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Everything you need to know A 2-Day Practical Course.

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Presentation on theme: "Everything you need to know A 2-Day Practical Course."— Presentation transcript:

1 Everything you need to know A 2-Day Practical Course

2 Types, Costs, and Funding Aubrey Harry Ducker, Jr. Law Offices of Aubrey Harry Ducker, Jr. PLC 2020 Mizell Avenue Winter Park, FL 32792 407-645-3297

3  Client Age  Health  Marital Status  Heirs  Long-term Care Desires  Facilities – Home v. ALF/ICP

4  55  65  75  85  95  Health: ◦ Self sufficient, earning income, fully insured, building assets ◦ Retired, using assets ◦ Medicare Plan ◦ Supplemental Insurance ◦ Resource loss

5 Immediate Concerns Long term prognosis Cost of Care Level of need

6 How to tell?

7 Nothing complicates planning so much as: Multiple Decision Makers Married Widowed Divorced Remarried Divorced again  What are your concerns for her husband?  What are your concerns for his children?  Who cares about the former spouse?  Seriously?  Complications Arise.

8 Who decides what you recommend? Who decides how or whether to follow your advice?  Natural Heirs  Spouse  Children  Second Spouse?  Stepchildren?  Adopted Heirs  Decision Makers ◦ Spouse ◦ Children ◦ Healthcare Surrogate ◦ Power of Attorney ◦ Trustee ◦ Guardian ◦ Investment advisor ◦ Doctor

9 Old Woman? Young Woman? What are you looking for when you meet a client?

10 Care Need and Assets are the driving factors  Home care: ◦ Visiting Assistant ◦ Short term nurse ◦ Live in caregiver ◦ Private Duty Nurse ◦ Hospice  ICP – Institutional Care Program  Nursing home  Assisted Living Facility  Hospice

11 The Client’s desires, mayor may not be doable.  Wants ◦ Stay home ◦ Die in sleep ◦ Pass on assets to heirs ◦ Nursing care only if incompetent  Needs ◦ In-home care plan ◦ Assets to support ◦ Family support ◦ Continued good health

12 Median national cost of services, 2012 Homemaker: $18/hour Home health aide: $19/hour Adult day health care: $61/day Assisted living: $3,300 per month Nursing home: $200-$220/day Source: Genworth Financial 2012 Cost of Care Survey. Challenges of Aging in Place

13 *Changing needs—A house that was ideal 30 years ago may now be too difficult to handle alone. Older houses often need a lot of costly maintenance, improvements, or repairs. *Safety—A house with cluttered furniture or steep stairs is an accident waiting to happen. Unsafe neighborhoods may make you afraid to go shopping or attend social activities. *Isolation—A trip to the grocery store, pharmacy, or place of worship can be a problem when you cannot drive. It is easy to feel lonely or trapped when family and friends are far away. *Ease of use—If you need a walker or a wheelchair, it helps to have a bedroom on the first level, grab bars in the bathroom, and ramps for the entrance of the house. Challenges of Aging in Place

14 Other Insurance may apply Other insurance may apply  Medicare Part A: Coverage of inpatient hospital care  Medicare Part B: Medical Insurance – Outpatient Care  Medicare Part D: Prescription drug plans  Long Term Care Insurance:  Medicare: 100 Days when transferred from hospital for Rehabilitation

15 Medicare & You Handbook  Medicare:  Compare Nursing homes  Medigap: Medicare Supplement  State Health Insurance Assistance Program (SHIP)  Medicaid: LTC/ICP Programs  Agency for Health Care Administration: AHCA http://ahca.myflorida.c om http://ahca.myflorida.c om  Florida Department of Children and Families

16 The official U.S. Government Site for Medicare Sign up/change plans Your Medicare Costs What Medicare Covers Drug Coverage (Part D) Supplements & Other Insurance Claims & Appeals Manage Your Health Forms, Help, & Resources Is my test, item, or service covered? ______________

17 Medicaid Nursing Facility Provider Information The Department of Children and Families (DCF) district offices staff determines eligibility for Institutional Care Program (ICP) services. To begin the ICP application process, a nursing facility refers the resident to the DCF by completing a Client Referral Notice [199 KB PDF], CF-ES Form 2506A.Client Referral Notice Providers must use the Client Discharge and Change Notice [187 KB PDF], CF-ES Form 2506, to advise public assistance specialists of the placement status of institutional Medicaid applicants and recipients.Client Discharge and Change Notice Copies of these forms are also available from the Department of Children and Families, Office of Economic Self Sufficiency.Office of Economic Self Sufficiency

18 Questions Every Elder Advisor Wants Answered : Eligibility Standards for SSI-related Programs – July 2014 ICP/HCBS/Hospice/HCDA Individual $ 2,163$ 2,000 ICP/HCBS/Hospice/HCDA Couple $ 4,326 $ 3,000 Spousal Impoverishment Minimum Monthly Maintenance Needs Allowance (MMMNA)** $1,966 Excess Shelter Standard** $590 Maximum Community Spouse Income Allowance (MMMNA plus excess shelter allowance cannot exceed this figure) $2,931 Community Spouse Asset Allocation Standard $117,240 Home Equity Interest Limit $543,000

19 A Guide to the Institutional Care Program Medical assistance for low income individuals in or entering a Nursing Home What is Institutional Care Program (ICP)? When Level of Care requires intermediate & skilled care, Medicaid pays for those qualified for an unlimited time period Who may apply? Individual, Guardian or Designated Representative Main Eligibility requirements: 65 or Disabled, In Need of Facility Services, In participating home, Qualifying Assets/Income

20 Asset limit: $2,000 Types of Assets that count: Real Estate – not homestead Any Liquid assets: Bank accounts, CDs, Money Market funds, Stock and Bonds accounts Trusts Life Insurance – Face Value more than $2,500 - Cash Value Types of Assets that do NOT count: Homestead First Car Pre-paid Burial Contracts: Revocable up to $2,500 Irrevocable contract – Unlimited Certain other special exceptions A Guide to the Institutional Care Program

21 Income Limit:3xSSI limit – currently $2,163 (Excess QIT) How Much does the Patient Pay? All patient’s monthly income, except for $35 (with certain set-asides) How Much does Medicaid Pay? The Balance of the Allowable Rate Changes in income, assets or facility, Must be Reported ASAP Reviews Annually – by patient, guardian, Designated Rep A Guide to the Institutional Care Program

22 Qualified Income Trust : Income over the ICP income limit - $2,163 Eligible if they set up a “qualified income trust” and Deposit all excess funds every month Income is less than the income limit QIT must: *Be irrevocable; *Be comprised of income only; and, *Designate the state will receive any funds remaining upon the death of the recipient, up to the amount of Medicaid payments paid on behalf of the individual. A Guide to the Institutional Care Program

23 Transfers of Income and Assets: Income or assets transferred for less than fair market value May create a period of ineligibility Varying depending on the value of that transferred Allowable Transfers:  Any resource to a spouse or disabled adult child.  The homestead, without penalty, to  His/her spouse, or, minor or disabled child  His/her sibling w/equity interest and resided there at least one year prior to institutionalization.  His/her ADULT son or daughter who resided at least two years immediately before institutionalization and who provided care that delayed the institutionalization. A Guide to the Institutional Care Program

24 How to Apply: Individuals can apply for benefits:  From any computer with internet access by visiting our web site: or,  At one of the Department’s ACCESS Florida community partners. A listing of community partners can be found online at: or,  At a DCF ACCESS Florida Customer Service Center. A list of Customer Service Centers can be found online at: or,  By requesting a paper application by calling 1-866-762-2237 and submitting it in person, by mail or fax.

25 Florida’s Long-term Care Partnership Program Partnership program between Medicaid and private long-term care insurers Designed to encourage individuals to purchase private long-term care insurance. Long-term Care Partnership policies are tax qualified (a portion of premiums paid may be claimed as a tax deduction) under federal law; Provide policyholders with inflation protection; Provide dollar-for-dollar asset protection in the event the policyholder needs to apply for long-term care Medicaid assistance. KEY: For every dollar that a partnership policy pays out in benefits, a dollar of assets can be protected from Medicaid spend-down requirements.

26 Florida Statutes: Chapter 409.9102 Qualified state LTC Insurance Partnership Program in Florida Chapter 627.94075 A qualified state LTC Insurance Partnership Program in Florida Chapter 627.94076 Time limit on certain defenses Chapter 627.9403 Scope, Insurance Rates and Contracts Chapter 627.9407 Disclosure, advertising, and performance standards for long-term care insurance Chapter 641.2018 Limited coverage for home health care authorized Florida Long-term Care Partnership (LTCP) Program by the Agency for Health Care Administration Florida Administrative Code: Chapter 69O-157.201 Standards For Approved Long-term Care Partnership Program Policies69O-157.201 Chapter 69O-157.1155 Producer Training69O-157.1155 Chapter 65A-1.712 SSI-Related Medicaid Resource Eligibility Criteria65A-1.712

27 Do you need the money? How long will it last? Is Repayment Secure?


29  Government Insured Financial Tool allowing Equity conversion to tax-free Cash  Live in the home without making payments, on death, loan must be repaid  You OWN the home as long as you live in and can pay the Taxes and Insurance, and comply with the loan terms  No payments  Financial Freedom, control, security and dignity  To Qualify: 62, owner occupied

30 Reverse Mortgage Tips » You should never pay an application fee. » You should never be asked to pay for information. » A legitimate lender should never downplay the importance of pre-loan counseling. » A legitimate lender should encourage questions and provide clear, direct answers. » No legitimate lender will ever claim affiliation with the government. » No legitimate lender will ever claim to be a non-profit organization. » We have been serving America since 1967. » You can get confidential advice from professional advisors. » You will not be pressured to do anything.

31  Taxes must be paid annually  Insurance must be maintained  Homeowners assessments must be paid  On Death or Move (nursing home placement) Payment is Expected in a reasonable time

32 Go to HUD.GOV Home Equity Conversion Mortgages for Seniors

33 HUD Requirements  Borrower Requirements  You must:  Be 62 years of age or older  Own the property outright or paid- down a considerable amount  Occupy the property as your principal residence  Not be delinquent on any federal debt  Have financial resources to continue to make timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.  Participate in a consumer information session given by a HUD- approved HECM counselor  Property Requirements  The following eligible property types must meet all FHA property standards and flood requirements:  Single family home or 2- 4 unit home with one unit occupied by the borrower  HUD-approved condominium project  Manufactured home that meets FHA requirements

34 Financial Requirements Income, assets, monthly living expenses, and credit history will be verified. Timely payment of real estate taxes, hazard and flood insurance premiums will be verified For adjustable interest rate mortgages, you can select one of the following payment plans: Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence. Term - equal monthly payments for a fixed period of months selected. Line of Credit - unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted. More HUD Requirements:

35 Modified Tenure - combination of line of credit and scheduled monthly payments for as long as you remain in the home. Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower. For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan. Mortgage Amount Based On The amount you may borrower will depend on: Age of the youngest borrower or non-borrowing spouse Current interest rate Lesser of appraised value or the HECM FHA mortgage limit of $625,500 or the sales price; and Initial Mortgage Insurance Premium More HUD Requirements:

36 My sister/brother borrowed my mommy/daddy’s last red cent

37  Benefits to Borrowers:  Minimum interest rates Internal Revenue Service requires on intrafamily loans close to all-time lows.  Known as the Applicable Federal Rate, or AFR, currently just 0.2% for loans of three years or less, 1.27% for loans of more than three but less than nine years, and 2.8% for loans of a longer duration.  Benefits to Lenders:  Example: married couple in their early 60s—plan to lend $150,000 to their son and daughter-in-law to purchase a "starter home." In return, the parents will receive a 4% interest rate.  By Anne Tergesen, Dec. 18, 2011

38  ABA lists 13 significant specific uses  Inadvertent loans – planned and unplanned  Estate Planning Tools -

39  1. Loans to children with significant net worth;  2. Loans to children without significant net worth;  3. Non-recourse loans to children or to trusts  4. Loans to grantor trusts;  5. Sales to children or grantor trust for a note;  6. Loans between related trusts (e.g., from a bypass trust to a marital trust, from a marital trust to a GST exempt trust, such as transactions to freeze the growth of the marital trust and transfer appreciation to the tax-advantaged trust);  7. Loans to an estate;  8. Loans to trusts involving life insurance (including split dollar and financed premium plans);5  9. Home mortgages for family members;

40  10. Loans for consumption rather than for acquiring investment assets (these may be inefficient from an income tax perspective because the interest payments will be personal interest that does not qualify for an interest deduction);  11. Loans as vehicles for gifts over time by forgiveness of payments in some years, including forgiveness of payments in 2012 as a method of utilizing $5.0 million gift exemption available in 2012;  12. Loan from young family member to client for note at a higher interest rate (to afford higher investment returns to those family members than they might otherwise receive) (In a different context, the Tax Court has acknowledged the reasonableness of paying an interest rate higher than the AFR6); and  13. Client borrowing from a trust to which client had made a gift in case the client later needs liquidity (and the resulting interest may be deductible at the client’s death if the note is still outstanding at that time7).

41  Treated as a bona fide loan  Market rate of interest (Applicable Federal Rates ‘AFR’-published monthly by IRS)  Proper payments of interest and principal  Documentation  Mortgage must be properly recorded against the property

42  Children create Problems, Aubrey 2014  Married with Children  Married with children from previous marriage  Married with children from multiple previous  My child, your child, his child, her child

43 Nothing complicates planning so much as: Multiple Decision Makers Married Widowed Divorced Remarried Divorced again  What are your concerns for her husband?  What are your concerns for his children?  Who cares about the former spouse?  Seriously?  Complications Arise.

44 Get help when needed Protect yourself: use multiple attorneys

45            ◦

46  ram_offices/housing/sfh/hecm/hecmabou ram_offices/housing/sfh/hecm/hecmabou  publications/publications/ncoa_reverse_mortgag e_booklet_073109.pdf publications/publications/ncoa_reverse_mortgag e_booklet_073109.pdf  doc?id=DOC_13006.pdf doc?id=DOC_13006.pdf  publishing/rpte_ereport/2014/1_february/te_ake rs.authcheckdam.pdf publishing/rpte_ereport/2014/1_february/te_ake rs.authcheckdam.pdf  

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