Overview of Government Sources for Long Term Care

1. Elder Care in New Jersey:Legal and Financial IssuesPresented by Donald D. Vanarelli, Esq. Certified Elder Law AttorneyRegistered GuardianR. 1:40 Qualified Mediator

2. Overview of Government Sources for Long Term Care

3. A Truth Almost Everyone Must Face Most older people develop physical or mental impairments which at some point prevent them from living completely independent lives.

4. Long Term Care Long Term Care refers to the kind of care a person needs when he or she is unable to care for himself or herself due to illness, frailty or cognitive impairment.

5. Long Term Care Long Term Care is different from traditional medical care. Long term care helps one live as he or she is now; it may not help to improve or correct medical problems.

6. If you cannot live independently, what care options are available? 1. Stay at home - Home Health Care 2. Move in with Family 3. Assisted Living Facility 4. CCRC 5. Nursing Home

7. The Need for Long Term Care • 1 of 2 women and 1 of 3 men who reach the age of 65 will use a nursing home at some point during their lives. • 40% of nursing home residents are between 18 and 64 years of age. • Average stay in NH - 2.9 years • 7 in 10 individuals will need home health care.

8. The Cost of Long Term Care Average cost of 24 hour Home Health Aides provided by an agency - $4,500 per month, or $54,000 per year. Range of costs charged by Assisted Living facilities - $4,500 - $6,500 per month, or $54,000 - $78,000 per year. Typical cost of Nursing Home care in New Jersey - $8,000 per month, or $96,000 per year.

9. Who Pays For Long Term Care? 1. Private Pay 49% 2. Medicaid 44% 3. VA Benefits 4% 4. Medicare 2% 5. Private Long Term Care Insurance 1%

10. Long Term Care CostsCovered by Medicare 1. Home Health Care 2. Nursing Home Care

11. Medicare - Home Health Care Aides • Covers up to 100 home visits per “spell of illness”. • Preconditions to payment: prior hospital stay of at least 3 days and home health care initiated within 14 days of discharge. • Beneficiary must be homebound and need skilled nursing care, physical or speech therapy, NOT custodial care.

12. Medicare Payment of Nursing Home Care • Immediate prior hospital stay of 3 days • Admitted to NH within 30 days of hospital discharge • Covers, skilled nursing care or rehabilitation only, NOT custodial care.

13. Custodial Care Custodial Care (sometimes called Personal Care) is the level of care provided in ALFs and NHs. Custodial Care helps one with activities of daily living (ADLs). ADLs include bathing, eating, dressing, toileting, continence and transferring. Medicare does NOT pay for custodial care. Compare: Custodial Care vs. Skilled Nursing Care

14. How Much Does Medicare Pay? • Maximum Coverage - 100 days • Day 1-20 - Medicare pays 100% of covered charges • Day 21-100 - Medicare pays all covered charges, except coinsurance amount. Year 2008 coinsurance payment = $128/day, or about $3, 840/month • Day 101 - on your own

15. Medigap Policies Medigap policies fill in the gaps in Medicare coverage, but do NOT extend coverage for long term care needs beyond what Medicare provides.

16. Compare Medicare and Medicaid • Medicare is an insurance program. Medicaid is a welfare program. • Medicare is for elderly and disabled people regardless of their income or resources. Medicaid is for elderly and disabled people with low income and resources.

17. Medicaid Joint Federal and State Program Provides medical assistance for financially eligible persons who are aged, blind or disabled.

18. General Eligibility • 1. U.S. Citizen or legal alien • 2. New Jersey Resident • 3. Age 65 or older, blind or disabled • 4. Financial Limitations

19. Income and Resources Limits Income - all income is counted in determining eligibility Income cap - Community Medicaid programs which pay for home health aides and care in Assisted Living facilities have an income cap. In 2008, the cap is $1,911/month. No cap for Nursing Home Medicaid.

20. Resource Limits Countable resources - all assets in the sole name of applicant, in the sole name of spouse, or in joint names, either with the spouse or another person. Includes pension and retirement assets of BOTH the applicant and spouse. Resource Limits - $2,000 for an individual and $3,000 for a couple. Excess resources - must be spent down.

21. Transfer of Resource Rules Instead of spending down excess resources on long term care costs, some have attempted to achieve Medicaid eligibility and preserve assets by making gifts to family members and others.

22. Transfer of Resource Rules To prevent gifting of assets, Medicaid imposes a “penalty period”, or period of ineligibility for Medicaid, for all gifts made within the “lookback period”.

23. Estate Recovery: The Medicaid Lien Federal and State law requires the States to seek, from the estate of a deceased Medicaid recipient, recovery of all Medicaid benefits paid when the recipient was 55 years of age or older when the Medicaid benefits were received.

24. Comparing Medicare and Medicaid Coverage for Long-Term Care Costs Medicare: covers home health aides and nursing home costs for many people, but only for a short time. No financial limits. Medicaid: covers home health aides, assisted living facilities and nursing homes, but only for aged, blind and disabled people who meet strict financial limits.

25. Long Term Care Planning Includes: LTCI Wills Advance Medical Directives Powers of Attorney Trusts Guardianships for incapacitated persons Asset Inventory Restructuring of assets

26. Estate Planning When A Spouse Is Confronting Health Issues

27. Estate Planning ForThe Healthy Spouse When one spouse is a resident of a nursing home or medical institution, the “community spouse” may utilize various strategies to protect and retain resources for the family without jeopardizing the institutionalized spouse’s Medicaid eligibility.

28. Asset Titling-Deeds, Bank Accounts and Life Insurance Transfer Title of Principal Residence to CS- this is an “exempt” transfer when determining eligibility of IS. -Significant estate planning measure -Home will escape “Medicaid lien”

29. Spend Down • Pre-Pay Real Estate Taxes • Pre-Pay Homeowners Insurance • Pay Off Debts • Pay For Services

30. Convert Countable To Non-Countable Assets • Buy household goods and personal effects • Make home repairs and improvements • Purchase a more expensive home • Purchase life estate from children • Purchase a new car • Buy cemetery plot • Pre-pay funeral

31. Retitling of Bank Accountsand Life Insurance • Life Insurance • Change beneficiary designation to a third party • Assign policy to funeral home • Assign policy to children • Borrow Cash Value • Bank Accounts • Change bank accounts to exclude name of institutionalized spouse

32. Changing CS’s Will to Exclude Disabled Spouse • If institutionalized spouse is named beneficiary of CS’s Will and CS passes away first, IS may be ineligible for Medicaid • Elective Share Issue

33. Durable Power of Attorney with Gift-Giving Power • POA - Legal instrument which authorizes an “agent” to perform specific acts documented in the POA on behalf of the “principal”. • NJ statute specifically authorizes an agent under POA to conduct banking transactions. • To execute POA, principal must understand nature and effect of appointing an agent. • “Durable” POA is not affected when principal becomes disabled. Must specifically so state in document.

34. Durable Power of Attorney with Gift-giving Power, cont’d • Plan ahead to avoid guardianship proceeding-In reKeri issues • “Gifting powers” must be specifically granted to the agent for purposes of Medicaid planning. • Tailor gifting provisions to include other siblings or alternate agent in process to avoid appearance of “self-dealing”.

35. Exempt Transfers • Transfer Home To • CS • Disabled Child • Caregiver Child • Sibling with an equity interest • Transfer Non-Home Assets To • CS • Disabled Child

36. Exempt Transfers,cont’d • Transfer To Trust for Disabled Child • Disability Annuity Trust • (d) (4) (A) Trust • Pooled Trust

37. Transfer For Value-No Penalty • Purchase Commercial Annuity • Spousal Annuity Trust • Private annuity • SCIN • Sell Remainder interest in senior’s home • Buy Life Estate in child’s home

38. Transfer For Value, cont’d • Board and Care Agreement • Life Care Contract • Family Reverse Mortgages • Interest-Only Note

39. Countable Transfers - Result in Penalty • Large transfer • Half-a-loaf transfer • Monthly or Sequential transfers • Transfer home, retain life estate

40. Thank You For Your Attention Questions or Comments?