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Savings bonds and Medicaid – what should I do when Dad applies for benefits?

March 6, 2014

Filed under: Medicaid Planning — admin @ 8:15 pm

sav-bondsFor generations, savings bonds have been purchased for newborns and retirees alike as an investment in the future. While savings bonds aren’t a complex investment vehicle, bonds that aren’t properly handled can cause Medicaid ineligibility.

Here’s a common scenario:

“My dad owns savings bonds; he bought them years ago and added my name to them when his health started declining, so they are payable to me or him. He is now in a nursing home and needs to apply for Medicaid – do these savings bonds count against him? Since I’m a joint-owner, can I cash them so they aren’t an available resource?”

First, it is important to note that savings bonds are a countable resource – the Pennsylvania Medicaid application explicitly names U.S. Savings Bonds as a resource to report. Additionally, savings bonds list the owner’s social security number, which means savings bonds can be tracked through the Treasury department and linked to a Medicaid applicant.

Although the savings bonds are payable to either you or your father, the state may consider the bonds an available resource for your father, because he can redeem them himself. In Pennsylvania, if a Medicaid applicant can sell a jointly-owned resource without the other owner’s consent, the applicant’s share of the resource is presumed available to the applicant. An applicant’s share of a jointly-owned liquid resource is determined by the applicant’s contribution to the resource; this is a very fact-specific determination, but because your father purchased the bonds, the entire value will likely be considered available to him.

If you cash the savings bonds now, the state may consider the action a gift from your father to you, and he will incur a period of Medicaid ineligibility. The determination of whether this will be considered a gift depends on the circumstances, so it is important to proceed with caution.

Given the complex nature of these resources when it comes to Medicaid eligibility, it is important to seek expert advice. By consulting with a certified elder law attorney, you can learn how your resources are characterized and develop a Medicaid Planning arrangement that best serves your needs.


Protecting the Family Home: Part 2. Can the state take my home after I die to recover Medicaid benefits I received?

February 10, 2014

Filed under: Medicaid Planning — admin @ 4:04 pm

When you bought your family home years ago, you didn’t just see an asset with equity value – you saw a legacy you could pass to your children. When the time came for you to move into a nursing home, you were relieved to learn that you didn’t have to sell your home to apply for Medicaid. However, did you know that, without proper advance planning, the state can take your home after you die to recover Medicaid benefits you received?

In Part 2 of our series “Protecting the Family Home,” we discuss what happens to a Medicaid recipient’s home after death and the importance of advanced Medicaid planning.

Although your home is generally an excluded resource for Medicaid eligibility and does not have to be sold while you collect benefits, this protection may be lost after you die. Under a process known as “estate recovery,” the Department of Public Welfare can make a claim against your probate estate after your death to recover Medicaid payments made for your benefit.  Your “probate estate” generally includes all of your property that does not pass through a beneficiary designation. If your home is part of your probate estate, your family may have to sell your house to repay the claim.

Complex planning techniques may be used to protect your family home from estate recovery, but the most effective Medicaid planning takes place well in advance of a crisis situation.  By working with a certified elder law attorney before applying for Medicaid, you may be able to preserve your family home for your children.

At Sykes Elder Law, we have experience with a variety of complex Medicaid Planning techniques – give us a call today to discuss how we can help you achieve your estate planning goals.


Interview with our Medicaid Specialist, Mike Henninger

January 27, 2014

Filed under: Medicaid Planning — admin @ 9:43 pm

Meet Mike Henninger, Medicaid Specialist at Sykes Elder Law. mike_cropMike worked for more than 21 years for the Department of Public Welfare (DPW for short), the agency that administers Medicaid programs in Pennsylvania. He served in the Allegheny County Assistance Office as a caseworker and later as a trainer.

At Sykes Elder Law, he helps clients qualify and apply for Medicaid, and works to solve problems they may experience with the program.

Q. What did you do when you worked for the County Assistance Office?

A. Determined eligibility for the various programs, cash, food stamps, medical.  I’d been there as the medical programs expanded and started to cover more things.  There were more categories of assistance. Literally every program DPW has I’ve dealt with.

Q. And then as a trainer what did you do?

A. On those very same programs I trained new case workers, trained clerical staff in their functions, trained supervisors in various supervisory functions.

Q. So now that you’re working here, how would you describe what it is that you do to help clients?

A. When a person comes in and applies for medical assistance I know from personal experience that application is really overwhelming.  And I say that knowing full well why the questions get asked on that application and why the DPW needs to know those things. What I do is I look at that application and I try to think like a caseworker and I want to try to organize everything in a nice, rational, logical fashion. If I can put it in a rational order, knowing what it is they need to look at, and I can get that information from our client, it makes it a whole lot simpler for that process. It eliminates a lot of the back and forth that goes on between the case worker and either us or the client.  I can eliminate a lot of that.  Conversely I can keep clients from throwing a whole bunch of information at the caseworker that they don’t need.

I try to make it easier for the caseworker to process that application and get it approved. That’s how I see my role here.  As far as the asset planning, that’s what the attorneys do. All I need to know is what the final outcome of that is so that I can put it in the summation I do with the application that explains everything.

Q. What are the biggest problems you’ve seen with people applying for Medicaid throughout the years?

A. Well, not keeping documentation is a big one… keeping checking account statements; nobody ever thinks to keep five years’ worth of statements. The other thing I’ve seen over the years is just lousy planning.

Everybody knows the rule about transferring something within 60 months of the application (the five year look-back period).

The department makes the assumption that you transferred that to be eligible for medical assistance. That’s what they call a rebuttable presumption. If you have evidence in your hand, and you’ve planned for the possibility, then you can rebut that presumption. 

The other thing is that if you’re in your late 50’s, you know, maybe getting close to retirement age, to 65 or so, and you’re starting to pile up assets; that’s perfectly natural, that’s what you want.  But you need to figure out some way ahead of time to protect that stuff, be that a family trust or something like that. 

Q. So plan for it in your estate planning.

A. So you head off that problem at the pass by doing it when you’re younger. If you want your kids to have that money, plan early so that can happen.


Protecting the Family Home: Part 1

January 24, 2014

Filed under: Medicaid Planning — admin @ 11:13 pm

Do I have to sell my home to be eligible for Medicaid benefits?

This is the first post in a series discussing what happens to your home when you apply for Medicaid benefits.

When you enter a nursing home and need to apply for Medicaid, the issue of whether your home must be sold can be a concern. People often misunderstand Medicaid’s rules regarding homes, which can make emotional conversations about a loved one’s care even more complex.

Generally, you do not need to sell your home to be eligible for Medicaid. In Pennsylvania, a Medicaid applicant’s principal place of residence, up to $543,000 equity value in 2014, is an “excluded resource.” This means the state will not count the home against you, the applicant, when determining your eligibility for benefits. For the home to earn “excluded” status, you must state in writing that you intend to return to the home.

The home may also be an excluded resource, with no limit on equity value, based on who is still living there. If the Medicaid applicant’s spouse is still living in the home, the home is excluded; this is also true if the applicant’s child — under age 21, blind, or permanently disabled – is living in the home.

Any additional residences, other than the primary residence, are protected if another exclusion applies (for example: the property is income producing) or if the property can be preserved as part of the Community Spouse Resource Allowance (CSRA).

With assistance from a certified elder law attorney, a number of strategies may be used to help protect the family home. At Sykes Elder Law, we have years of experience in Medicaid Planning and can help you find the plan that best suits your needs.


2014 Medicaid figures for Pennsylvania

January 7, 2014

Filed under: Medicaid Planning,Uncategorized — admin @ 10:42 pm


Can I be discharged from a nursing home against my wishes?

October 4, 2013

Filed under: Elder Law - General,Medicaid Planning — admin @ 3:07 pm

For what reasons may a nursing home discharge a resident?

The federal Nursing Home Reform Act of 1987 prohibits transfer or discharge of a resident by a skilled nursing facility except for the following reasons:

Failure to pay. A nursing home can discharge a resident if the bill isn’t paid “after reasonable and appropriate notice.”

However, if the resident is eligible for benefits – such as Medicaid – that would pay for the resident’s stay, and the resident has filed all necessary paperwork to apply for benefits, the nursing home must wait until the application process has been completed.

Health or safety. If the resident’s stay endangers the health or safety of individuals in the facility, that is another appropriate reason. A physician must document the endangerment in the resident’s clinical record.

Resident has improved. Sometimes a resident’s health “has improved sufficiently” so that “the resident no longer needs the services provided by the facility.”

Severe needs. At other times, however, “the transfer or discharge is necessary to meet the resident’s welfare and the resident’s welfare cannot be met in the facility.”

Ceasing operations. If the facility ceases to operate, it will obviously need to transfer or discharge its residents.

Prior to transfer or discharge, the facility must notify the resident, and if known, a family member or legal representative of the resident.

If discharge is because the resident has not paid or the facility will cease to operate, then the facility must give notice at least 30 days in advance. If it’s due to health improvement, 30 days notice is not required “where the resident’s health improves sufficiently to allow a more immediate transfer or discharge.” If due to severe needs, the facility may forego 30 day notice “where a more immediate transfer or discharge is necessitated by the resident’s urgent medical needs.”

The law attempts to balance the rights of various parties. On the one hand, the law attempts to ensure that nursing home residents are free from arbitrary and harmful discharge from care. On the other hand, nursing homes should not be forced to house a resident under unreasonable circumstances.


Protecting the IRA in Medicaid situations

August 10, 2013

Filed under: Estate Planning,Medicaid Planning — admin @ 11:19 am

An individual retirement account (IRA), 401k, or similar retirement account is a wonderful way to save for retirement, provide for a surviving spouse, and even to leave a legacy to the next generation.

But if a retiree has uninsured long term care needs, that valuable account could be at risk.

Here are some thoughts on protecting such an account.

At the crisis point

Let’s start with a situation in which someone –let’s call him Joe – needs skilled nursing care right now. What are the options?

If Joe is married, his wife’s qualified retirement account is exempt from spend-down in qualifying for Medicaid. Joe and his wife may qualify for benefits depending on what assets they have and how much they spend on care, but if his wife had an IRA worth, say, $200,000, it wouldn’t count in the equation.

What if Joe has an IRA worth $200,000? It is countable, so what can Joe do?

First, he may be able to make an exempt transfer to someone else. For example, if Joe has a disabled child or other family member, he may consider giving the contents of his IRA (after taxes) to his disabled child or establishing a special needs trust for a disabled family member who is under age 65 (a grandchild, for instance). While asset transfers to others made less than five years before a Medicaid application usually lead to ineligibility for benefits, exempt transfers don’t count.

Second, Joe might cash in his IRA and use it to purchase items that are exempt. He could buy irrevocable burial reserves for himself and his wife. If his wife were renting an apartment, he could even buy her a house to live in. Joe could therefore qualify for benefits sooner while benefitting his wife.

Joe could also consider using his IRA to purchase an annuity. This alternative raises complex legal questions under the Medicaid rules. But if done right, an annuity for Joe’s spouse could give her greater income while avoiding unnecessary spend-down of assets.

If Joe were unmarried, he could still consider annuitizing his IRA. This option requires a careful analysis of Joe’s age, life expectancy, care costs, income, and other factors. There is some legal authority providing that an annuity purchased “by or on behalf of an annuitant who has applied for [Medicaid]” with proceeds of an IRA is not considered an “asset” for purposes of penalized asset transfers. In the right situation, Joe’s heirs could benefit more from the annuity option than from a straight spend-down.

Planning ahead

As with many elder law issues, better results come from planning ahead.

If you’re not at the crisis point, see your financial advisor or insurance professional about long term care insurance. It’s a great way to protect your retirement assets and have better care options.

Protection of retirement assets can also be part of a comprehensive estate and asset protection plan. We discuss this topic in depth at our regular estate planning workshops. See our website at www.elderlawofpgh.com/event-calendar for upcoming dates.


Son held liable for Mom’s nursing home bill: video

June 20, 2012

Filed under: Elder Law - General,Medicaid Planning — admin @ 7:04 am

Following up our last post, here is a four-minute video explaining the recent Pennsylvania case holding a son liable –retrospectively–for his mother’s $93,000 nursing home bill: video

Lesson: encourage your parents to do advance long-term care planning with an elder law attorney. It is well worth the investment. They (and you) can’t afford not to.


Kids liable for parents’ nursing home bills – Part II

June 4, 2012

Filed under: Elder Law - General,Medicaid Planning — admin @ 9:17 am

In a previous post, we explored the state law making adult children liable to support indigent parents who need long term care.

A recent Pennsylvania case reaffirmed these concerns.

In Health Care & Retirement Corp. v. Pittas (decided May 7, 2012), Pennsylvania’s Superior Court upheld a judgment of $92,943 against the son of an elderly woman who had resided in a nursing home. The nursing home had to show the son had the ability to pay the bill, the court said, but found sufficient proof because the son had yearly income of over $85,000 and had recently paid off a tax lien by making monthly payments of $1,100.

The court further held that the trial court need not consider other sources of income available to the mother, such as the mother’s husband, her two other grown children, or her pending application for Medicaid benefits. As a result, the one son sued by the nursing home was stuck for the entire bill, unless the mother’s Medicaid application was ultimately approved.

This case once again underscores the importance of having a plan in place to pay for long term care, protect assets, and avoid becoming a burden to family members.


When NOT to file a Medicaid application

January 6, 2012

Filed under: Medicaid Planning — admin @ 9:35 am

There is a subtle but important distinction between the Medicaid look-back rule and the ineligibility rule while the look-back period is limited to five years, the ineligibility period is not.

Think about that.

If you file a Medicaid application, the state asks you to reveal any transfers of assets in the past five years. Any transfers made before that won’t count. So you might think that any transfers you have made shouldn’t make you ineligible for benefits beyond five years. But here is the tricky thing: the ineligibility period is unlimited.

Here is an example of how these two rules work.

Madge has modest means, but the vacation house her father left to her has greatly increased in value over the years. In February of 2007, when the property was appraised at $650,000, she transferred title to her three children. Since she spent every summer there with her children when they were young, Madge wanted to keep it in the family.

Now in January of 2012 she enters a nursing home. The value of her assets is such that she could qualify for Medicaid benefits to pay for her care in a month or two.

Her nursing home has a policy of routinely filing an application for every new resident that transfers from a hospital, as Madge did. The nursing home, understandably, wants to make sure that every resident who qualifies for benefits gets approved as soon as possible so that the nursing home can continue to get paid.

But look at Question 10 on the Pennsylvania’s Medicaid application:

Within the past 60 months, have you or your spouse closed, given away, sold or transferred any assets such as: a home, land, personal property, life insurance policies, annuities, bank accounts, certificates of deposit, stocks, IRA, bonds or a right to income?

If her application is filed in January, Madge must answer “yes” and list the transfer of title to her children.

The result? The state finds Madge ineligible for Medicaid benefits for 80 months, or more than 6 ½ years! (The ineligibility period comes from a formula based on the value of the property transferred: $650,000 ÷ $8,112.13 = 80.13.) Madge may have to have her children transfer the house back to her, sell it, and spend down much of the proceeds.

The sad part is that Madge wasn’t even eligible for benefits until March. Had she waited until then to file her application, the transfer of title to her children would not have counted because it would have occurred more than five years before.

So if you have made sizeable transfers of your assets, be careful about when you file a Medicaid application. Better planning can help you achieve your estate planning goals.


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