Elder Law and Medicaid Planning - The Law Offices of Aubrey Harry

Everything you need to know
A 2-Day Practical Course
Types, Costs, and Funding
Aubrey Harry Ducker, Jr.
Law Offices of Aubrey Harry Ducker, Jr. PLC
2020 Mizell Avenue
Winter Park, FL 32792
[email protected]
Client Age
Marital Status
Long-term Care Desires
Facilities – Home v. ALF/ICP
◦ Self sufficient, earning
income, fully insured,
building assets
◦ Retired, using assets
◦ Medicare Plan
◦ Supplemental Insurance
◦ Resource loss
•Long term prognosis
•Cost of Care
•Level of need
Different needs, Different Resources
How to tell?
Divorced again
Nothing complicates
planning so much as:
What are your concerns
for her husband?
What are your concerns
for his children?
Who cares about the
former spouse?
Complications Arise.
Multiple Decision Makers
Natural Heirs
Second Spouse?
Adopted Heirs
Who decides what you
Decision Makers
Healthcare Surrogate
Power of Attorney
Investment advisor
Who decides how or whether
to follow your advice?
What do you see? What are you looking for?
Old Woman?
Young Woman?
What are you looking for when you meet a
Home care:
◦ Visiting Assistant
◦ Short term nurse
◦ Live in caregiver
◦ Private Duty Nurse
ICP – Institutional Care
Nursing home
Assisted Living Facility
◦ Hospice
Care Need and Assets are the driving factors
Stay home
Die in sleep
Pass on assets to heirs
Nursing care only if
The Client’s desires, may
In-home care plan
Assets to support
Family support
Continued good health
or may not be doable.
Challenges of Aging in Place
Median national cost of services, 2012
Homemaker: $18/hour
Home health aide: $19/hour
Adult day health care: $61/day
Assisted living: $3,300 per month
Nursing home: $200-$220/day
Source: Genworth Financial 2012 Cost of Care Survey.
Challenges of Aging in Place
*Changing needs—A house that was ideal 30 years ago may now be too
difficult to handle alone. Older houses often need a lot of costly
maintenance, improvements, or repairs.
*Safety—A house with cluttered furniture or steep stairs is an accident
waiting to happen. Unsafe neighborhoods may make you afraid to go
shopping or attend social activities.
*Isolation—A trip to the grocery store, pharmacy, or place of worship
can be a problem when you cannot drive. It is easy to feel lonely or
trapped when family and friends are far away.
*Ease of use—If you need a walker or a wheelchair, it helps to have a
bedroom on the first level, grab bars in the bathroom, and ramps for
the entrance of the house.
Medicare Part A:
Coverage of inpatient
hospital care
Medicare Part B:
Medical Insurance –
Outpatient Care
Medicare Part D:
Prescription drug plans
Other Insurance may
Long Term Care
Medicare: 100 Days
when transferred from
hospital for
Other insurance may
Compare Nursing
Medigap: Medicare
State Health Insurance
Assistance Program
Medicaid: LTC/ICP
Agency for Health Care
Administration: AHCA
Florida Department of
Children and Families
Medicare & You
The official U.S. Government Site for Medicare
•Sign up/change plans
•Your Medicare Costs
•What Medicare Covers
•Drug Coverage (Part D)
•Supplements & Other Insurance
•Claims & Appeals
•Manage Your Health
•Forms, Help, & Resources
•Is my test, item, or service covered? ______________
Medicaid Nursing Facility Provider Information
The Department of Children and Families (DCF) district offices staff
determines eligibility for Institutional Care Program (ICP) services.
To begin the ICP application process, a nursing facility refers the
resident to the DCF by completing a Client Referral Notice [199 KB
PDF], CF-ES Form 2506A.
Providers must use the Client Discharge and Change Notice [187 KB
PDF], CF-ES Form 2506, to advise public assistance specialists of the
placement status of institutional Medicaid applicants and recipients.
Copies of these forms are also available from the Department of
Children and Families, Office of Economic Self Sufficiency.
Questions Every Elder Advisor Wants Answered:
Eligibility Standards for SSI-related Programs – July 2014
ICP/HCBS/Hospice/HCDA Individual
ICP/HCBS/Hospice/HCDA Couple
$ 2,163
$ 4,326
$ 2,000
$ 3,000
Spousal Impoverishment
Minimum Monthly Maintenance Needs Allowance (MMMNA)**
Excess Shelter Standard**
Maximum Community Spouse Income Allowance (MMMNA plus excess
shelter allowance cannot exceed this figure)
Community Spouse Asset Allocation Standard
Home Equity Interest Limit
A Guide to the
Institutional Care Program
Medical assistance for low income individuals in or entering a Nursing Home
•What is Institutional Care Program (ICP)? When Level of Care
requires intermediate & skilled care, Medicaid pays for those
qualified for an unlimited time period
•Who may apply? Individual, Guardian or Designated Representative
•Main Eligibility requirements:
•65 or Disabled,
•In Need of Facility Services,
•In participating home,
•Qualifying Assets/Income
A Guide to the
Institutional Care Program
•Asset limit: $2,000
•Types of Assets that count:
•Real Estate – not homestead
•Any Liquid assets:
•Bank accounts, CDs, Money Market funds,
•Stock and Bonds accounts
•Life Insurance – Face Value more than $2,500 - Cash Value
•Types of Assets that do NOT count:
•First Car
•Pre-paid Burial Contracts:
•Revocable up to $2,500
•Irrevocable contract – Unlimited
•Certain other special exceptions
A Guide to the
Institutional Care Program
•Income Limit:3xSSI limit – currently $2,163 (Excess QIT)
•How Much does the Patient Pay? All patient’s monthly
income, except for $35 (with certain set-asides)
•How Much does Medicaid Pay? The Balance of the
Allowable Rate
•Changes in income, assets or facility, Must be Reported
•Reviews Annually – by patient, guardian, Designated Rep
A Guide to the
Institutional Care Program
Qualified Income Trust:
•Income over the ICP income limit - $2,163
•Eligible if they set up a “qualified income trust”
•Deposit all excess funds every month
•Income is less than the income limit
QIT must:
*Be irrevocable;
*Be comprised of income only; and,
*Designate the state will receive any funds
remaining upon the death of the
recipient, up to the amount of
Medicaid payments paid on behalf of
the individual.
A Guide to the
Institutional Care Program
•Transfers of Income and Assets:
Income or assets transferred for less than fair market value
May create a period of ineligibility
Varying depending on the value of that transferred
Allowable Transfers:
Any resource to a spouse or disabled adult child.
The homestead, without penalty, to
His/her spouse, or, minor or disabled child
His/her sibling w/equity interest and resided there at least one year
prior to institutionalization.
His/her ADULT son or daughter who resided at least two years
immediately before institutionalization and who provided care that
delayed the institutionalization.
How to Apply:
Individuals can apply for benefits:
From any computer with internet access by visiting our web
site: http://www.myflorida.com/accessflorida or,
At one of the Department’s ACCESS Florida community
partners. A listing of community partners can be found online
at: http://www.dcf.state.fl.us/access/CPSLookup/search.aspx
At a DCF ACCESS Florida Customer Service Center. A list of
Customer Service Centers can be found online at:
http://www.dcf.state.fl.us/ess/ or,
By requesting a paper application by calling 1-866-762-2237
and submitting it in person, by mail or fax.
Florida’s Long-term Care
Partnership Program
•Partnership program between Medicaid and private long-term care insurers
•Designed to encourage individuals to purchase private long-term care
•Long-term Care Partnership policies are tax qualified (a portion of premiums
paid may be claimed as a tax deduction) under federal law;
•Provide policyholders with inflation protection;
•Provide dollar-for-dollar asset protection in the event the policyholder needs
to apply for long-term care Medicaid assistance.
KEY: For every dollar that a partnership policy pays out in
benefits, a dollar of assets can be protected from
Medicaid spend-down requirements.
Florida Long-term Care Partnership (LTCP) Program by the
Agency for Health Care Administration
Florida Statutes:
Chapter 409.9102 Qualified state LTC Insurance Partnership Program in Florida
Chapter 627.94075 A qualified state LTC Insurance Partnership Program in Florida
Chapter 627.94076 Time limit on certain defenses
Chapter 627.9403 Scope, Insurance Rates and Contracts
Chapter 627.9407 Disclosure, advertising, and performance standards for long-term care
Chapter 641.2018 Limited coverage for home health care authorized
Florida Administrative Code:
Chapter 69O-157.201 Standards For Approved Long-term Care
Partnership Program Policies
Chapter 69O-157.1155 Producer Training
Chapter 65A-1.712 SSI-Related Medicaid Resource Eligibility Criteria
Do you need the money?
How long will it last?
Is Repayment Secure?
Government Insured Financial Tool allowing
Equity conversion to tax-free Cash
Live in the home without making payments,
on death, loan must be repaid
You OWN the home as long as you live in and
can pay the Taxes and Insurance, and comply
with the loan terms
No payments
Financial Freedom, control, security and
To Qualify: 62, owner occupied
Reverse Mortgage Tips
» You should never pay an application fee.
» You should never be asked to pay for information.
» A legitimate lender should never downplay the
importance of pre-loan counseling.
» A legitimate lender should encourage questions and provide clear,
direct answers.
» No legitimate lender will ever claim affiliation with the government.
» No legitimate lender will ever claim to be a non-profit organization.
» We have been serving America since 1967.
» You can get confidential advice from professional
» You will not be pressured to do anything.
Taxes must be paid annually
Insurance must be maintained
Homeowners assessments must be paid
On Death or Move (nursing home placement)
Payment is Expected in a reasonable time
Home Equity Conversion
Mortgages for Seniors
Borrower Requirements
You must:
Be 62 years of age or older
Own the property outright or paiddown a considerable amount
Occupy the property as your principal
Not be delinquent on any federal debt
Have financial resources to continue
to make timely payment of ongoing
property charges such as property
taxes, insurance and Homeowner
Association fees, etc.
Participate in a consumer information
session given by a HUD- approved
HECM counselor
Property Requirements
The following eligible
property types must
meet all FHA property
standards and flood
Single family home or 24 unit home with one
unit occupied by the
condominium project
Manufactured home that
meets FHA requirements
HUD Requirements
More HUD Requirements:
Financial Requirements
Income, assets, monthly living expenses, and credit history will be verified.
Timely payment of real estate taxes, hazard and flood insurance premiums will
be verified
For adjustable interest rate mortgages, you can select one of the following
payment plans:
Tenure - equal monthly payments as long as at least one borrower lives and
continues to occupy the property as a principal residence.
Term - equal monthly payments for a fixed period of months selected.
Line of Credit - unscheduled payments or in installments, at times and in an
amount of your choosing until the line of credit is exhausted.
More HUD Requirements:
Modified Tenure - combination of line of credit and scheduled monthly
payments for as long as you remain in the home.
Modified Term - combination of line of credit plus monthly payments for a fixed
period of months selected by the borrower.
For fixed interest rate mortgages, you will receive the Single Disbursement
Lump Sum payment plan.
Mortgage Amount Based On
The amount you may borrower will depend on:
Age of the youngest borrower or non-borrowing spouse
Current interest rate
Lesser of appraised value or the HECM FHA mortgage limit of
$625,500 or the sales price; and
Initial Mortgage Insurance Premium
My sister/brother borrowed my
last red cent
Benefits to Borrowers:
Minimum interest rates Internal Revenue Service
requires on intrafamily loans close to all-time lows.
Known as the Applicable Federal Rate, or AFR,
currently just 0.2% for loans of three years or less,
1.27% for loans of more than three but less than nine
years, and 2.8% for loans of a longer duration.
Benefits to Lenders:
Example: married couple in their early 60s—plan to
lend $150,000 to their son and daughter-in-law to
purchase a "starter home." In return, the parents will
receive a 4% interest rate.
 By Anne Tergesen, Dec. 18, 2011
ABA lists 13 significant specific uses
Inadvertent loans – planned and unplanned
Estate Planning Tools -
1. Loans to children with significant net worth;
2. Loans to children without significant net worth;
3. Non-recourse loans to children or to trusts
4. Loans to grantor trusts;
5. Sales to children or grantor trust for a note;
6. Loans between related trusts (e.g., from a bypass
trust to a marital trust, from a marital trust to a GST
exempt trust, such as transactions to freeze the
growth of the marital trust and transfer appreciation
to the tax-advantaged trust);
7. Loans to an estate;
8. Loans to trusts involving life insurance (including
split dollar and financed premium plans);5
9. Home mortgages for family members;
10. Loans for consumption rather than for acquiring investment
assets (these may be inefficient from an income tax perspective
because the interest payments will be personal interest that does
not qualify for an interest deduction);
11. Loans as vehicles for gifts over time by forgiveness of
payments in some years, including forgiveness of payments in
2012 as a method of utilizing $5.0 million gift exemption
available in 2012;
12. Loan from young family member to client for note at a higher
interest rate (to afford higher investment returns to those family
members than they might otherwise receive) (In a different
context, the Tax Court has acknowledged the reasonableness of
paying an interest rate higher than the AFR6); and
13. Client borrowing from a trust to which client had made a gift
in case the client later needs liquidity (and the resulting interest
may be deductible at the client’s death if the note is still
outstanding at that time7).
Treated as a bona fide loan
Market rate of interest (Applicable Federal Rates
‘AFR’-published monthly by IRS)
Proper payments of interest and principal
Mortgage must be properly recorded against the
Children create Problems, Aubrey 2014
Married with Children
Married with children from previous marriage
Married with children from multiple previous
My child, your child, his child, her child
Divorced again
Nothing complicates
planning so much as:
What are your concerns
for her husband?
What are your concerns
for his children?
Who cares about the
former spouse?
Complications Arise.
Multiple Decision Makers
Protect yourself: use multiple attorneys
Get help when needed

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