Warning!! Watch out for Medicaid Traps when setting up an Irrevocable Prepaid Funeral Contract

When “spending down” excess resources in connection with an application for Medicaid benefits under the MLTSS program, the individual frequently purchases an irrevocable, prepaid funeral contract, because such a contract is treated as an “excluded resource” under the rules of the program. These contracts are set up by the funeral home, and the individual looks through a menu of items and selects their choices for the pre-arrangements. Once the contract is paid for, the individual cannot revoke it and cannot get back the money. Typically, a funeral arrangement will include a casket, preparation and transportation of the body, hearse, limousine, pallbearers, use of funeral home’s chapel space for visitation or service, and whatever is needed for a memorial service such as clergy, music, flowers, guest sign-in book, prayer cards, and sometimes a religious icon that is placed on the casket.

Medicaid applications are filed after the individual’s non-excluded resources (assets) are below the limits set by the MLTSS program. The application is processed by the County Board of Social Services. This summer, our clients have received notices from certain County Boards that various prepaid items in the irrevocable contract are still being counted as resources because they are “for the living” and not “for the funeral for the deceased.” Needless to say, this has come as a shock and in some cases results in the County Board rejecting the application due to “excess resources”  in spite of the fact that the applicant has no access to the money paid for those items.

Believe it or not, we have seen cases in which the County is trying to disallow an exclusion for the payment made for pallbearers ($50 each), clergy ($500), cost of the room for the viewing ($800), and the memorial package that includes guestbook ($30), prayer cards ($45). The Counties are relying on the instruction written in the New Jersey  State Med-Com No. 18-08, since the State’s regulation [N.J.A.C. 10:71-4.4.(b) 9 ] is not explicit as to what would be disallowed. Med-Com 18-08 Funeral Trusts

If the available resources of the applicant (and spouse, if any) are very close to the resource limit, counting the few bucks that are no longer accessible because they are part of the irrevocable funeral contract can be disastrous — the county would deny the application due to “excess resources,” leaving the applicant (and spouse) potentially liable for nursing home bills that run over $10,000 per month until the resources are below the limits and a new application can be filed. In my opinion, though, what should happen, at most, is the imposition of a transfer-of-assets penalty (see N.J.A.C. 10:71-4.10) because money has been placed into an irrevocable trust that cannot pay out benefits during the lifetime of the applicant (see N.J.A.C. 10:71-4.11).That penalty period would run from the time of the application, assuming all other criteria have been met.

I say this because the State’s definition of a “resource” is that it is an asset that “could be converted to cash” and is “available” to the individual. See N.J.A.C. 10:71-4.1(b) and (c). Clearly, the assets held in the irrevocable funeral trust are not “available” at all during the lifetime of the individual. Therefore, they cannot and should not be counted as “resources.”

Review these issues carefully when setting up the prepaid funeral trust. Certain expenses might have to be paid separately by a third party such as a family  member, and not included as part of what the irrevocable contract covers, or should be expressly delineated as having been paid for separately by someone else.

 

Call us for legal advice and representation on  Medicaid spend-downs, applications and appeals ……….. 732-382-6070

 

Block Grants Could Throw Elder Care into Chaos

Since the election, there have been serious plans put out there to radically alter the Medicaid program .  Right now, while it can be hard to get Medicaid without guidance and assistance,  if you meet the eligibility criteria you are entitled to receive certain statutory benefits under federal law.  The benefits provided to every person on Medicaid are paid for through a combination of  state dollars and federal dollars, and each state has a formula for this.

Block grants change this.  Instead of the federal government contributing a certain amount per person, each State would receive a yearly amount (block of funds), and the State would decide how to allocate the funds.  Right now, this is how the Temporary Assistance for Needy Families (TANF) program works. While block grants may provide enough money to help people in good economic times (when enrollment is lower), when times aren’t so great the money won’t go as far, and eligible people might not get the services they would have gotten before.  This could mean waiting lists for nursing home Medicaid residents (creating financial hardship for the nursing home providers), and waiting lists for receipt of home health care services by aged or physically disabled people residing in the community, as well as waiting lists for residential services for people with intellectual disabilities, and less health care for low-income adults and children. Here is the  KAISER FAMILY FUND Block grant analysis

What can we do about this?  I can think of a couple of things.  First, speak out–let your Congressperson know that you don’t like the idea of block grants and you don’t want services for seniors cut.  Second, really think about whether a loved one has put off seeking present or future public benefits that he or she could benefit from. Seniors need to plan for their care and it’s important to seek enrollment before the rules substantively change for the foreseeable future.  If you’re not sure, we’re here to help.

We can prepare and file your Medicaid application. Call us for legal advice about your eligibility … 732-382-6070

Creating a safe home care plan for a loved one with dementia

For many senior citizens, being able to “age in place” and stay in their  home is a really high priority. The obligation to use Medicaid dollars to support aged and disabled individuals in the least restrictive environment has been a cornerstone of federal policy since the Olmstead decision was issued by the Supreme Court in 1999.  In addition to that there is the obligation to utilize “person-centered planning” and to individually tailor the services being provided. The  New Jersey Medicaid Long Term Services and Supports (MLTSS) program which provides Home and Community based Services (HCBS) is required to develop procedures that will adequately address the needs of the individual so that he or she can be adequately supported in the community environment.

The Centers for Medicaid and Medicare Services issued an interesting “FAQ” on the subject of how to address the individual needs of a Medicaid recipient who has a tendency to “elope,” “wander” or “exit-seek.” While that FAQ is geared to program administrators and policy makers, it seems to me that it provides useful guidance to any of you who are engaged in senior care planning for someone who has this problem. For example: ” Assessing the patterns, frequency, and triggers for unsafe wandering or exit-seeking through direct observation and by talking with the person exhibiting such behaviors, and, when appropriate, their families. •Using this baseline information to develop a person-centered plan to address unsafe wandering or exit-seeking, implementing the plan, and measuring its impact. •Using periodic assessments to update information about an individual’s unsafe wandering or exit-seeking, and adjust the person-centered plan as necessary.”

What I have learned over the years from the thousands of families I have advised is that, in an organic way, they are instinctively engaged in Person-centered service planning for their loved one. They try hard to sustain the activities that the loved one enjoyed and avoid the things that the person loathed. Out of a sense of respect and honor, they try hard to incorporate what has always mattered to their parent.  Yet Elder care planning often needs to deal with new situations and behaviors that present themselves as a result of  underlying dementia. Sometimes it isn’t clear whether the behavior is willful and intentional or is just an erratic problem triggered by unpredictable things as a result of Alzheimers or other dementia. In either case, the caregiver needs to find strategies to keep the person as safe as possible.

Call us for advice on elder care planning legal issues … 732-382-6070