Medicaid Eligibility – What is a “divestment” and why should I care?

The Medicaid application process uses various terminology to refer to eligibility requirements.  For example, what is a divestment?  A “divestment” is defined as any transfer of income, non-exempt assets, or homestead property belonging to the Medicaid applicant and/or his or her spouse for less than fair market value.

Any divestment during the applicable look-back period triggers a period of Medicaid ineligibility, with certain limited exceptions.  The look-back period is 60 months and is measured from the date that the applicant is institutionalized and applies for certain Medicaid benefits.  The penalty period is equal to the value of the divestment, divided by the average daily nursing home private pay rate ($286.15 as of July 1, 2018).

As an example, Jane gifts her personal residence, with a fair market value of $50,000, to her son John in May 2018.  In May 2019, Jane is admitted to a nursing home and applies for Medicaid to cover the cost of her long-term care.  Because Jane transferred homestead property for less than fair market value during the 60 months prior to her admission to the nursing home, she will incur a penalty period of 174 days ($50,000 divided by $286.15 = 174.73 days, rounded down) during which she will be ineligible for Medicaid.

Certain transfers, such as the purchase of an annuity or a promissory note, are not considered a divestment if they meet certain requirements.

If you have any questions on this subject, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Medicaid Eligibility – How do I know which assets to count?

As referenced our previous post, Medicaid 101 – What is it and who is eligible?, Medicaid applicants can have no more than $2,000 in available, non-exempt assets, which raises two questions: when are assets available, and which assets are exempt?

An asset is “available” if: (1) the asset can be sold, transferred, or disposed of by or on behalf of the applicant; (2) the applicant is entitled to receive the proceeds from the sale of the asset; (3) the applicant can legally use the proceeds to provide for his or her support and maintenance; and (4) the asset can be made available in less than 30 days.

Exempt assets, which are not subject to the $2,000.00 asset limit, include:

  • the applicant’s personal residence (up to $750,000 in equity), if he or she has a subjective intent to return to the residence, or his or her minor or disabled child or dependent relative resides in the home;
  • one (1) automobile of unlimited value, if the applicant uses it to travel to his or her medical appointments;
  • whole life insurance with face value of up to $1,500;
  • irrevocable burial trust worth up to $4,500; and
  • personal property and furnishings of “reasonable value.”

If you have any questions on this subject, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Medicaid 101 – What is it and who is eligible?

Medicaid, also known as Medical Assistance (“MA”) or Title XIX, is a health insurance
program, jointly administered by the federal and state governments, for the benefit of certain elderly, blind, and disabled Wisconsin residents.

Because Medicaid is essentially a welfare program, eligibility is subject to strict income and asset limitations. Income limitations depend on whether the applicant is single or married, whether the applicant is “categorically needy” (is already eligible for Social Security Income), and whether the applicant is “medically needy” (resides in a nursing home where the cost of care exceeds his or her income).

The asset limitation, however, is the same for most Medicaid applicants: the applicant can have no more than $2,000 in available, non-exempt assets. Note, however, that if the applicant is married, his or her spouse is able to retain additional non-exempt assets. The topics of exempt vs. non-exempt assets, eligibility for married individuals, and other related issues will be covered in future blog posts.

If you have any questions on this subject, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

New year, new estate plan?

As we begin 2019, consider adding a review of your estate plan to your list of New Year’s resolutions. For most people, it is appropriate to review your estate plan every two to three years, or whenever a life-altering event occurs (e.g., marriage, divorce, a significant change in job or health, birth or adoption of a child).

In addition, the following are a few non-tax reasons to review your estate planning documents:

  • Children Need Powers of Attorney.  Any child of yours that has attained the age of 18 since you implemented your estate plan (especially those away at college) should have basic estate planning documents in place, especially financial and health care powers of attorney.
  • Outdated Estate Planning Documents.  Estate planning documents may have been prepared prior to a marriage or divorce or prior to the birth of your children. Individuals you have named as trustee, guardian, or power of attorney may no longer be appropriate under the present circumstances.
  • Specialized Planning / Asset Protection.  Each family has its own unique situation that may require specialized estate planning, such as a blended family situation, a desire to make sure the assets you leave to your beneficiaries are protected in asset protection trusts, or a beneficiary’s disability and the considerations it presents in leaving assets to that disabled beneficiary.

In connection with reviewing your estate plan, it is also important to review the beneficiaries named on your life insurance policies and retirement accounts, to ensure that they are coordinated with your existing estate plan documents. Beneficiary designations that are not consistent with your estate plan can result in distributions that are inconsistent with your desires or cause unintended tax consequences to your beneficiaries.

This year, consider reviewing your estate plan to ensure that it continues to meet your needs.

If you have any questions on this topic, please contact Attorney Evan Y. Lin or Attorney Emily E. Ames at (920) 393-1190.

Disclaimer: The information in this blog post is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author.  Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation. 

Fireside Chats During the Holiday Season

As the holidays approach and families gather together, topics like long-term care and estate planning are likely to be the last thing on your mind.  However, the holidays are the perfect opportunity to discuss these difficult issues with your loved ones.  For older relatives, it is important to discuss whether he or she has planned for future incapacity and/or assisted living or nursing home care needs.

In addition, if you and your older family members already have existing advance health care directives and powers of attorney for finance in place, the holidays are a good opportunity to ensure that your health care agents understand your wishes with regard to end of life care, and that your attorneys-in-fact have a good understanding of your finances, or that they know where to find that information if and when they need it.

If you and your family will be gathering together for the holidays, remember that the most difficult conversations are often the most important, and that when it comes to long-term care and estate planning, the earlier you begin planning, the better.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disclaimer: The information in this blog post is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author.  Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation. 

Up the river without a paddle – is one power of attorney as good as the next?

Not all powers of attorney are created equal.  When planning for future incapacity, particularly if you anticipate requiring governmental benefits such as Medicaid, it is important that your financial power of attorney provide your agent(s) with all the powers he or she might need to provide for your elder law or special needs objectives.  These powers may include, but are not limited to, the ability to:

–          Create and fund revocable, irrevocable, or supplemental needs trusts;

–          Make gifts above the annual exclusion amount or to him or herself, if necessary;

–          Execute estate planning documents and other agreements, such as a caregiver agreement; and

–          Change beneficiary designations on life insurance policies and retirement assets.

If you are planning for your future incapacity, make sure that your power of attorney grants your agent the powers he or she will need to accomplish your elder law and special needs objectives, so that your agent does not find themselves up the river without a paddle.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disclaimer: The information in this blog post is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author.  Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation. 

We get by with a little help from our friends – Supported Decision-Making Agreements for functionally impaired adults.

In April 2018, the Wisconsin State Legislature passed legislation to create Chapter 52 of the Wisconsin Statutes, authorizing the use of Supported Decision-Making Agreements in the State of Wisconsin.   Wis. Stat. § 52.01(6) defines “supported decision-making” as “a process of supporting and accommodating an adult with a functional impairment to enable the adult to make life decisions… without impeding the self-determination of the adult.”

Accordingly, a Supported Decision-Making Agreement can authorize the principal’s supporter (or supporters, if the principal desires more than one) to assist the principal in a number of ways, including:

a.  Providing supported decision-making to the principal, including assistance in understanding the options, responsibilities, and consequences of the principal’s life decisions, without making those decisions on behalf of the principal;

b.  Assisting the principal in accessing, collecting, and obtaining information that is relevant to a given life decision, and in understanding said information; and

c.  Assisting the principal in communicating his or her decisions to the appropriate persons.

A Supported Decision-Making Agreement cannot be used as evidence of incapacity or incompetency of the principal, and is revocable by the principal at any time.  Because of their flexibility, Supported Decision-Making Agreements may (and in many cases, should) be used in conjunction with powers of attorney for finances and healthcare.  Importantly, Supported Decision-Making Agreements must now be considered as a potentially less restrictive alternative to guardianship, and may also be used in conjunction with a full or limited guardianship.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disclaimer: The information in this blog post is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author.  Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation. 

Medicare vs. Medicaid: Do you know the difference?

When speaking about public benefits, people often confuse Medicare and Medicaid.  After all, they do basically the same thing, right?  Not exactly…

Medicare is available to all individuals age 65 and older, in addition to chronically disabled individuals of any age, irrespective of resources (i.e., assets).  It is federally administered and beneficiaries are often responsible for co-pays and premium payments.  Medicare has four parts, each providing distinct benefits:

1.       Part A (Hospital Insurance) – provides coverage for hospital costs and related

          services (e.g., skilled nursing facility care, home health care, and hospice care).

2.      Part B (Supplementary Medical Insurance) – provides coverage for physician services

          and certain outpatient services that are not covered by Part A.

3.      Part C (now known as Medicare Advantage) – provides expanded coverage beyond

         Parts A and B.

4.      Part D (Voluntary Prescription Drug Benefit) – provides prescription drug coverage

          through private insurance companies.

Medicaid, commonly referred to as Medical Assistance (MA), receives federal funding but is administered by the individual states.  Unlike Medicare, Medicaid is a needs-based program, and beneficiaries are subject to strict financial eligibility requirements.  Medicaid covers a broad range of health services, but is primarily known for providing long-term care (i.e., nursing home) coverage.  Individuals may be eligible for both Medicare and Medicaid, and receive benefits from both programs at the same time.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disclaimer: The information in this blog post is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author.  Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation. 

What is guardianship and how do you avoid it?

Guardianship is a court procedure in which an individual is appointed to make certain decisions for another person (the “ward”). The purpose of a guardianship is to protect or assist an individual who, due to mental incapacity, is unable to make decisions, defend him or herself against exploitation, or otherwise provide for his or her needs.

The proposed ward may require a guardian of the estate and/or a guardian of the person.  A guardian of the estate handles the ward’s financial matters, similar to a power of attorney for finances, whereas the guardian of the person handles day-to-day matters such as the ward’s living arrangements, medical care, etc.  In addition, the person petitioning the court to appoint a guardian for the proposed ward may request a temporary or permanent guardianship.  A temporary guardianship can generally be established within a few weeks and lasts for sixty days, with up to one sixty-day extension.  A permanent guardianship, on the other hand, remains in effect until removed by the court.  In order to establish a guardianship, the proposed ward must be found legally incompetent by two physicians or one physician and one psychologist.

The ultimate goal of a guardianship is to impose as few restrictions on the ward as possible (i.e., remove as few of the ward’s rights as possible), while also ensuring that his or her needs are being met.  However, even the most minimally restrictive guardianships results in the loss of some of the ward’s rights.  One way to prevent a guardianship from becoming necessary is to plan ahead and execute a Financial Durable Power of Attorney and Power of Attorney for Healthcare.  These documents will usually provide the principal’s power of attorney or health care agent with sufficient authority to protect or provide for the principal’s needs without petitioning the court to establish a guardianship, thereby avoiding the time and expense of a court proceeding.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author.  Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation.