No Slide Title

Report
MEDICAL ASSISTANCE: A
SUMMARY OF THE BASIC
ELIGIBILITY REQUIREMENTS
Laurie Hanson
Long, Reher & Hanson,
P.A.
www.mnelderlaw.com

Long Reher Hanson
2008 Long, Reher & Hanson, P.A.
Minnesota Elder Law Attorneys
Course Overview
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Long-term care payment
sources
Basic Medical Assistance
Eligibility
Assets
Spousal Impoverishment Laws
Long Reher Hanson
Minnesota Elder Law Attorneys
Course Overview
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Income
Transfers
Appeals/hardship waivers
MA Waiver programs
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Minnesota Elder Law Attorneys
Why does this Matter?

Planning for persons who are living with
disabilities who must maintain or obtain
eligibility for public benefits to meet basic needs
and use.


To enhance quality of life – to live as
independently as possible for as long as possible
To ensure that assets can be protected to
supplement and not supplant government
benefits.
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Minnesota Elder Law Attorneys
WHAT IS LONG-TERM CARE?
A person who needs assistance
with activities of daily living, such
as bathing, dressing, eating,
transferring, is a person who
needs long-term care.
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Minnesota Elder Law Attorneys
Long-term care settings
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Home Health Care
Adult Day Services
Assisted Living
Skilled Nursing Facilities
Board and Care Homes
Group Residential Housing
Hospice Care
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Minnesota Elder Law Attorneys
Long-Term Care payment
sources.
•Private pay/private insurance
•Medicare and supplemental
insurance
•Long-term care insurance
•Veterans Benefits/ Veterans Home
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Minnesota Elder Law Attorneys
Medicaid
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State and Federal program
Minnesota’s Medicaid Program is called
Medical Assistance
Basic Medical Assistance
Medical Assistance for the nursing home
Home and Community-Based waivers
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Minnesota Elder Law Attorneys
Home and Community Based
Medical Assistance programs*
for persons under age 65:
*Also known as “waiver” programs.
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Mental Retardation or Related Conditions
(MR/RC)
Community Alternative Care (CAC)
Community Alternatives for Disabled
Individuals (CADI)
Traumatic Brain Injury (TBI)
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Minnesota Elder Law Attorneys
Home And Community Based
Medical Assistance Programs
for people 65 and Older:
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Elderly Waiver Program (EW)
Special Income Standard Elderly Waiver
program (SIS EW)
Alternative Care program (AC) (not MA)
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Minnesota Elder Law Attorneys
Medical Assistance
Services

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Medical Assistance benefits include:
Hospitalization, physician services, some dental and eye
care, medical supplies and treatments, etc

Mental health services for adults and children
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Nursing homes

Home health care.
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Minnesota Elder Law Attorneys
MA ELIGIBILITY
GENERAL REQUIREMENTS
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Minnesota resident
Categorical Basis of Eligibility
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65 and older Blind or Disabled
Pregnant woman
Under 21
Parent or caretaker of
dependent child
Financially Eligible
Basic Financial Eligibility
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Single
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$3,000 in available assets
Income spenddown
Married
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Community spouse asset allowance +
$3,000
Income spenddown
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Minnesota Elder Law Attorneys
WHICH ASSETS COUNT TOWARD
THE $3,000?
Excluded Assets (no)
 Unavailable assets (no –
but used on asset
assessment)
 Available Assets (yes)

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Minnesota Elder Law Attorneys
Available assets
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Assets are available if the owner has both
legal authority and actual ability to use them
for self-support and assets are not excluded
or unavailable.
Include savings and checking accounts,
stocks, bonds, CDs, contracts for deed, IRAs,
certain real property, collections, cash
surrender value of life insurance policies, etc.
Premarital agreement has no effect.
Excluded assets
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Homestead subject to limit in
some circumstances (eff. 1/1/06)
Household goods and personal
effects
Assets of trade or business
One motor vehicle
Excluded assets
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Insurance payments to repair or replace
lost, damaged, or destroyed property
CSV of certain insurance policies
Revocable burial fund: limit is $1,500
Irrevocable funeral trust:
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Services limited to $2,000
No limit for burial spaces and space items
Prepayment of funeral
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Life insurance or annuity:
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Itemized agreement with funeral home
Amount paid same as in agreement
Irrevocable primary beneficiary: “any
funeral home as its interest may appear”
Irrevocable contingent beneficiary:
“estate”
Unavailable assets
Unavailability proved by showing legal or
actual barrier to disposal of asset that
cannot be overcome. Unavailable assets
may include:
Next four slides…
Unavailable assets
Share of an estate that has not been
probated
Property involved in a pending legal action
Non-homestead real property
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Considered unavailable as long as applicant
is making reasonable effort to sell
Asking price is no more than estimated
market value on real property tax
statement
Reasonable offer: no less than 2/3 EMV
Jointly held assets
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General rule: Presumption that joint
tenants own pro rata share
Exception: Checking or savings account,
time deposits owned by MA applicant
Savings bonds: Unavailable if owned
jointly and in possession of person who
is not applying for MA
Life Estates and Joint Tenants
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Life tenant has the right to:
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Life tenant has continuing
obligation to:
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Live in the property throughout lifetime
Receive all profits from the property
Pay property taxes, fire insurance,
maintenance
Life estate is extinguished at death
unless after August 1, 2003
Trusts: available?
Depends on:
(1) Kind of trust involved
(2) Who established the trust
(3) Whose assets were used to fund the
trust…and
Trusts: available?
(4) Whether the trust is revocable or
irrevocable
(5) Whether trust was established during
lifetime or through a will
(6) Provisions of the trust agreement
Kinds of trusts

Revocable trust
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Irrevocable Trust
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Trust with springing provisions
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Supplemental needs trust
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Special needs trust
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Pooled trust
Other assets
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Annuities
Continuing Care Communities
Bob’s and Kate’s assets
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Certificates of deposit $125,000
Kate’s IRA
$65,000
Bob’s IRA
$35,000
Homestead
$300,000
Automobile
$ 20,000
Household stuff $15,000
1/2 lake property $50,000
Bob’s and Kate’s assets
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Certificates of deposit $125,000 Available
Kate’s IRA
$65,000
Bob’s IRA
$35,000
Homestead
$300,000
Automobile
$ 20,000
Household stuff $15,000
1/2 lake property $50,000
Bob’s and Kate’s assets
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Certificates of deposit $125,000 Available
Kate’s IRA
$65,000
Available
Bob’s IRA
$35,000
Homestead
$300,000
Automobile
$ 20,000
Household stuff $15,000
1/2 lake property $50,000
Bob’s and Kate’s assets
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Certificates of deposit $125,000 Available
Kate’s IRA
$65,000
Available
Bob’s IRA
$35,000
Available
Homestead
$300,000
Automobile
$ 20,000
Household stuff $15,000
1/2 lake property $50,000
Bob’s and Kate’s assets
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Certificates of deposit $125,000 Available
Kate’s IRA
$65,000
Available
Bob’s IRA
$35,000
Available
Homestead
$300,000
Excluded
Automobile
$ 20,000
Household stuff $15,000
1/2 lake property $50,000
Bob’s and Kate’s assets
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Certificates of deposit $125,000 Available
Kate’s IRA
$65,000
Available
Bob’s IRA
$35,000
Available
Homestead
$300,000
Excluded
Automobile
$ 20,000
Excluded
Household stuff $15,000
1/2 lake property $50,000
Bob’s and Kate’s assets
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Certificates of deposit $125,000 Available
Kate’s IRA
$65,000
Available
Bob’s IRA
$35,000
Available
Homestead
$300,000
Excluded
Automobile
$ 20,000
Excluded
Household stuff $15,000
Excluded
1/2 lake property $50,000
Bob’s and Kate’s assets
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Certificates of deposit $125,000 Available
Kate’s IRA
$65,000
Available
Bob’s IRA
$35,000
Available
Homestead
$300,000
Excluded
Automobile
$ 20,000
Excluded
Household stuff $15,000
Excluded
1/2 lake property $50,000
Unavailable
TERMINOLOGY: Married
Couples
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Community Spouse
Ill Spouse (long-term Care Spouse)
Asset Assessment Date
Community Spouse Asset Allowance
Community Spouse Income Allocation.
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Minnesota Elder Law Attorneys
Community spouse asset
allowance
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CSAA = 1/2 of non-excluded assets on asset
assessment date with a
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Minimum of $29,389
and
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Maximum of $104,400
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assets at time of MA application =
CSAA + $3,000
Date of Institutionalization
$35,000
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Protected Assets:
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CSAA
MA limit
Excess Assets:
$29,389
$ 3,000
$ 2,611
Date of MA application, if in 2008:
$29,389
$3,000
Date of Institutionalization
$100,000
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Protected Assets:
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CSAA
MA limit
Excess Assets:
$50,000
$ 3,000
$ 47,000
Date of MA application:
$50,000
$3,000
Date of Institutionalization
$220,000
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Protected Assets:
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CSAA
MA limit
Excess Assets:
$104,600
$ 3,000
$112,400
Date of MA application, if in 2008:
$104,400
$3,000
Kate’s and Bob’s community
spouse asset allowance
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Total non-excluded assets
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CDs
Kate’s IRAs
Bob’s IRAs
1/2 interest in lake property
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Total
$125,000
$ 65,000
$ 35,000
$ 50,000
$275,000
1/2 of total is $137,500, which is greater
than $104,400, so CSAA = $104,400.
Excess assets to be reduced = $167,600.
MEDICAL ASSISTANCE:
DISCUSSION OF INCOME
RULES
Types of income

Excluded income
Reverse mortgages
 Payments form low-income home
energy programs
 In-kind income
 Cash from sale of property
 Tax refunds
 Reimbursement of expenses
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Minnesota Elder Law Attorneys

Types of income
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Available income
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Received by individual or on her behalf
Earned Income
Unearned Income
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Annuity payment
RSDI, SSI
Trust disbursments
Regularly received gifts
Lump sums
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Minnesota Elder Law Attorneys
Income Rules for Recipients in
the Community
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MA recipient is required to pay
portion of income towards cost of
services
Income standards for persons living
in community:
100% FPG, currently $851 OR
 Spending down to 75% FPG ($639).
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Long Reher Hanson
Minnesota Elder Law Attorneys
Income Spenddown for Single
Person in Community:
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Income of Individual
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less Medicare Part B
less standard
less insurance premium
Income applied to care
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Cost of Care
 less
MA pays:
Long Reher Hanson
$2,000.00
-96.00
-650.00
-100.00
$1,154.00
$5440.00
-1,154.00
$4,286.00
Minnesota Elder Law Attorneys
Income Spenddown for Single
Person in Nursing home:
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Income of Individual
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less Medicare Part B
less personal needs allowance
less insurance premium
Income applied to care
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$2,000.00
Cost of Care
 less
MA pays:
Long Reher Hanson
-96.00
- 84.00
-100.00
$1,720.00
$5,440.00
- 1,720.00
$3,720.00
Minnesota Elder Law Attorneys
SPECIAL INCOME RULES FOR
MARRIED COUPLES
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Community spouse is eligible for a
spousal income allocation if his or her
income does not meet a minimum
income level
Minimum of $1,751 up to
Maximum of $2,610
Calculation takes into account ONLY
excess shelter costs.
Long Reher Hanson
Minnesota Elder Law AttorneysC
SPECIAL INCOME RULES FOR
MARRIED COUPLES
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This amount changes every year
Otherwise spenddown is the same as for
single person
Only applies to long term care MA (LTC
MA) or EW
Long Reher Hanson
Minnesota Elder Law Attorneys
Income Spenddown for Married
Person in Nursing home:
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Income of Ill Spouse
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$2,000.00
less Medicare Part B
-96.00
less personal needs allowance
- 84.00
Less community spouse allocation -1,500.00
less insurance premium
-100.00
Income applied to care
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$ 220.00
Minnesota Elder Law Attorneys
Assets
Eligible?
Income
Is reduction of assets
necessary?
51
REDUCING ASSETS
Paying monthly expenses
 Purchase of excluded assets
 Paying debts
 Prepaying funeral expenses
 Repairs to house
 Transferring assets??
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Transfer warnings
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Federal law 1997: Makes it a
misdemeanor for paid advisor to counsel
or assist in transfers if results in penalty
period. Found to be unconstitutional.
Deficit Reduction Act of 2005: Affects
transfers on or after February 8, 2006
Loss of ownership and control: once
given away, assets are no longer yours.
What is a transfer?
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Gift
Sale
Reduction in ownership interest
Waiving the right to an inheritance
or income
Refusing or failing to take action to
obtain a PI settlement
54
Whose transfers matter?
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Transfers made by:
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Applicant,
Recipient,
Spouse, or
Any person, court or administrative body
on behalf of applicant or spouse
Must be reported and may affect eligibility
IF THE TRANSFER IS FOR LESS THAN
FAIR MARKET VALUE
55
What is an uncompensated
transfer?

Uncompensated value of transferred (or
refused) asset =
Fair market value less encumbrances and
compensation received.
Fair Market Value
Sale Price
TRANSFER
$250,000
$200,000
($50,000)
56
Transfer rules, in general

Transfers of assets or income
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For less than FMV
Within the “lookback period” (36
months for transfers before 2/8/06 and
until 2/09, then gradually increasing to
60 months by 2/11)
Ineligible for LTC coverage for a specific
period of time
57
Services to which
transfer penalty applies
During a PERIOD OF INELIGIBILITY,
Medical Assistance will not cover
“institutional care.”
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Nursing facility services
Level of care in any institution equivalent
to nursing facility services
Home or community-based services
58
Transfers: Presumption
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Any transfer of assets or income is
presumed to be for the purpose of
establishing or maintaining MA eligibility.
Applies to transfers by CS after MA
eligibility established for LTC spouse.
Any transfer to preserve estate, avoid
probate, or reduce taxes is deemed
“improper.”
59
Calculation of period of
ineligibility



Divide the amount transferred by the
Statewide Average Payment for Skilled
Nursing Facility care (SAPSNF)
As of the date of the application
Currently $4,772 from 7/1/08 through
6/30/09
60
Transfers before Feb. 8, 2006
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Add total uncompensated transfers in
any one month of the 36 months
preceding the MA application
Divide by the SAPSNF, currently $4,772
Penalty period begins the month after
the first transfer
Transfer of $200 or less OK except
during pre-existing period of ineligibility
61
EXAMPLE
TRANSFER $50,000 October 2005
$50,000 ÷ $4,772 = 10.48 months
PERIOD OF INELIGIBILITY
Transfer made in October, 2005
11/05 ----------------------------------9/06 (.48)
62
EXAMPLE
TRANSFER $200,000 June 2005
$200,000 ÷ $4,772 = 41.91 months
PERIOD OF INELIGIBILITY
If apply before July 2008 (within 36 months), full
POI is imposed.
If wait to apply until after 36 months:
June 2005 --------------- July 2008
The effective waiting period is 36 months.
APPLY JULY 1, 2008
at the earliest
Transfers on or after 2/8/06


Lookback period of 60 months will be
phased in
Period of ineligibility is calculated by dividing
total assets transferred within 60 months by
SAPSNF
Transfers on or after 2/8/06

Period of ineligibility begins:


For recipient: the month for which county
can give 10 days advance notice, not to
exceed three months after report/discovery
of transfer
For applicant: the month in which individual
is receiving long-term care services, applies
for MA, and would be eligible except for
transfer
SAME EXAMPLE
TRANSFER $50,000 October 2006
$50,000 ÷ $4,772 = 10.47 months
PERIOD OF INELIGIBILITY
•10.47 MONTHS FROM
•Date of application for Medical Assistance
AND
•When otherwise eligible but for the period of
ineligibility
Transfers on or after 2/8/06
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There is no cap to the period of
ineligibility.
No minimum allowable transfer.
Can have a snowball effect
Ineligibility begins when individual
applies and is otherwise eligible
Care costs can exceed amount
transferred
67
EXAMPLE 1: Monthly Charitable
Gifts
$500/month x 4 yrs = $24,000
TRANSFER of $24,000
POI: $24,000 ÷ $4,772 = 5.03 months
68
EXAMPLE 1 (cont’d)
POI is 5.03 months
|________________________________________
____|
August ‘08
January (.03)
Month of Application
Ends 5.03 months
later
69
EXAMPLE 1 (cont’d)
Monthly long-term care cost = $6,000
Cost of care during POI:
$6,000 x 5
= $30,000.00
$4,772 x .16 = $
763.52
$30,763.52
70
Types of
Transfers
71
Promissory notes, loans, and
mortgages must:



Have repayment term that is actuarially
sound
Provide for payments to be made in
equal amounts during term of loan,
with no deferral and no balloon
payments made
Prohibit the cancellation of the balance
upon the death of the lender
Purchase of life estate
interest
The full amount that a person pays for
a life estate in someone else’s home
will be considered a transfer UNLESS
the purchaser resides in the home for a
period of at least one year after the
date of the purchase.
Paying a relative can
be an uncompensated
transfer
Payment for services by a relative is a
transfer unless:
 The parties have a notarized written
agreement dated at or before time of
service, requiring payment
OR
 Payment for services is made with
sixty days of when services given
74
Transfer of real estate

The transfer is complete when:



Deed is executed AND
Deed is delivered.
Date of delivery is earlier of:




Date of recording
Date of delivery as stated in affidavit
Date of judicial order creating the
interest
Date upon which interest devolves at
person’s death
PURCHASE OF ANNUITIES
AS TRANSFERS
See Bulletin No. 08-21-04 dated
May 27, 2008 on DHS web site
76
ALLOWABLE
TRANSFERS:
Exceptions to the
transfer rules
Allowable transfers of home

To spouse, disabled or blind child of
any age, child under age 21

To sibling with equity interest

To caretaker child (not grandchild)

For value

Denial would cause undue hardship
Other exceptions to transfer
rules




To spouse at any time, or to 3rd
person for sole benefit of spouse
To disabled or blind child or sole
benefit trust
Transfer into trust for any
disabled person under age 65 (or
a pooled trust for people of any
age)
Return of assets
Return Assets: Example



Eleanor transfers $200,000 to her son
in August and applies for MA in
August.
POI is 41.91 months, beginning in
August
Eleanor’s cost of care is $6,000 each
month which her son returns to her
and she uses to pay for care.
80
Example (cont.)





The period of ineligibility is reduced
each time money is returned.
After six months, $36,000 will have
been returned; thus the total amount
transferred to son is reduced to
$164,000.
New POI = 34.38 months.
At this rate, POI will be reduced to
18.5 months;
81
$88,282 protected.
Other exceptions to transfer
rules
(cont.)



Individual intended to dispose at
FMV
Transfer of excluded assets other
than homestead
Denial of eligibility would cause
undue hardship
Undue hardship waiver:
MN


Based on imminent threat to individual’s
health and well-being
Evaluation criteria:




Whether the individual was the victim of
financial exploitation
Whether the individual has made reasonable
efforts to recover transferred property
Other factors relevant to determination of
hardship
Cause of action against transferee if
Undue hardship waiver:
DRA




State develops procedures in
accordance with standards specified by
Secretary of HHS
NF can file application on behalf of
individual
30-day bedhold payment to NF: NOT IN
MN!!
Undue hardship exists when denial would
deprive individual --
Criteria for determining if
cause of action exists

C/A exists if transferee knew or
should have known:



Transferor was resident of LTC facility
or receiving that level of care in
community
Transfer was being made to obtain or
maintain MA eligibility
Transferee actively solicited transfer
with intent to assist person obtain or
maintain MA eligibility
Cause of action against
transferee



Transfers made by applicant and not
reported on application
Transfers by recipient during ongoing
eligibility and reported too late to
create period of ineligibility
If undue hardship waiver is granted
to transferee
Liens


Medical Assistance lien
against non-homestead real
property
Notice of potential claim
against life estate and joint
tenancy interests
Estate recovery

County may place claim against
estate for MA when:



Person was over 55 and received
MA/AC.
Persons resided in medical institution
for 6 months or longer and could not
have been expected to return home.
Claim is against estate:


of recipient, if single
of surviving spouse, if married.
Estate recovery (cont.)


If claim is against estate of surviving
spouse, claim limited to assets that were
marital assets or held jointly during
marriage (But, Barg may change this!)
Estate includes:



Probate assets
Some non-probate assets (joint tenancy,
POD and TOD accounts)
Life estate or joint tenancy interest in RE
created on or after August 1, 2003
In the Estate of Francis E.
Barg
Opinion issued by MN Supreme Court on May
30, 2008, which held:
1.
2.
Federal Medicaid law does not preclude all
recovery from estate of surviving spouse of
MA recipient.
Federal law limits scope of recovery to only
those assets in which deceased MA recipient
had a legal interest at the time of death and
only to extent of MA recipient’s interest.
Thank you for your
attention!
Long, Reher & Hanson,
P.A.
www.mnelderlaw.com
(952) 929-0622

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