Transcript Estate planning for medicaid 8-27-09

Janna Dutton & Associates, P.C.
One N. LaSalle Street, Suite 1700
Chicago, IL 60602
(T) 312-899-0950
(F) 312-899-0959
www.duttonelderlaw.com
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The cost of long term care - meaning either in
home care or nursing home care for individuals
requiring assistance with activities of daily livingis largely an uninsured health care cost for most
individuals. Planning for possible exposure to
these costs is necessary for effective retirement
planning.
Medicare Coverage of Long Term Care
1.Covers 100 days of skilled nursing
care provided in a Medicare certified
nursing facility following a hospitalization
per spell of illness. Medicare pays the full
cost of the first 20 days. There is a
coinsurance payment of $133.50 per day for
days 21 through 100 which most Medicare
supplemental policies cover.
2.Medicare provides home care to
those individuals needing intermittent
skilled care, usually post hospitalization
only, although long term part time skilled
home care services are covered. Skilled care
does not include custodial care, which is the
type of long term care most individuals
impaired by dementia require
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Long Term Care Insurance
Long Term Care Insurance is the only insurance which
pays for ongoing nursing home, assisted living, or
custodial home care.
Illinois Medical Assistance
The Medicaid program in Illinois is a needs based
program and covers custodial long term care expenses
for the aged and disabled - covers nursing home, some
assisted living (Supportive Living Facilities) and some
home care – Community Care Program, In Home
Services.
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$2000 Asset Disregard
Homestead Property
Personal Effects and Household goods
Automobile worth $4500 or less (unless needed for
Medical Transportation, modified, or for employment)
Burial Plot and Tangible Burial Merchandise
Exempt Prepaid Burial Arrangements
 Revocable Burial Trust - $1500
 Irrevocable Burial Trust - $5,210
 Life Insurance Irrevocably Assigned to Funeral Home
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Illinois is an income “spend down” State: if an
applicant’s countable income is $1 less than the private
pay cost of care, the applicant is income eligible.
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Countable income is the income left after certain
deductions:
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Personal Needs Allowance - $30;
Amounts need for Health Insurance premiums;
Community Spouse Maintenance Needs Allowance;
Amounts needs for medically necessary items and services not
covered by Medicaid.
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Income of community spouse does not affect eligibility
of nursing home spouse
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If community spouse’s monthly income >$2,739:
◦ Spousal contribution assessed by State
◦ Paid directly to State (not nursing home)
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The federal Deficit Reduction Act of 2005, Pub. L. No.
109-171 (DRA), signed into law by President Bush
effective February 8, 2006, made substantial, and for
the most part punitive, changes to the eligibility rules
for long-term care coverage. Although the State of
Illinois was required to implement the DRA in 2006, it
has not done so. However, it is likely (unless DRA is
amended by Congress) that Illinois will be
implementing the DRA in the future.
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Present Illinois Rule – look back period 36 months
from month of application for Medicaid, except 60
months for transfers to irrevocable trusts or from
revocable trusts
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If nonallowable transfer occurs during the look back
period, a penalty period of ineligibility is applied
calculated by dividing the total transfers made in each
month by the private pay cost of the nursing home,
supportive living facility, CCP cost.
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Total gift/private pay cost of nursing home
◦ Gift of $50,000 in 1/09
◦ Private pay cost of $6000 ($200/day times 30);
$50,000/$6000 = 8.33 (8 months)
Penalty period beginning1/09 through 8/09
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Medicaid applicants are allowed to transfer their
homestead property to certain persons:
◦ Community Spouse
◦ Live -in Caregiver child (2 years)
◦ Sibling with an equity interest who has lived in home for at
least 1 year
◦ Disabled or minor child
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There are certain allowable transfers that will not affect
eligibility for Medicaid:
◦ Transfer to or for the benefit of a adult disabled child (SSA
definitions of disabled)
◦ Transfers to a trust for the benefit of a disabled person
◦ Transfers made exclusively for reasons other than to become
eligible for Medicaid
◦ Transfers for fair market value
◦ Where the imposition of a penalty period will cause a hardship
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IL Community Spouse (CS) may refuse to disclose her
assets
◦ Will not affect nursing home spouse’s (NS) eligibility
◦ BUT CS not eligible for Community Spouse Asset Allowance
◦ AND Transfers from NS to CS during look back period will
cause penalty period
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The State of Illinois allows the Community Spouse of a
Medicaid nursing home resident to receive a portion of
the income of the nursing home resident, which is the
Community Spouse Maintenance Needs Allowance
(CSMNA). The CSMNA is calculated by subtracting
the nursing home spouse’s income from the standard,
which in 2009 is $2739. The State never directly
subsidizes a CS.
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OBRA Trusts allow Medicaid recipients to set aside
their nonexempt funds in an irrevocable trust which can
be used for their benefit and remain eligible for
Medicaid
◦ Medicaid recipient must be disabled
◦ Trust must be Irrevocable and for the exclusive benefit of
disabled Medicaid recipient
◦ Trust must contain a “pay back” provision to the State at the
death of the beneficiary
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Individual OBRA Trusts
◦ Available to disabled persons under the age of 65
Pooled OBRA Trust Subaccounts
Presently available to disabled persons of any age
Must be managed by a non for profit organization
Illinois Pooled Trusts
Illinois Disability Association Pooled Trust (contact Howard
Berk at 312 332 4622)
Options For Living Pooled OBRA Pay Back Trust (contact
Jeffrey Schmidt at 630-443-2011)
Life Plan, Inc. Pooled Trust (630 620 2222).
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Pooled OBRA Trust Subaccounts
State may start penalizing transfers by persons over
the age of 65 to Pooled OBRA Subaccounts
Spouse Refusal to Disclose Assets
State may discontinue practice of allowing
community spouses to refuse to disclose assets
Deficit Reduction Act of 2005
State may implement the DRA: 60 month look
back starting the month of eligibility for Medicaid
coverage of nursing home care.
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Illinois Program Manual
Detailed policy and procedure relating to the
Medicaid program is contained in the IDHS
“Combined Policy Manual (PM) and Worker’s Action
Guide(WAG)”. This manual is a necessity for anyone
processing Medicaid applications and may be accessed
online at
http://163.191.134.21/pmwag/intranet.htmlhttp://www.
dhs.state.il.us/ (Illinois Department of Human Services
web site - search for Cash, Food Stamp and Medicaid
Manual).
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www.duttonelderlaw.com
A detailed explanation of Medicaid coverage of long term
care in Illinois can be found on the website of Janna Dutton &
Associates. It contains citations to the IDHS policy manual
which will allow you to find the policy sections relevant to
your issue which is otherwise a time-consuming search. You
can find this material by clicking onto the “Speaking
Engagements” Menu Option, then clicking onto the “Learn
More…” hyperlink and finally downloading the “Medicaid
Book Chapter” in the blue box. You can also use the
following direct link:
www.duttonelderlaw.com/documents/2008_Medicaid_Chap_Draft.pdf