandate to Buy Health Insurance

With the elimination of the individual mandate to purchase health insurance, there will no longer be a penalty for not buying insurance. This is expected to help offset the cost of the tax bill and save money by reducing the amount the federal government spends on insurance subsidies and Medicaid.

The Congressional Budget Office expects that fewer consumers who qualify for subsidies are expected to enroll on Obama Care exchanges and fewer people who are eligible for Medicaid will seek coverage and learn they can sign up for the program. (Estimates of those who are expected to have no health insurance by 2027 are all over the place, ranging from 3-5 million to 13 million.)

Critics, including AARP, claim that eliminating the individual mandate will drive up health care premiums, result in more uninsured Americans and add $1.46 trillion to the deficit over the next ten years, which could trigger automatic spending cuts to Medicare, Medicaid, and other entitlement programs unless Congress votes to stop them.

Some claim the individual mandate helps to encourage younger and healthier Americans to sign up for coverage. Without it, the individual market might lean more toward sicker and older consumers, which might lead some insurers to drop out of the market. 29% of current enrollees on the federal exchange already have only one option in 2018. Others maintain that the mandate is not a key driver for obtaining insurance. About 4 million taxpayers paid the penalty in 2016.

Inflation Adjustments Slowed

The new tax law uses “chained CPI” to measure inflation, which is a slower measure than that currently used. This means that deductions, credits and exemptions will be worth less over time because the inflation-adjusted dollars that determine eligibility and maximum value would grow more slowly. It would also subject more of your income to higher rates in the future.

529 Plans Expanded

529 plans have been a tax-advantaged way to save for college costs. The new tax law expands the use of tax-free distributions from these plans, including paying for elementary and secondary school expenses for private, public and religious school, as well as some home schooling expenses. Educational therapies for children with disabilities are also included. There is a $10,000 annual limit per student.

ABLE Accounts Adjusted

ABLE accounts, established under Section 529A of the Internal Revenue Code, allow some individuals with disabilities to retain higher amounts of savings without losing their Social Security and Medicaid benefits. The new tax law allows money in a 529 education plan to be rolled over to a 529A ABLE account, but rollovers may count toward the annual contribution limit for ABLE accounts ($15,000 in 2018). The new law also changes the rules on contributions to ABLE accounts by designated beneficiaries who have earned income from employment.

What to Watch

Expect some clarifications and strategies as the experts weigh in. There will also undoubtedly be some adjustments as the new tax bill goes into effect.  Please don’t hesitate to reach out if you have questions about these new provisions and how they may impact you or those you work with.

If you would like to have professional assistance determining how the provisions of the TCJA might affect you, then you should consult with an experienced estate planning attorney to help you evaluate the impact on you and your loved ones, as well as how you can plan around the TCJA to maximize the benefit to you and your family.

National Long-Term Care Spending Hits All-Time High at $163 Billion

• By : Randy Coleman
• December 31, 2017
• elder care, elder law, elder law attorney, long term care, Medicaid, Medicaid planning, nursing home care
• No Comments

Americans spent nearly $163 billion for long-term care in skilled nursing facilities and continuing care retirement communities (CCRC) in 2016, according to a recent U.S. Government report.

The Centers for Medicare & Medicaid Services’ National Health Care Spending report for 2016, published December 27, 2017, in Health Affairs, found that total healthcare spending in the United States increased 4.3% in 2016, reaching $3.3 trillion.

When it comes to long-term care, $162.7 billion was spent last calendar year. That marks the highest point in total nursing care and CCRC spending to date, compared to $140.5 billion in 2010. The annual growth rate for nursing care facilities and CCRCs hit 2.9% for 2016, down from 3.7% the prior year.

All Medicaid-related goods and services experienced slower growth in 2016 than in previous year, except for nursing homes and CCRCs, according to the report. Total Medicaid expenditures for 2016 increased 3.9% to reach $565.5 billion. In total, Medicaid spending made up 17% of the nation’s total health expenditures for last year.

Medicare spending made up 20% of total healthcare spending in 2016, at $672.1 billion. Medicare fee-for-service spending growth slowed down in 2016, due in part to declines in spending on long-term care in nursing homes, the report found. That drop in Medicare spending for long-term care was driven by a lower use of services and a smaller increase in the Medicare reimbursement rate.

The overall slower growth of healthcare spending in the U.S. in 2016 is likely due to a deceleration of the “major changes” experienced by the industry in previous years, such as provisions of the Affordable Care Act that expanded insurance options. For that reason, 2016 may mark “a return to the more typical relationship between annual rates of growth in healthcare spending and growth in nominal GDP,” researchers wrote.

A recent report from Health Affairs projected long-term care spending to continue to climb over the next decade, driven by the rapidly aging U.S. population. That report predicted that nursing facilities and CCRC spending would grow at an average rate of 5.2% per year until 2024, reaching $274 billion in total spending.

If you need assistance with qualifying for Medicaid to pay for long-term care in a skilled nursing facility, we can help.  Call 904-448-1969 to schedule an appointment to discuss how to get you or your loved one qualified for Medicaid benefits to pay for long-term care while preserving as many family assets as allowed by law.

Social Security Income to Increase in 2018, But Offset by Medicare Premium Increase

• By : Randy Coleman
• October 26, 2017 October 26, 2017
• elder care, Medicare, Social Security
• No Comments

In 2018, Social Security recipients will get their largest cost of living increase in benefits since 2012, but the additional income will likely be largely eaten up by higher Medicare Part B premiums.

Cost of living increases are tied to the consumer price index, and an upturn in inflation rates and gas prices means recipients get a small boost in 2018, amounting to $27 a month for the typical retiree. The 2 percent increase is higher than last year’s .3 percent rise and the lack of any increase at all in 2016. The cost of living change also affects the maximum amount of earnings subject to the Social Security tax, which will grow from $127,200 to $128,700.

The increase in benefits will likely be consumed by higher Medicare premiums, however. Most elderly and disabled people have their Medicare Part B premiums deducted from their monthly Social Security checks. For these individuals, if Social Security benefits don’t rise, Medicare premiums can’t either. This “hold harmless” provision does not apply to about 30 percent of Medicare beneficiaries: those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and “dual eligibles” who get both Medicare and Medicaid benefits. In the past few years, Medicare beneficiaries not subject to the hold harmless provision have been paying higher Medicare premiums while Medicare premiums for those in the hold harmless group remained more or less the same. Now that seniors will be getting an increase in Social Security payments, Medicare will likely hike premiums for the seniors in the hold harmless group. And that increase may eat up the entire raise, at least for some beneficiaries.

For 2018, the monthly federal Supplemental Security Income (SSI) payment standard will be $750 for an individual and $1,125 for a couple.

For more on the 2018 Social Security benefit levels, click here.

If we can help you understand your Social Security benefits, please call to schedule an appointment.

Using a Prepaid Funeral Contract to Spend Down Assets for Medicaid Eligibility

• By : Randy Coleman
• August 18, 2017 October 26, 2017
• elder care
• No Comments

No one wants to think about his or her death, but a little preparation in the form of a prepaid funeral contract can be useful. In addition to helping your family after your death, a prepaid funeral contract can be a good way to spend down assets in order to qualify for Medicaid.

A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for: embalming and restoration, room for the funeral service, casket, vault or grave liner, cremation, transportation, permits, headstones, death certificates, and obituaries, among other things.

One benefit of a prepaid funeral contract is that you are paying now for a service that may increase in price—possibly saving your family money. You are also saving your family from having to make arrangements after you die, which can be difficult and time-consuming. And, if you are planning on applying for Medicaid, a prepaid funeral contract can be a way to spend down your assets.

Medicaid applicants for benefits to pay for long term care, including a skilled nursing home, must spend down their available assets until they reach the qualifying level (usually around $2,000, depending on the state). By purchasing a prepaid funeral contract, you can turn “available assets” (that Medicaid attributes to you as funds available to pay for long term care) into an exempt asset that don’t count as available assets and won’t affect your eligibility. In order for a prepaid funeral contract to be exempt from Medicaid asset rules, the contract must be irrevocable. That means you can’t change it or cancel it once it is signed.

Before purchasing a contract, you should shop around and compare prices to make sure it is the right contract for you. Buyers need to be careful that they are buying from a reputable company and need to ask for a price list to make sure they are not overpaying.

For information from the Federal Trade Commission on shopping for funeral services, click here.

If we can assist you with determining whether you are eligible for Medicaid benefits to pay for long term care, or how to restructure your countable assets to below the $2,000 threshold so that you are eligible for Medicaid benefits, please give us a call.  If all you need to qualify for Medicaid benefits is a qualified income trust, because your income is too high, then click here to prepare a qualified income trust (“Miller Trust”).

Don’t Let Health Care Providers Use the Improvement Standard to Deny Medicare Coverage

• By : Randy Coleman
• August 3, 2017
• elder care, elder law, elder law attorney, long term care, Medicaid, Medicaid planning, nursing home care
• No Comments

Have you or a loved one been denied Medicare-covered services because you’re “not improving” or “not making progress”? Many health care providers are still not aware that Medicare is required to cover skilled nursing and home care even if a patient is not showing improvement. If you are denied coverage based on this outdated standard, you have the right to appeal.

For decades Medicare, skilled nursing facilities, and visiting nurse associations applied the so-called “improvement” standard to determine whether residents were entitled to Medicare coverage of the care. The standard, which is not in Medicare law, only permitted coverage if the skilled treatment was deemed to contribute to improving the patient’s condition, which can be difficult to achieve for many ill seniors.

Three years ago in the case of Jimmo v. Sebelius the Centers for Medicare & Medicaid Services (CMS) agreed to a settlement in which it acknowledged that there’s no legal basis to the “improvement” standard and that both inpatient skilled nursing care and outpatient home care and therapy may be covered under Medicare as long as the treatment helps the patient maintain her current status or simply delays or slows her decline. In other words, as long as the patient benefits from the skilled care, which can include nursing care or physical, occupational, or speech therapy, then the patient is entitled to Medicare coverage.

Medicare will cover up to 100 days of care in a skilled nursing facility following an inpatient hospital stay of at least three days and will cover home-based care indefinitely if the patient is homebound.

Unfortunately, despite the Jimmo settlement, the word hasn’t gotten out entirely to the hospitals, visiting nursing associations, skilled nursing facilities, and insurance intermediaries that actually apply the rules. As a result, the Jimmo plaintiffs and CMS have now agreed to a court-ordered corrective action plan, which includes the following statement:

“The CMS Corrective Statement is intended to make it absolutely clear that Medicare coverage can be available for skilled therapy and nursing that is needed to maintain an individual’s condition or slow deterioration,” says Judith Stein, Executive Director of the Center for Medicare Advocacy and a counsel for the plaintiffs. “We are hopeful this will truly advance access to Medicare and necessary care for people with long-term and debilitating conditions.”

While this doesn’t change the rights Medicare patients have always had, it should make it somewhat easier to enforce them. If you or a loved one gets denied coverage because the patient is not “improving,” then appeal.

To read the court order implementing the new corrective action plan, click here.

If you need an advocate to assist you with obtaining compliance from nursing homes with the court ruling in Jimmo, or with planning to obtain Medicaid benefits without losing all of the assets you’ve taken a lifetime to accumulate, call us, we can help.

Use of Immediate Annuities in Medicaid Planning for Married Couples

• By : Randy Coleman
• June 2, 2017
• elder care, elder law, elder law attorney, long term care, Medicaid, Medicaid planning, nursing home care, Uncategorized
• No Comments

Immediate annuities can be a useful tool to protect the spouse of a nursing home resident who applies for Medicaid. These types of annuities allow the nursing home resident to spend down assets and give the spouse a guaranteed income. Immediate annuities are an available planning tool in the State of Florida.

Medicaid is the primary source of payment for long-term care services in the United States. To qualify for Medicaid, a nursing home resident must become impoverished under Medicaid’s complicated asset rules. In most states, this means the applicant can have only $2,000 in “countable” assets. Virtually everything is countable except for the home (with some limitations) and personal belongings. The spouse of a nursing home resident–called the “community spouse” — is limited to one half of the couple’s joint assets up to $120,900 (in 2017) in “countable” assets. The least that a state may allow a community spouse to retain is $24,180 (in 2017). While a nursing home resident must pay his or her excess income to the nursing home, there is no limit on the amount of income a spouse can have.

An immediate annuity is a contract with an insurance company under which the annuitant pays the insurance company a sum of money in exchange for a stream of income. This income stream may be payable for life or for a specific number of years, or a combination of both — i.e., for life with a certain number of years of payment guaranteed. In the Medicaid planning context, most annuities are for a specific number of years.

The spouse of a nursing home resident may spend down his or her excess assets by using them to purchase an immediate annuity. But if Medicaid applicants or their spouses transfer assets within five years of applying for Medicaid, the applicants may be subject to a period of ineligibility, also called a transfer penalty. To avoid a transfer penalty, the annuity must meet the following criteria:

• The annuity must pay back the entire investment. When interest rates were higher, it was possible to purchase annuities for as short as two years, but now short annuities usually don’t pay back the full purchase price.
• The payment period must be shorter than the owner’s actuarial life expectancy. For instance, if the spouse’s life expectancy is only four years, the purchase of an annuity with a five-year payback period would be deemed a transfer of assets.
• The annuity must be irrevocable and nontransferable, meaning that the owner may not have the option of cashing it out and selling it to a third party.
• The annuity has to name the state of Florida as the beneficiary if the annuitant dies before all the payments have been made.

Here’s an example of how an immediate annuity might work: John and Jane live in a state that allows the community spouse to keep $120,900 of the couple’s assets.  If John moves to a nursing home and John and Jane have $320,000 in countable assets (savings, investments, and retirement accounts), Jane can take $200,000 in excess assets and purchase an immediate annuity for her own benefit. After reducing their countable assets to $120,000, John will be eligible for Medicaid. If the annuity pays her $3,500 a month for five years, by the end of that time, Jane will have received back her investment plus $10,000 of income. If she accumulates these funds, at the end of five years she will be right back where she started before John needed nursing home care.

Given this planning opportunity, many spouses of nursing home residents use immediate annuities to preserve their own financial security. But it’s not a slam-dunk for a number of reasons, including:

• Some states, other than Florida, either do not allow spousal annuities or put additional restrictions on them.
• Other planning options may be preferable, such as spending down assets in a way that preserves them, transferring assets to exempt beneficiaries or into trust for their benefit, seeking an increased resource allowance, purchasing non-countable assets, using spousal refusal, or bringing the nursing home spouse home and qualifying for community Medicaid.
• The purchase of an annuity might require the liquidation of IRAs owned by the nursing home spouse, causing a large tax liability.
• The non-nursing home spouse may be ill herself, meaning that she may need nursing home care soon, in which case the annuity payments would simply go to her nursing home.
• The savings may be small due to a high income or the short life expectancy of the nursing home spouse, and the process of liquidating assets and applying for Medicaid might not be worth the considerable trouble.

In short, the use of this powerful planning strategy depends on each couple’s particular circumstances and should be undertaken only after consultation with a qualified elder law attorney. In addition, those who do purchase immediate annuities need to shop around to make sure they are purchasing them from reliable companies paying the best return.

Finally, couples need to beware of deferred annuities. Some brokers will attempt to sell deferred annuities for Medicaid planning purposes, but these can cause problems. While a deferred annuity can be “annuitized” (meaning it can be turned into an immediate annuity), if the nursing home resident owns the annuity, the income stream will be payable to the nursing home instead of to the healthy spouse. Often, the annuity will charge a penalty for early withdrawal, so it is difficult to transfer it to the healthy spouse. In short, while immediate annuities can be great tools for Medicaid planning, deferred annuities should be avoided by anyone contemplating the need for long term care in the near future.

We can help you determine whether an immediate annuity will be beneficial for you and your spouse.