1. A LZHEIMER ’ S A SSOCIATION 2012 S PRING C AREGIVER C ONFERENCE 1 CHANGES IN MEDICARE/MEDICAID AND HEALTH CARE DECISION MAKING ON A STATE AND NATIONAL LEVEL K EITH P. H UFFMAN

2.  Advance Directives for health care  Basic estate planning needs for families faced with Alzheimer’s Disease  Planning for the cost of nursing home care  Planning for Medicaid waiver services to allow families to age in place T ODAY ’ S P RESENTATION 2 A ROAD MAP

3.  VA benefits available to help with the cost of care  Early onset Alzheimer’s Disease and the Social Security Compassionate Allowance Initiative  Caregiver Agreements and the IRS Household Employee Rules T ODAY ’ S P RESENTATION 3 A ROAD MAP

4. Under- standing Advance Directives 4 ADVANCE DIRECTIVES & HOSPITAL POLICIES

5. Advance Directives  Health Care Representative  Health Care Power of Attorney  Living Will  Life Prolonging Procedure Directive  Out of Hospital DNR  Psychiatric Advance Directive  Organ and Tissue Donation  Funeral Directives Hospital Policies  AND: Allow Natural Death  DNR: Do Not Resuscitate  No-Code/Physician  When death is Imminent  Coming Soon: P.O.S.T. Physician’s Order for Scope of Treatment 5 UNDERSTANDING ADVANCE DIRECTIVES

6.  Directs who is to make health care decisions in the event you are unable to  Not a substitute for a discussion  Health care professionals may ask if you have a living will, but these are of little value for ongoing health care concerns.  Health care by committee is not a proper plan HEALTH CARE REPRESENTATIVE (AND OTHER ADVANCE DIRECTIVES) 6

7. Using Various Instruments BASIC ESTATE PLANNING NEEDS FOR FAMILIES FACED WITH ALZHEIMER’S DISEASE. 7

8.  Powers of Attorney  Wills  Trusts  Beneficiary Designation Instruments  Nursing Home Cost Planning TESTAMENTARY INSTRUMENTS 8

9.  Durable  Immediately Effective  Unlimited  Contains a Gifting Clause POWER OF ATTORNEY MOST USEFUL WHEN IT IS: 9

10.  Like almost everything—they have varying degrees of complexity WILLS And Everything In-between… 10

11.  Trusts  Special Needs Trusts  Pour-over Provisions WILLS WHAT CAN MAKE THEM MORE COMPLEX? 11

12.  Inter vivos Trusts: A trust made during your lifetime.  Revocable Trust  Irrevocable Trust  Pour-over Trust: Receives property from a will  Testamentary Trust: Created under the terms of a will and does not take effect until the settlor dies TRUSTS COMMON TYPES 12

13.  Commonly: Transfer on Death or Payable on Death  Savings Accounts, Checking accounts, Certificates of Deposit (CDs) Most anything at a Financial Institution  Transfer on Death Property Act  Allows you to add Transfer on Death to just about anything  Real Estate  Titled Vehicles  Securities BENEFICIARY DESIGNATION INSTRUMENTS 13

14. WHO NEEDS LONG- TERM CARE? 14 PLANNING FOR THE COST OF NURSING HOME CARE.

15.  In 2012, the average cost of nursing home care is $5,139.00/mo; that is on average $61,668.00/year.  Long Term Care insurance is a way to protect assets from the cost of nursing home care if you can afford it. However, most do not have such insurance.  Medicaid can also pay for care  A Power of Attorney is the crucial document in this planning  So long as that is in place, little need be done until someone needs nursing home care. NURSING HOME COST PLANNING 15

16. DEFICIT REDUCTION ACT OF 2005 SIGNED FEBRUARY 8, 2006 ENACTED IN INDIANA NOVEMBER 1, 2009 DRA 16

17.  The DRA is a Federal Law that requires Indiana to change many of the current Medicaid laws  The Look Back Period for gifts changes from 3 years prior to application to 5 years  Changes the treatment of gifts and the imposition of a period of Medicaid ineligibility  Imposes a penalty period for any small gift or charitable donation  Changes the way annuities are treated  Requires Indiana to be named as the first beneficiary for repayment of funds paid out for the annuitant or his spouse. WHAT IS THE DEFICIT REDUCTION ACT? 17

18.  Mom  Gifts $100 to 4 children at Christmas & for each birthday  Gifts $200 monthly to her church  Gifts $300 annually to United Way  Annual gifts $2,300 over $1,200 permitted  $2,300 ÷ 5,139 =.45 month penalty or 13.68 days, rounded up to 14 days EXAMPLE 18

19. PENALTY START DATE  For transfers of property after October 31, 2009, the penalty begins when:  Mom is in the nursing home;  Mom is qualified for Medicaid;  Mom applies for Medicaid to help pay for her care; and  Mom is turned down for Medicaid only because of the gift 19

20.  State of Indiana must be named as the primary beneficiary unless there is:  A spouse  A minor child; or  A disabled child  If any of these are named primary, the State can be named secondary  Applies to all non-qualified annuities purchased on or after November 1, 2009 ANNUITY RULES 20

21.  The following transactions bring old annuities under the November 1, 2009, rules:  You put more money in;  You take some money out;  You change the ownership;  You annuitize the policy; or  You change the distribution of the annuity EXISTING NON-QUALIFIED ANNUITIES 21

22. ALLOWING FAMILIES TO AGE IN PLACE 22 PLANNING FOR MEDICAID WAIVER SERVICES

23.  Provides Medicaid covered services in the community for those individuals who meet the financial criteria for Medicaid eligibility and meet the need for nursing home level of care. Services may include home health care, adult day care & respite care.  Some assisted living facilities participate in the Waiver Program. THE MEDICAID WAIVER PROGRAM 23

24.  The spousal impoverishment rules apply to the waiver program. This means Mom or Dad can obtain help for these expenses without having to consider nursing home care and without going broke. THE MEDICAID WAIVER PROGRAM 24

25. TO HELP WITH THE COST OF CARE 25 VA BENEFITS AVAILABLE

26.  Aid & Attendance Award  Monthly Pension  Served 90 days in military including one day while we were at war VA BENEFITS

27.  The Aid & Attendance Award provides benefits of up to $1,703 per month to a veteran; $1,094 per month to a surviving spouse; $2,019 per month to a couple; or $2,631 to a veteran married to another veteran. For many, this award can make the difference between a comfortable retirement and constant worries about making ends meet. VA BENEFITS

28. EXPANDING TO COVER EARLY ONSET ALZHEIMER’S DISEASE 28 SOCIAL SECURITY COMPASSIONATE ALLOWANCE INITIATIVE

29.  “Social Security has an obligation to provide benefits quickly to applicants whose medical conditions are so serious that their conditions obviously meet disability standards.” http://www.ssa.gov/compassionateallowances  Although applicants still have to meet other criteria to qualify for Social Security Disability (SSDI) and Supplemental Security Income (SSI), by adding Early- Onset Alzheimer's to the initiative, individuals diagnosed with Early-Onset (younger-onset) Alzheimer’s are considered eligible when it comes to the disability criterion just by the virtue of the disease. 29 SSA’S COMPASSIONATE ALLOWANCE INITIATIVE

30. KEEPING MOM AND DAD AT HOME 30 CAREGIVER AGREEMENTS AND THE IRS HOUSEHOLD EMPLOYEE RULES

31.  Can many times be used instead of making gifts with more benefits for all members of the family  Mom and Dad are much more likely to live at home.  Mom and Dad do not burden their children.  The child (daughter and/or son) providing the services is fairly compensated among the siblings.  Mom and Dad’s money stays in the family instead of being spent at the nursing home.  Compliance with all taxes and Medicaid laws 31 PERSONAL SERVICE (CAREGIVER) AGREEMENTS

32.  Personal Service Agreements have tax implications and therefore should be prepared by an experienced Elder Law Attorney  Tax implications to consider:  Social Security Tax  Medicare Tax  Federal Withholdings  State Income Taxes  Etc. 32 IRS HOUSEHOLD EMPLOYEE RULES

33.  Insist those you care for consult with an experienced Elder Law Attorney to review their current legal documents and draft new ones, if necessary.  Provide information to those who want to develop a plan for how to cover the cost of long term care or home care.  Encourage Discussion “Talk to your family/children about your wishes”.  Hire or Associate with a geriatric care manager for assistance with placement options and caregiving issues. HOW TO PLAN FOR THE FUTURE