Elder Law is devoted to and encompasses all aspects of planning, counseling, educating, and advocating for elderly clients and their families.  Our office assists clients and their families in dealing effectively with the unique intricacies associated with aging, debilitating illnesses, incapacity, and death.

The Elder Law specialist handles general and complex estate planning issues and counsels clients about planning for disability and/or  incapacity. The attorney also assists the client in planning for possible long term care needs, including at home care, adult day care, assisted living, and nursing home care. Locating the proper care, coordinating private and public resources, and working to ensure the client’s right to quality care are all part of the practice of Elder Law. Therefore, we routinely confer and work closely with other members of the elder support team, including care managers, accountants, financial planners, financial advisors and physicians.

Our office is ready to assist you and your loved ones. We are frequently contacted by nonresident family members who have concerns regarding their parents or other loved ones here in Florida.  We welcome the opportunity to work with family members and their loved ones. We believe that the practice of elder law fills a void in our community - and that Elder Law is best defined by our clients' needs.

Please contact our office for further information, and to schedule an appointment for you and/or your loved one. Telephone appointments, home visits, nursing home visits and office appointments may be arranged.

Disability and Medicaid Planning

          A.   The Need for Planning.

One of the greatest fears of older Americans is that they may end up in a nursing home. This not only means a great loss of personal autonomy, but also a tremendous financial price to be paid. Depending on the location and level of care, nursing homes  in Florida cost between $45,000 and $90,000 a year.

Most people end up paying for nursing home care out of their savings until they run out of money. Then they can qualify for Medicaid to pick up the cost. The advantages of paying privately are that you are more likely to gain entrance to a better quality facility and it eliminates or postpones dealing with your state's welfare bureaucracy--an often demeaning and time-consuming process. The disadvantage is that it's expensive.

Careful planning, whether in advance or in response to an unanticipated need for care, can help protect your estate, whether for your spouse or for your children. This can be done by purchasing long-term care insurance or by making sure you receive the benefits to which you are entitled under the Medicare and Medicaid programs. Veterans may also seek benefits from the Veterans Administration.

          B.  Medicare

Medicare Part A covers up to 100 days of "skilled nursing" care per illness.  The care in the skilled nursing facility must follow a stay of at least three days in a hospital.  However, the definition of "skilled nursing" and the other conditions for obtaining this coverage are quite stringent, meaning that few nursing home residents receive the full 100 days of coverage. For 21 through 100 days you must pay a copayment of  $114 per day (in 2005).  (This may be covered by Medigap insurance.)  As a result, Medicare pays for only about 9 percent of nursing home care in the United States. Therefore, it is appropriate to think of Medicare as short term solution for the long term skilled nursing care needs.

          C.  Medicaid

For all practical purposes, in the United States the only "insurance" plan for long-term institutional care is Medicaid.  Lacking access to alternatives such as paying privately or Medicare, most people pay out of their own pockets for long-term care until they become eligible for Medicaid.  This is sometimes called "Spending Down" in order to become eligible for Medicaid benefits.  Applicants for Medicaid and their spouses may protect savings by spending them on noncountable assets. These may include:

Medicaid and Medicare are quite different programs.  Medicaid is a form of welfare, whereas Medicare is a federal government "entitlement" program. So to be eligible for Medicaid, you must become "impoverished" under the program's guidelines.  Unlike Medicare, which is totally federal, Medicaid is a joint federal-state program. Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive federal money, which pays for a large part of  the state's Medicaid costs. The state picks up the rest of the tab.

This complicates matters, since the Medicaid eligibility rules are somewhat different from state to state, and they are continually changing. (The states also sometimes have their own names for the program, such as "MediCal" in California and "MassHealth" in Massachusetts.) Both the federal government and most state governments seem to be continually tinkering with the eligibility requirements and restrictions. The rules for gaining eligibility to the program are complex but generally require that the Medicaid applicant meet minimum income and "countable" asset requirements in order to qualify .  Generally speaking, the Medicaid Applicant cannot have more than $1,869 income  per month (2007) and $2,000 in "countable" assets.  As Elder Law attorneys we can guide you through the complicated rules of the different programs and help you plan ahead.

Those who are not in immediate need of long-term care may have the luxury of distributing or protecting their assets in advance. This way, when they do need long-term care, they will quickly qualify for Medicaid benefits. Giving general rules for so-called "Medicaid planning" is difficult because every client's case is different. Some have more savings or income than others. Some are married, others are single. Some have family support, others do not. Some own their own homes, some rent. Still, a number of basic strategies and tools are typically used in Medicaid planning. These are described below.

          1.  Qualified Income Trusts (Miller Trusts)

A Qualified Income Trust  is an irrevocable trust that may be utilized when the Medicaid Applicant's income exceeds $1,869 per month.  An "irrevocable" trust is cannot be changed after it has been created.  In most cases, this type of trust is drafted so that the income is payable to you (the person establishing the trust, called the "grantor") for life, and the principal cannot be touched during your life. At your death the principal is paid to your heirs. This way, the funds in the trust are protected and you can use the income for your living expenses. For Medicaid purposes, the principal in such trusts is not counted as a resource, provided the trustee cannot pay it to you or for your benefit. However, if you do move to a nursing home, the trust income is required  to go to the nursing home.

You should be aware of the drawbacks to such an arrangement. It is very rigid, so you cannot gain access to the trust funds even if you need them for some other purpose. For this reason, you should always leave an ample cushion of ready funds outside the trust.

You may also choose to place property in a trust from which even payments of income to you or your spouse cannot be made. Instead, the trust may be set up for the benefit of your children, or others. These beneficiaries may, at their discretion, return the favor by using the property for your benefit if necessary. However, there is no legal requirement that they do so.

Transferring assets to an irrevocable trust can cause you to be ineligible for Medicaid for up to five years, depending on the value of what you place in the trust. Transfers to individuals have a maximum transfer penalty of only three years for Medicaid eligibility purposes.

          2.  Immediate Annuities

Single Premium Immediate Annuities can be a  planning tools for spouses of nursing home residents. An immediate annuity, in its simplest form, is a contract with an insurance company under which the consumer pays a certain amount of money to the company and the company sends the consumer a monthly check for the rest of  his or her life. In most states the purchase of an annuity is not considered to be a transfer for purposes of eligibility for Medicaid, but is instead the purchase of an investment.  It transforms otherwise countable assets into a non-countable income stream. As long as the income is in the name of the community spouse, it's not a problem. If there is no community spouse then the income from the  immediate annuity may need to be made payable to a Qualified Income Trust for the institutional spouse in order to keep him or her within the income and asset limits discussed above.  The Debt Reduction Act of 2005 which was signed by President Bush on February 8, 2006 has made some changes to the use of an immediate annuity for medicaid eligibility.  These changes are still being implemented by the states.  One of the major changes is to require that the state providing medicaid benefits be first in line for payment of death benefits to the extent of medicaid benefits paid by the state before other beneficiaries receive any of the death benefit of the annuity.

Example:

Mrs. Jones, the community spouse, lives in a state where the most money she can keep for herself and still have Mr. Jones, who is in a nursing home, qualify for Medicaid (her maximum resource allowance) is $101,640. However, Mrs. Jones has $208,280 in countable assets. She can take the difference of $108,640 ($208,280 minus the sum of $101,640 and the $2,000 Medicaid recipients are allowed to retain) and purchase an annuity, making her husband in the nursing home immediately eligible for Medicaid. She would continue to receive the annuity check each month for the rest of her life. Under the Debt Reduction Act of 2005 upon the death of the community spouse the state will be able to recover from the death benefit of the annuity  reimbursement for Medicaid expenditures to the institutionalized spouse).

In short, immediate annuities are a very powerful tool to "shift" countable assets into a  noncountable asset to facilitate Medicaid eligibility of the Applicant.

          3.  Testamentary Trusts

Testamentary trusts are trusts created under a will. The Medicaid rules provide a special "safe harbor" for testamentary trusts created by a deceased spouse for the benefit of a surviving spouse. The assets of these trusts are treated as countable  to the Medicaid applicant only to the extent that the trustee has an obligation to pay for the applicant's support. If  payments are solely at the trustee's discretion or the trust provides that the payments are to be made only to supplement but not to supplant public benefits paid by Medicaid then they are considered noncountable for continued Medicaid eligibility of the institutionalized spouse..

Therefore, these testamentary trusts can provide an important mechanism for community spouses to leave funds for their surviving institutionalized husband or wife that can be used to pay for services that are not covered by Medicaid. These may include extra therapy, special equipment, evaluation by medical specialists or others, legal fees, visits by family members, or transfers to another nursing home if that becomes necessary. But remember that if you create a trust for yourself or your spouse during life (i.e., not a testamentary trust), the trust funds are considered available if the trustee has the ability to use them for you or your spouse.

          4.  Supplemental Needs Trusts

Supplemental needs trusts (also known as "special needs" trusts) allow a disabled beneficiary to receive gifts, lawsuit settlements, or other funds and yet not lose her eligibility for certain government programs. Such trusts are drafted so that the funds will not be considered to belong to the beneficiary in determining her eligibility for public benefits. As their name implies, supplemental needs trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds. These trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life. (However, the trustee can use trust funds for food, clothing and shelter if the trustee decides doing so is in the beneficiary’s best interest despite a possible loss or reduction in public assistance.)

               a.  Third Party Supplemental Needs Trusts

The Medicaid rules also have certain exceptions for transfers for the sole benefit of disabled people under age 65. Even after moving to a nursing home, if you have a child, other relative, or even a friend who is under age 65 and disabled, you can transfer assets into a trust for his or her benefit without incurring any period of ineligibility. If these trusts are properly structured, the funds in them will not be considered to belong to the beneficiary in determining his or her own Medicaid eligibility. Supplemental Needs Trusts are sometimes also called "Special Needs. Trusts".  Supplemental needs trusts are usually created by a parent or other family member for a disabled child (even though the child may be an adult). 

               b.  Self Settled Supplemental Needs Trusts

The disabled individual can also create the trust with his or her own money, provided the trust meets certain requirements.  These "self-settled" trusts are frequently established by individuals who become disabled as the result of an accident or medical malpractice and later receive the proceeds of a personal injury award or settlement.  Both the Medicaid and SSI programs allow two "safe harbors" permitting the creation of supplemental needs trusts with a beneficiary's own money if the trust meets certain requirements.

The first of these is called a "payback" or "(d)(4)(A)" trust, referring to the authorizing statute. "Payback" trusts are created with the assets of a disabled individual under age 65 and are established by his or her parent, grandparent, legal guardian or by a court. They also must provide that at the beneficiary's death any remaining trust funds will first be used to reimburse the state for Medicaid paid on the beneficiary's behalf.

Medicaid and SSI law also permits "(d)(4)(C)" or "pooled trusts." Such trusts pool the resources of many disabled beneficiaries, and those resources are managed by a non-profit association. Unlike individual disability trusts, which may be created only for those under age 65, pooled trusts may be for beneficiaries of any age and may be created by the beneficiary unlike the payback trusts which must be created by a parent, grandparent, legal guardian or court.   In addition, at the beneficiary's death the state does not have to be repaid for its Medicaid expenses on beneficiary's  behalf as long as the funds are retained in the trust for the benefit of other disabled beneficiaries. (At least, that’s what the federal law says; some states require reimbursement under all circumstances.)  

We encourage you to email us utilizing the form below or if you have need for an immediate response, please call us.