Can A Family Agree to Pay A Nursing Home or Assisted Living Residence for A Private Room When Their Loved One is Receiving Medicaid?

By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Medicaid Attorney

It’s a question I’m asked often.  It’s also one that causes a lot of confusion within the nursing home community.  Some nursing homes think that any form of private payment violates Medicaid laws.  That is incorrect, it’s perfectly legal.

Here’s the general fact pattern – Mom qualifies for Medicaid, which pays for a semiprivate room, that is, a room with a roommate.  If the family wants a private room for Mom, they can pay the additional charge, provided of course that the home has a single room available.

What is the going rate for a private room? Generally it ranges from $25 to $30 per day. While Medicaid is picking up the semiprivate room rate its reimbursement rate is much lower than the private pay rate. You see, Medicaid pays long term care facilities at a rate approximately 40-50% less than the rate that you and I must pay.  But, while you and I must pay the much higher rate, the good news is that the difference between a semiprivate and a private room is small, once Medicaid eligibility is established.

If your loved one is in an assisted living facility it works the same way.  Medicaid will pay for a shared room but not a single, private room.  Provided the facility has a single room available, the family can pay the difference between the single vs double room rate at the private non-Medicaid rate.  Medicaid will cover the double rate.

Keep in mind that with both nursing home and assisted living Medicaid Mom will continue to contribute almost all of her income to the cost of the facility and Medicaid will pay the rest up to its reimbursement rate.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.

Medicaid’s “Caregiver Child Exception”- Does My Parent Qualify to Transfer Their Home If I Take Care of Them?- Part 1

By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Medicaid Attorney

As a faithful son or daughter of a parent who is of ill health, you want to be able to be there for your parent when they need you the most, as they were once there for you.  It’s your way of giving back to your family that made you into the person you are.  If you are someone who lives with your parents and takes care of them as they decline in health, you may be in luck to help your loved one become possibly eligible for Medicaid quicker if there is a need in the future to send your parents to a nursing home.

As mentioned in my earlier blogs, normally, under Medicaid’s regulations, a transfer of assets is a gift when made below the fair market value of the asset. A gift results in a Medicaid application being assessed a penalty period of non-eligibility.  To have Medicaid pay for your parent’s stay at a nursing home, the parent’s total assets must be less than $2,000.  Often times, a parent has a house in his or her name, and it needs to be taken out of their name to qualify for Medicaid.  Or if the house is sold, or transferred out of their name into another’s with very little money given for the transfer, it is penalized if that is done within 5 years of the application for Medicaid.

But there is an exception that allows the house to be transferred below fair market value without it being considered an improper gift or transfer.  Under the applicable regulation, N.J.A.C. 10:71-4.10(d)(4), a parent’s interest in their home may go to a child of the parent needing Medicaid, if the child resided in the home for at least 2 years before the parent was placed in a nursing home facility AND he/she had provided care that permitted the individual to reside at home rather than at a nursing home.

What kind of care needs to be provided?  It must be beyond supportive activities and include taking care of everything essential to the health and safety of the parent.  So, for example, shopping for your parent and occasionally taking them for their doctor’s appointments will not be enough.  Examples that the regulation gives of activities that would need to be done includes supervising your parent’s medication, monitoring your parent’s nutrition, and insuring your parent’s safety.  I would also argue that to qualify, you need to take care of your parent’s basic needs, including bathing them, dressing them, feeding them, toileting them, and transporting them to their necessary doctor’s appointments.

There is a lot that needs to be proven here, and in our next blog, I will discuss a case where a daughter provided this care, but the court still found it not to be enough under the exception.

To discuss your NJ Medicaid Eligibility matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.

Medicaid’s “Caregiver Child Exception”- Does My Parent Qualify to Transfer Their Home If I Take Care of Them?- Part 2

By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Medicaid Attorney

In my last post, I discussed how if you are providing a high-level of care to your parent, you’re eligible to receive your parent’s interest in his/her home. Medicaid will disregard this transfer for purposes of determining eligibility.  One thing I must emphasize is that the transfer rules must be strictly adhered to.  Remember, the State is looking to deny you Medicaid, so if you choose to use this exception, you need to make sure you can meet their strict criteria.  I can think of no better case where this occurred then in M.K. v. Division of Medical Assistance and Health Services.

In this decision, M.K. was severely debilitated and required a high amount of assistance.  Her daughter provided a great amount of care over five years, including shopping for her, dressing and bathing her, cleaning the house, and attending to M.K.’s financial affairs.  The house was transferred from M.K. to the daughter for less than fair market value, and in the application, M.K. argued the caregiver exception applied to make her eligible for Medicaid despite this transfer within 5 years of the date of the application.

This position was rejected by the State and the courts for three reasons.  First, M.K.’s assets went to pay for a home health aide that came in weekdays from 8 AM to noon when the daughter was working.  Second, the daughter was able to leave M.K. home alone five hours a day while working when the home health aide wasn’t there.  Third, during the 2-year period before M.K. was sent to the nursing home, she had lived with her son for five months, with the daughter only providing assistance with M.K.’s medication and transportation to doctor’s appointments.  Because the care was not continuous in the eyes of the court for the 2 years, it concluded the exception did not apply and the penalty assessed was therefore appropriate.

So if you believe the exception applies to you and your parents, you have to really make a showing that not only was your parent debilitated and that you provided a high level of care, your parent was almost never left alone while you went to work, and if she was, you personally paid for home health assistance to stay with her.  In addition, you must also show that you provided the same level of care throughout the 2 year period even if your parent goes to live with another sibling.  In a slumping economy, with the cost of home health care rising, this is a tall task for anyone to perform over the course of 2 years.  The government essentially wants you to become a full-time nurse for your parent, and if you can’t because you need to work, then you must bear the cost for a home health assistant for Medicaid to pay for the subsequent move to the nursing home.  It is an unfortunate decision because it puts a lot of strings on the use of this exception, which was originally meant as a good intention to encourage children to move in and take care of their parents that once cared for them. More than ever you need our experience in Medicaid eligibility law to help you achieve your asset protection goals.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.

The Consequences of Paying Every Day Expenses with Cash: How One Couple was Penalized Under NJ Medicaid

By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Medicaid Attorney

Here’s a disturbing case I recently read about. A 70+ year old couple, consistent with their established pattern, had approximately $42,000 of cash withdrawals during the five year lookback period for which they did not have receipts. The wife needed long term care and applied for nursing home Medicaid. Her county board of social services (the processor of all Medicaid applications in the county of applicant residence) imposed a penalty for the full $42,000.

Of course, the couple has a hard time understanding how paying for their customary living expenses can be considered transferring assets for the purpose of becoming Medicaid Eligible. Are there any effective suggestions on what to do?

One commentator suggested using commonly accepted statistical studies and publications including government reports, for example. There is a United States Department of Agriculture (USDA) chart with food allowances for elderly adults, which has been accepted. Another suggestion was to get letters from vendors, if the customer is well known to them, verifying that “so and so” has been a longstanding customer for many years and frequently shops there. If there are no charges on credit cards for the categories of items purchased, and no checks, by inference, cash was paid. If there is a frequent shopper card (like for a grocery store), you can probably have the store produce receipt copies or a tally of purchases, amounts, and dates.

Unless there are returned checks/debit card line item expenses that indicate otherwise, you may be able to work backwards.

Also, if you have a good relationship with the bank, an affidavit from the bank tellers as to this pattern of practice helps. Better for mom and dad if each went to the bank alone or together and were well known to the employees.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.

The Medicaid Income Gap and Divorce: An Injustice Remedied

By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Medicaid Attorney

There is troublesome phenomenon which exists in the Medicaid world which is known as the “Medicaid Gap.”  This is a term that is used to describe an income level that is just above the Medicaid cut-off yet too low to cover the cost of nursing home care.  In L.M. v. State Div. of Medical Assistance Health Services, a person applied for Medicaid benefits to cover the cost of the nursing home he was staying at.   The application was denied because his combined income from Social Security and his pension put him above the income level for eligibility.  His income was greater than the cost of private care at the nursing home. In order to get around this, L.M. and his wife, who he was married to for a period of 53 years, divorced in order to lower his income below the income cutoff.  The way this works is that by divorcing his wife, L.M.’s pension would necessarily be distributed in part to her, since she was his wife for over 50 years.  When L.M. reapplied for Medicaid benefits, the Department of Human Services decided that his full pension should be included in the income eligibility assessment process.  Once again, they denied L.M.’s application for benefits.  In short, the divorce tactic did not work either.

On appeal, the court reversed the ruling in L.M.’s favor.  Ultimately, there was a policy reason that they emphasized was the reason they reversed the lower court’s decision.  The court said, “The government and the court are equally concerned about federal and state Medicaid policies that are so restrictive that they encourage married couples, like L.M. and his wife, to seek judicial authorization to sever the bonds of a fifty-three-year-old marriage that they would otherwise preserve at all costs.”  Basically, the court is saying, the departments overseeing those who are eligible to receive Medicaid benefits should be more relaxed in applying the rules for eligibility.  Otherwise, elderly married couples will have to uproot their lives simply to be eligible for Medicaid.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.

Do You Need to Fund A Trust With Money Before the Trust is Legal in New Jersey?

By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Trust Attorney

So you have just created a trust, signed some papers, and you are ready to go with it.  Now what? Must you fund this trust?  What does funding a trust mean?

To fund a trust means to change the ownership of your property to the trustee of the trust, or to change the beneficiary of investments, retirement plans or life insurance to the name of trust owner.  Subject to the type of trust you created, the means and method of funding the trust depends upon why you set up the trust and what you wanted to accomplish.

A revocable living trust is one where you decide who benefits from your assets when you are alive or become disabled, or die.  It eliminates the hassle of probate because your family knows what they are getting pre-death.  The assets of the trust must be retitled into the trust in order for your trust property to be administered according to your wishes, particularly if you are disabled.  Note though that assets in a revocable trust are still available to creditors, and are still counted as resources for purposes of Medicaid and death taxes.

Another common trust people tend to execute is an irrevocable trust.  This type of trust protects assets from creditors.  It is critical that the assets of the trust that you wish to keep safe from creditors and don’t want counted for Medicaid purposes are placed in to this type of trust.  The timing of when the assets are transferred is critical with Medicaid.  If you are an avid reader of this site or watch my videos, you know Medicaid looks back 60 months, or 5 years, to review all of the transfers you have made, invalidating those transfers made within that time period when determining eligibility.  Therefore, with each transfer to a trust you start another 5 year waiting period before Medicaid does not count the transfer.

There are other available options to transfer your estate when you die. You can transfer your remaining property via your last will to a trust if you so choose.  But you may not incur the benefits of asset protection or give your executor the opportunity to control the assets.  This is huge if you want a partial say on how your money is distributed after you die. Moreover, if the money is going to a spouse looking to get on Medicaid, you just jeopardized their eligibility (assuming the IRA is not annuitized).

These are just some of the considerations you must evaluate when creating an estate plan.  Always be aware of how you own your property. The consequences do matter.

To discuss your NJ Medicaid and Estate Planning matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.