For more information about Medicaid and Medicare, click here:

Seniors who get remarried are often concerned about what will happen to their assets if their new spouse enters the nursing home in the future. They are concerned that their hard-earned assets they saved could be lost. They also want to make sure that when they die their assets will go to their children. Although the prenuptial agreement will protect the senior’s assets from claims of his surviving spouse when he dies, the prenuptial agreement does not protect his assets from his spouse’s nursing home expenses. Seniors who have entered into second marriages are often surprised to learn that the prenuptial agreement that specified that their spouse had no claim to their assets does not prevent Medicaid from counting the assets of the spouse at home in determining Medicaid eligibility.

Medicaid is the governmental program that pays nursing home costs when a senior runs out of assets. Until the nursing home resident has less than $2,000 of countable assets, he must pay his own nursing home costs. When countable assets are less than $2,000, Medicaid will begin paying the senior’s nursing home costs.

However, just because the nursing home spouse has less than $2,000 in assets does not necessarily mean that the nursing home spouse will be eligible for Medicaid. Instead, despite the prenuptial agreement, Medicaid looks at the assets of both spouses. The rules for determining Medicaid eligibility are exactly the same for couples with prenuptial agreements and those without them.

This does not mean that all assets of both spouses must be used up before Medicaid will begin paying nursing home costs. Congress passed “spousal impoverishment rules” to keep the spouse at home from having to be completely impoverished before Medicaid payments kick in.

Under these rules, the amount that the at-home spouse can keep is based on the resources that the couple has at the time one spouse enters an institution. Resources are counted (often referred to as a “snapshot” of resources) as of the date a senior first begins a period of continuous institutionalization. This can be when a senior enters a nursing home or when he first entered a hospital. So, if a spouse first enters a hospital prior to a nursing home, the snapshot is taken based on the date of admission to the hospital, not the nursing home. The spouse at home is permitted to keep half of the couple’s countable assets as of the snapshot date, up to $101,640; but the spouse in the nursing home is limited to $2,000 of countable assets.

For more information about Medicaid and Medicare, click here:

Many families are concerned that if a spouse enters a long-term care facility, then the marital home will be eventually lost. Medicaid has no intention of evicting the at-home spouse (also known as the “community spouse”). Nor does Medicaid require the at-home spouse to sell the home and apply the proceeds toward long-term care costs. However, Medicaid can, under the veil of estate recovery, place a “lien” of claim on the subject premises. When the community spouse passes away or sells the house, then Medicaid can demand to be reimbursed for all monies expended on behalf of the ailing spouse.

The Supreme Court of Minnesota rules that Medicaid may not recover from the estate of a Medicaid recipient’s surviving spouse if, at the time of her death, the recipient did not possess a legal interest in the property being claimed. However, the court also finds that federal Medicaid law does not totally preclude recovery from the estate of a surviving spouse of a Medicaid recipient.

Dolores and Francis Barg had been married for 53 years when Mrs. Barg entered a nursing home in 2001. Once she entered the home and began receiving Medicaid benefits, Mrs. Barg’s guardian transferred her joint tenancy interest in the couple’s home to Mr. Barg, individually. Mrs. Barg died in January 2004 without leaving a probate estate and Mr. Barg passed away five months later. The county Medicaid agency then filed a claim against Mr. Barg’s estate for the cost of Medicaid services paid on Mrs. Barg’s behalf. Mr. Barg’s estate contested a portion of the county’s claim and an appellate court decided that, under principals of real property law, Mrs. Barg possessed a one-half share of the property at the time of her death which could be recovered from Mr. Barg’s estate.

Mr. Barg’s estate appealed, arguing that federal Medicaid law preempts any recovery from the estate of a surviving spouse, and, even if recovery was allowed in some cases, the state could not recover from Mr. Barg’s estate because Mrs. Barg had transferred her property interest to Mr. Barg during her life, not through a transfer at her death. The county argued that Minnesota law allows recovery from the estate of a surviving spouse for any assets jointly owned by the couple at any point during their marriage.

The Supreme Court of Minnesota rules that federal Medicaid law does not preempt a state from pursuing all estate recovery against the estate of a surviving spouse because there is “sufficient ambiguity” in the federal statute authorizing estate recovery. However, the court also finds that the allowable scope of estate recovery is limited to assets that the Medicaid recipient had a legal interest in at the time of her death and voids a portion of the Minnesota estate recovery statute permitting recovery of assets in which the recipient did not have a legal interest. Since “Dolores had no interest in assets at the time of her death that were part of a probate estate or an expanded estate definition permissible under federal law … there is no basis for the County’s claim against the estate,” the court writes.

The adult children of elderly parents in many states could be held liable for their parents’ nursing home bills as a result of the new Medicaid long-term care provisions scheduled to be voted on by the House of Representatives February 1. The children could even be subject to criminal penalties.

The 750-page Deficit Reduction Act of 2005 includes punitive new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. Essentially, the proposed law attempts to save the Medicaid program money by shifting more of the cost of long-term care to families and nursing homes.

One of the major ways it does this is by changing the start of the penalty period for transferred assets from the date of transfer, as is the case now, to the date when the individual would qualify for Medicaid coverage of nursing home care if not for the transfer. In other words, the penalty period would not begin until the nursing home resident was out of funds, meaning there would be no money to pay the nursing home for however long the penalty period lasts.

If the law passes, nursing homes will likely be flooded with residents who need care but have no way to pay for it. In states that have so-called “filial responsibility laws,” the nursing homes may seek reimbursement from the residents’ children. These rarely-enforced laws, which are on the books in 30 states, hold adult children responsible for financial support of indigent parents and, in some cases, medical and nursing home costs.

For example, Pennsylvania recently re-enacted its law making children liable for the financial support of their indigent parents.  Fredrick P. Niemann, Esq. says the new Medicaid law could trigger a wave of lawsuits involving adult children.

According to the National Center for Policy Analysis, 21 states allow a civil court action to obtain financial support or cost recovery, 12 states impose criminal penalties for filial nonsupport, and three states allow both civil and criminal actions.

The Senate passed the bill containing the new transfer provisions before Christmas, with Vice President Dick Cheney casting the tie-breaking vote. However, procedural moves by Senate Democrats require the House to vote on the bill a second time after having passed it by a 212-206 margin at the end of an all-night session.
Those who are concerned about the impact of this bill, S. 1932, on them or their loved ones may want to make their concerns known to their congressional representative. For contact information for your congressperson, click here.

On March 12, 2008, Washington State Governor Christine Gregoire signed into law House Bill 3104, extending 170 legal rights and responsibilities to couples in domestic partnerships (same- or opposite-sex relationships). Among the new responsibilities is that the state will treat surviving members of the couple the same as surviving spouses of married couples for purposes of estate recovery by Medicaid.

The new law, which takes effect June 12, 2008, prohibits recovery by Medicaid if the agency would not have been permitted to recover from a surviving spouse in similar circumstances.

The federal Centers for Medicare & Medicaid Services (CMS) has announced that its Web site comparing nursing homes will now identify facilities that are on its list of those that have a history of poor performance.

From now on, the agency’s Nursing Home Compare site will point out nursing homes that it calls Special Focus Facilities — those that have repeated violations of state and federal health and safety rules and that rank in the worst 5 percent to 10 percent for inspection results in a given state. CMS released the names of the 131 SFF facilities earlier this year, but this is the first time they will be included on the Nursing Home Compare site. 

The troubled facilities are identified by a small “2″ in superscript next to a facility’s name.
A Wall Street Journal article on the CMS decision notes that “consumer groups and nursing home officials warn, however, that nothing can substitute for visiting a nursing home in person.” The article also highlights a free Web site MemberoftheFamily.net that features easy-to-read, color-coded assessments of nursing homes nationwide.

The Journal article observes that CMS began making some of the information about problematic nursing homes public last fall after pressure from Sens. Herb Kohl (D-WI) and Charles Grassley (R-IA). The senators are sponsoring a bill that would force CMS to reveal even more data about nursing homes and Grassley is trying to get the provisions added to a Medicare-related bill expected to pass Congress by July 1.

An Ohio appeals court rules that assets held in an irrevocable trust are available to a Medicaid applicant because the trustee has the discretion to make payments of trust principal for the applicant’s benefit. Balanda v. Ohio Dept. of Job (2008-Ohio-1946, April 24, 2008).

After living in a nursing home for three years, Eleanor Balanda applied for Medicaid in December 2004. The Ohio Department of Job and Family Services denied her application due to excess resources. In February 2005, Eleanor’s husband, Vincent, created an irrevocable trust and subsequently transferred $40,800 into it. In December 2005, Eleanor again applied for Medicaid and the Department again denied her application, this time holding that the assets in the trust were available because the trust gave the trustee discretion to distribute principal to or for the benefit of either Eleanor or Vincent. Eleanor appealed.

The Court of Appeals of Ohio affirms the Department’s decision. The court points out that Ohio law considers a trust an available asset “[i]f there are any circumstances under which payment from [an irrevocable] trust could be made to or for the benefit of the applicant/recipient.” Ohio Admin.Code 5101:1-39-27.1(C)(2)(c)(i). Since, in this case, the trustee has the discretion to distribute funds to or for the benefit of Eleanor or Vincent, the court finds that the trust assets were correctly counted as an available resource.

For the full text of this decision, click here:

Costs for nursing homes, assisted living facilities and some in-home care services have risen for the fifth consecutive year and might continue to rise unless more long-term care workers can be found, according to a new survey by Genworth Financial.

A private room in a nursing home now costs $76,460 a year or $209 daily, a 17 percent increase since 2004, Genworth’s 2008 Cost of Care survey found. A semiprivate room in a nursing home is now $68,408.

The cost of assisted living facilities is shooting up even faster, having risen 25 percent since 2004 to a current average of $36,090 a year for a one-bedroom unit. Assisted living costs ranged from a high of $4,921 a month in New Jersey to a low of $1,981 a month in Arkansas.

While the cost of in-home care by workers who are not certified by Medicare remained about the same, at an average hourly rate of $18 for homemaker services and $19 for home health aide services, the cost of a Medicare-certified home health aide rose to an average $38 an hour.

The survey also priced adult day care for the first time, finding that the daily cost is averaging $59, or about $15,000 a year for five days a week of care.  Adult day care facilities provide care and companionship outside of the home and give the elderly a chance to interact with peers. Sometimes based in a community center, the facilities can provide social or therapeutic activities and provide supervision for participants with cognitive problems.

The study, which was conducted by CareScout on behalf of Genworth, surveyed more than 40,000 providers in all 50 states and the District of Columbia between December 2007 and February 2008.

Genworth Financial sells long-term care insurance policies. Buck Stinson, president of Genworth’s long-term care insurance unit, said the results of the Cost of Care survey indicate that “the expense of just a few years of long-term care in a facility or at home can very quickly wipe out a lifetime of savings.”

In a companion report, Genworth says that the nation faces an impending caregiver shortage that could drive costs even higher.

Genworth’s Cost of Care survey features an interactive map allowing consumers to see long-term care costs and trends in their state. For both the survey and caregiver report, click here.

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. 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 an attorney before entering a nursing home, or as soon as possible afterwards, in order to discuss ways to protect your home.

In those states that have implemented the Deficit Reduction Act of 2005, the home is not counted as an asset for Medicaid eligibility purposes if the equity is less than $500,000 ($750,000 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. (For example, transfers to a disabled child or one who qualifies as a “caregiver child” are permitted.) 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.

The general goal of Medicaid under the Deficit Reduction Act of 2005 (DRA) is to restrict the access of middle-class taxpayers to state medical assistance benefits. One aspect of the law, however, is being touted by the Centers for Medicare and Medicaid Services (CMS) and state medical assistance officials as a measure that will expand the pool of moderate-income individuals who will be eligible for Medicaid. The Long-term Care Insurance Partnership (LTCIP) provisions of the DRA, to the extent implemented in individual states, will allow individuals who have purchased qualified long-term care insurance policies and thereafter exhaust their benefits paying for long-term care to shelter assets of significant value and still become eligible for Medicaid. Section 6021 of the DRA, codified at 42 U.S.C.A. § 1396p(b)(1) and (5), provides that states may amend their Medicaid plans to allow an individual who purchases quali¬fying long-term care insurance policies to keep more assets than the federal standard of $2000. A Medicaid applicant may exempt assets up to the value of the long-term care benefit his or her policy encompasses in determining the total value of his or her countable assets for purposes of determining Medicaid eligibility. For example, a person who buys a qualified Partnership policy that assures a $200,000 long-term care benefit may exclude $200,000 in assets in addition to those assets already treated as exempt or within allowable limits for purposes of calculating the applicant’s total assets and spend-down. The assets are also off-limits from estate recovery. In essence, states implementing this aspect of the DRA “reward” those who buy long-term care policies with special privileges with respect to retention of personal assets in the event they apply for Medicaid at some point in the future.  Many details of the Partnerships have yet to be worked out—among them, portability of policies (that is, whether a Partnership policy purchased in one state will entitle the beneficiary to the asset exemption in a different state) and what measure of inflation protection individual states will mandate. Advocates of the long-term partnership provisions of the DRA provision claim that the long-term care partnership program will save billions in Medicaid costs over the next 10 years.

As of late May 2007, at least 20 states had LTCIPs or had taken the first steps towards amending their state plans to allow for them. These include four states California, Connecticut, Indiana, and New York that were involved in a federally-authorized, privately funded pilot program that began in the early 1990’s, and others that have obtained CMS approval of state plan amendments and intend to roll out their programs by the end of 2007.  State officials are teaming up with CMS for heavy pro¬motion of their LTCIPs with a fanfare that more closely resembles Microsoft’s launch of its new Vista operating system than the implementation of a state Medicaid rule.  New Jersey recently began discussing the concept which is a very positive development.

But what is the true truth about the Long-term Care Partnership programs now being implemented across the country? The bottom line: read the fine print. In the final analysis, it is unlikely that the persons who are most likely to need long-term care in the future will be able to purchase policies, due to existing disabilities or diseases that are almost universally considered disqualifying conditions within this sector of the private insurance market. Additionally, most persons who are healthy enough to qualify for these policies and can actually afford to purchase them are sufficiently well-off that they will not be eligible for Medicaid anyway due to its income limitations.

This article discusses how LTCIPs will be implemented in individual states and what these Partnerships do and do not offer clients who an¬ticipate a future need for long-term care. It outlines some basics about long-term care insurance, dis¬cusses the origins of the DRA’s Partnership autho¬rization in a demonstration program funded by a private foundation, and analyzes the likely potential that older persons who are likely to need long-term care in the future will be able to buy policies. It also offers practice tips for attorneys who shortly will need to know more about long-term care insurance than they have in the past due to the newly impor¬tant relationship between the LTCIP program and traditional Medicaid planning.

Basics of long-term care insurance. Long-term care insurance is a relatively new insurance product.  Nearly 200 companies are licensed in at least one state to sell policies, but the market is highly con¬centrated only six companies control more than 70% of the market based on premiums paid.  The general consensus within the industry is that in the early days of its marketing, LTCJ was significantly underpriced and not sufficiently “exclusive.” Not surprisingly, then, rates have gone up precipitously in recent years, and insurers and underwriters vigor¬ously pre-screen potential applicants. Recent reports suggest that some companies are denying as many as one in four LTCI claims made against older policies.  In May of this year, the industry became the subject of a congressional investigation due to news stories in the popular press reporting that some insurers were routinely denying legitimate claims.

Long-term care insurance policies can vary widely in terms of the benefits offered and other factors: differences among policies include the aggregate amount of the benefit and whether it is paid as a daily, monthly, or accumulated benefit, the event(s) triggering entitlement to the policy benefit, the elimination period, whether home or assisted living care is covered by the policy, whether and how much inflation protection is offered, and so forth.  Premiums vary significantly among policies, and it can be difficult to be an informed consumer when considering what policy to buy.  Companies do not make rate information available online or otherwise in a form that facilitates comparison shopping by potential individual applicants (employers shop¬ping for group policies may have access to better information). Employer-sponsored group policies, which are an option for fewer than 4% of American workers, are less expensive than policies available to individuals. Thus, a healthy 55-year-old state employee who has access to group long-term care insurance plan might expect to pay about $2,400 annually for a policy offering a $200 per day, in¬flation-protected benefit for three years, while a similarly situated person buying an individual policy might have a premium that is 50 to 100% or more higher than this. In short, it is impossible to articulate an “average” monthly cost for long-term care insurance.

Policies that contain inflation protection are al¬most twice as expensive as those without it. A carrier can usually increase rates on existing policies for all members of a “class” of insureds when such an increase is reasonable, as determined by the state regulatory agency.” Loss ratios (the percentage of total premiums collected that are paid out to poli¬cyholders who collect on their policies) appear to be substantially lower than in other sectors of the insurance market. Historically, agents have received higher commission percentages on LTCI sales than on other types of policies, although this may be changing. Three-quarters of all LTCI benefits are paid to persons between the ages of 81 and 95.