1. Presented by MEDICAID RULE UPDATE: Payments to Caregivers Cause Medicaid Ineligibility

2. The Sweeping Affect of the Jensen Decision Jensen v. Dept. of Human Services - Court of Appeals decision on February 19, 2015 Upholds the DHS imposition of Medicaid ineligibility for paying for personal care services to anyone ! Departure from prior Medicaid rules Affects anyone receiving or who may need Medicaid benefits in future, as well as in-home care agencies, senior and assisted living facilities

3. Medicaid Eligibility Rules Medicaid eligibility rules differ for single or married persons. However, for both must satisfy three tests to qualify: Medically Need Test (LOC Determination) “Countable” Income Test (Waiver $2,199 or private pay rate) “Countable” Asset Test The “Asset Test” causes many people difficulty.

4. The Medicaid “Asset Test” For the “asset eligibility” test DHS breaks your assets into three groups: excluded (good), unavailable (good), and countable (bad). An applicant can’t have more than $2,000.00 of “countable” assets. Countable assets are essentially all liquid assets (cash, bank accounts, retirement accounts, etc.)

5. Gift - Divestment Rules Five year look-back (not three) Penalty in months equal to Gift/$8,084 = # months disqualified from Medicaid Different than IRS $14,000 exempt gift limit! Penalty does not begin to run until: (1) you apply for Medicaid, (2) meet all of the eligibility (need, income and assets) requirements, and (3) in need of nursing home care Don’t run out of money during look-back period

6. History of Personal Care Contracts Under Medicaid Prospective care contracts – pay for lifetime of care in lump sum (reduced to present value) Paid family member and spent down assets without causing divestment penalty

7. DHS Changed Caregiver Rule For 7 Years NO prospective, lump-sum care agreements Payments to family members for caregiving or property maintenance services = GIFT unless certain conditions met prior to payments are made GIFT = Medicaid disqualification

8. Personal Care Contracts Payments to relatives for providing personal care or property maintenance assistance are gifts, unless the following is established in advance of such payments: A formal, written contract is executed and notarized Provider can’t sign as “agent” for person Being paid fair market value for services Person not residing in an institution at the time Recommended in writing by physician who states…. Level of care is preventing nursing home confinement

9. Special Rules Didn’t Apply For Third Party Caregiver No special requirements for non-family member caregiver contracts – third party, professional caregivers The DHS applied rule that way for years, until….

10. Jensen v. The DHS - Facts Non-relative caregiver for grandmother Paid reasonable rate – total of $19,000 over months Informal - no written agreement Her condition worsened - entered nursing home Approved for Medicaid but penalty period imposed She appealed to circuit court – reversed - saw rule as been used for years The DHS appealed to Court of Appeals

11. Jensen v. The DHS - Rule of Law COA reluctantly ruled in favor of the DHS Agreed paid reasonable rate – no abuse Said the plain reading of the Caregiver Rule dictated penalty for even non-relative caregiver payments Indirectly statedthat rule misinterpreted for years May have ruled differently had it had a chance to explore facts de novo (from the start)

12. Meaning and Impact Payments to ANY type of caregiver (family OR non- family) are NOW considered a “gift” or “divestment” which = Medicaid penalty period During the penalty period the “giftor” is ineligible for Medicaid (even if otherwise eligible) This is the LAW for anyone that seeks or receiving Medicaid assistance until, when and if, it’s reversed DHS WILL use ruling offensively to deny applications

13. Case Illustration Person pays family member $1,500/month for three years to provide personal care services. Person pays a caregiving agency $1,000/month for two years for similar personal care services while in senior living facility. No written contract or physician statement that services preventing nursing home confinement. Result is 10 month nursing home Medicaid ineligibility period! Even longer penalty period under Medicaid Waiver. $80,000 total payments divided by $8,040/month Medicaid gift divisor.

14. Planning for Families – The Three “A’s” A BIDE BY - Before making payments for caregiving services (1) get a proper contract in place and (2) obtain a physician statement that complies with rule A DJUST FOR - Develop a plan to cover costs during penalty period if payments already made without written contract - BEFORE you run out of money A VOID - Have a plan to cover care costs during 5 year Medicaid “gift” look-back period

15. Planning for Caregiving Agencies & ALFs Providing in-home, senior facility or ALF care Don’t be THE cause of Medicaid ineligibility New and referral business killer “Waiver” clients affected if they are paying a caregiver Same recommendations made for families

16. Contact Us & Stay Informed!  We can help with care contracts  Handle all three plans of action  Develop Elder Transitions Plans