You can receive Medicaid coverage while still keeping an ownership interest in your home. However, at your death the state will have the right to recover from your probate estate—essentially your home—whatever it pays out for your care. Your home could escape this claim if it were transferred to one or more of your children. A problem with doing this is that under the general transfer penalty rule, you would be ineligible for Medicaid benefits for up to 60 months following the conveyance.
The Caretaker Child Exception to the transfer penalty can be a valuable tool to preserve the home of parents.
However, an exception to the transfer penalty allows a Medicaid applicant to transfer his or her home to a qualified caregiver child. The law defines a caregiver-transferee as a child of the Medicaid applicant “who was residing in the applicant’s…home for a period of at least two years immediately before the date of the applicant’s…admission to the institution, and who (as determined by the DHS) provided care to the applicant…that permitted him or her to reside at home rather than in an institution. “ In order to qualify under this exception, an applicant should be prepared to submit a certification by his or her attending physician which basically states that, but for the caregiver, the applicant would have had to move to a nursing home.
If you can get the necessary certification, and if you would feel comfortable with the property in your caretaker’s name solely, it is recommend that you transfer your interest in your home to your caretaker child. No transfer penalty would be triggered and, in addition, the unit would not be subject to any reimbursement claim by the state. Once the transfer is made, your caretaker child would be free to sell the house or simply rent it out. If you choose to transfer the house to your caretaker child, you should discuss the form of conveyance—trust, life estate, or outright ownership—and the tax consequences to each approach.
If you decide to make the transfer, you will have the option of doing so after you qualify for Medicaid, or before you submit the application. To make the transfer before you have qualified for Medicaid may prolong the application process. For that reason, it may be easier to make the transfer after you have been determined eligible for Medicaid. However, we have submitted applications where the home was transferred before and after and all were approved.
Want to discuss how to take advantage of the Caretaker Child Exception with your family? Call us to schedule a no obligation consultation.
Many older adults and people with disabilities who want to stay in their own homes cannot do so without help. The programs that can help you or someone you care for live comfortably and safely at home are called Home and Community Based Services.
Some programs can help you fill prescriptions or get meals or rides. Other programs will help you out at home with activities like personal grooming or getting in and out of bed. The programs you use will be based on your needs.
Medicaid LTSS provides medical care and covers most of the services and supports people need to stay in their homes or a community-setting. People who have the highest or high level of need may get Medicaid LTSS in the home or community setting.
Need to apply for LTSS Medicaid home waiver for a loved one? Contact us.
Levies on the post-mortem transfer of property originated in Egypt around 700 BC, according to a IRS history They were later imposed, around the time of Christ, by the Roman emperor Caesar Augustus, and then by feudal lords in Europe. America’s first death tax—that’s what it was officially called—was imposed as part of the Stamp Act of 1797 to cover the cost of US military skirmishes with France. The federal government charged 25 cents on postmortem bequests of $50 to $100, 50 cents on $100 to $500, and $1 on each additional $500.
Congress enacted a second round of death taxes in the Revenue Act of 1862 to raise funds for the Union to fight the Civil War. Lawmakers did so again in 1898 to bankroll the Spanish-American War. These taxes were not burdensome. In the latter case, if a wealthy man left behind $10 million—a staggering fortune—to a sibling, child, or grandchild, his estate owed the government just over 2 percent, about $219,000. All three taxes were repealed after the hostilities ceased.
By the late 1800s, however, America was transitioning rapidly from an agrarian economy to an industrial one. The old federal patchwork of tariffs and property taxes was leaving the fortunes of Gilded Age industrialists like Andrew Carnegie and John D. Rockefeller largely untouched. Reformers began calling upon the government to tax these “robber barons,” while the businessmen, as today, countered that such a move would stifle growth and quash innovation. The Revenue Act of 1916, in anticipation of the coming war effort, levied a tax of up to 10 percent on inheritances of $50,000 or more (about $1.1 million today); the levy was increased to 25 percent the following year, although it was later repealed. But Rockefeller never paid a penny. He just signed his fortune over to his son before he died, because Congress hadn’t yet passed a gift tax.
Modern Day
It wasn’t until 1976, after another six decades of tweaks, that Congress finally put in place a comprehensive, integrated gift-and-estate tax similar to what we have today. But the endless squabbling over the estate tax, which was expected to bring in just $16 billion last year, continues to this day.
Do you or a loved one need to discuss the impact estate taxes may have on your Estate? Call us for a no-obligation consultation.
Section 401(a)(9) requires most retirement plans and individual retirement accounts to make required minimum distributions (“RMDs”) over the lifetime of the individual (or the lifetime of the individual and certain designated beneficiaries) beginning no later than such individual’s required beginning date (generally, April 1 in the year following attainment of age 72). This minimum amount is determined by dividing the individual’s account balance by the applicable distribution period found in one of the life expectancy and distribution tables (the “Tables”).
On November 12, 2020 the Department of Treasury is scheduled to publish final regulations updating the Tables, which is in response to an Executive Order issued in August of 2018 directing the Secretary of the Treasury to review the Tables to determine if they should be updated to reflect current mortality data.
RMD’s Tables are being updated
Longer Life Expectancies Reflected
The updated Tables will generally reflect longer life expectancies than presently reflected in the current Tables last published based on 2003 mortality rates. For example, the current Tables use a life expectancy of 25.6 years for a 72-year-old for purposes of calculating the RMD while the updated Tables will use a life expectancy of 27.4 years. This will result in reduced RMDs, enabling individuals to retain larger balances in retirement accounts to account for the possibility of living longer.
The updated Tables will be effective for distributions beginning on or after January 1, 2022 and will include a transition to ‘re-set’ the life expectancy for certain individuals already receiving RMDs based on the prior Tables. For example, an individual who attains age 72 in 2021 will be required to take an RMD no later than April 1, 2022. The updated Tables will not apply to calculate the individual’s 2021 RMD (paid on or before April 1, 2022), but the updated Tables will apply to the 2022 RMD (paid on or before December 31, 2022). The regulations do not include periodic automatic updates to the Tables. Instead, the Treasury and IRS will review the Tables at the earlier of 10 years or whenever a new study of mortality experience is published. The final regulation and new Tables can be found here.
Impact on Medicaid and Estate Planning
RMD’s are a factor that every estate planner must consider into calculations of income and assets for Medicaid eligibility. Understanding the new tables and income that will be forced out to a individual or spouse is important to know as there are minimum and maximum income limits. A personal consult with an estate planning attorney can best illustrate the impact this will have on your plan.
Will my COVID-19 Stimulus Check impact Medicaid Eligibility?
The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act (passed on March 27, 2020) is a $2 trillion economic relief package intended to help offset the huge financial crisis caused by the Coronavirus (COVID-19) pandemic. As part of the CARES Act, the majority of Americans, including those who are elderly and on fixed income, will receive a one-time stimulus check from the Internal Revenue Service (IRS).
Stimulus checks will not be counted as income and therefore will not impact Medicaid beneficiaries or applicants. However, should the stimulus money not be spent within 12 months, it may be counted as an asset, and therefore could impact eligibility in the year ahead. Therefore, make sure you spend the funds as soon as possible on eligible purchases in accordance with Medicaid regulations (DO NOT GIFT IT).
Nursing Home Residents
he receipt of a stimulus check by Medicaid beneficiaries who reside in nursing homes will not impact these individuals’ Medicaid benefits. Stated differently, the receipt of the check will not disqualify them from Medicaid nursing home care. This is because Medicaid will not count the money as income, which means it cannot push one over Medicaid’s income limit, and hence, result in the loss of Medicaid benefits.
United States Treasury stimulus payment for Coronavirus CoViD-19 outbreak disease.
While Medicaid-funded nursing home residents are required to surrender all of their income except for a personal needs allowance and a monthly maintenance needs allowance for a non-applicant spouse (if applicable) to Medicaid, the money from the stimulus check will not have to be surrendered to Medicaid. This is because, as mentioned above, the stimulus check is not considered as income by Medicaid. Rather, it can be thought of as a tax refund.
Furthermore, the stimulus check will not count as assets, given the money is spent within 12-months of receiving it. So, within this time frame, a nursing home Medicaid recipient can have possession of the money and it will not impact one’s Medicaid eligibility. However, it is imperative that the money, in its entirety, be spent within one year. If not, the money will count towards Medicaid’s asset limit and can potentially push one over the limit, resulting in Medicaid disqualification.
The money can be spent by nursing home residents in a number of ways. For example, one might buy new clothing, purchase a television for his / her room, stock up on extra snacks, or purchase an irrevocable funeral trust. What one does not want to do is to buy assets that are counted towards Medicaid’s asset limit. For instance, collectors coins would most likely be considered an investment and the value of them would be counted towards the asset limit, potentially causing one to be over the limit and lose Medicaid benefits.
The stimulus check will either be directed deposited in the nursing home resident’s bank account or be mailed to the address on one’s 2018 or 2019 tax return. To further clarify, if a refund was issued via direct deposit for one’s tax return, the stimulus check will be directed deposited in the same bank account. If not, the check will go in the mail. Persons who do not have to file tax returns, such as Social Security recipients, will receive stimulus checks in the same manner in which they receive their Social Security benefits. Therefore, if one receives his / her Social Security payment by direct deposit, the stimulus check will automatically be received via direct deposit also.
Spouses of Nursing Home Residents
Spouses of nursing home residents on Medicaid (called Community Spouses), who are not on Medicaid themselves will receive a stimulus check. The receipt of this check will not impact their spouses’ Medicaid eligibility in any manner. First, and foremost, the money from the stimulus check is not considered income by Medicaid, and even if it were, the income of a non-applicant spouse is not considered in the continuing Medicaid eligibility of his / her nursing home spouse.
For Medicaid beneficiaries, the entire check needs to be spent within 12-months of receiving it or the remaining funds will count as assets towards Medicaid’s eligibility. However, the same rule does not hold true for community spouses. To be clear, there is no time limit in which a spouse of a nursing resident must spend his / her stimulus check. Furthermore, non-applicant spouses can spend the stimulus check in any manner they choose, such as paying rent or mortgage, utility bills, food, or even on a splurge, such as a pricey piece of jewelry.
No matter how long it takes for the community spouse to spend the funds, and regardless of how they are spent, it will not impact the institutionalized spouse’s Medicaid eligibility. In other words, a community spouse can be rest assured that it will not cause the nursing home resident to lose his / her nursing home Medicaid benefits. This is because the assets of the non-applicant spouse are not considered for the continuing Medicaid eligibility of his / her Medicaid beneficiary spouse. (The community spouse’s assets are only considered when determining initial eligibility).
The community spouse will receive the stimulus check either via direct deposit or in the mail. Exactly the manner in which it will be received will be based on one’s 2018 or 2019 tax return and how a refund was issued. For instance, if one received a refund via the mail, the address on file will be used and the stimulus check will be mailed to that address. For those who are not required to file tax returns, such as recipients of Social Security, the check will be received in the same way in which their monthly Social Security benefit is received. This means that if it is deposited directly in one’s bank account, the stimulus check will also be directly deposited.
Please note that the institutionalized spouse will also receive a stimulus check. However, at this time, it is not known if the check will be issued separately from his / her community spouse’s check. It is our assumption that if 2018 or 2019 tax returns were filed jointly, the couple will receive one check (couples who filed joint tax returns are eligible for double the amount of a single filer), while if tax returns were filed separately, each spouse will receive an individual check. Again, for persons on Social Security, there is no need to file tax returns. In this case, checks will automatically be received in the same manner in which Social Security benefits are received.
How Much Will the Stimulus Check Be?
The amount of the stimulus check, also called an economic impact payment or recovery rebate, may be for as much as $1,200 / person.
• Individuals who earn up to $75,000 / year will receive a $1,200 check.
• Married couples, filing jointly who earn up to $150,000 / year, will receive a $2,400 check.
• Individuals who earn up to than $99,000 / year will receive a check, but it will be for less than $1,200.
• Married couples, filing jointly who earn up to $198,000 / year, will receive a check, but it will be for less than $2,400.
Payments will be based on one’s tax returns from 2018 or 2019. Please note that for disabled persons and seniors who receive Social Security payments, it is not necessary for a tax return to be filed. (Persons who receive Social Security benefits generally do not have to file a tax return). Rather, the IRS will automatically send out economic impact payments to these individuals.
Checks will be received either via direct deposit or in the mail.
The Coronavirus (COVID-19) Pandemic has impacted every corner of the world at this point. As medical experts, financial advisors, and our colleagues that specialize in healthcare law, employment law, and other related areas are busy advising clients on the best course of action for the weeks and months ahead, we – as estate planners – also want to remind our clients and friends of some important considerations during these uncertain times.
At this point, we would simply promote the following actions to ensure that your estate planning affairs are in order:
(1) Review your existing documents. Make sure that you have copies (either paper or electronic) of your existing estate planning documents, and review them to confirm that they still reflect your wishes. If you cannot locate your documents, consider calling or emailing your estate planning attorney to obtain copies.
(2) Pinpoint any items that require attention sooner rather than later. As you review, take note of any major changes that may have occurred in your family since you last updated your estate plan. These might include child births, deaths, marriages, divorces, etc. And also consider whether the individuals that you previously appointed to serve as your agents are still appropriate.
(3) Follow up with your loved ones and advisors.
Make sure that your loved ones know to contact your estate planning attorney in the event anything should happen to you. This includes your named executor (i.e. personal representative under your will, or trustee of your trust), guardian for your minor children, attorney-in-fact under your financial durable power of attorney, and patient advocate under your health care power of attorney.
Consider reaching out to your financial advisor, insurance advisor, etc. to ensure that your beneficiary designations are up to date and discuss any new planning opportunities relative to your current financial status.
If you require any medical attention in the near future, confirm that your medical provider has a copy of your patient advocate designation and is informed as to who you wish to have access to your confidential health information.
NOTE – If you do not already have an estate plan, now is as good of a time as any to consider the opportunity before you. Having a will/trust, a durable general power of attorney, and a healthcare power of attorney can certainly contribute to a healthy state of mind.
Rhode Island has updated its rules to become Medicaid eligible.
If you are a Rhode Island resident and you are seeking Medicaid benefits, you should be aware of some recent changes approved by the Rhode Island Department of Human Services as to your eligibility under the program. Final rules are expected to be published and release shortly but here is a recap of the expected changes:
Income cap of $9,581 meaning that if the applicant has more than $9,581 in income, then they can never become eligible for Medicaid, nor can they start the penalty period. If they have income under $9,581 but greater than $6,700 and they want to start a penalty period, they can do so but cannot get community Medicaid benefits, like Rx copays and doctor bills. If their income is under $6,700, then nothing changes. This went into effect in September and is effective for applications for eligibility delivered after 10/1/18. 50-00-2.4
Changes Are Coming
Long term care insurance is not considered countable income for purposes of the above income cap. However, once on Medicaid, it would need to be spent as part of the patient share. 50-00-6.5.2(B)
Burial Funds & Irrevocable Funeral Contracts have new limits which are helpful and could affect clients. The new cap on Irrevocable funeral contracts is $15,000 and anything over that would be considered a countable asset. 40-00-3.5.5 A(1)(f)
Life insurance is now exempt up to $4,000 of cash surrender value, with anything over being countable. 40-00-3.5.5 A(1)(h)
Retirement Funds now have a new definition, but as long as they are income producing and the client gets at least the RMD, then they should still be fine. 40-00-3.5.5 A(2)(g)
Penalty Divisor is $9,581 since mid September.
Like any social program, the figures and rules for eligibility are constantly revisited and updated based on changes in federal law, budgets, and program changes and advances. Staying current on the latest rules is the challenge.
If you or a loved one is facing serous medical issues requiring skilled nursing care, the Medicaid program will help pay for those costs for applicants who have assets and income within program limits. Contact us to discuss your estate plan and if your estate plan should be revised so as to become eligible for these valuable benefits.
State (Non-Medicaid) Enhanced Assisted Living Program
The Supplemental Security Income (SSI) Enhanced Assisted Living Program is a state and federal program for adults over age 65 and adults with disabilities. The program provides financial assistance to eligible individuals who are assessed and found to be in need of services provided in an Assisted Living Facility. The SSI Enhanced benefit allows for an increased SSI payment to help cover the cost of room and board. To qualify, an individual must participate in an assessment and be considered an appropriate candidate for admission.
To qualify for the SSI Enhanced Assisted Living Program, you must meet the following criteria:
– Rhode Island resident
– Be at least 65 years old or an adult with a disability
– Have a gross income of less than $1,212 per month
– Your resources/assets must be less than $2,000
– You CANNOT have whole life insurance worth more than $1,500 face value
– You must not require extensive medical services such as those provided in a nursing facility
– You must apply for or to be a recipient of SSI
For more information or to apply for the program, call THE POINT at (401) 462-4444.
Benefits and Services
This program helps pay for assisted living costs up to a maximum of $1,212 / month. This figure may be updated later in 2018.
In assisted living, the staff provides assistance with the activities of daily living, congregate meals, medication oversight, transportation assistance and social activities.
While this amount is well below the average monthly cost of assisted living in RI, some residences have negotiated to accept this amount and in other cases there are supplemental sources of funding.
Many families planning for the future needs of loved ones see those needs progress in stages over time. People may not need a skilled nursing facility but do need the resources of assisted living. This program can put those facilities in reach for those who may not otherwise be able to afford this assistance.
Are you planning for the future needs of yourself or a loved one? Call us to discuss your plan.
The report issued on the roll-out of the computer system shows continued problems
The Rhode Island Department of Human Services (“DHS”) which administers the Medicaid program has been attempting to roll out a new computer system for several years. The system was designed to speed up application review and automate the application process to an on-line system. Unfortunately per the auditors report, the system is still experiencing issues.
For those attorneys who assist elder clients with Medicaid applications this has been a challenging time. Medicaid will pay for the nursing home care needed by these elderly clients who have less than $4,000 in countable assets. It is stressful to family members who have submitted applications for coverage, who have a loved one being cared for at a nursing home, and not knowing if their application has been approved. They fear the consequence of an unexpected denial and how that may impact a spouse or the recipient.
Applicants can wait months or years prior to receiving an approval of their application.
Rhode Island law requires DHS to pay nursing homes for any care given patients who have applications pending for greater than 90 days. This law has allowed payments to go out, facilities to get paid, and patients to receive the care they need, until the application is approved.
Fortunately, the reports also states that things are improving and applications are being reviewed quicker and more accurately. The employees at DHS have done an admirable job overcoming a challenging roll-out but still have much work to do.
A Cautionary Tale of the Long Term Care Insurance Marketplace
By 2050, the U.S. will have almost 90 million people aged 65 and over, and more than half will need long-term care at some point. Yet only a sliver of that group can afford long term care insurance. As of 2015, private insurance covered less than 10 percent of U.S. spending on long-term care — and the private market has been shrinking.
Medicare covers only a short period of care after a person has been hospitalized. That leaves Medicaid, the state-administered program for long term care. The paperwork involved is a protracted ordeal, especially for those with physical and mental impairments, and the rules to qualify are strict and complex.
The reality is – the private insurance market is on life support so understanding Medicaid is critical. Schedule an appointment to learn the rules.
Nothing illustrates this more than General Electric and its Long Term Care Products. The company’s troubles with long-term-care insurance show the challenge of caring for an aging population.
Long-Term Care Insurance Policies have hurt many insurance companies balance sheets.
General Electric’s multi-billion-dollar loss in a unit that sold long-term-care insurance is a blow from which the iconic company is still reeling. But it’s also a harbinger of a much greater challenge for society at large: paying to care for the growing number of Americans who can’t look after themselves.
GE’s travails stem from the early 1990s, when insurance companies began developing a new line of business, offering policies that, in return for regular premium payments, would cover the cost of a nursing home or other long-term care if the need arose. With the baby-boom generation approaching retirement, sales took off. By 2007, some 7 million policies were in force, generating almost $10 billion a year in premiums.
The insurers miscalculated. Claimants lived longer than expected — perhaps because people prudent enough to buy the insurance were more careful about staying healthy. But longer lives meant more people needing long-term care. Medical costs rose, and investment returns fell short. To cover their obligations, companies had to increase premiums (as far as regulators allowed) and, like GE, take big charges against earnings. Penn Treaty was forced into liquidation, leaving policy holders to rely on meager state guaranty funds.
Tempting as it may be to blame regulators, that wouldn’t be fair. True, they could have allowed more premium increases sooner, and they should always demand that companies have ample equity to absorb losses. They’ll need to investigate GE’s accounting. But new insurance products are inherently risky, and companies are bound to make mistakes. Officials shouldn’t be expected to catch risks that actuaries can’t foresee.
Rather, the debacle illustrates a troubling truth: Private insurance can’t handle this problem by itself.
Understanding the rules as to the Medicaid program is critical for all persons. Failure to anticipate long term care nursing costs can wipe out an entire lifetime of savings. Call us to discuss how to protect your lifetime savings while still qualifying for Medicaid.
onfirm that they still reflect your wishes. If you cannot locate your documents, consider calling or emailing your estate planning attorney to obtain copies.
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