When your relative is in an assisted living facility or nursing home, oftentimes they cannot access their assets any longer. That’s when it is necessary for you to have the financial power of attorney, which allows you to immediately access your loved one’s assets and act on their behalf.
In Maryland, financial powers of attorney must be notarized.
But during the COVID-19 pandemic, how can you safely get estate planning documents notarized?
Before October 2020: Remote notarization
In the beginning of 2020, Governor Hogan issued emergency measures to allow for remote notarization. Those emergency measures appeared to address the concerns.
However, in all reality, the emergency measures made it a Herculean effort to still execute a financial power of attorney. The final financial power of attorney resembled a “Frankenstein power of attorney” because multiple authentication documents were stitched together to form one document.
Unfortunately, the emergency rules expired in October 2020.
After October 2020: Physical presence of a notary
The current statutory requirement, per Md. Ann. Code Est. & Trust Section 17-110, is that the financial power of attorney must be signed by the principal (i.e., your relative in the nursing home) before a notary public in the physical presence of two witnesses.
This means that the principal, the notary public, and two witnesses must all be together in person, at the same time, in order for the financial power of attorney to be officially signed and notarized. Virtual presence (e.g., through Zoom or Facetime) for any of those four people is not acceptable.
The Requirement of Physical Presence
The unique challenge during COVID-19 is that there are severe restrictions about who can enter assisted living facilities and nursing homes. On top of that, even in pre-COVID-19 times, many staff members of these facilities were already reluctant to assist in document executions. They’re afraid of being dragged in as witnesses if someone contests the validity of the legal document.
The requirement of physical presence is an issue not only for getting a financial power of attorney notarized. In Maryland, although last will and testaments and advance directives do not need to be notarized, they do require the physical presence of witnesses.
This means that there are complicated issues across the board with getting estate planning documents executed during the pandemic.
Local Elder Law Firm: How We Help During COVID-19
As a result of COVID-19:
There is an even greater need to use the advance directive and financial power of attorney.
But it is even harder to get these necessary documents executed.
At the Law Office of Adam J. Roa, we work with each family and each assisted living and nursing home facility on a case-by-case basis. As an experienced elder law firm in Maryland, we’re happy to guide you through the process of preparing these essential estate planning documents for your loved one. Please call us at 410-296-8166 x292.
Transferring Medicaid Costs From the Federal Government to the State
There is constant pressure from the Federal government to cut Medicaid costs.
One drastic solution is to push Medicaid costs from the Federal government to the State.
Instead of being treated as an entitlement program (i.e. if you are eligible then you will be covered), the block grant system will change Medicaid (i.e. Medical Assistance in Maryland) to a program that is funded if the state can afford it.
The bottom line is that less funds would be available for each state, Maryland included, which would mean potentially drastic cuts for Medical Assistance and likely large scale changes to determine who is eligible (i.e. based on stricter criteria). It will also likely mean that even if a person qualifies, there may not be coverage because there are not enough funds to pay for coverage. At this point in time, there is great uncertainty as to exactly what changes will occur. But, there is no question that change is going to occur and that change will mean different more stringent criteria and likely denial of benefits because there are no remaining funds to pay for said services.
As there are new developments and clarity on the issue, I will place additional updates.
One of the various changes proposed by candidate Trump was the idea of shifting Medicaid responsibility from the Federal Government to the States. The rational proposed by Trump was that such a move would “maximize flexibility to states via block grants so that local leaders can design innovative Medicaid programs that will better serve their low-income citizens.” As it currently runs, States, like Maryland, really heavily on Federal government support for Medicaid benefits for at risk groups, including seniors in nursing homes. This proposal is not a new one. It was first proposed by New Gingrich in 1995, then in 2003 by President George W. Bush and by House Republicans in 2011. The practical effect to the States would be to reduce Federal funding and shift the payment responsibilities to the States. The States in turn will either have to dramatically increase taxes to carry the extra burden or reduce reimburse rates to nursing homes, reduce what is covered under Medical Assistance, or likely restrict Medical Assistance eligibility.
As of right now, this is just a proposal. If this proposal moves forward, I will continue to post the practical impact this will have on Maryland at-risk seniors.
Our firm was recently successful in helping a family recover funds for an elderly mother and her adult disabled son who was subject to guardianship. The person of interest was a neighbor who posed as an accountant to prepare the elder mother’s and her disabled son’s tax returns. Unknown to our client was that this this individual opened numerous accounts and credit cards and misappropriated over $100,000 worth of their assets. Our firm was successful in obtaining the return of those assets. We recently were informed by the family that the perpetrator was successfully prosecuted and is now serving a significant jail time for her actions in taking funds from our client and her disabled son.
We just won another Medical Assistance appeal issue. In this case, Medical Assitance was initially denied for nursing home benefits and the son of the Medical Assistance applicant was handed an invoice from the nursing home for over $100,000. Needless to say, he was upset. We were able to successfully argue that that the transactions at issue were not Medicaid Penalty transfers and that full Medical Assistance benefits should have been granted from day 1. We received the Administrative Law Judge opinion today removing approximatley 98% of the penalty. Client is happy.
The issue of whether or not an IRA asset is a countable asset is an interesting issue from a Maryland Medical Assistance perspective. For individuals and their spouses, when an ill spouse goes into a nursing home and reviews the issue of applying for Medical Assistance for the ill spouse, the issue that routinely comes up is the issue of what is a countable asset towards the Medical Assistance threshold for the community spouse and ill spouse (i.e. how much can the ill spouse and community spouse own and still be eligible for Medical Assistance benefits). From a Maryland perspective, and IRA account and other forms of retirement accounts are fully countable assets. This is specifically addressed in the Maryland Medical Assistance Manual and all of the caseworkers are processing Medical Assistance applications counting IRA and other forms of retirement assets as countable assets. The real question is whether or not Maryland is correct in treating the IRA and other forms of retirement assets as countable assets. The answer is Maryland may well indeed be incorrect. We are looking for the right client scenario to push this issue and clarify and correct this fundamental determination that IRA and other retirement assets should not be countable assets.
The new minimum community spouse resource allowance (CSRA) is $22,728, and the new maximum CSRA is $113,640. The new maximum monthly maintenance needs allowance is $2,841. The minimum monthly maintenance needs allowance remains $1,838.75. This has yet to be implemented for Maryland. It is expected to come out shortly. It is unclear if this will be retroactive to January 1, 2012.
In part, what this means is that the community spouse of a Medical Assistance applicant can have no more than $113,640 in countable assets at the point when she is seeking eligiblity for the nursing home spouse. The prior maximum amount allowed was $109,560.
According to the newly published survey by Metlife, the average cost of long term care continues to rise. According to the report the average room nursing home rates rose nationwide by 4.4 percent to $87,235 a year or $239 a day, while assisted living facility costs jumped 5.6 percent on average to $41,724 a year or $3,477 a month.
According to the Metlife survey, Baltimore area nursing homes ranged in monthly costs (for a semi private room) from $6,944 to $9,424 a month. The Baltimore area average assisted living costs grew to $3,830 a month. The Baltimore area average home health aide charged $19/hour.
Recent Tax Court Decision Clarifies When Long-Term Care Expenses are Deductible
There is no question that long-term care can be very expensive (both assisted living and nursing home level of care). However, many of these long-term care expenses can be deducted the parent’s income tax return as a medical expense deduction. A recent U.S. Tax Court recently ruled on whether or not non-medical caregiving expenses are deductable for non-medical personnel.
In the Estate of Lillian Baral (U.S. Tax Ct., No. 3618-10, July 5, 2011), Lillian Baral suffered from dementia and her doctor recommended that she get 24-hour-a-day care. Ms. Baral’s brother hired caregivers to assist Ms. Baral with her daily activities. On her income tax return Ms. Baral included, as a medical expense deduction, the payments made to the caregivers. The IRS said the expenses were not deductable. Following Ms. Baral’s passing, her estate appealed the IRS determination to the U.S. Tax Court.
The Internal Revenue Code provides that expenses for medical care may be claimed as an itemized deduction if they exceed 7.5% of adjusted gross income (this will increase to 10% of adjusted gross income in 2012). The definition of allowable medical expenses includes the cost of long-term care if a doctor has determined the parent is chronically ill. Chronically ill is defined as needed help with such basic activities as eating, going to the bathroom, dressing, or requiring substantial supervision due to a sever cognitive impairment.
In this case, the Tax Court agreed that the payments Ms. Baral made for caregivers for assisting and supervising her were deductible medical expenses. The expenses qualified as long-term care services even though the caregivers were not medical personal since a physician found that the services provided to her were necessary due to her condition.
The issue of whether caregiving expenses are deductable as a medical expenses is a tricky area, but one that is worth exploring as the potential income tax savings may be substantial. Remember, the medical expense deduction may be available in both the nursing home as well as assisted living context. Please seek legal counsel for more detailed information.
What is cited below is another jurisdictional case which illustrates the limits of what a State may do to accomplish a Medical Assistance (i.e. Medicaid) recovery on community spouses’ assets. In this case, an attempt was made to put a Medicaid lien on the estate of a recently deceased community spouse at a time when the nursing home spouse continued to receive Medicaid benefits. In this case the court ruled that the State was prohibited from reaching into the spouses’ estate for recovery.
An Idaho district court rules that the state cannot recover assets from the estate of a Medicaid recipient’s spouse that were transferred to the spouse before the Medicaid recipient died. In Re: Estate of Perry (Idaho Dist. Ct., 4th Dist., No. CV-IE-2009-05214, March 16, 2011).
Martha and George Perry owned property together. Mrs. Perry entered a nursing home, and Mr. Perry transferred the property into his name. Mrs. Perry then began receiving Medicaid benefits. Mr. Perry died before Mrs. Perry, and the property was sold. After Mr. Perry’s death, the state filed a claim against his estate seeking recovery of more than $100,000 in Medicaid benefits it had so far paid on Mrs. Perry’s behalf.
The state asserted that, because Mrs. Perry previously had an interest in the property during the marriage, the state could recover an amount equal to her ownership interest. The estate’s personal representative countered that the state was entitled only to recover an amount equal to Mrs. Perry’s interest in the home at the time of her death. Because Mrs. Perry was still alive at the time of the transfer, the personal representative argued the state could not recover any amount. The magistrate ruled that the state’s ability to recover costs was limited to assets that were transferred to the recipient’s spouse at death, not to inter vivos transfers. The state appealed. (Mrs. Perry died while the appeal was pending.)
The Idaho District Court affirms, holding the definition of “estate” in federal Medicaid law does not permit the state to recover property interests the Medicaid recipient divested before death. The court determines that there is a conflict between state and federal law because state law would allow the state to recover from the spouse’s estate so long as the property was once community property, but the court concludes that federal law preempts state law.