Elder Law and Medicaid Planning:

Everything you need to knowA 2-Day Practical Course

Types, Costs, and Funding

Aubrey Harry Ducker, Jr.Law Offices of Aubrey Harry Ducker, Jr. PLC2020 Mizell AvenueWinter Park, FL 32792www.aubreylaw.com407-645-3297aubreylaw@gmail.com

Long-Term Care Planning:

Client Age Health

Marital Status Heirs

Long-term Care Desires Facilities – Home v. ALF/ICP

Age, Family Dynamics and Projected Medical Needs

Client Age and Health 55

65

75

85

95

Health:◦ Self sufficient, earning

income, fully insured, building assets

◦ Retired, using assets

◦ Medicare Plan ◦ Supplemental Insurance

◦ Resource loss

Health concerns:

•Immediate Concerns•Long term prognosis•Cost of Care•Level of need

Different needs, Different Resources

How to tell?

Marital Status: WHY?

Nothing complicates planning so much as:

Multiple Decision Makers

Married

Widowed

Divorced

Remarried

Divorced again

What are your concerns for her husband?

What are your concerns for his children?

Who cares about the former spouse?

Seriously?

Complications Arise.

Heirs:

Who decides what you recommend?

Who decides how or whether to follow your advice?

Natural Heirs Spouse Children Second Spouse? Stepchildren? Adopted Heirs

Decision Makers◦ Spouse◦ Children◦ Healthcare Surrogate◦ Power of Attorney◦ Trustee◦ Guardian◦ Investment advisor◦ Doctor

What do you see? What are you looking for?Old Woman? Young Woman?

What are you looking for when you meet a client?

Levels of Care

Care Need and Assets are the driving factors

Home care:

◦ Visiting Assistant

◦ Short term nurse

◦ Live in caregiver

◦ Private Duty Nurse

◦ Hospice

ICP – Institutional Care Program

Nursing home

Assisted Living Facility

Hospice

Long Term Care

The Client’s desires, may

or may not be doable.

Wants◦ Stay home ◦ Die in sleep◦ Pass on assets to heirs◦ Nursing care only if

incompetent

Needs◦ In-home care plan◦ Assets to support◦ Family support◦ Continued good health

Median national cost of services, 2012

Homemaker: $18/hourHome health aide: $19/hourAdult day health care: $61/day

Assisted living: $3,300 per month

Nursing home: $200-$220/daySource: Genworth Financial 2012 Cost of Care Survey.

Challenges of Aging in Place

*Changing needs—A house that was ideal 30 years ago may now be too difficult to handle alone. Older houses often need a lot of costlymaintenance, improvements, or repairs.

*Safety—A house with cluttered furniture or steep stairs is an accidentwaiting to happen. Unsafe neighborhoods may make you afraid to goshopping or attend social activities.

*Isolation—A trip to the grocery store, pharmacy, or place of worshipcan be a problem when you cannot drive. It is easy to feel lonely ortrapped when family and friends are far away.

*Ease of use—If you need a walker or a wheelchair, it helps to have abedroom on the first level, grab bars in the bathroom, and ramps forthe entrance of the house.

Challenges of Aging in Place

Medicare Advantage Plans and Long Term Care Insurance

Other Insurance may apply

Other insurance may apply

Medicare Part A: Coverage of inpatient hospital care

Medicare Part B: Medical Insurance – Outpatient Care

Medicare Part D: Prescription drug plans

Long Term Care Insurance:

Medicare: 100 Days when transferred from hospital for Rehabilitation

Insurance:

Medicare & You Handbook

Medicare: http://medicare.gov/

Compare Nursing homes

Medigap: Medicare

Supplement State Health

Insurance Assistance Program (SHIP)

Medicaid: LTC/ICP Programs

Agency for Health Care Administration: AHCA http://ahca.myflorida.com

Florida Department of Children and Families www.myflfamilies.com

Medicare.govThe official U.S. Government Site for Medicare

• Sign up/change plans

• Your Medicare Costs

• What Medicare Covers

• Drug Coverage (Part D)

• Supplements & Other Insurance

• Claims & Appeals

• Manage Your Health

• Forms, Help, & Resources

• Is my test, item, or service covered? ______________

Medicaid Nursing Facility Provider Information

The Department of Children and Families (DCF) district offices staff determines eligibility for Institutional Care Program (ICP) services.

To begin the ICP application process, a nursing facility refers the resident to the DCF by completing a Client Referral Notice [199 KB PDF], CF-ES Form 2506A.

Providers must use the Client Discharge and Change Notice [187 KB PDF], CF-ES Form 2506, to advise public assistance specialists of the placement status of institutional Medicaid applicants and recipients.

Copies of these forms are also available from the Department of Children and Families, Office of Economic Self Sufficiency.

Questions Every Elder Advisor Wants Answered:

Eligibility Standards for SSI-related Programs – July 2014

ICP/HCBS/Hospice/HCDA Individual $ 2,163 $ 2,000 ICP/HCBS/Hospice/HCDA Couple $ 4,326 $ 3,000 Spousal Impoverishment

Minimum Monthly Maintenance Needs Allowance (MMMNA)** $1,966

Excess Shelter Standard** $590

Maximum Community Spouse Income Allowance (MMMNA plus excess shelter allowance cannot exceed this figure) $2,931

Community Spouse Asset Allocation Standard $117,240

Home Equity Interest Limit $543,000

A Guide to the Institutional Care Program

Medical assistance for low income individuals in or entering a Nursing Home

http://www.dcf.state.fl.us/programs/access/docs/icp_brochure.pdf

•What is Institutional Care Program (ICP)? When Level of Care requires intermediate & skilled care, Medicaid pays for

those qualified for an unlimited time period

•Who may apply? Individual, Guardian or Designated Representative

•Main Eligibility requirements: • 65 or Disabled, • In Need of Facility Services, • In participating home, • Qualifying Assets/Income

•Asset limit: $2,000 • Types of Assets that count:

• Real Estate – not homestead• Any Liquid assets:

• Bank accounts, CDs, Money Market funds, • Stock and Bonds accounts• Trusts• Life Insurance – Face Value more than $2,500 - Cash

Value• Types of Assets that do NOT count:

• Homestead • First Car• Pre-paid Burial Contracts:

• Revocable up to $2,500• Irrevocable contract – Unlimited

• Certain other special exceptions

A Guide to the Institutional Care Program

•Income Limit:3xSSI limit – currently $2,163 (Excess QIT)

•How Much does the Patient Pay? All patient’s monthly income, except for $35 (with certain set-asides)

•How Much does Medicaid Pay? The Balance of the Allowable Rate

•Changes in income, assets or facility, Must be

Reported ASAP

•Reviews Annually – by patient, guardian, Designated Rep

A Guide to the Institutional Care Program

Qualified Income Trust: • Income over the ICP income limit - $2,163 • Eligible if they set up a “qualified income trust”

and • Deposit all excess funds every month• Income is less than the income limit

QIT must: *Be irrevocable; *Be comprised of income only; and, *Designate the state will receive any funds

remaining upon the death of the recipient, up to the amount of Medicaid payments paid on behalf of

the individual.

A Guide to the Institutional Care Program

•Transfers of Income and Assets: Income or assets transferred for less than fair market value May create a period of ineligibility Varying depending on the value of that transferred

Allowable Transfers: Any resource to a spouse or disabled adult child. The homestead, without penalty, to His/her spouse, or, minor or disabled child

His/her sibling w/equity interest and resided there at least one year prior to institutionalization.

His/her ADULT son or daughter who resided at least two years immediately before institutionalization and who provided care that

delayed the institutionalization.

A Guide to the Institutional Care Program

How to Apply:

Individuals can apply for benefits:

From any computer with internet access by visiting our web site: http://www.myflorida.com/accessflorida or,

At one of the Department’s ACCESS Florida community partners. A listing of community partners can be found online at: http://www.dcf.state.fl.us/access/CPSLookup/search.aspx or,

At a DCF ACCESS Florida Customer Service Center. A list of Customer Service Centers can be found online at: http://www.dcf.state.fl.us/ess/ or,

By requesting a paper application by calling 1-866-762-2237 and submitting it in person, by mail or fax.

Florida’s Long-term Care Partnership Program

•Partnership program between Medicaid and private long-term care insurers

•Designed to encourage individuals to purchase private long-term care insurance. 

•Long-term Care Partnership policies are tax qualified (a portion of premiums paid may be claimed as a tax deduction) under federal law;

•Provide policyholders with inflation protection;

•Provide dollar-for-dollar asset protection in the event the policyholder needs to apply for long-term care Medicaid assistance.  

KEY: For every dollar that a partnership policy pays out in benefits, a dollar of assets can be protected from Medicaid spend-down requirements.

Florida Statutes:

Chapter 409.9102 Qualified state LTC Insurance Partnership Program in Florida

Chapter 627.94075 A qualified state LTC Insurance Partnership Program in Florida

Chapter 627.94076 Time limit on certain defenses

Chapter 627.9403 Scope, Insurance Rates and Contracts

Chapter 627.9407 Disclosure, advertising, and performance standards for long-term care insurance

Chapter 641.2018 Limited coverage for home health care authorized

Florida Long-term Care Partnership (LTCP) Program by the Agency for Health Care Administration

Florida Administrative Code:

Chapter 69O-157.201 Standards For Approved Long-term Care Partnership Program Policies

Chapter 69O-157.1155 Producer Training

Chapter 65A-1.712 SSI-Related Medicaid Resource Eligibility Criteria

Reverse Mortgages and Intrafamily loans

Do you need the money?How long will it last?Is Repayment Secure?

Reverse Mortgages

Government Insured Financial Tool allowing Equity conversion to tax-free Cash

Live in the home without making payments, on death, loan must be repaid

You OWN the home as long as you live in and can pay the Taxes and Insurance, and comply with the loan terms

No payments Financial Freedom, control, security and

dignity To Qualify: 62, owner occupied

Reverse Mortgages:

Reverse Mortgages

Reverse Mortgage Tips» You should never pay an application fee.» You should never be asked to pay for information.» A legitimate lender should never downplay the

importance of pre-loan counseling.

» A legitimate lender should encourage questions and provide clear, direct answers.

» No legitimate lender will ever claim affiliation with the government.» No legitimate lender will ever claim to be a non-profit organization.

» We have been serving America since 1967.» You can get confidential advice from professional

advisors.» You will not be pressured to do anything.

Taxes must be paid annually

Insurance must be maintained

Homeowners assessments must be paid

On Death or Move (nursing home placement)

Payment is Expected in a reasonable time

Reverse Mortgages:

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmhome

Go to HUD.GOVHome Equity Conversion Mortgages for Seniors

Rev. Mort. Cont’d.

HUD Requirements

Borrower Requirements You must: Be 62 years of age or older Own the property outright or paid-down

a considerable amount Occupy the property as your principal

residence Not be delinquent on any federal debt Have financial resources to continue to

make timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.

Participate in a consumer information session given by a HUD- approved HECM counselor

Property Requirements The following eligible

property types must meet all FHA property standards and flood requirements:

Single family home or 2-4 unit home with one unit occupied by the borrower

HUD-approved condominium project

Manufactured home that meets FHA requirements

Financial Requirements

Income, assets, monthly living expenses, and credit history will be verified.Timely payment of real estate taxes, hazard and flood insurance premiums will be verifiedFor adjustable interest rate mortgages, you can select one of the following payment plans:

Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.

Term - equal monthly payments for a fixed period of months selected.

Line of Credit - unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.

More HUD Requirements:

Modified Tenure - combination of line of credit and scheduled monthly payments for as long as you remain in the home.

Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan.

Mortgage Amount Based OnThe amount you may borrower will depend on:

Age of the youngest borrower or non-borrowing spouse Current interest rateLesser of appraised value or the HECM FHA mortgage limit of

$625,500 or the sales price; andInitial Mortgage Insurance Premium

More HUD Requirements:

Intra Family Loans –

My sister/brother borrowed my mommy/daddy’s last red cent

Wall Street Journal Report: Benefits to Borrowers: Minimum interest rates Internal Revenue Service

requires on intrafamily loans close to all-time lows. Known as the Applicable Federal Rate, or AFR,

currently just 0.2% for loans of three years or less, 1.27% for loans of more than three but less than nine years, and 2.8% for loans of a longer duration.

Benefits to Lenders: Example: married couple in their early 60s—plan to

lend $150,000 to their son and daughter-in-law to purchase a "starter home." In return, the parents will receive a 4% interest rate.

By Anne Tergesen, Dec. 18, 2011

ABA lists 13 significant specific uses

Inadvertent loans – planned and unplanned

Estate Planning Tools -

Intra Family Loans:

1. Loans to children with significant net worth; 2. Loans to children without significant net worth; 3. Non-recourse loans to children or to trusts 4. Loans to grantor trusts; 5. Sales to children or grantor trust for a note; 6. Loans between related trusts (e.g., from a bypass trust to

a marital trust, from a marital trust to a GST exempt trust, such as transactions to freeze the growth of the marital trust and transfer appreciation to the tax-advantaged trust);

7. Loans to an estate; 8. Loans to trusts involving life insurance (including split

dollar and financed premium plans);5 9. Home mortgages for family members;

ABA List:

10. Loans for consumption rather than for acquiring investment assets (these may be inefficient from an income tax perspective because the interest payments will be personal interest that does not qualify for an interest deduction);

11. Loans as vehicles for gifts over time by forgiveness of payments in some years, including forgiveness of payments in 2012 as a method of utilizing $5.0 million gift exemption available in 2012;

12. Loan from young family member to client for note at a higher interest rate (to afford higher investment returns to those family members than they might otherwise receive) (In a different context, the Tax Court has acknowledged the reasonableness of paying an interest rate higher than the AFR6); and

13. Client borrowing from a trust to which client had made a gift in case the client later needs liquidity (and the resulting interest may be deductible at the client’s death if the note is still outstanding at that time7).

More on ABA List:

Treated as a bona fide loan

Market rate of interest (Applicable Federal Rates ‘AFR’-published monthly by IRS)

Proper payments of interest and principal

Documentation

Mortgage must be properly recorded against the property

Valid Loan:

Children create Problems, Aubrey 2014

Married with Children

Married with children from previous marriage

Married with children from multiple previous

My child, your child, his child, her child

Planning for Blended Families:

Marital Status: WHY?

Nothing complicates planning so much as:

Multiple Decision Makers

Married

Widowed

Divorced

Remarried

Divorced again

What are your concerns for her husband?

What are your concerns for his children?

Who cares about the former spouse?

Seriously?

Complications Arise.

Get help when needed

Protect yourself: use multiple attorneys

http://medicare.gov/

www.Medicaid.gov

http://ahca.myflorida.com/

http://www.dcf.state.fl.us/programs/access/docs/icp_brochure.pdf

www.health.gov.bce.ca/pharmacare

www.minimental.com

www.Depressionguide.com

www.Alzheimers.org

www.Aarp.com

http://ahca.myflorida.com/Medicaid/ltc_partnership_program/pdfs/Florida_LTCP_FAQs_7-26-11.pdf

http://www.dcf.state.fl.us/programs/access/docs/esspolicymanual/a_09.pdf

◦ http://www.dcf.state.fl.us/programs/access/docs/esspolicymanual/1630.pdf

Helpful Links and Websites:

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmabou

http://www.ncoa.org/news-ncoa-publications/publications/ncoa_reverse_mortgage_booklet_073109.pdf

http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_13006.pdf

http://www.americanbar.org/content/dam/aba/publishing/rpte_ereport/2014/1_february/te_akers.authcheckdam.pdf

https://www.nationalfamilymortgage.com www.irs.gov

More Helpful Links: