Medi-Cal's Power to Recoup Benefits Paid: Estate Recovery and Liens

Federal law requires the state to attempt to recover the long-term care benefits from a Medi-Cal recipient's estate after the recipient's death. If steps aren't taken to protect the Medi-Cal recipient's house, it may need to be sold to settle the claim.

For Medi-Cal recipients age 55 or older, states must seek recovery of payments from the individual's estate for nursing facility services, home and community-based services, and related hospital and prescription drug services. States also have the option of recovering all Medi-Cal benefits from individuals over age 55, including costs for any medical care, not just long-term care benefits.

There are a few exceptions. The state cannot recover from the estate of a Medi-Cal recipient who has a surviving spouse until after the spouse passes away. After the spouse dies, the state may file a claim against the spouse's estate to recover money spent for the Medi-Cal recipient's care. The state also cannot recover from the estate if the Medi-Cal recipient had a child who is under age 21 or a child who is blind or disabled.

While states must attempt to recover funds from the Medi-Cal recipient's probate estate, meaning property that is held in the beneficiary's name only, they have the option of seeking recovery against property in which the recipient had an interest but which passes outside of probate (this is called "expanded" estate recovery). This includes jointly held assets, assets in a living trust, or life estates. Given the rules for Medi-Cal eligibility, the only probate property of substantial value that a Medi-Cal recipient is likely to own at death is his or her home. However, states that have not opted to broaden their estate recovery to include non-probate assets may not make a claim against the Medi-Cal recipient's home if it is not in his or her probate estate.

In addition to the right to recover from the estate of the Medi-Cal beneficiary, state Medi-Cal agencies may place a lien on real estate owned by a Medi-Cal beneficiary during his or her life unless certain dependent relatives are living in the property. The state cannot impose a lien if a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living there.

Once a lien is placed on the property, if the property is sold while the Medi-Cal beneficiary is living, not only will the beneficiary cease to be eligible for Medi-Cal due to the cash from the sale, but the beneficiary would have to satisfy the lien by paying back the state for its coverage of care to date. In some states, the lien may be removed upon the beneficiary's death. In other states, the state can collect on the lien after the Medi-Cal recipient dies. Check with your attorney to see how your local agency handles this.

There are some circumstances under which the value of a house can be protected from Medi-Cal recovery. The state cannot recover if the Medi-Cal recipient and his or her spouse owned the home as tenants by the entireties or if the house is in the spouse's name and the Medi-Cal recipient relinquished his or her interest. If the house is in an irrevocable trust, the state cannot recover from it.

In addition, some children or relatives may be able to protect a nursing home resident's house if they qualify for an undue hardship waiver. For example, if a Medi-Cal recipient's daughter took care of him before he entered the nursing home and she has no other permanent residence, she may be able to avoid a claim against his house after he dies. Consult with your attorney to find out if the undue hardship waiver may be applicable.

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Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: 818-905-0601

Email:elise@elampertlaw.com

http://www.eliselampert.com

What to Do If You Are Appointed Conservator of an Older Adult?

Being appointed conservator of a loved one is a serious responsibility. As conservator, you are in charge of your loved one's well-being and you have a duty to act in his or her best interest.

If an adult becomes mentally incapacitated and is incapable of making responsible decisions, the court will appoint a substitute decision maker, often called a "conservator," but in some states called a "guardian" or other term. Conservatorship is a legal relationship between a competent adult (the "guardian") and a person who because of incapacity is no longer able to take care of his or her own affairs (the "conservatee").

If you have been appointed conservator, the following are things you need to know:

Read the court order. The court appoints the conservator and sets up your powers and duties. You can be authorized to make legal, financial, and health care decisions for the conservatee. Depending on the terms of the conservatorship and state practices, you may or may not have to seek court approval for various decisions. If you aren't sure what you are allowed to do, consult with a lawyer in your state.

Fiduciary duty. You have what's called a "fiduciary duty” to your conservatee, which is an extremely high standard. You are legally required to act in the best interest of your conservatee at all times and manage your conservatee's money and property carefully. With that in mind, it is imperative that you keep your finances separate from your conservatee's finances. In addition, you should never use the conservatee's money to give (or lend) money to someone else or for someone else's benefit (or your own benefit) without approval of the court. Finally, as part of your fiduciary duty you must maintain good records of everything you receive or spend. Keep all your receipts and a detailed list of what the conservatee's money was spent on.

File reports on time. The court order should specify what reports you are required to file. The first report is usually an inventory of the conservatee's property. You then may have to file yearly accountings with the court detailing what you spent and received on behalf of the conservatee. Finally, after the conservatee dies or the conservatorship ends, you will need to file a final accounting.

Consult the conservatee. As much as possible you should include the conservatee in your decision-making. Communicate what you are doing and try to determine what your conservatee would like done.

Don't limit social interaction. Conservators should not limit a conservatee's interaction with family and friends unless it would cause the conservatee substantial harm. Some states have laws in place requiring the conservator to allow the conservatee

to communicate with loved ones. Social interaction is usually beneficial to an individual's well-being and sense of self-worth. If the conservatee has to move, try to keep the ward near loved ones.

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Elise Lampert, Attorney at Law

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: 818-905-0601

Email:elise@elampertlaw.com

http://www.eliselampert.com

What to Look for When Buying an Annuity

An annuity can be a useful tool for long-term care planning, but annuities are also complex financial products that are hard to understand. If purchasing an annuity, you need to consider your options carefully. 

An annuity is a contract with an insurance company under which the consumer pays the company a certain amount of money and the company sends the consumer a monthly check for the rest of his or her life, or for a certain term. Annuities come in many flavors. They can be deferred (begin paying out at a later date) or immediate (begin paying out right away). They can pay a fixed amount each month or pay out a variable amount based on how the money is invested. While a fixed immediate annuity can be a good Medicaid planning option for a married couple, other annuity products can be quite complex and confusing and are not right for everyone. 

If you have decided an annuity is the right choice for your long-term care or retirement plan, you need to shop around to find the right product. The following are some purchasing tips:

• Check the terms. Be sure to read the annuity contract carefully. Annuities often have surrender charges that penalize you for withdrawing your money too early. You need to understand for how long you won’t be able to access your money and when payouts begin. There may also be other fees associated with the annuity as well as optional riders. Understanding the fees will allow you to shop around to find the best product. 
• Choose your salesperson. Insurance companies often pay generous commissions to the brokers who sell their particular annuities, payments that many of the brokers don't disclose. They also generally don't disclose whether they are paid more or less by one insurance company than another or whether the annuity being sold is the best option for the consumer. Ask your broker questions to determine how they are paid. You may want to seek a second opinion to make sure your salesperson isn't steering you into a product that isn't right for you. 
• Select a sound insurance company. Annuity payments are often supposed to last a lifetime, so you want an insurance company that will stick around. Make certain that the insurer is rated in the top two categories by one of the services that rates insurance companies, such as A.M. Best, Moody’s, Standard & Poor's, or Weiss.  

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Elise Lampert, Attorney at Law

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: 818-905-0601

Email:elise@elampertlaw.com

http://www.eliselampert.com

How to Use a Trust in Medi-Cal Planning

With careful Medi-Cal planning, you may be able to preserve some of your estate for your children or other heirs while meeting Medi-Cal's low asset limit.

The problem with transferring assets is that you have given them away. You no longer control them, and even a trusted child or other relative may lose them. A safer approach is to put them in an irrevocable trust. A trust is a legal entity under which one person -- the "trustee" -- holds legal title to property for the benefit of others -- the "beneficiaries." The trustee must follow the rules provided in the trust instrument. Whether trust assets are counted against Medi-Cal's resource limits depends on the terms of the trust and who created it.

A "revocable" trust is one that may be changed or rescinded by the person who created it. Medi-Cal considers the principal of such trusts (that is, the funds that make up the trust) to be assets that are countable in determining Medi-Cal eligibility. Thus, revocable trusts are of no use in Medi-Cal planning.

Income-only trusts

An "irrevocable" trust is one that cannot be changed after it has been created. In most cases, this type of trust is drafted so that the income is payable to you (the person establishing the trust, called the "grantor") for life, and the principal cannot be applied to benefit your or your spouse. At your death the principal is paid to your heirs. This way, the funds in the trust are protected and you can use the income for your living expenses. For Medi-Cal purposes, the principal in such trusts is not counted as a resource, provided the trustee cannot pay it to you or your spouse for either of your benefits. However, if you do move to a nursing home, the trust income will have to go to the nursing home.

You should be aware of the drawbacks to such an arrangement. It is very rigid, so you cannot gain access to the trust funds even if you need them for some other purpose. For this reason, you should always leave an ample cushion of ready funds outside the trust.

You may also choose to place property in a trust from which even payments of income to you or your spouse cannot be made. Instead, the trust may be set up for the benefit of your children, or others. These beneficiaries may, at their discretion, return the favor by using the property for your benefit if necessary. However, there is no legal requirement that they do so.

One advantage of these trusts is that if they contain property that has increased in value, such as real estate or stock, you (the grantor) can retain a "special testamentary power of appointment" so that the beneficiaries receive the property with a step-up in basis at your death. This will also prevent the need to file a gift tax return upon the funding of the trust.

Remember, funding an irrevocable trust within the five years prior to applying for Medi-Cal (the "look-back period") may result in a period of ineligibility. The actual period of ineligibility depends on the amount transferred to the trust.

Testamentary trusts

Testamentary trusts are trusts created under a will. The Medicaid rules provide a special "safe harbor" for testamentary trusts created by a deceased spouse for the benefit of a surviving spouse. The assets of these trusts are treated as available to the Medi-Cal applicant only to the extent that the trustee has an obligation to pay for the applicant's support. If payments are solely at the trustee's discretion, they are considered unavailable.

Therefore, these testamentary trusts can provide an important mechanism for community spouses to leave funds for their surviving institutionalized husband or wife that can be used to pay for services that are not covered by Medi-Cal. These may include extra therapy, special equipment, evaluation by medical specialists or others, legal fees, visits by family members, or transfers to another nursing home if that became necessary. But remember that if you create a trust for yourself or your spouse during life (i.e., not a testamentary trust), the trust funds are considered available if the trustee has the ability to use them for you or your spouse.

Supplemental needs trusts

The Medi-Cal rules also have certain exceptions for transfers for the sole benefit of disabled people under age 65. Even after moving to a nursing home, if you have a child, other relative, or even a friend who is under age 65 and disabled, you can transfer assets into a trust for his or her benefit without incurring any period of ineligibility. If these trusts are properly structured, the funds in them will not be considered to belong to the beneficiary in determining his or her own Medi-Cal eligibility. The only drawback to supplemental needs trusts (also called "special needs trusts") is that after the disabled individual dies, the state must be reimbursed for any Medi-Cal funds spent on behalf of the disabled person.

To find out whether a trust is the right Medi-Cal planning strategy for you, talk to your elder law attorney.

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Elise Lampert, Attorney at Law

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: 818-905-0601

elise@elampertlaw.com

http://www.eliselampert.com

Most Are Taking Social Security at the Wrong Time

A new report finds that almost no retirees are making financially optimal decisions about when to take Social Security and are losing out on more than $100,000 per household in the process. The average Social Security recipient would receive 9 percent more income in retirement if they made the financially optimal decision.

When claiming Social Security, you have three options: You may begin taking benefits between age 62 and your full retirement age, you can wait until your full retirement age, or you can delay benefits and take them anytime up until you reach age 70. If you take Social Security between age 62 and your full retirement age, your benefits will be reduced to account for the longer period you will be paid. If you delay taking retirement, depending on when you were born, your eventual benefit will increase by 6 to 8 percent for every year that you delay, in addition to any cost-of-living increases. 

The new report, conducted by United Income, an online investment management and financial planning firm, found that only 4 percent of retirees make the financially optimal decision about when to claim Social Security. Nearly all of the retirees not optimizing their benefits are claiming benefits too early. The study found that 57 percent of retirees would build more wealth if they waited to claim until age 70. However, currently more than 70 percent of retirees claim benefits before their full retirement age. Claiming before full retirement is the financially best option for only 6.5 percent of retirees, according to United Income. 

The consequences of claiming Social Security too early can be big. The report found that collecting benefits at the wrong time causes retirees to collectively lose $3.4 trillion in potential income (an average of $111,000 per household). The report also estimates that elderly poverty could be cut in half if retirees claimed benefits at the financially optimal time. 

One reason most people do not optimize Social Security is because waiting to collect benefits means their overall wealth may fall during their 60s and 70s. They also may not be aware that collecting benefits before full retirement age means that their benefits will be permanently reduced. According to the report’s authors, policy changes are necessary to get retirees to wait to claim benefits. The report recommends that early claiming be made the exception and reserved for those who have a demonstrable need to collect early. Another recommendation is to change the label on early retirement and call it the "minimum benefit age."  

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9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: 818-905-0601

Email:elise@elampertlaw.com

http://www.eliselampert.com

Tips for Preventing, Detecting, and Reporting Financial Abuse of the Elderly

Reports of elder financial abuse continue to increase, and the elderly are particularly vulnerable to scams or to financial abuse by family members in need of money.

It is hard to ascertain the exact numbers of people affected by elder abuse because studies show that elder abuse is underreported. However, one study found that financial loss from financial elder abuse could be close to $3 billion a year. 

While it is impossible to guarantee that an elderly loved one is not the victim of financial abuse, there are some steps you can take to reduce the chances. One option is to have more than one family member involved in caring for the loved one. You can also encourage the elder to get involved in community activities to ensure that he or she has a wide range of support. Using direct deposit as much as possible is also helpful. And of course you should always screen caregivers carefully and verify references.

Financial abuse can be very difficult to detect. The following are some signs that a loved one may be the victim of this kind of abuse:

• The disappearance of valuable objects
• Withdrawals of large amounts of money, checks made out to cash, or low bank balances
• A new "best friend" and isolation from other friends and family
• Large credit card transactions
• Signatures on checks that look different
• A name added to a bank account or newly formed joint accounts
• Indications of fear of caregivers

If you suspect someone of being financially abused, there are several actions you can take:

• Report the possible crime by calling your local Adult Protective Services and state attorney general's office. File a police report.
• Explore options at your local probate court if your state has such courts. The court can intervene if someone in the family is misusing a power of attorney or their role as guardian or conservator.
• Contact advocacy organizations. The National Center on Elder Abuse offers guidance on how to investigate and seek justice for elder abuse. State laws vary, but some have elder abuse statutes and may be able to get restitution for breach of fiduciary duties.
• Try to get a temporary restraining order from a court while building your case.

Another valuable resource is Aging in Place's guide to recognizing elder abuse.

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9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: 818-905-0601

Email:elise@elampertlaw.com

http://www.eliselampert.com

Grandparents Raising Grandchildren May Qualify for the Earned Income Tax Credit

Raising a grandchild can be tough financially, but grandparents should be aware that there is a tax credit available that could help them. Working grandparents who are supporting their grandchildren may qualify for the earned income tax credit, which could reduce the amount they pay in taxes by thousands of dollars or allow them to receive a refund. 

The earned income tax credit is a benefit for working people with low to moderate incomes and dependents, and this includes grandparents.  (Taxpayers without a dependent may also qualify, but it is more difficult.) To be able to claim the tax credit, you must be raising a child who meets the following criteria:

• Is your son, daughter, adopted child, stepchild, foster child, brother, sister, half brother, half sister, step-sister or a descendent of any of them, such as a grandchild or niece or nephew
• Is younger than 19 at the end of the year, younger than 24 and a full-time student at the end of the year, or any age and permanently and totally disabled
• Lives with you for more than half the year

In addition, to qualify for the tax credit your income must be below certain limits, depending on how many dependents you have. The limits for 2019 are as follows:

• One child.  Filing as an individual, your income must be less than $41,094. Filing jointly, your income must be less than $46,884.
• Two children. Filing as an individual, your income must be less than $46,703. Filing jointly, your income must be less than $52,493.
• Three or more children. Filing as an individual, your income must be less than $50,162. Filing jointly, your income must be less than $55,952.

The maximum amount of the tax credit also depends on how many dependents you have. In 2019, the following are the maximum credit amounts:

• $6,557 with three or more qualifying children
• $5,828 with two qualifying children
• $3,526 with one qualifying child

For more information from the IRS about the tax credit, click here.

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9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: 818-905-0601

Email:elise@elampertlaw.com

http://www.eliselampert.com

Will My Advance Directive Work in Another State?

Making sure your end-of-life wishes are followed no matter where you happen to be is important. If you move to a different state or split your time between one or more states, you should make sure your advance directive is valid in all the states you frequent.

An advance directive gives instructions on the kind of medical care you would like to receive should you become unable to express your wishes yourself, and it often designates someone to make medical decisions for you. Each state has its own laws setting forth requirements for valid advance directives and health care proxies. For example, some states require two witnesses, other states require one witness, and some states do not require a witness at all.

Most states have provisions accepting an advance care directive that was created in another state. But some states only accept advance care directives from states that have similar requirements and other states do not say anything about out-of-state directives. States can also differ on what the terms in an advance directive mean. For example, some states may require specific authorization for certain life-sustaining procedures such as feeding tubes while other states may allow blanket authorization for all procedures.

To find out if your document will work in all the states where you live, consult with an attorney in the state. 

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Elise Lampert, Attorney at Law

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: 818-905-0601

Email:elise@elampertlaw.com

http://www.eliselampert.com

Medi-Cal Asset Transfer Rules

In order to be eligible for Medi-Cal, you cannot have recently transferred assets. Congress does not want you to move into a nursing home on Monday, give all your money to your children (or whomever) on Tuesday, and qualify for Medi-Cal on Wednesday. So it has imposed a penalty on people who transfer assets without receiving fair value in return.

This penalty is a period of time during which the person transferring the assets will be ineligible for Medi-Cal. The penalty period is determined by dividing the amount transferred by what Medi-Cal determines to be the average private pay cost of a nursing home in your state.

Example: If you live in a state where the average monthly cost of care has been determined to be $5,000, and you give away property worth $100,000, you will be ineligible for benefits for 20 months ($100,000 / $5,000 = 20).

Another way to look at the above example is that for every $5,000 transferred, an applicant would be ineligible for Medicaid nursing home benefits for one month. In theory, there is no limit on the number of months a person can be ineligible.

Example: The period of ineligibility for the transfer of property worth $400,000 would be 80 months ($400,000 / $5,000 = 80).

A person applying for Medi-Cal must disclose all financial transactions he or she was involved in during a set period of time -- frequently called the "look-back period." The state Medi-Cal agency then determines whether the Medi-Cal applicant transferred any assets for less than fair market value during this period. The look-back period for all transfers is 60 months (except in California, where it is 30 months). Also, keep in mind that because the Medi-Cal program is administered by the states, your state's transfer rules may diverge from the national norm.

The penalty period created by a transfer within the look-back period does not begin until (1) the person making the transfer has moved to a nursing home, (2) he has spent down to the asset limit for Medi-Cal eligibility, (3) has applied for Medi-Cal coverage, and (4) has been approved for coverage but for the transfer.

For instance, if an individual transfers $100,000 on April 1, 2017, moves to a nursing home on April 1, 2018, and spends down to Medi-Cal eligibility on April 1, 2019, that is when the 20-month penalty period will begin, and it will not end until December 1, 2020.

In other words, the penalty period would not begin until the nursing home resident was out of funds, meaning there would be no money to pay the nursing home for however long the penalty period lasts. In states that have so-called "filial responsibility laws," nursing homes may seek reimbursement from the residents' children. These rarely-enforced laws, which are on the books in 29 states, hold adult children responsible for financial support of indigent parents and, in some cases, medical and nursing home costs. In 2012, a Pennsylvania appeals court found a son liable for his mother's $93,000 nursing home bill under the state's filial responsibility law.

Exceptions

Transferring assets to certain recipients will not trigger a period of Medicaid ineligibility. These exempt recipients include the following:

A spouse (or a transfer to anyone else as long as it is for the spouse's benefit)

A blind or disabled child

A trust for the benefit of a blind or disabled child

A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances).

In addition, special exceptions apply to the transfer of a home. The Medi-Cal applicant may freely transfer his or her home to the following individuals without incurring a transfer penalty:

The applicant's spouse

A child who is under age 21 or who is blind or disabled

Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medi-Cal applicant, under certain circumstances)

A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home

A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

Congress has created a very important escape hatch from the transfer penalty: the penalty will be "cured" if the transferred asset is returned in its entirety, or it will be reduced if the transferred asset is partially returned. However, some states are not permitting partial returns. Check with your elder law attorney.

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Elise Lampert, Attorney at Law

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: 818-905-0601

Email:elise@elampertlaw.com

http://www.eliselampert.com