i. long term care medicaid in florida after the deficit reduction act of 2005

I. Long Term Care I. Long Term Care Medicaid in FloridaMedicaid in FloridaAfter the Deficit Reduction Act of After the Deficit Reduction Act of

20052005

II.II. DRA 2005DRA 2005

• Legislative History• Major changes to eligibility for LTC• NAELA analysis of federal law is excellent• Florida implemented DRA effective

11/1/07 • Areas addressed by DRA

– Look Back extended to 5 years for transfers before February 8, 2006 (federal) or 11/1/07 (state)


– Purchase of an annuity is a transfer unless annuity meets certain criteria (irrevocable, non-assignable, payout of P & I over life expectancy) and State is named as primary beneficiary

• If spouse, minor or disabled child then State must be in second position

– Promissory notes, mortgages are transfers unless pay out in equal installments and prohibit cancellation at death

– Purchase of life estate in a home is transfer unless buyer lives in home for at least one year after purchase


– Equity in home exceeding $500,000 defeats long term care eligibility (States may raise to $750,000); individual may receive other types of Medicaid

– Income first is mandatory before allowing an increase in the CSRA

– Continuing Care Retirement Communities (CCRC) – deposit can be asset and CCRC can require spend down as condition for entrance


• CMS issued guidelines on July 27, 2006

• Litigation is still pending in several venues

III. The Medicaid ProgramIII. The Medicaid ProgramBackgroundBackground

• Federal/State program• Basic concept is “Coverage Group”• Generally means tested: limited income/assets• Poverty alone is NOT sufficient• Initial coverage groups: SSI & AFDC • Mandatory vs. Optional Groups

III. The Medicaid ProgramIII. The Medicaid ProgramBackgroundBackground

– Eligibility Formula• (Coverage group) + (Financial Test) = Eligibility

• For example

• Pregnant Women + income less than 185% of PLIS = benefits

• Institutionalized individual + financial criteria = long term care benefits

IV. The Medicaid ProgramIV. The Medicaid ProgramMandatory Coverage GroupsMandatory Coverage Groups

• Mandatory Coverage Groups– State must provide Medicaid to SSI

Recipients w/ one major exception.• SSI is a means tested cash assistance program for

the aged, blind and disabled with limited income and assets.

– Income less than maximum Federal Benefit Rate– Assets limited to $2000 plus exempt assets– Exempt assets include home, car, burial.


– Exception to mandatory Medicaid coverage for SSI recipients

• So called 209(b) states may use income, resource and disability standards no more restrictive than those in place on January 1, 1972 this altering the mandatory Medicaid – SSI equation

• 209(b) States: Connecticut, Illinois, Hawaii, Indiana, Minnesota, Missouri, New Hampshire, North Dakota, Ohio, Oklahoma & Virginia


• Medicare Savings Groups– Qualified Medicare Beneficiaries (QMB)

• Income at 100% FBR/ Assets $5,000/$6,000.• Pays Medicare premiums, deductibles coinsurance• Does not pay long term care, drugs, acute care

– Specified Low Income Medicare Beneficiaries (SLMB)• Eligibility criteria same as QMB but income between

100%FBR and 120 % FBR• Pays only Medicare Part B premium

– Qualified Disabled and Working Individuals (QDWI)• Disabled individuals who lose Medicare because return to

work, but continue to be disabled• Income 200% of FBR/Assets below 200% of SSI rate


– Qualifying Individuals (QI-1)• Income between 120% and 135% of FBR• Pays monthly Medicare part B until allotment

depleted.

V. Medicaid ProgramV. Medicaid ProgramOptional Coverage GroupsOptional Coverage Groups

– Disabled elderly with incomes below 100% FBR

– Nursing home residents – Medically Needy– Working disabled

VI. Medicaid ProgramVI. Medicaid ProgramWaiversWaivers

• What is a Waiver? Permits deviation from Federal mandates– Three types of waivers

• Home and Community Based Services (HCBS)• Freedom of choice Waiver• Pilot Project Waiver

– See generally www.cms.gov/medicaid/waivers

VI. Medicaid ProgramVI. Medicaid ProgramWaiversWaivers

– Florida Waivers• Channeling• Project Aids• Aged/Disabled Adult• Developmental Services (DS or DD Waiver)• Assisted Living• Long Term Care Community Diversion (Diversion)• Cystic Fibrosis • Program for all Inclusive Care for Elderly (PACE)

VII. Medicaid ProgramVII. Medicaid ProgramAdministrative ProcessAdministrative Process

• Applications– Online and paper– Designated Representative– Interview – Time limits– Documents required


– Notice of Case Action• Triggers appeal rights• Should state basis for action taken

– Hearings• Chapter 120 hearings before agency Hearing

Officer• De Novo proceeding


– Appeals• To applicable District Court of Appeal

– Change of Circumstance• Report within 10 days• Responsibility of Designated Representative

VIII. Eligibility for Long Term CareVIII. Eligibility for Long Term Care

• Categorical/Technical Criteria– Aged (65 or older), blind OR disabled– US citizen, legal alien etc.– Florida resident

• Medical Criteria– Institutional residence for 30 continuous days– CARES evaluation of LOC

VIII. Eligibility for Long Term Care VIII. Eligibility for Long Term Care

• Financial Criteria– Income

• Applicant– Income Cap– QIT– Retroactive eligibility– Termination of QIT

• Community Spouse

VIII.VIII. Eligibility for Long Term CareEligibility for Long Term Care

– Post Eligibility Treatment of Income• Personal Needs Allowance• Spousal Diversion

– MMNA– Excess Shelter Costs

VIII.VIII. Eligibility for Long Term CareEligibility for Long Term Care

– Assets• Applicant can own countable assets totaling

$2,000.00• Community Spouse can own countable assets

totaling $104,400 (2008)• Countable assets do NOT include exempt,

unavailable or certain income producing assets


– Exempt Assets• Homestead up to $500,000 in equity – DRA

– Be sure to distinguish from constitutional protection

• Vehicles• Personal Property• Life Insurance • Burial Plan• Burial Fund• Life estates - DRA


• Lookback, Transfers & Penalty Periods– Lookback

• Pre DRA• Post DRA

– Transfer• Generally FMV of asset transferred• Presumption • Rebuttal• Hardship


– Penalty Period• Not a fine• Divisor• Example• Pre/Post DRA

– Exempt Transfers• Transfers for value• For purposes other than Medicaid• Hardship• Life Estate


– Exempt Transfers• To a spouse or to a third party for sole benefit of

spouse• To blind or disabled child or to a trust for the

benefit of such child• To trust for benefit of disabled individual under age

65• NOTE: Transfers of exempt assets are not

automatically exempt transfers!


• Trusts assets generally considered available and income is counted as income in determining patient responsibility

• Transfers to irrevocable trusts may trigger transfer penalty

• Revocable living trusts DO NOT protect assets for eligibility purposes


– Exempt Trusts• Self Settled “d4A” trusts• Pooled trusts• QITs• Payback trusts

IX.IX. Planning Planning

• General Concepts– Goal is to protect the elder, NOT the money– It is OK to use money for elder’s care – that is

the point.– It is OK to pay the state back– It is NOT OK to let Medicaid tail wag the dog

IX. PlanningIX. Planning

• Spousal Impoverishment– MCCA– MMNA– Increasing CSRA– Income First Rule - DRA– Court ordered support– Right of refusal

IX.IX. PlanningPlanning

• Spend Down – Best use of funds concept– Don’t spend for the sake of spending– Does not involve uncompensated transfers– Examples

• Purchase or improve exempt assets• Prepay burial• Purchase Burial CD


• Transfer Issues – Post DRA– Typically between spouses or for benefit of disabled

children– Beware adverse consequences such as loss of

control, security and tax implications– Ethics– Transactional Capacity– Self dealing– Underlying document authorizing transfer

• POA, Trust, etc.


• Disclosure– It is imperative to be totally candid and truthful

in disclosing all income, assets and transfers during the application process

– Failure to disclose is fraud and may subject the applicant or advisor to criminal and/or civil penalties

– Benefits may be lost at much later date and benefit recovery instituted


• Tax Issues– Capital Gain

• Donor vs donee

– Loss of step-up in basis at death– Sale of home– Gift tax– Valuation

IX. PlanningIX. Planning

• Personal Care Contracts– Payment for services, not gift.– Must be arms length transaction– Cannot be for past services – Should be considered well before need for

services in drafting legal documents– Consider using escrow agent for lump sum

payments– Tax implications


– Process for implementing PSC• Assessment• Log• Appropriateness of services• Cost in community• Life expectancy• Discount• Calculate• Authority• Written agreement

X.X. Medicaid Estate RecoveryMedicaid Estate Recovery

• OBRA ’93 required estate recovery• Definition of “estate” up to states but must

include at least probate estate• Expanded estate may include joint property,

survivor property, life tenancies, etc.• Exempt categories of property

– Home if decedent survived by spouse, minor, blind or disabled child or if sibling lived there for year

X.X. Medicaid Estate RecoveryMedicaid Estate Recovery

• Florida – Must notify ACHA upon death of individual 55

or older– State has claim as class three creditor in

estate for benefits paid during life of decedent– Claim can only be filed after death and is

currently limited to probate estate or if those assets insufficient, revocable trust assets

– See generally 409.9101; 733.212(d); 733.707(1)c & 733.707(3) Fla. Stat. (2005)

XI.XI. Special Needs TrustsSpecial Needs Trusts

• Concept simple and based on well thought out public policy.

• General rule is that trusts are available and income is counted

• Special Needs Trusts are exception to general rule– Revocable Trusts

• Invisible to creditors and for public benefits


– Irrevocable Trusts subject to two inquiries:• Could any portion of the trust (income or assets) be used for the

individual’s benefit?• Is any portion of the trust available to someone else?

– Pre DRA look back was 60 months• This was major exception to three year rule generally applicable to

transfers for less than fair market value• DRA does not distinguish between transfers to trusts or otherwise• Beware of trusts bearing annuities post DRA?

XI. XI. Special Needs TrustsSpecial Needs Trusts

• Types of Special Needs Trusts– Third Party Trusts

• Funded with assets that do not belong to disabled individual

• May be inter vivos or testamentary• Not subject to payback requirement

– First Party or Self Settled Trusts• Funded with disabled individual’s own assets


• Self Settled Trusts – “D4A” or “Disability Trusts” (42 USC

1396p(d)4(A)• Established by for benefit of disabled individual

under age 65• May only be established by parent, grandparent,

court or guardian• Must be funded with assets of disabled individual• Must provide for payback to state for Medicaid

benefits paid during life


– “Pooled Trusts” (42 USC 1396p(d4(C)• Established by non-profit• Maintain separate accounts for each beneficiary• Established for benefit of disabled individual• May be created by individual, parent, grandparent

guardian or the Court• Individual’s funds used to create account• At death of beneficiary, any funds not retained

must be used to pay the state back for Medicaid benefits paid over life


• Execution, Funding and Administration are critical to success of SNT

• Examples of Supplemental Needs– ALF– Medical, dental, mental health – Care and Case management services– Travel– Companionship– Professional (Attorney, guardian, accountant)

XI.XI. Special Needs TrustSpecial Needs Trust

• Benefits of SNT– Preserve critical public benefits for medical

care– Significantly increase quality of beneficiary’s

life– May avoid guardianship– Trust assets are restricted but invested and

less likely to be misused by beneficiary, family or friends


• Some issues to watch out for with SNTs– Beware of deeming rules when suit is settled for minor or spouse– Selection of Trustee is important

• Administration requires specialized knowledge

– Be wary of over structured settlement of lawsuit• May end up with insufficient funds to care for beneficiary

– Liens must be satisfied before trust is funded• May take time to obtain these documents

– Payback provision means assets frozen at beneficiary’s death• Stinking body rule

– Be sure to notify applicable agencies of funding, death of beneficiary etc.


• Consider using Trust Protector, Trust Advisor and/or Trust Advisory Committee– Trust Protector may be able to hire and fire

trustee, serve as mediator, distribution manager, obtain service providers, or any or all of these

– Family often best suited for Trust Advisor– Trust Advisory Committee may be helpful for

continuity if parent dies, but may be cumbersome and expensive

XII.XII. ConclusionConclusion

• Constantly changing statutory, regulatory and public policy environment

• Stay in touch with organizations on cutting edge of interpretation and advocacy for the aging and disabled populations– NAELA– AFELA– Elder Law Section of Florida Bar