New York Elder Law Attorney Blog

by Bonnie Kraham, Esq.

Most of us don't want to end our days in a nursing home, and would rather "age in place," so it's important to become familiar with available home health care services.

There are three major ways to pay for home health care: self-pay, long-term care insurance, or Medicaid, which is government provided health insurance for those whose assets have been depleted. Medicare, which is government provided health insurance for the elderly, only has limited community home health care. A New York elder law attorney can help to decide which one is the best option.

In general, "community" Medicaid programs, for home care, do not have a "look-back period," that is, Medicaid does not "look back" to see if any transfers (gifts) were made which would make the person ineligible for a certain period of time. Therefore, assets can usually be transferred before applying for community Medicaid without penalty, unlike the rules for "nursing home" Medicaid.

If you meet the asset and income rules, following is a list of some of the home health care services covered by Medicaid:

Personal Care Aide Program. Agencies, paid by Medicaid, employ aides who give custodial level services based on the Activities of Daily Living (ADL's) - feeding, toileting, grooming, bathing, ambulating and transferring. A patient must need help with at least two ADL's.

Consumer-Directed Program. The services are the same as above but the patient, or adult family member, selects the aides, rather than going through an agency. The home attendant cannot be an immediate family member.

Certified Home Health Aide Services. This program usually covers the cost for 45 days after hospitalization. The aide performs health care under the supervision of a registered nurse or licensed therapist. The covered activities include the ADL's and possibly skilled services such as special meals, and tube feedings if the patient is self-directing.

Lombardi Program. Also referred to as the "nursing home without walls," this is the long-term home health care program, the equivalent of a nursing home level of care. The cost for the care cannot exceed 75% of nursing home costs. Availability is limited. The Lombardi program and other similar programs have a five-year look-back period for any asset transfers which would create a "penalty period," or period of ineligibility for Medicaid.

To find other home health care services, contact your county's Office for the Aging for a list of local providers. Orange County (845-615-3700) or Sullivan County (845-807-0241) and Ulster County (845-340-3456)

by Bonnie Kraham, Esq.

Family members overwhelmingly provide the care for elderly and disabled loved ones at home. Although a labor of love, taking care of ailing loved ones also has a market value, meaning that caretakers can be paid as a way to protect assets.

Through the use of a Caregivers Agreement, also known as a Personal Services Contract, the disabled or elderly person can transfer money to family members as compensation rather than as a gift. Gifts to family members made in the last five years before applying for Medicaid to pay for nursing home costs disqualify the applicant from receiving Medicaid for a certain period of time, known as a "penalty period."

For example, Mom depends on daughter Janice for her care. If Mom gifts $100,000 to Janice, then goes into a nursing home in the next five years, and applies for Medicaid, the gift to Janice will result in about a nine month penalty period. Janice will have to give the $100,000 back to Mom to pay nursing home costs during the penalty period, or Mom will have to use other resources to pay.

Instead, using a Caregivers Agreement, Mom pays Janice $2,500 per month for caregiving services. If Mom moves to the nursing home in the next five years, the payments to Janice are compensation, not gifts.

Caregivers Agreements must follow strict rules, so should be drafted by an experienced New York elder law attorney.

The Caregivers Agreement must detail the services to be performed and the obligations of the parties. The payment is based on the going rate of caretaking in that county. Compensation is clearly delineated with hourly and yearly calculations for 24-hour personal care.

Janice must actually give the care and document her caretaking duties. Mom must actually need the care, which should be documented with a doctor's note.

To protect family relationships, it's recommended that all family members agree with the arrangement even if they are not parties to the agreement.

Janice has tax consequences. She reports the payments as ordinary income on her income tax return and pays income taxes on the compensation. In some cases, Mom may be able to deduct the payments as a medical expense.

A proper Caregivers Agreement arrangement can be a valuable elder law planning tool in the right circumstances.

by Michael Ettinger, Esq.

Long-term care insurance (LTCI) and the Medicaid Asset Protection Trust (MAPT) are often thought of an alternatives to each other. They are not. While LTCI is both a shield and a sword, the MAPT is a shield only.

LTCI protects your assets and income from the costs of care. But it has a positive effect (the sword) in that it actually pays for someone to come into your home and care for you there. The MAPT protects assets, like your home and your life savings, but it does not protect your income (pensions, social security, interest, dividends, etc.). The MAPT has no positive effect in terms of providing care. It is solely a defensive tactic. That being said, in the event LTCI is unavailable to the client for medical or financial reasons, the MAPT is a wonderful tool. And there is truth in the saying that a good defense is the best offense. With the MAPT in place five years ahead of time, the client's assets are protected and Medicaid will pay for the cost of care, over and above what your income provides. If you have a spouse at home, they may keep about $3,000 per month of the couple's combined income and sometimes more.

Our stated preference for clients is LTCI, if available. Most clients would prefer to "age in place" or, in other words, stay in their own home and receive home care if needed. Here, the LTCI stretches your dollars, to allow you to remain in the home for years more than you might have been able to afford otherwise. If your spouse is unable to care for themselves, it allows you to call in extra help so that you do not wear yourself out acting as a caregiver in your later years.

Some clients have adopted a hybrid approach when it comes to LTCI and the MAPT. They purposely underfund the LTCI, say taking a $200/day benefit ($6,000/month) instead of a $400/day benefit ($12,000/month). They also establish the MAPT and transfer their assets to the trust. The thinking is that the $200/day will pay for the home care that they may need and want, at half the cost of the full policy. On the other hand, if they end up in a nursing home, they won't lose their assets due to the $6,000/month they may be short, and Medicaid will pick up the difference.

There are no right and wrong answers in deciding which is the best avenue to take when considering protecting your assets from the high costs of long-term care. We have found, however, that an open discussion between the client and the experienced elder law attorney, with all of the facts and circumstances on the table, often yields the most satisfactory result.

by Michael Ettinger, Esq.

Medicaid annuities have been a viable planning option for New York spouses since The Deficit Reduction Act of 2005.

Say you have a spouse who needs nursing home care (the "institutionalized spouse") but you have more assets than the Medicaid law allows you, the spouse at home (the "community spouse") to keep. Currently, the community spouse may keep about $125,000 in resources (not including the house, which is exempt if a spouse is living there). But what if the couple has $400,000 in assets? That's $275,000 in excess resources.

Many well meaning advisers, including lawyers, will tell you that it is too late and you have to first spend down that $275,000 before Medicaid will pay. Not correct.

Elder law attorneys have a number of good planning options here. One, spousal refusal was the subject of an earlier blog post.

Another planning option, the Medicaid annuity, may in some cases turn out to be the best planning option.

The community spouse purchases a Medicaid annuity worth the excess $275,00 which must make repayments of the full amount of the annuity plus interest with the community spouse's actuarial life expectancy. Now, the $275,000 has disappeared and the institutionalized spouse is immediately eligible for Medicaid, saving nursing home costs of $12,000 or more per month. Spouse at home receives an increased income which is also almost all sheltered from Medicaid.
What if the spouse at home dies first, or before all the payments are made? The children may be named the beneficiary and receive the balance of the payments.

by Michael Ettinger, Attorney at Law
The Medicaid Asset Protection Trust (MAPT) is a technique commonly used by elder law attorneys. It consists of an irrevocable trust, usually set up by a parent of parents sixty-five and older. One or more of the adult children are named as "trustees" to manage the trust for the benefit of the "beneficiaries" who remain the parents during their lifetimes. For example, the parents retain the right to the exclusive use and enjoyment of the home and the income from all of the trust assets. The establishment and "funding" of the trust, i.e. retitling the home and the investments in the name of the trust, starts the five year look-back period running. After five years, those assets become exempt and are protected from the costs of long-term care.

Once the MAPT is established, there are certain things the parties can and cannot do. Below are a list of the "Do's and Don'ts" concerning the MAPT.

Do make all transfers to your trust, as advised by the law firm, in a timely manner.
Do use trust assets for repairs or improvements to the home or other property in the trust.
Do use trust assets for payment of real estate taxes and homeowners insurance.
Do take dividends and income on trust assets on at least a quarterly basis.
Do call the law firm when you wish to make a gift from the trust to any of your beneficiaries.
Do call the law firm when a Grantor needs Medicaid benefits or dies.
Do call the law firm when personal or financial circumstances change significantly.
Do call the law firm if you wish to change trustees or break the trust.
Do provide your homeowner's insurance company with the "letter of instruction" and a copy of the trust for real property transferred to the trust.
Do provide your CPA or tax preparer with the "letter of instruction" regarding the trust tax return
and the "letter of instruction" tax deductibility of legal fees.
Do choose your trustee carefully to avoid the expense (and unpleasantness) of changing
the trustee.
Do call the law firm if you want to take out a reverse mortgage on the property in the trust.

Don't use trust assets to pay telephone or utility bills.
Don't use trust assets to pay personal expenses.
Don't use trust assets to purchase an automobile.
Don't take principal or capital gains from trust assets.
Don't transfer IRA's or 401(k)'s to the trust.
Don't allow beneficiaries to return to the trust or the Grantor any gifts made from trust assets.
Don't make additional transfers to the trust without advising the law firm.