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Medicaid Eligibility Strategies in Long-Term Care Planning for the Elderly

Navigating the Complex Requirements for Medicaid Qualification in a Climate of Services Cutbacks

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THURSDAY, JUNE 14, 2012

Presenting a live 90-minute webinar with interactive Q&A

David Goldfarb, Managing Partner, Goldfarb Abrandt Salzman & Kutzin, New York Michael J. Keenan, Attorney, Keenan Law, Glastonbury, Conn. Yale S. Hauptman, Attorney, Hauptman & Hauptman, Livingston, N.J.

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Medicaid Eligibility Strategies in Long-Term Care Planning for the Elderly

David Goldfarb Goldfarb Abrandt Salzman & Kutzin LLP 350 Fifth Ave. Suite 4310 New York, NY 10118 212-387-8400 www.seniorlaw.com

Strafford June 14, 2012

• I. Medicare v. Medicaid
• Medicare is a federal program available to

persons who are sixty-five years of age and older and certain disabled persons.

• Medicaid is a joint federal, state and city

program which provides medical assistance for persons with low incomes and limited assets.

6

Medicare Parts A & B

• Basically Medicare is the health insurance

component of Social Security.

• There is a Medicare Part A which covers hospital

care and a limited amount of "skilled" nursing care and home health care.

• There is an optional Medicare Part B which

covers part of physicians' costs and other medical services and supplies.

7

Medicare Parts C & D

• There is Medicare Part C or Medicare + Choice,

which is an option for Medicare Managed Care.

• There is a Medicare Part D which is prescription

drug coverage.

8

Medicare Gaps

• Medicare is far from perfect; it is in fact a safety net with

many holes.

• Medicare has certain deductibles, limited payment

periods, and restrictions on the types of services covered.

• Two of the most severe restrictions are:

▫ It only covers nursing home care if it is "skilled" care rather than "custodial," ▫ and it covers only 100 days of nursing home care per spell of illness. ▫ A spell of illness begins with the first day of inpatient care in a hospital or nursing home and ends when the beneficiary has been hospital and nursing home free for 60 consecutive days.

9

Medicare Supplemental Insurance (Medigap)

• Fill-in some of the gaps in Medicare coverage.
• For example most Medigap policies cover the 20% of

physician's charges not covered under Medicare. However, most policies do not cover the part of the physician charges above the Medicare approved level.

• Medigap policies which cover nursing home care (Plan C
• r better) only cover 80 days of coinsurance and care

which is "skilled" under the Medicare definition.

• There are some guaranteed renewable policies which

predate the federal regulation of Medigap which cover up to 365 days of nursing home care (for example, AARP policies M or N)

10

Medicaid

• Medicaid is available to persons who are eligible for

public assistance or SSI (Supplementary Security Income).

• Medicaid is also available in some states for persons with

higher incomes.

• Spendown or Surplus Income Program:

▫ In states like New York the Medicaid Surplus Income Program is available for persons over sixty-five or who are blind or disabled whose incomes are too high to qualify for public assistance or SSI, but who spend down any excess income on medical costs until they reach the Medicaid income level.

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Medicaid: Medical Necessity

Michael J. Keenan, Esq. Michael@Keenan-Law.com

Glastonbury, CT www.keenan-law.com (860) 657-2683

www.keenan-law.com

Medicaid: Medical Necessity



Criteria Used to determine level of care for Medicaid reimbursement for NH care or participation in long-term supportive services via a Medicaid waiver varies widely from state to state. – Such criteria can include:



Medical conditions, or



A combination of medical conditions and functional impairments, or



Functional impairments alone, or



A particular “score” through an assessment instrument.

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– Medical

 Some states allow for admission to a nursing

facility when nursing care is needed on a daily basis.

 Some states allow for admission when the

resident requires intermittent skilled nursing care, daily skilled nursing assessment and 24/7 supervision by an RN or LPN.

Medicaid: Medical Necessity

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Medicaid: Medical Necessity

– Medical/Functional



Some states require that residents need skilled care on a daily basis, which may include nursing or rehabilitation therapies, or



Full assistance with at least 3 ADL’s which may include transferring, ambulating, toileting, or eating; or



One of several specified combinations of nursing and functional needs.

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Medicaid: Medical Necessity

– Functional

 States may use ADL’s to establish its minimum

criteria for admission. In such states, individuals need assistance with 2 or more ADL’s, or they may need 24/7 care for medical monitoring and nursing care, restorative nursing or rehabilitative care or medication administration.

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Medicaid: Medical Necessity

– Scores

 Eligibility in states may be based upon determination of

need scoring.

 May be derived from a “mini-mental state examination”

(MMSE), identified minimum number of needs for assistance with ADL’s, ability to recognize and respond to danger when left alone.

 This process is designed to target services for individuals

with higher level of impairments who may have informal supports, and to individuals with lower level of impairments without informal supports.

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Medicaid: Medical Necessity

 Federal regulations require that states limit eligibility for such

services to individuals who meet the state’s criteria for institutionalization.

 Although states may apply stricter criteria limiting eligibility for

admission to an institutional placement, the consequence is that such states would also be limiting participation for those why may be functionally or clinically eligible to participate in waiver programs.

 States must provide satisfactory assurances to the Centers for

Medicare and Medicaid Services that necessary safeguards have been taken to protect the health and welfare of Medicaid recipients.

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Medicaid: Medical Necessity

– Adequate standards for all types of providers of services under the waiver; – That standards of any state licensure, or certification requirements are met for service providers or individuals furnishing services under the waiver; – That all facilities in which home and community based services are provided are in compliance with state standards that meet requirements for board and care facilities; – Include periodic re-evaluations of level of care to determine if the recipient continues to require the level of care provided and absent the availability of waivered services, the individual would require institutionalization in either a hospital, nursing facility,

• r ICF/MR.

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Medicaid: Medical Necessity

– States can and do change LOC in response to budget constraints. – The state of Georgia in particular revised it’s LOC criteria and screening procedures for children’s participation in the TEFRA/Deeming Waiver, resulting in the denial of LOC for hundreds of children who were previously participating, state-wide. – Anticipate that current economic conditions will continue to result in states making LOC criteria more stringent.

20

Medicaid Eligibility Requirements

Yale S. Hauptman

(973) 994-2287 contact@hauptmanlaw.com

21

• II. Medicaid Eligibility Requirements
• B. Financial Eligibility

– Aged, Blind and Disabled (ABD) Classes of Medicaid have varying financial eligibility criteria including, income and asset limits

22

2012 SSI Financial Eligibility

• Supplemental Security Income (SSI)

–SSI Individual Benefit Rate: $698 –SSI Individual Resource Standard: $2000 –SSI Couple Benefit Rate: $1047 –SSI Couple Resource Standard: $3000

23

Nursing Home Income Cap

– 2012 Nursing Home Income “Cap”

• $2094/month (gross) or

– 300% of the federal benefit rate

• Only income of the Medicaid spouse is counted
• “Spend down” Medicaid states permit eligibility if the

resident’s income is less than the incurred nursing home and medical expenses

• “Income Cap” Medicaid states must allow the use of a

“Miller” Trust or “Qualified Income Trust” (QIT) to enable an individual whose income exceeds the income cap to meet income eligibility requirements

24

2012 Spousal Impoverishment (Nursing Home Financial Criteria)

– Minimum Monthly Maintenance Needs Allowance (MMMNA): $1838.75/month

• (All States except Alaska and Hawaii)*

– Maximum Monthly Maintenance Needs Allowance: $2841.00/month

• All states

* Alaska - $2297.50; Hawaii - $2116.25

25

2012 Community Spouse Resource Allowance

– Minimum resource standard: $ 22,728 – Maximum resource standard: $113,640 – Home equity limits (not applicable to spouse)

• Minimum:

$525,000

• Maximum:

$786,000

– Exempt or non-countable assets

• Primary residence and contiguous land
• Retirement funds
• Personal property
• One car
• Life estate interest in real property if serving as primary residence
• Qualifying Promissory Notes
• Qualifying Annuities
• Qualifying Personal Services contracts
• Limited Business Interest
• Term Life Insurance
• Qualifying Pre-need Funeral Contracts

26

• II. Medicaid Eligibilty Requirements
• C. Transfer of Assets
• Medicaid Transfer of Asset rules were originally in the

Omnibus Reconciliation Act of 1993 (OBRA ’93)

• The "Foster Care Independence Act of 1999" included

important provisions affecting SSI recipients.

▫ Transfer of assets now effect eligibility for SSI (as had been the rule prior to 1988). ▫ There is only a 36-month look-back (unlike Medicaid’s current 60 months) ▫ And a penalty period calculated by dividing the amount transferred by the SSI rate (including the state supplement).

27

• II. Medicaid Eligibilty Requirements
• C. Transfer of Assets
• Deficit Reduction Act of 2005 (DRA)

enacted Feb. 8, 2006, created major changes in the Medicaid Transfer of Asset rules:

▫ (1) created a five year look back; ▫ (2) calculate a penalty or waiting period from when a person is receiving institutional care and would be

• therwise eligible;

▫ (3) created limits on home equity; and ▫ (4) required the state be a beneficiary on annuities.

28

Transfer of Assets: Institutional vs. Community Based Care

• States must imposes a penalty period of ineligibility for

nonexempt transfers made by persons applying for "nursing facility services," typically a nursing home.

• States have an option as to whether to impose a penalty

for transfers made by a person who is applying for community-based (noninstitutionalized) Medicaid (e.g., home care, hospital services).

• States vary as to whether they impose a transfer of asset

penalty to care, services, and supplies provided as part of a waivered program under Section 1915(c) of the Social Security Act.

29

Transfer of Assets: Exceptions

• No penalty period is imposed on

transfers made for full and adequate consideration (e.g., sale of an asset for fair market value)

30

Transfers for Value: Personal Service Contracts

• Funds paid to a care provider, including a friend or

relative, may be considered "a transfer for fair market value or other valuable consideration" if the compensation is reasonable and in accord with the fair market value of the services.

• a lump sum payment for an actuarially sound lifetime

contract based on the life expectancy of the person receiving the care, may also be considered "for fair market value or other valuable consideration."

31

Transfer of Assets: Annuities

• Under DRA '05, the purchase of an annuity is treated as

a transfer for less than fair market value, unless the annuity meets the following criteria:

– (1) it names the State as the first remainder beneficiary for at least the total amount of medical assistance paid on behalf of the institutionalized individual or the second remainder beneficiary after a community spouse or minor or disabled child; – (2) it is irrevocable and nonassignable; – (3) is actuarially sound; – (4) it provides for equal payments during the term with no deferral or balloon payment.

• The provisions (2) through (4) above do not apply to

annuitizing certain qualified retirement plans, an IRA or a Roth IRA.

32

Transfer of Assets: Promissory Notes

• The transfer of assets under DRA '05 includes

funds used to purchase a promissory note, loan

• r mortgage unless the note, loan or mortgage:

▫ (1) has a repayment term that is actuarially sound; ▫ (2) has equal repayments during the term of the loan, with no deferral or balloon payments; ▫ (3) prohibits cancellation upon death of the lender.

• However, a promissory note may not be

considered to be for fair market value where there is no reasonable expectation that it will be paid back.

33

Exempt Transfers: Purchase of a life estate

• The purchase of a life estate interest in another

person's home is a transfer of assets under DRA '05 unless the purchaser resides in the home for at least one year after the purchase.

34

Exempt Transfer of Homestead

• A person will be eligible for Medicaid including,

if the house is transferred to that person's:

▫ spouse; ▫ child who is blind, disabled or under age 21; ▫ sibling who has an equity interest in the home and who resided in the home for at least one year before the person was institutionalized; or ▫ child who resided in the home for at least two years before the person was institutionalized and provided care to maintain the person at home ("caretaker child").

35

Exempt Transfers (other than a home )

• Transfers of assets other than a home are

exempt from penalty if the asset transferred was a disregarded or exempt resource:

▫ A burial fund; property which is "contiguous" to the homestead; ▫ Life insurance policies with an aggregate face value of $1,500 or less; ▫ Reparation payments; and ▫ Retroactive SSI and Social Security benefits for nine months after the month received.

36

Exempt Transfers (other than homestead)

• Transfers of assets are exempt from penalty if

the transfer is to:

▫ the spouse, or to another for the sole benefit of the spouse (including, but not limited to, transfer to a trust for the sole benefit of the spouse); ▫ a third party, by the spouse, for the sole benefit of the spouse; ▫ a blind or disabled child or a trust established for the sole benefit of the child (including, but not necessarily limited to, an OBRA '93 supplemental needs trust); or ▫ a trust established for the sole benefit of a disabled person under the age of 65.

37

Self Settled Exception Trusts

• Trusts that are established for the sole benefit of

a disabled person, and funded with the assets of the disabled person, are exceptions to the general rule that the principal and income of discretionary self-settled trusts are considered available to the Medicaid applicant or recipient.

• There are two forms of exception trusts which

contain the assets of a person with a disability:

– an individual OBRA '93 "payback" trust established for a disabled person under the age of 65; and – an OBRA '93 pooled trust established for a disabled person of any age.

38

Self Settled Exception Trusts

• To qualify as an individual OBRA '93 payback trust:

▫ The trust is established for the benefit of a disabled person under the age of 65 by a parent, grandparent, guardian of the disabled person, or a court. ▫ The trust is funded with the assets of the disabled beneficiary. ▫ The state Medicaid agency must be reimbursed, up to the total value of medical assistance provided to the beneficiary, from the remaining balance in the trust upon the death of the beneficiary.

39

Medicaid: Scope of Services

Michael J. Keenan, Esq.

Glastonbury, CT www.keenan-law.com (860) 657-2683

www.keenan-law.com

Medicaid: Scope of Services

• Mandatory coverage requirements dictated by federal

statute, but states can expand on these minimum requirements.

• Medicaid covers “medically necessary” services.
• Coverage for some services is mandatory while

coverage for others is optional.

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Medicaid: Scope of Services



Home health care services.



Coverage outlined in the “state plan”. Plan must spell

• ut amount, duration and scope of benefits.



SSI States & Section 209(b) States.



Waiver programs.

42

• III. Medicaid Scope of Services
• B. Cutbacks in Home care
• Home Care is an optional service provided by

some states under there Medicaid State Plan.

• Some States provide various amounts of home

care under Medicaid Waivers.

• States are expanding Medicaid Managed Care to

include their home care programs.

• New York is mandating Managed Long Term

Care.

43

Cutbacks in Home care

• Personal care services (home attendant services) means

assistance with the activities of daily living such as dressing and feeding; nutritional and environmental support functions; and health-related tasks.

• Continuous personal care services (for more than 16

hours per day) can include up to continuous 24-hour personal care services provided in shifts for persons who require “total assistance” with toileting, walking, transferring or feeding at times that cannot be predicted.

44

Cutbacks in Home care

• Personal care services shall not be authorized if the

patient's need for assistance can be met by (a) voluntary assistance available from informal caregivers including, family, friends or other responsible adult; or formal services provided by an entity or agency; or (b) adaptive

• r specialized equipment or supplies including bedside

commodes, urinals, walkers and wheelchairs.

• New York has refused to include “safety monitoring” in

its task-based assessment and it has been upheld in federal court. Rodriguez v. DeBuono (City of New York), 197 F.3d 611 (2d Cir. 1999).

45

Home Care: Consumer Directed Personal Assistance Program

• NY has a Consumer Directed Personal

Assistance Program (CDPAP) program provides for the applicant-recipient, or a family member, to manage all aspects of the employment of the home care worker, including hiring, training, and supervising the worker.

• A vendor agency authorized by the local

Department of Social Services oversees the administrative aspects of the program such as timesheets and paychecks.

• To be eligible, the applicant-recipient must be able

to direct the home care workers or have a guardian, relative or other adult who is able to direct the home care workers.

46

• IV. Best Practices for Meeting Medicaid

Eligibility and Application Requirements

• A. Healthy Spouse Strategies

Snapshot of Assets

As of the first day of the first month of continuous institutionalization

47

Healthy Spouse Strategies (cont)

• Convert Countable assets to Non-Countable

– Buy a new home – No equity limit for healthy spouse

48

• Purchase Medicaid qualifying annuity

– Irrevocable – Nontransferable and non-cancellable – Can only take out monthly payments – Actuarially sound

49

Healthy Spouse Strategies (cont)

• Purchase life estate
• Must live there 1 year to avoid

transfer penalty

50

Healthy Spouse Strategies (cont)

• Pay down debt
• Expand CSRA
• Fix up home

51

Healthy Spouse Strategies (cont)

• Change the will to disinherit the

Medicaid spouse

• Be aware of the elective share which

could trigger Medicaid transfer penalty

52

Healthy Spouse Strategies (cont)

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Pro’s & Con’s

• f Medicaid

Michael J. Keenan, Esq.

Glastonbury, CT www.keenan-law.com (860) 657-2683

www.keenan-law.com

Pro’s

• If long term care insurance and/or private payment is

not an option, Medicaid qualification can address staggering long-term care costs.

• Medicaid qualification can preserve some assets and

income for a community spouse and/or dependents.

55

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Con’s



A significant spend-down of assets is often required.



Medicaid beneficiary status can often make entry into a high-quality nursing home.



Risk that gifts during the 5-year look-back, done without asset protection in mind, can ultimately be a significant eligibility problem.

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Con’s

 Onerous application process; volumes of

documentation, lengthy process.

 Shared room at nursing facility is likely.  Ongoing re-determination process.  Risk of estate recovery.

57

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Alternatives

• Private pay
• Long term care insurance

58

• IV. Best Practices
• C. Estate Recovery
• There are strict limitations on the right of the

State to recover against the estates of decedents who were Medicaid recipients and the estates of their spouses.

• There is no right of recovery against an estate for

Medicaid benefits correctly paid, except

▫ from the estate of a person who was permanently institutionalized and who owned real property that was subject to a valid Medicaid lien, or ▫ the estate of a person who received Medicaid benefits when he was over the age of 55.

59

Estate Recovery

• Any adjustment or recovery shall be

made

▫ "only after the death of the surviving spouse" and ▫ "only at a time" when there is no surviving child who is under 21, blind, or disabled.

60

Estate Recovery: Limited or Expanded

• Federal law gives states the option to define the

term "estate" broadly or narrowly.

• Notably, some states limit the definition of

estate to "all real and personal property and

• ther assets included within the individual's

estate and passing under a valid will or intestacy."

61

Estate Recovery: Limited or Expanded

• Enhanced Medicaid estate recovery:

▫ an individual's "estate" includes all of the individual's real and personal property and other assets passing under the terms of a valid will or by intestacy and also includes any other property in which the individual has any legal title or interest at the time of death, including jointly held property, retained life estates, and interests in trusts, to the extent of such interests.

62

Estate Recovery: Estate of a Spouse

• If a Medicaid recipient is survived by a spouse,

no recovery against the recipient's estate may be made until after the death of the surviving spouse

• In cases involving efforts to recover from the

estate of a surviving spouse, some courts have denied recovery unless the surviving spouse could be considered a "responsible relative," who had the means to support the Medicaid recipient during the time benefits were received.

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