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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.

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.