First let’s be clear. The nursing home admission agreement is a legally binding contract. Those who sign are bound to the terms of the contract. Some of these obligations can financially harm the representative of the nursing home resident.
A nursing home contract is required by law and it is a good thing. Your resident is paying a lot of money – or incurring a huge bill – and you want to know what you should get for what you pay. However, the agreement does not always spell out the rights of the resident that must be respected by the home. Nursing home residents have rights guaranteed by the 1987 federal Nursing Home Reform Law and conforming state statutes. That is the subject for another blog post.
You should expect the nursing home contract and supporting information to cover the subjects of: services included in the daily rate and services for which there is an extra charge; whether the home participates in the medicare and medicaid programs and with your managed care organization; pharmacy arrangements; financial matters including daily and extra charges; resident personal funds; responsible party obligations; refusal of services; resident’s rights duties and grievance procedure; recognition of designation of patient representative; policy on restraints and such devices; resident property; use of resident’s photograph and/or recordings for identification or publication; access to resident’s records; transfers & discharges; re-admission and bed hold policy. These are items you want to know about.
As I said the contract will not lay out all the resident’s rights under the law. And, the contract may involve waiver of some rights. It is not illegal for a person to knowingly waive his/her rights, which is why you should carefully review, not simply sign, the contract. One of the things you want to look for language that says the responsible party will be responsible for obtaining Medicaid or otherwise being responsible to get the nursing home bill paid. Remember, the bill is the resident’s, not yours. Tell the admission person you would like to take the papers with you to review.
What if you signed a contract to admit a family member to the nursing home? Do you want to revoke your agreement? Sometimes if you go back the admissions person will agree that an arbitration agreement is voluntary and that you do not have to sign it and you can revoke your agreement. Sometimes they will agree that a resident can sign his own agreement. If you present the question “really dad should sign his own agreement” they will often agree and let dad sign the papers and destroy those with your signature.
What is a “Responsible party”? (Let’s use RP. It’s shorter.) Under federal law a responsible party is the person who is managing the resident’s money. The RP is not responsible for the nursing home bill and not responsible for securing payment from Medicare, Medicaid or insurance. The RP is responsible for using the resident’s money for the resident’s benefit, not the RP’s benefit. That’s all. Of course an RP can waive his rights through a little paragraph in the middle of a multi-page nursing home agreement. That is why is important to read it. It is a binding legal contract that a nursing home enforce in court.
If you read articles in the popular press about nursing homes and Medicaid you will soon hear that Medicaid nursing homes are places to be avoided. They supposedly reek of bad care. And, life is so much better if you “private pay” and avoid a Medicaid nursing home. And all of that is nothing but nonsense.
So, what is a Medicaid nursing home? It is just about every nursing home. Almost all nursing homes in Southeast Michigan participate in the Medicaid program.
Only a few, about 15, in the entire region do not participate. Their corporate strategy seems to be to try to cash in on the higher post-hospital Medicare dollars available for rehab and such. Medicare will pay over $700 per day for full course therapy. Some of these have a captive relationship with Beaumont hospital. Others, notably the Heartland chain, somehow are able to capture the lion’s share of post-hospital Medicare patients. These homes empty the patient’s skilled care benefit. They then pass the patient on to a “long term care” nursing home, which has the same post-hospital Medicare beds. These latter nursing homes too could provide the post-hospital rehab but they don’t get these Medicare patients. They must not have the same “pull” or “connections” as the few do.
The problem with Medicare only nursing homes is that it is harder for a family to get their preferred nursing home. It is much easier to get in if one can offer Medicare days.
Tip: if you think your family member might be in for long term care after the hospital, bypass a short term Medicare only facility for one that has Medicare and Medicaid certified beds.
There is an unanswered question. Since all long term care nursing homes accept Medicaid, will one get better care if one avoids Medicaid and “private pays”? That is, do Medicaid patients get worse care? The legal and real answer is “no.” Medicaid patients receive equal care. You can test this by your own observation.
It is illegal for a nursing home to discriminate by basis of payment source. You can go to any nursing home and you will not see a “private pay,” or Medicare or Medicaid section. You will see no dim and dusty corridors for Medicaid patients. You will see no marking on the door, walls or bed of a Medicaid patient.
You can ask the nurses and aides where are the Medicaid beds and they will tell you they don’t know. And note, since everybody knows that Medicaid has “spend down” you will find some people private paying in a Medicaid bed. You can ask the staff which patients are private paying and which have Medicaid pay and they will tell you they don’t know.
So, there you have it. A Medicaid nursing home is almost any nursing home. And care in a nursing home varies by the quality of the patient and patient advocate more than by how the bill is paid.
A Michigan Medicaid application looks deceptively simple. It is only four pages long. The trap comes in the proof of every item that is written. The Michigan Department of Human Services does not take the applicant’s word for anything. You must prove everything. For example you will need a birth certificate for date of birth, social security card for the number, the “award letter” to state the amount of the monthly check and Medicare card to prove coverage. There is much more.
The application must disclose the applicant’s complete financial status. This includes the obvious such as bank accounts, CDs, safe deposit box contents, savings bonds, annuities and IRAs. There are what we might call “hidden assets” such as cash value of a life insurance policy or stock ownership in the company. The ownership and value of all of these must be proven and if spent then the amount received and what it was spent on must be proven by paper. One of the indicators for hiring an attorney is if you are not sure of the applicant’s financial state. This often happens when a parent is in a nursing home and the children, who are handling the application, do not know their parent’s financial affairs. It is better to have an attorney do it right the first time than risk a denial with the possibility of unpaid nursing home bills. Some nursing homes sue children who do not get Medicaid to pay the entire bill.
Failure to have paper proof for every statement is cause for application denial.
There are some times when you can be sure you don’t “need” an attorney to handle the application. For example you have have handled all a parent’s finances for years and are confident that everything is spent down. Of course, even in this case you could hire an attorney for the convenience of not having to deal with the Medicaid office.
One large area of “Yes, you need an attorney” is the realm of having a spouse at home. If the couple has more than $25,000 in savings the elder law attorney can help the at home spouse retain the savings for his or her future needs. Your attorney will save you much more than you spend plus you will have the convenience of not dealing with the Medicaid office.
Another situation of “Yes, you need an attorney” is when the applicant’s financial affairs are complicated. He or she may own many parcels of real estate, may have many accounts at banks and credit unions. The Medicaid office will require proof of how much was in each account and where the funds went. The extra real estate may need asset protection strategies to save it.
And for now, the final category of “Yes, you need an attorney” is when there is a large amount of money that will have to be spent down. An attorney can always help you save a portion of countable assets.
With the average monthly cost of a nursing home near $8,000 per month, the stakes are sky high. It is only prudent and good sense to have an experienced elder law attorney review a Medicaid application be fore filing even if there is no money to save – you don’t want to be stuck with a huge bill.
I think you can see from the above why we say we “save you money, you don’t have to deal with bureaucratic hassle when you least need it and we give you peace of mind.
Give us a call at 248-356-3500. We’re friendly and helpful <G>
Excluded or exempt assets are not subject to spend down and include:
A residence where the applicant has lived, value limited to $536,000 unless spouse lives there then no limit;
A motor vehicle, no stated limit;
$1,500 in face value life insurance and funeral preparations;
Prepaid funeral, limited to approximately $11,700 if paid for by cash and $9,400 if paid for by life insurance;
Burial space including cemetery plots.
“Countable assets” includes any other asset that may be reduced to cash and used for spend down. This category includes:
A. Money in:
1. Cash, savings and checking accounts, credit union share and draft accounts
2. Certificates of deposit
3. U.S. Savings Bonds
4. Individual retirement accounts (IRA), Keogh plans, (401Ks, 403Bs)
5. Nursing home trust funds
6. Prepaid funeral contracts which can be canceled
7. Trusts (depending on the terms of the trust)
B. It also includes non-cash assets that could be sold. These include equity in:
8. Real estate
9. second motor vehicle, boats or recreational vehicles
10. Stocks, bonds and mutual funds
11. Land contracts or mortgages held on real estate sold
Spend down does not mean that all the money goes to the nursing home. As a broad rule of thumb, the applicant may spend on things for himself or his property. For example, he may pay for clothing and a funeral for himself . Or he may pay for repairs or improvements to his home. He may repair his car or buy a new car. All of these purchases will be reviewed by the Medicaid office and so prudence must be exercised.
An applicant may also spend down by transfer of countable assets to a spouse or disabled child.
There are many strategies that maximize savings by planned spend down such as divestment of assets combined with a Medicaid annuity.
The best plan for strategic spend down that results in the maximum of savings is to hire an experienced elder law attorney.
Got a Michigan Medicaid problem? Just give me a call and let’s get started,
Some time ago we had an education program about Alzheimer’s Disease. Over 200 people attended and I made a free offer to the attendees: I would review their current “estate planning” documents for free. Many folks took me up on my offer. The results? I was shocked. They were all inadequate. Let me explain.
I was not surprised that their documents would fail at some point since, by and large, they were prepared for “estate planning.” That means “death and taxes.” The lifetime, long term care needs caused by aging conditions such as Alzheimer’s, Parkinson’s, stroke, etc. require a different approach. That is one of “take over for me and do what I would.” The death and taxes approach is “if I am not able to take care of business due to sickness, then I’m giving limited authority to continue, but not change, my business.” Long term care requires more than “just keep things going.” It often calls for major changes to be made in lifetime arrangements as well as, at times, changing the “estate plan.” For example, it is very common for a family member, usually a daughter, to step up and be a caregiver in the final years of an elder’s life. That can require significant changes to the elder’s matters to qualify for government benefits. A trust or a power of attorney must have flexibility to handle unpredictable life changes built in. Otherwise, it is off to the probate court you go.
Back to the main story: Here are some of the nine common short comings I found in attorney prepared documents:
no successor agent named;
no ability to open and close accounts;
no currently effective healthcare power;
no pension plan powers;
no ability to create, amend or revoke a trust;
no authority to employ family members;
no authority to compensate a full-time family caregiver;
gifting power inadequate to qualify for benefits;
no provision to deal with Michigan’s self-dealing limitations on trusts and powers of attorney.
There were other less common problems as well. Any one of these shortcomings can lead to lifetime probate. So, take a tip from me. If you are at all concerned about long term care – in home, assisted living, you name it – run, don’t walk to your certified elder law attorney and have your “estate planning” documents turned into elder law based “life planning” documents.”