Timeline Provides Understanding, Guidance to Complicated Health Care Laws

For those interested in understanding health care reform (in particular, the Affordable Health Care Act), government website Healthcare.gov provides a timeline that is user-friendly and informative. Below, I will highlight some of the more interesting goals and aspirations of the Act.

Discounts and Services Starting January 1, 2011:

50% discounts available for seniors who reach the coverage gap. Savings will be available for those purchasing Medicare Part D brand-name drugs. The gap is expected to close by 2020, and during the interim, seniors will be given additional savings.

Preventative services will be provided to Medicare recipients for free. For instance, annual wellness visits.

Administrative Funding to Become Available October, 2011:

The Medicare Trust Fund will be assessed by The Independent Payment Advisory Board with an aim to extend its life. Plans are expected to be submitted to Congress and the Executive Office.

New “Community First Choice Option” will allow States to provide home and community services through Medicaid (as opposed to traditional nursing home care).

Doctors to Help Each Other to Exchange Information; January, 2012

New laws provide incentives for physicians to assimilate and form “Accountable Care Organizations.” Doctors would be able to exchange information more easily, and costs would be cut by eliminating unnecessary tests.

Going Green and Online: October, 2012

Changes are expected to reduce paper records. By standardizing billing and using electronic storage systems, not only will care be more efficient but also less costly.

Increased Medicaid Payments for Primary Care Doctors: January, 2013

The Act will require states to pay primary care physicians 100% of Medicare payment rates in 2013 and 2014 for primary care services.

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Senior Homeowners: When does a Reverse Mortgage Make Sense?

For many seniors the equity in their home is their largest single asset, yet it is unavailable to use unless they use a home equity loan. But a conventional loan really doesn't free up the equity because the money has to be paid back with interest. A reverse mortgage is a risk-free way of tapping into home equity without creating monthly payments and without requiring the money to be paid back during a person's lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title "reverse mortgage". Many seniors are finding they can use a reverse mortgage to pay off an existing conventional mortgage, pay off debt or help pay for home repairs, remodeling or long term care needs. False Beliefs "The lender could take my house." The homeowner retains full ownership. The Reverse Mortgage is just like any other mortgage; you own the title and the bank holds a lien. You can pay it off anytime you like. "I can be thrown out of my own home." Homeowners can stay in the home as long as they live, with no payment requirement. Virtually anyone can qualify. You must be at least 62, own and live in, as a primary residence, a home [1-4 family residence, condominium, co-op, permanent mobile home, or manufactured home] in order to qualify for a reverse mortgage. There are no income, asset or credit requirements. It is the easiest loan to qualify for. The amount of reverse mortgage benefit for which you may qualify, will depend on your age at the time you apply for the loan, the reverse mortgage program you choose, the value of your home and current interest rates. As a general rule, the older you are and the greater your equity, the larger the reverse mortgage benefit will be (up to certain limits, in some cases). The reverse mortgage must pay off any outstanding liens against your property before you can withdraw additional funds. The loan is not due and payable until the borrower no longer occupies the home as a principal residence (i.e. the borrower sells, moves out permanently or passes away). At that time, the balance of borrowed funds is due and payable, all additional equity in the property belongs to the owners or their beneficiaries. The most popular reverse mortgage plan is the HECM. (Home Equity Conversion Mortgage) Over 90% of all reverse mortgages are HECM contracts. You must participate in an independent Credit Counseling session with a FHA-approved counselor early in the application process for a reverse mortgage. The counselor's job is to educate you about all of your mortgage options. This counseling session may charge a fee to the borrower and can be done in person or, more typically, over the telephone. After completing this counseling, you will receive a Counseling Certificate in the mail which must be included as part of the reverse mortgage application. You can choose 3 options to receive the money from a reverse mortgage: all at once (lump sum); fixed monthly payments (for up to life); a line of credit; or a combination of a line of credit and monthly payments. The most popular option, chosen by more than 60 percent of borrowers, is the line of credit, which allows you to draw on the loan proceeds at any time. Keeping money in a reverse mortgage line of credit in most states will not count as an asset for Medicaid eligibility.  It is best to get an opinion from an Elder Attorney in your state. Tom MacDonald, in his article on “ReverseMortgageconsultant.com”, makes the following statement about Medicaid, Med-Cal or SSI requirements: No matter how you take your money in a reverse mortgage, it is considered a loan. If you are looking at a financial statement, it is a liability, not an asset. The home is the asset. Many times we refer to the monthly payments incorrectly as monthly income. Neither the IRS nor Medicaid nor any other agency count the funds from a reverse mortgage as taxable income or qualifying income. Think of taking a cash advance from a credit card. It is money you owe to the credit card company. I've not see an agency consider the money from a cash advance as income. The funds from a reverse mortgage are similar. The Medicaid, Medi-Cal or SSI guideline you need to be most cautious of is the cash on hand guideline. Once example is the requirement you have no more than $2,000 in your bank accounts. If you are taking $1,000/mo of payments from a reverse mortgage and spending only $500/mo, it is obvious that you will exceed the $2,000 guideline within a few months. So, when taking monthly payments, take no more than you know you will be spending every month.

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Medicaid Asset Protection: What Works and What Does Not

By Evan Farr, Certified Elder Law Attorney

This article was posted by ElderLaw Answers
 

Much confusion abounds in the world of asset protection trusts, including the false belief by many elder law, estate planning, and asset protection attorneys that self-settled Offshore Asset Protection Trusts and/or Domestic Asset Protection Trusts are helpful in connection with Medicaid asset protection planning.  In fact, these trusts are useless when it comes to the world of Medicaid asset protection planning.

“Self-Settled Trust” Defined
The term “self-settled asset protection trust” refers to a very specific type of “self-settled,” i.e., an irrevocable asset protection trust where the settlor is allowed to receive distributions of both income and principal. Such trusts have historically been prohibited in the United States.

This prohibition is seen in both the Restatement of Trusts, Second, and the Uniform Trust Code.  Section 156 of the Restatement of Trusts, Second, states the traditional rule as follows:  “(1) Where a person creates for his own benefit a trust with a provision restraining the voluntary or involuntary transfer of his interest, his transferee or creditors can reach his interest. (2) Where a person creates for his own benefit a trust for support or a discretionary trust, his transferee or creditors can reach the maximum amount which the trustee under the terms of the trust could pay to him or apply for his benefit.”

Section 505(a)(2) of the Uniform Trust Code states that “with respect to an irrevocable trust, a creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the settlor’s benefit.”

Offshore Asset Protection Trusts
The demand for self-settled asset protection trusts (i.e., irrevocable asset protection trusts where the settlor is allowed to receive distributions of both income and principal) and the refusal of anyU.S.jurisdiction to recognize them led to the development of a prosperous Offshore Asset Protection Trust industry by the mid-1980s.  Offshore Asset Protection Trusts make it nearly impossible for general U.S.creditors to reach the underlying assets because the trusts are not subject to the jurisdiction of the States. Thus, in order to enforce the judgment, the creditor must theoretically file suit in the offshore jurisdiction and then try the case in the foreign jurisdiction. Foreign law will apply and the creditor and witnesses must travel across the globe to try the case.

Domestic Asset Protection Trusts
The Domestic Asset Protection Trust (DAPT) is a spin-off of the Offshore Asset Protection Trust. DAPTs were first introduced in theUnited Statesin 1997 as an effort to retain in theU.S.some of the wealth that had been steadily moving into Offshore Asset Protection Trusts. Alaska and Delaware were the first to offer DAPTs. Since then, eleven other states have enacted DAPT legislation: Colorado, Hawaii, Missouri, Nevada, New Hampshire, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah and Wyoming. 

Subject to certain exceptions that vary from one DAPT state to another, most creditors cannot reach property in a DAPT unless that property was fraudulently transferred to the trustee. Most important, for elder law attorneys, however, is the fact that the term “most creditors” does not include Medicaid.

On the contrary, the biggest limitation of both Offshore and Domestic Asset Protection Trusts, which makes them essentially useless for a client who desires complete asset protection, is that these trusts allow the settlor to have access to principal and are therefore absolutely ineffective for Medicaid asset protection purposes because, under federal Medicaid law and under the Medicaid laws of every state, if the Medicaid applicant or the spouse of the Medicaid applicant has access to principal, the assets in the trust will be deemed “countable” for Medicaid purposes.

The Asset Protection Trust that Works for Medicaid and General Asset Protection
Only an irrevocable trust that puts 100 percent of the principal beyond the reach of the settlor is effective for both Medicaid asset protection and general asset protection. This can be a trust designed so that the settlor has no direct access to income or principal or, if the settlor wishes to retain use of at least the income from the trust, it can be designed an Income-Only Trust (IOT), which allows the settlor to receive all ordinary income from the trust, but no direct access to principal.  Based on the author’s research, IOTs work in all 50 states for general asset protection because of the general common law as seen in both the Restatement of Trusts, Second, and the Uniform Trust Code.

IOTs work for Medicaid asset protection because of OBRA ’93 and two ensuing clarification letters from HCFA (now CMS) – one dated 12-23-1993 (the Richardson letter), and one dated 2-25-1998 (the Streimer letter), which together made clear that:  “[t]ransfers to an irrevocable trust with retained income only interests are considered available only to the extent of the income earned”;  and “transfer of those assets to or for the benefit of someone other than the beneficiary does not incur a separate transfer penalty.”  Based on the author’s research, the only two states where the IOT does not work for Medicaid asset protection are Connecticut and Minnesota, both of which have “trust buster” statutes that effectively nullify the Medicaid asset protection features of an IOT.

For more information about the benefits and flexibility of IOTs, and how to properly draft IOTs, visit the author’s Web site at http://www.LivingTrustPlus.com or order the ALI-ABA publication Planning and Defending Asset-Protection Trusts (2009) at http://www.ali-aba.org/bk64, in which the author’s chapter Asset Protection for the Middle Class:  Income-Only Trusts & Medicaid Asset Protection provides a detailed treatise on the topic.

If you are interested in learning more about the Living Trust Plus™ from the Author's Firm's website, simply connect via Facebook by clicking the button below:

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Is Medicaid Too Complex for Americans?

Medicaid complexity is a real problem. For those not familiar with program specifics, Medicaid - not Medicare - is the program Americans rely on to receive their long-term care. Long-term care is extraordinarily expensive – in fact, it is the single most expensive creditor Americans are likely to face.  Unfortunately, understanding the various Medicaid rules is a monumental task for the average layperson, and to properly qualify for the program and protect one's assets, it often it takes an experienced professional and a complicated asset protection plan.


Why is Medicaid so complex?  One reason may be due to the fact that Medicaid is a joint state and federal program, and planning to receive (either for you or for a client) this public benefit often involves tax planning, too.  Proper Medicaid planning requires an understanding of several complex bodies of law. 
While some of these quotes are humorous, it is no laughing matter that Americans, by and large, do not realize that Medicaid is available to the middle class.   Protecting assets from long-term care expenses can enable a family to pass an inheritance on to their children that otherwise would not have been available; it allows for the recipient to enjoy an enhanced qualify of life while alive; and it gives peace of mind and security to the family members.

Here is a glance at what the courts have had to say about Medicaid complexity over the last thirty-five years. 

1976:

The Second Circuit commented the absurdity of any law or regulation 7 subsections deep.  For example:

“As program after program has evolved, there has developed a degree of complexity . . . regulations which makes them almost unintelligible to the uninitiated . . . [a] draftsman who has gotten himself into a position requiring anything like [§139a(a)(10)(A)(ii)(VIII)(cc)] should make a fresh start.” Friedman v. Berger, 547 F.2d 724 (2^nd Cir. 1976).

1981:

The United States Supreme Court has called the Medicaid laws:

“an aggravated assault on the English language, resistant to attempts to understand it.” Schweiker v. Gray Panthers, 453 U.S. 34, 43 (1981).

1985:

The Second Circuit calls the Medicaid statute one of:

“unparalleled complexity” in DeJesus v. Perales, 770 F.2d 316, 321 (2^nd Cir. 1985).

1991:

In a case arising out of Maine, the District Court called Section 1396a(a)17) of the Medicaid statute:

“a virtually impenetrable thicket of legalese and gobbledygook.” Lamore v. Ives, 1991 WL 193601 (D.Me.)

1994:

The Fourth Circuit called the Medicaid Act:

“one of the most completely impenetrable texts within human experience” and

“dense reading of the most tortuous kind.” Rehab. Association of Virginia v. Kozlowski, 42 F.3d 1444, 1450 (4th Cir. 1994).

Medicaid complexity is a problem for all Americans.  Most Americans will need some form of long-term care, and of those that do, such care may be a nursing home stay.  The average private nursing home room costs nearly six-figures every year, and the average nursing home stay is close to three years.  Medicaid is available to anyone who can qualify; unfortunately, there are many public misperceptions when it comes to Medicaid.  Contrary to public belief, a person does not need to be "poor" to qualify.
At this point in time, the laws are so complex that it is recommended that any person contemplating long-term care speak with an experienced elder law attorney.

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“How do I obtain a death certificate?”

If you have lost a loved one and are now attempting to close out their estate, we are sorry for your loss and we understand how frustrating the process can be.

The steps to take after the loss a loved one can be overwhelming, but requesting a death certificate is a great place to get started.  You will need a death certificate to complete many of the administrative tasks that you will face in the weeks to come, so it only makes sense to order a copy of this as soon as possible. While the exact process to order a death certificate can vary from county to county, there are basic guidelines that you can follow to make the request for a death certificate as quick and easy as possible.

Let’s take a look at these guidelines:

It is smart to order 8-10 copies of your loved one’s death certificate. As mentioned above you will need them for many tasks over the next few weeks, so it’s best to have them on hand. The easiest way is to order them through the funeral home, as there is generally a lag time when you order straight from the county recorder’s office.

Make sure to have the following information readily available when filling out the request:

• Full name of the deceased
• The date of death
• The place of death
• The deceased’s date of birth
• The purpose of your request
• Your driver’s license number
• Provide a self-addressed stamped envelope along with your request
• Typing or printing the information is helpful

If you are still not sure how to properly obtain a death certificate for your loved one, or you need to know whether or not you should obtain one based on your responsibilities, visit the senior citizen and estate planning resource page now, brought to you by Elder Law Attorney Evan Farr.

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Those who are aware of Medicaid, but misinformed and confused

If you are confused or mistaken about the rules of gifting in the context of Medicaid qualification, you likely won't ever venture into the practice of Medicaid Asset Protection.  If you do practice Medicaid Asset Protection, but your potential clients are confused or mistaken about the rules of gifting in the context of Medicaid qualification, they likely won't ever show up at your door.

The most common gifting misconceptions I encounter in my daily practice are:

Those who are completely unaware of any gifting rules:

- Can’t I just give all of my assets away to my children?


- How can the government tell me what I can do with my own money?

Those who are vaguely aware of the tax rules and assume they apply to Medicaid:

- If I give any gifts to my children, won't they have to pay a lot of taxes?
- Isn’t it true I can only give away $13,000 per year?
- Isn't it illegal if I give away more than $13,000 per year?

Those who are aware of Medicaid, but misinformed and confused:

- If I've made any gifts in the past 5 years, doesn't that mean I can't qualify for Medicaid?
- Once my spouse qualifies for Medicaid, doesn't that mean I can’t ever make any more gifts?
- If I make any gifts to my family, doesn't that mean I won’t ever qualify for Medicaid?

Most potential clients, and many attorneys who don't practice regularly in the field of Medicaid Asset Protection, harbor some or all of these misconceptions.  Understanding the realities of gifting in the context of Medicaid Asset Protection is extremely important, because any one of these misconceptions can influence your decision as to whether to practice in this area, and can influence the decision of a potential client as to whether to hire you and engage in Medicaid Asset Protection.

Although it is true that some gifts will disqualify a person from receiving Medicaid for a specific period of time, there are extremely important exceptions and extremely complex Medicaid rules that apply.  The misunderstanding that gifting is capped at $13,000 per year is of course a complete fallacy.  As most attorneys understand, the annual gift tax exclusion only applies for tax purposes, and has nothing whatsoever to do with Medicaid.

Depending on the donee and the type of property, gifts of any amount may be just fine under your state’s Medicaid rules.  For example, the following types of gifts are generally not penalized at all:  gifting assets to a spouse; gifting assets to a disabled child or a trust for a disabled child; making regular gifts in certain small amounts; gifting a residence to a caregiver child; gifting a residence to a sibling on title; and numerous other exceptions.  There are also many asset protection strategies that involve making intentional gifts that are penalized, but doing so in a controlled fashion under the guidance and supervision of an knowledgeable Elder Law attorney.

There are complex Medicaid considerations underlying all of these gifting strategies, and understanding these considerations, along with all of the complex and myriad Medicaid rules and requirements, is a daunting task for any Elder Law attorney.  Evan H. Farr on Google +

5 Basic Reasons to Consider a Revocable Living Trust

 A revocable living trust can function as a Will, but it also offers other benefits that you should consider. If you pass away without a Will or Trust, the laws of your state will determine who receives your property, and in what amount. Moreover, your heirs will be required to wait a minimum of 1 year in Virginia. Not only can probate be time-consuming, it also can be very expensive. Proper estate planning can allow you to distribute your assets with peace of mind.

#1 - Avoid Expenses and Probate Tax: Probate is a court supervised proceeding that can be expensive and lengthy. How long? Anywhere from one to three years in most cases!

#2 - Enable Your Heirs to Receive Your Property More Quickly: Your loved ones can receive your assets much more quickly than if they are required to go through the probate process.

#3 - Ensure Your Trusted Family Members Oversee Your Estate Distribution, Not the Court: When you plan properly, you can select the persons responsible for overseeing the distribution of your estate. If you leave it up to the court system, there is no guarantee that what you expect to happen, will in fact take place.

#4 - Maintain Your Privacy: The distribution of your estate can be a highly personal matter. If you wish, you can maintain your privacy.

#5 - NO Annual Fee Required: Fees are only associated with amendments to the trust. Although there is no fee associated with maintaining a trust, our firm offers an optional Estate Plan Protection Program. We feel that such an option generates the most peace of mind for clients.

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Estate Planning Attorneys Warn About Matching Beneficiaries to Those Named in Your Will or Trust

As an estate planning attorney in Virginia, I have unfortunately seen many circumstances where a person goes through the time and expense of having an estate plan done, only to fail to update their beneficiaries on their financial or retirement accounts before they pass away.

An example of this would be Mary naming her brother Bill as the beneficiary of her life insurance policy in her trust, but at the time of her death, she had a different beneficiary named on the policy itself.

Just as life changes, so do your relationships, which can affect who you want to receive your assets --especially if you do not have children. Changing the beneficiary on assets such as bank accounts or life insurance policies is not uncommon, but you must remember to make sure that your will or trust reflects that change also.

Keeping your estate planning documents and beneficiaries up-to-date and coordinated is a quick and painless way to prevent legal headaches from occurring after you are gone.

Having two different named beneficiaries on two different documents can result in a lengthy and costly process to fix it – especially if each named person believes that they should be the one to inherit the asset.

The best way to avoid problems like this is to have a lawyer who focuses on wills and trusts handle every aspect of your estate.

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5 Ways to Ease the Burden When Caring for Kids and Aging Parents

5 Ways to Ease the Burden When Caring for Kids and Aging Parents

Did you know we just completed National Sandwich Generation Month? You may have never heard of it before, but if you care for aging parents and young children, you are part of this rapidly growing demographic.  The burden of shouldering so much responsibility can be overwhelming.  

Common struggles include having to pay for mom or dad’s long-term care, shielding mom or dad’s assets from nursing home facilities and cleaning up a financial or legal mess in the absence of proper planning. If you are facing these same struggles right now, there are a number of planning steps you can take to ease the legal and financial pain. Here are 5 suggestions to ease the transition, both for you and your parents:

1. Don’t Wait.  Find out what type of estate planning documents your parents have in place (i.e. will, trust, power of attorney) while there is still time to update them. If their medical directives were created pre-HIPPA, they should be reviewed immediately by an attorney. 

2. Sit Down With Parents Every 2-3 Years to Review their Estate Plan. Make sure their wishes are the same and that they still approve of the people they chose to make important end-of-life decisions on their behalf.  Make sure your parents have an Advance Medical Directive so they may communicate desires to physicians and family members regarding all forms of medical treatment, including preferences as life support, organ donation, funeral arrangements, and disposition of remains.  There has been some concern among attorneys as to whether the public will understand the need to properly plan a will or trust in light of these large exemptions.  On the contrary, the new tax laws that are in-flux should, if anything, prompt families to seek an updated assessment of their existing will or trust documents. 

3. Consider a Trust.  Not a Will.  Consider placing all of mom or dad’s assets into the right kind of trust so they stay protected and out of the equation if your parents ever need to apply for Medicaid benefits or go into a nursing home.  A Certified Elder Law Attorney can help with this and save your family substantial sums of money.  Medicaid is not just for the “poor,” but is a government program meant to pay for the long-term care needs of Middle Class Americans, too.     

4. Locate Existing Documents Immediately.  If your parents expect you to fulfill a particular role or carry out an important task upon their death, the documents giving you these rights should be stored somewhere safe. Taking these steps will help ease the pressure of being “Sandwiched” between caring for young children and aging parents. They will also help to ensure that mom or dad’s assets stay protected and that you are in the best position to honor their wishes during the later stages of life. 

5. Consider Mediation.  Have the tough conversations with mom or dad about their wishes now while they are still active and in good health. Find out what type of long-term care they want (or don’t want) and be sure to document their wishes accordingly.

Sometimes the consequence of dealing with the final years of elderly parents can break families apart and create long-lasting animosity.  Suspicions or distrust often lead to anger and the anger often leads to severing the channels of communication between family members. This can occur between parent and child or between siblings or between all of them.

Mediation allows parents to focus on their abilities rather than their limitations; allows children to come up with and consider options not thought of previously; encourages uninvolved family members to become involved; and allows parents to express wishes and desires that had previously gone unuttered.

Members of the Sandwich Generation have a lot on their plate (no pun intended).  But with proper planning you can give your family and your parents the peace of mind they deserve.  

Unfortunately, true asset protection can only be achieved through complex strategies.  A living trust isn't enough, and a will most definitely isn't either.  A Living Trust Plus™, however, just might be the answer for many Americans.  You see, it's capable of *not just* probate avoidance, but also protection from the biggest creditors most Americans face during their lifetimes - nursing homes. Here is the page if you are interested in asking your attorney if he or she is a part of this network. 

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