Estate Planning Bits

Your Medicaid application – a complex and complicated process

Elders are often concerned that the cost of long-term care will deplete their estates. Specifically, the cost of nursing home care in Massachusetts is now estimated at between $90,000.00 and $115,000.00 per year. As such, many elders turn to Medicaid, referred to as MassHealth in Massachusetts, which is a joint federal-state program that pays for nursing home care for individuals that meet their stringent financial eligibility rules.

The Medicaid application is often a difficult and time-consuming to complete. The long look-back period and the ever-changing use of asset protection techniques complicate the application process. The supporting documents necessary for a successful application include a birth certificate, health insurance cards and premium information, 36 months of bank statements, three years of tax returns, investment information and insurance policies, all income checks, expense information and trust documents.

Numerous practitioners compare the Medicaid application process to the complexity of the multi-year tax audit. Therefore, due to the complexity of the Medicaid application process, it is strongly encouraged to utilize an experienced elder law attorney with support staff who are specifically trained in the preparation and submission of Medicaid applications

By: Todd C. Ratner, Esquire

Medicaid: Estate recovery – Is your home in jeopardy after Medicaid Eligibility?

Created in 1965, Medicaid is a Federal Program that is designed to pay for the medical expenses of financially needy people. Individuals over the age of 65 are eligible for Medicaid if they meet certain income and resource tests. However, even if an applicant is approved for Medicaid benefits, that does not necessarily mean that Medicaid can’t recover the benefits previously provided to the Medicaid recipient.

Medicaid has the right to recover the value of the benefits it provided on your behalf after the age of 55 for community benefits, or at any age for long-term care or nursing home benefits. However, recovery is limited to your probate estate. Also, Medicaid can only pursue claims against your probate estate if there is no surviving spouse, no child under the age of 18 and no disabled child of any age.

If you own a home, Medicaid may place a lien on your house for the amount of funds expended on your behalf after you reach the age of 55. Pre-death Medicaid liens are simply notice liens. Medicaid has no claim against the real estate until you die. However, if your house is sold before your death, Medicaid can seek recovery from the proceeds of the sale.

Therefore, if you are planning to qualify for Medicaid, you should not only prepare to meet the Medicaid eligibility requirements, but also protect your assets, especially your home, prior to seeking Medicaid benefits.

By: Todd C. Ratner, Esquire

Healthcare Decision Day 2008 – a time to review or establish your Healthcare Proxy

Today is Healthcare Decision Day across the country. The purpose is to raise awareness of the importance of planning for healthcare decisions not only relative to end of life, but all medical decision making. It is somewhat timely that this day follows tax day, resulting in two important dates being consecutively “celebrated.”

In Massachusetts, any adult has the right to prepare for the eventual situation where they may not be able to make decisions for themselves. In the Commonwealth, this is called a Healthcare Proxy, but in other states the document may be called a Living Will, Advanced Medical Directive or Statements of Wishes. These documents should be prepared while you are competent, and well, thus proving that you can think clearly about the decisions you’re making, including who you want to make your end of life decisions.

It is important to put these wishes in writing so there won’t be any issue when it becomes necessary to utilize this document. Perhaps one of the most noteworthy cases in recent history was the Terri Shivo case. Terri had allegedly told others what she wanted, but since her wishes were not in writing, the Courts disregarded them. The 17 court cases that occurred over several years regarding Terri’s desires remind us of the adverse situation that may occur when you don’t effectively plan.

Many people put off these decisions. However, it is important to establish them now so there won’t be any confusion about your desires. This will establish clear lines of authority for decision making and determine the course of action to take or not to take when the time comes. This document is so important that it is really not an option for you to go without it. Whether or not you want to be kept alive is a personal decision that is too important to leave to a likely very emotionally overwhelmed family member.

While most states do not allow for assisted suicide, a decision may be made to not prolong the dying process. This allows a person to be taken off life support if there is no reasonable likelihood that they are going to recover with any dignity or quality of life. This so called “living will” language should be included within your Healthcare Proxy since living wills are not allowable in Massachusetts. However, in other states, this may be utilized as a separate document that provides clarification and direction to the individuals making medical decisions for you when you become incapacitated.

Once the document has been completed, a copy should be given to your family members, your proposed decision makers and the physicians who will be talking with family members about these decisions when the time arises.

While most Healthcare Proxies do not have to be notarized, they need to be in writing and should be witnessed similar to a Will. However, I strongly urge all my clients to be sure that their documents are notarized so if you become ill in a state that requires a notarized statement, the document will comply with the laws there.

If your Healthcare Proxy hadn’t been revised for some time, it should be updated to comply with any new laws, such as the HIPAA waiver, which will permit your agent or backup agent to talk with your physician or medical provider to obtain the necessary information to allow him or her to fulfill your wishes.

By: Hyman G. Darling, Esq.

Earned Income Credit – a sometimes unclaimed benefit for the disabled

There are many disabled people in the United States who are not taking advantage of a credit offered to them by the Internal Revenue Service called the Earned Income Credit. This was originally provided as an anti-poverty program for hard working low income employees aimed at reducing taxes.

Many individuals who are disabled do not file a tax return, as they do not believe that they have made enough money to do so. However, by not filing a return, they may be failing to claim funds that may be due them through a tax credit. Rather than merely a reduction of earned income or an itemized deduction, this Earned Income Credit is a direct credit against the tax, if there is one, and if not, then the tax payer is entitled to receive a refund of this credit.

A qualified person may receive a credit up to $428, with a family of two or more children being able to receive up to $4,716! However, the credit is not going to be paid unless it is claimed on the return.

Many people may not be filing a tax return because they fear they will lose governmental benefits if they receive too much of a refund. Included in this situation are people with disabilities who receive supplemental security income (SSI) or Medicaid, since these people may not have more than $2,000 in assets, or possibly income above a certain level based on where they are living and what programs they are receiving. However, the earned income credit does not count as income in determining eligibility for benefits such as cash assistance, Medicaid, food stamps, SSI or public housing.

Naturally, there are limits for individuals to claim the refund, and for 2007, the calculations are as follows:

1. A person who has no children must have income below $12,590.
2. A person with a child must have income below $33,241.
3. A person with two or more children must have income below $37,783.

It is estimated according to 2000 Census, that there are over 22,000,000 individuals between the ages of 18 and 64 who have a disability. Approximately one-fourth of these individuals have total annual income of less than $15,000, and 83% of the people surveyed stated that they had never claimed an income tax credit.

The government designated January 31, 2008, as Earned Income Tax Credit Day. Each year, the government designates a day to attempt to encourage more people with disabilities to file their taxes and apply for the credit.

In order to claim this credit, a return must be filed, but if there is no availability to claim the credit by a person who may not be able to file their own return, they should attempt to contact their local disability center or senior citizen center, who should have the forms available to file the return online. By filing an online return, the person may have their credit deposited directly into their bank account, and thus be more expeditious than if a manual check has to be issued.

By: Hyman G. Darling, Esq.

Umbrella Policies – peace of mind in today’s litigious society

Many individuals have potential liability based on the fact that they have assets. With today’s society being quite litigious, it is important to protect your assets as much as possible, and an umbrella policy will certainly help to limit the liability you may have, since the insurance company would take the risk.

This is an additional policy over and above your homeowner’s insurance and car insurance liability policies. Many companies have requirements for higher limits or lower deductibles on their automobile policy before the insurance company will write the umbrella policy.

Here’s an example of how it may protect your family. Let’s say that a family has a $300,000 liability policy on their homeowner’s policy with a $1,000,000 umbrella policy. If a child is injured on their property and a $1,000,000 judgment is entered against them, their homeowner’s policy will pay $300,000, and the umbrella policy carrier will pay $700,000. However, many companies insist that they have the ability to be the insurance company for both policies so that they may control the coverage and potential defense.

Umbrella policies are relatively inexpensive and may be no more than a couple hundred dollars a year. But if you have significant assets, you may wish to purchase an umbrella policy with greater than the $1,000,000 of coverage to cover potential risk and liability.

It is important to be sure that your insurance agent is aware of all potential risks so he may assess the situation to verify that the policy will cover risks which such as bodily injury, mental anguish, wrongful eviction, invasion of privacy, etc. It is also important to make sure that the company and agent are aware of all issues, such as children in the household who may have cars and are driving your name or under their own name alone.

Due to some policy exclusions and the possibility of the company alleging that it will not pay for a claim when it is filed, it is important to review the exclusions of the coverage so that the insurance is available when you need it. It’s a good idea to have an annual review of all policies to verify you have all the coverage you need.

By: Hyman G. Darling, Esq.