Massachusetts Estate Planning & Asset Protection Blog

The High Cost of Seniors Living Longer

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Sep 05, 2014

 

The Cost of Living Longer | Massachusetts Eldercare Attorney

 

 planning, estate, eldercare

 

A Pachyderm of Problems

Every day, we see clients for whom long-term care is the elephant in the room. They feel they can’t afford the costs, but they also feel they can’t afford not to have it either. So their solution is to pretend they don’t see the elephant and try to ignore the problem until it goes away on its own. This unfortunately often leads to our metaphorical elephant trampling their life savings and any future inheritance they are trying to leave behind. The older you are, the more expensive a long-term care policy gets and if you get sick before you have long-term care protection in place, it’s too late. Insurance companies are looking out for their bottom line, and an already ill senior will scare them off.

The costs for these policies are rising faster than inflation too. Therein lies the conundrum for Boomers and seniors: They’re living longer than their parents did but that means they need more money to make it through “old age”. Finding long-term care is a tough and complicated process. You’ll need to find a place that cares for people with your (or your loved one’s) circumstances. You need to find a place with the right facilities and staff, a place that leaves you with a good, safe feeling. And you have to be able to afford it too. This is not any sort of one-size-fits-all situation. Everyone has their own specific services and conditions that they or their loved ones will need met. Remember, what we call “long-term care” is a broad category, with options ranging from live-in facilities to your own home.

Lurking Complications With Long Term Care

The greatest threat to the financial security of Boomers and seniors is the cost of long-term care (and Obamacare will not assist with this). Assisted-living facilities are now climbing toward the $7,500-a-month mark. Many have started bundling more services together, rather than charging for each individually. Bundling might be a good idea from the nursing home’s perspective, but just like pre-packaged cable TV you will wind up paying for a lot of services you don’t need and don’t want. A private room at a nursing home will range from $500 - $600 a day.

The cost of home healthcare is rising, too. Some people choose independent-living apartments. These facilities typically don’t require lump-sum payments, and residents can contract with home health-services independently. Medicaid may be there for those who qualify but if you ever want to learn the true meaning of “jumping through hoops” just try qualifying! The best thing, of course, is long-term care insurance, but that’s getting more expensive too as companies raise their rates while cutting back on their coverage. In addition, this insurance is getting more complicated, now encompassing aspects such as protection of the surviving spouse, caregiver issues, scams/ID theft, and making sure you have an advocate to fight for your rights in a system that’s slanted against you.

In short, we’re living longer, and unlike previous generations, people are generally not living with or even near their children. Seniors are going to need more money for this longer life and for any unforeseen medical problems that may arise.

A Magic Trick No One Wants to See

Do you know the fastest way for a Boomer or senior couple to become an impoverished Boomer or senior couple is? Simple, one of them just needs to become ill before they get long-term care insurance. We see it every day, people who’ve worked hard and saved money all their lives are forced to see it wash away in a flood of medical bills as they age. It is truly heart-breaking, because, if you’ve managed to squirrel some money away, you could probably have afforded long-term care. 

The Downside to Living Longer

Our life expectancies are going up these days and so is the cost of healthcare, the distance seniors are living from their children and families, and the financial pressures on Medicare and Medicaid. The new Affordable Care Act, in fact, stipulates $500 billion in Medicare cuts over the next decade! Where do you turn if you or your spouse gets ill? Home health care? Adult day-care? Assisted-living? A nursing facility? Respite-care services, which allow the caregiver to drop off the senior for a limited period? Who’s going to pay for it? And for how long?  These are the questions to ask now, while you still have time to plan. If you haven’t purchased long-term care before you or your spouse become ill…forget about it. No one will insure you once you’re sick! If this happens to you, you’re going to be out of time, out of options, and very quickly out of money. And if you’ve planned to leave something for your heirs, there may be nothing left to leave to them other than a pile of bills. 

 

It’s an old (but true) cliché: those who fail to plan, are planning to fail. When it comes to healthcare expenses as you age, you fail to plan at the risk of yourself and those you love.  

 

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop 

 

Tags: living will, Estate Planning, Estate Planning, asset protection, Massacusetts Estate Tax, long term care, life insurance, Medicaid, MassHealth, in-home care, marriage, Estate Planning Tip, seniors, assisted living, life-care plan, hospice, Massachusetts, assets, in home, incapacity, asset, home, surviving spouse, Estate Planning Recommendations, in-home care, long term care insurance, Inheritance

Things You Need To Know About Hospital Admissions and Long term care

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Jul 29, 2014

 

Medicade Estate Planning Asset Protection

 

The Bad News: The Three Midnight “admission” Stay Requirement Can Destroy Medicare Coverage for Rehab (the cost could be from $8,000 to 10,000 a month)

 

Alas, notwithstanding all the controversy about the Three Midnight Stay Rule (That you must be on “Admitted” status not on “Observational” status) to qualify for the subsequent Medicare coverage, we still do not see any relief.

 

There is legislation pending to change this so that people are very clear as to when they are on admission status versus observation status, the latter of which does not qualify towards the Three Midnight Stay required by Medicare for coverage in a subsequent rehabilitation center. This has surprised, shocked and disappointed a large number of seniors. Don’t let it happen to you!

 

The Good News: The Old “Improved Standard” for Medicare Coverage is out and the new “Maintain Standard” is in!

 

As a result of the recent court decision in Jimmo v. Sibelius that was decided in 2013, Medicare clarified that maintenance coverage under the skilled nursing. Home health, skilled therapy and outpatient therapy benefit does not depend on whether the patient can improve. Eligibility for Medicare depends solely on whether skilled care is required and whether the actual services are reasonable and necessary.

 

This means that you no longer need to demonstrate that you will be improving every day during treatment. With chronic diseases such as MS, Parkinson’s and other health matters, improvement may not actually be possible. However, healthcare providers humanely try to help patients maintain and sometimes this maintenance is dependent on their skilled care. Now, as decided in the class action lawsuit mentioned above, you will qualify for Medicare.

 

Clients and patients should be made aware that they may request a review for all Medicare claims for skilled care or therapy denied before January 13, 2011.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Estate Planning, Estate Planning, Elder Law, MassHealth, Estate Planning Tip, elder care, elder care journey, Massachusetts, Elder Law, Estate Planning Recommendations, Massachusettes, 2014

Dealing with Financial and Emotional Costs of Dementia

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Wed, Jun 11, 2014

Helping Families Deal With the Financial and Emotional Costs of Dementia 

 Estate Planning, Alzheimers, Hardships, Dementia, Elderly, Nursing Homes, Assisted Living Homes, Financial Protection, Writing a will, Asset Protection,

Last month was National Elder Law Month A time for us to help educate the public about Elder Law and how we can help seniors and their families by providing solutions to the unique issues that come with aging.  Today we will discuss a debilitating condition that many Americans eventually face as they age:  dementia.  First, we will describe what dementia is and what it isn’t.  Then we will turn our focus to its costs to the individual, the family and our nation.  Statistics show that Massachuestts costs range from $13,800 - $16,000 per month for a Nursing Home, $5,400 - $7,500 per month for assisted living, and $15 - $32 an hour for in-home care. We are specially situated to help find solutions to many of the problems this condition brings with it.  While we can’t stop dementia, we can help protect those in its clutches while the medical world continues to seek prevention, treatment and reversal of the condition.

            Dementia Defined  

The Alzheimer’s Association defines dementia as, “a general term for a decline in mental ability severe enough to interfere with daily life. Memory loss is an example. Alzheimer's is the most common type of dementia.” 

 

Dementia is not actually a specified disease.  It describes, instead, a general decline in memory or other thinking skills and is identified through a variety of symptoms.  Alzheimer’s disease accounts for 60 to 80 percent of dementia cases.  In order to be characterized as dementia, at least two of the following mental functions must be significantly impaired:  visual perception; reasoning and judgment; memory; communication and language; or ability to focus and pay attention.  Dementia is not a normal part of aging as the terms “senility" or "senile dementia” infer. 

If a loved one is having trouble with any two or more of these mental functions, it’s a good idea to get it checked by a doctor.  Dementia is progressive and typically takes over the mental functions over time.  In this way, it provides the individual and the family with time to plan for its disastrous affects. [1]

 

Cost to the Individual

The cost to the individual with dementia is difficult to quantify.  Because dementia is a progressive condition and one where aging is the greatest risk factor, it is logical that at the beginning and younger stages of dementia, the cost to the individual is minimal.  As dementia progresses, so does the need for assistance with daily activities. 

This assistance often comes in the form of meal preparation, help with grooming and hygiene, transportation assistance, as well as help with many other daily activities.  Dementia patients can become so mentally challenged that they may place themselves in dangerous situations, such as roaming neighborhoods and getting lost.

  While the individual affected by dementia may need only a few hours of help per week at the beginning of symptoms showing, soon they may need around the clock supervision, not only for assistance with daily activities, but to protect them from themselves.  The individual’s costs will include medical expenses as well as paying a caretaker. 

Caretaking for one with dementia varies depending on the quantity of care required.  Statistics show that Massachuestts costs range from $13,800 - $16,000 per month for a Nursing Home; $5,400 - $7,500 per month for assisted living; and $15 - $32 an hour for in-home care. 

 

Cost to the Family

Where the individual with dementia is fortunate enough to have family nearby, the family will often step up to assist the ill loved one with their daily activities.  Again, the process can be gradual and before the helpful family member realizes it, they may find themselves missing work and, finally, quitting their job altogether in order to give proper care to the dementia patient.  Obviously, the cost to the family includes the loss of income from this family member’s job. 

The less recognizable cost to the family, however, is the emotional strain that is placed on the family member caretaker.  In order to save the family money, many family members will work nearly twenty-four hours, seven days per week.  The ramifications are physical, mental and emotional health problems to the caretaker.  The medical costs and possible future psychological costs to the caretaker, then, must be considered.

 

            It is important that family members: take a step back from the situation and assess this cost.  Providing a caretaker with time off every day, week and year is a must to ensure the caretaker’s health.  The caretaker must have appropriate support in order to keep caring for the loved one.


Cost to the Nation

As a nation we have begun to recognize the devastation that dementia has caused and will continue to cause.  Organizations such as the Alzheimer’s Association have been effective in lobbying for monies to be put towards the research of dementia treatment, prevention and reversal.  The cost of dementia to our nation has been a great motivator for politicians to fund such research.


A study conducted by RAND Corporation in 2013, estimated the national cost of dementia to be between $159 billion to $215 billion (including an estimate for the monetary value of informal care provided).[2]  The majority of the costs associated with dementia are for institutional and home-based long-term care and not medical services. 

Medicare and Medicaid pay for some of this cost, which amounts to a taxpayer burden.  According to the Alzheimer’s Association March 2013 Fact Sheet, in 2013 it is estimated that Medicare and Medicaid paid approximately $142 billion in caring for those with Alzheimer’s or other type of dementia.[3]

           

It is clearly in the best interest of the nation’s economy to continue research on prevention, treatment and reversal of dementia.

 

            Conclusion

 The costs of dementia can be devastating to the affected individual, their family and the nation.  While scientists continue to search for solutions to the debilitating condition, the families affected with it must face its challenges.  It is recommended that those families seek emotional support by way of a therapist or support group. In our recent book, “Senior and Boomer’s Guide to Health Care Reform and Avoiding Nursing Home Poverty” we provided helpful information how families can obtain quality care and protect a loved one with Alzheimer’s.  In addition, seeking out an Elder Law attorney can benefit the affected individual and family members in several ways.  We can also ensure that the family’s assets are being used in the most efficient manner considering other available resources and the family’s individual goals. 

 

Becoming educated and involved in planning for the challenges ahead is one of the MOST important steps a family facing the impact of dementia will take.  If you or someone you know is affected by dementia, we can help and we welcome the opportunity to do so.  To attend a workshop call 800-964-4295 or register online at DSullivan.com. For more information regarding our books, free workshops, and a DVD entitled,

“Helping People and Their Families on the Alzheimer’s Journey,”

Call our office at 781-237-2815.

 

 Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

[1] http://www.alz.org/what-is-dementia.asp
[2] http://www.rand.org/news/press/2013/04/03.hml
[3] http://act.alz.org/site/DocServer/2012_Costs_Fact_Sheet_version_2.pdf?docID=7161 
 

Tags: Estate Planning, Alzheimer's Disease, MassHealth, dementia, VA benefits, alzheimers, caretaker

Hiring a Health Care Aide - Independent Contractor or Employee?

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, May 13, 2014

 

MassHealth, In Home Care, Massachusetts

It’s a conversation we have with most of our clients at some point when guiding them through what we call the elder care journey.  Dad wants to stay at home but needs assistance with some of what are known as the activities of daily living – eating, bathing, dressing, walking and toileting.

We recommend to our clients that they hire a home health agency for a variety of reasons which I have written about in previous blog posts.  That aide is going to be coming into Dad’s home.  The agency does background checks before hiring.  Proof of spend down for Medicaid isn’t an issue when hiring an agency.  The contract and payment to the agency is all that needs to be shown, unlike the cash payments that families often make when hiring an undocumented aide.

There is another concern we discuss with clients and their families, but which they then generally push aside, and that is the question whether the aide they hire is an employee or an independent contractor.

In many cases the line between the two is easy to draw.  For example, the contractor you hire to do work on your home is not your employee.  He is hired to do a specific job, controls the manner in which he does it and upon completion he is paid.  Similarly, most professionals such as doctors, lawyers and architects are paid the same way.

The question is more difficult to answer, however, when we consider someone who comes into your home regularly to perform a service.  For example, a landscaper who cuts your lawn or the person that comes to clean your home every week will generally be treated as an independent contractor.

What are the commonalities to an independent contractor?  If only the worker can control how the work is done, the worker provides his or her own tools and offers his or her services to the general public as an independent business, then it is clear that he is treated as an independent contractor.

The line becomes more blurred, however, when we consider the aide hired to provide care for Dad.  Does the aide work for more than one person at time?  Is the aide a live in?  Who controls the manner in which the work is performed?  And what laws might a family be concerned with if the aide is considered an employee?  We’ll discuss all that next time.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: MassHealth, Health Care, 2014, in-home care

What To Do When Medicaid Comes For You Part 2

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Wed, Apr 09, 2014

Medicaid, Masshealth, Estate Planning

Last time I was telling you about Noah’s problem with Medicaid.  After his Dad died he received a Medicaid estate recovery letter from the State of Massachusetts looking to recoup $150,000 in benefits.

He was not happy when I explained to him that under Medicaid rules they are owed that money.  When Noah purchased Dad’s house, he did not pay fair market value for it.  That’s because he reduced the purchase price by $300,000 to pay for repairs and upgrades that benefitted Noah, not Dad.  In essence, Dad made a transfer for less than fair value which is subject to a Medicaid penalty.

So, why then did Medicaid approve the application and pay for Dad’s care for 3 years?  Because the state never came back to check on whether the home was sold.  Remember I told you that Noah first put the home on the market to try to sell it so the State processed Dad’s application and approved it.  They just never checked backed to see the status of the sale until after Dad died.

It’s never easy telling someone they have a $150,000 bill to pay but Noah was actually financially much better off than had he sold the home for fair market value before applying for Medicaid.  If he sold the home and netted $300,000 for Dad before he applied for Medicaid, then that money would have been spent on Dad’s nursing home care at a rate more than double what the State was paying.  In approximately 2.5 years the money would have run out, at which time Noah would then have filed a Medicaid application.

Instead, he applied for Medicaid before the house sold.  Once Dad died Massachusetts came looking to be reimbursed but for only half of what Dad should have netted from the house sale, which means Noah can keep the rest.  He also received what is the equivalent of an interest free loan, since the State is not charging him interest on the money it paid out in benefits.

With all the improvements he made, Noah told me the home is now worth probably $600,000 or more.  If he doesn’t have the cash to pay the State, he can take a mortgage on the home.  And again, he is still $150,000 ahead.

I knew it would take time for it to sink in but I told Noah he was lucky.  What it did end up to be the best move from a Medicaid standpoint.  He just didn’t know it at the time.  Noah’s story is a cautionary tale.  He went through the Medicaid system blindly and, albeit, with a repayment of $150,000 to Medicaid, it turned out OK.  It certainly could have been a lot worse.

Keep in mind that each situation is different.   What was the right move for Noah and his Dad may not be the right one for the next person.  Each situation has its unique set of facts and circumstances and is why I always tell people there is too much at stake to try this on your own.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Medicaid, MassHealth, Massachusetts, Medicaid penalties, 2014

What To Do When Medicaid Comes For You

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Apr 04, 2014

Medicaid, estate planning

Noah called us because he received a letter from Medicaid looking for money.  Dad had been on Medicaid for 3 years before he passed away.  Massachusetts was looking to recoup benefits it paid out on Dad’s behalf to the tune of approximately $150,000.

                Noah received what is called an estate recovery letter.  The State of Massachusetts looks to recover as much of its money as it can from the estates of Medicaid recipients when they die.  “But, why would there be anything left when Dad died,” you might ask, since he had to spend down to less than $2000 in assets before qualifying in the first place.  Good question.

Well, you see, the problem goes back about 4 years.  Noah told me that his dad was living in his home until his health declined to the point where he needed to be placed in a nursing home.  Since Dad had only the house to his name and no other assets, Noah paid some of Dad’s care costs before and after he moved to the nursing home, about $100,000 total.  He then put the house up for sale and applied for Medicaid.

                Massachusetts Medicaid will approve the application while you are trying to sell the home – as long as all the other Medicaid requirements are met.  And that is just what happened in the case of Noah’s dad.  But then the story takes a bit of a twist.

                After some time on the market without an offer, Noah decided to buy the home himself.   It needed a lot of work and upgrades so he and his wife and kids could move in.  He purchased the home for $400,000 and spent $300,000 in repairs and upgrades.  At the closing he reimbursed to himself the $100,000 he spent on Dad’s care from his own funds.  But, he also reduced the purchase price by $300,000.  In other words, Dad actually paid the costs of the repairs and upgrades and received no cash in the transaction.

                That was the root of the problem with Medicaid.  Dad actually made a gift of equity in the home to Noah, which would of course be subject to a Medicaid penalty.  But, why did Dad remain on Medicaid for 3 years?  Didn’t that mean everything was still OK? And how much does Noah actually have to pay back?  We will cover that next time.

 

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Estate Planning, Medicaid, MassHealth, Medicaid penalties, 2014

Medicaid & Marriage, Do They Go Together?|Massachusetts Elder Law Attorney

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Wed, Feb 19, 2014

Medicaid, Marriage, Estate Planning

 

Ted called me concerning his step-mom, Roberta.  Roberta is in the hospital but about to be transferred to a nursing facility where she will remain on a long term basis once Medicare coverage stops.  The conversation quickly turned to Medicaid.

Ted explained that Dad and Roberta have been married 5 years.  Roberta came into the marriage with very few assets.  Dad owns the home where Ted and his brother grew up, worth approximately $500,000, and another $500,000 of additional investments.  His mom died about 10 years ago and Dad, seeking companionship, reconnected with Roberta, an old high school classmate.  Ted told me that Roberta has a daughter with whom she has no relationship and who is no help at all in caring for Roberta.

Ted’s $64,000 question was, “How much does Dad have to spend down towards Roberta’s care before she can qualify for Medicaid?”  He told me that Dad had always intended to leave his assets to Ted and his brother when he dies but now is concerned about whether that will happen.

I asked Ted some preliminary questions.  Neither Dad nor Roberta has any long term care insurance.  They also do not have a prenuptial agreement in place, although even if they did, Dad would have to divorce Roberta to invoke that agreement and protect his assets from being spent down towards her care.

So, where does that leave them?  Next time I’ll tell you.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Can be seen at: Click Here

Tags: Estate Planning, Medicare, Medicaid, MassHealth, Health Care, medicaid qualification, 2014

Tax Fraud, Medicaid Penalty, or Both? Part 2 | Massachusetts Estate Planning Attorney

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Jan 30, 2014

 

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Last time we were discussing Ed’s problem.  His brother Tom had been using Dad’s account to buy and sell Tom’s investments, presumably because having Dad pay the tax instead of Tom was more beneficial.  However, what happens when Dad applies for Medicaid?

Medicaid will definitely question the $500,000 in assets transferred back from Dad to Tom.  As long as Tom can show that he originally transferred the assets to Dad, then the transfer back is simply Tom taking his money back.  Ed, however, told me of Tom’s reluctance to cooperate, for obvious reasons.

I explained that while I cannot guarantee that the IRS or State Division of Taxation won’t catch on, it is highly unlikely.  I don’t know of any instance in which Medicaid has reported what it sees on a Medicaid application to the IRS or Massachusetts’ income tax division.  Government bureaucracies don’t communicate well with each other.  And certainly there is even less communication between federal and state government.  So, I think it is very unlikely that Tom will run into problems because of what is disclosed as part of a Medicaid application.

Still, that may not be enough to secure Tom’s cooperation.  But, I told Ed that his calling me now, while Dad still has significant assets, was a good thing.  Knowing the potential problems that lie ahead, we can work around them.

Ed told me that Dad receives $2250 from Social Security and a pension and that he is a Korean War Veteran.  That’s good.  Moving Dad’s assets into a VA qualifying trust, we can get him a VA Aid and Attendance pension of  $1753 per month if he moves to an assisted living facility.  At $4000 per month his income would entirely cover the $4000 monthly cost of care that Ed had estimated.

It is very likely, however, that as Dad’s health declines he’ll need increased care so that $4000 number will climb.  Our goal is to stretch his dollars so that he does not need Medicaid until 5 years after Tom took his $500,000 back.  Why?  Because then we won’t have to explain it all to Medicaid since it will fall outside the 5 year look back.

Doing the math, I showed Ed how that was very doable.  Tom took back his money 6 months ago.  So we really have to get through the next 4 and ½ years, 54 months.  If over that 54 month period Dad’s care averages $6000 per month, he’ll need an additional $2000 above what his income can cover.   That money would come from the money we transferred to the trust, approximately $108,000 in total.  Once we’re past the 5 years we don’t have to worry about the mess Tom created.

But what if Dad’s health deteriorates more rapidly and he needs nursing home care at $10,000 per month after, say, 6 months.  Well, that means the shortfall over 4.5 years would be about $300,000 and Dad would have just enough to get through till Medicaid kicks in.

I explained to Ed that these were all estimates but the point I was making, which he clearly understood, is that we need to manage Dad’s care and costs with an eye towards Medicaid down the road.  Of course, we don’t know what scenario will actually occur, but following my plan he’ll be ready for whatever the future throws at him.  And we won’t have to worry about getting Tom to cooperate to fix the mess he created.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: IRS, Medicaid, MassHealth, medicaid qualification, Medicaid penalties, 2014

Tax Fraud, Medicaid Penalty, or Both?|Massachusetts Elder Law Attorney

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Mon, Jan 20, 2014

 Taxes, Medicaid, Medicare, Fraud

Ed called me because he had just taken over Dad’s finances and the management of care from his brother, Tom.  That’s when he made a discovery that troubled him and caused him to reach out to us.

Dad was still living at home alone but his health was declining.  Ed began looking at assisted living facilities.  At a cost of approximately $4000 per month, Ed was concerned about whether Dad could afford it.  So I started to ask him about Dad’s assets and income.

Ed told me Dad has about $300,000 in assets but he then went on to explain that Tom had transferred almost $500,000 out of Dad’s name.  He explained that Tom bought and sold investments in Dad’s account so the income was being taxed at Dad’s income level, which was lower than Tom’s.   “Is that a problem”, he asked.

“It could be”, I told him.  If Dad runs out of money and needs to apply for Medicaid, he’ll have to produce 5 years of records and that’s where the problem lies.  They’ll see the money going back to Tom.  As I always explain, Medicaid works differently than the criminal system.  In the criminal system you are innocent until proven guilty, but the Medicaid system works the other way around.

I told Ed that he will have the burden of proving that the money was Tom’s and not Dad’s.  As long as Tom is able to show a paper trail of assets he deposited into Dad’s account that matches the money going back to Tom then no Medicaid penalty will be assessed for a “transfer for less than fair value”.

“But I’m not sure Tom will cooperate.  If he admits that the assets are his, could he or Dad run into problems with the IRS or Massachusetts Department of Revenue”, Ed asked.

I have to admit that if Tom is in a higher tax bracket, that would mean a higher tax bill.  And if Tom transferred assets to Dad for the purpose of avoiding income tax, he and Dad could be accused of committing tax fraud.  I told Ed he’d need to consult with a tax attorney.

My focus, however, was on the Medicaid issue.  I had some thoughts on how to avoid a Medicaid penalty.  Next time I’ll share them with you.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Medicaid, MassHealth, tax exemption, taxes, medicaid qualification, tax, 2014

Did You Think Medicare Would Pay For That? | Massachusetts Elder Law Attorney

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Mon, Dec 09, 2013

Rehab, Mass, Masshealth

 

Many people think that Medicare will pick up the tab for most of your rehabilitation, but it doesn't always. Read below to find out more!

A common problem we often see occurs when someone goes into the hospital for surgery and then goes immediately to a skilled nursing facility (SNF) for rehabilitation (rehab).

Most people assume that the rehab stay in the skilled nursing facility will be covered by Medicare. Unfortunately that is not necessarily the case.

 The Medicare rule is that a patient must spend at least three consecutive days, meaning three midnight stays, in a hospital as an inpatient on admitted status in order to qualify for Medicare coverage for the subsequent rehab stay in a SNF.

 Unfortunately, patients may be classified as outpatient on observation status in the hospital and fail to achieve the three day inpatient stay to qualify for subsequent SNF Medicare coverage even though they are in a hospital bed for multiple days and the care they receive is indistinguishable from admitted patient care.  Observation status does not equal admitted status.

 Talk to your admitting physician. Determine whether or not your procedure will qualify as an admitted patient procedure. We have been told that sometimes your doctor may have some discretion to put you on admitted status (and not observation status) depending on the rules that he or she must abide by to comply with Medicare.

 If your doctor has any discretion in this area then he must give you the proper coding and admitted status before you leave the hospital, because after you leave, the record becomes permanent and cannot be changed.

 And a recent October 1, 2013 CMS rule unfortunately does not help Medicare beneficiaries. The new rule indicates that a two midnight standard set out in the new regulations is simply a tool for physicians to apply in making an inpatient admission decisions. Thus, if your doctor believes that you will require at least two midnights in the hospital, your doctor should admit you to admission status. But, you as the patient will continue to need three midnights on admission status to qualify for Medicare coverage in the subsequent SNF rehab stay.

 Sound confusing? It is.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Estate Planning, Estate Planning, Medicare, Medicaid, MassHealth, estate, Medicare, 2013, 2014

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