Here are the updated figures for Michigan Medicaid in 2013.
$7,631 State Average Cost of Nursing Home also known as Divestment Divisor
$536,000 Homestead Exemption; does not apply when there is an at-home spouse or disabled child living in the home.
Community Spouse Resource (Asset) Allowance
$23,184 Minimum asset allowance
$115,920 Maximum asset allowance
Community Spouse Income Allowance
$1,892 Minimum income allowance
$2,898 Maximum income allowance
Why do I need a lawyer to apply for nursing home Medicaid? A common question. And, the common answer “Because, it’s complicated.” Easy to say, but how about some proof?
I always write about how complicated Medicaid is and how there are these nasty trap doors and these wonderful options – all of which you need a lawyer to learn about. Want proof?
Our State Bar section had its fall conference earlier this month. One subject was Recent Changes in Medicaid Policy. So here we go with “Did you know . . . ?” and “What’s wrong with this picture?”
What’s wrong with this picture? The above while they are reported statements of Michigan Medicaid policy provisions, they are legally “wrong.” Many lawyers will not know that these provisions actually conflict with federal Medicaid policy.
And so the obvious moral: if even a lawyer may not know the Medicaid law, how can a non-lawyer have a chance at “getting it right, every time?”
Answer: “no chance.”
Till the next time.
You may have noticed on our website that we had an education program about Alzheimer’s Disease last summer. Over 200 people attended and it received rave reviews. Why? It was all solid information. 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 were not “top-notch” since, by and large, they were prepared for “estate planning” and 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 business as well as questions about fair compensation for the caregiver.
Here are some of the 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 law.
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 “life planning and estate planning documents.”
A true story: a fellow’s wife went into the hospital and after that she entered the nursing home. He was afraid they would be bankrupt by the enormous bills. Friends told him to go see a well known elder law attorney. He did and he met with an associate who told him he had no hope but to lose everything.
Folks that associate was dead wrong.
A social worker referred him to my office and were able to get everything fixed inside of one week. No bankruptcy. Instead he got to an attorney who knew what to do and an experienced staff who could take care of the problem immediately.
Another case. I went to a community seminar on long term care for seniors. It was put on by an associate of a well-known elder law attorney. Things were going fine until he gave a dead-wrong answer to a Medicaid question. He had it on a chart – it was wrong. The question was about Medicaid “divestment.” The associate said that if an elder gave away $100,000 worth of stock and then later went into a nursing home, the assets would have to be returned. So far so good. He said what if the stock’s value fell to $33,000 in the mean time? He said the family would have to find $67,000 to add to the stock to make $100,000. That was dead wrong. The family would only have to return the stock regardless of its value.
There are other examples I have given in prior posts, such as the fellow who charged a wife $10,000 to do a simple Medicaid application for her husband and then took three months to get it in. In addition to paying him much more than he was worth, she had to needlessly pay the nursing home for those three months!
That’s why I say go to a certified elder law attorney. (Myself included of course!) You will get an attorney who is knowledgeable and can quickly take care of your problem with a minimum of time, expense and STRESS. After all, who needs extra stress?
Have a problem with Medicaid or our other areas of work? Give us a call at 248-356-3500.
If you are “spending down” your assets to qualify for nursing home Medicaid, you should hire us to do it for you. I’ll give you five reasons that you will find quite fair and objective. We’ll save you the stress, aggravation and hassle of dealing with the Medicaid department. More than that, the bottom line is we save you time and money. After all when you are paying a nursing home almost $7,000 per month or $1,750 week, time is money!
1. Don’t do it yourself. Medicaid is a very complicated process. It begins with a “Medicaid certified bed” in a nursing home. Without that bed certification Medicaid will not pay. It proceeds to “spend down.” That raises the questions of what can you spend the money on and what can you do with “excess assets.” It takes a long time to learn about it, put it all together to execute the plan and then get the documentation for the application. Most likely you will miss something. The rule at the Medicaid office is that the first application is denied (after months of it sitting in the office). Time is money. You are paying almost $7,000 per month and you don’t have time or money to waste.
Think about that. How long would it take to find out what options you had in spend down? In our experience it often takes two to three months. It’s not that they are researching every day, it’s just that other things come up, it takes days to get to see somebody and so on. At the same time they are spending on what they learn they can. And that takes time too. It’s easy for 12 weeks to slip by and that is $21,000 in nursing home bills.
So here’s a tip: When you are interviewing an attorney or other to hire to help with the application, ask them how soon can get this application in? We can get eligibility in weeks.
2. The second reason is related to the first. The fact that Medicaid is complicated means that the application complicated as well. The worker must be very demanding of the applicant. That means a) the worker will be very detailed in demanding proof and documentation, and b) if the application is not complete and done right, it will be denied. The workers do not have time to wait until an applicant gets everything right. And, they don’t have time to teach applicants how to complete the application. In other words “they didn’t tell me that” is no defense.
3. The third reason is also a variation of the first. Medicaid has loopholes that work for you and against you. How many seniors have somebody do their taxes? Almost all. Why do they? It’s because they want it done right, filed on time and they want to be sure to get all their deductions. A Medicaid application is much more complicated. Allow me to give one example. Most people think of assets as money in the bank and they are right. But for Medicaid there is more. Many do not think of life insurance as a cash asset. If an applicant has an insurance policy that is not disclosed on the application, the application will be denied.
Life insurance may be a “countable asset” for Medicaid and it may not. Term life, of any value, is not an asset because it has no present cash value. Of course, that must be proven. Whole life insurance is an asset to the extent of the cash value of the policy. But, life insurance is exempted if the face value is $1,500 or less, regardless of cash value. That loophole may work for you and against you. You must not only disclose the policy, but disclose the cash value by a statement from the insurance company. The Medicaid worker will not take your word for it. You must get a letter from the company and that may take weeks to get. A Medicaid worker need not wait weeks for you to get the letter. The rules say they need only give you 10 days to get the statement. If it is not in: application denied.
4. The fourth is a variation of the third. Knowing Medicaid’s loopholes can save you thousands of dollars in spend down. When we speak of Medicaid’s loopholes we usually refer to those that save applicants thousands of dollars for their families. I’ve said and written many times that a spouse of the applicant can save everything and when there is no spouse we can save 75% or more of all savings.
5. All of the above urges you to get help with your Medicaid application. But why choose us? In a nutshell we are the fastest, most knowledgeable there is. Nobody knows the loopholes better or can get an application in faster than us. Where some lawyers take months we take weeks. And, our applications are done right the first time. We have been doing Medicaid applications for over 15 years. We have done hundreds. I keep up on the latest developments in Medicaid. And on top of all that we’re nice people. Really! Just give us a call and find out. Hint: 248-356-3500.
Till the next time friends,
Jim
There they go again. DCH and DHS would propose to violate federal law by reviewing actions of the community spouse AFTER the institutional spouse has applied and found to be eligible. I wrote an official response/ comment which I share here. So, let’s go.
The proposed change to BEM 402, page 4, is:
Presumed Asset
Eligible Period Ends
SSI-Related MA Only
When the presumed asset eligible period ends, use BEM 400 to determine
the client’s asset eligibility. Count only the client’s assets, not the
spouse’s assets to determine continued eligibility. Verify all assets
which are still owned by the individual, by the spouse, and jointly
owned. Verify the transfers of all assets which were owned at the IAA
but which are no longer owned. Review all transfers for divestment.
How does this violate federal law? Because actions of the community spouse concerning her assets during the presumed eligible period may be reviewed under this proposal. If so then it violates federal law. Here’s how. This section of policy would be applied at the end of the “presumed asset eligible” period. The questionable parts are:
1. “Verify all assets which are still owned [], by the spouse,”
2. “Verify the transfers of all assets which were owned at the IAA
but which are no longer owned. Review all transfers for divestment.”
This policy may be read as reviewing actions of the community spouse after the application. We grant that actions by the applicant are properly subject to review.
The applicable federal statute provides:
(4) Separate treatment of resources after eligibility for benefits established
During the continuous period in which an institutionalized spouse is in an institution and after the month in which an institutionalized spouse is determined to be eligible for benefits under this subchapter, no resources of the community spouse shall be deemed available to the institutionalized spouse.
42 USC 1396r-5 (c)(4)
A resource which is not available cannot be divested by an applicant. However, the proposed rule may be read as covering transfers by the community spouse. The proposed change claims authority under the “presumed eligible” period. Federal policy does not allow such an extension of the divestment determination. The purpose of the presumed eligibile period is to allow the institutional spouse time to transfer excess assets to the community spouse. It is not to continue eligibility determination. The State Medicaid Manual section 3260 states
3262.4 Transfers of Resources Under §1924.–Once eligibility has been established, resources not used to determine eligibility for institutionalized spouses (i.e., the amount of spousal resource allowances) may be transferred to community spouses to assist such spouses in meeting their needs in the community. Thus, resources are not merely deemed available (or attributed) to community spouses in initial eligibility periods, but are actually made available to meet their needs in the community. Spouses who intend to transfer resources for this purpose are encouraged to do so as soon as is practicable before the first regularly scheduled redetermination of eligibility under 42 CFR §435.96. Resources transferred to community spouses as well as other specified parties, without receiving fair market value for the property transferred, do not adversely affect continuing eligibility of institutionalized spouses.
Let’s paint a picture. George Smith is an active, golf-loving retiree of age 75. He and his wife Betty have been having a great retirement traveling, visiting with grandchildren, doing Florida winters and staying in the Lake Huron cottage during summers. Things are going great. But.
George has started to notice that Betty has some serious lapses of memory. She always brushes these off with a laugh “Oh, there I go again! Forgetful Betty!” Some of these are nothing at all like forgetting where she put her purse. Others are troubling. When down in Florida every now and then she could not find their condo. Other times she would go right to it. Lately it seemed that whenever she would go to the store she always came back with bread, even though she just bought it two days ago. He looked in the cupboards and noticed that they had multiple cans of tuna and green beans and then noticed that every time she came back from the store she brought tuna and green beans too. Then there is her cooking. Betty always prided herself on being a good cook but lately she has been having problems. It seems that she does not handle the more complicated processes. She doesn’t do her complicated recipes much and makes simpler meals. Yet she still might forget a step. It might be forgetting the vegetables or forgetting to saute the meat. This is not the normal Betty.
George began reading on Alzheimer’s disease and learned that a person has it for years before it gets so bad it can be officially diagnosed. He is afraid Betty is in the very early stages of Alzheimer’s and that before 10 years she will be in a nursing home.
George began looking into long term care insurance. He found, just as he feared, that at their age it was prohibitively expensive. Was there anything he could do to afford the cost of caring for her? Anything to “insure” their home and savings from total depletion? The answer is “yes” but let’s look at the problem a bit further.
Currently the state average cost of a nursing home in Michigan is just over $7,000 a month. It has been increasing at the rate of about 4% per year for the past 10 years. For example in 2002 the average cost was $4,700 a month. That means in 10 years George could expect the monthly cost to be over $10,000 per month.
Could George consider long term care insurance? We might use the federal employees plan as a point of comparison. Let’s consider a plan that pays most, but not all of the cost for three years – $200 per day. For a 75 year old applicant a policy with a 4% inflation rider, would cost $5,660.88 per year. Let’s double that for two. That would make it $11,321.76 per year. After 10 years that would be $113,217.60. That could still be a good investment, if they could get it. Reports say that about 44% of applicants between ages 70 and 79 are denied. Of the two of them Betty may not be able to get it.
If Betty cannot get long term care insurance, then are there any other options? Yes. They can consider five year Medicaid planning. It acts as insurance against loss of life-savings by accessing the Medicaid program to pay for long term care. For the cost of less than one year insurance bill they can shelter their assets in the contemplation that Betty likely will need a nursing home. To do that they will have to execute an estate plan that transfers assets to George who then sets aside a substantial portion of their savings in an irrevocable trust.
There are many questions to be answered when contemplating five year Medicaid pre-planning. I will here offer a very brief overview. I have covered the subject in more depth in other articles.
One of the first questions to be answered is “How great is the risk of long term care?” If a person has serious heart disease and related conditions Alzheimer’s Disease may not be a terminal condition to plan for.
What is your long term care plan? Will you rely on family members or commercial providers? A person rich in human resources will not need to save funds for commercial providers and has an incentive to be sure the wealth stays in the family.
How does Medicaid fit into your plan? If it only provides payment for the nursing home, are you willing to give away assets to gain that? If you are adamant about avoiding the nursing home, then Medicaid may be of little benefit to you and you should plan on self pay for your care.
Do you have enough to ‘give away’ and still provide for yourself? Commercial dementia care is expensive. Even adult day programs can cost hundreds of dollars a week. The cost of assisted living for dementia care can range from $3,000 to $6,000 per month.
Who is the ideal candidate for five year Medicaid pre-planning? A person who is already in an assisted living / long term care facility that provides a continuum of care with Medicaid being part of the service plan. With that information you can then plot a care continuum and budget for the expenses. If you find you have enough to cover at least five years of progress of the disease then the remainder of the wealth is suitable for asset sheltering.
In closing we can see that George and Betty may or may not be interested in five year Medicaid pre-planning. They would have to consult with an elder law attorney and review all options. Then they would have a clearer idea of what course of action to take.
From the Chamber of Horribles comes this true story. A wife could not discharge a $47,000 nursing home bill in bankruptcy. In re Plybon (U.S. Bankr. E.D. Ky., No. 11–10146, March 9, 2012).
When I write on Medicaid I always point out that a wife has the right to save all property and money if her husband is in long term care in a nursing home. Today’s case shows that while that is her right she can give it away through bad decisions. Note that this case involves a wife but it could just as well be a son or daughter.
The Plybon case comes with two morals:
1. Medicaid Application – do it yourself and your bank account is at risk.
2. Get sued. Ignore it and it will only get worse.
As usual when things go wrong, mistake piles on top of mistake. Here is how it started. Mr. Plybon entered a Kentucky nursing home by the name of Woodland in December 2009. Mrs. Plybon signed the admission agreement which said she was the “responsible party” and that she agreed to apply for Medicaid. Four months later in April 2010 she applied for Medicaid for him. It was denied – date unknown – because she did not submit all the paperwork they wanted. That does not mean he was not financially eligible, it means she did not get proof into their office quick enough.
Her husband was discharged from Woodland in September 2010. They had not been paid. The nursing home sued them in December 2010. She defaulted, which means she did not hire a lawyer to defend the suit. She effectively ignored it. Woodland got a judgment in $47,692.02 February 2011 and then she filed for bankruptcy in March 2011. The court denied her bankruptcy discharge of the $47,000 debt.
This case should not have turned out that way. Here are a number of things she could have done differently.
1. Hire an elder law attorney to do the Medicaid application. I had to get the obvious out of the way.
2. Ask the nursing home for help with the Medicaid application. Under federal regulations they must assist in applying for benefits if asked. At least she would not spend more than she had. Remember bankruptcy means you owe more than you have.
3. Appeal and re-file the Medicaid application on denial.
4. Hire an elder law attorney to complete 3. Most of the time appeals of paperwork denials can be won or the re-application corrects the mistake, IF it is handled properly.
5. When sued, hire an attorney and defend on the basis that
a. she was misinformed of what the contract was about and that her signing it was not voluntary;
b. she had no duty to guarantee payment by Medicaid;
c. the nursing home had the duty to assist her;
d. that as “responsible party” she should not be personally responsible for the debt since “third party guarantees” illegal;
e. that the nursing home had the duty to mitigate damages and, at least, assist in the application.
She did not have to make all these mistakes. Remember the old rule: if you do it yourself and make a mistake – it is your mistake. Hire an attorney and he makes a mistake – it is his mistake. Medicaid is a process in which mistakes are very, very expensive. Don’t do it yourself. Get help – there won’t be mistakes and if there are, the mistakes are not yours!
A problem we see every month here is the “no skilled nursing facility near our home.” There are skilled nursing facilities near the client’s home that participate in Medicare. But those are not in the client’s Medicare Advantage plan network. Some plans will only pay for skilled care, such as post-hospital rehab after hip surgery, at a limited number of facilities in a county. There is a solution, though some may consider it a partial fix.
Patients can disenroll from their Medicare Advantage plan and enroll in traditional Medicare or another Advantage plan that has open enrollment for “institutionalized individuals.” That way patients can get their post-hospital rehab in the nursing facility near their home. After the institutionalization ends the person has 60 days to return to their original Advantage plan or enroll in another Medicare Advantage plan if they wish, provided the plans have open enrollment for “institutionalized individuals.”
Here are the necessary details.
A person who qualifies as a an “institutionalized individual” can enroll in Medicare during any month. Their enrollment is effective the next month. This eligibility is what Medicare calls “Open Enrollment Period for Institutionalized Individuals” which is abbreviated as OEPI.
The OEPI ends two months after the month the individual moves out of the institution.
Here is the word straight from the source – the CMS Medicare Managed Care Manual Item 30.3:
“The OEPI is continuous for eligible individuals. For purposes of enrollment under the
OEPI election period, an institutionalized individual is defined as an individual who
moves into, resides in, or moves out of an institution, as defined in §10. The OEPI ends
two months after the month the individual moves out of the institution.
An MA (Medicare) eligible institutionalized individual can make an unlimited number of MA enrollment requests during the OEPI. An MA organization is not required to accept
requests to enroll into its plan during the OEPI, but if it is open for these enrollment
requests, it must accept all OEPI requests to enroll into the plan.
Since the OEPI is continuous for eligible individuals, Original Medicare is also open
continuously. Therefore, MA organizations must accept requests for disenrollment from
their MA plans during the OEPI whether or not the MA plan is open to accept
enrollment.”
Thanks to our friends at Center for Medicare Advocacy we have a quick definition of what an “institutionalized individual”is. (Ever try to cut through those Medicare regulations? Complex!) That is a person who is in a long-term care facility (skilled nursing facility), an intermediate care facility for the mentally retarded (ICF-MR), a psychiatric, a rehabilitation hospital or unit, or a long term care hospital, or a “swing-bed” hospital.
So a person may disenroll from their Medicare Advantage plan and enroll in traditional Medicare or another Medicare Advantage plan that allows OEPI enrollment. Here are the points:
1. Must be an institutionalized individual to trigger the open enrollment period -OEPI
2. OEPI open enrollment continues as long as they are in an institution and ends two months after the person is out.
3. During OEPI the person can enroll in Medicare or any other plan that is open to institutionalized individuals.
4. A Medicare Advantage plan has no choice but to allow disenrollment during the OEPI.
5. If the original Medicare Advantage plan is not open to OEPI the person will need to continue with traditional Medicare, or find another Advantage Plan that is open to OEPI, until open enrollment period of the original plan.
We might compare two common Medicare Advantage plans around Detroit: HAP Senior Plus and Blue Care Network BCN Advantage. HAP has a limited number of skilled nursing facilities – nursing homes – in its plan list. A person can disenroll from HAP to receive the skilled care coverage from Medicare or another Advantage plan. But since HAP Senior Plus does not have OEPI enrollment the person would have to wait for open enrollment period to return. The BCN Advantage plan offers OEPI enrollment, but the person will need to know if a proposed skilled care center participates with BCN Advantage. You can check with a skilled nursing home to see if they accept the plan you wish to use. If all else fails you can always rely on traditional Medicare.
Final note: the above also applies to Medicare Part D prescription plans. It does not come up as often but we can see that a person may need to change plans to better cover their prescription needs while they are in an institution. Again, the plan must allow OEPI enrollment.
You can leave a Medicare Advantage plan and re-enroll in traditional Medicare effective the first day of the next month in one of three ways. You can:
All the best,
Jim
The Detroit Free Press has a series running on nursing home neglect and abuse. It is a must read for any patient advocate and family of a nursing home resident. This series relates what we have seen for years: no matter how fancy or expensive nursing homes do not have the staff to meet the needs of very sick people. This is why we have always advised vigilance, daily visitation and informed, empowered advocacy.
Hats off to reporter Robin Erb for an excellent, excellent job.
The link is http://www.freep.com/article/20111211/FEATURES08/111207034/Trust-neglect-Special-report-nursing-homes-Michigan?odyssey=tab|topnews|text|FRONTPAGE
Give me a call at 248-356-3500 if you want to know more,
Jim