What’s Really Wrong with Family Care

These days we have shared  a lot of concern over Governor Walker’s attempt to make sweeping changes to Family Care and Aging and Disability Resource Centers without consulting any citizen stakeholders. (See the article I wrote on that issue.) We don’t really know what Governor Walker thinks is wrong with Family Care the way it is, other than cost. (And it has not yet been clearly spelled out how he thinks the sweeping changes he wants will save costs, leading me to believe the cart has been put before the horse.)

I’ll tell you what’s really wrong with Family Care, in my opinion. The Budget proposals don’t fix the problems I am going to talk about.

PROBLEM 1: ARBITRARY RULES ABOUT TAKING FAMILY CARE IN ASSISTED LIVING FACILITIES

Family Care allows assisted living facilities to pick and choose when they agree to take Family Care. So you never know if you will be able to use Family Care even if you meet all the financial qualifications.

In the operation of Family Care, the State allows assisted living facilities to set parameters on their agreement to allow residents to use this benefit. Which means that an assisted living  facility could say that it will only take Family Care benefits for a limited number of residents. Or the facility could say that it will only let you use Family Care benefits if you have paid privately for two years.

By contrast, under federal law, if a skilled nursing facility agrees to take Medicaid payments for any patient, it must agree to take Medicaid for anyone who qualifies, no strings attached. A nursing home cannot refuse to take Medicaid for a qualified patient. It cannot limit the number of patients for whom it will take Medicaid. It cannot impose a requirement that the patient must pay privately for a specified amount of time.

It gets much more complicated to figure out how to plan when you are not sure about whether you will be able to count on Family Care in the assisted living facility you would like to live in. When I am talking with my clients about Family Care, I have to explain it this way:

1) First you have to find an assisted living facility that you are comfortable with for your loved one.

2) Then you need to find out if it takes Family Care. There is a web page you can look at here. You will find lists that indicate whether or not a particular facility in a particular county takes public funding, among other useful information. You can also search the provider lists for the Family Care Managed Care Organizations in your county. OR, you can ask the billing office of the facility. Getting a “yes” answer is the first step.

BUT THAT IS NOT ENOUGH

3)  The next thing you have to find out is what the facility’s limitations are for taking Family Care. “Do you take Family Care right away if someone qualifies?” “How long must we pay privately before you will take Family Care?” “Do you only allow Family Care for a limited number of residents at a time?”  OR, the trickiest one of all. “Do you take Family Care in the Wing I am considering?” This is because some facilities will refuse to take Family Care in certain sections of the residence where a higher care level is involved, such as a “memory care” wing.

Making the wrong move can be a disaster. If you pick a facility because you hear it will take Family Care, but you don’t know the rules about WHEN or in what WING the facility  will take Family Care, you could run out of funds and be unable to access Family Care. Worse yet, it will be that much more difficult for you to find a new place. I painfully recall a family who inquired of a facility, moved in, paid privately as required, and applied for Family Care after several years, only to be told the facility didn’t take Family Care for the memory wing in which the client resided. We were able to persuade the facility to bend the rules.

But why? The reason for all this is that the state is unwilling to pay assisted living facilities a decent rate to provide quality care, and so they give some leeway not to rope the facilities in too much when they DO take Family Care.  These places are caring for our mothers and fathers, grandparents and our disable children. They deserve a decent rate of payment.

(Aside: I am all too aware of the growing costs of long term care. But look at the inevitable. The population of individuals with dementia in Wisconsin is predicted to grow by almost 20% in the next ten years, according to the Alzheimer’s Association. We cannot nickel and dime this crisis by cutting rates to the people caring for our loved ones. The time to figure out a funding mechanism for quality care for everyone who will need it is upon us right now. And YES, it NEEDS TO cost the taxpayers more money.)

If you are nervous about all this uncertainty, I don’t blame you. I tell my clients, “well you can always go to a nursing home where they HAVE to take Medicaid if you qualify.” But that is ironic, since federal anti-discrimination laws including the Americans with Disabilities Act (ADA)  require states to provide services to disabled individuals in the least  restrictive environment available. I believe this arbitrariness in Family Care is in violation of those anti-discrimination laws.

PROBLEM NUMBER 2: YOU CAN’T GET FAMILY CARE BENEFITS WHEN YOU QUALIFY FOR THEM.

When you apply for Family Care, there is a lengthy process involved that takes several weeks. You must call to schedule a meeting, you are required to have a counselor talk to you about the program, then have a screening to see if you meet certain functional tests, then fill out a financial application and have it reviewed. After you get through all of that, which can be 4-6 weeks, then you get to choose your managed care organization and enroll in Family Care. Only then do you actually get to receive benefits. This is a problem if you are in assisted living, because you apply for Family Care when you have virtually run out of funds to pay for your care. If it takes 6 weeks to get benefits, you end up with an outstanding bill you cannot pay.

Federal law requires that people who apply for Medicaid get benefits as of the date of application (and in most cases as of three months prior to the date of application, if you were otherwise qualified.) This is how it works if you are in a nursing home. In a nursing home, if you apply for Medicaid and it takes a month or 6 weeks to process your application, your Medicaid benefits will go back to when you applied, and even up to three months before that. If you paid privately for that time, you will even get a refund. Not so with Family Care.

Now, the actual Family Care rules require the state to give you benefits as of when you apply. The state just doesn’t follow its own rules, let alone federal law.  Again, this is another lawsuit waiting to happen.

You may be able to get around this by demanding “conditional enrollment” in Family Care. This is a process where you are enrolled right at the beginning, but if it turns out you do not meet the financial requirements, you have to pay for your services.

This is part of the Family Care Contract mandated by the state of Wisconsin. I’m not kidding:

 Provision of Services While Financial Eligibility is Pending
The MCO will cooperate fully in executing a memorandum of understanding or other written agreement with each ADRC within its service area that describes the circumstances in which the MCO will provide services to an individual who is functionally eligible but whose financial eligibility is pending.
This agreement can be to serve individuals whose financial eligibility is pending at the time of initial enrollment or during a period of disenrollment due to loss of financial eligibility.  The MOU shall include a process for the resource center to inform the individual, or their authorized representative, that if he/she is determined not to be eligible, he/she will be liable for the cost of services provided by the MCO.
The MCO will not receive a capitation payment for an individual during the time financial eligibility is pending. If and when eligibility is established, the MCO will receive a capitation payment retroactively to the date indicated as the “effective date of enrollment��? on the Enrollment Request form, up to a maximum of ninety (90) calendar days of serving the person while financial eligibility was pending.
The effective date of enrollment entered on the Enrollment Request Form shall also be no earlier than the date on which an individual or their authorized representative signs an explicit agreement (not just the enrollee’s signature on the enrollment form) to accept services during the period of pending financial eligibility.
If the individual is determined not to be eligible, the MCO may bill that individual for the services the MCO has provided. The MCO shall pay providers for services which were provided and prior authorized by the MCO.  MCO providers may not directly collect payment from the individual.
The timelines for completion of the comprehensive assessment and member-centered plan shall be the same as those indicated in Article V, Care Management.

The thing is,  most of the ADRCs seem to be entirely ignorant of this requirement so it is usually an uphill battle. In Milwaukee, they are well aware of the requirement but they flat out refuse to do it. One of these days, I will have to push the issue. But then again, if you don’t like that problem, you can always go into a nursing home. Hmmmm, there is that pesky ADA discrimination issue again.

Budget

Posted in Elder Law, Medicaid | Tagged

What Governor Walker’s Proposed Change to Promissory Notes Means

money sign

Governor Walker’s 2015-2017 budget proposal contains a change to one particular area of Medicaid planning involving the use of promissory notes. While this is relatively minor compared to the chaos of the 2013-15 budget, it is worth a passing comment.

The proposed change adds language in two areas of the Medicaid law, and the revised language would prevent the use of promissory notes in Medicaid planning.

A promissory note is a loan. Under Federal law, a loan will be considered a “divestment” (see my explanation of divestments here) unless it:

(i) has a repayment term that is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the Social Security Administration);

(ii) provides for payments to be made in equal amounts during the term of the loan, with no deferral and no balloon payments made; and

(iii) prohibits the cancellation of the balance upon the death of the lender.

Governor Walker’s proposal adds a fourth requirement: the loan may not be non-negotiable, non-assignable, or contain terms preventing its sale.

Then, the new budget proposal states, in another section, that a loan that is assignable and negotiable is a countable resource to the individual.

So….under the proposed new law, if you use a promissory note, it  will either be an available resource or it will be a divestment.

This proposal is illegal. A state cannot have rules that are more restrictive than federal law.

And, it is really a waste. As I explain to my clients, promissory notes are really just a stop gap measure to help curtail the bleeding of the private pay nursing home rate, over $10,000 per month in my area of the state. Promissory notes can reduce a person’s assets so that they qualify for Medicaid, and can purchase care at a much lower rate.   But the law requires that those notes be paid back, so when a payment comes in there are very limited options as to what a person, especially a single person, can do – many of my clients use the loan repayment to make a payback to estate recovery. The interest on the loan counts as income that must go to the nursing home as a cost share. Also, if the person dies before the loan is repaid, the outstanding balance may be available for estate recovery.

So the state is not really creating much of a benefit by curtailing the use of promissory notes, and is setting itself up for a legal battle. I wonder why this pettiness is such a priority for Governor Walker. He attacked promissory notes the  last time around and the provision ultimately did not remain. It’s BAAAACCCCKKK. (Well, he is going about it in a new way this time.)

Even if it passes, it  won’t prevent people from becoming eligible for Medicaid. An annuity meeting federal requirements would have the same benefit that a promissory note provides now.

Posted in Elder Law, Medicaid | Tagged , ,

Governor Walker’s Budget Proposal Contains Radical Change to Family Care Without Input From Consumers (And Provides Another Glimpse Into Walker’s Way of Doing Business)

Or, Thompson and Walker approach long term care redesign in entirely different ways – A tale of then vs now.

Governor Walker’s proposed Wisconsin budget for the 2015-2017 biennium contains a major overhaul of the Family Care System. This proposal blindsided the vast majority of organizations who work with seniors and disabled individuals. It came as a complete surprise because Walker had not consulted with any stakeholders prior to proposing this overhaul. This is nothing new for Walker, who is not exactly known for having a cooperative approach on reforming laws and services for the less-than-wealthy.  Walker prefers the ramrod approach. But it is new for those of us in the elder and disability community, because here in our world we have a history of coming to the table to discuss these things. This approach was put in place by a prior Republican governor, Tommy Thompson.

Before I get in to the historical background, let me briefly explain Family Care. It is Wisconsin’s community long term care program for elderly and disabled individuals. Family Care is a program that is operated through the federal Medicaid Waiver program. This means the program gets Medicaid funding and follows many of Medicaid’s rules. Family Care provides services to people who, because of their medical conditions,  need help and support to stay in their homes or in a community setting such as assisted living, a group home or a supervised apartment. Many of my elderly clients who live in assisted living facilities are able to qualify for this program. Others are able to pay for services coming into their home to help with things like medication management, bathing and transportation.

Programs like Family Care are mandatory as a result of cases like the Olmstead decision in the United States Supreme Court, that found a state violated disability discrimination rules when it had long waiting lists for community care that forced people to receive care in an institution when a less restrictive setting would be appropriate.

Which brings me to the history of Family Care. Years ago, Wisconsin’s program to provide community-based long term care services was called the “Community Options Program” (and the Community Options Waiver Program). Although it was a good program for those who could get it, there were extremely long waiting lists and delays, so much so that the state and counties were being sued for discrimination and violations of federal laws. I was one of the attorneys representing elderly individuals on such a case. Governor Thompson, as well as the aging and disability community and the county governments, recognized the need for change. So in 1995, Governor Thompson convened a committee on Long Term Care Redesign to study the possibility for reworking the system to eliminate waiting lists.  A history of this effort can be found here. The Redesign Committee worked for several years, formed subcommittees focused on certain issues, and held many stakeholder meetings. Family Care was born as a result. It was in Governor Thompson’s 1999-2001 budget proposal, the product of several years of study and the development of consensus among stakeholders.

But when you are Scott Walker, who needs consensus?

Walker’s redesign proposal would eliminate some important aspects of the program. First, it would eliminate the IRIS ( I Respect, I Self-direct) program, which allows participants to self-manage their own budget for their care, providing the widest latitude to create an individual program within a budget. Second, it would replace the Managed Care Organizations that operate in various districts to run the program. It would restrict participation in Family Care only to those MCOS that can operate on a statewide basis. This is NONE of the current MCOs. To operate statewide,  an MCO would have to have significant capital, the kind that only large insurance programs have.Third, it transfers oversight of the MCOs to the Office of the Commissioner of Insurance instead of the Division of Health Services. Fourth, it provides a means to eliminate the current Aging and Disability Resource Centers that provide help on a local basis to seniors and disabled individuals, by allowing this service to be contracted out. There are numerous other changes proposed that are too many to go into here.

You might ask, why the changes?  Well, when you are Scott Walker, why not? He must have a good reason. Like, providing big business for out of state insurance companies and putting Wisconsin MCOs out of business. Reducing the size of government by eliminating the ADRCs. Or something like that. But definitely not improving services for elderly and disabled people. That is nowhere in this equation, or else he would have had them at the table in making the decision.

Since its implementation, Family Care has eliminated waiting lists, reduced long term care costs, and increased the delivery of care and services. Is it perfect? No. Part of my job is to complain about the things that go wrong in that system. But it is effective. And changing it is something that should be done with careful consideration, not an iron Walker fist.

walker with seniorThe reaction of most seniors at this radical change is about the same as the woman in the picture I’ve included in this post. If you feel the same, now is the time to contact your state legislators and tell them to put a stop to this. You can find your legislators by putting your address into the box on this page. You might also want to attend one of the four public hearings on the proposed budget. The dates and locations of all four public hearings are provided below:

 March 18, Brillion High School, 10 a.m. – 5 p.m.

March 20, Alverno College, Milwaukee, 10 – 5.

March 23, U.W. Barron County, Rice Lake 10 – 5.

March 26, Reedsburg High School 9:30 – 4:00.

 It might be the only chance that consumers get to be part of the discussion. It seems certain we won’t get an invitation from Governor Walker.

Posted in Elder Law, Medicaid | Tagged , ,

The Mom I Knew

mom and dad wedding pictureMy mother Velma was complex and our relationship was complicated. Like many women of her generation, she took a job during World War II. As a chemistry major in college, she worked in a plant  that developed therapeutic uses for penicillin. She had to give it up when the war ended. She continued in college and met my father Russell after he returned from duty in the Navy. They married and she finished school at the same time she was caring for my oldest brother as a newborn.

As a child growing up, Mom was the driving force in our lives. My father, having been on the road for many years as a traveling textbook salesman, settled in the background in a supporting role, taking charge mostly when travel, our Canadian cottage, or cars, repairs or logistics were involved.

Mom always had papers moving around. When I was a small child, she was writing her Master’s thesis, although I didn’t know it at the time. To me she was just spending a lot of time at the typewriter. As I grew up, she was typing letters to the editor, political comMy beautiful picturementaries, letters to friends and seemingly always working on editing a paper for one of my brothers and later, me. Or campaigning for some issue of justice she felt needed to be addressed. She clipped newspaper and magazine articles and saved them for discussion among the family.

Mom held strong opinions on issues of justice and injustice. We belonged to three different  churches over the course of my life, because my mother took issue with either an action of the church (treating a woman minister unfairly in the Methodist Church) or a political position (our Lutheran church supporting a war my mother felt was wrong.) They settled on a UCC church that my parents remained active in until my father died, and which committed no political or administrative transgressions warranting its removal from their religious lives. Although she came from a Republican family, she was a Democrat her whole adult life.

At times, my mom seemed to have a level of frustration with the limitations of her primary role as housewife and mother. She spent time as a substitute teacher and worked with homebound students, but never took a full time job. I wonder if she felt like she was never allowed to develop her full career potential. She was extremely bright. Even though she had the mind of a scholar, she put her heart into being an involved and active mother. And her heart was as strong as her mind.

My mom was an excellent cook. Growing up on a chicken farm, she made the best fried chicken ever. Her pie crusts were perfect and in Canada at our cottage, she could mom dad and bailey in the boatcook fresh fish six different ways at the drop of a hat. She had many other hobbies and interests. She loved the time she and my father spent together in Canada.

While my mother was mostly a caring, loving woman when I was younger, she also had a temper that could become ugly, particularly when I or one of my brothers got out of line. When she would react with rage at some transgression, I sometimes wondered whether it was really me she was angry with, or something or someone else.  Maybe her lack of control over me mirrored a lack of control over her life. I never learned the truth about that. Because I was a particularly rebellious young woman, I bore the brunt of a lot of  my mom’s temper in my teens. Later, when my son Ken was a newborn, I saw an entirely different side – a nurturing and happy woman caring for my little boy without the slightest hint of anger or discontent. She was a wonderful Grandma.

It was in the late 1990’s when she was diagnosed with a rare type of abdominal cancer, Pseudomyxoma Peritonei. The doctors in Wisconsin gave her six months to live. I asked the doctor to tell me which type of this rare cancer my mother had (there were three types) and she refused to answer, simply insisting that my mom and memother’s life expectancy was six months or less. We did not want to accept this determination, so I located a specialist in Washington DC. We flew there for a second opinion. Shortly afterward my mother had a complicated, long surgery for the cancer.  She did extremely well and returned home much earlier than expected. She chose to fight, and she fought hard. She proved the Wisconsin doctors wrong, surviving over 15 years.

Not quite two years after the surgery, we noticed the forgetfulness. Questions being repeated. Stories being retold. Losing track of what she had been doing. At first it was just annoying. We didn’t know what was going on, and it simply irritated us to answer questions over and over. Eventually, we became concerned.

Her first trip to the doctor for testing revealed mild cognitive impairment. It was enough for us to get involved in memory care treatment. I still recall the initial meeting with the  doctor, asking what kind of dementia this was. Her surprising response was “it doesn’t really matter, we treat them all the same way.”

Mom and Dad continued on in their home, living independently for the next several years. I kept in touch with phone calls, church on Sunday, stopping for lunch or dinner, and holidays. The questions kept being repeated. Mom stopped driving on her own. More and more handwritten notes, lists and reminders appeared around the house. Important letters and bills had the words “SAVE” written in Mom’s handwriting, sometimes circled. Cooking became more difficult for Mom. One time, she put dish soap in the soup she was making, and became extremely humiliated and upset.  Eventually, we stopped having holidays at my parents’ house and started having them at my house.

On Thanksgiving, 2007, Mom and Dad came to my house for the holiday dinner. The next day, my father called asking me to take him to the emergency room. After seeing the doctor, it became clear he needed care for a bladder condition, and would need to stay at my house for the weekend, so I could monitor him. We returned home and picked up Mom, and they came to my house. I settled them in my bedroom for the weekend. They never left.

My father had been spending so much time attending my mother, that he had neglected his own care. His treatable bladder condition had progressed to a point where it needed surgery that was only minimally helpful and ultimately, the cancer became fatal. In the course of evaluating my father, as they stayed at my house it became very clear that my mother’s dementia was progressed much farther than we realized. When we were only seeing her for a day, or talking on the phone, she was able to pull the wool over our eyes, albeit unintentionally. Because of her high level of intelligence, she was able to carry on a conversation for quite awhile (the repeated questions aside)  and it was only when I compared her stories about her day with what I knew to be reality because she was living with me, that I realized she was relaying a life of fiction to us which she made up as she went along.

Thus began our lives as caregivers for my mom and briefly, for my dad. During the course of their illnesses, my three brothers and I took part in caring for my parents. My oldest brother Richard moved from his home in New Mexico to stay in my house with my parents while my dad was dying, because I had a full time job. My brothers Bob and Brad provided respite care and did other tasks to make our situation workable.mom bday

My parents were married for 61 years when my father died of cancer in June, 2008. At his funeral, my mother asked me, “Now, whose husband is that in the casket?”  At the gravesite, when the military honor guard handed her the flag, she seemed to understand it was her dear Russell.

After my father’s death began the quest to find high quality care for my mother. That, and the stories of our adventures and misadventures while Mom  lived with me and in the three care facilities she experienced, are best saved for other posts. Throughout the course of her disease, we saw both the sweet and challenging, angry sides of my mother as she had always been.

My mother’s dementia continued to deteriorate. By 2012, she no longer knew my brothers or I. We were simply nice people who came to visit.  By 2014, she needed skilled care and we were fortunate to get her into Lasata Care Center in Cedarburg.

At some point in the later stages of the disease, we started referring to “the Mom we knew.” The Mom we knew would never have wanted this, we would say. Somehow, we now had a new mom. This was the dementia mom. The dementia mom was not our “real” mom.  I called her “Velma” because she no longer responded to “Mom.” We convinced ourselves that our “real” mom, the Mom we knew, was gone. This somehow made it ok that the “dementia mom” did not know us.  It made it ok that  “dementia mom” swore at her caregivers, and chewed on napkins thinking they were food or stole stuffed animals and pictures of someone else’s loved ones from other residents’ rooms. Our “real mom” never would have done those_MG_6180 things, but it was ok for dementia mom. Eventually, the thoughts came that our “real mom” never would have wanted to be alive if she knew she had become the dementia mom, it would not have been something our “real mom” would have stood for, as beneath her dignity and fierce autonomy. But our real mom was not there to stand up for herself, so dementia mom continued to live in her own way. Of course we loved the dementia mom, it was just different.

Then came the call, at 5:30 a.m. on Thursday, Jan. 15.  “Your mother has had a change of condition,” said the nursing supervisor.  This call was the beginning of the final stage of my mother’s disease. She had developed a high fever. It subsided after treatment, then came back the next day. My brothers Brad and Bob came down the following day, and then on a Sunday my mother lapsed into a state of not eating, not drinking, not responding.  During the week that followed, we stayed with my mother as much as possible, taking shifts. In those days, on my shifts I held my mother’s hand, rubbed her arms and feet, and played music.  I put cold cloths on her head and put moist sponges in her mouth.  I tried to sing to her and talk to her. I decided I should remind her about heaven, in case she had forgot. I cried and cried for the years we had lost. And in those hours and days, it occurred to me. This was my real Mom. This Mom lying on her bed, dying but still fighting. The dementia mom and the political mom, the Mom who didn’t know us and the Mom who raised us, the Mom who fought with her caregivers and the Mom who beat our behinds, the Mom who repeated questions and the Mom who wrote our papers, the Mom who was there when I was a little girl and the Mom who was there at the end when I felt so very, very old and tired. The Mom who lived, and the Mom who died on January 24, 2015 after a fifteen year battle with Alzheimer’s Dementia.

I so dearly miss the Mom I knew. Bless you, Mom.

 

 

 

 

Posted in Elder Law | Tagged ,

Home for the Holidays

Many non-retail businesses experience a slow-down over the holidays, and retailers feel a January slump. In elder law, on the other hand, we invariably see an uptick in our intake calls over the holidays and especially just afterward.

What causes that?

After experiencing this trend for over 20 years, I can say with a fair amount of certainty what causes it: holidays. Well, not exactly the holidays themselves. It’s that fact that many children return home over the holidays to visit mom and dad. And when they do, they see things that concern them. I call it “Home for the Holidays Syndrome.”

Children, particularly those who have been away from day-to-day interaction with the parents, will notice quite clearly that Dad is not getting around like he used to, or that Mom is getting more and more forgetful. And they become worried.  And they decide to call an elder law attorney.

Sometimes, children who are out of the day to day caregiving routine for a parent will return home and develop concerns about how the caregiving child is handling things. Alternatively, they will realize that a parent living alone is no longer able to manage successfully without support.

In the best of situations, family members coming home for the holidays may be able to see things that a parent, or a caregiver child, immersed in a situation every day, has simply absorbed as part of the day to day progression of caregiving.

I will never forget the Thanksgiving in 2007 where I realized that the pleasant phone conversations I had with my mother were filled with fiction – she had the early stages of dementia but also had a Master’s degree in history and was extremely articulate – so she could fill a conversation with chatter and information that she simply, innocently made up when she could not remember reality. When we were all together I realized that she was spinning yarns about things that simply did not happen. I also realized that my father, in caregiving for my mother, had let his own health go to the point where he had a medical condition that was extremely serious. I didn’t live far away, but with a full life of work and childrearing, I thought my regular phone conversations  were enough to “check in” on Mom and Dad. At that point we realized help was needed, and  we began to collectively make a plan for  increasing our involvement. (Before that plan even was put into place, my dad’s condition got worse and then,  before I knew it, they were living with me, and my brothers and I began our caregiving roles for both Mom and Dad.)

In the worst of situations, family coming in for the holidays may inappropriately confront a caregiver without knowing all the facts or without awareness of the intense amount of effort that daily caregiving involves. Or, family members who have had a history of conflict may choose this situation to pull out the baggage and start the same old family fights again, only with a new excuse: the care of mom or dad. Finally, in the worst of situations a family member from the outside may discover something very wrong with the caregiving situation, such as financial or physical abuse, or neglect.

I simply want to remind anyone coming home for the holidays to visit aging parents that there are resources available. Elder law attorneys exist in every state – look at http://www.Naela.org to find an elder law attorney near you. Also, geriatric care managers can provide an invaluable objective eye on the caregiving arrangements and can help set up services and support if needed.  Click here to find a care manager near your family. Finally, the Alzheimer’s Association has a wealth of resources available to afflicted individuals, caregivers, and family members. Please spend time visiting the website at www.alz.org and return there often.

I also want to make a point about reactions: In my experience, it is simply destructive for children to fight amongst themselves in front of their parents. Whatever issues you may have had with your brother or sister, now you need to focus on what mom or dad needs. Fighting in front of your parents or parent will accomplish nothing and simply make the situation worse.

Enjoy the holiday season!holiday home

 

Posted in Elder Law

Timing is everything…

Gold_Chaika_Pocket_Watch_made_in_the_USSRIn understanding the ins and outs of Medicaid and divestment, timing is everything.

Divestment is the concept that if you give away your assets with the intention of becoming eligible for Medicaid, the gift will cause you to be ineligible for Medicaid for a period of time. This is pretty easy to grasp, why would any government poverty program allow you to give away a million dollars today, and apply and qualify tomorrow? (Well, some government programs do allow you to give away a million dollars and qualify immediately  – such as Veterans’ Aid and Attendance Pension – and even Medicaid allows you to do that in a limited situation such as when the gift is for the benefit of a disabled child –  but that is not what we are here to talk about today. In my experience, most millionaires want to keep their money.)

Even though the Medicaid rules are intended to penalize intentional divestment, as a practical matter, if an individual has given away any substantial sum of money while his or her health has been declining, it is going to be viewed as a divestment by a Medicaid caseworker. There are cases where we have successfully argued that a particular gift was not for the purpose of becoming eligible for Medicaid, but that does not happen without a bit of a struggle.

So, the basic timing in divestment cases goes like this:

Timing issue number one: FIVE YEAR LOOKBACK. If you give something away, and at any time within five years after that gift you need to apply for Medicaid in a nursing home, or for Family Care to provide home care or assisted living benefits, you will be required to disclose the gift on your application.  That five years is called the “look back period.”

Because of the “look back period,” people who divest and apply too soon could be hit with a large penalty, and people who wait five years will have no penalty. This is why, in doing planning involving the transfer of assets to an irrevocable trust, it becomes irresponsible if the person does not have enough money outside of the trust to be secure for five years. That is also why, if the plan is to wait out the lookback period, it is critically important to time the application so that it is not done too early.

A gift within the lookback period is likely to create a “penalty period,” which leads us to timing issue number two: THE PENALTY PERIOD. This is also referred to as the “period of ineligibility.” The penalty period is a calculation that uses the amount gifted, and divides it by a figure that is updated “sort of” annually  (it does not always get changed.) For example, a gift of $20,000 that is made within the lookback period will create a penalty period of 82 days.

If you are newly applying for Medicaid that penalty period is imposed beginning when you:

1) are in the nursing home, (or when you apply for Family Care in the community);

2) have spent your assets down to the level at which you qualify for Medicaid ($2000 for an individual, and usually somewhere between $50,000 – $119,240 for married couples in most cases); and

3) apply for Medicaid.

For people already on Medicaid who divest money, the timing is even more complicated and I won’t go into it here. The penalty period will mean that even though you qualify for the Medicaid program, you still need to pay privately for the duration of the penalty period.

“Well, how am I supposed to do that if I only have $2000?”  

Good question! The answer is: You can’t! Particularly if you are single. Unless…..You have planned carefully. 

Careful planning is the reason that in some cases, where a person has gifted money, it makes sense to take steps to further reduce that person’s assets immediately so that an application for benefits can be made and a penalty period served out. (Which, I realize, is exactly the opposite of waiting out the five year lookback period, and so this has to be carefully considered.) One such case would be where a person is in assisted living but anticipated to move to a nursing home setting. In that case, instead of waiting to gradually spend down all the person’s money, and apply for Medicaid in a nursing home, and then get hit with a divestment penalty, it would make sense to have that application completed while the person is in assisted living, even if the assisted living facility does not take Family Care benefits! That way, the penalty period will be over before the high cost of nursing home care sets in.

In other cases, where a person has gifted money and then finds him or herself in need of nursing home care, we advise the family that instead of gradually spending down money, and then again ending up applying for Medicaid and facing a penalty period, the family should immediately reduce assets by using a vehicle such as an annuity or loan, whose payout is carefully timed so that the income will cover the cost of the penalty period.

These techniques are not “gaming” the system. These people are “paying the penalty” for having divested money. The difference is that when clients understand how the timing works, there are steps they can take instead of simply waiting and being hit with a penalty when neither the client nor his or her family can afford it.

And I won’t beat around the bush – timing is everything in one more respect: getting in to see a qualified elder law attorney sooner rather than later. This is because people who have good advice will minimize the impact of a divestment. People who don’t will end up simply spending down all of their funds and will be hit with an unworkable penalty.

Posted in Elder Law, Medicaid | Tagged ,

10 important points about irrevocable Medicaid trusts

trust imageWith the State’s drastic changes to estate recovery, there has been  a corresponding  increase in the number of clients for whom an irrevocable trust becomes an attractive option for Medicaid planning. At the same time, over the course of my work with clients in 20+ years as an elder law attorney, I have seen many cases where clients had at some point in the past created an irrevocable trust, and ended up with serious problems because the trust was drafted improperly, or because they simply did not understand how the trust worked. I want to set out some of the points I use to educate my clients when we talk about irrevocable trusts. This isn’t meant to be a complete analysis of all the legal issues regarding this type of trusts, rather a set of highlights. How any of these applies to a particular case depends very much on individual circumstances.

There are a number of different kinds of irrevocable trusts, set up for different reasons including not only Medicaid planning, but also to benefit disabled children or relatives, for estate tax planning, and charitable gifting. Here I am talking about Medicaid irrevocable trusts.  Readers should always consult with an Elder Law Attorney for advice on their specific situation.

1. An irrevocable trust can protect assets for Medicaid eligibility purposes, but means those assets are not available for your own use if you are the one setting up the trust and funding it with your assets.

When a trust is set up to protect assets for Medicaid purposes, the key feature is to structure the trust so that assets are not considered to belong to the “grantors” (the people setting up the trust and funding it with their assets) if the grantors need to apply for Medicaid. In order for this to work, the grantors cannot have access to any of the “principal” of the trust – in plain language, this means if you put $100,000 into the trust, you cannot get it back out.  AND what’s more, that $100,000 cannot be used for your expenses, such as your care, your needs, vacations, your bills, any repair to your home, etc. You cannot take the money for your needs. Period.

While loaning the funds back to you may be a possibility, it is not a certainty.

Which brings me to an important point. The concept of “protecting assets” for Medicaid purposes is a bit of a misnomer. This is because often, in order to avoid using assets to pay for nursing home care, frequently you must transfer them out of your control and possession. Which really means that you are not “protecting” them at all as far as your own needs. You are “protecting” them in the sense of passing them on to your chosen beneficiaries. That may NOT be what is best for you in terms of your own needs, and possibly may not be what you are inclined to do.

When I make this point with clients, I am very strong about it. Clients should not engage in this type of Medicaid planning if they need to use the funds for their own care and expenses. On the other hand, some clients are in a position to do this type of planning. This is a very fact-specific analysis and should not be made on the basis of some “package” deal or “group” presentation that many clients fall victim to. Insist on individual advice by a qualified attorney.

Because you cannot have access to the principal of a Medicaid qualifying trust, it is important to plan on having enough assets outside of the trust to meet your needs.

EXAMPLE: I had a client whose family came to me for advice after he had set up and funded an irrevocable trust. He put his home into the trust, and ALL of his liquid assets. At the time he created the trust, he was already in the early stages of Dementia. Shortly after funding the trust, he needed to move from his home into assisted living. He did not have enough funds to pay for his care. His family did not understand how this trust was supposed to work, and did not understand that the assets in the trust could not be used to pay for his care.

We solved the problem, but it was complicated.

2. You can opt to have access to income from a Medicaid irrevocable trust, but if you do so, it will count when you apply for Medicaid.

A Medicaid Qualifying trust could allow you to get income from the assets in the trust. In other words, if that $100,000 in the trust is earning 1% interest per year, you could receive $1000 per year. But that is it. You cannot get the principal.

If you set the trust up so that you can get income, then that income will be counted as your income when you apply for Medicaid. This is true even if you choose not to take the income in a given year.

If you want to be able to get income from the trust, it must be set up carefully so that only the income counts, and not principal. Improperly drafted trusts will result in the entire amount being counted as an asset.

3. Transferring assets to a Medicaid Qualifying Trust creates a penalty period that will affect you for FIVE YEARS after you transfer assets to the trust.

When you create a Medicaid irrevocable trust, the transfer of your assets into the trust (called “funding” the trust) creates a “divestment” penalty based on the amount you put into the trust.  (Note: If you are creating a special kind of irrevocable trust for the benefits of a disabled individual, or creating an account in a “pooled trust” such as WisPACT or Life Navigators for yourself, there most likely would not be a divestment penalty. Those are different types of trusts that I am not talking about here.)

If you or a spouse needs to apply for Medicaid, you will need to disclose all assets you have transferred into this trust for the last five years. Because the transfer of assets to the trust creates a divestment, this is NOT the type of trust you want to keep putting money into without understanding the negative consequences.

EXAMPLE: If you transfer $100,000 to an irrevocable trust on July 1, 2014, you will need to disclose that transfer if you apply for Medicaid any time through July 1, 2019. The penalty will be calculated based on what you gave away, For example, using today’s rates, a $100,000 divestment would cause a penalty of  410 days where you would be ineligible for Medicaid.

For this reason, it is important to keep your “operating accounts” such as basic checking where your Social Security and Pension income is deposited, outside of the trust.

4. If you transfer your home or real estate into the trust, you cannot use your own money for major repairs without creating a penalty.

The biggest problem I see involving individuals or couples  that have already created one of these trusts, involves clients who have put their home, or other real estate, into the irrevocable trust. They have transferred their home into the trust without understanding that this means when it comes to Medicaid,  they no longer own it. They are often shocked when I explain this. I blame this on a failure by whoever created the trust for them in the first place. It was not properly explained to them.

This is complicated, because the tax treatment of property in the trust could be different than the Medicaid treatment. But what it boils down to, is that if you want to continue to live in a home that has been transferred to the irrevocable trust, you should be careful about detailing the financial arrangements regarding the occupancy of the home.  For example, you may be able to continue to pay some costs of the home such as taxes, utilities, etc as a cost of occupancy. But if the home needs a new roof, the trust must pay for it. If you pay for it yourself (because you see this property as “your” home) you may run into a divestment penalty since you paid for a major repair on a home that was not yours.

There are ways to handle this problem, such as transferring a fund of money at the same time you transfer the real estate.  The fund would be there to cover major repairs or pay the taxes if you can no longer afford to do so because you are in a nursing home. Also, the occupancy arrangements regarding your home should be worked out at the time you set up the trust, so that everyone is on the same page and things go smoothly.

This also means that if the home is sold, you do not get to keep the money, since the home belongs to the trust. The proceeds from the sale will go into the trust.

5.  You can reserve the right to decide who gets the trust assets after you die, even after the trust is set up and funded.

One of the nice things about a Medicaid irrevocable trust, is that even though you cannot get the assets back for yourself, you can reserve the right to decide who gets them when you die, AND you can change your mind about it.  This power is called a “reserved power of appointment” and becomes useful to clients who want to have the freedom to choose who benefits from their assets.

This is also one of the main things that makes an irrevocable trust BETTER than simply gifting assets to family members as part of a Medicaid planning strategy. When you gift money, it is done. You don’t get to change your mind about who you give it to. But with an irrevocable trust, you can keep this right as long as you are able to make those decisions.

The only caveat to this is that for tax purposes, you cannot reserve the right to appoint yourself or your estate as the beneficiary of the assets.

6. Assets in an irrevocable trust will not be taken by the state through estate recovery.

Under current law, if your assets are in an irrevocable trust, they will not be subject to estate recovery. This means that if you receive Medicaid in a nursing home, the assets you put in the trust will not be taken to pay back the benefits you received.

7. You can retain control of an irrevocable trust by selecting yourself as a trustee.

While you must give up the right to use the assets you put in an irrevocable trust, you can still be in charge of managing the assets as trustee. For example, if you were the trustee of an irrevocable trust that contained your house, you would decide when if ever the house should be sold.

If liquid assets are in the trust and you are the trustee, you can make decisions about investing the assets, and about whether or not anything should be distributed for the benefit of your beneficiaries (but NOT yourself or your spouse).

You can also name successor trustees to manage the trust if you cannot.

8.  You can retain certain tax benefits by setting your trust up correctly.

Certain provisions can be put in an irrevocable trust that will allow the assets to be treated as your assets for tax purposes, which minimizes capital gains taxes when the assets are sold after you die. These provisions are designed to make the trust an “intentionally defective grantor trust” for tax purposes. This can be particularly important if you are transferring appreciated assets or real estate into the trust.

Retaining the right to income is one of these provisions. Reserving the right to change beneficiaries is another one of these provisions. There are others. Talk to your lawyer about whether it makes sense to include these provisions in your trust.

9. Irrevocable trusts are not right for everyone

In fact, my position is that for most of the people I see, an irrevocable trust is too risky. This type of trust is probably not right for you if you have modest assets and are in declining health.  Most of my clients are in this position already.

If you want to consider this type of trust, it is something you may want to thing about when you are just entering your retirement age and can afford to set things aside while still healthy. It can also be appropriate for couples who have a secure retirement nest egg or who have long term care insurance.

10. A problem trust may be repairable, even when it is irrevocable.

If you are a person who has an irrevocable trust and has learned that there is a problem, either because you did not understand how it works or because it was improperly drafted and now the Medicaid agency says it is available to you, it may be possible to fix things. I have represented clients in getting the problems with their trusts corrected. Sometimes it involves court involvement.  Sometimes it can be done outside of court. So if you have a problem with your irrevocable trust, do not assume it is a lost cause. Talk to a lawyer to see if it can be fixed.

Posted in Elder Law, Estate Planning, Irrevocable Trusts, Medicaid | Tagged , ,

Medicaid Member Update Clarifies How Wisconsin Will Implement New Estate Recovery Rules, Leaves Members in the Dark on Community Spouse Divestment.

A “Member Update” publication dated June 13, 2014 arrived in the mailboxes of Medicaid recipients last week. We received copies in my office on behalf of some clients. You can read a copy here. 

This update clarifies that Wisconsin’s new and draconian estate recovery provisions will not be applied against beneficiaries until August 1, 2014. It also states that life estates and revocable trusts created prior to August 1, 2014 will not be subject to estate recovery. This resolves a large degree of uncertainty as to whether life estates created many years ago, would now be subject to recovery on the death of the life estate holder. They will not.

It also clarifies that recovery from non-probate assets such as Payable on Death accounts and joint accounts will begin for recipients who die on or after August 1, 2014.

Interestingly, while the state had the opportunity to educate recipients about another critical change in its policies, specifically the rule  that prevents the spouse (“community spouse”) of a person in a nursing home or on Family Care (“institutionalized spouse”), from transferring the community spouse’s assets to anyone else until the institutionalized spouse has been on Medicaid for five years,  and while including this information in an update that went out to all recipients would have been simple, the state chose not to include this. I have already been contacted by community spouses inadvertently caught in this trap. Unlike estate recovery which the state is implementing going forward, the state has chosen to apply the new divestment penalty going back to the effective date of the Joint Finance Committee’s approval of the law, and to do so without warning. When I contacted a DHS employee about this concern a couple months ago, I was told the reason not to provide this information was the cost of sending it to all affected recipients. Well, given that the June Member Update went to everyone, that does not appear to be a valid concern.  It is disappointing that the state chooses to keep couples in the dark about this rule.

Budget

Posted in Elder Law

Do Spousal Impoverishment Protections Apply to Same-sex Married Couples?

gay marriageUpdated! On October 6, 2014, the United States Supreme Court refused to review the lower court decision finding Wisconsin’s same-sex marriage prohibition unconstitutional. In plain language this means that the decision stands, and same-sex marriage is legal in Wisconsin!

 

In a decision dated June 6, 2014, Judge Barbara Crabb has struck down Wisconsin’s constitutional amendment prohibiting same-sex marriage in Wisconsin. You can read her full decision here. As a result, many same-sex couples are happily marrying in Wisconsin. Nonetheless, the legal decision is being appealed, and the future is somewhat uncertain at this time.

So how will these newlyweds be affected if one of them needs long term care in a nursing home? Under the federal policy guidance issued by the Center for Medicare and Medicaid Services shortly after the decision of the United States Supreme Court in U.S. v. Windsor, same-sex couples whose marriage is legally recognized in in the state where the Medicaid application is made, will be treated exactly like heterosexual married couples.

This means that for those couples who now marry legally in Wisconsin, spousal impoverishment protections  will apply if one of them needs long term care Medicaid. I have written about these protections here. Also, spouses can transfer assets to each other without a divestment penalty. There is still some concern whether the marriages taking place in Wisconsin now will ultimately be recognized as legal if Judge Crabb’s decision is overturned. That concern should be resolved in due course.

As I advise all couples, from the perspective of Medicaid issues, marriage can be a double – edged sword. On the one hand, the couple has a more generous asset level than a single person. On the other hand, all of the assets belonging to either spouse are counted (with some exceptions) and subject to a maximum. On the one hand, couples can transfer assets to each other without penalty. On the other hand,  there will be estate recovery from the surviving spouse’s estate. Couples considering marriage  need to weigh the advantages and disadvantages from the Medicaid perspective if that is a concern.  I am happy to help address those questions. and am looking forward to working with same-sex spouses on these issues.

In the broader context, Attorney Ruth J. Irvings, my former partner at Nelson Irvings & Wessels, who is now at the Law Offices of Ruth J. Irvings, has considerable experience and expertise in same-sex couple counseling and estate planning. Couples may want to consider seeking legal advice from Ruth in making this decision.

 

 

Posted in Elder Law, Medicaid | Tagged , ,

Medicaid Myths Part Three: Estate Recovery

house tax recoveryMyth: “I heard I have to turn over my home to the state in order to get Medicaid.”

This fear, or something similar that involves worry that the state will swoop in and take property, furnishings, car, or home out from under a person who needs Medicaid, is common among clients who come in to see me. It is a myth, based on a misinterpretation of Wisconsin’s Medicaid recoupment law.

The truth is that you never have to give up your house to qualify for Medicaid. In most cases, the home will be a resource that does not count in the Medicaid eligibility process. It’s often unfortunate that people have been given bad advice to sell their homes and use the proceeds  to pay for nursing home care before applying for Medicaid, when they may have been able to qualify while still owning the home.

Truth: You never have to give property to the state as a condition of Medicaid eligibility. Period.

That being said, if you receive Medicaid in a nursing home, or hospital where you have been there for more than 30 days, AND you own a home, AND there is no reasonable likelihood that  you will ever return home, the state may be able to place a lien on your home.  This does not apply in all cases however. For example, if a spouse lives in the home, the state may not obtain a lien. There are other exceptions as well.

If the state is allowed to place a lien on your home, then the lien could be enforced if, for example, the house is sold in a probate of your estate.

The lien cannot be enforced if certain people are living in the house, such as a child who lived with and  took care of you for two years prior to the time you went into the nursing home, and who continues to live in the home.

Allowing a lien to be placed on the home is not the worst thing in the world. This is because the lien is for the cost of nursing home care at the Medicaid rate.  Compare the following:

Joe’s house is worth $200,000 free and clear. 

If Joe sells his house and uses the proceeds to pay for nursing home care at the private pay rate of $9000 per month, he will exhaust the proceeds in about 22 months.  There will be nothing left. 

However, if he keeps the home and it is considered exempt because he intends to return home (even if that intent is not reasonable) then he can qualify for Medicaid without selling the home. At some point a lien will be placed on the home. 22 months of care at the Medicaid rate of about $5500 is $121,000. The lien would be based on the Medicaid rate.  After the same amount of time has elapsed, if Joe chooses Medicaid even with the lien,  he still has $79,000 worth of equity in his home.  This increases the chance that if he dies, there will still be equity in the home to leave to his heirs. 

The takeaway is this:

1) If worry about the state taking your house is preventing you from considering Medicaid,  that worry may be based on a myth.

2) If a caseworker or nursing home social worker tells you that you have to sell the house to pay the nursing home, get a second opinion. Selling the house will lead to you paying the nursing home at a higher rate than if you kept the house.

You can learn the truth by talking with an elder law attorney.

 

 

 

 

Posted in Elder Law, Medicaid | Tagged ,