Patinelli & Chang, LLP

Estate Planning Documents and Medicaid Planning

“People frequently hear that they should visit their attorney to have their wills and other important legal documents prepared, but many people procrastinate. Therefore, if you’re in that group, do not feel like you’re alone.”

The conversation that you have with an estate planning attorney, when you are in your thirties with a new house, young children, and many years ahead of you is different than the one you’ll have when you are much older, maybe just before you retire. The estate planning attorney will know that you are about to enter a time in your life, when the legal documents you prepare are more likely to be used, says the article “Learn about legal documents and Medicaid” from the Houston Chronicle.

It should be noted that everyone needs an estate plan at any time of life, so they may state their wishes for how assets are distributed and name a person who will speak in their behalf, in the event of incapacity because of an illness or injury.

An estate plan also includes a power of attorney, so someone you chose can serve as your agent to transact business and handle your financial matters. There should also be a declaration of guardian, in the event of later incapacity and a HIPAA medical authorization document. In some instances, a designation of remains is prepared in order to name an individual who will be the appointed agent to care for the body at the time of death.

However, there’s another reason why you’ll need to meet with an attorney at this time. As we get older, the need to address long term care becomes more important. Making the right decisions now, could have a big impact on the quality of your retirement and your later in life medical care.

If you have not updated your will or your powers of attorney, specifically a durable power of attorney for property, it would be wise to do so now. You will need a document to clearly authorize your agent to deal with assets. Any documents that are out of date, or in which named agents have predeceased you, won’t be effective, leading to problems for you and your heirs.

The document may also need to include a broad gifting power for your named agent, so assets can be transferred out of the estate. If this detail is overlooked, the agent may not be able to protect your assets.

This is the time when you may want to take steps to protect your children upon your death or upon the death of the second parent. If your goal is to eliminate assets to be eligible for Medicaid coverage, this planning needs to be done well in advance. In numerous states, there are state administered programs that pursue recovery of assets when a person has received Medicaid benefits.

Your attorney will be able to work with you and your family to address your specific situation. It may be that your estate plan will include trusts, or that certain assets need to be retitled. Meet with an estate planning attorney who is familiar with your state’s laws. And don’t procrastinate.

Reference: The Houston Chronicle (April 19, 2019) “Learn about legal documents and Medicaid”

Medicare Advantage and Nursing Homes

A recent study suggests that Medicare Advantage enrollees are more likely to go to lower quality nursing homes, than people enrolled in traditional Medicare.

Not all nursing homes are equal. Some have much higher rates of re-hospitalization than others or just do a generally better job at providing good outcomes for residents. The reasons for the differences in the quality of care that nursing homes provide are not always clear. Nevertheless, figuring out those reasons is of such vital importance to families, that the federal government keeps track of these things and makes them publicly available.

They are also important as a matter of public policy. Recently, some researchers looked at the quality of care that traditional Medicare enrollees receive versus Medicare Advantage enrollees as ElderLawAnswers discusses in "Are Medicare Advantage Plans Steering Enrollees to Lower-Quality Nursing Homes?"

It turns out that Medicare Advantage enrollees, on average, enter nursing homes that score worse on quality control metrics than traditional Medicare enrollees. The study did not examine the reasons for the discrepancies. However, it is important that this study be pursued, so policy makers can make sure that all seniors receive high quality care.

Medicare Advantage enrollees should do their own investigation into nursing homes, before deciding upon one. If they cannot do so, their families need to do it for them.

Reference: Elder Law Answers (April 16, 2018) "Are Medicare Advantage Plans Steering Enrollees to Lower-Quality Nursing Homes?"

Protecting Assets from Medicaid

If Medicaid ends up needing to pay for your nursing home care, the government will seek to take any assets that you have to pay for its costs. You might be able to create a trust to get around that problem.

One of the realities of aging in America, is that people who need to stay in long-term nursing home care cannot pay for their stays without losing all of their assets. There is nothing left for their children to inherit. They spend everything they have left, and only then will the government pay for their care through Medicaid.

If the elderly person has a home, the government will even seek to claim that and sell it after no one else is living there. That creates an awful feeling for many elderly parents, because they have nothing to leave their families.

There are some ways around this problem, including using a certain type of trust as the Times Herald-Record discussed in "Benefits of Medicaid Asset Protection Trust."

A Medicaid Asset Protection Trust is a trust that set up specifically to protect assets from Medicaid, while still qualifying an elderly person for Medicaid assistance with long-term care. These are irrevocable trusts and any assets put into them at least five full years before applying for Medicaid are protected. The trusts are not perfect, since the trust settlors cannot use any of the principal in the trusts.  However, income can be used.

If you are interested in a Medicaid Asset Protection Trust, talk to an elder law attorney about one and  other options you might have.

Reference: Times Herald-Record (March 8, 2018) "Benefits of Medicaid Asset Protection Trust."

Hospital Discharge Planning

Before a Medicare patient can be discharged from the hospital, there must be a plan in place for any needed continual care. Patients and their families should double check some information in that plan.

When Medicare patients are ready to leave a hospital after an extended stay, they often are not ready to go home and resume their normal lives. They might need to be transferred to another facility, such as a nursing home or a rehabilitation center. It depends on the needs of the specific patient being discharged.

Medicare requires that a plan for care be developed with a social worker who can help the patient understand the plan. Just taking the word of the social worker about what options are available, is not always advisable as the Pittsburgh Post-Gazette points out in "Doublecheck when they say the rehab center doesn't have room."

Patients are sometimes told that their preferred facilities for care after being discharged from the hospital do not have room for them. Sometimes that is true, but it is not always true.

Hospitals that have financial interests in other facilities, all too often try to steer patients into those facilities and away from others. For that reason, it is a good idea for patients and families to call facilities for themselves to ask about availability.

If you think a hospital is not doing what Medicare requires it to do, then it is a good idea to contact an elder law attorney.

Reference: Pittsburgh Post-Gazette (Feb. 26, 2018) "Doublecheck when they say the rehab center doesn't have room."

Report Finds Problems with Assisted Living Oversight

One way that Medicaid can save money is by paying for assisted living care for seniors who are eligible for it, instead of paying for nursing home care. A new report found that because of a lack of oversight, that is not happening.

Medicaid was not originally designed to pay for seniors' stays in assisted living facilities. However, as more and more money was being spent on nursing home facilities and the costs at those facilities continued to rise, the federal government granted states waivers to use Medicaid funds for the generally less expensive assisted living facilities.

This should have saved the federal government quite a bit of money.

A group of Senators asked the Government Accountability Office to study how the government's money was being used. The results were not good as The New York Times reported in "U.S. Pays Billions for 'Assisted Living,' but What Does It Get?"

Every year the government spends approximately $10 billion on assisted living facilities. The discouraging news? It is almost impossible to determine how much of the money is well-spent and how much of it is not. The GAO found that a lack of regulations and proper oversight made it impossible to get even basic information about patient outcomes and critical events in many states.

This is disturbing since Medicaid is expected to need even more money in the future to pay for the nursing home care and assisted living care of an aging population. If the oversight problem is not fixed, it will be seniors who are most harmed by the problems.

Reference: New York Times (Feb. 3, 2018) "U.S. Pays Billions for 'Assisted Living,' but What Does It Get?"

Being Under Observation in the Hospital

Many elderly people face gigantic medical bills for hospital stays because of how they are classified by the hospital. This makes a big difference in how much Medicare will pay.

When an elderly person has an extended stay in the hospital, they are almost always under the impression that Medicare will cover most of the costs. However, many stay in the hospital for weeks and only later discover that they are responsible for most of the costs of their stay.

This is because Medicare is very particular about when it will pay for hospital costs.

For Medicare to pick up the bill, the patient must be classified as an inpatient. This means that the patient has been formally admitted to the hospital.

If the patient is an outpatient, Medicare will not pay and those patients who are in the hospital "under observation" are still considered to be outpatients, no matter how long they are actually in the hospital.

The story is picked up by The New York Times in "Under 'Observation' Some Hospital Patients Face Big Bills."

Elder law advocates have long pointed out that the rule is absurd.

The patient does not always get to choose what the hospital writes down in the file. The patient also does not always know the importance of being formally admitted, instead of just being under observation.

There has never been a way for the patients to challenge their designations later, until now.

A judge in Connecticut has recently opened the door for legal challenges.

Reference: New York Times (Sep. 1, 2017) "Under 'Observation' Some Hospital Patients Face Big Bills."

The Ethics of Medi-Cal Planning

Arranging your assets so that you will qualify for Medicaid (CA - Medi-Cal), should you ever need to stay in a nursing home for long-term care is possible. However, many people question the ethics of doing so.

Medicaid often does not get a lot of attention, despite its importance. However, with some in Congress looking to make cuts to it as a way to reduce spending and taxes, Medicaid is back in the news on a regular basis.

One of the things the program does, is pay for long-term care in nursing homes for those elderly people who cannot afford their own care.

That part of the program is under fire because some people essentially hide their assets to make it look like they cannot afford their own nursing home bills, so that Medicaid will pick up the tab.

Recently, The New York Times looked at the debate over the ethics of doing that in "The Ethics of Adjusting Your Assets to Qualify for Medicaid."

On one side of the debate are people who point out that those who can plan for Medicaid are wealthy enough to hire attorneys.  Therefore, they should not hide assets to take advantage of a program designed to help the poor.

On the other side, people point out that nursing home care is extremely expensive.  They believe that it is not fair for people to have to exhaust all of their assets, leaving nothing for their children to inherit, in order to have some of that care paid for by a program they fund with their taxes.

Whichever side you are on, it is important to know that if you do want to plan for Medicaid, then you need to see an elder law attorney about doing so and you need to do that long before you will ever need nursing home care.

Reference: New York Times (July 21, 2017) "The Ethics of Adjusting Your Assets to Qualify for Medicaid."

Forced to Pay for Your Parents

It is well-known and accepted that parents are required to provide care and support for their minor children. What is less well-known, is that in over half the states, adult children can be required to provide care and support for their elderly parents.

There are many laws on the books that receive very little attention because they are very rarely used. If few ever bother to attempt to enforce a law, then there is usually no reason for people to bring it up.

However, sometimes those laws do eventually become important, because of a general change in circumstances that sees those laws starting to be used more frequently.

An example of this is filial-responsibility laws.

These are laws that have been passed in 28 states that require adult children to provide financial support for their elderly parents, if the parents are unable to pay their own bills, as the Wills, Trusts & Estates Prof Blog discusses in "Filial-Responsibility Laws Could Cost You."

These laws were not used much in the past because government programs for the elderly such as Social Security, Medicare and Medicaid provide financial support for the elderly.

Today, with people saving less and living longer, many elderly people are not able to afford the costs of their own care, which is increasing.

Nursing homes in states with filial-responsibility laws are increasingly looking to enforce them against children with parents who do not pay their bills.

This is yet another reason to make sure that you plan for your retirement and estate. If you do not, your children might be required to pay for you.

Reference: Wills, Trusts & Estates Prof Blog (May 3, 2017) "Filial-Responsibility Laws Could Cost You."

Counting on Medicaid/Medi-Cal in Torrance CA

People who plan to rely on Medicaid, if they ever need long-term care in a nursing home, often make a very big mistake.

Nursing home care is one of the most expensive things facing elderly people. It costs a lot of money to get long-term care in a nursing home.

Many older people do not have the money for it and do not have a realistic way of getting that money.

As a result, they look to the government to pay for that care. The government will step up through Medicaid, but only if the elderly person, who is in need of nursing home care, has no assets.

When seeking to qualify for Medicaid, however, many people make a big, big mistake.

This mistake is discussed in the Pauls Valley Daily Democrat article titled "Misunderstandings create traps in planning."

The mistake is a simple one to explain, but it is important to make sure you understand it so you will not make it. You cannot give your assets to your children, just before you go into a nursing home, at Medicaid's expense.

Unfortunately, that is just what many people are planning to do and it will not work.

What is the problem?

Medicaid has a five-year lookback window, which means that the program will look at any asset transfers the applicant (or anyone on his or her behalf) made within five years of needing long-term care.

California Medi-Cal has a 30 month lookback window.

If those transfers were not made at market value, then Medicaid will not pay for care until the expenses start to exceed the value of the transferred assets. There is a formula to calculate the “penalty period” that will be applied.

This simple mistake is a big source of problems for the elderly. Make sure that you understand it and ask an elder law attorney, if you have any questions about it.

Reference: Pauls Valley Daily Democrat (March 8, 2017) "Misunderstandings create traps in planning."

Hospice Owner Accused of Ordering Overdoses

The alleged actions of a hospice owner in Texas may call into question the way in which Medicare and Medicaid reimburse hospices for patient care.

Hospices are supposed to offer humane end-of-life care for their patients. They are not supposed to hasten the deaths of those patients. However, the system might unintentionally encourage a hospice to hasten the death of patients in some cases as illustrated by a case in Texas. Hospice owner Brad Harris is alleged to have ordered nurses to intentionally overdose patients in four cases. He is also alleged to have asked that patients be found who would be expected to die within 24 hours. Fox News reported on this story in "Texas hospice owner ordered nurses to overdose patients, FBI says."

The motivation for this alleged behavior may have been the way in which hospices are reimbursed by Medicaid and Medicare for patient care. The longer that a patient is in the hospice the less that the hospice gets paid. If the patient stay is too long, the hospice might even have to reimburse the government. Payments are designed this way as a safeguard against hospices taking patients who do not yet need their services. However, that payment system might unintentionally create incentives for bad behavior when hospice patients live longer than expected.

Elder law advocates will undoubtedly monitor this case closely to see if changes need to be made to the system to protect the elderly from abuse.

Reference: Fox News (March 31, 2016) "Texas hospice owner ordered nurses to overdose patients, FBI says