Blog Series Part 2: Medicaid and Long Term Care 101

By | Elder Law, Estate Planning

In Part 1 of this series, we described the most common ways to pay for long term care in a nursing home, namely long term care insurance, personal income/savings, and Medicaid.  According to a policy brief published by the University of Pittsburgh in 2013*, the Pennsylvania Medicaid (or Medical Assistance) program currently carries the burden of 65% of the total cost of nursing home care provide in the state.  Each state administers its own Medicaid program and has its own unique eligibility rules in order to qualify.  The basic eligibility guidelines for Pennsylvania (in 2015) are described below:

  • A person must meet ALL financial and non-financial eligibility requirements in order to obtain Medicaid benefits for nursing home care.
  • The 4 basic Non-Financial Eligibility Requirements are: 1) A doctor must complete a form attesting to the fact that you have a medical need for long term care, 2) You must be a U.S. citizen or a qualified non-citizen, 3) You must be a resident of Pennsylvania, and 4) You must have a Social Security number.
  • Financial Eligibility is based on an analysis of two things: Income and Resources.  In a nutshell, if BOTH your income AND resources fall below a certain threshold, and you meet the all of the other applicable eligibility criteria, then Medicaid will cover the cost of nursing home care above and beyond what you can pay on your own.
  • How is income counted?
    • Most income is counted, including Social Security, pensions, investment income, IRA withdrawals, etc.
    • Income Limits: For a single person, if your monthly income is below 300% of the Federal Benefit Rate you are automatically income qualified.  Currently, that amount is $2,163/month.  If your monthly income is higher than that, you may still be considered Medicaid eligible if your medical expenses offset your income to bring it down to a limit of $2,550 (currently).  Many people with higher incomes are still able to qualify for Medicaid because the cost of care in a nursing home is considered a deductible medical expense, thus bringing them below the income eligibility threshold.  Different rules apply for married applicants, which will be discussed in a later blog post.
  • How are resources counted?
    • Examples of resources counted for eligibility purposes include bank accounts, stocks, IRA accounts, vacation property, and the cash value of life insurance. Examples of resources which are NOT counted include the value of your home if it is less than a certain amount and you intend to return home or your spouse lives there, one motor vehicle, all burial spaces/plots, and burial reserves subject to specified limits.
    • Resource Limits: If your income is $2,163/month or lower, you currently are allowed to retain up to $8,000 in resources.  If your income is higher than $2,163 (regardless of medical expenses), you are only permitted to retain $2,400 in resources.  Many people pay privately for long term care until their resources fall below the limits, and then apply for Medicaid.
    • The Look-Back Period – At the time you apply for Medicaid you must report any assets that you transferred, sold or gave away within the past 5 years/60 months. If the Department of Public Welfare determines that you gave that asset away for less than Fair Market Value, your application may still be approved, but a “penalty period” will be assessed before your benefits can begin.  This can be devastating to both the applicant and/or their family because often times the asset which was given away is now depleted or unavailable, leaving no cash to cover the private cost of nursing home care until the penalty period ends.

How the Medicaid application process works for married applicants will be discussed in subsequent posts in this series, as well as how to preserve assets without running afoul of the Look-Back Period.  If you would like more information in the meantime, contact Yardley Estate Planning, LLC where you can come in for an elder care consultation, explore your options and develop a prudent plan for paying for care.

This blog post was originally created by Joellen Meckley while she served in an “Of Counsel” position in our firm. While she no longer does that, we do maintain a  professional relationship and if you have any Elder Law needs, I’d recommend you reach out to her firm Meckley Law. If you need Estate Planning, please reach out to us.

Blog Series Part 1: Paying for Long Term Care in Pennsylvania

By | Elder Law, Estate Planning

Part 1 – Three Options for Paying for Nursing Home Care

The average annual cost of care in nursing home in Pennsylvania is currently a little over $100,000/year. It is no wonder that a common fear among older adults is that they will end up in a nursing home and leave their spouse in the community destitute or pass away without any inheritance to leave for their children. Knowledge is power in any situation, so the first thing one needs to understand in this situation are the basic options available to pay for nursing home care.

First, to dispel a misconception, Medicare Part A (not to be confused with Medicaid) does NOT pay for long term custodial care in a nursing facility. Medicare will partially cover the cost of up to 100 days of skilled nursing care and rehabilitation, if the recipient meets certain strict eligibility criteria. But note, Medicare never pays exclusively for what is called “custodial care,” like help with bathing, dressing, or caring for oneself.

So what are the basic options for paying for long term care in a nursing home? One option is Long Term Care Insurance, if you are fortunate enough to have a policy in place. However, many individuals did not have the foresight or could not afford to purchase a policy when they were younger and premiums were more reasonable, thus few people can rely on this payment option. Another option for covering the cost of long term care is the most obvious one – using a combination of income and a gradual liquidation of your assets to the cover the cost of care. While this is certainly a straightforward approach, at a cost of approximately $100,000 a year, most people will quickly deplete whatever assets they own. If the nursing home resident is married with a spouse living in the community, this option is particularly devastating due to the rules dictating what assets may be retained by the community spouse versus which must be used to pay for the institutionalized spouse’s care.

Last is the Medicaid program, also known as Medical Assistance in Pennsylvania. Medicaid is the fundamental financial safety net for most individuals facing long term care in a nursing home. While the availability of Medicaid is a godsend for many needing care, it also has very complex set of financial qualification rules and the potential pitfalls are numerous, especially for those with a community spouse or those who were lucky enough to have certain assets prior to entering the nursing home. Many try to take steps to try to protect those assets without consulting with an elder law attorney knowledgeable about Medicaid Planning, which if done incorrectly could result in a denial of benefits and stiff financial penalties.

Subsequent parts of this Blog Series will focus primarily on how the Medicaid application works, how to submit a successful application, and the potential planning options available to protect and preserve your assets for loved ones so it’s not all lost to the nursing home. If you would like more information in the meantime, contact Yardley Estate Planning, LLC where you can come in for an elder care consultation, explore your options and develop a prudent plan for paying for care.

This blog post was originally created by Joellen Meckley while she served in an “Of Counsel” position in our firm. While she no longer does that, we do maintain a  professional relationship and if you have any Elder Law needs, I’d recommend you reach out to her firm Meckley Law. If you need Estate Planning, please reach out to us.

Ask an Elder Law Attorney – What can I do if my elderly parent is losing the ability to make decisions and manage his or her affairs?

By | Elder Law, Estate Planning | 2 Comments

Ask an Elder Law Attorney – What can I do if my elderly parent is losing the ability to make decisions and manage his or her affairs?

By Joellen Meckley, Esq.

Here are three things you should keep in mind:

  1. The best time to plan is now. Oftentimes, mental decline in old age does not happen suddenly, it happens gradually. The signs can begin to show in subtle ways, such a noticing your mother isn’t paying her bills or has bounced a check or noticing that your father’s personal hygiene has begun to decline. Don’t ignore those signs, because the best time to plan is when your parent is still relatively healthy and competent. Planning can always be done, but the longer you wait, options become more limited.

 

  1. These conversations are often difficult. Older adults are no different from the rest of us – some are more resistant to change than others and it can be difficult to raise this subject. If you as a child are worried that your relationship with your parent may be damaged by raising these issues, a subtle approach may work best. Consider relating what a friend is going through with her own elderly parents and use that as a spring board to raise the issue of how you’re worried about what to do if it ever happens to them. Many elderly parents don’t want their children to feel burdened and will be more motivated to address certain issues if they see the potential negative impact their problems could have on their adult child. If there are siblings involved, try to reach a consensus beforehand. A united front can be more effective.

 

  1. A range of options are available based on existing mental capacity.   Depending on how receptive the parent is, the first step is generally to meet with an elder law attorney who can lay out the options. Hopefully the parent still has some capacity in decision-making and can dictate what he or she wants. They can then be walked through the process of appointing financial and health care powers of attorney, which saves the process of going through court to have a legal guardian appointed. An elder law attorney also can lay out common techniques that can be employed or pitfalls to be avoided when managing the affairs of an aging parent, as well as putting you in contact with a wide range of support resources in the community who are available to help in such a situation such as geriatric care managers, home health agencies, and daily money managers.

 

Throughout the process, don’t forget that remaining as independent and autonomous as possible may be critical to your elderly parent’s long term well-being and happiness. Obviously, safety and independence must be balanced and decline often continues. However, taking the time to recognize their dignity and promoting independence whenever possible can go a long way in sustaining their quality of life into the future.

Estate Planning for Young Families

By | Uncategorized | No Comments

Estate Planning for Young Families

By Joellen C. Meckley, Esq.

Many people don’t consider estate planning until they get married or have their first child. It’s natural to resist considering your own mortality until it occurs to you that your untimely death could seriously jeopardize the well-being or financial security of someone else. Particularly for young parents, that realization is enough to keep you tossing and turning at night, however, a well-written estate plan can put those worries to rest.

There are 6 basic components to a simple and thorough estate plan for someone with young children. A qualified estate planning attorney can help you sort through all of them and decide which steps are necessary given the unique facts of your situation.

  1. Write a Will

A will, in its most basic form, directs who will inherit your assets when you die. Some assets pass to your beneficiaries when you die regardless of whether or not you have a will, such as joint bank accounts, real estate owned jointly, or any other assets for which you can name a payable on death beneficiary. Other assets will pass to your heirs according to state law if you die without a will. Having a simple will in place enables you to dictate clearly and definitively who will inherit your property and assets when you die. Taking the time to think ahead about how your property will pass on to those you love and then legally documenting that plan also can potentially save your loved one thousand’s of dollars in taxes if done correctly.

  1. Appoint a Guardian

When you have young children, one of the scariest scenarios to contemplate is what will happen to them if something ever happens to you. It can be an uncomfortable conversation to have with your spouse and the rest of your family or friends – but it’s a conversation that needs to happen. When children are involved, one of the primary reasons to have an estate plan is because it gives you a vehicle by which to officially appoint the person of your choice to serve as guardian in the event that you and your spouse are unable to care for them. An experienced estate planner can help you work through that decision making process.

  1. Buy Life Insurance

While an estate planning attorney won’t be selling actual insurance products to you, he or she should be asking you about any life insurance you already have in place and will make sure that the potential proceeds of that life insurance policy are fully incorporated into your estate plan. Term life insurance is often a smart, affordable way to ensure that your loved ones can remain financially stable after your death, and it’s absolutely essential that it be taken into consideration when drafting your estate plan.

  1. Appoint Retirement Account Beneficiaries

When you nailed down that first “real” job, hopefully you were lucky enough to sign up for some sort of employer sponsored retirement plan, or perhaps you have an IRA. Many people don’t realize that if a retirement plan passes directly to your estate upon your death, the proceeds from that account will be subject to significantly higher taxation than if the proceeds passed directly to a named beneficiary. An estate planning attorney can help you go through your current retirement plans to help you determine the most optimal way to distribute those funds to your beneficiaries upon your death.

  1. Include a UTMA provision or a Trust

Providing for your children in the event of your premature death requires more than just choosing someone to serve as their legal guardian. You also need to plan for what will happen to any money that your minor children inherit from you. One common way to address this in an estate plan is to choose who will manage your children’s money under your state’s Uniform Transfers to Minors Act (UTMA), which will enable their money to be managed by a custodian up until the maximum age permitted under state law (often age 21). Alternatively, you can include a trust in your will which would enable you to appoint a trustee to manage your child’s property and money until whatever age you specify. Your will can be drafted to include a UTMA provision or a trust, either of which can meet your needs depending on the unique circumstances of your family and your children.

  1. Durable Power of Attorney and Advanced Directive

The final component of a basic estate plan is to plan for your potential incapacity. In the event that you are unable to manage your own financial affairs, a durable power of attorney enables you to appoint an individual to have the authority to manage it on your behalf.   A similar document should be executed appointing someone to act as your health care decision-maker in the event that you become incapacitated and cannot speak for yourself. With a valid power of attorney, the person who you trust will be legally permitted to take care of important matters for you.

The attorneys at Yardley Estate Planning LLC are ready to meet with you to discuss your family’s estate planning needs at any time. We look forward to walking you through the process to ensure that your family’s needs and interests are protected for years to come.