A very common situation for my clients (or potential clients) find themselves in is the chaotic situation of transferring their parent from a hospital to an area nursing home for rehabilitation. It is in this situation, when emotions are high, people are tired, that the nursing home will, at the last second, wants the son or daughter admitting the parent to sign a 60+ page nursing home contract. Of course, the nursing home contact (usually the nursing home admissions director) is very friendly and advises that “don’t worry” this is just for your parent’s assets and does not obligate you to use your own funds for nursing home expenses. Often times the nursing home will demand that the contract be signed before admission (even if the hospital is in the process of discharging from the hospital). Often times this is an extremely hectic situation and the last thing that is on the son’s or daughter’s mind is a careful review of the nursing home contract. To be clear: under no circumstances should the contract be signed until an elder law attorney reviews the contract. It is a very routine question to ask the nursing home to allow time for their elder law attorney to review the contract. No matter how friendly the director of admissions person is, if there is a shortfall in payment or the Medical Assisstance application goes awry, the nursing will look for however signed the contract to pay the nursing home bill in full. I had a recent case where the nursing home assured the son that there was nothing to worry about and had him sign the contract in his name. The nursing home handeled the Medical Assistnace application. Unfortunately, the Medical Assistance application was denied. The next day, the nursing home delivered an invoice to the son for immediate payment for $100,000 for unpaid nursing home bills. Nursing home contracts are sophisticated documents with good attorneys hired by the nursing home that will use this contract against you. It is absolutely critical that an elder law attorney review that contract as soon as possible. If the contract is already signed, then the situation becomes more complex. In either event, a competent elder law attorney should be immediately contacted.
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.
Medicaid Spousal Impoverishment Figures for 2012
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.
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.
One of the most often used techniques to protect assets for a single individual is the use of the Reverse Half a Loaf technique. With this technique the higher the fixed income and lower the nursing home costs the greater the savings. This technique involves controlled gifting and most likely the use of a financial power of attorney. Where the financial power of attorney is insufficient (for a variety of reasons) court intervention may be the only method by which to protect the assets.
The amount of assets that can be protected may well be significant but is usually in the range of 40%-60% of the exposed assets. This technique is complicated and must be done under the supervision of an elder law attorney familiar with this technique.
We often retain clients in situations where the client’s parent is in rehabilitation at a local nursing home. Often, Medicare has just run out and the client just received the first nursing home bill equal to the current month and the next month. Clients are often stunned and realize quite quickly that all of the assets will be gone very soon. Using the Reverse Half a Loaf even under this scenario may well be an attractive route to take to protect the assets at issue and to set them aside to pay for the wide range of items and services that Medical Assistance will not pay. Remember, once on Medical Assistance, the recipient can only have $71/day for his/her needs.