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Estate Planning, Medicaid and Veteran’s Benefits Todd Whatley, CELA Certified Elder Law Attorney Attorney at Law, LL.M. Elder Law VA Accredited Attorney.

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Presentation on theme: "Estate Planning, Medicaid and Veteran’s Benefits Todd Whatley, CELA Certified Elder Law Attorney Attorney at Law, LL.M. Elder Law VA Accredited Attorney."— Presentation transcript:

1 Estate Planning, Medicaid and Veteran’s Benefits Todd Whatley, CELA Certified Elder Law Attorney Attorney at Law, LL.M. Elder Law VA Accredited Attorney

2  Last Will and Testament  Tells the Court what to do with your property as it goes through Probate  Does NOT avoid probate  In most situations, should NOT give everything to your spouse

3  Revocable Living Trust  Avoids probate unlike a will  Allows someone to manage your affairs before death and after death with no court involvement  Distributes your property very quickly and cheaply  Can protect your children’s inheritance from Creditors, Lawsuits and Divorces

4  Power of Attorney  THE Most important document you can do  Allows someone else to help with your affairs when you can no longer do it  Allows for Medicaid planning  Avoids Guardianship

5  Health Care Power of Attorney  Allows someone else to talk to the hospital staff regarding your care  You pick who makes those decisions  Allows them to override the physicians during end of life situations

6  Living Will  This is the end of life document  Tells the health care staff what to do if you are terminally ill or permanently unconscious  Refers back to the Health Care Power of Attorney for the ultimate authority

7  HIPAA Release  Health Insurance Portability and Accountability Act  Allows your medical information to be released to health providers and insurance companies  Without this release, great possibility of your family not being able to know your medical condition  Necessary for Health Care Power of Attorney

8  Used for a beneficiary that has a disability and is on or may be on Public Benefits  Needs to be a separate trust from the testamentary trust  Facilitates approval  Allows others to add to it also  Avoids the pitfalls of leaving the money to another child

9  Most People don’t know about VA Benefits  What Benefits are Available  Improved Pension  Housebound  Aid and Attendance

10  Requirements for Improved Pension Benefits  Served 90 days active service, 1 day during time of war  Discharged other than dishonorable  Limited Income and limited assets  Permanent and total disability at the time of application  Disability was caused without willful misconduct  Sign and submit an application

11  Asset Requirement  The Claimant must have “less than sufficient means to pay for their own care”  Typically for a younger elder (65-70) this means $80,000 (more realistically: $30,000)  Income Requirement  Gross income is reduced by the unreimbursed medical expenses paid by the Claimant.

12  Low Income Pension  Very simple: how much is your income?  Veteran with no dependents: $958/mo  Veteran with one dependent: $1291/mo  Widower(er) with no dependents: $661/mo

13  Homebound Benefit  Veteran or widow(er) disabled and essentially confined to the home  Single permanent disability rated as 100% disabling under the VA schedule and confined to the dwelling OR  100% disability with another 60% disability, regardless of whether or not the person is confined to a dwelling

14  Homebound Benefit  Veteran with no dependents: $1204/mo  Veteran with one dependent: $1510/mo  Widow(er) with no dependents: $808/mo

15  Aid and Attendance  Claimant is blind  Claimant is living in a Nursing Home  Claimant is unable to:  Dress/undress or keep self clean and presentable  Unable to attend the wants of nature  Has physical or mental incapacity that requires assistance on a regular basis to protect Claimant from daily environmental hazards

16  Aid and Attendance  Veteran with no dependants: $1644/mo  Veteran with one dependant: $1949/mo  Widow(er) with no dependants: $1056/mo

17  Protecting the Elder’s Right to keep his money  The Rules allow for it.  Everything you will see today strictly follows the Arkansas and/or Federal Rules  Your Health and Safety  spouse will suffer at home rather than go broke

18  Federal program for medical assistance to eligible, needy persons  Federal and state funds  State administration  Department of Human Services

19  Who is eligible?  United States citizen or qualified alien  Arkansas resident  Aged, blind, or disabled  Meet financial needs criteria of state Medicaid program

20  Financial Needs Criteria  Resource:  Any property held for more than 30 days.  Countable resources must be ≤ $2,000  Income requirements  Money that comes in either periodically or lump sum  NOT VA Aid and Attendance  ≤ $2022 (year 2011)

21  Medical necessity  Need of long term/nursing home medical care  30 consecutive days in licensed facility participating in Medicaid program (hospital and/or nursing home)

22  Income Requirements  “Cap” state  Income definition  Receipt of assets  Lump sums or one time payments counted in month of receipt  Exclusion – VA aid and attendance payments  If over “cap”, Miller Trust is the answer

23  Non-Countable Resources  The Home and Land on which it is located  $500,000  One automobile

24  Non-countable Resources  Burial spaces for individual or members of the immediate family  Burial fund of $1,500 in cash OR  Irrevocable policy-unlimited  Personal property $2,500  Non-home incoming-producing property  Inaccessible assets  Land owned with others who refuse to sell  CS Qualified Retirement Plan

25 The Federal Rules are clear that the Qualified Retirement Plan (401K, IRA) of the Community Spouse should NOT be counted. - I am about to pursue this vigorously. - If you know a situation where this is a problem let me know.

26  Resources Countable resources  Real property other than home  Cash  Bank accounts (checking, savings, CD)  Promissory notes/mortgages  Stock, bonds, mutual funds  Trusts  Automobiles  Life Insurance with cash value *****

27  Pre-nuptial Agreements DON’T work.  Revocable Living Trusts DON’T work.  Bank accounts with just the well spouses name on it DON’T work.

28  Income Rules  The Community Spouse gets to keep their income regardless of amount  If that amount is not $1822/month, we can pull from the Institutionalized spouse’s income to get them to that amount.  That minimum amount can be raised for exceptional situations

29 An Application should be approved, denied or withdrawn within 45 days. - we have done over 2500 applications and less than 5 have been approved in less than 45 days. - The delay in approval is causing severe problems with the family, the facility and our office - Now pursuing action to make DHS follow their own rules and act on an application within 45 days.

30  Community Spouses Maximum Resources  Snapshot Date: 1 st day of 30 in a facility  Lesser of $109,560 or spousal half of resources (1/2 total countable resources held by both IS and CS)  Greater of above figure or $21,920 (minimum)  Can be increased but not likely

31  Mistake by DHS: “They must spend down to $3,000.”  That is when both spouses are in the facility  Incorrect computation of the “Snapshot”  First day of 30 consecutive days, NOT Date of Application  Three Fair Hearings done recently on this very issue

32 Rule allows the CS to keep at least One Half of all Countable Resources up to $109,560 CS gets to keep $21,920  (plus <$2,000 for the IS) Probably need to do a new will – Why?

33  Gift = Transfer for less than Fair Market Value  60 Month lookback is only for gifts  Not purchases  The total amount of the gift will be divided by the average cost of nursing home care ($4657) = penalty period of ineligibility.  Rule change: Feb. 8, 2006

34  Period of ineligibility  No limit  Begins on first month in which the applicant is otherwise Medicaid qualified:  In the facility (and medically qualified to be there)  Has less than $2,000 in assets  Date of Application

35 Exempt if transferred:  “Not for the purpose of qualifying for Medicaid” – they are ALL for this purpose!  From Spouse to Spouse  To blind or disabled child solely for the benefit of that child or to trust for benefit of child (real estate)  To trust established solely for benefit of disabled individual under 65

36 What is new: DHS at this time allows us to credit any payback of a gift against the total penalty of that gift. This is beneficial because we can minimize old gifts with new gifts. Example: $50,000 gift = 10 months penalty - pay back $5000 for a month of NH, get a credit for reducing the gift. Month two, do this again. - when we are half-way through this penalty, the penalty is over. DHS is now wanting to change this to not allow a reduction for partial gifts. This is devastating!!!!

37  Sale for Fair Market Value  Can be to anyone including family  Can be for less than appraised value but at least County assessed value

38  Jointly owned property  DON’T SELL!!!!!  DON’T GIVE AWAY!!!!!  Since it is owned by another person, it is a non-countable asset and will go to the survivor upon death

39 - Mom owns a house worth $100,000. She now wants to move in with the daughter. - What usually happens? Mom sells the house and then sits on the money until she goes into the nursing home. - The daughter of course would never charge mom rent. - When mom goes into the facility, she now has $100,000 that has to be spent before she can qualify.

40  Purchase of Real Estate  Example: Mom buys a interest in daughter’s home. A $200,000 house, Mom pays $100,000 to daughter for joint interest.  The $100,000 payment is not a gift, but a purchase

41  IS spends his half of the money for Non-Countable assets  Equipment for the IS  Repair the home  New vehicle for spouse (not for children!!!!!)  Household furnishings for the spouse  Pre-pay burial

42  Purchase of a very specific annuity that converts the excess resources to a stream of income to the Community Spouse  Must list the State as the second beneficiary after the spouse  Must pay out within life expectancy  Must not be able to be liquidated, terminated or transferred

43  Person has $100,000 in assets, $1,500 in income each month. NH = $4,000/mo  This would last for 40 months just paying.  A gift would create a 21.5 month penalty. Family pays $2,500/month back = keeping $40,000.  Gift and Annuity lets them keep $62,700.

44 - A Waiver Program - A DHS nurse must evaluate the client for medical need, if over 65 - If under 65: must have a physical disability or be reviewed by the Medical Review Team - A Miller Trust is allowed, the only Waiver Program where it is allowed.

45  Helps to offset the cost of long term care  I recommend enough to cover the balance between your income and the cost of an above average facility.  Be sure to get a “qualified” plan.

46  Qualified Plan  If the plan is “qualified” then the beneficiary/Medicaid recipient will get to keep in resources what the policy pays out.  Example: Your policy pays $100/day for 1095 days (3 years) you will get to keep $109,500 in assets!

47 4 office through Arkansas: Bryant: 501-847-1311 Springdale: 479-750-1101 Fort Smith: 479-434-3531 Bella Vista: 479-750-1101

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