Payments to Caregiver Subject Medicaid Applicant to Penalty Period

Reversing a lower court, a Michigan appeals court rules that under state regulations a Medicaid applicant’s payments to a non-relative caregiver subjected the applicant to a penalty period because the caregiver did not have a written contract and a doctor had not recommended the service be provided. Jensen v. Department of Human Services (Mich. Ct. App., No. 319098, Feb. 19, 2015).

Jason Jensen hired a non-relative caregiver for his grandmother, Betty Jensen, who suffered from dementia. Mr. Jensen and the caregiver had an informal agreement and no contract was signed, but Mr. Jensen paid the caregiver a total of $19,000 from Ms. Jensen’s assets over the course of the months she worked for Ms. Jensen. When Ms. Jensen’s condition worsened, she entered a nursing home and applied for Medicaid. The state established a penalty period, holding that the payments to the caregiver were an unlawful transfer. Ms. Jensen died before the penalty period ended.

Mr. Jensen appealed, but the state upheld the decision. Under state regulations, payments to caregivers are considered “divestments” and transfers for less than fair market value unless there is a signed contract and a doctor has recommended in writing that the services be provided, among other requirements. Mr. Jensen appealed to court, and the trial court reversed, holding that the regulation requiring that a contract be in writing applied only to relative caregivers. The state appealed.

The Michigan Court of Appeals reverses, holding that the trial court improperly interpreted the regulations and that the penalty period was appropriate. According to the court, because there was no written contract and no written doctor’s recommendation for the services, the payments to the caregiver were a divestment. The court notes that “it does not appear from the factual record that [Mr.] Jensen overpaid for [the caregiver’s] services, or hired [the caregiver] unnecessarily. If we were not bound by the plain language of [the regulations], and were we permitted de novo review of the lower tribunals’ factual considerations, we would reach quite a different result.”

TOP 8 MISTAKES

IN MEDICAID PLANNING

Feel free to contact me with any Medicaid Planning questions,

Regards,

Brian A. Raphan

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Nursing Home Agreements: 

Protecting Your House from Medicaid Estate Recovery

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After a Medicaid recipient dies, the state must attempt to recoup from his or her estate whatever benefits it paid for the recipient’s care. This is called “estate recovery.” For most Medicaid recipients, their house is the only asset available.

Life estates

For many people, setting up a “life estate” is the simplest and most appropriate alternative for protecting the home from estate recovery. A life estate is a form of joint ownership of property between two or more people. They each have an ownership interest in the property, but for different periods of time. The person holding the life estate possesses the property currently and for the rest of his or her life. The other owner has a current ownership interest but cannot take possession until the end of the life estate, which occurs at the death of the life estate holder.

Example: Jane gives a remainder interest in her house to her children, Robert and Mary, while retaining a life interest for herself. She carries this out through a simple deed. Thereafter, Jane, the life estate holder, has the right to live in the property or rent it out, collecting the rents for herself. On the other hand, she is responsible for the costs of maintenance and taxes on the property. In addition, the property cannot be sold to a third party without the cooperation of Robert and Mary, the remainder interest holders.

When Jane dies, the house will not go through probate, since at her death the ownership will pass automatically to the holders of the remainder interest, Robert and Mary. Although the property will not be included in Jane’s probate estate, it will be included in her taxable estate. The downside of this is that depending on the size of the estate and the state’s estate tax threshold, the property may be subject to estate taxation. The upside is that this can mean a significant reduction in the tax on capital gains when Robert and Mary sell the property because they will receive a “step up” in the property’s basis.

As with a transfer to a trust, the deed into a life estate can trigger a Medicaid ineligibility period of up to five years. To avoid a transfer penalty the individual purchasing the life estate must actually reside in the home for at least one year after the purchase.

Life estates are created simply by executing a deed conveying the remainder interest to another while retaining a life interest, as Jane did in this example. In many states, once the house passes to Robert and Mary, the state cannot recover against it for any Medicaid expenses Jane may have incurred.

Trusts

Another method of protecting the home from estate recovery is to transfer it to an irrevocable trust. Trusts provide more flexibility than life estates but are somewhat more complicated. Once the house is in the irrevocable trust, it cannot be taken out again. Although it can be sold, the proceeds must remain in the trust. This can protect more of the value of the house if it is sold. Further, if properly drafted, the later sale of the home while in this trust might allow the settlor, if he or she had met the residency requirements, to exclude up to $250,000 in taxable gain, an exclusion that would not be available if the owner had transferred the home outside of trust to a non-resident child or other third party before sale.

Contact me to find out what method will work best for you.

More Related Articles >

Financial Abuse of the Elderly: Sometimes Unnoticed, Always Predatory

Caution to elders and family members of elders. This happens too often:

Via The New York Times 11/27/15 Elizabeth Olson

It was only after Mariana Cooper, a widow in Seattle, found herself with strained finances that she confessed to her granddaughter that she was afraid she had been bilked out of much of her savings.

Over three years, Ms. Cooper, 86, had written at least a dozen checks totaling more than $217,000 to someone she considered a friend and confidante. But the money was never paid back or used on her behalf, according to court documents, and in early November the woman who took advantage of Ms. Cooper, Janet Bauml, was convicted on nine counts of felony theft. (She faces sentencing on Dec. 11.)

Ms. Cooper, who lost her home and now lives in a retirement community, is one of an estimated five million older American residents annually who are victimized to some extent by a caregiver, friend, family member, lawyer or financial adviser.

With 10,000 people turning 65 every day for the next decade, a growing pool of retirees are susceptible to such exploitation. As many as one in 20 older adults

said they were financially mistreated in the recent past, according to a study financed by the Justice Department.

Traditionally, such exploitation, whether by family, friends or acquaintances, often has been minimized as a private matter, and either dismissed with little or no penalty or handled in civil court.

Even when the sums are large, cases like Ms. Cooper’s are often difficult to prosecute because of their legal complexity and because the exploitation goes unnoticed or continues for long periods. Money seeps out of savings and retirement funds so slowly it draws attention only after it is too late.

Ms. Cooper, for example, wrote her first check, for $3,000, in early 2008, and later gave Ms. Bauml her power of attorney. In early 2012, after Ms. Cooper realized that Ms. Bauml was not going to repay her in time for her to afford a new roof for her house, she told her granddaughter, Amy A. Lecoq, about the checks. She later called the police.

Ms. Bauml maintained that Ms. Cooper gave her money for services she provided as a home organizer or as loans.

Later, testing by a geriatric mental health specialist found that Ms. Cooper had moderate dementia, which showed her judgment had been impaired.

The diagnosis “helped the jury to understand why she would keep signing all these checks to this woman as loans when she was never being paid back,” said Page B. Ulrey, senior deputy prosecutor for King County, Wash., who pressed the case against Ms. Bauml.

The case was challenging in part because Washington State does not have an elder abuse statute, said Ms. Ulrey, who is one of a small but growing number of prosecutors around the country with the specific duty of prosecuting those who take financial advantage of elders, whether it is connected to investments, contracts or other fraud.

As the number of complaints grows, more municipalities are trying to combat such abuse, which is often intertwined with physical or sexual abuse, and emotional neglect.

Some organizations also have set up shelters, modeled on those for victims of domestic abuse. In the Bronx, for example, the Weinberg Center for Elder Abuse Prevention at the Hebrew Home in Riverdale started such a shelter in 2005. Since then, 14 other such shelters have been opened in various long-term care operations around the country to deal with urgent cases of financial abuse.

One such woman, who agreed to talk only if she was not identified by her last name, stayed at Riverdale after she was threatened with eviction. A neighbor discovered that the woman, a 73-year-old widow named Irene, had not paid her rent in six months because relatives living with her had been withdrawing money from her account and leaving her short of funds.

“I had to leave with one small suitcase,” Irene said. “They were abusing me.”

She was later able to move to federally subsidized housing away from the abusive situation.

To help elders in financial and other distress, more municipalities, using federal funds, are training law enforcement officers, prosecutors, and social workers how to spot the sometimes subtle signals that may indicate someone has been swindled.

“We see many cases where someone convinces an older person to give them the power of attorney, and then uses that authority to strip their bank accounts, or take the title of their home,” said Amy Mix, a lawyer at the AARP Legal Counsel for the Elderly, which works with the Adult Protective Services division in the District of Columbia government as well as the city’s police department.

In the most recent fiscal year, 934 cases of abuse were reported in Washington. About one-quarter of those were financial exploitation, according to Sheila Y. Jones, chief of Adult Protective Services. “And they involve millions of dollars,” she said.

But many cases are not counted officially because older people are reluctant to pursue legal remedies against relatives and friends. Louise Pearson, 80, a retired government computer analyst, declined to press charges against a security guard in her building who had befriended her and later obtained $30,000 from her savings.

“There was something about him you just had to take to,” Ms. Pearson said.

When she finally asked Malika Moore, a social worker at Iona Senior Services in Washington, for some assistance with her shaky finances, the social worker realized that the situation was serious.

One clue, she said, was that, “When I opened her refrigerator, it was empty.”

Ms. Moore was able to get Ms. Pearson home-delivered meals, and after the bank confirmed that she was missing savings, help to find a conservator to handle her money. Ms. Pearson, who now lives in a housing complex for the elderly, said, “I get money whenever I need it, and more than I did before.”

In Seattle, Ms. Cooper’s granddaughter expressed determination to educate others on the warning signs of financial abuse. “I wish we had known some of the red flags,” she said.

But even though she’s a trained social worker, it’s not surprising she missed the signs. She was deeply involved in caring for her mother, Ms. Cooper’s daughter, who was fighting cancer and died shortly before the period when her grandmother was writing the checks.

“Our family saw her regularly,” Ms. Lecoq said, “but we just didn’t see indications of what was going on.”

In retrospect, she might have been more suspicious with “my grandmother suddenly having a new friend and a friend who got so close so fast.”

Once Ms. Lecoq and her husband, John, recognized what had happened, they pushed for prosecution. Ms. Ulrey, the prosecutor, said the case required medical tests and search warrants for both the victim’s and the suspect’s financial accounts.

Ms. Cooper was unable to recover her lost money and worries about how long she will be able to pay for her retirement home. “She’s ashamed and embarrassed and feels guilty,” Ms. Lecoq said of her grandmother. “But I tell her: ‘You were a victim of a crime.’”

To help older people, families and friends should be on the lookout for some of the warning signs of financial abuse. These include not being able to cover normal expenses; paying for excessive, unexpected gifts to others; and signing over power of attorney or transferring property to unrelated individuals. 

To learn more about protecting the savings of the elderly and helping them avoid being exploited financially, these publications are worth reading: 

An Attorney Who Advised Against Life Estate While Conducting Medicaid Planning Is Liable for Legal Malpractice

An Attorney Who Advised Against Life Estate While Conducting Medicaid Planning Is Liable for Legal Malpractice

Medicaid Planning

A Massachusetts appeals court rules that an attorney who negligently advised a client that obtaining a life estate in property would hurt her chances of qualifying for Medicaid damaged the client because deprivation of a property right is actual damage. Brissette v. Ryan (Mass. Ct. App., No. 14-P-919, Oct. 29, 2015).

Marie Brissette and her husband consulted attorney Edward Ryan about protecting their house if they eventually needed Medicaid. Mr. Ryan advised them to transfer the house to their children and reserve a life estate, which they did. Thirteen years later, they wanted to sell that house and buy another house. Mr. Ryan advised them not to retain a life estate in the new property because it would make them ineligible for Medicaid and Medicaid could obtain a lien on the property. The Brissettes sold their house and used the money to buy a new house in the name of two of their children.

After her husband died, Mrs. Brissette sued Mr. Ryan for legal malpractice, arguing that due to his incorrect advice not to obtain a life estate on the new property, she had no legal right to it, which subjected her to the risk of being forced to move out by her children. A jury found Mr. Ryan liable for $100,000 in damages. Ryan appealed and the judge entered a judgment n.o.v., ruling that Mr. Ryan’s negligence did not cause Mrs. Brissette any actual harm because her children testified that they would never evict her. Mrs. Brissette appealed.

The Massachusetts Court of Appeals reverses and reinstates the jury’s verdict, holding that deprivation of a property right is actual damage. According to the court, “the fact that because of [Mr.] Ryan’s negligence [Mrs. Brissette] has no right to alienate the property during her lifetime by, for example, renting or mortgaging it, means that she did not obtain something of value that she otherwise would have. ”

TO READ THE TOP 8 MISTAKES IN MEDICAID PLANNING CLICK HERE.

For the full text of this decision, go to: http://www.mass.gov/courts/docs/sjc/reporter-of-decisions/new-opinions/14p0919.pdf

Be sure to consult with an experienced Medicaid Planning Attorney before making any planning decisions.

Questions? Email me at medicaid@RaphanLaw.com

Regards,

Brian

Medicaid Spousal Impoverishment Numbers Likely to Be Unchanged for 2016

With the just-announced September 2015 Consumer Price Index for All Urban Consumers (CPI-U) actually lower than the comparable figure in September 2014, the betting is that next year’s Medicaid’s spousal impoverishment figures and related numbers will remain the same as 2015. 

In an email to his state colleagues in the National Academy of Elder Law Attorneys, Pennsylvania ElderLawAnswers member Robert Clofine points out that the last time the CPI-U was lower than the previous year (in 2009) , the Centers for Medicare and Medicaid Services (CMS) did not adjust the Medicaid numbers downward but kept them level.

This means that the 2016 community spouse resource allowance (CSRA) should continue to be a maximum of $119,220 and a minimum of $23,844.  The maximum monthly maintenance needs allowance should remain $2,980.50 a month and the income cap stay at $2,199.  Medicaid’s home equity limits should also be unchanged at a minimum of $552,000 and a maximum of $828,000.

LINK: MEDICAID PLANNING FOR NEW YORKERS

Regards,

Brian A. Raphan

Why your Medicaid Application should be entrusted to an Elder Law Attorney:

The New York State Bar Association provides this informational pamphlet for long term care and Medicaid needs.

New York State Bar Association - Elder Law

What Is Medicaid?
Medicaid is the government funded program through which many persons receive care at home or in a nursing home. Medicaid is a state-wide and state specific program, currently admin- istered through each county’s Department of Social Services (with the exception of the five counties comprising metropolitan NewYork, which are administered through the single NYC entity, Human Resources Administration).
The process of applying for Medicaid is complex and often times confusing. Because Medicaid offers many different programs, the eligibility rules and application processes differ. Having an attor- ney who has a full and thorough understanding of the benefits available through Medicaid, the rules for eligibility, and the process by which to secure those benefits provides a tremendous advantage to the applicant for Medicaid benefits.
The Medicaid Application Process
Information Needed
Depending upon the program for which you are applying, different information may be required. All Medicaid applications, regardless of benefits sought, require extensive personal documenta- tion and detailed proof of income. Certain pro- grams require proof of assets and sixty months of records for all assets held during that period.
Help with the Application
An experienced Elder Law Attorney can advise you on the benefits available, the process for obtaining the benefits you need, the provisions of the law that might enable your family to protect assets, and the rights that certain family members of the applicant may have.
In New York State, it is not required that an attor- ney assist with the Medicaid appli- cation. In fact, you can prepare the appli- cation yourself. There are many entities, agencies, or divisions within hospitals and nursing homes which may offer to prepare and submit the application for you
for free or for a reduced fee. However, you must exercise great caution when accepting that help, as those entities and agencies are not obligated to advise you of your rights and are not permitted to give legal advice or implement legal strategies. Using these services might expose you and your family to risk.
Be Wary Of:
• Offers to prepare the Medicaid application free of charge or at a significantly reduced rate—
if it’s“too good to be true,”it probably is!
• Persons holding themselves out as attorneys or giving legal advice without confirming they are admitted to the New York State Bar.
• Guarantees of Medicaid eligibility or other government benefits.
• Agencies, entities or groups which have as their “sole job”the securing of Medicaid benefits for you. These entities may not have any liability to you if they fail to secure Medicaid eligibility.
Exposure to Risks When an Elder Law Attorney Is Not Used 

The law has many nuances and intricacies. An Elder Law Attorney has the obligation to ensure
that you are fully informed of all the provisions of law related to Medicaid, and to accurately answer any questions you may have. The Elder Law Attorney does not work for the nursing home. In fact, the Elder Law Attorney has an ethical duty to advocate for you and your interests.

Failing to use an Elder Law Attorney could expose you to the following risks:
• Failure to be fully informed of spousal rights;

• Failure to be informed of oppor-tunities for asset protection;
• Incomplete or inaccurate application submission;
• Denial of application due to failure to provide information;
• Failure to be informed of consequences of prior actions;
• Imposition of a penalty period for which mitigation strategies could have been implemented;

• Failure to have a dedicated advocate working with you through the process.

To learn read THE TOP 8 MEDICAID PLANNING MISTAKES click here.

Regards,

Brian

ELDER ABUSE: FINANCIAL EXPLOITATION FOR $797,000

Another case handled by Brian A. Raphan, P.C. was on the Cover Page of the New York Law Journal last week.

I was appointed as Special Referee by the Supreme Court of the State of New York to perform a forensic review of Nassau County attorney Martha Brosius’ handling of a senior citizen’s financial affairs. Brian uncovered many undocumented and improper financial transactions and filed his detailed analysis to the Court.  As a result of my report, criminal actions were commenced against attorney Brosius, which ultimately led to a guilty plea. Brosius now faces 6-12 years behind bars.  Of course, she will lose her license to practice law.  Another win for the good guys!

The article is provided below.

*As appeared Front Page of the New York Law Journal 6/25/15,

By Andrew Denney, The New York Law Journal

ATTORNEY ADMITS TO TAKING $797,000 FROM CLIENTS

A Long Island elder law attorney has admitted to embezzling more than $797,000 from her clients over a four-year period, the Queens District Attorney’s Office announced on Tuesday.

elder abuse, district attorney

Martha Brosius, 52, of Brosius & Associates of Great Neck, appeared Tuesday before Acting Supreme Court Justice Helene Gugerty and pleaded guilty to two counts of second-degree grand larceny and one count of scheme to defraud, according to a news release from Queens District Attorney Richard Brown’s Office.

“The defendant has admitted to breaching her fiduciary duty and unjustly enriching herself at the expense of her client,” Brown said in the release. Brosius was indicted for the offenses in 2013. Her clients included a 77-year-old man who had been deemed mentally incapable and for whom Brosius served as legal guardian, as well as two brothers who retained Brosius to sell their deceased father’s estate and establish a special-needs trust for their disabled sister, who was the sole heir to the father’s estate.

Brosius is scheduled to appear before Gugerty on Aug. 12 for sentencing. Gugerty has indicated that her prison sentence would range between four and 12 years. Brosius is a graduate of the St. John’s University School of Law and was admitted to the bar in 2003. According to the Office of Court Administration website, she has not been publicly disciplined. Her guilty plea will subject her to mandatory disbarment.

Assistant District Attorneys James Liander and Yvonne Francis appeared for the Queens District Attorney’s Office.

• • •

“Improper use of an adult’s funds, property, or resources by another individual is elder abuse. This includes, but is not limited to, fraud, embezzlement, forgery, falsifying records, coerced property transfers, or denial of access to assets.”  

TO REPORT FINANCIAL EXPLOITATION OF ELDERS IN NY STATE Click Here. Or Call 844-697-3505

FOR THE DISTRICT ATTORNEY’S PRESS RELEASE Click Here.

Careful…Gifting To Family Can Affect Medicaid Eligibility

By Matthew S. Raphan, Esq.  Attorney at The Law Offices of Brian A. Raphan, PC

View image | gettyimages.com
View image | gettyimages.com

Every so often a client says to me, “I’ve been gifting money to my children and grandchildren so I can apply for Medicaid.” While gifting may offer benefits to you and your family, if you think you may someday apply for Medicaid benefits, you should be aware that giving away money or property can interfere with your eligibility.

Under federal law, if you transfer certain assets within five years prior to applying, you may be ineligible for Medicaid benefits for a period of time. This is called a transfer penalty, and the length of the penalty depends on the amount of money transferred. (This waiting period can also be costly as you may pay for your care out of your own pocket.) Even small transfers can affect eligibility. Although federal law currently allows individuals to gift up to $14,000 a year without having to pay a gift tax, Medicaid still treats that gift as a transfer.

Any transfer that you make, however nominal, may be scrutinized. For example, Medicaid does not have an exception for gifts to charities. If you make a charitable donation, it could affect your Medicaid eligibility down the road. Similarly, gifts for holidays, weddings, birthdays, and graduations can all trigger a transfer penalty. If you buy something for a friend or relative, this could also result in a transfer penalty.

Some people have the notion that they can also go on a spending spree for themselves or family. Not so fast. Spending a large sum of cash at once or over time may prompt the state to request documentation showing how the money was spent. If you don’t have receipts showing that you received fair market value in return for a transferred asset, you could be subject to a transfer penalty.

While most transfers are penalized, certain transfers are exempt from this penalty. For example, even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:

  • your spouse;
  • your child who is blind or permanently disabled;
  • a trust for the sole benefit of anyone under age 65 who is permanently disabled.

In addition, you may transfer your home to the following individuals (as well as to those listed above):

  • your child who is under age 21;
  • your child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time;
  • your sibling who already has an equity interest in the home and who lived there for at least one year before you moved to a nursing home.

Before transferring assets or property, check with us or your elder law attorney to ensure that it won’t affect your Medicaid eligibility.

For more information on Medicaid’s transfer rules, click here.

Related Articles:

Medicaid planning mistakes
TOP 8 MEDICAID PLANNING MISTAKES

If you have a question you can send us a message here.

Careful…Gifting To Family Can Affect Medicaid Eligibility

By Matthew S. Raphan, Esq.  Attorney at The Law Offices of Brian A. Raphan, PC

View image | gettyimages.com
View image | gettyimages.com

Every so often a client says to me, “I’ve been gifting money to my children and grandchildren so I can apply for Medicaid.” While gifting may offer benefits to you and your family, if you think you may someday apply for Medicaid benefits, you should be aware that giving away money or property can interfere with your eligibility.

Under federal law, if you transfer certain assets within five years prior to applying, you may be ineligible for Medicaid benefits for a period of time. This is called a transfer penalty, and the length of the penalty depends on the amount of money transferred. (This waiting period can also be costly as you may pay for your care out of your own pocket.) Even small transfers can affect eligibility. Although federal law currently allows individuals to gift up to $14,000 a year without having to pay a gift tax, Medicaid still treats that gift as a transfer.

Any transfer that you make, however nominal, may be scrutinized. For example, Medicaid does not have an exception for gifts to charities. If you make a charitable donation, it could affect your Medicaid eligibility down the road. Similarly, gifts for holidays, weddings, birthdays, and graduations can all trigger a transfer penalty. If you buy something for a friend or relative, this could also result in a transfer penalty.

Some people have the notion that they can also go on a spending spree for themselves or family. Not so fast. Spending a large sum of cash at once or over time may prompt the state to request documentation showing how the money was spent. If you don’t have receipts showing that you received fair market value in return for a transferred asset, you could be subject to a transfer penalty.

While most transfers are penalized, certain transfers are exempt from this penalty. For example, even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:

  • your spouse;
  • your child who is blind or permanently disabled;
  • a trust for the sole benefit of anyone under age 65 who is permanently disabled.

In addition, you may transfer your home to the following individuals (as well as to those listed above):

  • your child who is under age 21;
  • your child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time;
  • your sibling who already has an equity interest in the home and who lived there for at least one year before you moved to a nursing home.

Before transferring assets or property, check with us or your elder law attorney to ensure that it won’t affect your Medicaid eligibility.

For more information on Medicaid’s transfer rules, click here.

Related Articles:

Medicaid planning mistakes
TOP 8 MEDICAID PLANNING MISTAKES

If you have a question you can send us a message here.