Question: “We have heard that Medicaid won’t pay a dime if the “community spouse” – the spouse not in the nursing home – has more than a certain amount of countable assets. (A number that changes periodically.) However, we are now hearing about something called “spousal refusal,” whereby the community spouse can retain all of his or her assets by simply refusing to pay the nursing home bills of the institutionalized spouse. Can you tell us about this? My parents live in Connecticut.”
Answer: Often, a Medicaid applicant needing nursing home care will have a spouse who is able to continue living at home in the community (“Community Spouse”). There are strict income and asset guidelines regarding Medicaid eligibility when there is a community spouse. These guidelines prevent couples with significant assets from making one spouse eligible for Medicaid. However, federal Medicaid law has been interpreted to create an opportunity for the Community Spouse to keep all of his or her assets simply by refusing to pay the nursing home bills of the institutionalized spouse.
The federal provision is known as “just say no” or the spousal refusal doctrine. Under this doctrine, if a spouse refuses to contribute his or her income or resources to pay the nursing home bill of the spouse applying for Medicaid, the ill spouse may still be able to qualify for Medicaid. The ill spouse must properly “assign” the right of support to the state. Once there has been a valid assignment of support rights, the Medicaid agency is required to determine the eligibility of the nursing home spouse based solely on the applicant’s own assets. The assets of the Community Spouse must be disregarded when making this eligibility determination. When such a situation occurs, the Medicaid agency can begin a legal proceeding to force the Community Spouse to pay the state back for the care of the institutionalized spouse. This process does not always happen because of the burden such a proceeding puts on the agency.
The spousal refusal doctrine has only been adopted by two states, New York and Florida. In 2005 a U.S. Court of Appeals in Connecticut upheld the right of spousal refusal in a case called Morenz v. Wilson-Coker. This decision allowed citizens of Connecticut to also take advantage of this doctrine.
The Connecticut legislature responded to the Morenz decision by revising the Connecticut General Statutes to prevent the use of the spousal refusal doctrine. Before Morenz, the statute stated that an assignment of support rights to the state was valid “provided the spouse of such person is unwilling or unable to provide the information necessary to determine eligibility for Medicaid.” Conn. Gen. Stat. § 17b-285 (2005). The revised statute allows assignment of support rights only if:
(1) the assets of the institutionalized person or person in need of institutionalized care do not exceed the Medicaid program asset limit; and
(2) the institutionalized person or person in need of institutionalized care cannot locate the community spouse; or the community spouse is unable to provide information regarding his or her own assets.
The statutory change made in response to Morenz, if valid, significantly limits the ability of Connecticut residents to take advantage of the spousal refusal doctrine. This became a pivotal issue in the case of Fortmann v. Starkowski, a spousal refusal case brought following the statutory revision. The husband assigned his rights of support to the state and was then determined to qualify for Medicaid. As a result, none of the assets he had previously transferred to his wife were used to pay the nursing home bill.
Assigning the right of support to the state essentially puts the burden of obtaining payment for nursing homes care onto the state. At issue in the Fortmann case was whether the limitations on assignment of support rights in the Connecticut law conflicted with the federal provision, in which case the state law would be invalidated.
The court’s final decision in Fortmann determined that Connecticut’s revised statute was valid. Consequently, Connecticut residents can no longer use the spousal refusal doctrine if the community spouse’s location is known and he or she can provide information about his or her assets. The court interpreted the federal law as giving states the power to define for themselves what constitutes a valid assignment of support by a Medicaid applicant. Therefore, Connecticut could freely determine that a valid assignment could only occur when a spouse’s location was unknown or the spouse could not provide required information about his or her assets.
To locate thousands of professionals across America who help families with a wide range of Elder Care Matters, go to: www.ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.
Question: Our family is now dealing with elder care issues for both sets of parents, and we desperately need help with a host of elder care matters, including Elder Law, Geriatric Care Management, Home Care, Medication Management, and Financial Management. When will ElderCareMatters.com include ALL Elder Care Professionals in our State so that we can simply search this one Elder Care website to find ALL the help we need with our family’s Elder Care Matters? This would truly simplify our LIVES.
Answer: ElderCareMatters.com was founded more than a decade ago with one objective in mind: To provide families across America with a Single Internet Source to help them plan for and deal with their Elder Care Matters. We now offer families easy access to thousands of Elder Care Professionals across America, and we are continually striving to include ALL competent Elder Care Professionals on ElderCareMatters.com. To this end, we are now enlisting the assistance of our ElderCare Matters Partner Members to serve as State Coordinators, with the goal of helping us “Get the Word Out” to ALL Elder Care Professionals in ALL 50 States plus the District of Columbia. Not every Elder Care Professional who applies will be accepted for inclusion on ElderCareMatters.com, but we agree with you that ALL competent Elder Care Professionals should be included on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.
Thank you for your support of ElderCareMatters.com.
Phillip G. Sanders, MBA, MSHA, CPA
Founder & CEO of ElderCare Matters, LLC
Answer: A will deals with assets, whereas a living will deals with medical care. Many States have done away with the so-called living will and replaced it with the advance health-care directive (“AHCD”). An AHCD can accomplish a variety of objectives, from saying who will make health care decisions for you if you cannot communicate with your doctors, to saying under what circumstances conventional health care will be withheld from you so that nature will be allowed to take its course.
Scott A. Makuakane, Esq., CFP
Est8Planning Counsel LLLC
State Coordinator of the national ElderCare Matters Alliance, Hawaii chapter
Question: Can we use Mom’s Medicaid funds from one state if we were to relocate her to a nursing home in a different state so that she would be closer to her children? Specifically, are Medicaid funds portable between states?
Answer: Unfortunately, your Mother cannot use the benefits she may be entitled to receive from State A to pay for her care in State B. Medicaid is a program that is jointly funded by the federal government and the individual states. Since the individual states pay a large portion of the Medicaid costs, one of the requirements to qualify for Medicaid is that you must be a resident of that State. State A has no interest in paying for the care of individuals in other States.
If you were asking whether your Mother could get qualified in her current State, and then transfer the eligibility to the State where her children live, the answer to that is also no. Medicaid is a state-run program which means that eligibility requirements vary from one state to the next. While the federal government sets minimum and maximum standards for the Medicaid program, there is a fairly wide range in between where each individual State can set its standards. That means your Mother may qualify in one State but not in another.
If you plan on moving your Mother to another State, I would recommend that you do that prior to applying for Medicaid. Your first step would be to contact and retain an experienced Elder Law Attorney in the State in which you intend to move your Mother. Initially the Attorney can advise you whether your Mother meets the eligibility requirements in that State. Assuming your Mother does qualify, then the Elder Law Attorney can help your Mother establish residency in the new State and apply for Medicaid coverage.
I would recommend that you take a look at ElderCareMatters.com to find a list of Elder Law Attorneys near you who can help you with your elder care matters. ElderCareMatters.com is a FREE, online national Directory of Elder Care / Senior Care Resources for Families.
I hope this helps.
James C. Siebert, Attorney at Law
The Law Office of James C. Siebert & Associates
Arlington Heights, Illinois
Member of the national ElderCare Matters Alliance, Illinois chapter
Question: Mom takes a lot of prescription medicines and often gets confused and takes too many. Is there someone we can contact who can help our elderly mother get a prescription medicine system established?
Answer: A Geriatric Care Manager (GCM) who is a nurse could help you with your mother’s situation. Medication management can be confusing, especially if a client has multiple medications at various times throughout the day. There are several options for managing medication. A GCM could assess the situation with the medication and determine which of the many options available would be most appropriate for your mother’s situation. I would also recommend you consult with each of the prescribing physicians to determine if there are medications which can be discontinued or changed to an extended release option to decrease the number of times per day the medication is taken. Finally, I would remove from the home any discontinued prescription medications and any expired over the counter medications.
An excellent source for locating a Geriatric Care Manager near you is to search ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.
Heather Frenette, RN, MSN, CMC
Desert Care Management
A member of the national ElderCare Matters Alliance, Arizona chapter
Question: “The VA has denied our Application for Aid & Attendance benefits for long-term care. May we appeal this decision?”
Answer: Yes, you can appeal the denial of benefits. There should be instructions along with the Notice of Denial. Check with the Department of Veterans Administration and they will have a list of Accredited Attorneys that are qualified to bring your appeal. Only an Accredited Attorney may represent you in an appeal. The Accredited Attorney will know how to determine the cause of the denial and what evidence may be missing from your original application and to file the appeal. The appeals process requires the attorney to file a copy of the contract of representation with the VA before he can represent you. The attorney cannot charge you to file the Notice of Appeal, but he can charge you once he is recognized by the VA as your representative. Time is of the essence so read the Denial Letter and the other enclosures to stay within the time requirements for filing the Notice of Appeal.
Ivan Michael Tucker, Esq.
Law Office of I. Michael Tucker, PLC
Member of the national ElderCare Matters Alliance, Florida chapter
Question: My wife and I are in our 70s and recently moved from Illinois to Florida to live out our remaining years in retirement. It’s been more than 10 years since we last had our Wills updated. Is it necessary for us to have our Wills re-done now that we have moved to Florida? Also, what is a “Self-Proving Affidavit”, and should we make sure that our new Wills contain one of these?
Answer: It would be best to have your wills redone now that you are Florida residents. First off, the witnesses on your Illinois wills may not be around to verify your signatures should your wills be presented to a Florida court for probate. Many years ago, I had to track down out-of-state witnesses to verify that the wills were properly signed and witnessed. This could lead to a commissioner being appointed (usually someone from the probate court in Illinois) to take the sworn affidavit from one of the Illinois witnesses that the will is actually the will that you signed. This adds additional time to the probate of your will and additional cost that would be better off to eliminate. Second, there may be additional changes that you may wish or need to make to cover any change in circumstances (additional children, grandchildren, special needs, etc.) that didn’t exist at the time of drafting and signing your Illinois. Third, the personal representative and alternates that you named in your Illinois will may not be able to serve in the state of Florida. Florida permits any Florida resident to serve as your personal representative as well as certain non-residents because they are designated family members.
Virtually all Florida wills have a Self-Proving Affidavit attached to them. The Self-proving Affidavit is an additional page in which the will maker identifies the will as his own and the witnesses again identify the will as the document they saw you sign in their presence. The signatures of the will maker and each of the witnesses is again notarized. The self-proving affidavit makes it unnecessary for the witnesses to appear in court to verify the signature of the will maker and the court will accept the will on its face.
Ivan Michael Tucker, Esq.
Law Office of I. Michael Tucker, PLC
Altamonte Springs, Florida
An ElderCare Matters Partner
Question: “I desperately need some advice. My wife is 79 years old and has progressively gotten so debilitative that I (82 years old) can no longer care for her at home. We have lived in our paid off home for more than 30 years and we receive every month about $2,800 in total benefits, including our Social Security checks. Other than the value of our home (which is about $125,000), we have a modest about of savings and no other assets to speak of. How can I afford to place my wife in a nursing facility, which I understand may cost $5,000 – $6,000 per month? What are my options? Please help!”
Answer: It would appear that your circumstances are not as desperate as you may believe. Your wife should probably qualify for Medicaid assistance to pay her nursing home bills, and you should be protected by the spousal impoverishment rules. Medicaid is a joint federal-state welfare program. One portion of the program pays for nursing home care, if eligibility requirements set forth in statute and regulations are met by the applicant. The program is governed by both federal and state law and regulations. Individual state eligibility rules may vary. Though the exact dollar amounts can vary from state to state, in general your assets and income are such that your wife should qualify for Medicaid to pay for her nursing home care.
Typically Medicaid will provide nursing home coverage in Medicare/Medicaid certified nursing homes if its strict financial eligibility requirements are met. A detailed and lengthy application process is used to determine those who qualify for the coverage. To qualify, not only does the individual have to meet the financial qualifications at the time of the application, but cannot have improperly transferred assets or income away for less than fair market value during the look back period. When an application is filed, the applicant caseworker will inquire about any gifts or transfers for less than fair market value made by the applicant, the applicant’s spouse or anyone acting on behalf of either of them within the preceding 60 months. These five years before application is known as the “lookback” period, gifts made before that period will not affect eligibility. Gifts made during the “lookback” period will result in a period of ineligibility, and that disqualifying period will not start to run until the applicant has already spent down all of his or her assets and applied for Medicaid.
While Medicaid is a “spend down” program, you don’t have to be destitute, or leave your spouse destitute, to qualify for Medicaid. Certain assets and transfers are exempt from a Medicaid spend down, and by effective planning, you can qualify for Medicaid and still keep, transfer, or gift certain assets.
This is especially true with a community spouse such as you. There are special exemptions and rules in regard to resources which apply only to community spouses. In general, “resource” means cash or any other personal or real property that a person owns and has the right, authority or power to liquidate. Certain resources are considered exempt and do not affect one’s eligibility. The idea behind the special rules for community spouses is the desire to allow the nursing home resident to receive the appropriate care while avoiding spousal impoverishment.
The Community Spouse Resource Allowance” (CSRA) is the amount of non-exempt resources the “institutionalized spouse” is permitted to transfer to the “community spouse” without affecting the resident spouse’s eligibility. The current CSRA in Illinois is $109,560.00. In addition to this amount the community spouse is also entitled to keep several other assets as exempt including the homestead property and an automobile. In Illinois the net value of the homestead property cannot exceed $500,000.00, so in Illinois all of your assets as well as your home as you have described them would be protected. In addition to the CSRA, the community spouse is entitled to a contribution of monthly income from the resident spouse to bring the community spouse’s monthly income up to what is known as the “Minimum Monthly Maintenance Needs Allowance”. The current MMMNA in Illinois is $2,739.00 per month. Though your monthly income is slightly above this figure, your wife will be entitled to a monthly allowance of $30.00 while in the facility, and accordingly in Illinois you would not have to contribute any of your wife’s or your income to the monthly nursing home bill.
I strongly recommend that you consult with an Elder Law Attorney to make sure you meet all the eligibility requirements of your state. Generally the Elder Law Attorney as well as ElderCareMatters.com can direct you to the appropriate resources you will need to find an appropriate place for your wife as well as protect your interests.
James C. Siebert, Attorney at Law
The Law Office of James C. Siebert & Associates
An ElderCare Matters Partner
Question: “My husband died earlier this year and had a large amount of money in his Individual Retirement Account (IRA). I understand from our Financial Advisor that I need to make some decisions about this IRA. Would you please share with me some of the decisions that need to be made when it applies to my inheriting his IRA, including the time frame for making these decisions and what the tax consequences of making certain decisions may be?”
Answer: First, you did not indicate your husband’s age when he passed but we will infer he had been taking Required Minimum Distributions (“RMDs”) from his IRA account annually. For a given IRA account holder, once RMDs are required, withdrawals must be taken each and every subsequent year. A given year’s RMD is based on the account balance as of December 31 of the previous year. Families sometimes forget that means a RMD is required for the year in which the death occurs, with the withdrawal made in the year following the year of death. A RMD will need to be taken out of his IRA by December 31, 2013.
Second, it is crucial that you obtain a copy of the beneficiary designation on file with the financial institution where the IRA account is held. An IRA account holder can modify their beneficiary designation as often as they like while they are alive. But once the account holder dies, the last submitted designation will govern what can happen with the account. The ideal scenario from an estate planning perspective is for a beneficiary designation to include not only a primary beneficiary, but also one or more secondary beneficiaries. Depending on the financial circumstances of you and other family members, and what sort of estate planning you and your husband may have engaged in, it might make for the primary beneficiary to “disclaim” the account, thereby letting the account pass to one of the secondary beneficiaries. That is done via a formal legal document called a “disclaimer.” A disclaimer can be thought of as a sort of legal no thank you, simply requesting that the financial institution treat the signing beneficiary as if they too are deceased, thereby permitting the account to pass to the next successive beneficiary. While a well-drafted beneficiary designation may appear to the layman to be unnecessarily cumbersome, the intention to provide the IRA account holder’s family maximum flexibility.
Please bear in mind the following:
1) If a disclaimer is to be filed, it must be submitted to the account holding financial institution within nine (9) months of the date of death. So, you will want to obtain copy of the designation as soon as possible in order to allow plenty of time for you to consult with your elder law attorney, your accountant, and/or other pertinent family members.
2) A key legal element to a disclaimer is that the disclaimant cannot take possession or otherwise control or benefit from the asset to be disclaimed. In other words, if the financial institution sends you a check from the IRA account, do not cash the check before you consult with your advisors.
Third, as the surviving spouse of an IRA account holder, you get to choose one of two distinctly different ways in which the account will pass to you. You can elect for the account to be treated as an “inherited” IRA, which largely means you will continue to take annual RMDs based on your life expectancy starting the year of death. In contrast, you could instead elect to “roll over” the IRA. When that is done, the tax rules essentially treat the account as if it was yours from the beginning.
Why would you want to do that? This allows you to defer taking any distributions until you reach 70 1/2. Of course in some circumstances, you may want to simply liquidate the account. Since the tax bill will be the largest when all the money is withdrawn from the IRA at once in a given year, it is unsurprising the IRS will readily allow you to do that! In order to avoid taxed when rolling over his IRA into your own, the amount withdrawn from the initial account must be deposited into your own account within sixty (60) days of the withdrawal. To avoid the possibility of immediate taxation we generally recommend an IRA to IRA transfer.
Fourth, the ability to “stretch out” IRA distributions over a longer period of time is frequently advocated by tax planners, especially in scenarios when the surviving spouse and/or other heirs have sufficient assets outside the IRA. However, whether or not IRA distributions can be stretched out over a long period of time, will depend in part whether the account has a “Designated Beneficiary.” That is a term of art used in the tax code and a complete discussion of the topic is beyond the scope of a brief response to your question, but suffice it to say if some part of the IRA can potentially pass to a charity, a limited liability company, or a probate estate, the entire IRA will therefore not have a Designated Beneficiary.
The presence of any one of these “problem” beneficiaries will mean the entire account must be withdrawn within five (5) years of the date of death of the original account holder. Imposition of the 5 year rule will likely result in an increased income tax liability on the withdrawals. However, if problematic beneficiaries can be removed by September 30 following the year of death, then the 5 year rule may be avoided. The easiest way to do that is to completely withdraw and distribute the portion of the IRA that would go to a problem beneficiary, leaving the remainder to remain in the account for the beneficiaries who do not pose a problem. Then, the IRA can then be considered to have a “Designated Beneficiary” and a stretch out of withdrawals is still possible.
When the IRA beneficiary is to be a trust, much care and attention must be paid to drafting and administering the trust and the IRA. If done properly, a trust as an IRA beneficiary may be split into separate trust shares for individual beneficiaries, in a manner where each respective individual trust beneficiary’s life expectancy will apply to RMDs. If that is the case, separate IRA accounts for each respective trust beneficiary must be established by December 31 of the year following the year of death.
In summary, planning for the appropriate distribution of IRAs so that you get the best income tax results and financial results for beneficiaries is a complex undertaking that in many cases is not properly addressed.
Henry C. Weatherby, Esq., CLU, ChFC, CEBS
Weatherby & Associates, PC
An ElderCare Matters Partner
Question: My husband and I (64 & 62 years old respectively) are currently in the process of planning for our elder care needs and it was suggested that we set up a Trust. Why would this be necessary – i.e., what are the advantages of setting up this type of legal document? We are financially secure and own our home, but we want to make sure that we plan appropriately for our future elder care needs so that our children don’t have to worry about paying for our elder care needs.
Answer: Your question is a difficult one to answer as the topics covered are very complex. In regard to the issue of a Trust, it is first important to know that there are many types of Trusts. Trusts are wonderful documents which provide many different benefits depending upon the type of Trust. It is important that you have an experienced Elder Law or Estate Planning Attorney review your current situation and your goals to properly advise you regarding Trust choices. A Trust should not be something off the shelf, but drafted to address your particular circumstances and goals. Among the types of Trusts which might apply to your circumstances are revocable trusts, various irrevocable trusts including income only trusts, and possible some sort of special needs trust.
The first question in the analysis would be to determine your primary goal. A revocable trust can avoid probate, be used to reduce or eliminate estate taxes, and to allow your children to assist you during your lifetime when you become incapacitated. As we age, and the likelihood of incapacity increases, a properly drafted Trust can make sure that you and your husband’s needs are provided, whether by your family or third party professionals. A trust such as this allows you and your husband to remain fully in control while you are capable, yet provides for a smooth transition when incapacity occurs.
If your primary concern is asset preservation and payment of elder care needs, it is possible that in addition to the revocable trust you might want to consider an additional irrevocable trust. An irrevocable income only trust can be used to put assets outside the reach of creditors while allowing you to maintain your tax benefits, the use of the property as well as any income generated from the Trust principal. If being done for asset preservation or potential qualification for Medicaid, it is essential that a detailed analysis of your finances be done to make sure that funds exist to provide for your care outside of the irrevocable trust should you become incapacitated earlier than expected.
An Elder Law Attorney will review these options and others with you to develop an overall plan best suited for your circumstances. The plan will undoubtedly include certain items such as durable powers of attorney, and may include others such as suggesting partnership long term care insurance. A trust or trusts offer you many options to achieve your stated goals provided that you work closely with your Elder Law attorney and have the documents drafted to meet you and your husband’s current and future needs and goals.
An excellent resource to find help with your family’s elder care matters is ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families
If you need answers to your elder care questions, send your questions to us at:
Answers are provided by our ElderCare Matters Partners, some of America's TOP Elder Care Professionals who have years of experience in helping families plan for and deal with a wide range of Elder Care / Senior Care Services.
All Q&A's are posted on the homepage of ElderCareMatters.com
If you help familes plan for or deal with elder care matters, then you owe it to yourself and to families across America to become a professional member of the National ElderCare Matters Alliance and to be listed on the many Elder Care / Senior Care Directories that are sponsored by this National Alliance of Elder Care Professionals.
For additional information about professional membership in the National ElderCare Matters Alliance, (including the many benefits of becoming one of our ElderCare Matters Partners) and to download an Application for your Basic, Premium or Partner Membership in the National ElderCare Matters Alliance, visit: ElderCare Matters Alliance.