More formality may be better with intergenerational households

As elder law attorneys, our clients have presented us with many difficult situations involving adult children or grandchildren who live in their houses. Sometimes a child has run into some hard times and sees the parent’s home as an economical option; the child may move into his parent’s house along with his spouse and children. Sometimes the child just never became self-sufficient and never made any plan to move out. The adult child may or may not be disabled. Sometimes the expenses are being shared to a degree, but often the parent pays for most of the expenses. The parent may be wrestling with a feeling of obligation, and the child may have a feeling of entitlement. The child may feel that they are “taking care of the parent,” yet the actual need for care or the work being done may be imprecise and doubted by others in the family.

The longer the arrangement lasts, the more difficult it can be for the parent to move on. The dynamic can really change when there are other children who are upset at the arrangement. The parent’s financial security may get on edge. Things can particularly blow up when the parent has to hire a caregiver or wants to sell the house in order to downsize or move to assisted living or nursing home.  How can all of these competing interests be managed? How will the house be sold, and where will the child go?

Aging parents who are still supporting their adult children may want to do some careful planning. They need to consider what will happen to them if they need their funds for care but their child is counting on all of that ongoing financial support. There are many issues to consider. Should they charge actual rent? Should there be a written lease that specifies that occupancy only continues of the occupancy fees are paid? Should they put restrictions on the child’s behavior so that the parent’s peaceful residence isn’t disturbed? A parent may want to put a provision in his or her Will that allocates some extra amount for the dependent child so that at the parent’s death, there are extra funds for relocation. By putting protective provisions into the estate plan, the parent may be able to provide better protections than counting on other family members to honor the parent’s verbal “wishes.” It may not work well to just assume that the whole family will be able to work out an agreement to support the dependent one after mom or dad passes on.

At some point, should the parent insist that the child move out, but agree to pay for the alternate housing for some period of time? What if the house is going to be sold. Does the parent want to give the child written, enforceable rights to remain in the house for a certain amount of time under certain terms & conditions if the parent dies or moves out? How will that impact the parent’s well-being, or the ability of their Executor to wrap up the estate after death? Will the child need a new guardian or life care planner?

Call us for legal advice on developing a family well being plan … 732-382-6070

County Medicaid Agency Backs Off – Small Business Saved

Recently, a senior client who had a very small business that he ran by himself came to see me in a panic.  He was just making ends meet. His spouse had been on Medicaid in a nursing home for several years, but the county board of social services was now questioning the nature of the business and whether it was a countable resource that should have been spent down.  They were going to  terminate the wife’s eligibility.  “How can I appeal this?” was one of his worries.

The client was distraught, but we helped him to keep a level head.  Our first step was to file for a Medicaid Fair Hearing and make sure that benefits were continued while that administrative appeal was going on. Next was getting more information about this business–did it have any other employees other than the spouse?  What equipment or real estate was owned by the business?  How were taxes handled–could we see the returns?  Did the applicant spouse have an ownership interest in the business?

Once we had this information, it looked like these business activities and the equipment associated with them would fall firmly in the category of excluded resources under the New Jersey Medicaid regulations (N.J.A.C. 10:71-4.4):

“Excludable resources (b) The following resources shall be classified as excludable:  5. Nonhome property that is used in a business or nonbusiness self-support activity that is essential to the means of self-support of an individual and/or spouse, is excluded from resources.   i. Tools, equipment or other items that are used for trade or business and required for employment, including, but not limited to, the machinery and livestock of a farmer, are assumed to be of a reasonable value and producing a reasonable rate of return and are, therefore, excluded from resources.”

Further, under the Social Security Administration interpretive publication (called the POMS), there is no value limit to property that is essential to a trade or business.  It would all be excludable as long as it is in current use. The income the business generates to a community spouse is exempt, regardless of how much.  This is true of all income of a community spouse.

Once we fully disclosed the nature of the business and how it was essential to the spouse’s self-support, the county backed off and reinstated benefits. We could then withdraw the fair hearing.  The client was relieved and thrilled.  He could get back to caring for his wife without this cloud hanging over his head!

The Medicaid regulations are a thorny thicket, but sometimes protection is available if you can just find where it is hidden in there.

If you or a spouse needs Medicaid, but you are unsure about how an active business affects this, give us a call…. 732-382-6070

 

Medicaid annuity planning is alive and well in NJ

When a person applies for Medicaid under the NJ MLTSS program after having made gift transfers during the most recent 5 years, there will likely be a penalty period in which Medicaid will not pay for the care that this person needs (unless the transfers were exempt, such as transfers to a spouse or disabled child). This transfer penalty is mandated by federal law, and the greater the amount that was transferred, the longer the transfer penalty will be. If an applicant addresses this issue before the end of his spend-down period, there may be opportunities to protect the applicant by using some of the spend-down funds to purchase an annuity contract that can provide the income needed to pay for care during the penalty period.

The type of annuities that fit the bill are highly restricted and are not designed to maximize the rate of return the way conventional annuities might be. The reason that the technique works is because under federal and state Medicaid law, a distinction is made between “income” and “resources.” Resources must be reduced to a certain level before the person can even apply for benefits. Income, on the other hand, is usually received on a monthly basis and is turned over to the facility as a contribution towards the cost of care (with certain deductions). For the annuity plan to work, the contract cannot be countable as a “resource” as defined by Medicaid law. We had successfully litigated an IRA annuity case with the NJ Division of Medical Assistance and Health Services (DMAHS) in 2009-10 (the P.K. case) PK FAD  A few years later, after several cases were decided in out of state venues,Lopes 2nd Cir ; Carlini we successfully litigated a non-IRA annuity case against DMAHS in 2013 (the M.W. case; M.W. FAD 1-28-140001 M.W. Initial ALJ decision ) leading to confirmation that if properly structured, an annuity effectively transforms countable resources into an irrevocable stream of income. If properly done, this technique can provide protection for the Medicaid applicant as well as his/her community spouse, and can also help to assure that there is a way to pay for care during an anticipated Medicaid penalty period.

Seniors who are planning for their care have many tools in their toolbox; the question is always which tools to use and how to get the results that the senior needs.

Call us to discuss a Medicaid spend-down plan that suits your circumstances … 732-382-6070

Federal Law limits involuntary discharge of nursing home residents

The federal  Nursing Home Residents’ Rights Act protects residents against arbitrary, involuntary discharge by specifying only 6 grounds for discharge..And above all,  even when one of those 6 bases exists, a nursing home also has the duty to make a safe discharge.   A nursing home cannot involuntarily transfer a Medicaid resident unless there is another placement available which is acceptable to the Department of Health and Senior Services. NJAC 8:85-1.10(d), (e). This means that the facility cannot transfer the obligation of care to a family member of the resident who refuses to accept that obligation. The resident cannot be escorted to the door.

Discharge is limited to the following circumstances: 1.  The transfer is necessary to meet the resident’s welfare, and the resident’s welfare cannot be met in the facility. 2. The resident’s health has improved such that long term care in the institution is no longer necessary.  3. The safety of individuals in the facility is endangered.  4. The health of other individuals in the facility is endangered. 5. The resident has failed after reasonable and appropriate notice, to pay for a stay (including applying for Medicaid). 6.The facility closes.

On November 7, 2011, the Ombudsman for the Institutionalized Elderly in Trenton issued a Notice to all nursing home administrators reiterating the limited bases on which residents could lawfully be discharged, and reminding them that the notice must specifically cite one of these reasons. Here it is.Other justifications, such as behavioral problems or failure to follow facility policies, are not sufficient reasons under federal law.

The facility must provide the resident with at least 30 days written notice including the specific date of the intended discharge, unless the facility is closing, in which case, 60 days’ notice is required. Also the facility must specifically identify the exact place to which the resident will be transferred.

A Medicaid recipient or applicant would appeal the planned discharge through the Division of Medical Assistance and Health Services Fair Hearing Unit, P.O. Box 712, Trenton, NJ 08625, (609) 588-2655. A private pay resident would initiate an action for an injunction  in Superior Court, Chancery Division in the vicinage where the nursing home is located.

When it comes to senior care planning it’s vital that the family advocate become familiar with these resident’s rights. Forewarned is always forearmed.

If your loved one has received an involuntary discharge notice, spring into action. Sometimes a team meeting can resolve the problem.

Call us for representation on involuntary discharge emergencies and other nursing home issues … 732-382-6070

Medicaid applicant gets penalty period for cash transactions

Followers of this blog know that if a person applies for Medicaid to pay for nursing home care (or assisted living or home care), they have to provide five years’ of financial records and prove to the agency just what they spent every dollar on during the five year look-back period which immediately precedes the application. If the applicant can’t  prove that the dollars were spent on himself or herself, the agency presumes that the money was given away (“gifted” or “transferred.”) That in turn raises the presumption that the purpose of the gift was to qualify for Medicaid. And that in turn will usually result in a transfer penalty period. Medicaid won’t pay for the care during a penalty period.

This is an overwhelming challenge for most people. Although the general burden of proof in administrative agency cases is “prove by the mere preponderance of the competent evidence,” the burden on the applicant in Medicaid cases is “convincing evidence.” It’s not quite clear just what that means. The standard of proof in criminal cases is “beyond a reasonable doubt,” and the standard in court cases such as guardianship, Will contests and trust disputes is generally “clear and convincing evidence,” which is some place between the criminal standard and the administrative standard. In a new decision by our Appellate Division, the court sustained the agency’s finding that the applicant had failed to provide convincing evidence that the funds were spent and not gifted. N.K. vs. Div. of Med. Assistance & Health Services, July 19, 2016 (Sppellate Div.).

The applicant, N.K., lived in the community with a home health aide. She said that she paid the aide $1,000 a week [not an unusual wage for that work]. She had withdrawn $69,200 in cash from her checking account over the course of the look-back period, and could not prove just how she spent her money. As a result, a 7 month, ten day penalty period was imposed.

Five years is a long time, and for elderly individuals living in the community with a cash lifestyle, it may be impossible to prove just what they spent their dollars on. They go to the store; they go out for dinner or a movie or a show; they pay for a car repair; maybe they take out a hundred dollars and keep it in the car to pay tolls with. The person who is developing Alzheimers dementia may be prone to discarding all stray papers. The Medicaid applications are particularly problematic when aides are paid in cash with no records or receipts, or when a child pays for everything out of his or her own account and then takes regular reimbursements without saving each receipt. The Agency regards every transaction with suspicion.

When entering that phase of life where the need for nursing home care is a distinct possibility — however one hopes to avoid it — you need to handle the financial arrangements carefully, always thinking about how you will prove that you have been spending, and not gifting, your funds.

Call us to prepare and file your Medicaid application, or for asset protection planning, or to represent you on an appeal of a Medicaid penalty …. 732-382-6070