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.

What do you do when a client comes in to see you and says that his mother is going into a nursing home and she has $300,000 in assets. In fact, mom scrimped and saved all of her life to have this nest egg and now she desperately wants to see her children get an inheritance.

Although you may protect all of your assets by planning five years ahead of time with a Medicaid Asset Protection Trust, all is not lost if nothing has been done and the client finds herself on the nursing home doorstep.

The advanced elder law technique, used to protect assets at the last minute, is called "half-a-loaf" planning. Here's how it works. Let's assume, for the purposes of our example, that the nursing home costs $10,000 a month. When mom goes into the nursing home, we gift one-half of the nest egg, in this case one-half of $300,000, or $150,000, to her children. Then we lend the other $150,000 to the children and they execute a promissory note agreeing to repay the $150,000 in fifteen monthly payments of $10,000 per month, together with a modest amount of interest. Now we apply for Medicaid benefits. Medicaid will impose a penalty period (i.e. they will refuse to pay) for 15 months on the grounds that the gift of $150,000 could have been used to pay for mom's care for 15 months. Medicaid ignores the loan since it was not a gift. It is going to be paid back, with interest, according to the terms of the promissory note. What happens is that the fifteen loan repayment installments will be used to pay for mom's nursing home care during the penalty period. Just when the loan repayments are finished, the penalty period expires and Medicaid begins to pick up the tab. Lo and behold, the children get to keep the $150,000 gift and mom has saved some of the inheritance for her children.

Also known as the "gift and loan" strategy, half-a-loaf planning has been approved by New York State Department of Social Services.

And of course everyone knows what half-a-loaf is better than, right?

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.

By: Elizabeth L. Schalk, Medicaid Supervisor

The following are current Medicaid home care programs in New York.

Personal Care Aide Program (PCS)

The Personal Care Aide Program provides for custodial level (assistance with the "Activities of Daily Living" or ADL's) home care services and is not covered by Medicare. For the purposes of Medicaid, it is a "prior approval" program. This means that Medicaid financial eligibility as well as the need for home care services must be approved by The Department of Social Services (DSS) before Medicaid will authorize the home care services for the applicant.

To be eligible for this program, the applicant must require custodial care and need partial or total assistance with a minimum of two ADL's. These are defined as feeding, tolieting, grooming, bathing, ambulating and transferring. The home attendant may perform personal care functions and assist only with ADL's.

Hours granted could be from four hours per day up to round-the-clock (split shift) care. Twenty-four hour sleep-in care means the home attendant assists the client during the daytime hours, and is available to assist the client once or twice during the night. If the applicant is awake more than once or twice they may be eligible for split shift where one aide is on duty at night and another during the day, each working twelve hour shifts. It is difficult to obtain more than four to eight hours per day on this program from the counties.

The current physician must complete and sign a Physician's Order form. Once this form has been completed it is only good for thirty days and an application must be made prior to this form expiring.

Consumer-Directed Personal Assistant Program (CDPAP) Or Consumer-Directed Program

This program is the same as the above except that an adult child or family member (consumer) may direct care of a patient. The "consumer" hires, trains and supervises the home attendants who are allowed to perform tasks which ordinarily would require the skills of a home health aide or even a licensed practical nurse. The home attendant cannot be an immediate family member and the "consumer" will be trained by the vendor, assigned by the county, as to what forms must be completed, what documentation for employment is required and all duties and responsibilities that must be performed. They will be responsible for keeping personnel records, completing payroll forms, arranging the schedules of the home attendants and having back-up for the home attendants that cannot make their shifts along with training the home attendants in the care of the applicant and all other supervisory needs for the applicant's home care. They must be able to make educated choices as to the type and quality of services. This program is available whether the person is on personal care services, the Lombardi Program, CHHA services, AIDS home care services and private duty services.

The above two programs require a Medicaid application, three current months of financial statements, all income award letters, common documents, written verification of health insurance premiums, copy of current year's federal and state tax filings and no payment for services during the processing of the Medicaid application will be reimbursed to the client. The applicant may use a Pooled Trust if it is in place upon application. If applying for any borough in NYC, the application for the PCS program goes to the Community Alternative Systems Agency (CASA) assigned for that area and for the CDPAP it goes to the assigned office for that program. There are no transfer penalties for this program.

Certified Home Health Aide Services (CHHA)

This program provides home health services under both Medicare and Medicaid. Medicaid home health services must be provided pursuant to a physician's written plan of care. They do not require prior approval from Medicaid and Medicare will usually cover the cost of CHHA services for about forty-five days upon a person's discharge from the hospital. The home health aide carries out health care tasks under the supervision of a registered nurse or licensed therapist and may also provide custodial care and assistance with the individual's ADL's. They may preform skilled tasks, such as preparation of meals in accordance with complex modified diets; assistance with tube feedings; placement of spray or spoon of medication in patient's mouth, but only if the patient is self-directing; give medicated baths; performance of skin and nail care; dressing changes on stable skin surfaces; monitoring vital signs; and caring for mature and stable colostomies and tracheotomies. Applicants for CHHA services apply directly to the CHAA, not DSS.

***Please note that this program may no longer be offered due to budget cuts.

Lombardi Program (long-term home health waivered program or nursing home without walls program)

This program provides skilled services and "waivered" services, but they also provide personal care aide services to their clients when needed. A waivered service is a service which is not ordinarily covered by Medicaid because it is not "medical" unless a state obtains special permission from the federal government to cover those services as part of a special package. Some of the "waivered" services would be home maintenance tasks; transportation to social events; congregate/home delivered meals; respite care; social day care; and social work services.

In this program the cost of all services for each client may not exceed 75% of the cost of nursing home care for that applicant. The applicant must be eligible for nursing home services and the budgeting is figured on the standards for home care with spousal impoverishment budgeting. There are no transfer penalties and this program may be applied for through the CHHA provider or local DSS.

***Please note this program is being financed on a trial basis until the federal government extends the special permission for waivered services or notifies NYS that it will no longer grant permission for waivered services.

Nursing Home Transition and Diversion Program (NHTD)

This program is an alternative to traditional home care services. Applicants will receive nursing home type services at home. The NHTD program is budgeted under community Medicaid and the applicant may use a Pooled Trust if enrolled and accepted prior to application. There are no transfer penalties for this program. This is a waiver program and the applicant must be capable of living in the community; eligible for nursing home level of care; authorized to receive Medicaid Community-based Long-Term care; at least eighteen years of age; and considered part of an aggregate group that can be cared for at less cost in the community than a similar group in a nursing home. The program offers service coordination, assistive technology, community integration counseling, congregate and home-delivered meals, moving assistance, peer mentoring, respiratory therapy and respite services. It does not offer medical services such as personal care aide and the applicant cannot be on any other Medicaid program for home services.

Applications must go through the local Regional Resource Development Centers (RDCC). The applicant, social worker at the nursing home, or family member may call the RDCC and a nurse will be sent to complete an assessment to decide if the applicant will qualify for this program. The RDCC is responsible for interviewing potential applicants, reviewing Service Plans, maintaining regional budgets and issuing notices to applicants and participants relevant to their participating in the waiver program. There are a limited number of entries for all of NYS on this program and waiting lists are very long. Spousal impoverishment budgeting is not allowed for this program.

Medicaid Managed Long-Term Care (MLTC)

The applicant must be already accepted to the Medicaid program for long-term care and may then change to a Managed Care plan voluntarily There is a table of all of the MLTC Plans in NYS available in the Medicaid Supervisors Office.

Pace for All-Inclusive Care for the Elderly (PACE)

This program provides a comprehensive system of health care services for members age fifty-five and older who are otherwise eligible for nursing home admission. The objective is to provide a fully integrated package of care for seniors while allowing them greater independence by avoiding institutionalization. Both Medicare and Medicaid pay for this program and anyone eligible for Medicaid may participate in a PACE by paying a monthly premium equal to the Medicaid capitation amount. PACE members are not allowed to go "out of plan" to receive services. Most participants are dually eligible for Medicare and Medicaid. Medicaid coverage for PACE is under community coverage with community-based long-term care, meaning they must provide three months of current financial statements, common documents, etc. There are no transfer penalties for this program but spousal impoverishment rules do apply to PACE enrollees. There are 5 PACE sites that operate in NYS with only one for the NYC area. There is a table of the 5 PACE sites in NYS available in the Medicaid Supervisors Office. This program is not for someone who needs aide care in the home.

Assisted Living (AH-ALP)

There are limited assisted living beds paid for by Medicaid in NYS. The application process follows the same regulations as the community coverage with community-based long-term care, meaning they must provide three months of current financial statements, common documents, etc. There are no transfer penalties for this program but spousal impoverishment does apply to PACE enrollees. The Medicaid Supervisor has a list of all available assisted living centers that are Medicaid contracted. Beware that some assisted livings tell the clients they will accept Medicaid, but this is only for their medical bills after Medicare pays, it is not for the room and board.

Please note that all of the above programs will not roll-over to a chronic care application. A chronic care application for nursing home coverage will be a new application requiring 60 months of financial documentation for trusts and all personal accounts from 02/01/06 - forward. However, someone with chronic care coverage may roll-over their coverage to one of the above programs if they return home.

by Michael Ettinger, Esq.
"Spousal refusal" is a legally valid Medicaid planning option in just three states: New York, Florida and Connecticut. By way of background, certain income and assets are exempt from Medicaid if there is a spouse. Generally, the spouse at home, known as the "community spouse" may keep about $3,000 per month of the couple's combined income and about $100,000 of the assets or "resources". Not included in those figures are any other exempt assets, such as a home and one automobile. The spouse who is being cared for in a facility is known as the "institutionalized spouse".

Many a spouse has advised us that they simply cannot afford to live on the allowances that Medicaid provides. This is where spousal refusal comes in. We start by shifting excess assets into the name of the community spouse. He or she then signs a document which the elder law attorney prepares and files with the Department of Social Services (DSS) indicating that they refuse to contributed their income and assets to the care of the ill spouse since they need those income and assets for their own care and well-being. Note that you may not refuse your spouse's own income over the $3,000 per month exemption as it is not coming to you.

Once the community spouse invokes their right to refuse, an option granted to New Yorkers since 1998, and all of the other myriad of requirements of the Medicaid application are met, the state Medicaid program must pay for the care of the institutionalized spouse.

After Medicaid has been granted, DSS may institute a lawsuit seeking to recover the cost of care from the refusing spouse. Nevertheless, there are a few reasons why spousal refusal make sense, even in light of this risk. First, in many instances, DSS never invokes this right. Secondly, these lawsuits are often settled for significantly less than the cost of care provided. Thirdly, the payment to the county can sometimes be deferred until the community spouse dies. As one county attorney told us when agreeing to such an arrangement, "the county is going to be around for a long time". Finally, even though the county may seek recovery, it is only for the Medicaid reimbursement rate and not the private pay rate. For example, if the private pay rate is $12,000 per month, which is what you would have to pay, the amount Medicaid has to pay is much less in most cases. So the Medicaid rate at the same facility may be only $8,000 to $9,000 per month. The county may only pursue you for the amount they actually paid. Worst case scenario then, if you had to repay the county, is that you would still be saving $3,000 - $4,000 per month for the cost of your spouse's care.

Spousal refusal is an excellent option for spouses who find one of them on the nursing home doorstep. Far better however, is to plan ahead with long-term care insurance or, where such insurance is not available for medical or financial reasons, consider setting up a Medicaid Asset Protection Trust (MAPT) at least five years ahead of time to protect your home and life savings.

The viability of spousal refusal as a Medicaid planning option in the future remains in doubt. On at least two occasions the state legislature has sought to abolish the technique, only to be rebuffed by strong lobbying. However, in times of mounting deficits, New York's liberal traditions in this regard may not be sufficient to save spousal refusal in the future.