NY Court Rules that Community Spouse’s Refusal to Contribute to Care Creates Implied Contract to Repay Benefits

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A New York trial court enters judgment against a woman who refused to contribute to her spouse’s nursing home expenses, finding that because she had adequate resources to do so, an implied contract was created between her and the state entitling the state to repayment of Medicaid benefits it paid on the spouse’s behalf. Banks v. Gonzalez (N.Y. Sup. Ct., Pt. 5, No. 452318/15, Aug. 8, 2016).

Evelyn Gonzalez’ spouse was admitted to a nursing home and received $28,235.56 in Medicaid benefits from the Department of Social Services of the City of New York.  At the time of her spouse’s Medicaid application, Ms. Gonzalez’ assets exceeded the community spouse resource allowance.  However, she signed a declaration refusing to make her income or resources available to pay for her spouse’s care.

After a letter to Ms. Gonzalez demanding repayment of the cost of Medicaid benefits paid on behalf of her spouse went unanswered, the agency filed suit.  Ms. Gonzalez did not respond to the summons and complaint nor to the agency’s motion for default judgment.

The Supreme Court of New York, New York County, grants the motion and enters default judgment against Ms. Gonzalez for the cost of benefits provided to her spouse.  The court notes that in cases such as this where Ms. Gonzalez has the income and resources but refuses to contribute to her spouse’s care, state law creates an implied contract between her and the state allowing recovery of the cost of the benefits provided during the preceding 10 years.

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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

Free Downloads: Easy to read elder guides for families and seniors.

Probate, Estate Planning, Healthcare Proxies, Medicaid Planning, etc. Get informed and find many of the answers to your existing questions in these guides. Download and save as reference for free.

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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.

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Medicaid Applicant’s Irrevocable Trust Is an Available Resource Because Trustee Can Make Distributions

medicare denial

An Alabama appeals court rules that a Medicaid applicant’s special needs trust is an available resource because the trustee had discretion to make payments under the trust. Alabama Medicaid Agency v. Hardy (Ala. Civ. App., No. 2140565, Jan. 29, 2016).

Denise Hardy inherited a one-half interest in a house and placed it in an irrevocable trust. The trust instrument stated that the trustee could distribute income to Ms. Hardy at the trustee’s discretion and that the trust was intended to be a special needs trust. Ms. Hardy entered a nursing home and applied for Medicaid. The state determined that the trust was an available resource.

Ms. Hardy appealed, and an administrative law judge agreed that the trust was an available resource. Ms. Hardy appealed to court, arguing that the trust was not available because it was irrevocable and could not be altered. The trial court reversed the state’s decision and ordered the state to pay Ms. Hardy benefits. The state appealed.

The Alabama Court of Civil Appeals reverses, holding the trust is an available resource. According to the court, a trust is an available resource if there is any circumstance under which payments can be made to the beneficiary, and that in this case, “if the house was sold and half of the proceeds of the sale were placed in the trust, the trustee could then make distributions as required by the terms of  [Ms.] Hardy’s trust.”

For the full text of this decision, go to: https://acis.alabama.gov/displaydocs.cfm?no=713449&event=4JX0KDU8D

8 Medicaid Planning Mistakes to Avoid: Click here

Additional Medicaid Planning questions? Click here

Regards,

Brian A. Raphan

 

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

What’s the Difference Between Medicare and Medicaid in the Context of Long-Term Care?

Although their names are confusingly alike, Medicaid and Medicare are quite different programs. Both programs provide health coverage, but Medicare is an “entitlement” program, meaning that everyone who reaches age 65 and is entitled to receive Social Security benefits also receives Medicare (Medicare also covers people of any age who are permanently disabled or who have end-stage renal disease.)

Brian Raphan, P.C.

Medicaid, on the other hand, is a public assistance program that that helps pay medical costs for individuals with limited income and assets. To be eligible for Medicaid coverage, you must meet the program’s strict income and asset guidelines. Also, unlike Medicare, which is totally federal, Medicaid is a joint state-federal program. Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive federal money, which pays for about half the state’s Medicaid costs. (The state picks up the rest of the tab.)

Medicare and Medicaid Coverage of Long-Term Care

The most significant difference between Medicare and Medicaid in the realm of long-term care planning, however, is that Medicaid covers nursing home care, while Medicare, for the most part, does not. Medicare Part A covers only up to 100 days of care in a “skilled nursing” facility per spell of illness. The care in the skilled nursing facility must follow a stay of at least three days in a hospital. And for days 21 through 100, you must pay a co-payment of $152 a day (in 2014). (This is generally covered by Medigap insurance.) In addition, the definition of “skilled nursing” and the other conditions for obtaining this coverage are quite stringent, meaning that few nursing home residents receive the full 100 days of coverage. As a result, Medicare pays for less than a quarter of long-term care costs in the U.S. In the absence of any other public program covering long-term care, Medicaid has become the default nursing home insurance of the middle class. Lacking access to alternatives such as paying privately or being covered by a longterm care insurance policy, most people pay out of their own pockets for long-term care until they become eligible for Medicaid. The fact that Medicaid is a joint state-federal program complicates matters, because the Medicaid eligibility rules are somewhat different from state to state, and they keep changing. (The states also sometimes have their own names for the program, such as “Medi-Cal” in California and “MassHealth” in Massachusetts.)

Both the federal government and most state governments seem to be continually tinkering with the eligibility requirements and restrictions.

This is why consulting with your elder law attorney is so important. As for home care, Medicaid has traditionally offered very little — except in New York, which provides home care to all Medicaid recipients who need it. Recognizing that home care costs far less than nursing home care, more and more states are providing Medicaid-covered services to those who remain in their homes. It’s possible to qualify for both Medicare and Medicaid. Such recipients are called “dual eligibles.” Medicare beneficiaries who have limited income and resources can get help paying their out-of-pocket medical expenses from their state Medicaid program. For details, click here.

How to Manage Higher Health Insurance Costs in 2016

There are ways to mitigate the effects of cost increases.

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Via US NEWS & WORLD REPORT By Aug. 5, 2015

If you have health insurance, there’s a good chance you’ll pay more for it in 2016.

Health care and health insurance costs increase year to year, like most expenses. Since the implementation of the Affordable Care Act, growth in premiums has mostly slowed (as has the rise in health care costs overall), while your share of expenses – like deductibles – has increased. For several reasons, increases in both premiums and other out-of-pocket costs are expected in the coming year.

You can cope with these cost increases by understanding how they’ll happen and what you can do to mitigate their effects. How they affect you depends largely on where you get your insurance.

Employer-Based Health Insurance

About half of all Americans receive health insurance through an employer, less than in years past. Although having a job with health insurance is a perk, that doesn’t mean the benefit comes cheap.

Employer-based insurance premiums have grown relatively modestly over the past few years, according to Sabrina Corlette, senior research fellow and project director of Georgetown University’s Center on Health Insurance Reforms. This is due, in part, to slower growth in health care costs, but also because employers are shifting other costs to their workers, a practice known as “cost-sharing.”

For instance, the number of workers with a health insurance deductible grew from 55 percent in 2006 to 80 percent in 2014, and the average deductible more than doubled, from $584 for individual coverage to $1,217, according to the Kaiser Family Foundation. Further, more employers are offering only plans with high deductibles.

In 2016, if you receive your insurance through your job, you may see modest premium increases and are likely to see increased cost-sharing, like bigger deductibles.

Depending on the size of your employer, you will likely have a few plan options at open enrollment time, which is usually in the fall. Here are some tips for choosing the right health plan to help keep costs in check:

● Opt for a smaller provider network (HMO) or a high-deductible plan if you’ll feel the pinch in premiums. Both of these options could reduce your monthly costs. Remember, these plans have trade-offs. In an HMO, you have less freedom to go to the doctors of your choice. With a high-deductible health plan, you’ll cover more of your health care costs upfront until your insurance starts picking up the tab.

● Choose a higher premium plan like a PPO if the thought of that big deductible scares you. These plans may have higher monthly costs, but allow you greater freedom to visit the doctors you want without such high out-of-pocket expenses.

● Take advantage of health spending accounts no matter your plan choice. These accounts allow you to set aside pre-tax dollars for out-of-pocket medical expenses, and they’re usually taken directly from your paycheck. The two most common types are health savings accounts and flexible spending accounts. HSAs are available only to people with high-deductible plans, but have benefits over FSAs because you are able to carry your unused balance from year to year. With FSAs, if you don’t use the money you’ve allocated to the account, you’re likely to lose it at the end of the year.

“Marketplace”-Based Health Insurance

During the second open enrollment period of the ACA, an estimated 11.7 million people had selected or were automatically re-enrolled in health insurance plans on the federal and state marketplaces, according to the Department of Health and Human Services.

Recent media coverage of planned 2016 premium hikes refers to plans purchased by individuals on these health care exchanges. But these reports don’t tell the whole story.

“The data that’s out there about 2016 premiums is a little deceiving,” Corlette says. “And that’s because, in most states, the only rates that have to be posted right now are those that are proposed to be over 10 percent increases.” Insurance companies projecting more modest increases, therefore, don’t have to share that publicly, creating a skewed sample.

But, Corlette says, that doesn’t mean there won’t be premium increases. They’re driven largely by rising prescription drug costs, insurers having a clearer picture of their policyholders’ health care needs and the end of temporary “risk mitigation” programs that gave cash incentives to insurers for approving everyone.

In 2016, if you buy your insurance on state or federal health insurance marketplaces, you’re likely to see both increased premiums and cost-sharing. But unlike employer-based coverage, increased premiums on these plans are often offset by subsidies.

The solution, as with employer coverage, lies in shopping carefully.

● Reapply for the premium tax credit or health care subsidies. The Department of Health and Human Services estimates 87 percent of people purchasing marketplace plans receive this financial assistance to help lower premium costs. Updating your income information each year will ensure you’re getting the maximum allowable benefit.

● Be flexible and willing to part with your current plan. As costs change, the government may label another marketplace plan the “benchmark,” or the plan to which subsidy amounts are tied. If the price of your current plan goes up and another goes down, that lower-priced option may be deemed the benchmark. By switching plans, you’ll likely avoid cost increases altogether.

“The subsidy is almost like a gift card,” Corlette says. “So if you take it and stay in your same plan, even though that plan has gone up, yes, you’ll be paying more. But if you take it and go shop for a lower-priced plan, you should be fine.”

● Apply for Medicaid or CHIP coverage if you have children. If you make too much to qualify for Medicaid, your children could still be eligible for it or for The Children’s Health Insurance Program. Both are designed to provide health insurance to children at no or low cost. Eligibility varies by state, income and family size. In some states, children in a family of four could be eligible even if the household adjusted gross monthly income is as much as $6,000 or $7,000.

Stay Calm

When you’re reading about potentially dramatic health care cost increases, 2016 doesn’t seem so far off. Take this time to understand what is and isn’t working for you on your current plan and what your other options are. This way, when open enrollment comes around, you’re prepared to make savvy decisions about your health care.

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

Appeals Court Upholds Class Certification of Nursing Home Residents Seeking Community-Based Alternatives

A U.S. Court of Appeals upholds a district court ruling that granted class certification to a group of disabled nursing home residents who complained of a lack of Medicaid-funded community-based alternatives.  In re District of Columbia, (D.C. Cir., No. 14-8001, June 26, 2015).
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The plaintiffs, a group of disabled nursing home residents receiving Medicaid-funded long term care, sued the District of Columbia for allegedly violating its obligation, pursuant to the Americans with Disabilities Act, to provide services to the disabled in the most appropriate, integrated setting. The plaintiffs filed a motion seeking class certification, asserting that they were all similarly situated nursing home residents who wanted to live in the community but were forced to remain institutionalized against their will.

The U.S. District Court for the District of Columbia granted the motion for class certification, finding that alleged systemic deficiencies, such as the District’s failure to offer sufficient discharge planning or to provide residents with meaningful choices of community-based alternatives to nursing home care, were sufficient bases upon which to certify the class.

The District filed a petition for permission to file an interlocutory appeal of the district court’s ruling certifying the class.  The District argued that the lower court committed manifest error by failing to identify policies or practices that were common to all members of the class and that were amenable to class-wide resolution.

The U.S. Court of Appeals for the District of Columbia Circuit disagrees and upholds the class certification.  The court concludes that it was not manifest error for the lower court to find the allegations of systemic deficiencies in the program sufficient to establish a class of plaintiffs.

For the full text of this decision, click here.