We have another nursing home win! In this matter, the nursing home worked with the client (before we were hired) to file the Medicaid application for her disabled husband. Client knew little of what was involved with the Medicaid application and relied on the nursing home to complete the application and file it. During the application process the nursing home kept on telling the client everything was fine.
After being denied twice for Medicaid and 9 months later, the nursing home gave the client a bill in excess of $100,000 and told her to pay it or else they would discharge her husband. In a move even bolder than that, in a moment of crises as he was being taken to the hospital, they literally had her sign a form as she was rushing out the door to the hospital. That form was an acknowledgement of discharge that could bypass all of the Federal and State regulations for discharge.
Next was the suit by the nursing home against client and her disabled husband in excess of $100,000. Never mind that it was entirely the nursing home’s fault that the nursing home application was denied, and the fact that client did not sign the nursing home contract, the nursing home and their attorneys still sued the disabled husband and client. We immediately filed a motion to dismiss and asked for sanctions. A few days before the motions hearing, the nursing home attorneys filed a motion to dismiss the matter (with prejudice) and paid our attorney fees. I would consider that to be a win!
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 answer to this is easy: yes. However, the more interesting question is should you have two individuals serve as guardians at the same time. Remember, that as co-guardians each of you would have to agree on every decision. If you didn’t agree each of you would have to petition the court for resolution. That is time consuming and expensive. My general advice for guardianship is to have only one person appointed at a a time. If that person can no longer serve, then this person should submit a resignation with a petition from the new proposed guardian with, ideally, the written consent of the previous guardian.
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.
For Medical Assistance (i.e. Medicaid) eligibilty, Maryland will examine the amount of assets held by the applicant and by the applicant’s spouse (if any). The most the applicant may have at the time of filing is $2,500 and the most a spouse may have (currently) is $109,560. The bigger question is what is a counable asset? This may seem to be very straightforward but is absolutely not an easy question to answer. For example, we often are asked if automobiles are countable assets. The answer is no, so long as it is not a luxury automobile (however, there is no set defination of a luxury automobile). Some assets are relatively straightfoward and it is easy to see how they are countable assets. This includes bank accounts in the applicant’s name. But what about burial plots? The applicant is allowed to have 2 burial plots. But, what if he has his name on 3 burial plots, then what? That’s when you call your elder law attorney. What happens if I jointly hold my account with mom and I contributed my own money into mom’s account. Is “my money” part of her countable asset. That is when you call your elder law attorney. What happens if my mom has a reverse mortgage on her house, is this a countable asset? Again, you need to call your elder law attorney. The point is, this area of elder law is confusing, it changes, and the deteermination of what is a countable asset does vary state to state. And, most importantly, the determination of a countable assets will be absolutely critical when filing the Medical Assistance application and determining which assets can be saved.
A good portion of our clients engaged in virtually no planning (before they came to our office) when faced with a parent or loved one entering a nursing home. Even in this late stage of the game, there are plenty of opportunities to protect a parent’s or loved ones’ assets from nursing home related costs. The key document to this process is the financial power of attorney for the nursing home resident. Without a doubt, this document will be key to the asset protection process. Ideally, this power of attorney was drafted by an attorney and, if recently executed, conforms with the new Maryland provisions relating to financial powers of attorney. Without this document, the next question is whether or not the nursing home resident can sign a new financial power of attorney. Even if this person cannot sign (or should not sign), then seeking court authorization will be neccessary. The absolute key is that just because one enters the nursing home do not assume that you can’t save assets at that point. That assumption is totally incorrect.
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.