New Jersey Issues Updated Medicaid Penalty Divisor
The last time New Jersey updated it’s Medicaid penalty divisor was two years ago. The divisor is the State’s determination of what the average daily cost of nursing home care is across the State of New Jersey. Although it is supposed to be updated annually the last adjustment occurred 2 years ago. What is noteworthy here is the jump in the divisor by almost $90 from $332.50 to $423.95, effective for applications seeking benefits from April 1, 2017 forward. On a monthly basis that computes to $12,895, which is more in Iine with the actual cost of care in Northern New Jersey. For many years the divisor was below the actual cost of care in a nursing facility. Why is this correction so important? Because the divisor is used to calculate a Medicaid penalty, the waiting period for Medicaid benefits that New Jersey imposes for transfers for less than fair value that occur within the 5 year lookback period – that period of time for which an applicant must provide detailed records of assets so Medicaid can scrutinize whether those assets have been spent down correctly. Let’s say I have gifted $50,000 to my children a year before I
A Word About Family Caregiver Contracts (Part 2)
Last week I was telling you about Mary’s question to me. Her mom is in a Florida nursing home but she wants to bring her up north closer to Mary. Mom had given Mary $100,000 under a personal services contract which was drafted by a Florida attorney. Her question was, "Will New Jersey Medicaid treat the money she was given as a transfer for fair value or will it be subject to a Medicaid penalty, making her mom ineligible for Medicaid for a period of 10 months. Mary told me she visited Florida 2 to 3 times a year. The services contemplated under the agreement included assistance with Mom’s activities of daily living as needed, doing laundry, paying bills etc. Based on what Mary had already told me obviously she wasn’t providing these services on a regular basis from New Jersey. Maybe the bill paying she could but not everything else. New Jersey will question the services provided. Mary had no explanation for how she could provide care from 1000 miles away. I also told Mary that even if the bill paying is legitimate there still is a question regarding the charges. New Jersey Medicaid will question the reasonableness
A Word About Caregiver Contracts
Mary called because her mom is currently in a nursing facility in Florida. She wants to bring her up north to be closer to Mary. She then told me that a Florida attorney prepared a personal services contract in which Mom paid Mary a sum of $100,000 to provide her with various care services. Her question to me was simple. “Will New Jersey Medicaid treat the money paid by parent to child as a transfer for value or will they treat it as a transfer for less than fair value?” The answer to that question is critical to her decision whether to move her mom, she told me. That’s because if the contract is not an equal value transfer it will carry a Medicaid transfer penalty. Mary told me the Florida attorney assured her it would not pose a problem for Medicaid eligibility in Florida. She wanted to know if that was also true in New Jersey. My initial reaction was skepticism. Then I started asking a few more questions. Mary told me she lives in New Jersey. I reviewed the contract which provides for various services such as laundry, bill paying, and assistance with activities of daily living (ADLs). I
An Update on an Important Medicare Decision
In 2013 I wrote on this blog about an important court decision that impacted many seniors discharged from hospitals to subacute facilities for rehabilitation. (See my posts on March 25 and April 1, 2013.) Up to 100 days of rehabilitative services are covered by Medicare but many seniors receive well short of 100 days of coverage because of a misapplied standard. The decision to stop Medicare coverage has been based on a determination that the senior is not improving as a result of the treatment received, despite the fact that nowhere is this actually written in the Medicare regulations. Medicare advocacy organizations filed a lawsuit to stop the practice. A settlement was reached in the case of Jimmo v. Sebelius in which the federal government agreed to stop applying an “Improvement Standard”. Federal officials agreed to rewrite Medicare manuals to insure that this standard would no longer be used. 4 years later, however, the federal government hasn’t complied so the advocacy groups went back to court. In February, the Jimmo court approved a corrective statement which the Center for Medicare and Medicaid Services (CMS) must now use to disavow the “Improvement Standard”. The statement is intended to remind the
Irrevocable vs. Revocable Trusts – Is One Better than the Other? (Part 2)
Last week I explained that the initial reaction to irrevocable trusts vs. revocable ones is generally negative. People perceive there to be a loss of control or really a loss of the use of the funds transferred to irrevocable trusts. But, is that really true? No, it isn’t because irrevocability is not synonymous with loss of control. It all depends on the purpose and the terms of the trust. If, for example, I want to transfer assets out of my name in order to reduce the value of my estate for estate tax purposes and I have sufficient other assets so that I won’t ever need the assets transferred to the trust, then an irrevocable trust would be drafted to accomplish the tax benefit. I would never be able to get the assets back but that’s OK. My purpose is to get the tax benefit and I’m not worried about using the assets for my own personal needs. On the other hand, the clients for whom we set up irrevocable trusts for long term care planning very well may need to use the funds in those trusts. They hope they won’t need to but we just can’t be sure.
Irrevocable vs. Revocable Trusts – Is One Better than the Other? (Part 1)
When I talk about trusts – and specifically irrevocable ones – many people quickly reply that they don’t like irrevocable trusts because they don’t like the idea that they are losing control of their assets. They much prefer a revocable trust. Each type of trust has its uses but first, let’s look at what revocability actually means. A trust is established by a grantor, sometimes referred to as a trustor, by way of a written agreement. Revocability means the trust can be revoked by the grantor who can basically “tear up” the trust agreement and take all the assets back. Revocability also means the trust can be amended by the grantor (ie. the terms of the trust can be changed). Revocable trusts are typically used to avoid probate. Assets held in the trust are not subject to state probate proceedings, making for immediate unrestricted access to the trust assets when the grantor dies. Revocable trusts also may be created to minimize or in some cases avoid estate taxes by creating other trusts into which assets pour over after the grantor’s death. Revocable trusts, however, do not protect assets from the cost of long term care, which is a primary