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Medicaid

Aug 20

Utilizing In-Marriage QDRO’s for Estate Planning

By Jessica L. Estes

As an estate planning and elder law attorney, often the most difficult type of asset to deal with is a retirement account.  Not only must you consider the type of account it is, but you must understand the owner’s rights to the funds in the account, as well as the consequences, tax or otherwise, of accessing those funds, which can depend on age and/or other factors.  In Maryland, retirement accounts are countable assets for Medicaid purposes, which adds another layer of complication.  And, even something as simple as naming a beneficiary for the retirement account is not as simple as it may seem, especially if asset protection is your main goal.

There are many reasons why someone may need to access retirement benefits.  Perhaps one’s spouse is in a nursing home and has a substantial retirement account that will have to be “spent-down” before qualifying for Medicaid, but the family wants to preserve those monies for the spouse at home, without suffering a huge tax consequence.  Or, perhaps one spouse is older than the other spouse and wants to delay taking required minimum distributions (“RMD’s”), as the couple does not need the extra income and wants to avoid additional taxes. 

Many people may have heard the term Qualified Domestic Relations Order (“QDRO”), but only in context to a divorce, and very few understand what a QDRO really is.  Simply put, a QDRO is an order signed by an appropriate state court judge that: (1) recognizes the joint marital ownership interest in a retirement plan; (2) provides for the plan benefits between the parties – the plan participant (employee spouse) and the alternate payee (non-employee spouse); and (3) is approved, or qualified, by the retirement plan administrator. Unlike a QDRO in a divorce that transfers retirement benefits to an ex-spouse, an “in-marriage QDRO” transfers retirement benefits to a current spouse.

To be eligible for an in-marriage QDRO, the retirement account must be an Employee Retirement Income Security Act (“ERISA”) based plan, certain state pension plans, or a Federal Thrift Savings Plan.  ERISA-based plans include 401k, 401(a), 403(b), corporate pension plans, some employee stock ownership plans, profit sharing plans, and State deferred compensation 457 plans.  Plans that are not eligible for an in-marriage QDRO include military pensions, Federal pensions (FERS and CSRS), railroad retirement plans and privately sponsored non-qualified stock plans.  Although individual retirement accounts (IRA’s) and simplified employee pension plans (SEP’s) are not immediately eligible, if a limited liability company (“LLC”) was established with a solo 401k, the funds in the IRA or SEP could be transferred to the solo 401k and then qualify for the in-marriage QDRO.

If eligible for an in-marriage QDRO, a review of the plan documents is necessary to verify the amount that may be transferred, as well as the amount that should be transferred based on the family’s needs.  Similarly, an inter-spousal agreement must be drafted that is the basis for the justification of the in-marriage QDRO. The inter-spousal agreement should lay out the agreement between the spouses as to the division of the retirement funds.  Using the example of the couple wanting to delay RMD’s, the agreement may state that all the retirement account will be transferred to the younger spouse which would allow the funds to remain in the account until the younger spouse reaches age 70 ½.  Or, in the case of the couple wanting to qualify for Medicaid benefits, rather than “spend-down” the funds and pay taxes on that money, the retirement funds of the nursing home spouse would be transferred to the spouse still residing at home, which could avoid most, if not all, of the tax consequences and preserve the asset for the community spouse, while allowing the nursing home spouse to qualify for Medicaid benefits. 

As you can see, in-marriage QDRO’s can be useful tools for estate planning but require careful drafting and knowledge of the various federal and state laws.  Do not attempt this on your own;  contact a qualified attorney to assist and help you navigate these complicated rules.

Jun 04

How to Qualify for Long-Term Care Medicaid

By Jessica L. Estes

Long-term care Medicaid is a needs-based program that helps qualified individuals pay for long-term care costs.  Long-term care is required when an individual, for a period exceeding thirty days, is unable to perform the basic activities of daily living such as bathing, dressing, eating, toileting, walking, and transferring.  Long term care can include homecare, adult daycare, respite care and assisted living or nursing home services, but long-term care Medicaid will only cover nursing home services.  As such, an individual must be admitted to a nursing home or other long-term care facility in order to apply for long-term care Medicaid.   

Moreover, there are three eligibility criteria that an individual must meet to qualify for long-term care Medicaid: (1) technical; (2) medical; and (3) financial.  In Maryland, to be technically eligible, an individual must be (1) a resident of Maryland; (2) aged 65 or older, blind, or disabled; and (3) a United States citizen or resident alien.  For purposes of Medicaid, an individual is considered a Maryland resident from the moment they are admitted to a nursing home in Maryland, even if their primary residence is located in another state or the District of Columbia.

To be medically eligible, an individual for a period exceeding thirty days, must require skilled nursing care, assistance with at least three activities of daily living, or assistance with at least two activities of daily living if the applicant also needs assistance with an instrumental activity of daily living.  Skilled nursing care is care or treatment that can only be done by doctors or nurses such as complex wound dressings, rehabilitation, or tube feeding.  Instrumental activities of daily living are not necessary for fundamental functioning but are necessary for an individual to live independently in the community.  Instrumental activities of daily living include such things as using a telephone, shopping, preparing meals, housekeeping, or money management.

Most individuals in a nursing home will meet the technical and medical eligibility criteria; however, the financial eligibility requirements are two-fold and most people will not immediately be eligible.  There are two tests an individual must pass to be financially eligible for Medicaid: the income test and the asset test.  The income test is simple.  If a person’s gross monthly income is less than the monthly cost of care at the facility, that person will pass the income test, and because the monthly cost of care at a nursing home is so high, most do.

The asset test, although simple, is not quite so easy to pass.  An individual cannot have more than $2,500 in countable assets as of the first of the month in which he or she applies for benefits.  As such, most people will need to “spend-down” their assets below that $2,500 limit to be eligible for benefits.  But, be careful!  The Medicaid qualification process is very complex and trying to navigate these rules alone, or with the assistance of a non-attorney, likely will result in wasted time, stress and frustration, and an unnecessarily large nursing home bill.  Instead, seek the advice of a competent elder law attorney who will not only obtain Medicaid benefits for his or her client, but preserve some, or all, of the client’s assets as well.

Apr 09

Personal Care Contracts

By: Jessica L. Estes

If you currently provide care for a chronically ill, disabled, or aged family member, likely you spend, on average, twenty hours per week providing that care.  This is in addition to your own personal commitments, which may, and often do, include managing a full-time job and your own family.  Not only can this be overwhelming, but it can be extremely stressful.  Moreover, family caregivers usually are not paid, as they feel some responsibility to provide this care solely out of love and affection.  

But what happens when they can no longer provide adequate care for their loved one?  The loved one may not have the resources to afford in-home, assisted living or nursing home care.  And, unless the loved one has less than $2,500 in countable assets, they will not qualify for Medicaid benefits.  Although one can “spend-down” assets below the $2,500 limit, Medicaid does not allow reimbursement for the care you provided.  If you are reimbursed and your loved one files an application for Medicaid benefits, that reimbursement will be considered a gift subject to penalty and your loved one may not qualify for benefits for a very long time.

However, a family caregiver may be compensated for their services without any impact to their loved one’s Medicaid benefits if they have a personal care contract.  A personal care contract is an agreement between a caregiver (one who provides care) and a care recipient (one who needs care) detailing the services to be provided for a set amount each month.  To avoid a Medicaid penalty, the personal care contract should be written, signed and dated before you begin providing services or receiving payment.  Also, the personal care contract should specify which services will be included and which will be excluded.  Services can include meals, lodging, furnishings, utilities, laundry, housekeeping, personal assistance (bathing, dressing, grocery shopping, transportation to/from medical appointments, etc.), medical care and costs, and materials and supplies necessary to perform the services.

Additionally, the personal care contract should include the amount the caregiver will charge the care recipient for these services.  You cannot, though, be paid more than someone with your equivalent experience and skills who does this professionally in your general area.  For Medicaid purposes, though, the caregiver should keep a log of the services they are performing on a daily basis and a record of the payments received for these services.  In the event the care recipient applies for Medicaid, the caseworker will want to see a record of the services provided and the payments made, which should be in accordance with the contract.  As long as the services and payments are in accordance with the personal care contract, Medicaid will not penalize payments made to the family caregiver.

Finally, because this is a legal contract, I recommend having a qualified elder law attorney draft the contract for you, especially if Medicaid benefits might be needed in the future.

Sep 25

#TuesdayTips: About the Elderly Population in the United States

The older population (persons 65 years or older) numbered 40 million in 2015, representing 13% of the U.S. population, or one in every eight Americans. It is predicted that by 2030, there will be about 72.1 million older persons, more than twice their number in 2000. People 65+ represented 12.4% of the population in the year 2000 but are expected to grow to be 20% of the population by 2030 (U.S. Census Bureau, 2013). How these people will be tended to is an issue of import today. Here are just several of the issues that must be considered.

  • More and more of these elderly adults will need round-the-clock care in full-time residential convalescence facilities.The federal law and regulations regarding nursing home issues are contained in the Nursing Home Reform Act of 1987. Current standards of care can be traced back to the congressionally enacted Omnibus Budget Reconciliation Act of 1987 (OBRA 1987) or NHRA 1987.
  • The legislation set forth certain requirements for quality of care – with regard to nursing homes that receive Medicare and Medicaid funding, but individual states were permitted to pass stricter standards if they chose According to the U.S. Code of Federal Regulations long term care facilities were required to adhere to a list of expectations including (but not limited to) such things as promoting quality of life and maintaining resident dignity, preventing the deterioration of a resident’s physical and communicative needs, ensuring residents receive proper treatment and assistive devices to maintain vision and hearing abilities, and develop a comprehensive care plan for each resident.
  • The purpose of this legislation was to set minimum standards for nursing home care while offering a guarantee of a level of quality to the greatest extent possible. The statute include the incorporation of a Bill of Rights to further support the nursing home resident. The federal government had the ability to intervene because nursing homes rely on the receipt of Medicare and Medicaid programs to continue to function, although this is less true in ‘for profit’ facilities than ‘not for profit’ centers. In either case they must be in compliance with the requirements of the NHRA 1987 unless they have received a waiver.

Do you have an elder family member who currently resides or whom you are considering placing in a nursing home? The legal experts at ERA Law Group in Annapolis will work with you to ensure he or she is receiving proper medical care and support.

Jun 12

WHAT IS ELDER LAW?

By Jessica L. Estes

Ever wonder what “Elder Law” is?  Most people think that if you are 65 or older, it is called Elder Law and if you are younger than 65, it is called Estate Planning.  The real difference, though, is the focus of the representation.

Generally, the focus of estate planning is to make sure you have legal documents in place that provide the following: Read More

Apr 10

#TuesdayTips: Long-Term Care Insurance Policies

By Jessica L. Estes

 Generally, most people do not have sufficient income or assets to fund their long-term care for extended periods of time.  And, most people are not what the government deems “needs-based,” so they would not qualify immediately for any needs-based benefits.  Rather, most individuals are somewhere in the middle.Read More