St. Charles MO Elder Law and Estate Planning Thoughts

Monday, September 26, 2011

My disabled child is turning 18- do I need a guardianship?

Many times I have parents call me wanting to talk about a guardianship/conservatorship for their son/daughter who is disabled.   Many times they don't know if or why they might need to be doing something, other than that a friend or the school district has told them they need to do so.  Here are some basic thoughts:

Once an individual turns 18, in the mind of the law they are a competent adult, free to make any decisions either good or bad.   They retain this right until the day they die, or until a Court enters an order that says they are no longer competent.

In the case where a child with a disability is turning 18, many times they are completely unable to make their own decisions, and could actually be quite vulnerable to outside influences.   For instance, this child is now free to get a credit card, enter into any type of contract, and parents can often find themselves outside the waiting room- unable to be involved in medical decisions or having access to medical information.  Clearly, this can be problematic.

It is important to understand what the difference between a guardianship and conservatorship is.   A guardianship is when a person is nominated to be in charge of the incompetent indivdual's physical well-being.  This includes making medical decisions, ensuring the indivdiual has access to the basic necessities of food and shelter.  The conservator is in charge of any financial assets that the individual has in their name.  This would include bill-paying, managing bank or brokerage account assets, etc.

The guardian and conservator are often the same person, but they don't have to be the same.  Many times, if a child is turning 18, they may not have an assets in their own name, but I will often appoint a conservator anyways so that if the individual comes into property later in life, this step is already out of the way.

Next time, we will go into how someone actually becomes the guardian/conservator for an individual who can't make their own decisions.

Thursday, February 10, 2011

What is an EVR?

With every new year, our firm gets lots of questions from our existing clients that are receiving veteran's administration (VA) benefits as either a wartime veteran or their surviving spouse.  This is because these clients have just received an EVR (Eligibility Verification Report) from the VA.  

The purpose of this form is twofold.   First, they want to make sure that the estimated expenses and income that the veteran reported for the last year (2010) was fairly accurate, and if possible to award them any extra benefits if the expenses were larger than expected.   Second, they want to determine if the veteran or their spouse is expected to remain eligible for benefits for the next year (2011).

We have had clients who decided they didn't feel like filling out these forms, or didn't return them timely.   DON'T DO THIS!!!

If you fail to return these forms, the VA will stop your benefits, and it is a major pain to try to get them reinstated.  With most applications taking 6-8 months to get approved, don't let procrastination cause you to lose your benefits for many more months.

The EVR is actually fairly simple to fill out, but many people make the mistake of not including the costs of the assisted living/skilled nursing/home care as a medical expense.   In most cases, these costs is what entitled the veteran or spouse to get the aid and attendance benefits in the first place- so a failure to include them on the EVR will likely cause the benefits to stop, and could even cause the VA to issue a demand for repayment.   Again, while it is posisble to fix mistakes, it is much better to be careful and ask for help before causing a big problem for the family.

Monday, January 31, 2011

Time to update your old documents?

Many times people will ask me if they need to review their planning that they did many years ago.  My answer is always the same- You should be having your estate plan reviewed every three to five years.   They are often suprised that they should be doing this as often as recommended.   There are three reasons why it is important to review planning frequently.

1) Your memory isn't as good as you think it is (neither is mine). -  Many times when I sit down with families and I read through their trust and read to them what their planning currently says- they are suprised that a certain child was named trustee over another, or forgot that they gave a gift of funds to a relative or charity that they no longer desire to do so.   If not for the review, they would have completetly forgotten about this until it was too late (because they passed away)

2) Your health or financial situation is different than it used to be-   Whether it is a positive or negative change in health or financial situation, both can have very serious effects on both your estate planning wishes, and the practicality of carrying out those wishes.   In addition, there are often tax consequences that might not have been important or applicable several years ago.  We also see that often while reviewing old estate plans it becomes a good time to incorporate asset protection against long term care costs before the crisis health situation hits.

3) The law is different than it used to be-   There have been many major legal changes in just the last 10 years that have a very dramatic impact on estate planning.  For instance, the estate tax credit is now 500% higher than it was just ten years ago.  This has caused many families that needed semi-complex estate plans to no longer need the same level of sophistication.   We have also seen major changes in our health care power of attorneys, and trust code all in the last 5-7 years.  

The bottom line is that estate plans, while they don't "expire" (although the makers of those plans will!), they are not designed to be a plan that you put in place and never think about again.  Estate planning is important, and just your house, car, and body all need maintenance from time to time, so does your estate plan.

Monday, January 24, 2011

Last Chance to change that Advantage Plan!

We are quickly approaching the deadline to opt-out of a Medicare Advantage Plan for 2011.  February 15 is the last day that individuals can opt out of an Advantage Plan for the rest of the year.   This is not to say that everyone should dump their Medicare Advantage plans- as many are a very good deal, particularly for healthy seniors.   However, most of the time as seniors start to need long term care, they would be better served with a combination of traditional Medicare and a supplement.   However, the downside to the supplement plans is that they all have a premium that is due each month.   But, if you don't start paying for the supplement plans when you are healthy enough to get through medical underwriting, then your choices are very limited when you get sick and wish you had a supplement.  
 

If you are interested in learning more about the differences between Advantage and Supplemental plans, look at some of the posts from June 2010.

Friday, January 14, 2011

Basics of Medicaid for a couple

Previously, we have looked at the difference between Medicare coverage of skilled nursing coverage and what happens after that coverage ends.  Typically, the individual requiring skilled care will now either go home, become a private pay skilled nursing resident, or qualify for Medicaid benefits.  If the person is private pay, they (or their family) will be expected to write a check each month for between $4500 and $7000 per month (depending on the facility, private room vs. semi-private, etc.).  For the families that can’t afford this, Medicaid (or MoHealthnet as it is officially known) is the only other alternative.  This article will attempt to explain the basic eligibility standards for a married couple, and also briefly explain some of the more basic planning options that are available.

When an individual enters a skilled nursing facility, and will spend at least 30 days in the facility, and has a spouse that lives anywhere other than a skilled facility, they are entitled to have a division of assets assessed.  This is a two-stage process, with the first step being dividing the assets that the couple has (note that there is no distinction as to whose name the assets are in) into two categories, countable or non-countable.  The easiest explanation is that every asset is countable, unless it falls into one of the five categories of non-countable assets.  These are 1)The primary residence, as long as the value doesn’t exceed $500,000, 2) One car, 3) $1500/person cash value of life insurance OR  a prepaid funeral plan and burial plot/person, 4) The personal property of the couple, and 5) Business or income producing property.

So, countable assets include all of the bank accounts, IRA’s, stocks, bonds, mutual funds, savings bonds, extra cars or real estate, and insurance.   Once the countable assets are determined, this number is divided in ½.  So, if the couple has $200,000 of assets, ½ or $100,000 will be considered to be the spousal share, and the other ½ will be the spenddown amount.  The spenddown amount will need to be reduced to $1,000 or less before the individual receiving care will be eligible for Medicaid benefits.  However, if that same couple had $300,000 in countable assets, the spousal share would be the federal maximum of $109,560, and the spenddown amount would be $190,440.   This is because the federal government wanted to ensure that Medicaid would largely be a program that provided care for the lower and middle class, and not allow someone with substantial assets to qualify for Medicaid coverage. 

When couples are not significantly above the threshold of assets that the community spouse (the person who doesn’t need care), there are some relatively easy steps that can be taken in order to complete the spenddown and qualify for Medicaid benefits.  These could include the purchase of prepaid funeral plans for both the husband and wife, spending money on home improvements, paying down mortgage or credit card debts, or perhaps purchasing a new car for the spouse still at home.   At some point, there reaches a point where no more of these basic strategies can be used.   At that point, the two most likely scenarios are paying the nursing facility until the spenddown is complete or, under certain circumstances, the community spouse can make a case that they need additional assets in order to produce a level of income that is sufficient to allow them to live independently in the community.  Typically, this level of income will be between $1,822 and $2,739 per month.  The actual logistics behind this approach are beyond the scope of this article, but this is a perfect example of where a consultation with a qualified elder law attorney can make the difference between spending tens of thousands of dollars or more, when it was not necessary.   This area of the law is very much a specialty, and there are few places that families can turn to receive high quality advice.  However, this advice is often worth its weight in gold- if only families know to ask for help from qualified experts.  This is why elder law attorneys can be so incredibly valuable to families.

Wednesday, November 17, 2010

Different Types of Special Needs Trusts

We've previously discussed what special needs trust are, and how they often can be beneficial for individuals who suffer from various disabilities. These individuals often have substantial medical expenses, and require very substantial help to pay for these expenses, unless they qualify for Medicaid benefits.  Medicaid can offer coverage for things such as home care aides, transportation to and from employment, assistance with prescriptions, not to mention hospitalization and physician's bills.  Particularly for those who are more severely disabled, these expenses can often cost several thousands of dollars per month unless government aid is available.  The magic of a special needs trust is that it allows individuals with a disability to have some level of access to funds to help cover what public benefits programs, such as Medicaid, does not cover without losing eligibility for these programs.   This is important because as we've discussed previously, Medicaid and almost every other public benefits program has an asset test.  What this means is that if the individual is deemed to own property, particularly things like bank accounts or investment accounts, they simply will not qualify for any government aid till those funds are exhausted.

When using special needs trust, there are two major divisions for these trusts.  These can be broken down into first party special needs trust and third-party special needs trust.  This article will attempt to briefly summarize the differences between these two types of special needs trusts.

A first party special needs trust is an arrangement where an individual who was disabled is contributing money that otherwise would have been theirs.  This type of trust is typically used to hold either an inheritance or some type of proceeds from a lawsuit.  An example could be a settlement from a motor vehicle accident that left the individual permanently disabled.  This type of trust is specifically authorized under federal law, because the government acknowledged that oftentimes Medicaid does not provide complete coverage for an individual with a disability, but they still were concerned that these individuals should not be entitled to public benefits, and then also have the ability to leave a large inheritance to other family members.  This would then leave the state and federal government to spend hundreds of thousands of dollars on care, while other family members were reaping the benefit of the trust as opposed to just the individual disability.  The compromise came by allowing these trusts, but requiring that upon the death of the individual disability, any remaining funds in the trust be paid to the state where the individual received Medicaid benefits.  This repayment would either be the amount remaining in the trust, or the total amount of Medicaid benefits the individual received, whichever is less.  It is often necessary to have a court establish this type of trust, and it is very important to have a qualified elder law attorney involved in this process.

A third-party special needs trust is a slightly less complicated vehicle.  These types of trusts contain money which originally belonged to somebody else, such as a parent or other relative, who desired to leave funds to individual with a disability.  However, because of the asset test that is associated with Medicaid, it would be quite detrimental to the individual to leave this money to them outright.  Missouri, along with many other states, has a public policy that supports allowing other people to leave money for the benefit of an individual with a disability in special needs trusts.  Typically a key factor with this type of trust is to express clearly that the intention is to supplement and not to supplant public benefits.  When properly drafted this type of trust will enable the individual to retain eligibility for Medicaid benefits, and still have it be possible to use the funds to cover items that public benefits do not, such as dental care. This trust will last for the lifetime of the individual, and that upon the death of the individual with a disability, the assets can pass on to whomever the creator of the trust would desire.  Note that there is no requirement that the state be paid back with third-party special needs trust.  This makes proper planning for family members of disabled individuals all that much more important because the key to most third-party special needs trust that they need to be set up prior to the death person's leading money for the benefit of the disabled individual.

In summary, both types of special needs trust have a very valid place in planning for individuals with disabilities.  A qualified elder law attorney will be able to determine which type of trust is most appropriate for an individual’s circumstances and help ensure an individual with a disability can be well taken care of for many years.

Friday, October 01, 2010

Medicare vs. Medicaid benefits- What’s the difference?

Medicare vs. Medicaid benefits- What’s the difference?

In our last post, we discussed how Medicare pays in skilled nursing facilities for “rehab” stays.  To summarize, Medicare will pay for most of the costs of someone who has a 3 day hospital stay and then needs to go to skilled nursing for some type of therapy or other skilled need to fully recover.  The thought process is basically that Medicare will pay to help someone get better.  Once that person has either recovered, or it becomes apparent that continued therapy will not lead to that person’s recovery (because the person simply can not make any more medical recovery due to brain damage, for example), then Medicare stops payment.  Medicare will also stop payment if the rehab stay lasts greater than 100 days for any one spell of illness.  Rehab stays are all part of Medicare Part A.   However, it is possible to get some things paid for in a skilled nursing facility to be covered under Medicare Part B, which is a totally separate set of benefits.   An example of this could be the individual who is benefitting from physical therapy, but has completed the 100 day stay under Part A.   Part B can still cover the costs of therapy, even past the 100 days.  Even though the therapy is covered, there will still be charges for the room and board that the resident will be responsible to pay.  If someone completes the rehab stay, then they will either become a private pay resident, or if they qualify, they can receive Medicaid benefits.

Almost daily, I will have clients mistakenly use the terms “Medicare” and “Medicaid” interchangeably.   The truth is that these programs, other than both starting with M and dealing with health care, are completely different from each other.   It is important to realize the differences between the programs, in order to fully understand the financial impact of needing care will have on a family and their finances.

Basic eligibility:

You do not need to be eligible for Medicare to be eligible for Medicaid, or vice versa.   In order to be eligible for Medicare, you must be either age 65, or declared disabled by Social Security for 2 years (there are few exceptions to the two year rule).  You or your spouse must also have paid into Medicare for at least 40 quarters.   Virtually everyone who is over age 65 is eligible for Medicare Part A, and almost all of those people also voluntarily have enrolled in Medicare Part B.   In order to qualify for Medicaid (or MoHealthnet as it is officially called in Missouri), you must be age 65 or disabled (note that there is no 2 year wait).  However, there is also an asset test that must be met for eligibility, which is different than Medicare.  This asset test is usually having less than $1,000 of countable assets.   I often tell my clients that Warren Buffett receives Medicare benefits, but he will never get Medicaid benefits (because he will always fail the asset test).

What’s covered:

Medicare essentially acts like traditional health insurance in that it pays for hospitalizations, therapy, doctor’s visits, x-rays, etc.  Medicaid can also pay for those things (but only if Medicare or private insurance doesn’t pay first).  But Medicaid can also pay for things for which Medicare doesn’t pay.  Probably the most commonly used example is payment for long term care after a rehab stay ends.  But Medicaid can also possibly pay for in-home aides, transportation to/from doctor’s appointments, and several other areas.  While Medicaid may pay for more services, it is also important to note that more doctors will accept Medicare payment, and accessing providers can sometimes be difficult with Medicaid.

Do you have questions about Medicare or Medicaid?  For more information, please contact Mike at www.beckelderlaw.com or 636-946-7899.  Mike Weeks is a partner with The Beck Elder Law Firm, a St. Charles law firm that handles elder law and estate planning matters. 

Thursday, September 02, 2010

What is a Medicare stay?

A majority of seniors will spend at least some time in a skilled nursing facility during their lifetime, but most do it in the context of a rehab stay after some event, such as a stroke, fall, or general weakness after illness.   These stays are commonly referred to as a Medicare rehab stay.   This article will discuss the qualifications for a Medicare rehab stay, the costs associated with those stays, and what happens when the stay ends.

Qualifications

In order for someone to be eligible for a rehab stay, there are several requirements.  First, the individual must be eligible and enrolled in Medicare Part A benefits.   For someone who has a Medicare Advantage plan, they will also be eligible for rehab stays, but the basic rules and costs will vary from plan to plan.   As discussed in previous articles, for Medicare Advantage enrollees, it is very important that they be familiar with all the plan features, because there is a wide difference between plans.   Second, the individual must have been admitted to the hospital for 3 consecutive days.  Just because an individual was at the hospital doesn’t necessarily mean that the person was admitted, and many times when an individual first goes to the hospital they are under “observation,” which does not count towards the three day requirement.    Next, as you leave the hospital, the doctor must agree that you either need some type of therapy (speech, physical, or occupational) or have some other skilled need (such as intravenous injections or certain types of wound care).

Costs

If the person only has “regular” Medicare coverage (meaning parts A & B), then the first 20 days in a skilled nursing facility will be covered 100% by Medicare.  This includes the room and board at the skilled facility, the medications, and the therapy.  It may not include costs of beauty shop, cable, phone, or other extra costs that are unrelated to care.   For days 21-100, the individual will have a copay of $137.50 per day (in 2010, this number changes each year).   For most people who have a Medicare supplement plan, the supplement usually covers all of the copay during days 21-100.  Some of the less inclusive (and cheaper) supplemental plans don’t cover 100% of the costs.  If you have a 60 day rehab stay, that could mean the difference in a $5500 bill, and no bill.  But remember, these Medicare supplement plans also had a monthly premium that you pay whether or not you are sick.

How does a rehab stay end?

A rehab stay will last until the earlier of two events.  First, 100 days of skilled care during any spell of illness.  Second, when there becomes no ongoing skilled care need.   Just like there was a requirement of skilled care (such as the need for therapy or other qualifying care) to begin the rehab stay, this requirement must stay present at all times or else Medicare stops paying.   It is actually fairly uncommon for a rehab stay to last the entire 100 days, as usually the skilled care need stops before day 100.

What happens next?

Just because Medicare stopped paying, that doesn’t mean the individual is ready to return home.  While virtually everyone on a rehab stay hopes to return home, the reality is that a large portion of people will not sufficiently recover to be able to return to living independently in their homes.  Sometimes, moving to assisted living, or bringing caregivers into the home can work.  Other times, the individual is still impaired enough that they require the 24 hour supervision and assistance that a skilled nursing facility offers, and there isn’t an expectation that the person will recover enough to return home.   The individual is more than welcome to stay at the facility, but they will be a private pay resident unless they qualify for Medicaid (MoHealthnet) benefits.   Most of the facilities in this area have a private pay rate of between $160 and $200 per day.

For more information about Medicare rehab stays, Medicare produces a nice summary.  It is available at http://www.medicare.gov/Publications/Pubs/pdf/10153.pdf.

Tuesday, August 03, 2010

Article about the role of hospice

Very interesting article on a huge difficulty with the current setup of our healthcare system.  That problem being the ability to realistically and objectively confront dying.  I particularly noted the realities of continuing medical treatment in spite of the fact that there is virtually no medical benefit of these treatments.  I can't help but wonder how these decisions might be different if we had an entirely private pay medical system (i.e. no Medicare, Medicaid, or private health insurance).  

http://www.newyorker.com/reporting/2010/08/02/100802fa_fact_gawande?currentPage=all

Be warned, this is a very long article, but I thought it was totally worthwhile read.

Mike Weeks

Monday, August 02, 2010

How does my rental real estate affect Medicaid

Recently, we had a client who has always managed rental real estate, and used the rent to supplement social security.  Unfortunately, his wife has recently had a major stroke, and will likely require nursing home care for the rest of her lifetime, and they were concerned about the costs and interested in finding out more about Medicaid.  For the last 30 years, they have basically invested all of the funds they could save into purchasing rental properties, and now have 10 units that are managed by the husband.

He was concerned that he would be forced to sell most, if not all of his properties (which remember provide him the bulk of his monthly income) before his wife could qualify for Medicaid benefits.   This is a very tricky question, and unfortunately, the answer is not 100% clear.  

Federal law would exempt any business producing property, which would normally include rental real estate.  However, Missouri has long taken the position that rental real estate can never be business producing property.   So, when federal law says 1 thing, and the state policy says another- who wins?

Unfortunately, at the initial level, the answer is fairly certain that State will count the equity in the properties in the same manner that they would count cash in the checking account.  This would meant that all but $109,560 of the equity must be spent prior to qualifying for Medicaid benefits, which will require the sale of all but 1 of the properties, and the loss of approximately 75% of the family income on a monthly basis.

This is one of those situations, however, that shows how having a skilled elder law attorney, is really required to navigate through the maze of public benefits, including Medicaid.   The Medicaid rules are clear that federal law should trump the state law, and these assets should not be countable.   Most people, and a lot of attorneys, will just give up and say this is what the state law says, so they are stuck.   Our firm does not believe in allowing the state to "do what it pleases."    We believe that by appealling and fighting to make the State follow federal law, we will be able to secure a victory for our client, and for seniors all over Missouri.