Protecting Your House After You Move Into a Nursing Home

While you generally do not have to sell your home in order to qualify for Medicaid coverage of nursing home care, it is possible the state can file a claim against your house after you die, so you may want to take steps to protect your house.

If you get help from Medicaid to pay for the nursing home, the state must attempt to recoup from your estate whatever benefits it paid for your care. This is called “estate recovery,” and given the rules for Medicaid eligibility, the only property of substantial value that a Medicaid recipient is likely to own at death is his or her home. If possible, you should consult with your attorney before entering a nursing home, or as soon as possible afterwards, in order to discuss ways to protect your home.

The home is not counted as an asset for Medicaid eligibility purposes if the equity is less than $585,000 (in 2019) ($878,000 in some states). In all states, you may keep your house with no equity limit if your spouse or another dependent relative lives there.

Transferring a Home
In most states, transferring your house to your children (or someone else) may lead to a Medicaid penalty period, which would make you ineligible for Medicaid for a period of time. There are circumstances in which it is legal to transfer a house, however, so consult an attorney before making any transfers. You may freely transfer your home to the following individuals without incurring a transfer penalty:

  • Your spouse
  • A child who is under age 21 or who is blind or disabled
  • Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)
  • A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home
  • A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

While you can sell your house for fair market value, it may make you ineligible for Medicaid and you may have to apply the proceeds of the sale to your nursing home bills.

Lien on Home
Except in certain circumstances, Medicaid may put a lien on your house for the amount of money spent on your care. If the property is sold while you are still living, you would have to satisfy the lien by paying back the state. The exceptions to this rule are cases where a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living there.

Estate Recovery
If your spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house, lives in the house, the state cannot file a claim against the house for reimbursement of Medicaid nursing home expenses. However, once your spouse or dependent relative dies or moves out, the state can try to collect.

But there are some circumstances under which the value of a house can be protected from Medicaid recovery. The state cannot recover if you and your spouse owned the home as tenants by the entireties or if the house is in your spouse’s name and you have relinquished your interest. If the house is in an irrevocable trust, the state cannot recover from it.

In addition, some children or relatives may be able to protect a nursing home resident’s house if they qualify for an undue hardship waiver. For example, if your daughter took care of you before you entered the nursing home and has no other permanent residence, she may be able to avoid a claim against your house after you die.

Consult with an attorney to find out if the undue hardship waiver may be applicable or learn more from Kristen Prull Moonan or Amy Stratton.

Getting Paid as a Family Caregiver Through Medicaid

Caring for an ailing family member is difficult work, but it doesn’t necessarily have to be unpaid work. There are programs available that allow Medicaid recipients to hire family members as caregivers.

All 50 states have programs that provide pay to family caregivers. The programs vary by state, but are generally available to Medicaid recipients, although there are also some non-Medicaid-related programs.

Medicaid’s program began as “cash and counseling,” but is now often called “self-directed,” “consumer-directed,” or “participant-directed” care. The first step is to apply for Medicaid through a home-based Medicaid program. Medicaid is available only to low-income seniors, and each state has different eligibility requirements. Medicaid application approval can take months, and there also may be a waiting list to receive benefits under the program.

The state Medicaid agency usually conducts an assessment to determine the recipient’s care needs—e.g., how much help the Medicaid recipient needs with activities of daily living such as bathing, dressing, eating, and moving. Once the assessment is complete, the state draws up a budget, and the recipient can use the allotted funds to pay for goods or services related to care, including paying a caregiver. Each state offers different benefits coverage.

Recipients can choose to pay a family member as a caregiver, but states vary on which family members are allowed. For example, most states prevent caregivers from hiring a spouse, and some states do not allow recipients to hire a caregiver who lives with them. Most programs allow ex-spouses, in-laws, children, and grandchildren to serve as paid caregivers, but states typically require that family caregivers be paid less than the market rate in order to prevent fraud.

In addition to Medicaid programs, some states have non-Medicaid programs that also allow for self-directed care. These programs may have different eligibility requirements than Medicaid and are different in each state. Family caregivers can also be paid using a “caregiver contract,” increasingly used as part of Medicaid planning.

In some states, veterans who need long-term care also have the option to pay family caregivers. In 37 states, veterans who receive the standard medical benefits package from the Veterans Administration and require nursing home-level care may apply for Veteran-Directed Care. The program provides veterans with a flexible budget for at-home services that can be managed by the veteran or the family caregiver. In addition, if a veteran or surviving spouse of a veteran qualifies for Aid & Attendance benefits, they can receive a supplement to their pension to help pay for a caregiver, who can be a family member.

All of these programs vary by state. Contact your attorney to find out what is available in your state or learn more from Kristen Prull Moonan or Amy Stratton.

For more information about these programs and other ways to be paid as a family caregiver, click here and here.

How Parents Can Provide for a Caregiver Child

Taking care of a parent can be a full-time job. Children may have to give up paying jobs in order to provide care to aging parents. Unfortunately, caregiving is usually unpaid work. Parents who want to compensate a child who takes on the burden of caregiving may do so in one of several ways.

  • Caregiver Agreements. Caregiver agreements are an increasingly popular way to ensure a caregiver child is compensated for the child's work. A caregiver agreement (also called a personal care contract) is a contract between a parent and a child (or other family member) in which the parent agrees to reimburse the child for caring for the parent. These agreements have many benefits. They provide a way to reward the family member doing the work. They can help alleviate tension between family members by making sure caregiving is fairly compensated. In addition, they can be a be a key part of Medicaid planning, helping to spend down savings so that the parent might more easily be able to qualify for Medicaid long-term care coverage, if necessary. The downside to caregiver agreements is that the income is taxable.  Note that such agreements should not be drawn up without the help of your attorney.
  • Estate Plan. A parent can leave a caregiver child an additional amount in the parent's will or trust. The problem with this method of compensation is that it can lead to conflict between siblings or other family members. If a parent chooses to go this route, it is important that the parent explain his or her reasoning to any other children or family members that might be upset. Communication between the family members can prevent problems later. In addition, to avoid any appearance of undue influence, the parent should not involve the child in drafting the estate plan. 
  • House. If a parent doesn't have cash to compensate a child, the parent may transfer the parent's house to the caregiver child. The parent can transfer the house outright and retain a life estate for him- or herself or the parent could make the child a co-owner of the house. If the caregiver child has lived with the parent for at least two years, transferring a house can have Medicaid planning advantages as well. However, transferring a house can have serious tax and other consequences, so before taking this step it is important to consult with an elder law attorney.
  • Life Insurance Policy. Another option for compensating a caregiver is to take out a life insurance policy in the child's name. The benefit of this method is that the life insurance policy will go directly to the child, avoiding probate, but the problem is the life insurance policy could be very expensive.

Your attorney can help determine the right method to compensate a caregiver family member. 

 

Revoking a Power of Attorney

If for any reason, you become unhappy with the person you have appointed to make decisions for you under a durable power of attorney, you may revoke the power of attorney at any time. There are a few steps you should take to ensure the document is properly revoked.

While any new power of attorney should state that old powers of attorney are revoked, you should also put the revocation in writing. The revocation should include your name, a statement that you are of sound mind, and your wish to revoke the power of attorney. You should also specify the date the original power of attorney was executed and the person selected as your agent. Sign the document and send it to your old agent as well as any institutions or agencies that have a copy of the power of attorney. Attach your new power of attorney if you have one.

You will also need to get the old power of attorney back from your agent. If you can’t get it back, send the agent a certified letter, stating that the power of attorney has been revoked.

Because a durable power of attorney is the most important estate planning instrument available, if you revoke a power of attorney, it is important to have a new one in place. Your attorney can assist you in revoking an old power of attorney or drafting a new one.

To learn more, contact Kristen Prull Moonan or Amy Stratton.

Is My Will Still Valid If I Move to Another State?

Among all the changes you must make when you move to a new state — driver's license, voter registration — don't forget your will.

While your will should still be valid in the new state, there may be differences in the new state's laws that may make certain provisions of the will invalid. In addition, moving is a good excuse to consult an attorney to make sure your estate plan in general is up to date.

Property laws can vary from state to state. It is especially important to have your estate plan reviewed if you move from a common law state to a community property state (Arizona, California, Idaho, New Mexico, Louisiana, Washington, Nevada, Texas, Wisconsin, and Alaska) or vice versa. In a common law state each spouse's property is owned individually, while in a community property state, property acquired during the marriage is considered community property. In addition, states may have different rules about when co-owned property may pass to the surviving owner and when it may pass under the will.

Other things to consider are whether there is any language you can add to the will to make it easier to probate in the new state and whether your executor still makes sense based on your new location. Other pieces of your estate plan may need updating as well. For example, the state may have different rules for powers of attorney or health care directives.

 

What Is Required of an Executor?

Being the executor of an estate is not a task to take lightly. An executor is the person responsible for managing the administration of a deceased individual's estate. Although the time and effort involved will vary with the size of the estate, even if you are the executor of a small estate you will have important duties that must be performed correctly or you may be liable to the estate or the beneficiaries.

The executor is either named in the will or if there is no will, appointed by the court. You do not have to accept the position of executor even if you are named in the will.

The average estate administration takes one year, though you won't need to work full time on it. Following are some of the duties you may have to perform as executor:

  • Find documents. If there is a will, but you don't already know where the will is or the will hasn't already been brought to court, you may need to find it among the deceased's belongings. If all you have is a copy of the will, you may need to get the original from the lawyer who drafted it. You will also need to get a copy of the death certificate.
  • Hire an attorney. You are not required to hire an attorney, but mistakes can cost you money. You may be personally liable if something goes wrong with the estate or the payment of taxes. An attorney can help you make sure all the proper steps are taken and deadlines met.
  • Apply for probate. If there is a will, the court will grant you letters testamentary. If there is no will, you will receive letters of administration. This will officially begin your work as the executor.
  • Notify interested parties. Notify the beneficiaries of the will, if there is a will, as well as any potential heirs (such as children, siblings, or parents who may or may not be named in a will). In addition, you will have to place an advertisement for potential creditors in a newspaper near where the deceased lived.
  • Manage the deceased's property. You will need to prepare a list of the deceased's assets and liabilities, and you may need to collect any property in the hands of other people. One of the executor's jobs is to protect the property from loss, so you will need to assure the property is kept safe. You will also need to hire an appraiser to find out how much any property is worth. In addition, if the estate includes a business, you may have to make sure the business continues to run.
  • Pay valid claims by creditors. Once the creditors are determined, you will need to pay the deceased's debts from the estate's funds. The executor is not personally liable for deceased's debts. The estate usually pays any reasonable funeral expenses first. Other debts include probate and administration fees and taxes as well as any valid claims filed by creditors.
  • File tax returns. You need to make sure the tax forms are filed within the time frame set under the law. Taxes will include estate taxes and income taxes.
  • Distribute the assets to the beneficiaries. Once the creditors' claims are clear, the executor is responsible for making sure the beneficiaries get what they are entitled to under the will or under the law, if there is no will. You may be required to sell property in order to fulfill legacies in a will. In addition, you may have to set up any trusts required by the will.
  • Keep accurate records. It is very important to keep accurate records of everything you do. You will need to create a final accounting, which the beneficiaries must review before the distribution of the estate can be finalized. The accounting should include any distributions and expenses as well as any income earned by the estate since the deceased died.
  • File the final accounting with the court. Once the final accounting is approved by the beneficiaries and the court, the court will close the estate. File a final report with the court and close the estate.

All this can be a lot of work, but remember that the executor is entitled to compensation, subject to approval by the court. Keep in mind that the compensation is counted as income, so you will need to declare it on your income taxes.

Report Ranks States on Nursing Home Quality and Shows Families' Conflicted Views

A new report that combines nursing home quality data with a survey of family members ranks the best and worst states for care and paints a picture of how Americans view nursing homes.

The website Care.com analyzed Medicare's nursing home ratings to identify the states with the best and worst overall nursing home quality ratings. Using Medicare's five-star nursing home rating system, Care.com found that Hawaii nursing homes had the highest overall average ratings (3.93), followed by the District of Columbia (3.89), Florida (3.75), and New Jersey (3.75).  The state with the lowest average rating was Texas (2.68), followed by Oklahoma (2.76), Louisiana (2.80), and Kentucky (2.98). 

Care.com also surveyed 978 people who have family members in a nursing home to determine their impressions about nursing homes. The surveyors found that the family members visited their loved ones in a nursing home an average six times a month, and more than half of those surveyed felt that they did not visit enough. Those who thought they visited enough visited an average of nine times a month. In addition, a little over half felt somewhat to extremely guilty about their loved one being in a nursing home, while slightly less than one-quarter (23 percent) did not feel guilty at all. If the tables were turned, nearly half of the respondents said they would not want their families to send them to a nursing home. 

While the survey indicates that the decision to admit a loved one to a nursing home was difficult, a majority (71.3 percent) of respondents felt satisfied with the care their loved ones were receiving. Only 18.1 percent said they were dissatisfied and about 10 percent were neutral. A little over half said that they would like to provide care at home if they could. The most common special request made on behalf of a loved one in a nursing home is for special food. Other common requests include extra attention and environmental accommodations (e.g., room temperature). 

To read the full results of the survey, click here.

Window Closing for Couples to Use ‘Claim Now, Claim More Later’ Social Security Strategy

Spouses who are turning full retirement age this year are the last group who can choose whether to take spousal benefits or to take benefits on their own record. The strategy, used by some couples to maximize their benefits, will not be available to people turning full retirement age after 2019.

The claiming strategy — sometimes known as “Claim Now, Claim More Later” — allows a higher-earning spouse to claim a spousal benefit at full retirement age by filing a restricted application for benefits. While receiving the spousal benefit, the higher-earning spouse’s regular retirement benefit continues to increase. Then at 70, the higher-earning spouse can claim the maximum amount of his or her retirement benefit and stop receiving the spousal benefit. To use this strategy, the lower-earning spouse must also be claiming benefits. Workers cannot claim spousal benefits unless their spouses are also claiming benefits.

A 2015 budget law began phasing out the strategy. If you were 62 or older by the end of 2015, you are still able to choose which benefit you want at your full retirement age. You do not have to make the election in the year you turn full retirement age. If your spouse is still working, you can wait to collect benefits until your spouse begins collecting. For example, if your spouse does not begin collecting benefits until you are 68, you can wait to collect benefits and file a restricted application at age 68. However, when workers who were not 62 by the end of 2015 apply for spousal benefits, Social Security will assume it is also an application for benefits on the worker’s record. The worker is eligible for the higher benefit, but he or she can’t choose to take just the spousal benefits and allow his or her own benefits to keep increasing until age 70.

The budget law’s phase-out of the claiming strategy does not apply to survivor’s benefits. Surviving spouses will still be able to choose to take survivor’s benefits first and then switch to retirement benefits later if the retirement benefit is larger.

To learn more, contact Kristen Prull Moonan or Amy Stratton.

 

We’re Hiring: Law Firm Administrator / Office Manager / Legal Assistant

We are a busy, women-led and well-established estate planning and business law firm located on the East Side of Providence. Our workplace culture is based on respect and collaboration, both within our office and in our interactions with our clients. We are looking for a professional, full-time employee to be an integral part of our team.

We seek candidates with strong interpersonal skills to handle all substantive client-centric functions that do not require a law degree; these include client contact in the form of scheduling and conducting meetings, phone calls and emails.

This position also requires management of the firm’s telephone and computer systems; maintenance of office equipment and supplies; coordination of building facilities maintenance; and serving as liaison with outside providers on benefits administration, payroll, etc.

The ideal candidate will possess outstanding planning and organizational skills to handle all aspects of law firm administration including monitoring of budgets and expenses, and managing day-to-day workflow and deadlines.

The successful candidate should have 5+ years related law firm management experience and strong financial, computer, HR and analytical skills. A college degree and understanding of accounting principles and computerized accounting software are required. Experience with Microsoft office, Microsoft Excel, QuickBooks Desktop and Online required; experience with MyCase practice management software preferred.

We offer a congenial workplace environment, competitive salary and free parking. Please send resumes with salary history and requirements to Amy E. Stratton, Esq., Moonan, Stratton & Waldman, 4 Richmond Square, Suite 150, Providence, RI 02906. No phone calls please.

Costs of New Long-Term Care Insurance Policies Vary Considerably

We’ve all heard the advice “It pays to shop around,” but this has never been more true than with the current market for long-term care insurance.

According to the latest industry figures, the spread between the lowest and highest cost for virtually identical coverage was as high as 243 percent.  “This is the largest spread I can recall in recent years,” said Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI), an industry group that issues an annual Long Term Care Insurance Price Index. “It’s rare to see one policy costing more than twice another policy when both are large insurers but each company gets to set their own pricing and each has their own target market.”

Slome was referencing the results of AALTCI’s 2019 price index, which found that a married couple who are both 55 years old would pay an average of $3,050 a year combined for a total of $386,500 each of long-term care insurance coverage when they reach age 85. But the percentage difference between the lowest-priced and highest-priced policies for such a couple is 243 percent, meaning that a consumer could wind up paying more than triple what they might have paid for similar coverage. Slome said that the quoted premiums ranged from $2,898 to $9,932.

The price differences between policies for single people were lower but still significant, according to the index.  A single 55-year-old man can expect to pay an average of $2,050 a year (up from $1,870 in 2018) for $164,000 worth of coverage. But there is a 123 percent difference between the lowest-priced and highest-priced policies.  The same policy for a single woman averages $2,700 a year, down from $2,965 in 2018, although again the spread between the least and most expensive policies tops 100 percent.

For the first time, the index suggests ways for couples to save on their premium by electing less coverage or a “shared care” option.  Couples purchase 65 percent of policies, according to the AALTCI.  But clearly one of the best ways to save is to review the offerings of a number of different insurance companies.  “We really recommend the importance of talking to a specialist who is ‘appointed’ with multiple insurers,” Slome said.

For the association’s 2019 index showing average prices for common scenarios, go here: http://www.aaltci.org/news/wp-content/uploads/2019/01/2019-Price-Index-LTC.pdf

To learn more, contact Kristen Prull Moonan or Amy Stratton.