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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.

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.

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.

Continuing Care Retirement Communities, an alternative to Medicaid planning?

This month in Crisis Corner, I want to take a closer look at Continuing Care Retirement Communities (CCRCs) as an alternative to Medicaid planning.  In many cases, whether because of very high resource values or simply because a client does not like the idea of Medicaid, CCRCs can provide an alternative means of ensuring that you and/or your loved ones will receive the care that they need for the rest of their lives, without worrying about being displaced if they run out of money (read the fine print).

CCRCs, in general, are communities that offer independent living, assisted living, and skilled nursing all within the same campus. They have “buy ins” that can range from around $50,000 to over $1,000,000, and monthly charges for rent and care, which can vary greatly from $2,000 per month to over $10,000 per month. When looking at CCRCs there are several key points that you should research before choosing a community.

Flat Fee.  These are used in roughly 1/3 of WA CCRCs.  They tend to have larger buy ins, but the monthly fees are relatively consistent from move in to death.  There may be annual raises in fees for inflation, but you pay the same whether you are in independent living or in skilled nursing care.  These CCRCs are more likely to sign up residents who will come in at the independent level and spend as long as possible at that level of care.  This can be a great deal if your health turns well before the end of your life, but if you are expecting a long, healthy life, you will likely pay more here than you would for independent living at a different CCRC.

Resource Requirements. The buy in is only half of the financial qualification process. Nearly all CCRCs require that you show evidence of sufficient resources to pay for some number of years. This number can vary greatly from community to community, but my limited experience with these requirements suggests that it is often roughly double the buy in fee; i.e. if you buy in with $200,000, then you have to demonstrate proof of at least $400,000. It is important to know what this number is because you may want to reduce your estate to a number that is closer to this amount before showing your resources. Most CCRC contracts, at least for the ones that guarantee that you will not be kicked out if you run out of money (all non-profit CCRCs must make this guarantee, but for profit CCRCs are not required to do so) include language that states you will not gift resources after moving in. This is not small gifts at birthdays or holidays, but it does exclude larger gifts, such as those that you might make if trying to qualify for Medicaid.

What this means is that if you move in with $600,000 in resources and you live there for 15 years, you could easily be out of money. If you only needed to have $400,000 to qualify, then you could have given $200,000 to your family before applying, still run out of money (without being kicked out), and kept $200,000 in the family. Either way, you might run out of money but, by gifting before moving, your family can hold onto money that can be used for your benefit or just so that you feel like you are protecting a legacy for your children.

Type of Contract.  There are four basic types of CCRC contracts to be aware of.  It is important to understand which type you are signing up for when weighing buy in costs and initial monthly fees.  The different types are:

  1. Flat Fee. These are used in roughly 1/3 of WA CCRCs.  They tend to have larger buy ins, but the monthly fees are relatively consistent from move in to death.  There may be annual raises in fees for inflation, but you pay the same whether you are in independent living or in skilled nursing care.  These CCRCs are more likely to sign up residents who will come in at the independent level and spend as long as possible at that level of care.  This can be a great deal if your health turns well before the end of your life, but if you are expecting a long, healthy life, you will likely pay more here than you would for independent living at a different CCRC.
  1. Pay As You Go. These are also used in roughly 1/3 of WA CCRCs.  The buy in may be smaller, but your monthly expense is based largely on the level of care that you need and can make significant jumps any time your needs increase.  You may start in independent living, paying $2,000 per month, then start needing help with dressing or bathing and find yourself paying over $5,000 per month.  In these communities, skilled nursing care is often over $9,000 to $10,000 per month.
  1. Roughly 1/4 WA CCRCs use a hybrid contract.  In these communities there is a set monthly cost for independent living, one for assisted living, and one for skilled nursing care.  The level of care needed within each classification does not affect the cost, just the classification itself.  You will pay the same for assistance with dressing as you do for assistance with dressing, bathing, and using the toilet.
  1. Month to Month. A small number of WA CCRCs have month to month contracts, where either you or the community can terminate the contract with 30 days’ notice.  In most of these CCRCs the buy in is smaller or it vests over time, so you can get a partial refund if you leave within the first five years or so.

Care Levels.  Most CCRCs have independent living, Assisted Living, and Skilled Nursing care.  However, not all have the Skilled Nursing care.  It is important to know what level of care the community can provide before spending 10-15 years there, using up all of your savings, and then being told you have to leave because your care needs exceed those that the community can safely provide.

Location, Reputation, and Atmosphere.  These can all be lumped together as the “squishy factors.”  Location is most important to those who want to be close to family, friends, or community activities.  This is something that only you can judge the importance of, but it can play a big difference in your costs.  Reputation is hard to judge from the internet or the handouts the CCRC gives you.  You will see the highlights, but it is harder to locate the bad reviews.  You should talk to a professional housing specialist for the inside scoop.  Finally, Atmosphere really boils down to how you feel about the place when you visit or tour or spend a week test-driving the place.  If it feels like home, great; if it feels like a prison, bad.

Talk to a Specialist.  There are a lot of geriatric care managers who specialize in helping find appropriate housing.  If you are thinking about moving to a CCRC, contact us for a list of companies you can contact for help.

If the Nursing Home is Trying to Take Away a Medicaid Patient’s Stimulus Check, They’re Breaking the Law, Uncle Sam Warns

If you or a loved one live in a nursing home and receive Medicaid benefits, watch out. Some nursing homes and assisted living facilities around the country have snatched up their Medicaid residents’ stimulus checks, claiming that the facility owns that money.  But according to this Michelle Singletary column in the Washington Post, they’re wrong. That money belongs to the resident, and both the IRS and the Federal Trade Commission have recently issued strongly-worded statements putting violators on notice.

That Stimulus Check Belongs to You, Even If You’re on Medicaid

“The IRS issued an advisory last week to clarify that the economic impact payments distributed as part of the latest stimulus package belong to recipients, not a nursing home or assisted-living facility,” writes Singletary. This action by the IRS and other federal agencies comes in response to reports that “nursing homes and other elderly care organizations have seized the payments, arguing that because the residents are receiving Medicaid, the facilities are entitled to the money.”

(We’re reprinting portions of the IRS and FTC statements at the end of this article.)

As the Washington Post reports, The CARES Act (Coronavirus Aid, Relief, and Economic Security) provides a $1,200 refundable tax credit for individuals and $2,400 for joint taxpayers. “What many have not realized is that the stimulus payment is an advanced tax credit, and as such, it is not considered income, which is why it’s not taxed,” Singletary explains. “As a result, for the purpose of qualifying for federal benefits, such as Medicaid, the stimulus payment is not counted as a resource.”  This ruling also applies to other federal benefit programs.

You’re Free to Spend Your Stimulus Check as You See Fit

The National Center on Law and Elder Rights has determined that the stimulus payment cannot be used to affect a resident’s monthly payment or “share of cost,” according to the Post. Residents are free to spend their stimulus money however they please.

CMS has also weighed in on this issue, Singletary reports. The Centers for Medicare and Medicaid Services issued a warning which you can read here that “commandeering stimulus payments from residents could subject facilities to federal enforcement actions, including the possibility that they cannot participate in the Medicare and Medicaid programs.”  One IRS spokesman couldn’t have been more blunt. “The law is clear, and we want you to know that,” he said. “If you’re in a nursing home or other care facility, your economic impact payment belongs to you, not the home.”

According to the Washington Post, if a nursing home or assisted-living facility has taken your payment and won’t return it, you should contact your state attorney general. Since many AgingOptions blog readers live in Washington State, we’re including  this link to the website of the Washington State Attorney General.

The following comes from the IRS statement, which you can read in its entirety here:

The Internal Revenue Service today alerted nursing home and other care facilities that Economic Impact Payments (EIPs) generally belong to the recipients, not the organizations providing the care.

The IRS issued this reminder following concerns that people and businesses may be taking advantage of vulnerable populations who received the Economic Impact Payments.

The payments are intended for the recipients, even if a nursing home or other facility or provider receives the person’s payment, either directly or indirectly by direct deposit or check. These payments do not count as a resource for purposes of determining eligibility for Medicaid and other federal programs for a period of 12 months from receipt. They also do not count as income in determining eligibility for these programs.

Here’s a Link to the Statement by Lois Greisman of the FTC:

Do you or a loved one live in a nursing home or assisted living facility? Are you (or they) on Medicaid? If you said “yes” to both, please read on and prepare to get mad. We’ve been hearing that some facilities are trying to take the stimulus payments intended for their residents on Medicaid. Then they’re requiring those people to sign over those funds to the facility. Why? Well, they’re claiming that, because the person is on Medicaid, the facility gets to keep the stimulus payment.

But here’s the deal: those economic impact payments are, according to the CARES Act, a tax credit. And tax law says that tax credits don’t count as “resources” for federal benefits programs, like Medicaid. So: when Congress calls these payments “tax credits” in the CARES Act, that means the government can’t seize them. Which means nursing homes and assisted living facilities can’t take that money from their residents just because they’re on Medicaid. And, if they took it already, get in touch with your state attorney general and ask them to help you get it back.

This is not just a horror story making the rounds. These are actual reports that our friends in the Iowa Attorney General’s Office have been getting – and handling. Other states have seen the same.

If you’ve experienced this already, tell your state attorney general’s office first, and then tell the FTC: http://www.ftc.gov/complaint. If a loved one lives in a nursing facility and you’re not sure what happened to their payment, talk with them soon. And consider having a chat with the facility’s management to make sure they know which side of the law to be on.

(Note that the FTC statement includes other helpful links should you need them.)

Crisis Corner: 5 Myths of Medicaid

By: Aaron Paker

Welcome to the first installment of Crisis Corner.  Since this is the first article in this series, I should introduce what Crisis Corner is.  This is a monthly article to help aging Americans understand the options that they have when things go wrong.  I specialize in helping folks who are dealing with a sudden illness or diagnosis that turns their world upside down and they have not made all of the arrangements necessary to flow with the change.  This month, I will take on the five most common myths that prevent people from seeking Medicaid help.

The Big 5.

  I often get calls from adult children seeking help for their parents.  The children want the parents to get Medicaid to help pay for increasing care costs, but the parents will not listen to them.  I sit down with one or both parents to talk and I almost always hear between 1 and 5 of these myths: 

1) I make too much money
2) I have to be broke
3) I have to spend the money on care first 
4) I’ll lose my house when my spouse dies

5) I’ll have to move to a nursing home

This is the absolute, no contest, most common objection I hear.  In over 5 years and hundreds of Medicaid plans, I have run into three (3) people whose income was too high for Medicaid to approve them, though there have been a handful of single applicants whose income was high enough that remaining on benefits, once approved, would be impractical at best.  Generally speaking, the “ill spouse” can have an income of $7-10,000 per month and still be approved for Medicaid benefits and the “well spouse” can have unlimited income.  A high income for the ill spouse just means that they will pay for more of their care before Medicaid kicks in to pay the rest.  Sometimes this even means that they pay everything and Medicaid pays nothing, but they pay the Medicaid rate and not the private rate, which could be a savings of $2-3,000 per month or more.

Where this really becomes an issue is when a single person has a high income.  One situation that I have seen a few times involves a single person with an income of about $5,000 per month.  They are living in a care facility that charges $7-9,000 per month and so they are losing $24-48,000 per year from savings that may not have been very robust to begin with.  They use various methods to bring their savings to less than $2,000 so that they can apply for benefits and they are approved.  So far, so good.  Then the Medicaid rate for their care is set at $4,000 per month.  They pay the care providers $4,000 and add $1,000 to their savings, putting them over $2,000 and costing them their benefits.  This means that they have to find other things to spend $1,000 per month on, without gifting.  This can be done with companion services, messages, field trips, etc. but it is very difficult to continuously find appropriate expenses every month.

This one takes less words to explain away.  A single applicant can have one house with up to $595,000 in equity, a car of any value, and $2,000 in other resources.  If they want to protect the house from being liened, then they are essentially limited to a car and $2,000.  A married couple can have a house of any value, a car of any value, either $60,075 or up to $130,640 (in a nursing home scenario) in other countable resources, AND the well spouse can have unlimited income.  This means that, in most situations, a couple with one ill spouse and one healthy spouse can come to me with a great house, a nice car, and $1,000,000 or more and I can protect most or all of those resources and get them help.  There are times that it makes more sense to avoid Medicaid when you have that many resources, but that comes down to a case-by-case analysis of the situation.  I will clarify, because I am often asked “why would someone with that much need Medicaid?”  Here is a brief scenario where it might make sense: Couple has been very frugal with relatively large incomes while younger and made strong investments; retirement income is a combined $4,000 per month plus any interest being made from the investments; husband becomes very ill and has to move to a nursing home or have 24 hour care at home that is costing $12,000 per month.  This means that the $1M in savings is dropping by more than $96,000 per year ($96,000 is just his care costs and ignores all of her expenses), and they will be out of money in less than 10 years if he lives that long.

Here is my shortest answer of the day.  NO!  There are many ways to protect resources for a married couple and a few for single people.  Talk to an expert and we can help.

It is true that, if your spouse is on Medicaid AND their name is on the Title of your house WHEN THEY DIE, then the State will place a lien on the house for the amount paid in benefits. There are a few important things to note here; in most cases we can take the ill spouse off of the Title before the application or before they die.  In rare cases, usually where there is not a valid Power of Attorney and a Guardianship would be too costly or time consuming, we cannot get the ill spouse off of the Title.  In those cases the lien is placed.  The lien cannot be enforced during the surviving spouse’s life time, so they never have to pay the lien.  Oddly enough, if the surviving spouse sells or give away the property before their death, the State’s lien just goes away and is not paid by anyone.  The only time the lien can be enforced is if it was a single person who died with their name on the Title or a situation where the ill spouse was on the Title at his/her death and the surviving spouse never took steps to cancel the lien before passing.  This can be as simple as giving the house to a child or selling it to move to a smaller house.

Medicaid benefits are available in most nursing homes, many adult family homes or assisted living facilities, and in your own home.  There are times that one setting or another makes the planning easier, or provides more appropriate care, but there is no truth to the myth that Medicaid will only pay for a nursing home.


Take Away.  
There are many myths floating around that make Medicaid planning seem like a pipe dream.  If you or a loved one is facing current or expected costs of care that threatens to destroy a lifetime of savings, call and talk to an expert.  You may just learn that you have a relatively easy road to travel and a willing guide to make it even easier.  

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