Donna J. Hichman, Esq. The Hichman Law Office, PLLC January 15, 2015

 State specific program – NY addressed here  Means tested entitlement program  Administered locally by the Department of Social Services but Department of Health  Dealing with the county of last residence  Nursing Home Placement  Preferred plan: buy a long term health care insurance policy  Assets at risk (for the cost of care): clients’ assets less the asset exemptions

 Institutionalized Person/Applicant: *“Luxury” account of $14,850 *Funeral or cremation account -Irrevocable trust format -Established at funeral home -limited to “reasonable funeral” for a person of those means *Personal property

 Community Spouse: * Personal residence ($828,000 and can still reside there) * Resource allowance of at least $74,820 or up to $119,220 -increased if the “countable assets” are double $74,820 at the time of institutionalization -the range of countable assets where the exemption can be increased are $149,640 to $238,440 *Funeral account (same stipulations as the institutionalized spouse) *Personal property, including an automobile

 General rule: are a resource subject to the asset exemptions; must be spent down  However, if they are placed into “pay out” status, then they are exempt  Definition of payout status (Monroe Co.): being withdrawn from based on IRS Uniform Table RMDs if married and the DSS Medicaid life expectancy table (Office of the Actuary at the SSA) if single  Note: the withdrawals are then treated as income subject to the income allowance rules

 Life insurance policies  Annuities (non-IRA)  Joint Assets

Community Spouse Institutionalized Spouse/Applicant  $2, per month  Health insurance premiums (including Medicare)  Long term health care insurance premium  $50 per month  Health insurance premiums (including Medicare)

 Institutionalized spouse: can contribute income to the community spouse to bring him or her up to $2, per month  Balance: contributed 100% to the cost of care  Community spouse: 25% of the excess income must be contributed to the spouse’s cost of care

 Spend down method: get the assets to fit within the exemption amounts  Possibilities: establish funeral accounts; pay off credit obligations, including the mortgage; establish funeral accounts; put retirement accounts into pay out status; buy community spouse a new car; make house handicap accessible; etc.  No penalty period is incurred

Transfer assets outright to beneficiaries or to an Irrevocable Trust Look back period- 60 months from the date of the Medicaid Application -therefore, as many assets as desire can be transferred so long as do not need skilled care for 61 months from date of transfer - caveat: be ready to private pay to gain admission into a nursing home or to cover a portion of the 60 months

 If a transfer if found within the 60 months, an Applicant is ineligible for Medicaid based on this penalty period  Calculation: transferred amount divided by the penalty rate (in 2014, in the Rochester area, this is $10,073 per month)  When does this penalty period run? Not until the applicant is institutionalized, a Medicaid Application is submitted and the Applicant determined to be eligible but for the transfer

 Utilized if (1) a transfer is made and the 60 months have not passed OR (2) institutionalization has occurred and protection of assets is desired  Method: ½ the excess assets are transferred to the Promissory Note which pays out a per month amount. This payout, when combined with the monthly income, is used to pay for the cost of care (almost).

 The other ½ of the excess resources are gifted outright or to an Irrevocable Trust.  A Medicaid Application is submitted and denied due to the gift. The penalty period starts to run.  When the penalty period has run, the Promissory Note will have paid out in full. A second Medicaid Application is submitted and this time is accepted.

Approximately Half of the Assets at Risk are Gifted: Outright To a Trust By a Life Estate Deed Creates a Period of Ineligibility (POI) Other Half of the Assets at Risk Establish a Promissory Note which pays out to the Lender an amount each month to help cover the POI Need Two (2) Medicaid Applications

 Spousal refusal ◦ Be wary of proposals for a change in the law on this ◦ Can currently be used for income or assets ◦ County differences  Personal care contracts ◦ Must be in writing ◦ Should not reference “services provided as needed” ◦ Income tax consequences to recipient ◦ “Credible documentation” of services ◦ Reasonable wage scale

 1. House to a caretaker child who has lived in the home for 2 years prior to the institutionalization of the parent  2. House to a sibling with an equity interest who has resided in the home for at least a year  3. Transfers to a blind or disabled child (watch out for their benefits) or to a child under age 21  4. Purchase of a life estate in a home if the purchaser can live there for at least one year after purchase

 Consider a Supplemental Needs Trust if the Applicant is under age 65 (first party) ◦ Issue: Must have pay back provisions  Look for a situation where the clients have excess assets but their income does not meet the $2, per month ◦ The asset exemption can be increased through a fair hearing  Consider the Medicaid home care programs: ∘not subject to the 60 month look back periods ∘have different asset exemptions and income allowances

 Do the Wills leave assets outright to an institutionalized spouse? Consider SNT in Will of Community Spouse.  Are the Powers of Attorney current?  Are there Statutory Gifts Riders?  Are the Living Wills and Health Care Proxies current?  Elective Share Issues: right of the spouse to receive 1/3 of the other’s estate outright and free of trust (Waiver signed?)

 Tax favored account for those who received a disability before age 26.  Assets and distributions for qualified disability expenses generally disregarded when determining eligibility for most federal means-tested benefits.  There are limitations and restrictions Ex. Only first $100,000 disregarded for SSI  Can receive the annual exclusion gifting