Elder Law

Many seniors are not aware that Medicare does not pay for custodial long term care. An individual suffering from Alzheimer’s disease or dementia, which requires assistance with feeding, bathing, and taking oral medications will not be covered by Medicare not by a Medigap insurance. The only way of paying for custodial long term care are: private payments, Medicaid, or Long Term Care Insurance.

Long term care: this is care that can be provided in the home, in a nursing home or in an assisted living facility. Eligibility for benefits is based on medical necessity as evidenced by an individual’s inability to perform a specified number of personal functions (activities of daily living): bathing, toileting, dressing, self-feeding, lack of mobility or loss of cognitive capacity.

Home Care: Most long term care insurance policies have a home care component. It is usually beneficial for an elderly person to continue to reside at home: familiar surroundings, familiar people and familiar foods provide comfort and control. The long term care insurance policy can pay for the number of hours required by the patient. This is a large improvement over Medicaid: individuals relying on public programs (Medicaid) frequently find that the number of hours authorized may be significantly less than what is required for the individual’s health and safety.

Coverage Provisions: These vary, depending on the need and the willingness to pay. In New York, a policy must offer at least 24 consecutive months of coverage. Each policy generally provides for a specified payment level, based on whether care is received at home, in an assisted living facility or in a nursing home. If the cost of care exceeds the policy benefit, the full benefit will be paid. If the cost of care is lower than policy benefit, the actual cost will be paid. Most policies contain a deductible, usually measured in days. The benefit period can be as short as two years, and as long as the life of the insured, with everything in between.

Exclusions: certain conditions are excluded by long term care insurance policies. These are, among others: alcoholism and drug additions, attempted suicide or intentionally self-inflicted injuries, mental and nervous disorders (except Alzheimer’s disease or demonstrable organic brain disease).

New York State Partnership for Long Term Care

These are specific long term care insurance policies approved by the New York Partnership policy.

Under a Total Asset Protection plan, the insurance policy will pay for the first three years nursing home care or six years of home care or a combination of the above (where two home care days are equal to one nursing home day). Individuals who have received these specified Partnership long term insurance benefits may apply for Medicaid and be eligible without regard to the value of their assets. Individuals may sell, transfer spend or retain assets, before during and after applying for Medicaid nursing home care – the penalty period does not apply. However, the Medicaid income levels will still be applied.

The policy premiums depend on age and coverage chosen. The Partnership policies are generally slightly more expensive than other policies. Annual premiums for a basic policy can range from $2,800 for a 40 year old to $13,000 for an 80 year old. However, the benefit is the ability to apply for Medicaid without transferring assets. All aspects must be considered and analyzed before a decision is made.

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship. ATTORNEY ADVERTISING.

This article is an invaluable resource. It lists all the various government programs that are available to senior citizens, with links to criteria and additional information.

There is a lot of help available to seniors. The list of available programs includes, but is not limited to: Social Security, Medicare, Medicaid, Food Stamps, Property tax relief, legal help, housing vouchers and Supplemental Security Income.

The key is to know about them and have the ability or the knowledge to qualify.

http://www.investopedia.com/articles/personal-finance/100214/retirement-strategies-low-income-seniors.asp?layout=orig

These are alternative housing options for seniors, in which multiple levels of care, including independent living, assisted living and long term nursing home care are contained within one community. The number of these communities is growing rapidly in New York State.

An initial entrance fee is required. These entrance fees can range from $100,000 to $1MM, depending on the health of the resident, the type of housing, and the type of service contract. In addition to the down payment, the resident must pay a monthly maintenance fee, which can range from $3,000 to $5,000 a month. Additional fees may be incurred for housekeeping, social activities and transportation. The resident must maintain a Medicare and a Medigap insurance policy.

Who is entitled to survivor benefits:  

A widow or a widower is entitled to full survivor benefits at the age of 66 (or 67, for people born after 1962). In order to qualify for the benefits, the spouse must have been married to the deceased for at least 9 months prior to death. Divorced spouses are entitled to the same survivor benefits (provided that the marriage lasted for at least 10 years).

An unmarried child is entitled to full survivor benefits until age 18 (or 19, if he is still attending a secondary school full time)

Dependent parents (defined as those whom the deceased supported for at least one half of their total income) are entitled to survivor benefits as well.

How much are survivor benefits:

The amount depends on (1) the earnings of the deceased (2) the age of the recipient spouse and (3) whether or not the recipient spouse continues to work.

The earnings of the deceased: of course, the more the deceased contributed to the Social Security system, the higher the survivor benefit amount will be for all recipients.

If the widow or widower has reached a full retirement age, then he / she will receive 100% of the deceased worker’s benefit amount. If the widow or widower has not reached a full retirement age, then he /she will receive between 71.5% and 99% of the deceased worker’s basic benefit amount.

If the widow / widower continues to work and he / she is below the full retirement age, then the survivor benefits will get reduced. If, on the other hand, the survivor is above the full retirement age, then the benefits do not get reduced, despite the additional income.

Surviving dependent parent is entitled to 82.5% of the deceased worker’s basic benefit amount.

The total amount a family can receive each month is between 150% and 180% of the basic benefit rate.

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.

Your parents may have had a long and relatively happy marriage. They may intend to live together until their death. Nonetheless, the financial reality of today’s government rules may force them to consider divorce.  And there is no need for psychological counseling at this point. Divorce, with future cohabitation, would be done simply to qualify for long term care benefits.

Current Medicaid rules tacitly encourage divorce. In New York State, for people over 65, to qualify for Medicaid as an individual, one cannot have income of greater than $825 a month. A married couple cannot have income of greater than $1,209. Clearly, a divorced couple can shelter a greater amount of income than a married one. Furthermore, an individual on Medicaid cannot have assets of greater than $14,850. A married couple cannot have assets of greater than $21,750, again, penalizing a couple and encouraging divorce.

When only one spouse needs Medicaid (in order to receive home care or nursing home care), divorce may simply become a necessity in order to shelter some of the assets.  A ‘community spouse’ (the spouse which is not receiving Medicaid) is permitted to keep no more than $119,200 of assets, and no more than $2,980 of income per month. Any excess above these numbers may be subject to a Medicaid recovery lawsuit. As a result, the sick spouse may transfer all of his assets to his spouse, and then the spouses divorce.

The information in this blog was adapted from

http://www.huffingtonpost.com/rev-amy-ziettlow/is-divorce-the-best-option-for-older-americans_b_6878658.html

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.

Medicaid Eligibility:

What is homestead: A “homestead” is the primary residence occupied by the Medicaid recipient or his spouse, minor or disabled child. A homestead is an exempt resource for the purpose of Medicaid eligibility.

Penalty Period: All transfers, including the transfer of your home, are subject to a ‘look back period’ from the time of the application for Medicaid nursing home benefits. Currently the ‘look back period” is 5 years. The period of ineligibility for nursing home services is calculated by dividing (i) the uncompensated value of the transferred resource by (ii) the average regional monthly cost of a nursing home to a private pay patient. The period of ineligibility begins only when the Medicaid recipient is in a nursing home and “otherwise eligible”. The maximum penalty period is 60 months.

There is currently no look back period and no penalty for uncompensated transfers for Medicaid home care benefits.

Exempt transfers: Some transfers are exempt and do not incur a penalty period. Those are transfers to a spouse, transfers to a minor or disabled child, transfers to an adult child who has resided with the parent for at least 2 years prior to the transfer and became a primary caregiver, and transfers to a brother or sister of the owner who has lived with the owner for at least one year prior to the transfer and who already owns an ‘equity interest’ in the home.

Why should the home be transferred if it is an exempt resource? Even though it is an exempt resource, Medicaid has a right to put a lien on the home for the services provided to the Medicaid recipient. Therefore, even though one will have a right to receive Medicaid and a right to live in one’s home, after the Medicaid recipient’s death, the heirs will likely have to sell the home to pay off the Medicaid lien.

Furthermore, if the Medicaid recipient has to go into a nursing home and there is no spouse or minor / disabled child living in the home, the homestead becomes an available resource. At that point, it will likely have to be sold and the proceeds will be used to pay for nursing home.

Various Types of Transfers That Need to be Considered When Protecting the Home

1. Outright transfer to a spouse

2. Outright transfer to children / relatives

3. Outright transfer with a retained life estate

4. Transfer to a revocable trust

5. Transfer to an irrevocable trust with a retained life estate

6. Transfer to an irrevocable trust

Each type of a transfer has its own Medicaid, legal, asset protection and tax implications. The effect on the Medicaid recipient during his lifetime, the effect on the beneficiaries during the Medicaid recipient’s lifetime, and the effect on the beneficiaries after the Medicaid recipient’s lifetime should be considered.

There is no one correct solution that applies to everyone. Each situation is unique, and the client’s health, family status, resources and goals must be considered. It helps to talk to an elder law attorney, to evaluate the different options, and to understand the implications of your actions.

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.

Someone asked me recently whether or not I use ‘boiler plate’ documents. Another person said “I need a trust”, without a real understanding of what a trust is and why it would be useful. There are many misconceptions about a work of an elder law lawyer, but under no circumstances should a lawyer use a ‘standard’ set of documents (even if such a thing existed). Below are only some of the issues that one must consider when formulating a plan of action:

1. Is the elder law client married or single?

2. Health circumstances of the client, and the spouse, if applicable.

3. Is there an immediate need for a nursing home?

4. Is the current living arrangement appropriate?

5. All sources of income of the client and spouse.

6. All resources of the client and spouse.

7. Family dynamics. Are there children? Do any of the children or grandchildren have Special Needs? Do any of the children receive government programs? Do any of the children have creditor problems? Do any of the children contemplate a divorce in the near future?

8. Is the client comfortable with relinquishing control in return for achieving tax or long term care savings?

9. Veteran status.

10. Does a client have long term care insurance?

There is no perfect solution that would be appropriate for everyone. That’s why I often do not recommend setting up trusts for my clients, if I do not see a necessity for having this unnecessary complication and if planning can be achieved through other means. On the other hand, a trust may be an absolute necessity in some circumstances. It helps to talk to an elder law attorney, to evaluate the different options, and to understand the implications of your actions.

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.

There are many government programs: SSI, Medicaid, food stamps, etc. Most of these programs have thresholds for recipient’s income and assets. What happens when recipients receive an unexpected windfall – inheritance, personal injury award, etc? Can one retain both the money and the benefits? Can one decline the award? The answer depends on the type of benefit in question: 

SSI

Qualification: In order to qualify for SSI, one’s assets cannot exceed $2,000 (if single) and $3,000 (if married). Any uncompensated transfers of assets done within 3 years of SSI receipt will incur a penalty.

Effect of a windfall: if the SSI recipient receives a windfall, it is considered income in the month of receipt, and asset if retained until the next month. Any transfer of the asset will incur a penalty and a disqualification from the benefit. The only exception to this rule is for people who are below 65 and disabled; they are permitted to transfer the windfall to a Special Needs Trust for the benefit of themselves without losing their SSI benefit.

What to do: consider the amount of money received. If the amount is small, you may consider spending the money on yourself in the month of receipt. There are many things that one can do – house improvements, payment of debts, food, clothing, vacation, etc. As long as the money is spent within 1 month, the recipient will retain his eligibility for future months. 

If, on the other hand, the amount is large, you may consider transferring the money to a trust / relatives and then losing the benefit for the next 3 years. The maximum amount of SSI benefit in New York for 3 years is approximately $29,000. If the personal injury is $500,000, the loss of $29,000 is not that significant.

Medicaid

Qualification: depends on the age of the recipient and the type of Medicaid care that one is receiving.

If below age 65, not an SSI recipient and no disabilities, Medicaid considers only one’s income. Assets are not considered. Income thresholds depend on the number of people in the family and whether or not there are children.

If after age 65, Medicaid considers both income and assets. An individual’s assets cannot exceed $14,750 and income cannot exceed $825 per month.

Asset transfers: If one receives only home care or medical care, then Medicaid does not impose a penalty on asset transfers. On the other hand, if one is in a nursing home or will apply for nursing home care in the next 5 years, Medicaid imposes a penalty of up to 5 years. 

Effect of a windfall: If a Medicaid recipient receives a windfall, it is considered income in the month of receipt, and asset if retained until the next month. If one is below 65, one may either retain the asset or transfer it, and retain his eligibility for the future months.

What to do: If a Medicaid recipient is above 65, consider the amount of money and the type of care that is needed. Generally, seniors depend on Medicaid as their medical insurance, therefore retaining the assets and losing the benefit may not be an optimal solution. Consider first spending the money on your immediate needs (paying down debt, house repairs, etc). Then consider transferring the remaining money. Remember that if nursing home is needed in the 5 years after the transfer, Medicaid may impose a penalty and deny the benefits.

This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney client relationship.

You probably see a lot of advertisements trying to convince you to plan for Medicaid in order to obtain long term care coverage. Long term care is home care (for people who live in their homes but need help with daily activities) and nursing home care.

I, on the contrary, will show you that if you are over 60 and fall into a certain category, you might not need to plan for Medicaid.  Below are the 3 reasons you do not need to think about long term care planning.

1. You have over $1MM in savings that you do not mind spending on your own health care.

Approximately 70% of the seniors can expect to need some form of long term care.  Long term care can be in the form of home care services (home attendants) where a hired helper comes for a few hours a day to give assistance in daily living, or in the form of a nursing home.

On average, nursing home costs approximately $14,000 a month in New York City.  The annual amount ranges from $140,000 a year in Queens to $180,000 in Manhattan, and the cost is rising rapidly.  The average stay in a nursing home for a patient is approximately 2 years (which means that some people may stay there for 4 years or longer).

Home care services may range from a home attendant coming for a few hours each day to assist with shopping and cleaning, to 24 hour a day care. Usually, the length of time required for a senior increases as the diseases and the weaknesses progress. A 24 hour a day home attendant that is privately paid can cost up to $500 a day, translating into the same cost as a nursing home - $180,000 a year.

As I wrote earlier, Medicare generally does not pay for long term care. At this point, Medicaid is the only government program that pays for home care and nursing homes.

In general, if one expects to need some form of home care for several years, and then eventually to need nursing home care, the overall cost of this care can be $1MM or more. If you have this money and do not mind spending it on your own long term care, then you do not need to think about Medicaid planning.  

2. You have a crystal ball

A lot of people think that they do not need to plan for long term care, because they will do so only when the need arises. Others believe that they will not need long term care at all, and their family will take care of them. However, there are many situations when planning in an emergency is not an efficient method and can result in a large loss of money.

For example, Medicaid imposes a penalty for all uncompensated transfers made in the 5 years prior to an application for nursing home coverage. If there were any gifts made (this often happens when the family realizes that a loved one’s health is declining rapidly), Medicaid will refuse to cover the nursing home cost for up to 5 years from the date of application. The family will have to pay privately from its own savings.

There are ways to reduce this penalty period, but in general, at least ½ of the assets will have to be used to pay for nursing home cost. Planning ahead of the need is the best method of protecting your assets.

 3. You have long term care insurance

This is one of the best reasons not to plan for Medicaid long term care. A long term care policy may cover home care services and nursing home costs.

However, before you feel completely complacent, you should ask yourself the following questions about your policy:

• Does it provide enough coverage? You need to review the long term care policy to see the amount of coverage that it provides. Some policies pay only $250 a day. A nursing home private room or a 24 hour home attendant can cost up to $500 a day. The money that is not paid for by the insurance will have to come from your savings.

• Does it last for a sufficient time? Some policies only provide coverage for a limited number of years. Have you thought about your expenses if the coverage expires?

• Are you able to pay the premiums for the policy? You need to review if you are able to continue paying for the long term policy. Some policies have recently increased their annual premiums by 20-50% a year, to make up for the unexpected costs that they have to bear. Even if you have long term care policy now, will you still have it when the need arises?

Overall, if you fall into one of the above 3 categories, you may not need to plan for Medicaid. If you do not, however, you should consider talking to a Medicaid planning attorney who will review your individual situation and suggest an optimal course of action.

This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney client relationship.

There are many acronyms in government benefits. This article explains the difference between most common Social Security benefits.

Social Security benefits are based on the individual’s earnings, averaged over the worker’s life.

Eligibility: To be eligible, an individual must have a minimum of 40 quarters of reported earned income. To receive full credit for the quarter, the amount of earnings is currently $1,200. This amount has been raised incrementally since 1977.

Age of eligibility: for people born after 1959, the age of retirement is currently 67 years. For people born between 1943 to 1954, the full retirement age is 66. Individuals may retire early and collect reduced Social Security benefits as early as age 62. The reduced level of benefits will continue for the rest of the individual’s life.

What income is counted: only earned income is considered when determining eligibility or benefit amounts. Unearned income, such as interests and dividends, is not counted.

Earnings Limitations on Benefits: for individuals between ages 62 and 65 collecting Social Security benefits, earnings above $15,480 will reduce Social Security benefits by $1 for each $2 of earnings in excess of $15,480. For individuals above age 65 collecting Social Security benefits, all earnings limitations have been eliminated.

Social Security Disability (“SSDI”) benefits are based on several criteria, including medical condition, age, prior earnings level, and period between termination of employment and the onset of disability. The case will be periodically reviewed, to ensure that the individual is still disabled.

Definition of disability: inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of no less than 12 months, taking into account the person’s age, education and past work history.

Determination of Eligibility:

1. To be fully insured and eligible for Social Security Disability payments, an applicant must have 40 quarters of earnings. For workers under the age of 31, there is a special calculation.

2. To be fully insured and eligible for Social Security Disability payments, an applicant must have reported earnings within 5 years prior to the onset of disability.

If the above 2 criteria are met, then:

1. There are 5 criteria that Social Security Administration evaluates when determining eligibility, such as (a) substantial gainful employment at the time of the application, (b) severe impairment, (c) listed impairment, (d) past relevant work and (e) residual functioning capacity.

Medicare for Social Security Disability recipients

If an individual receives Social Security disability benefits for a continuous period of 24 months, he becomes eligible for Medicare Part A and B, without regard to age.

Reduction of Social Security Disability benefits

An individual’s benefits are not reduced if he has other sources of income, such as IRA accounts, pensions, insurance, SSI, or Veterans Administration benefits.

Supplemental Security Income (“SSI”) is a federal program that pays a monthly cash stipend to indigent aged, blind or disabled individuals.

Eligibility:

1. Categories: There are 3 separate categories of people who are eligible to receive SSI:

a. Aged: people above 65 years of age

b. Blind: either total blindness or minimal vision that is incapable of correction

c. Disabled: people who are unable to perform any gainful employment because of a medical or mental condition that is expected to last for at least a year.

2. Resource test: an individual is entitled to have no more than $2,000 in resources (a married couple is entitled to no more than $3,000)

a. Certain assets are exempt from calculation, such as a primary residence, a car, and household goods

b. Assets held for the benefit of an individual in a Special Needs Trust, if structured properly, are also not considered resources

3. Income test: an individual’s income from all sources is considered when determining eligibility  

a. Certain income is exempt, such as food stamp benefits, German reparation payments, reverse mortgages, etc.

b. Other income is disregarded, such as the first $65 of earned income and the first $20 of unearned income.

Transfer of Assets

At the time of application, Social Security Administration will conduct an investigation into any transfers that were done by the applicant or his spouse in the past three years. A penalty will be calculated for all transfers that were made for less than a full market value. The penalty is calculated by dividing the amount gratuitously transferred by the maximum monthly benefit. The maximum penalty period is 3 years.  

Medicaid for SSI recipients

Any New York State resident who is eligible for SSI is automatically enrolled into the Medicaid program.

This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney client relationship.

Spousal benefits are available to spouses, divorced spouses and widows / widowers. Married individuals can choose which Social Security benefit they will receive – their own or a percentage of their spouse’s, whichever is greater. The benefit of receiving the ‘spousal benefit’ is to delay the collecting spouse’s retirement age, and as a result, receive a larger Social Security Payment from her own earnings in the future.

When Should One Apply for Spousal Benefits:

Only after the both spouses reach the full retirement age (FRA). If you apply before the FRA, you may be permanently penalized and will not receive the full benefit of the program.

How Does It Work?

For example, Mary is 66 (her FRA), and her husband Jake is 67 (past his FRA). Jake is entitled to collect $2,000 from Social Security. Mary, if she were to start collecting her own social security benefit, would receive $800. Mary can either begin collecting her own benefit, or collect the $1,000 of the “spousal benefit” for the next 4 years (50% of Jake’s full benefit). As a result, she will delay collecting her own benefits until the age of 70. At the age of 70, she can begin collecting her own benefits, but at that point they will be 132% of the original amount - $1,056.

What If The Higher Earning Spouse Does Not Want to Collect His Own Benefit Yet?

In order for Mary to collect the “spousal benefit”, Jake needs to apply for his own benefit first. If he is not ready to start collecting yet, Jake can apply for benefits and then ‘suspend’ them. As a result, Mary will collect her spousal benefit based on Jake’s retirement benefit at the FRA. Simultaneously, by suspending the receipt of his own retirement benefits, Jake will be taking advantage of the increased benefits that he will receive after he turns 70. There is absolutely no downside to collecting ‘spousal benefits’.

Are These Benefits Available for Divorced Spouses?

Yes.  As long as you have been divorced for at least 2 years, the marriage lasted 10 years or longer, both you and your former spouse are aged 62 or older, and the former spouse is entitled to Social Security Benefits, you are entitled to ‘spousal benefits’.

Two additional benefits for divorced spouses:

1. the former spouse does not need to know that the spouse has applied for ‘spousal benefit’

2. the former spouse need not have filed (or filed and suspended) his own Social Security benefit in order for you to receive it.

Are These Benefits Available for Widows / Widowers?

At the death of one spouse, the surviving spouse will receive the larger of her own benefit or her husband's benefit, but not both. Therefore, it is beneficial for both spouses not to take their retirement benefits too early. The delay in collecting Social Security and maximizing  both spouse's benefits can act as another form of life insurance.

See more at: http://individual.troweprice.com/retail/pages/retail/applications/investorMag/2014/june/managing-it/index.jsp

This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney client relationship.