Choosing a nursing home for a family member can be one of the most difficult decisions anyone ever has to make. The fact that the family member needs to move to a nursing home means that he or she is in a vulnerable state and will be dependent on the care provided in the facility. Knowing how difficult this can be, I have put together a lengthy list of questions to help you select the best place for your mother, father, other family member or loved one.

Here Is my list of Questions:

*Is the facility certified by Medicare and Medicaid? How long has it been certified?
*Does the facility have an Alzheimer’s unit or other special care area restricted to patients with special care needs? Is the specialty unit separated from other areas of the facility?
*How convenient is the location to family members and friends? What are visiting hours? Location is important, because it can affect how often the patient is visited by family and friends. Frequent visits generally will improve the patient’s mental and emotional well being, as well as ensure that quality-of-care issues can be addressed as problems arise.
*Is the facility well lit, clean, safe, and welcoming? What diagnostic treatment facilities are available at the facility? What bathing facilities are available and how is bathing handled when the person needs assistance?
*What is the ratio of staff to residents during each shift?
*What kind of activities are planned each day for the residents? A good activities program should have regularly scheduled events, such as bingo, movie night or musical event, religious services, physical exercise activities, bingo, educational classes, and other social events. Is there a library available for residents with large print and audio books? Is there a vendor for purchasing personal items, such as shaving cream, hair care products, and snacks? Is there a safe place for residents to enjoy outdoor areas, such as an enclosed garden? Are plants, pets, and other natural elements added to the residents’ environment? Are residents taken to special community events and cultural activities?
*Will the resident share a room and/or a bathroom with one or more other residents? How are roommates and rooms selected? If the resident is dissatisfied, can roommates be changed and how is that accomplished? Can the resident bring some of his or her own furniture?
*Individual care plans must be implemented with each resident. How often is the care plan reviewed and changed? What is the protocol for handling problems?
*How are employees selected? How are employees screened for drug use, criminal records, and other potential problems? What is the turnover rate for skilled employees? What is the turnover rate for employees who perform ancillary services, such as meal preparation and financial record keeping?
*If there is a physician that is used by the majority of residents, what are his or her qualifications? How often is the doctor on premises? What is his or her bedside manner with residents?
*Are meals served in a communal dining room or is each resident brought her meal in her room? If communal, how are tables assigned in the dining room? How long does it take for a meal to be delivered to a bedridden resident? How does the food taste and how is it presented to the resident? Is there a means of heating food that has become cold?
*What financial information will the facility require during the admissions process? Can the patient or his representative have copies in advance of all admissions documents and contracts for review? How long does the process take?
*What is included in the cost of care? How are “extra” items billed? Can laundry be taken off-premises and does this save the resident some costs? How are prescription drugs handled? What is the cost difference between a private room and a semi-private room?
*If required non-emergency medical services are not available on premises (such as dialysis), how is transportation arranged? What about transportation to other places, such as local stores and religious services?

I hope this helps you to start thinking of some of the important considerations when searching for an acceptable care facility. If you have any questions about the Elder Law asset protection planning options for your loved one, please call us at 610-933-8069 to schedule an initial consultation with Douglas L. Kaune, esquire. Please also Check out our most recent Elder Law Reports available for free by clicking here.

Typically, our office will prepare two separate power of attorney documents for clients, one for financial matters and one for medical care. These two documents are among the most important estate planning documents you can have. They will help your Agent handle all of the financial and medical decision making should you be unable to do so. Unfortunately, the documents can be rendered useless if they don’t comply with the federal privacy law (HIPPA).

As many know, the power of attorney document allows someone you designate, known as your Agent or attorney-in-fact, to make decisions for you if you if you choose to allow them to act on your behalf or if you become incapacitated. The health care power of attorney document specifies who will make medical decisions for you when you are unable to communicate your own wishes. The Medical Agent might act for you following an accident or other emergency or at some time in the future when you are unable to properly communicate with your medical professionals.

For these documents to be effective, your agents may need to be able to access your medical information. However, medical information is protected under HIPPA provisions. The Health Insurance Portability and Accountability Act (HIPAA) protects health care privacy and prevents disclosure of health care information to unauthorized people. HIPAA authorizes the release of medical information only to a patient’s “personal representative.”

HIPAA can be a problem for the Agent trying to obtain medical records. Further, the Agent might not even be able to obtain the document under certain circumstances. For example, we are often asked to keep the POA documents for our clients in a safe fire proof location at our office. If the client cannot tell us to distribute the POA document, we cannot release the POA to the Agent. We have our client sign a HIPPA authorization allowing us to talk to their physician and allowing their physician to release medical information to us. Absent that HIPPA authorization, we could not get the necessary information from the physician.

To make sure your Agent is not put in a position of information deficit, your financial and medical POA documents should contain a HIPAA clause that explains that the Agent is also the personal representative for the purposes of health care disclosures under HIPAA. You should also sign separate HIPAA release forms that explain what medical information can be disclosed, who can make the disclosure, and to whom the disclosure can be made. This will serve to accelerate the Agent’s ability to help you if an when the need arises.

Make sure your Power of Attorney documents are up to date and HIPPA compliant. I cannot stess enough how important this is and how important the POA documents can be for assisting you in times of need.

Please call Douglas L. Kaune at 610 933 8069 or email him at 610 933 8069 to review your power of attorney or other related estate planning questions. Please also Check out our most recent Elder Law Reports available for free by clicking here.

An Executor’s job handling an estate administration can be difficult, but you can help your executor by providing a letter of instruction. If your fiduciaries and beneficiaries cannot find any of your documents or do not have all of the pertinent information about financial affairs, they might miss opportunities or even lose assets altogether. There can also be negative tax results for filing tax returns late or failing to make minimum withdraws from IRAs and other tax deferred assets. You can help avoid these problems by simply setting out a list of assets and how to access them.

A letter of instruction is not legally binding, but it is an easy way to provide guidance to the individuals who will be involved in your estate administration. The letter can include names and addresses of important people to contact when you die, including but not limited to, attorney, financial advisor and accountant. You can provide the location of important documents, a list of assets, passwords and PIN numbers for online accounts. You can also provide the following optional information:
*The location of any safe deposit boxes;
*list of contact information for lawyers, financial planners, brokers, tax preparers, and insurance agents;
*A list of credit card accounts and other debts
*A list of organizations that you belong to that should be notified in the event of your death (for example, professional organizations or boards);
*Instructions for a funeral or memorial service;
*Instructions for distribution of sentimental personal items;
*A personal message to loved ones, especially if your distribution of assets varies from the typical; and
*Whatever else you think assist your executor administer your estate.

Once the letter is written, be sure to store it in an easily accessible place and to tell your family about it. I suggest that clients keep a copy in multiple locations including with the original copy or their will. I also suggest reviewing it regularly to make sure it stays up-to-date.

To review your estate planning and Elder Law goals, please call 610 933 8069 to schedule a free initial consultation with Douglas L. Kaune, Esq. or email Doug at dkaune@utbf.com. Please also Check out our most recent Elder Law Reports available for free by clicking here.

Reverse mortgages allow homeowners who are at least 62 years of age to obtain a line of credit linked to their primary residence. The homeowner receives the ability to draw on this line of credit for the balance of their ownership of the residence, based largely on the value of the house, age of the borrower, and current interest rates. The borrow does not have to take the total amount available all at once. The applicable interest rate will only apply to the balance due and owing at any given time. Typically, neither the mortgage balance nor the accrued interest need to be paid back until the last surviving homeowner dies, sells the house, or permanently moves out.

The MetLife study found that younger borrowers are taking out reverse mortgages. Here are some of the findings:
*Today baby boomers aged 62 to 64 make up 21 percent of reverse mortgage applicants.
*In 1999, only 6 percent of applicants were in this age bracket.
*Of homeowners who are considering a reverse mortgage, 46 percent are under age 70.

The movement toward a younger average age of reverse mortgage borrower comes with concerns. While you can imagine situations when a reverse mortgage appears to be a beneficial options, there are major negatives. The closing costs for the loans are much higher than for conventional mortgages, and younger borrowers receive less money because their life expectancy is longer. The closing costs are usually wrapped into the loan and are reflected as an initial draw on the credit line. This serves to reduce the amount of money the borrower can actually receive and starts the interest accruing on that initial draw. In addition, the borrower is still responsible for property taxes, homeowner’s insurance, and maintenance. If the borrower runs out of money and can’t pay the property taxes or homeowner’s insurance, the loan will default, and the borrower could lose his or her house.

MetLife’s study also found that:
*most reverse mortgage applicants (67 percent) wanted to use the reverse mortgage to lower household debt;
*some (27 percent) wanted to enhance their lifestyle; and
*some (23 percent) wanted to plan for the future.
These reasons all are taking the place of using a reverse mortgage to pay for health care that would allow borrowers to remain in their homes during their final years. Borrowers seem to be using reverse mortgages to cover short-term financial shortfalls. The MetLife study finds that strong reverse mortgage counseling is needed, and it cautions that homeowners need to consider whether to use their home equity to shore up their retirement financing or preserve this asset for major unexpected expenses in the future, such as health-related expenses that inevitably increase as people age. As an aside, federal funds for reverse mortgage counseling were eliminated in last year’s budget deal between Democrats and Republicans but have since been restored.

The MetLife report can be viewed by clicking here. Please also Check out our most recent Elder Law Reports available for free by clicking here.

Medicaid Spousal Impoverishment Figures for 2012:

The new minimum community spouse resource allowance (CSRA) is $22,728, and the new maximum CSRA is $113,640. The new maximum monthly maintenance needs allowance is $2,841. The minimum monthly maintenance needs allowance remains $1,838.75 until July 1, 2012.

Income cap

The income cap for 2012 applicable in “income cap” states will be $2,094 a month.

Medicaid home equity limit

Minimum: $525,000; Maximum: $786,000

Gift and estate tax figures

Federal estate tax exemption: $5.12 million for individuals

Lifetime tax exclusion for gifts: $5.12 million

Generation-skipping transfer tax exemption: $5.12 million

The annual gift tax exclusion remains at $13,000. 

Long-Term Care Premium Deductibility Limits for 2012

The Internal Revenue Service has announced the 2012 limitations on the deductibility of long-term care insurance premiums from taxes. Any premium amounts above these limits are not considered to be a medical expense.

Benefits from per diem or indemnity policies, which pay a predetermined amount each day, are not included in income except amounts that exceed the beneficiary’s total qualified long-term care expenses or $310 per day (for 2012), whichever is greater.

For details from the American Association for Long-Term Care Insurance, click here.

Medicare Premiums, Deductibles and Copayments for 2012

• Basic Part B premium: $99.90/month (was $96.40 for most beneficiaries)
• Part B deductible: $140 (was $162)
• Part A deductible: $1,156 (was $1,132)
• Co-payment for hospital stay days 61-90: $289/day (was $283)
• Co-payment for hospital stay days 91 and beyond: $578/day (was $566)
• Skilled nursing facility co-payment, days 21-100: $144.50/day (was $141.50)

Premiums for higher-income beneficiaries:

• Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $139.90 (was $161.50).
• Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $199.80 (was $230.70).
• Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 in 2010 will pay a monthly premium of $259.70 (was $299.90).
• Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more in 2010 will pay a monthly premium of $319.70 (was $369.10).

Rates differ for beneficiaries who are married but file a separate tax return from their spouse:

• Those with incomes between $85,000 and $128,000 will pay a monthly premium of  $259.70 (was $299.90).
• Those with incomes greater than $128,000 will pay a monthly premium of $319.70 (was $369.10).

For more information, click here.

Social Security Benefit Changes for 2012

Monthly federal Supplemental Security Income (SSI) payment standard will be $698 for an individual and $1,048 for a couple.

Average monthly Social Security retirement payment: $1,229 a month (was $1,186) for individuals and $1,994 (was $1,925) for couples

Maximum amount of earnings subject to Social Security taxation: $110,100 (was $106,800)

For a complete list of the 2012 Social Security changes, go to: http://www.socialsecurity.gov/pressoffice/factsheets/colafacts2012.htm

The trust document in question forbids distributions of principal to the person who created the Trust. The problem with this particular document is that it contained “standard” language that, when combined with State law, could cause certain directions to be “construed and qualified in light of the instrument as a whole.”

Certain discretionary Trustee powers caused the Trust assets to be available for nursing home spending.

First, the Trustee was given the power to terminate Trust.  Many Trusts allow the trustee to close the trust when the value of the assets become so small and it becomes too expensive to run the trust. In this case, if the Trust was terminated, the assets were to be passed out “the beneficiaries.”  The Trust creator/Medicaid applicant was deemed to be one of the allowable “beneficiaries.”  As a result, the Medicaid applicant was deemed the owned of the assets and did not qualify for Medicaid.

A second discretionary power given to the Trustee, the ability to reclassify income, created issues.  The trust creator was an eligible recipient of Trust income and not principal.  Hence, the term, Irrevocable Income Only Trust.  If the Trust creator qualifies for Medicaid, the income is still payable to the Medicaid recipient’s nursing home even though the Trust principal is protected.  In this case, the Trustee was given discretion to decide what was to be defined as income. The Trustee could decide that all of the assets of the trust were “income.”  This definition of the Trust assets would therefore permit the Trustee to legally transfer all the assets to the Trust creator who is the income beneficiary.  This caused all of the Trust principal to be “owned” by the Medicaid applicant.

So you can see, a seemingly mundane clause can negatively impact planning and result the failure of well intentioned planning.   The Court did conclude that properly drafted trusts will be viable Elder Law tools going forward.  This article simply reflects the need for care at every turn in the Elder Law planning process.  We will continue to use the Medicaid Irrevocable Asset Protection Trust as a centerpiece of the planning process, but will use this case and others like it to continue assisting clients protect their family assets.

Douglas L. Kaune is a partner with the law firm of Unruh, Turner, Burke & Frees, P.C. having three offices in the Western Suburbs of Philadelphia, PA.  He practic in the legal areas of Estate Planning, Estate Administration, Elder Law and Asset Protection.  Please call his office at 610-933-8069 to schedule an appointent.

All estate plans should include, at minimum a Last Will and Testament and a General Durable Power of Attorney.  A Revocable Living Trust can also be used to avoid probate and to manage your estate both during your life and after you are gone.  Irrevocable Trusts are incorporated into the plan for greater Medicaid and Nursing Home Asset Protection and/or Inheritance Tax and Federal Estate Tax protection.  In addition to these documents, medical directives, also known as Living Wills, allow you to appoint someone to make medical decisions on your behalf.

Will

A will is a legally executed document which explains how, when and to whom a person would like his or her property distributed after death.  Under Pennsylvania law, an individual may prepare a will in his or her own handwriting as long as it is dated at the top and signed at the bottom/end of the document.  However, such wills (holographic wills) risk ambiguity and incompleteness if they are not reviewed by an attorney.  Ambiguity or incompleteness can render a will ineffective or can give a will a different interpretation than the testator (person who “makes” a will) intended.  Holographic wills often result in protracted litigation in the probate court system which can cause delays and can by costly.  Attorneys generally will ensure that a will is clearly and effectively drafted, typed, and then executed in accordance with the corresponding State law where signing takes place.  Furthermore, holographic wills or older wills may not coordinate the other assets you own such as insurance policies, IRAs, pensions, and the taxes on such property.

A will also appoints an executor to carry out the mandates of the will.  A will is especially important if you have minor children because it allows you to creates trusts for minor children and to name trustees and a guardian.  However, many types of property or forms of ownership pass outside of the control of a will.  Jointly-owned property, property in trust, life insurance  and property with a named beneficiary, such as IRAs or 401(k) plans, all must be handled in a way that incorporates them with the will planning.  Specific attention must be paid to the beneficiary designations to insure that a successful plan is carried out.

Trust

A Trust involves a legal relationship in which the owner of certain property (known as the Grantor or Settlor) transfers such property to a person or institution (known as a Trustee) to hold and administer for the benefit of a person or institution (known as a beneficiary).  A Trust established under a Will comes into existence after the death of a testator and is known as a testamentary Trust.  A Trust effective during a person’s lifetime is referred to as a Living or Inter Vivos Trust.  If the Settlor (the creator of the Trust) retains the right to modify the Trust, it is revocable.  However, if the Settlor expressly forgoes the right to change the terms of the Trust and retains no interest in the property he or she transferred to the Trust, it is irrevocable.

Irrevocable trusts can perform many functions.  Accordingly, there are many different types of irrevocable trusts, including but not limited to: Medicaid Asset Protection Trusts, ILITS (Irrevocable Life Insurance Trusts); QPRTS (Qualified Personal Residence Trusts, BCT (Beneficiary Controlled Trusts), and GST Trusts (Generation Skipping Transfer Tax Trusts), and Grantor Retained Annuity Trusts (GRATS).  Even among these trusts there are many different permutations that are used to adapt to each client’s particular needs.

Power of Attorney

A person who gives Power of Attorney to another person (known as the Agent) authorizes that person to act as his or her legal agent.  A Power of Attorney may be limited to a certain time and task (e.g., representing an individual at a real estate closing) or it may be a complete and general Power of Attorney which authorizes another individual to act with complete legal authority.  A “durable” Power of Attorney retains its effectiveness even if the person who granted the Power of Attorney becomes incompetent.  A Power of Attorney ceases to have effect upon the Grantor’s death.

Absent a Power of Attorney, if an individual becomes incapacitated, no one may gain access to his or her assets or make other important medical, financial or legal decisions for his or her benefit without going through the expensive, traumatic, and cumbersome process of declaring the person incompetent, and establishing a court appointed Guardianship.

Medical Directives

A Medical Directive or Living Will states an individual’s preferences with regard to heroic measures and whether or not they should be taken to preserve his or her life if there is no chance of recovery from a tragic illness or injury. Under Pennsylvania law now explicitly recognizes such documents.  However, even in Pennsylvania, Living Wills have some limitations.  There is, however, a legal and moral persuasiveness under the state statute and a new United States Supreme Court case.  Living Wills can be an important part of an estate plan at any age as they remove some of the heavy emotional burden of life and death medical decisions from family members and they sometimes can eliminate the erosion of an individual’s estate through avoidance of interminable medical bills.

Medical powers-of-attorney are used to designate one or more people to step into the patients shoes to make medical decisions.

Beneficiary Designations

Many assets pass outside of a will,  i.e., a will does not control disposition of all estate taxable assets.  Retirement plans, 401k’s, IRAs, insurance policies, joint property with right of survivorship, in-trust-for accounts, and pay-on-death accounts all pass outside the control of a will.  To ensure that a will control’s disposition of assets and to obtain all tax advantages, it is frequently necessary to designate one’s estate or a trust under a will as beneficiary.  This type of beneficiary designation must be handled properly and with extreme care or assets could be exposed to creditors’ claims or unwanted income or estate tax consequences.  Legal counsel is highly recommended.

To read more about one of the most popular Medicaid Asset Protection Trusts read this article.

To read about naming a Trust as beneficiary of and IRA or 401k or other tax deferred asset click here.

To read more about the Power to Modify Beneficiaries click here.

Please contact Douglas L. Kaune at 610 933 8069 to review your estate planning and Elder Law goals or those of a parent or loved one.

To understand those assets that the PA DPW cannot reach at the death of a Medicaid recipient, let’s first look at those that the estate recovery can require repayment from.  Probate assets are those that are in the decedent’s name alone and which are not owned jointly with another person or designated to transfer by beneficiary designation.  Examples of probate assets upon someone’s death are: 1. a real estate interest owned in the decedent’s single name, 2. a bank account owned in the decedent’s single name, 3.  a stock account owned in the decedent’s single name; and 4.  a vehicle owned in the decedent’s single name.  Therefore, to avoid estate recovery, you should look to transform any assets owned by the Medicaid recipient into non-probate assets so that they will transfer outside of the Department of Public Welfare estate recovery upon the death of the Medicaid recipient.

Non-Probate Assets which are not subject to estate recovery include property owned jointly by the decedent and another person.  For example, real estate owned jointly by a former Medicaid recipient with his or her spouse, friend, child or sibling cannot be recovered.  Life insurance proceeds paid directly to a designated named beneficiary are outside of the recovery process.  Assets of the decedent which had been placed in trust during his or her lifetime are free from recovery.  Additionally, PA estate recovery cannot go after irrevocable funeral reserves and certain trusts for disabled beneficiaries.

The process of converting assets to non-probate status is an important planning tool, but is frequently overlooked.  Take this prototypical case pattern:  Husband and wife own significant assets.  Wife enters a nursing home.  Husband’s and wife’s assets are spent down to required levels and Wife qualifies for nursing home.  Husband retains his allowable spousal share of the assets such as a primary residence worth $400,000, cash in the amount of $110,000 and an IRA of $400,000.  That is over $900,000 in assets!!  Husband does not seek proper planning advice and keeps his old will and does not change beneficiaries.  Husband lives for 5 more years while Medicaid pays for wife’s care.  When husband dies all assets transfer to wife who is in the nursing home.  The inheritance causes wife to go off of Medicaid and she begins privately paying for her care.  Wife does not seek proper planning advice and she leaves all assets in her name alone so that upon her death all assets remaining are probate in nature.  She lives for 3 more years after husband’s death having a probate estate of $550,000.  As a result PA DPW will have a claim against wife’s probate estate in the amount equal to the 5 years of care Medicaid had paid for during husband’s lifetime. This estate recovery claim would likely be between $350,000 to $450,000 depending on the monthly care cost paid by the Medicaid.

This horribly negative result could have been avoided or softened if;  1.  husband had prepared his estate plan to either disinherit his wife or create a special needs trust for her benefit; or, 2.  even if husband failed to  properly plan, wife or her power of attorney (agent) could have modified the ownership of assets so that they transferred non-probate at her death.

This fact pattern serves to illustrate only one of the many cases where proper planning could thwart the PA estate recovery program.  These are legal and powerful planning options that can serve to protect hundreds of thousands of dollars.

To review this additional article on the Estate Recovery Program click here.

To review this Unruh, Turner, Burke & Frees, P.C. article on the definition of probate and non-probate assets click here.

Please contact Douglas L. Kaune at 610 933 8069 to review your case in greater detail.

Although Medicaid recipients do not have to be given notice of the estate recovery program, the Department of Public Welfare has an informational brochure about the estate recovery program which is provided to Medicaid recipients  and their families when benefits are initiated.  It is also expected, but not required that each DPW caseworker will discuss the estate recovery program with the recipients and their families.

It is sometimes difficult to focus on all of the related issues during the Medicaid application process.  It is understandable that the applicants and their families are not necessarily paying close attention to the details of estate recovery while their primary concern is for the nursing care placement and overall well being of their family member.  That being said, proper titling of assets and strategies relating to beneficiary designations can make tens of thousands of dollars of difference to the Medicaid recipient’s family after his or her death.  We encourage you to pay attention to the caseworker during the application process and make sure that you familiarize yourself with estate recovery and the nuances that can be used to your advantage.  Although, you might not think it is important, the estate recovery issues could impact your or your loved one’s estate in cases like those mentioned below.

There are some exceptions to the estate reach of the estate recovery program. Medical assistance paid on behalf of a recipient before he or she reached age 55 is not subject to repayment.  The program also authorizes recovery only where Medicaid paid for specific types of services such as nursing home care and home care such as that provided through the Waiver Program.  Other medical care and hospital care may be exempt from recovery.

Pennsylvania actually has a shorter estate recovery reach than many other states.  Pennsylvania only permits recovery of probate assets.  Probate assets are those in the decedent’s name alone and which do not pass to a joint owner or a designated beneficiary.  Other states are permitted by their laws to seek recovery from jointly owned property and assets passing through beneficiary designation at death.  Probate assets are easily identifies because it will be necessary for an executor, administrator of appointed estate representative to be appointed in order for the probate asset to be accessed.

It is important to note that assets such as IRA’s, 401k’s, Annuities and life insurance payable to the decedent’s estate are subject to estate recovery.  Make sure to have the beneficiary designations properly constructed to avoid the estate recovery when possible.

Although there might not be an expectation of significant assets in the name of a Medicaid recipient at the time of his or her death, it is possible that there could be more than anticipated.  As a matter of qualifying for Medical Assistance, he or she likely had little to nothing in the way of assets.  That being said, there are a number of scenarios whereby a Medicaid recipient could own assets at death.

Some of those common scenarios are:

1.  The decedent owned a primary residence that was not sold because the owner/Medicaid recipient stated a possible intention to return.  Therefor the real estate was still there at the recipient’s death and in the decedent’s name.

2.  The decedent was married at the time he or she qualified for Medicaid.  His or her spouse died before the medicaid recipient and did not properly plan his or her estate and thereby left assets to the spouse who was still on Medicaid and living in a nursing home.  It is important to note that this scenario can be avoided through proper planning, but is often overlooked.

3.  The decedent was the named beneficiary of a deceased family member or friend and certain assets were paid to him or her after he or she had been receiving Medical Assistance.

4.  The decedent was receiving Medicaid during his or her lifetime.  Subsequent to qualifying for Medicaid, he or she successfully won a lawsuit that paid out a large settlement.

These are only some of the more common scenarios where assets are owned by the decedent which could potentially be available for estate recovery.  It is important in these cases to enter into proper planning to turn the assets into non-probate status so that any balance at death can escape estate recovery.

If you or a loved one are facing nursing care needs and you have questions about the estate recovery program and how best to navigate to process, please contact Douglas L. Kaune at 610 933 8069 or dkaune@utbf.com to discuss your case more fully.  Unruh, Turner, Burke & Frees, P.C. – Offices in Phoenixville, Malvern and West Chester.

The initial issue for many with disable children is awareness of this exception.  An applicant for Medicaid must be aware of this and other exceptions as it is not the Pennsylvania Department of Welfare’s obligation to make him or her aware of the planning options and exceptions.  It is very important for the applicant to be fully informed of his or her rights and the opportunities he or she might have to protect assets from nursing home spending. We want to avoid a scenario whereby a person with a disabled child could enter a nursing home, spend all of his or assets only to find out later that everything could have been protected.  Knowing the law can result in hundreds of thousands of dollars of savings.

A second consideration is the form of gift made to the disabled child.  It is almost always appropriate to make a gift for a disabled child to a Special Needs or Supplemental Needs Trust.  You can read this article on Special Needs Trusts to more fully understand the rationale for using this type of trust rather than making an outright gift.  Suffice it to say, an outright gift to a disabled beneficiary might disqualify him or her from government benefits such as social security disability (SSDI) or Medicaid.

Earlier this year (May 2011), the Pennsylvania Department of Public Welfare (DPW) provided additional guidance to caseworkers throughout the State for the disabled child exception to the 5 year ineligibility rule.

• · The policy statement confirmed that assets composed of both income and resources may be transferred without penalty to an individual’s disabled child.  The disability must be consistent with Social Security (SS) standards and must be documented.

• · It was confirmed that there is no age limitation for who can receive the gift.  The individual’s disabled child can be an adult or a minor.

Read this earlier article detailing gifting to special needs trusts for disabled children in order to protect family assets and qualify for Medicaid.

This additional guidance provides us with security that the disabled child transfer exception is available in Pennsylvania (PA) and what steps we need to take to make sure clients and their children fully qualify.  Please contact Douglas L. Kaune at 610 933 8069 or dkaune@utbf.com to review the disabled child exception and other Elder Law or Estate Planning considerations.