2. Long Reher Hanson Minnesota Elder Law Attorneys MEDICAL ASSISTANCE: A SUMMARY OF THE BASIC ELIGIBILITY REQUIREMENTS Laurie Hanson Long, Reher & Hanson, P.A. www.mnelderlaw.com  2008 Long, Reher & Hanson, P.A.

3. Course Overview Long-term care payment sources Basic Medical Assistance Eligibility Assets Spousal Impoverishment Laws Long Reher Hanson Minnesota Elder Law Attorneys

4. Course Overview Income Transfers Appeals/hardship waivers MA Waiver programs Long Reher Hanson Minnesota Elder Law Attorneys

5. Why does this Matter? Planning for persons who are living with disabilities who must maintain or obtain eligibility for public benefits to meet basic needs and use. To enhance quality of life – to live as independently as possible for as long as possible To ensure that assets can be protected to supplement and not supplant government benefits.

6. Long Reher Hanson Minnesota Elder Law Attorneys WHAT IS LONG-TERM CARE? A person who needs assistance with activities of daily living, such as bathing, dressing, eating, transferring, is a person who needs long-term care.

7. Long Reher Hanson Minnesota Elder Law Attorneys Long-term care settings Home Health Care Adult Day Services Assisted Living Skilled Nursing Facilities Board and Care Homes Group Residential Housing Hospice Care

8. Long Reher Hanson Minnesota Elder Law Attorneys Private pay/private insurance Medicare and supplemental insurance Long-term care insurance Veterans Benefits/ Veterans Home Long-Term Care payment sources.

9. Medicaid State and Federal program Minnesota’s Medicaid Program is called Medical Assistance Basic Medical Assistance Medical Assistance for the nursing home Home and Community-Based waivers Long Reher Hanson Minnesota Elder Law Attorneys

10. Home and Community Based Medical Assistance programs* for persons under age 65: *Also known as “waiver” programs. Mental Retardation or Related Conditions (MR/RC) Community Alternative Care (CAC) Community Alternatives for Disabled Individuals (CADI) Traumatic Brain Injury (TBI)

11. Long Reher Hanson Minnesota Elder Law Attorneys Home And Community Based Medical Assistance Programs for people 65 and Older: Elderly Waiver Program (EW) Special Income Standard Elderly Waiver program (SIS EW) Alternative Care program (AC) (not MA)

12. Long Reher Hanson Minnesota Elder Law Attorneys Medical Assistance Services Medical Assistance benefits include: Hospitalization, physician services, some dental and eye care, medical supplies and treatments, etc Mental health services for adults and children Nursing homes Home health care.

13. MA ELIGIBILITY GENERAL REQUIREMENTS Minnesota resident Categorical Basis of Eligibility 65 and older Blind or Disabled Pregnant woman Under 21 Parent or caretaker of dependent child Financially Eligible

14. Long Reher Hanson Minnesota Elder Law Attorneys Basic Financial Eligibility Single $3,000 in available assets Income spenddown Married Community spouse asset allowance + $3,000 Income spenddown

15. Long Reher Hanson Minnesota Elder Law Attorneys WHICH ASSETS COUNT TOWARD THE $3,000? Excluded Assets (no) Unavailable assets (no – but used on asset assessment) Available Assets (yes)

16. Available assets Assets are available if the owner has both legal authority and actual ability to use them for self-support and assets are not excluded or unavailable. Include savings and checking accounts, stocks, bonds, CDs, contracts for deed, IRAs, certain real property, collections, cash surrender value of life insurance policies, etc. Premarital agreement has no effect.

17. Excluded assets Homestead subject to limit in some circumstances (eff. 1/1/06) Household goods and personal effects Assets of trade or business One motor vehicle

18. Excluded assets Insurance payments to repair or replace lost, damaged, or destroyed property CSV of certain insurance policies Revocable burial fund: limit is $1,500 Irrevocable funeral trust: Services limited to $2,000 No limit for burial spaces and space items

19. Prepayment of funeral Life insurance or annuity: Itemized agreement with funeral home Amount paid same as in agreement Irrevocable primary beneficiary: “any funeral home as its interest may appear” Irrevocable contingent beneficiary: “estate”

20. Unavailable assets Unavailability proved by showing legal or actual barrier to disposal of asset that cannot be overcome. Unavailable assets may include: Next four slides…

21. Unavailable assets Share of an estate that has not been probated Property involved in a pending legal action

22. Non-homestead real property Considered unavailable as long as applicant is making reasonable effort to sell Asking price is no more than estimated market value on real property tax statement Reasonable offer: no less than 2/3 EMV

23. Jointly held assets General rule: Presumption that joint tenants own pro rata share Exception: Checking or savings account, time deposits owned by MA applicant Savings bonds: Unavailable if owned jointly and in possession of person who is not applying for MA

24. Life Estates and Joint Tenants Life tenant has the right to: Live in the property throughout lifetime Receive all profits from the property Life tenant has continuing obligation to: Pay property taxes, fire insurance, maintenance Life estate is extinguished at death unless after August 1, 2003

25. Trusts: available? Depends on: (1) Kind of trust involved (2) Who established the trust (3) Whose assets were used to fund the trust…and

26. Trusts: available? (4) Whether the trust is revocable or irrevocable (5) Whether trust was established during lifetime or through a will (6) Provisions of the trust agreement

27. Kinds of trusts Revocable trust Irrevocable Trust Trust with springing provisions Supplemental needs trust Special needs trust Pooled trust

28. Other assets Annuities Continuing Care Communities

29. Bob’s and Kate’s assets Certificates of deposit $125,000 Kate ’ s IRA$65,000 Bob ’ s IRA$35,000 Homestead$300,000 Automobile$ 20,000 Household stuff$15,000 1/2 lake property$50,000

30. Bob’s and Kate’s assets Certificates of deposit $125,000 Available Kate ’ s IRA$65,000 Bob ’ s IRA$35,000 Homestead$300,000 Automobile$ 20,000 Household stuff$15,000 1/2 lake property$50,000

31. Bob’s and Kate’s assets Certificates of deposit $125,000 Available Kate ’ s IRA$65,000 Available Bob ’ s IRA$35,000 Homestead$300,000 Automobile$ 20,000 Household stuff$15,000 1/2 lake property$50,000

32. Bob’s and Kate’s assets Certificates of deposit $125,000 Available Kate ’ s IRA$65,000 Available Bob ’ s IRA$35,000 Available Homestead$300,000 Automobile$ 20,000 Household stuff$15,000 1/2 lake property$50,000

33. Bob’s and Kate’s assets Certificates of deposit $125,000 Available Kate ’ s IRA$65,000 Available Bob ’ s IRA$35,000 Available Homestead$300,000 Excluded Automobile$ 20,000 Household stuff$15,000 1/2 lake property$50,000

34. Bob’s and Kate’s assets Certificates of deposit $125,000 Available Kate ’ s IRA$65,000 Available Bob ’ s IRA$35,000 Available Homestead$300,000 Excluded Automobile$ 20,000 Excluded Household stuff$15,000 1/2 lake property$50,000

35. Bob’s and Kate’s assets Certificates of deposit $125,000 Available Kate ’ s IRA$65,000 Available Bob ’ s IRA$35,000 Available Homestead$300,000 Excluded Automobile$ 20,000 Excluded Household stuff$15,000 Excluded 1/2 lake property$50,000

36. Bob’s and Kate’s assets Certificates of deposit $125,000 Available Kate ’ s IRA$65,000 Available Bob ’ s IRA$35,000 Available Homestead$300,000 Excluded Automobile$ 20,000 Excluded Household stuff$15,000 Excluded 1/2 lake property$50,000 Unavailable

37. TERMINOLOGY: Married Couples Community Spouse Ill Spouse (long-term Care Spouse) Asset Assessment Date Community Spouse Asset Allowance Community Spouse Income Allocation. Long Reher Hanson Minnesota Elder Law Attorneys

38. Community spouse asset allowance CSAA = 1/2 of non-excluded assets on asset assessment date with a Minimum of $29,389 and Maximum of $104,400 assets at time of MA application = CSAA + $3,000

39. Date of Institutionalization Protected Assets: CSAA $29,389 MA limit $ 3,000 Excess Assets: $ 2,611 Date of MA application, if in 2008: $29,389$3,000 $35,000

40. Date of Institutionalization Protected Assets: CSAA $50,000 MA limit $ 3,000 Excess Assets: $ 47,000 Date of MA application: $50,000$3,000 $100,000

41. Date of Institutionalization Protected Assets: CSAA $104,600 MA limit $ 3,000 Excess Assets: $112,400 Date of MA application, if in 2008: $104,400$3,000 $220,000

42. Kate’s and Bob’s community spouse asset allowance Total non-excluded assets CDs$125,000 Kate ’ s IRAs $ 65,000 Bob ’ s IRAs$ 35,000 1/2 interest in lake property $ 50,000 Total$275,000 1/2 of total is $137,500, which is greater than $104,400, so CSAA = $104,400. Excess assets to be reduced = $167,600.

43. MEDICAL ASSISTANCE: DISCUSSION OF INCOME RULES

44. Long Reher Hanson Minnesota Elder Law Attorneys Types of income Excluded income Reverse mortgages Payments form low-income home energy programs In-kind income Cash from sale of property Tax refunds Reimbursement of expenses

45. Long Reher Hanson Minnesota Elder Law Attorneys Types of income Available income Received by individual or on her behalf Earned Income Unearned Income Annuity payment RSDI, SSI Trust disbursments Regularly received gifts Lump sums

46. Long Reher Hanson Minnesota Elder Law Attorneys Income Rules for Recipients in the Community MA recipient is required to pay portion of income towards cost of services Income standards for persons living in community: 100% FPG, currently $851 OR Spending down to 75% FPG ($639).

47. Long Reher Hanson Minnesota Elder Law Attorneys Income Spenddown for Single Person in Community: Income of Individual $2,000.00 less Medicare Part B -96.00 less standard -650.00 less insurance premium -100.00 Income applied to care $1,154.00 Cost of Care $5440.00 less -1,154.00 MA pays: $4,286.00

48. Long Reher Hanson Minnesota Elder Law Attorneys Income Spenddown for Single Person in Nursing home: Income of Individual $2,000.00 less Medicare Part B -96.00 less personal needs allowance - 84.00 less insurance premium -100.00 Income applied to care $1,720.00 Cost of Care $5,440.00 less - 1,720.00 MA pays: $3,720.00

49. Long Reher Hanson Minnesota Elder Law AttorneysC SPECIAL INCOME RULES FOR MARRIED COUPLES Community spouse is eligible for a spousal income allocation if his or her income does not meet a minimum income level Minimum of $1,751 up to Maximum of $2,610 Calculation takes into account ONLY excess shelter costs.

50. Long Reher Hanson Minnesota Elder Law Attorneys SPECIAL INCOME RULES FOR MARRIED COUPLES This amount changes every year Otherwise spenddown is the same as for single person Only applies to long term care MA (LTC MA) or EW

51. Long Reher Hanson Minnesota Elder Law Attorneys Income Spenddown for Married Person in Nursing home: Income of Ill Spouse $2,000.00 less Medicare Part B -96.00 less personal needs allowance - 84.00 Less community spouse allocation -1,500.00 less insurance premium -100.00 Income applied to care $ 220.00

52. Assets Eligible? Income Is reduction of assets necessary? 51

53. REDUCING ASSETS Paying monthly expenses Purchase of excluded assets Paying debts Prepaying funeral expenses Repairs to house Transferring assets??

54. Transfer warnings Federal law 1997: Makes it a misdemeanor for paid advisor to counsel or assist in transfers if results in penalty period. Found to be unconstitutional. Deficit Reduction Act of 2005: Affects transfers on or after February 8, 2006 Loss of ownership and control: once given away, assets are no longer yours.

55. What is a transfer? Gift Sale Reduction in ownership interest Waiving the right to an inheritance or income Refusing or failing to take action to obtain a PI settlement 54

56. Whose transfers matter? Transfers made by: Applicant, Recipient, Spouse, or Any person, court or administrative body on behalf of applicant or spouse Must be reported and may affect eligibility IF THE TRANSFER IS FOR LESS THAN FAIR MARKET VALUE 55

57. What is an uncompensated transfer? Uncompensated value of transferred (or refused) asset = Fair market value less encumbrances and compensation received. Fair Market Value$250,000 Sale Price$200,000 TRANSFER($50,000) 56

58. Transfer rules, in general Transfers of assets or income For less than FMV Within the “lookback period” (36 months for transfers before 2/8/06 and until 2/09, then gradually increasing to 60 months by 2/11) Ineligible for LTC coverage for a specific period of time 57

59. Services to which transfer penalty applies During a PERIOD OF INELIGIBILITY, Medical Assistance will not cover “institutional care.” Nursing facility services Level of care in any institution equivalent to nursing facility services Home or community-based services including EW, AC, CADI, TIB, CAC, and DD 58

60. Transfers: Presumption Any transfer of assets or income is presumed to be for the purpose of establishing or maintaining MA eligibility. Applies to transfers by CS after MA eligibility established for LTC spouse. Any transfer to preserve estate, avoid probate, or reduce taxes is deemed “improper.” 59

61. Calculation of period of ineligibility Divide the amount transferred by the Statewide Average Payment for Skilled Nursing Facility care (SAPSNF) As of the date of the application Currently $4,772 from 7/1/08 through 6/30/09 60

62. Transfers before Feb. 8, 2006 Add total uncompensated transfers in any one month of the 36 months preceding the MA application Divide by the SAPSNF, currently $4,772 Penalty period begins the month after the first transfer Transfer of $200 or less OK except during pre-existing period of ineligibility 61

63. EXAMPLE TRANSFER $50,000 October 2005 $50,000 ÷ $4,772 = 10.48 months PERIOD OF INELIGIBILITY Transfer made in October, 2005 11/05 ----------------------------------9/06 (.48) 62

64. EXAMPLE TRANSFER $200,000 June 2005 $200,000 ÷ $4,772 = 41.91 months PERIOD OF INELIGIBILITY If apply before July 2008 (within 36 months), full POI is imposed. If wait to apply until after 36 months: June 2005 --------------- July 2008 The effective waiting period is 36 months. APPLY JULY 1, 2008 at the earliest

65. Transfers on or after 2/8/06 Lookback period of 60 months will be phased in Period of ineligibility is calculated by dividing total assets transferred within 60 months by SAPSNF

66. Transfers on or after 2/8/06 Period of ineligibility begins: For recipient: the month for which county can give 10 days advance notice, not to exceed three months after report/discovery of transfer For applicant: the month in which individual is receiving long-term care services, applies for MA, and would be eligible except for transfer

67. SAME EXAMPLE TRANSFER $50,000 October 2006 $50,000 ÷ $4,772 = 10.47 months PERIOD OF INELIGIBILITY 10.47 MONTHS FROM Date of application for Medical Assistance AND When otherwise eligible but for the period of ineligibility

68. Transfers on or after 2/8/06 There is no cap to the period of ineligibility. No minimum allowable transfer. Can have a snowball effect Ineligibility begins when individual applies and is otherwise eligible Care costs can exceed amount transferred 67

69. EXAMPLE 1: Monthly Charitable Gifts $500/month x 4 yrs = $24,000 TRANSFER of $24,000 POI: $24,000 ÷ $4,772 = 5.03 months 68

70. EXAMPLE 1 (cont’d) POI is 5.03 months |________________________________________ ____| August ‘08 January (.03) Month of ApplicationEnds 5.03 months later 69

71. EXAMPLE 1 (cont’d) Monthly long-term care cost = $6,000 Cost of care during POI: $6,000 x 5 = $30,000.00 $4,772 x.16 = $ 763.52 $30,763.52 70

72. Types of Transfers 71

73. Promissory notes, loans, and mortgages must: Have repayment term that is actuarially sound Provide for payments to be made in equal amounts during term of loan, with no deferral and no balloon payments made Prohibit the cancellation of the balance upon the death of the lender If terms are not met, balance is a transfer.

74. Purchase of life estate interest The full amount that a person pays for a life estate in someone else’s home will be considered a transfer UNLESS the purchaser resides in the home for a period of at least one year after the date of the purchase.

75. Paying a relative can be an uncompensated transfer Payment for services by a relative is a transfer unless: The parties have a notarized written agreement dated at or before time of service, requiring payment OR Payment for services is made with sixty days of when services given 74

76. Transfer of real estate The transfer is complete when: Deed is executed AND Deed is delivered. Date of delivery is earlier of: Date of recording Date of delivery as stated in affidavit Date of judicial order creating the interest Date upon which interest devolves at person’s death

77. PURCHASE OF ANNUITIES AS TRANSFERS See Bulletin No. 08-21-04 dated May 27, 2008 on DHS web site 76

78. ALLOWABLE TRANSFERS: Exceptions to the transfer rules

79. Allowable transfers of home To spouse, disabled or blind child of any age, child under age 21 To sibling with equity interest To caretaker child (not grandchild) For value Denial would cause undue hardship

80. Other exceptions to transfer rules To spouse at any time, or to 3rd person for sole benefit of spouse To disabled or blind child or sole benefit trust Transfer into trust for any disabled person under age 65 (or a pooled trust for people of any age) Return of assets

81. Return Assets: Example Eleanor transfers $200,000 to her son in August and applies for MA in August. POI is 41.91 months, beginning in August Eleanor’s cost of care is $6,000 each month which her son returns to her and she uses to pay for care. 80

82. Example (cont.) The period of ineligibility is reduced each time money is returned. After six months, $36,000 will have been returned; thus the total amount transferred to son is reduced to $164,000. New POI = 34.38 months. At this rate, POI will be reduced to 18.5 months; $88,282 protected. 81

83. Other exceptions to transfer rules (cont.) Individual intended to dispose at FMV Transfer of excluded assets other than homestead Denial of eligibility would cause undue hardship

84. Undue hardship waiver: MN Based on imminent threat to individual’s health and well-being Evaluation criteria: Whether the individual was the victim of financial exploitation Whether the individual has made reasonable efforts to recover transferred property Other factors relevant to determination of hardship Cause of action against transferee if granted

85. Undue hardship waiver: DRA State develops procedures in accordance with standards specified by Secretary of HHS NF can file application on behalf of individual 30-day bedhold payment to NF: NOT IN MN!! Undue hardship exists when denial would deprive individual -- of medical care such that individual’s health or life would be endangered; or of food, clothing, shelter, or other necessities of life

86. Criteria for determining if cause of action exists C/A exists if transferee knew or should have known: Transferor was resident of LTC facility or receiving that level of care in community Transfer was being made to obtain or maintain MA eligibility Transferee actively solicited transfer with intent to assist person obtain or maintain MA eligibility

87. Cause of action against transferee Transfers made by applicant and not reported on application Transfers by recipient during ongoing eligibility and reported too late to create period of ineligibility If undue hardship waiver is granted to transferee

88. Liens Medical Assistance lien against non-homestead real property Notice of potential claim against life estate and joint tenancy interests

89. Estate recovery County may place claim against estate for MA when: Person was over 55 and received MA/AC. Persons resided in medical institution for 6 months or longer and could not have been expected to return home. Claim is against estate: of recipient, if single of surviving spouse, if married.

90. Estate recovery (cont.) If claim is against estate of surviving spouse, claim limited to assets that were marital assets or held jointly during marriage (But, Barg may change this!) Estate includes: Probate assets Some non-probate assets (joint tenancy, POD and TOD accounts) Life estate or joint tenancy interest in RE created on or after August 1, 2003

91. In the Estate of Francis E. Barg Opinion issued by MN Supreme Court on May 30, 2008, which held: 1. Federal Medicaid law does not preclude all recovery from estate of surviving spouse of MA recipient. 2. Federal law limits scope of recovery to only those assets in which deceased MA recipient had a legal interest at the time of death and only to extent of MA recipient ’ s interest.

92. Thank you for your attention! Long, Reher & Hanson, P.A. www.mnelderlaw.com (952) 929-0622