Presentation on theme: "I. Long Term Care Medicaid in Florida"— Presentation transcript:
1 I. Long Term Care Medicaid in Florida After the Deficit Reduction Act of 2005
2 II. DRA 2005 Legislative History Major changes to eligibility for LTC NAELA analysis of federal law is excellentFlorida implemented DRA effective 11/1/07Areas addressed by DRALook Back extended to 5 years for transfers before February 8, 2006 (federal) or 11/1/07 (state)
3 II. DRA 2005Purchase of an annuity is a transfer unless annuity meets certain criteria (irrevocable, non-assignable, payout of P & I over life expectancy) and State is named as primary beneficiaryIf spouse, minor or disabled child then State must be in second positionPromissory notes, mortgages are transfers unless pay out in equal installments and prohibit cancellation at deathPurchase of life estate in a home is transfer unless buyer lives in home for at least one year after purchase
4 II. DRA 2005Equity in home exceeding $500,000 defeats long term care eligibility (States may raise to $750,000); individual may receive other types of MedicaidIncome first is mandatory before allowing an increase in the CSRAContinuing Care Retirement Communities (CCRC) – deposit can be asset and CCRC can require spend down as condition for entrance
5 II. DRA 2005 CMS issued guidelines on July 27, 2006 Litigation is still pending in several venues
6 III. The Medicaid Program Background Federal/State programBasic concept is “Coverage Group”Generally means tested: limited income/assetsPoverty alone is NOT sufficientInitial coverage groups: SSI & AFDCMandatory vs. Optional Groups
7 III. The Medicaid Program Background Eligibility Formula(Coverage group) + (Financial Test) = EligibilityFor examplePregnant Women + income less than 185% of PLIS = benefitsInstitutionalized individual + financial criteria = long term care benefits
8 IV. The Medicaid Program Mandatory Coverage Groups State must provide Medicaid to SSI Recipients w/ one major exception.SSI is a means tested cash assistance program for the aged, blind and disabled with limited income and assets.Income less than maximum Federal Benefit RateAssets limited to $2000 plus exempt assetsExempt assets include home, car, burial.
9 IV. The Medicaid Program Mandatory Coverage Groups Exception to mandatory Medicaid coverage for SSI recipientsSo called 209(b) states may use income, resource and disability standards no more restrictive than those in place on January 1, 1972 this altering the mandatory Medicaid – SSI equation209(b) States: Connecticut, Illinois, Hawaii, Indiana, Minnesota, Missouri, New Hampshire, North Dakota, Ohio, Oklahoma & Virginia
10 IV. The Medicaid Program Mandatory Coverage Groups Medicare Savings GroupsQualified Medicare Beneficiaries (QMB)Income at 100% FBR/ Assets $5,000/$6,000.Pays Medicare premiums, deductibles coinsuranceDoes not pay long term care, drugs, acute careSpecified Low Income Medicare Beneficiaries (SLMB)Eligibility criteria same as QMB but income between 100%FBR and 120 % FBRPays only Medicare Part B premiumQualified Disabled and Working Individuals (QDWI)Disabled individuals who lose Medicare because return to work, but continue to be disabledIncome 200% of FBR/Assets below 200% of SSI rate
11 IV. The Medicaid Program Mandatory Coverage Groups Qualifying Individuals (QI-1)Income between 120% and 135% of FBRPays monthly Medicare part B until allotment depleted.
12 V. Medicaid Program Optional Coverage Groups Disabled elderly with incomes below 100% FBRNursing home residentsMedically NeedyWorking disabled
13 VI. Medicaid Program Waivers What is a Waiver? Permits deviation from Federal mandatesThree types of waiversHome and Community Based Services (HCBS)Freedom of choice WaiverPilot Project WaiverSee generally
14 VI. Medicaid Program Waivers Florida WaiversChannelingProject AidsAged/Disabled AdultDevelopmental Services (DS or DD Waiver)Assisted LivingLong Term Care Community Diversion (Diversion)Cystic FibrosisProgram for all Inclusive Care for Elderly (PACE)
15 VII. Medicaid Program Administrative Process ApplicationsOnline and paperDesignated RepresentativeInterviewTime limitsDocuments required
16 VII. Medicaid Program Administrative Process Notice of Case ActionTriggers appeal rightsShould state basis for action takenHearingsChapter 120 hearings before agency Hearing OfficerDe Novo proceeding
17 VII. Medicaid Program Administrative Process AppealsTo applicable District Court of AppealChange of CircumstanceReport within 10 daysResponsibility of Designated Representative
18 VIII. Eligibility for Long Term Care Categorical/Technical CriteriaAged (65 or older), blind OR disabledUS citizen, legal alien etc.Florida residentMedical CriteriaInstitutional residence for 30 continuous daysCARES evaluation of LOC
19 VIII. Eligibility for Long Term Care Financial CriteriaIncomeApplicantIncome CapQITRetroactive eligibilityTermination of QITCommunity Spouse
20 VIII. Eligibility for Long Term Care Post Eligibility Treatment of IncomePersonal Needs AllowanceSpousal DiversionMMNAExcess Shelter Costs
21 VIII. Eligibility for Long Term Care AssetsApplicant can own countable assets totaling $2,000.00Community Spouse can own countable assets totaling $104,400 (2008)Countable assets do NOT include exempt, unavailable or certain income producing assets
22 VIII. Eligibility for Long Term Care Exempt AssetsHomestead up to $500,000 in equity – DRABe sure to distinguish from constitutional protectionVehiclesPersonal PropertyLife InsuranceBurial PlanBurial FundLife estates - DRA
23 VIII. Eligibility for Long Term Care Lookback, Transfers & Penalty PeriodsLookbackPre DRAPost DRATransferGenerally FMV of asset transferredPresumptionRebuttalHardship
24 VIII. Eligibility for Long Term Care Penalty PeriodNot a fineDivisorExamplePre/Post DRAExempt TransfersTransfers for valueFor purposes other than MedicaidHardshipLife Estate
25 VIII. Eligibility for Long Term Care Exempt TransfersTo a spouse or to a third party for sole benefit of spouseTo blind or disabled child or to a trust for the benefit of such childTo trust for benefit of disabled individual under age 65NOTE: Transfers of exempt assets are not automatically exempt transfers!
26 VIII. Eligibility for Long Term Care Trusts assets generally considered available and income is counted as income in determining patient responsibilityTransfers to irrevocable trusts may trigger transfer penaltyRevocable living trusts DO NOT protect assets for eligibility purposes
27 VIII. Eligibility for Long Term Care Exempt TrustsSelf Settled “d4A” trustsPooled trustsQITsPayback trusts
28 IX. Planning General Concepts Goal is to protect the elder, NOT the moneyIt is OK to use money for elder’s care – that is the point.It is OK to pay the state backIt is NOT OK to let Medicaid tail wag the dog
29 IX. Planning Spousal Impoverishment MCCA MMNA Increasing CSRA Income First Rule - DRACourt ordered supportRight of refusal
30 IX. Planning Spend Down Best use of funds concept Don’t spend for the sake of spendingDoes not involve uncompensated transfersExamplesPurchase or improve exempt assetsPrepay burialPurchase Burial CD
31 IX. Planning Transfer Issues – Post DRA Typically between spouses or for benefit of disabled childrenBeware adverse consequences such as loss of control, security and tax implicationsEthicsTransactional CapacitySelf dealingUnderlying document authorizing transferPOA, Trust, etc.
32 IX. Planning Disclosure It is imperative to be totally candid and truthful in disclosing all income, assets and transfers during the application processFailure to disclose is fraud and may subject the applicant or advisor to criminal and/or civil penaltiesBenefits may be lost at much later date and benefit recovery instituted
33 IX. Planning Tax Issues Capital Gain Loss of step-up in basis at death Donor vs doneeLoss of step-up in basis at deathSale of homeGift taxValuation
34 IX. Planning Personal Care Contracts Payment for services, not gift. Must be arms length transactionCannot be for past servicesShould be considered well before need for services in drafting legal documentsConsider using escrow agent for lump sum paymentsTax implications
35 IX. Planning Process for implementing PSC Assessment Log Appropriateness of servicesCost in communityLife expectancyDiscountCalculateAuthorityWritten agreement
36 X. Medicaid Estate Recovery OBRA ’93 required estate recoveryDefinition of “estate” up to states but must include at least probate estateExpanded estate may include joint property, survivor property, life tenancies, etc.Exempt categories of propertyHome if decedent survived by spouse, minor, blind or disabled child or if sibling lived there for year
37 X. Medicaid Estate Recovery FloridaMust notify ACHA upon death of individual 55 or olderState has claim as class three creditor in estate for benefits paid during life of decedentClaim can only be filed after death and is currently limited to probate estate or if those assets insufficient, revocable trust assetsSee generally ; (d); (1)c & (3) Fla. Stat. (2005)
38 XI. Special Needs Trusts Concept simple and based on well thought out public policy.General rule is that trusts are available and income is countedSpecial Needs Trusts are exception to general ruleRevocable TrustsInvisible to creditors and for public benefits
39 XI. Special Needs Trusts Irrevocable Trusts subject to two inquiries:Could any portion of the trust (income or assets) be used for the individual’s benefit?Is any portion of the trust available to someone else?Pre DRA look back was 60 monthsThis was major exception to three year rule generally applicable to transfers for less than fair market valueDRA does not distinguish between transfers to trusts or otherwiseBeware of trusts bearing annuities post DRA?
40 XI. Special Needs Trusts Types of Special Needs TrustsThird Party TrustsFunded with assets that do not belong to disabled individualMay be inter vivos or testamentaryNot subject to payback requirementFirst Party or Self Settled TrustsFunded with disabled individual’s own assets
41 XI. Special Needs Trusts Self Settled Trusts“D4A” or “Disability Trusts” (42 USC 1396p(d)4(A)Established by for benefit of disabled individual under age 65May only be established by parent, grandparent, court or guardianMust be funded with assets of disabled individualMust provide for payback to state for Medicaid benefits paid during life
42 XI. Special Needs Trusts “Pooled Trusts” (42 USC 1396p(d4(C)Established by non-profitMaintain separate accounts for each beneficiaryEstablished for benefit of disabled individualMay be created by individual, parent, grandparent guardian or the CourtIndividual’s funds used to create accountAt death of beneficiary, any funds not retained must be used to pay the state back for Medicaid benefits paid over life
43 XI. Special Needs Trusts Execution, Funding and Administration are critical to success of SNTExamples of Supplemental NeedsALFMedical, dental, mental healthCare and Case management servicesTravelCompanionshipProfessional (Attorney, guardian, accountant)
44 XI. Special Needs Trust Benefits of SNT Preserve critical public benefits for medical careSignificantly increase quality of beneficiary’s lifeMay avoid guardianshipTrust assets are restricted but invested and less likely to be misused by beneficiary, family or friends
45 XI. Special Needs Trusts Some issues to watch out for with SNTsBeware of deeming rules when suit is settled for minor or spouseSelection of Trustee is importantAdministration requires specialized knowledgeBe wary of over structured settlement of lawsuitMay end up with insufficient funds to care for beneficiaryLiens must be satisfied before trust is fundedMay take time to obtain these documentsPayback provision means assets frozen at beneficiary’s deathStinking body ruleBe sure to notify applicable agencies of funding, death of beneficiary etc.
46 XI. Special Needs Trusts Consider using Trust Protector, Trust Advisor and/or Trust Advisory CommitteeTrust Protector may be able to hire and fire trustee, serve as mediator, distribution manager, obtain service providers, or any or all of theseFamily often best suited for Trust AdvisorTrust Advisory Committee may be helpful for continuity if parent dies, but may be cumbersome and expensive
47 XII. ConclusionConstantly changing statutory, regulatory and public policy environmentStay in touch with organizations on cutting edge of interpretation and advocacy for the aging and disabled populationsNAELAAFELAElder Law Section of Florida Bar