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Right Idea, Wrong Conclusion

In this edition of Crisis Corner: Right Idea, Wrong Conclusion

We do a lot of consultations about Medicaid planning.  Many of them involve at least on child of the person who might need benefits.  In those consultations we will occasionally hear a child admit that they are doing the planning because they want to get something when mom and dad are gone, which is the wrong idea, but is also refreshingly honest.  More often, and usually heartfelt, we hear something along the lines of: “We don’t care about inheriting anything, it is mom’s/dad’s money and they should spend it.”  That is usually followed with calculations that range from grossly optimistic, i.e. “Mom is already 89 and has $100,000 in savings which should easily pay for her care for the rest of her life”; to “Based on the doctor’s prognosis, net income, and monthly expenditures with an expectation that care costs will increase over time, mom should have enough money to outlive her prognosis by about eighteen months.”

The problem with “letting them use their money on themselves” is that it assumes Medicaid planning is designed to save money for the sake of saving money.  It is great to reassure someone that by planning with us they will be able to leave a little something for their children or loved ones when they are gone.  Whether the kids want/need the inheritance or not, it is comforting to a parent to feel like they are helping their children.  It is the same reason that retired parents, on fixed incomes, sometimes insist on paying for meals out with their very successful, employed, children.  However, the real purpose behind Medicaid planning is to ensure the quality of life for the person receiving benefits.  It is not enough to make it to the end before you run out of money if the end comes with a low quality of life.

There are a few things that can cause a drop in quality of life when Medicaid planning is skipped in favor of spending every dime:

One of the things that we see more often than we ever imagined is a client out living the most optimistic predictions of doctors.  The most extreme case of this was a client who came to me more than 13 years after being diagnosed with four different Stage-4 cancers and given a life expectancy measured in weeks.  We have also had 94 year old clients driven to my office by their 96 year old spouse, and at least one client that came to me and got onto Medicaid just after his 101st birthday.  With the pharmaceuticals available today people are living longer and longer lives and planning your needs around the idea of dying by 90 does not work for many people.

If you outlive your life expectancy by a significant margin and you do not plan ahead to save assets or to move into a community that will eventually accept Medicaid, you could end up out of money and with no option except living in a skilled nursing facility (SNF).  Some SNFs are much nicer than others and in some situations they are the most appropriate setting from a medical stand point but, in general, living in a SNF should be the absolute last option for most people.

I started working in Medicaid planning in 2015.  At that time many adult family homes (AFHs) started in the $3,000 to $3,500 per month range and topped out around $6,000 to $7,000 per month for clients with very high care needs.  At that time there were also many AFHs and Assisted Living Facilities (ALFs) that took Medicaid with 0-12 months of private pay (the time you have to live in the community before they will accept Medicaid as a form of payment).  Today, it is hard to find an AFH that is less than $5,500-6,000 per month for low care levels and up to $9,000 or more for higher care levels.  Additionally, the most common private pay period is now 2-3 years and some communities are asking for up to 5 years.  In that same time, many of my clients have seen an increase of about $10 to $20 per month in their Social Security income.  Care communities are not the only place you will see this increase in costs.  Over the last six years I have seen the average cost of hiring in-home care rise from $10-15 per hour from an individual or $20-25 per hour for an agency to $20-25 for an individual and $30-40 for an agency.

I cannot account for the increase in charges by these communities, other than supply and demand and charging what they think the market can bear, but the lengthening private pay periods is not surprising at all.  In 2015, Medicaid would often approve $100 to $180 per day for care in a non-skilled nursing facility (nSNF) community (about $3,000 to $5,500 per month), which was lower than the private pay numbers but not significantly lower.  Today, Medicaid often approves $100 to $180 per day for care in an nSNF community.  Instead of losing 0-20% of the income they could get from private pay, they are losing up to 50% or more by accepting Medicaid. 

Increasing base costs of care, at home and in communities, are not the only unexpected costs that might spring up.  Let’s assume you find a community that has a base rate of $3,500 per month plus care costs based on need and they guarantee that the rates will not change once you move in, except with increased level of care.  Often this looks something like “Level 1 Care – $1,500; Level 2 Care – $2,000….”  Now let’s assume you are the client who very carefully calculated that mom would have 18 months of extra money left because you assumed that she would gradually move from Level 2 to Level 4 over the three years she has left.  Then six months after moving to a community she has a massive stroke that she only partially recovers from.  It does not shorten her three years but it jumps her instantly from Level 2 to Level 5, where she will remain for the next 2.5 years.  People with devastating health issues tend to develop more health issues and at a faster rate than those who are mostly healthy to start with.  I have had clients that move into a community and then have an episode that literally doubles their care cost within the first few months of living there.

Maybe the plan is for mom or dad to use their money on themselves, but as a backup they move into an ALF that will eventually take Medicaid if they run out of money.  They have a nice private room, a consistent staff of care providers that they know and get along with.  They are bathed at least every other day and have a one-on-one helper with mealtime.  Then they run out of money and apply for Medicaid.  They are approved and the ALF is now receiving $4,000 per month instead of $7,000 per month.  Mom or dad is now told that all of the ALF’s Medicaid beds are in shared rooms, so they will have to move to a new room, the same size or smaller in some cases, and share it with a total stranger.  Baths or showers may decrease to once or twice per week, and meal time might become one care provider sitting at a horseshoe table with six patients.  The staff who provide the daily care may be less experienced and or more randomly assigned, since the more experienced, long-term staff will have their pick of patients and will want to stick to the private payers.

Families can pay the ALF facility to upgrade to a private room, to provide more baths, and to have a one-on-one meal companion.  The problem is that the family has to find the money for those niceties.  With planning that protected some of the assets early on, there would be a source for those costs.  Without planning, that money is coming from the pockets of the family members or it just is not coming.

Why Plan? 

Proper planning makes it far more likely that your loved one will make it to the end of life with the highest quality of care and maybe, just maybe, a little something that they can leave for their children.  The funny thing is that most children will tell you that the quality of life is the more important piece of this and most parents will tell you that the ability to give something to their children is the most important piece.

Why Elder Law and Medicaid Planning?

This week in Crisis Corner: Why Elder Law and Medicaid Planning?

Most people reading this blog have heard Rajiv Nagaich tell the story of how he came to Elder Law.  It is a great story and leaves no doubt why he would choose to practice in this area of law.  Not all of us have that same personal connection to someone who has suffered through the pain of watching a loved one decline and suffer, so why not join one of the more glamorous practices?

Here is why I do what I do:

Growing up I was fairly small, until high school, and very academic.  That, combined with some medical challenges that affected my social interactions, made me a prime target for bullying.  However, rather than run from the bullies I sought them out, especially when I was not their target.  I constantly inserted myself between mountains of flesh and their intended victims.  Maybe it was because I always wanted someone else to be there for me and they weren’t or maybe I just enjoyed playing the role of David versus Goliath.  Whatever the reason, I developed a pretty strong “Superhero Complex.”  It felt good to save others, even when it meant getting hurt.

When I went to college I had grand plans for becoming a geneticist and curing a lot of diseases.  I may be dating myself, but I even had plans for how I would speed up the estimated decades it would take to map the human genome, which turned out to not take much longer than my college career.  Then in the summer between my sophomore and junior years I spent a few weeks living in Section 8 housing, doing work with the Rescue Mission and interacting with the residents.  A six year-old that was climbing on me like a jungle gym (at the time I was a mountain of flesh) told me that he was going to drop out instead of going to first grade because he would be dead or in jail before he graduated anyway.  That fall I changed my classes to meet the prerequisites for a Masters in Teaching program.  I went on to teach early childhood for close to 14 years, including a five year stint teaching Special Education Preschool in a low income area where I specialized in students with severe emotional and behavioral disorders.  I tried to be the superhero those kids needed so that they would see the possibilities that no one else would show them.

Eventually the stress and strain of being a male preschool teacher and all of the assumptions people made about me got to be too much.  I considered becoming a chef or a paralegal and decided on paralegal.  During my training I was told that I thought and wrote more like an attorney than a paralegal and that I should be in law school instead, but it was not financially possible at the time.  That did not stop me from looking for the glitz and glamour of high powered law.  I interned with a firm that handled Personal Injury and Criminal Defense.  I worked on murder cases and appeals being heard in front of the State Supreme Court.  It was not personally rewarding to me, but I sure felt important.  

Then I graduated and had to find a job.  No one was even answering my applications, despite what I thought were very impressive credentials.  Then a friend in realty convinced an Elder Law Attorney in Tacoma to take me on.  I did not have a lot of hands on work on the cases and did more work managing the office and tracking down missing heirs than anything else.  After a little less than a year doing that, I was introduced to Rajiv and soon became a Medicaid Specialist for him.

It did not take long before I realized that the people who need to get Medicaid help for a loved one are exactly the sort of people that I wanted to work with.  The work requires a lot of math and a lot of thinking outside of the box, not to mention thinking non-linearly.  The loved ones who need care and are running out of money are facing one of the biggest bullies there is and without a superhero they are going to get pummeled.  Once I realized that I could have fun, using all of my skills, AND I got to return to being a superhero, I was sold.  It became my goal to find every trick there was, and some that didn’t really exist until I thought of them, so that I could be the greatest shield my clients could hope for.

My eagerness combined with supervising attorneys who were not always as well versed in Medicaid law and who had a harder time not thinking in a straight line led to some conflict between me and my immediate supervisors, but they left and I stayed.  Before long it became clear that the answer was for me to become the attorney so that I would stop driving them away.  Rajiv bought in and supported some bizarre work schedules so that I could maintain full-time employment and go to law school at night.  Now I get to be the superhero I always wanted to be.  I even have a hand-painted thank you card from a client that shows me as the Superhero “Crisis Man” displayed in my office.

Aaron as "Crisis Man"

So, for me, Elder Law was not a choice born from a personal experience on the other side of the struggle.  For me, it was all about finding a place where I can live out my Superhero Complex and go to bed each night knowing that I used my powers to help some of the most desperate victims of some of the worst bullies come out of those situations, relatively, unscathed.  

If you or your loved ones are facing outrageous care costs, loss of a life savings, hospitals that tell you that going home is not an option, or any one of a dozen other stresses that come from a scary diagnosis, give me a call.  I cannot guarantee a perfect outcome, but I can guarantee that I will fight for you with more passion than you will find in 99% of the attorney offices anywhere in the world.  I want to be your superhero.

The three primary versions of Medicaid Long Term Care (LTC)

This week in Crisis Corner: The three primary versions of Medicaid Long Term Care (LTC).

There are many flavors of Medicaid benefits available to Washington residents, especially once you get into all of the medical only benefits. When it comes to LTC benefits for a person who is “aging, blind, or disabled” there are at least five or six programs, but in most cases clients are looking at one of three. Those three are: 1) Classic Medicaid; 2) Community Options Program Entry System (COPES); and 3) Community First Choice (CFC). They share many similarities but each is also unique both in its rules and its benefits. Much of the confusion that I have to help my clients sort through is created when they do their research before coming to me, but they research the wrong program for their needs.

Similarities across the board. About the only thing that is the same across the board for these three programs is the resource limit for a single person. In all three, a single person can own a home with up to $603,000.00 in equity, a car of any value, and up to $2,000.00 in other countable resources. For all three, a “well spouse” can have a house of any value and a car of any value (not separate from the ones owned by the applicant), and an unlimited income. The rest varies from program to program.

Classic Medicaid.

Classic Medicaid is what most people think of when they talk about Medicaid. It is the Federal program that is, relatively, universal across the states. This program is only available in a Skilled Nursing Facility (SNF) and nowhere else. When a married person applies for Classic Medicaid, their spouse can have up to $130,380.00 worth of “other countable resources.” This is not a fixed amount and has to be calculated on a case by case basis. The formula is that you add up the total value of resources (other than the house and car) that the couple owned on the first day of the month in which the applicant received care at the SNF and divide that number by two. The well spouse can have that amount of resources with a minimum of $58,075.00 and a maximum of $130,380.00.

Some examples:

  • John moves into a SNF on January 5th. On the 1st he and Jane owned their home, one car and $100,000.00 in other countable resources. Jane should get to keep $50,000.00, except the minimum is $58,075, so that is the amount she can keep.
  • John moves into a SNF on January 5th. On the 1st he and Jane owned their home, one car and $300,000.00 in other countable resources. Jane should get to keep $150,000.00, except that exceeds the maximum, so she is limited to $130,380.00.
  • John moves into a SNF on January 5th. On the 1st he and Jane owned their home, one car and $150,000.00 in other countable resources. Jane gets to keep $75,000.00.

The other big difference between Classic Medicaid and the other programs is that there is no functional assessment required. Medicaid assumes that you would not choose to live in a SNF if you did not have to do so because of your care needs.

Once on Classic Medicaid, the applicant can keep a $71.21 personal needs allowance (PNA), enough money to pay for their supplemental insurance premiums, and maybe give some to their spouse (if the spouse’s income is low enough). The rest of their income is paid to the SNF and then Medicaid pays the rest.

If any gifts are made within five years of applying for benefits, benefits may be denied for a period that is determined based upon the size of the gifts. The penalty is approximately equal to a month of penalty for every $10,500.00 given away.

COPES.

COPES is the rough equivalent to Classic Medicaid when the applicant lives anywhere other than a SNF. The Well spouse of a COPES applicant is allowed to have $58,075.00 in other countable resources. COPES does have a functional requirement in addition to the financial requirements. A State social worker will perform an assessment of the applicant’s care needs and assign a value to those needs. If benefits will be received at home, the assessment is used to determine how many hours per month Medicaid will approve (rarely over 180) and in any other setting it is used to determine how many dollars per day the care community will be paid.

Once on COPES, the applicant can keep a $71.21 PNA (outside of the home), $794.00 or $1,064.00 PNA (in the home married or single), enough money to pay for their supplemental insurance premiums, and maybe give some to their spouse (if the spouse’s income is low enough). The rest of their income is paid to the care provider and then Medicaid pays the remainder of the approved care cost.

If any gifts are made within five years of applying for benefits, benefits may be denied for a period that is determined based upon the size of the gifts. The penalty is approximately equal to a month of penalty for every $10,500.00 given away.

CFC.

The requirements for CFC are nearly identical to COPES, as are the benefits. It is easier to point out the differences in this program than it is to start from the beginning.

CFC is only available to those who are outside of the home but not in a SNF and whose gross income is less than $2,382.00 per month, or those who are in the home with gross income below $794.00 per month.

CFC only allows for the PNA and not for supplemental insurance premiums, which could mean that the applicant will need to change to a free supplemental insurance or their loved ones may need to cover the cost of the insurance premiums.

CFC benefits are not delayed by gifts made within five years of applying. However, the penalty period is still calculated and the applicant is not eligible to transition to COPES or Classic Medicaid during that period. The penalty period for all three programs is limitless. This means that a person who qualifies for CFC benefits but gives away $700,000.00 (just a random example) will not be able to move to a SNF with Medicaid coverage for over five and half years. This makes it important to ensure that the care community where they are living is one that will be able to handle their care needs for a long time.

Summary. It is not important for you to decide which program is right for you, which is the job of elder law attorneys like myself. However, understanding the differences between the programs can help you understand the advice you are given or even dissolve some misconceptions that have kept you from reaching out for help in the first place.

Choosing Where to Live and Receive Care

Anyone who has ever listened to Rajiv Nagaich speak knows that about 80% of Americans would like to take their last breath at home. They also know that only about 30% of Americans succeed at that goal. We believe that part of the answer to that problem is redefining how we think of “home.” Not counting an actual hospital, there are five places that you can live out the end of your life (this is over simplified, but covers the vast majority of options). Each of them has certain advantages and disadvantages and we will describe each individually, in no particular order.

For most people this means either their home or the home of a child or loved one. It could be the home you have always lived in, a new condo or house that you downsized to, or even a home in a 55+ community that does not provide any care services, but does have amenities close by.

The biggest advantages to spending your final years at “home” are comfort and autonomy. Everything in the space is yours (or your loved ones’). It is familiar, and there is no one telling you what to do or when to do it. If it is the home you have lived in for a long time, you know every nook and cranny and, even when your memory starts to fail, you can navigate in the dark with little concern.

The downside to staying here is that, if your care needs become significant, you will need to have a good deal of money and/or family support to meet all of your needs, even if Medicaid is paying for long term care (LTC). In most cases, unless you have a specific qualifying diagnosis, Medicaid will pay for no more than 120-180 hours per month of LTC, about 4-6 hours per day. If you need more care than that, then your family needs to provide it or you need to pay for it privately at an average of $30+ per hour. Even four extra hours per day will quickly add $3,600 per month that you will struggle to find once you have reached the point of financially qualifying for Medicaid (maybe a little easier for a married couple who are able to keep more assets and use more methods to protect assets).

Skilled nursing facilities or SNFs are rarely places that anyone would call home, though we can think of at least three that are better than most for comfort and quality of care. In most cases, a SNF is a last resort for people who waited too long to get help or who chose a different path that did not work out as planned.

SNFs do have a few advantages. Married couples can keep even more assets in a SNF than any other setting (generally), facilities that accept Medicaid do not have private pay periods (described more in later options), and there are staff available 24/7 to provide care for even the highest levels of care needs. Of these, the one that ends up deciding the care location for most of my clients who move into a SNF is the lack of private pay period. If you have high care needs and wait to get help until you cannot afford care at home and cannot pay privately at any other care community that will accept you, a SNF may be the only viable option.

The downsides are a bit more obvious. This is essentially like living your final years in a hospital. In all but a few SNFs we have been in, there is a smell of urine and disinfectant that lingers for hours after you leave, and very little social interaction takes place outside of treatments.

Adult Family Home – An AFH is usually a converted private home, though some are built for the purpose. They are limited to six residents receiving care, and are frequently owned by current or former nurses or EMTs (not always, but we see this very frequently).

The biggest advantage to an AFH is the small size. With only six residents and at least one staff member always on duty, there are more opportunities for one-on-one interaction with care providers. You can get to know the whole staff and all of the residents quickly and form relationships with them.

There are several disadvantages, but the extent to which they exist varies greatly from facility to facility. The most significant is the private pay period. Most AFHs require that you pay them privately for at least 2 years before they will accept Medicaid payments. With help from a geriatric care manager you can sometimes find shorter private pay periods, but the general trend if for these periods to get longer and homes that will take shorter periods are becoming fewer and fewer. The other major disadvantage is the lack of socialization and activities. While not always true, AFHs generally have fewer organized activities and always have fewer people around to interact with. Often times at least half of the residents are effectively non-communicative and there is rarely more than 7-8 total people in the home at any given time (other than visitors). For a very social person, this can be a nightmare scenario. The final disadvantage is that most AFHs do not have a nurse on premises at all times, though there is always supposed to be one on call. This means that if there is an emergency during a time when there is not a nurse on duty, you have to wait for an ambulance or the on call nurse to arrive.

ALFs are, generally, like living in an apartment complex with staff coming in and out all the time to provide services, though some are set up more like a SNF, with a hospital-like feel to them. They tend to handle higher levels of care than most AFHs (though not always), but less than SNFs (also a generalization), and they are the most common place to find secured memory care units.

The greatest advantage that an ALF has is the opportunities for activities and socialization. Most ALFs, or at least the good ones, have staff dedicated to organizing activities from bingo to crafts to field trips. There are many more residents than in an AFH, so you are more likely to find other residents that share a similar interest or hobby and that can communicate with you on your level. The other major advantage over an AFH is that there should always be at least one nurse on duty in the building and most also have a dedicated physician that works with all of the residents and is on call as needed.

The disadvantages include private pay periods, like those at AFHs, and reduced one-on-one interactions. With so many more residents and staff, it can be harder to form close relationships with the care providers, who may be different every day of the week. Some ALFs make an effort to have the same handful of care givers assigned to each resident for consistency, but that is not always the case. If you do not like a lot of social interaction and you want to have a closer bond with care givers, then this may not be a good fit.

CCRCs are a great option for people who can afford them and who do not want to use Medicaid. They come in many flavors but most require an initial buy in that can range from $50,000.00 to over $1,000,000.00 and proof that you own enough assets to pay for a while. The most common CCRCs that past clients have chosen require about $200,000.00 for the buy in and proof of $400,000.00-600,000.00 in assets.

While not always true, the advantage to most CCRCs is that they promise you will never have to leave because you run out of money or your care needs become too great. The buy in money is treated like an insurance policy so that the CCRC has money if you can no longer pay the monthly rent and most CCRCs have independent living, assisted living, and SNF level housing all on the same campus. Once you move in, the furthest you should ever have to move again is across campus to another building or another wing of the same building.

The biggest disadvantage is the cost. Even after the buy in, you can easily pay anywhere from $2,500.00 per month for independent living to over $10,000.00 per month for SNF. Even a large estate can be drained fairly quickly at those prices. Another disadvantage is that most CCRCs have a clause in the contract that forbids making large gifts once you sign the agreement. That means that if you have a $1,000,000.00 estate and need to prove at least $400,000.00 to move in, you had better consider giving away $600,000.00 before you move in or it will all go to the CCRC, assuming you live long enough to spend it all. The final disadvantage is that it can be very difficult to spot the CCRCs that do not guarantee that you will not be kicked out if you run out of money or the ones that cannot handle every level of care needs. It is very important to have a geriatric care manager or an attorney review the contracts closely before signing up or you may find yourself paying a lot of money to the CCRC only to be kicked to a different SNF when your money is gone or your care needs are too high.

Summary – There are options out there and, with careful planning and the right team, you can make any of these setting feel like “home,” even a SNF. The earlier you start looking at options and deciding what you will or will not accept, the more likely you are to spend your final years in a place that you consider to be your home, whether it is the place you currently live or not.

Overcoming the Fear of Handouts

By Aaron Paker.


This 
week in Crisis Corner, overcoming the fear of handouts. 

 

We have had many clients who were children during the great depression and many more who have spent much of their adult lives opposing Welfare and the spending of money on those who have not earned it.  They come to our office, usually grudgingly dragged in by their loved ones, and they tell us they do not want a handout and to find another way for them to get help.  Sometimes it even gets to the point of the family coming in only after their loved one is too incapacitated to refuse the help or completely out of money and with no other options.   

 

There are a few things that we often share with clients who are of this mindset: 

  1. You have likely paid for this.  There is no direct “Medicaid tax” that you pay, though you do pay into Medicare and Social Security, at least while you are working.  However, roughly 60% of the Federal budget is dedicated to mandatory spending.  That primarily consists of Social Security, Medicare, Medicaid, and Veteran’s benefits.  If you have paid taxes, you have contributed to the funding of the Medicaid program.  You might as well use some of that money rather than have it all go to others who may or may not have paid in. 

 

  1. Your family are the most likely to suffer from your refusal.  You have every right to spend all of your life savings paying privately for care.  The rules that we use to help clients protect some of their assets make it possible for them to have assets available to improve the quality of life that they experience after their care needs increase and, just maybe, have a little something left to pass on to their children when they are gone.  As with any set of rules, there are ways for people to abuse the rules that allow for the protection of assets.  We have had several couples with multi-million dollar estate and massive incomes request help getting Medicaid to pay for care and, if we were so inclined, we could have legally helped them do just that.  However, most of the people who come to me for help have somewhere in the range of $100,000.00 to $1,500,000.00 and care costs that are reaching the level of $60,000.00 to $180,000.00 per year.  It does not take long to become destitute with care costs that reach those levels.  For those with more than $500,000.00 there are often other, non-Medicaid, options available, but they are not always practical or appropriate. 

 

  1. Waiting could cost the government even more and give you a lower quality of life.  There are a few people who will hold out until every dime is gone and their family cannot help them, physically or financially, any longer.  At that point Medicaid, in a nursing home, may be the only option that is left to them.  The benefits that Medicaid pays to a nursing home are, generally, larger than the benefits paid in any other setting, with Medicaid paying as much as $10,000.00 per month or more to the nursing home as opposed to the $3,000.00 to $5,000.00 that they would pay in most other settings.  For all of that extra money that the government is paying, the person receiving care is living in a situation that almost no one would choose for themselves if there were any other options.  Do not get me wrong, we have visited clients in nursing homes that were quite pleasant and that provided a fairly good quality of life.  However, the majority of my visits to nursing homes are depressing.  We see patients sitting in wheelchairs in the hallwaywearing nothing but a hospital gown, and staring at nothing in particular. We see six patients seated around a horseshoe table being fed by one disinterested care provider. We smell the overwhelming stench of urine and bleach that lingers with me and my clothes for hours.  Waiting until you are out of options for where you receive care makes it very difficult to be choosy about which nursing home you land in and we would not wish most of them on our worst enemy if we had any other options. 

The key is to recognize that you are not taking a handout, you are taking a hand up.  You are using the rules that have been created, by the government, to give yourself and your family the best quality of life possible.  Assuming you come to us or another elder law attorney that believes that Medicaid is not always the answer, you will look at other options besides Medicaid unless it truly is the only resource left for you in your current situation.  You may still land on Medicaid, but you can at least feel better knowing that you have explored other options and then did what was right for you and your loved ones.   

 

If you want to learn more about Medicaid and how it might fit into your future or the future of a loved one, please give us a call today. 

Start Planning With Professionals Early!

This week in Crisis Corner, why it is more important than ever to start early and get professional help in planning for your long term care needs.

I recently had the opportunity to be a guest on Rajiv’s Aging Options radio show. During our conversation he asked me about changes to Medicaid in 2021 and, for the first time, I really put all of the changes I have been seeing together in my mind.

The good news, if you want to call it that, is that the amount of money a well spouse can have at the time of the application, the personal needs allowance that the Medicaid recipient gets to keep, the allowable home equity, and all of those sorts of things increased by a tiny percentage, as they do every year. In fact a person receiving benefits outside of their home gets to keep a full $1.12 per month more of their money in January 2021 than they did in December 2020. Needless to say, the increased benefits from the State are not significant.

The bad news is that the way that the State enforces rules is changing, whether officially or not, and the way care providers accept Medicaid is also changing. One of these sets of changes increases the need for seeking professional help and the other increases the need to start the process early.

The biggest change the State has made, its automated asset verification process (AAVP), is not really new to 2021 but it has been an increasing issue as 2020 progressed. Before the system was implemented, we would send three to six months of bank statements along with the Medicaid application and explain any unclear deposits or withdrawals. On rare occasions the case worker assigned to the application would see a red flag and ask for more bank statements, sometimes (twice that I recall from hundreds of applications) they asked for all statements from the five years leading up to the application. When the AAVP was first rolled out I did not see much change and it seemed that they only used it if they saw a red flag and wanted to get more information, or to look for bank accounts that were not reported at all. Then things changed. Now, as far as I can tell, the case worker prints out a report of every deposit or withdrawal over a specified amount (about $350 I think) that has occurred in the last five years. The good caseworkers sort through and eliminate the items such as transfers from checking to savings, automatic payments to a mortgage, or other similar items that are self-explanatory. Other case workers send a seven page letter requesting an explanation for each and every transaction, most of which I can simply note as self-explanatory. The problem lies with the ones that are not self-explanatory. If I show you a bank statement from January of 2016 and ask why you made a cash withdrawal of $400.00 on the 5th would you remember what the money was for? This becomes even more of an issue when the person applying for benefits managed their own finances until two or three years ago and now have no capacity to recall what they did, so their agent is trying to explain transactions that they had no part in. I spend more time trying to explain bank transactions that should not even be the subject of scrutiny than I do explaining the really complicated transactions that used to be the reason people came to me for help.

The other big change I have seen from the State is how they enforce old rules that have not changed. A good example is home equity. In the past if a single person was living at home or intended to return home and the equity was too high, the State would approve benefits and place a TEFRA lien on the home right away (a lien for all Medicaid benefits that normally is not placed until the recipient passes). Similarly, I had several married couples where the well spouse kept the home but rented an apartment near the care facility of the spouse applying for benefits, sometimes renting the house until they were able to move back in. Now, on several occasions, the single applicants are being forced to go through formal hardship waiver applications and the State is applying the equity limit to the married couples (normally a well spouse can own a home of any value) and requiring a hardship waiver application if the house has too much equity. The hardship waiver application is not overly difficult in and of itself, especially with help from an attorney; however, by the time the State informs you of the requirement, you prepare the application, and it gets reviewed by all the levels of supervisors that are mandated by the application, the approval can be delayed for several extra months. This is not the only rule that is seeing much harsher interpretations. I have had children pay large amounts of money to cover repairs to a parent’s home so that it can be sold and then get paid back after the sale and the State’s case worker insisted that the child made a gift and then received a gift because there was no paperwork to prove it was a loan. They wanted to impose a gifting penalty for something that was clearly not a gift (I eventually won that fight). That is only one extreme example of an increasing unwillingness to admit transfers that are not for Medicaid qualifying purposes as excluded. A few years ago I had a client who gave $10,000.00 to her youngest daughter, just before applying, because she had paid that much towards the other daughters’ weddings and did not want her youngest to miss out just because she was applying for Medicaid… and it was approved without a single extra question asked!

That brings me to the changes I am seeing in care providers, both in home and in communities. A year ago I could call one of the geriatric care managers that I regularly work with and tell them I need an adult family home (AFH) or assisted living facility (ALF) in a certain part of the state and I need them to accept Medicaid in no more than 6-12 months. They might have grumbled at me, but in most cases they had three to five possible communities for the families to look at within a week or two. Today, if I make the same request, the families might get a list of 3-5 facilities within 25 miles of the part of the state they want after a month or two (assuming they want a quality facility and not just one that accepts Medicaid). The demand for beds in quality communities is higher than ever and the amount that Medicaid is asking them to accept for care provided is not increasing with the increase in private pay rates. For example, when I started this six years ago, an AFH might get $4-5K per month private pay and $3-3.5K from Medicaid, so they would often take Medicaid after 6-24 months of private pay. Now the private pay is often $6-9K per month and the Medicaid rate is $3.5-4K so they all want 2-5 years of private pay or they have stopped accepting Medicaid all together. What used to be the high end of private pay periods has become the starting point for most communities. We always advocate for trying to keep your loved ones at home, but that is not always realistic, especially if you wait to start planning until the money is mostly gone and the needs are at their highest. Recognizing that a care community might be required and transitioning early, while care needs are relatively low, can save tens of thousands of dollars. Think of it like this, you can pay privately for three years while care needs are low and the rate is $5,500 per month or you can pay privately for three years when assistance is needed for nearly every activity of daily living and the rate is $8,000 per month.

People receiving care at home are not immune to this change in care givers or, more accurately, this lack of change in benefits. Clients often have care providers that have been working with them for some time and, when Medicaid starts, they want to keep that care provider. However, a care provider who is being paid $20-35 per hour may not want to accept $16.50 from Medicaid. Not only are Medicaid rates very low, they only look at experience related to State approved work. A recent client had a care provider with the training and experience to warrant over $20 per hour from the State, but it was not work performed for the State so she was only offered $16.75 per hour to stay on as a Medicaid provider. The only saving grace for finding willing providers is that the State approves very few hours for most elderly recipients and the families can pay a higher rate for the extra hours that they cover privately (please note that you cannot simply pay the provider more for the hours that Medicaid already pays for or the provider and you can face severe repercussions). For example, the state may pay $16.50 per hour for the first 100 hours of care each month and the family might opt to pay for an additional 20 hours of care at $30 per hour that the State does not cover. This brings the average pay per hour up to $18.75, which may be at least a little more palatable to the care provider.

My long-winded point is this: between changes to how Medicaid rules are enforced and a lack of change to how care providers are compensated, it is very important that you start planning for your long term care needs sooner than later and that you work with a professional to minimize the snags along the way. If you are fortunate enough that Medicaid and care providers are something that is in your distant future, if at all, then talk to one of our Life Planners and get a really early start. If things are starting to get shaky but you think you can hold it together a little longer before you spring for a professional, call me and start now. Starting early is the single best thing you can do to provide yourself and your loved ones the best possible outcome.

What is a Geriatric Care Manager, and what do they do?

This week we learn about Geriatric Care Managers. Who are geriatric care managers (GCMs) and what do they do?

GCMs play a huge part in the work that we do to help clients prepare for Medicaid. In general, most GCMs are nurses or social workers by trade, but that is not always the case. They can also offer a wide variety of services and not all of them offer the same services. The following are the primary services offered, that we request the most often, and how they help our clients.

Far and away the most common service that our clients need help with, and the one that most GCMs provide even if they provide no other services, is finding appropriate housing options in an adult family home (AFH), assisted living facility (ALF), skilled nursing facility (SNF), or continuing care retirement community (CCRC). Any GCM will have a list of facilities and the cost for each within any given search radius. The better GCMs will also be able to provide information about: past and present complaints or actions against the facility; anecdotal information about the quality of care; and a sense of what the overall feel/personality of the facility is. They can tell you whether or not your loved one who hates Asian food or only speaks in Cantonese or wants hotdogs every Tuesday will fit in. When it comes to housing research, many GCMs will not charge because they receive payment from facilities where they place a client. Some will charge by the hour if they do not receive such payments or if they are looking at facilities that do not make such payments. You should always clarify what you will be charged ahead of time and ensure that, regardless of the fee, the GCM is willing to look at facilities that do not make payments to the GCM for the placement.

The other thing that separates a good or great GCM form the rest is their willingness and ability to use their connections within the facilities to negotiate shorted private pay periods. As you may have read elsewhere in this firm’s writings, most non-SNF facilities that accept Medicaid expect you to pay privately for 2-4 years. GCMs can often negotiate terms where a larger deposit is made up front and the private pay period is shortened or even eliminated completely. Attorneys can make similar negotiations, but we have less of a direct connection with the facilities and that lack of a relationship can make it much harder to strike the same bargain.

Similarly, GCMs facilitate the finding and hiring of care providers to provide in-home care for their clients, such as driving them to appointments, fixing meals, or paying bills. They are familiar with local agencies that have good reputations and they are skilled at finding individuals who do not work for an agency if you want to avoid some of the agency mark-up. They are also very good at helping identify the pros and cons of using an agency or an individual based on the merits of your individual needs. Once a care provider is hired, the GCM can also serve as an overseer, checking in to be sure that the care is appropriate and the care providers are doing all that they are being paid for. To start out, this might be weekly check-ins and then ease back to monthly or even quarterly check-ins.

The second most common service that our clients need is a functional assessment and care plan. In order to qualify for Medicaid, and sometimes just to successfully create a plan for future benefits, it is important to know what help a client needs, how often they need it, and what it will cost them if they pay for it privately. GCMs can assess the needs of the client and put together a care plan that tells family members what they should be doing or what they should be hiring someone to do. It is very helpful to ensure that Medicaid does not understate the needs of the client, to create a contract for paying loved ones for care before the time for a Medicaid application, or for several other planning options that may be in consideration. A thorough assessment with a well prepared care plan makes my job much easier and provides invaluable information to the family and friends of someone who is in need of care

GMCs will often help coordinate and schedule appointments, attend medical and/or legal appointments, and then help relay and explain the conversations that were had to loved ones or to the client. They are also great at translating on the spot when a doctor starts using a lot of medical jargon and then asks a client to make a decision that could dramatically affect their life. Having someone with you who “speaks the language” can make a big difference.

GCMs are also available to help loved ones who have chosen to be the care provider. A good GCM can help find short-term respite options for someone who just needs a break but does not want to give up providing the care. This could range from finding care providers that are willing to only work one or two days per week, for limited hours, to allow the care provider a chance to get out, or it could be helping identify local adult daycares that will provide great quality care on an irregular schedule.

And So Much More.

We have also known GCMs to serve as agents under a financial and/or health care power of attorney, serve as weekly hired companions to just spend quality time with lonely individuals, coordinate family discussions to avoid or resolve misunderstandings and disputes, and so much more.

It is very important to find a great elder law attorney when planning for your future or the future of your loved ones. It is equally important to find a great GCM to work with. We have several great GCMs that we work with and we are happy to make introductions between our clients and our trusted GCMs.

I want to stay at home as long as possible…

This week in Crisis Corner, “I want to stay/keep them at home as long as possible.”

Just about everyone wants to stay at home or keep their loved one at home “for as long as possible” before moving to a care facility. In many cases, with enough planning and family support, it is possible for someone to remain in their home until they take their last breath. However, even in the best circumstances it takes a lot of effort and must be approached from the starting place of staying home for the long haul, not for as long as possible.

Staying home for as long as possible means that you have already decided that, at some point, staying home will not be an option. In most cases, if we are truly honest with ourselves, those who want to keep themselves at home as long as possible are really saying that they are afraid of making the change and those who want to keep a loved one home as long as possible are really trying to avoid feeling guilty about “putting them in a home.” If you know that staying home will not be an option, and you are willing to face the fear of the unknown or the guilt of making the hard choice; then there are many reasons to start the transition to a new place sooner than later.

First and foremost, this discussion typically starts with someone receiving a diagnosis of dementia or Alzheimer’s. Healthy people rarely talk about staying home as long as possible, they either talk about staying home or they talk about finding a retirement community. We cannot count the number of times that we have heard “I’ll keep him home until he is so confused that it does not matter where he is living” or “When she doesn’t recognize me anymore, then I’ll take her to a facility.” The problem with that line of thinking is that people with dementia and Alzheimer’s tend to have better long-term memory than short-term. They have spent years and years ingraining the layout of their house and their things in their minds. If they move to a new home early in the progression of their illness, they have more opportunity to form new memories and patterns. Moving them to a new home when they are not forming any sort of new memories and are already confused all of the time is much harder for them. They are more likely to have trips and falls, especially at night, as they try to navigate an unfamiliar room based on patterns that they walked in the old home. They are also likely to become even more confused and/or depressed. Many studies have shown that changing the place where a person with dementia or Alzheimer’s lives has a negative effect on their health and can make their condition progress even faster. The further they are into the illness, the greater this negative effect becomes.

Second, most care facilities, other than nursing homes, will not accept Medicaid without being paid privately for a period, typically 2-4 years. This means that if someone is receiving Medicaid benefits at home and then needs to move to a facility, they will likely either have to move to a nursing home or find a way to private pay and then reapply for benefits. There are a few adult family homes and assisted living facilities that will take Medicaid without a private pay period, but they are increasingly hard to find and many of them are not places that you would want to live or to have a loved one living.

Even if Medicaid is not yet involved, the cost for most care facilities increases as the needs of the resident increases. Moving yourself or your loved one into a facility early after the diagnosis rather than after a few years could mean the difference between paying $5,000 per month during the private pay period and paying $9,000 per month during the private pay period. If you have to pay privately for two or more years, then you want those to be the years when you need the lowest levels of care.

Finally, you need to consider the health of the rest of the family that is providing care. It is hard work to care for someone 24 hours per day. Even when professionals are hired to come into the home and help, it is hard for family members, especially spouse’s, to really back off and let others be the care givers. They often change from spouses to nurses and the effect is visible. Many couples come to us for help with planning for one ill spouse only to have the “healthy” one pass first because they are working themselves to death. We have seen clients lose 50 pounds, which they did not have to lose, over the course of six months working with them, not to mention the ones who have strokes or break a hip trying to assist with a transfer. In those situations, not only has the healthy spouse thrown away their own health, but they have created a situation where the ill spouse has no one available to provide care and they are forced to move to a facility on short notice with no thought or planning into where they will go.

If your plan is that you or your loved one will take their last breath at home, great; we can help make that happen. If your plan is try for as long as you can and then make the move, please read through this one more time and decide if you are making the best plan for the person who needs care or the best plan for avoiding a sense of fear or guilt for yourself. There truly are great care facilities out there and we can help you form a plan that is best for you and your loved ones.

What to do with your parents money.

This week in Crisis Corner, we want to discuss what to do when mom or dad gives you a large sum of money as part of their Medicaid planning.

It is a very common practice for aging parents, especially those with a new diagnosis of Alzheimer’s or Parkinson’s, to give a large portion of their assets to their children and start a “five year look back period.” In most cases, Medicaid will not pay benefits for an applicant that has made a gift within 60 months of applying. The period of time that the applicant is ineligible is based upon the size of the gift. Under the current standards (these change at least once per year) a gift of $631,450.00, give or take a little bit based on leap years, is enough to trigger a five year penalty. If the gift is less than this amount, it might be worth applying right away, or it might still be better to wait. That is a separate discussion that has to be had on a case by case basis.

Whether the gift is part of a plan to apply soon or a plan to apply after five years, you may be left wondering what to do with all of that money. In general, there are three options:

  1. Spend it. When a gift is made for Medicaid purposes, it has to be a true gift. That means that mom or dad cannot give it to you on the condition that you will only use it for them until they die. You can quit your job and take a month long trip to Europe, by a Ferrari or two, or just pay off your own debt. Most children do not do this but it is an option.
  2. Put it in the bank. Some children put some or all of the money in a bank account that is dog-eared for use that benefits mom or dad. This is totally acceptable and, for smaller gifts, it may be the best way to handle the funds. This gives you the flexibility to still use some of it for yourself and it is readily available to help mom or dad if they need help.
  3. Put it into a Safe Harbor Trust. If the gift is a significant one (that means different things to different people), and you want to use all or most of the money for mom or dad’s needs, then putting the money into a Trust for their benefit has a lot of advantages.
    • If the gift was made to several children who all want to help mom or dad, they can all put their gifted money into one Trust and not worry about who is paying more from their gifts.
    • If you rear-end someone on the freeway or otherwise get sued, the money is protected from the lawsuit.
    • Similar protection is there if you predecease mom or dad.
  4. You, and any others putting money into the Trust, can designate where the money will go after mom or dad dies. For example, there are two kids but one was disinherited over a silly fight and both kids feel like the estate should be shared when mom or dad passes so the gift goes to only one of you and they put it into a Trust that says when mom or dad dies everything in the trust goes to both of you.
    • You are able to avoid temptation. You might really want to save the money in case mom or dad needs it but you also really want a new car/home/vacation. You know that once you buy yourself one thing you will want to buy yourself more things. It might be easier if you keep enough of the gift to buy yourself one thing and the rest is securely in a Trust that cannot be used for the benefit of anyone except mom or dad.

When the plan to give you the gift was made, the attorney suggesting the gift should have talked to mom or dad about these options. If you came to Life Point Law and had a Family Meeting, the attorney should have also talked to you about these options. If you have not talked to anyone about what to do with the gift you received, or if you have a loved one that is waiting to run out of money so that they can apply for Medicaid (because they do not realize that these options exist), please give us a call and see how we can help you understand your options.

The Dangers of Free Advice.

by: Aaron Paker

This month in Crisis Corner, I want to discuss the dangers of free advice. As a Medicaid planner, one of the most common phrases I hear from clients is “I was told….” On a few occasions the things people were told was pretty good advice. On most occasions the advice ranges from inaccurate but harmless to potentially devastating if followed.

One such potential bear trap that I recently heard was made worse because it came from a source that you would expect to be trustworthy, HUD (the department of Housing and Urban Development). Without sharing too many details, a HUD employee learned that one of my clients was taking his mother off the Title on the house that they own together. He told them that she was coming off of Title to avoid Medicaid estate recovery, but taking her off the Title would affect a mortgage. The government employee told my client that a simple quit claim deed would block estate recovery and, since quit claim deeds do not affect Title, the mortgage would be fine. For those of you not in the legal world, I can tell you simply that the one and only purpose of a quit claim deed is to change Title. If my client had taken this advice he would have been blindsided by the loss of the mortgage.

HUD workers are not the only guilty parties. Most of the advice comes from well-meaning family and friends. Some comes from Wikipedia or Google searches that turn up information that may be accurate, but is hard to interpret without experience working with the rules and regulations. Some come from people who should know better, like the Auditor’s office (I have been given a lot of free legal advice while recording deeds and it always comes from a person with a large sign on their desk that says “WE CANNOT PROVIDE LEGAL ADVICE”), a nursing home administrator, or an in-home care provider.

If you have been paying for care for your loved one, the last two sources are likely the ones you are most familiar with and the ones you should be most wary of. The tendency of most nursing homes in Washington, in my experience, is to tell loved ones not to worry, they will submit a Medicaid application for you. They then submit an application that is based on partial information, without any attention paid to whether your loved one is remotely qualified for benefits. Then, after a month or two of waiting for an answer, you receive a letter explaining the 15 reasons your loved one was denied benefits. In many of those cases, they could have been qualified with a week or two of close work with a trained Elder Law Attorney. Instead, months of benefits are lost to the good intentions of the nursing home.

Here is the quick and easy rule of thumb to remember about legal advice about Medicaid. If it is not coming from an Elder Law Attorney, you should not rely on it. There is a reason that so many of these government and care facility employees have signs about not providing legal advice.

When you are ready for real legal advice about planning for Medicaid benefits, give me a call and let’s talk.