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       Once again, a recent New Jersey court case has highlighted the dangers of do it yourself Medicaid planning. In the case in question, C.W. v. New Jersey Division of Medical Assistance and Health Services, 90 year old C.W. moved into a nursing home in 2007. She then transferred her home and $540,000 in other assets to her 3 children. The total value of all assets transferred was just under $864,000.        A year later, in March, 2008, C.W. applied for Medicaid benefits. Predictably, the application resulted in New Jersey Medicaid imposing a penalty of 10 years and 4 months. This meant that she would not be eligible and would have to pay for her own care at the facility’s private pay rate for nearly 10 and ½ years before being eligible for Medicaid.        The family made a big mistake. Had they waited another 4 years to apply for Medicaid the transfers would have fallen outside of Medicaid’s 5 year lookback period. Instead they must pay an additional 5 and ½ years, should C.W. live that long, before the State will provide any help.        They then tried to fix their problem. The children returned $235,000 to Mom who used it to

            It’s a comment we get frequently when someone calls our office just after getting sticker shock at the cost of their loved one’s long term care. Some get angry upon hearing that, if they have assets but no long term care insurance coverage, they’ll need to use their own funds to pay for care.             I’ve always considered the response to be an odd one, to say the least. No one would expect the government to pay for your car or your food or your housing if you have savings of your own. In some cases we’re talking about people who have several hundred thousand dollars to 1 to 2 million dollars or more.             Maybe it’s because Medicare covers the cost of medical care with supplemental “Medigap” insurance policies keeping the out of pocket costs so low. There must be some government program that covers long term care then, right? But, there isn’t.             Certainly, the cost of long term care contributes to the anger and frustration. The average monthly cost of nursing home level care in New Jersey is $125,000 to $140,000 per year, $300,000 or more if you need a ventilator. That will eat into savings at a rapid

            Last week we were discussing family caregiver agreements in light of a recent New Jersey Appellate court decision, E.R. v. DMAHS.  In that case, Mom and Daughter entered into a caregiver agreement while Mom was living in Daughter’s home.             Mom eventually entered a nursing home and applied for Medicaid.  The State of New Jersey looked back 5 years and counted all transfers from Mom to Daughter as transfers for less than fair value and not as payment for services received, despite the caregiver agreement.  A 2.5 year penalty period resulted, meaning after Mom had no money left she still was obligated to pay the nursing home for another 2 and ½ years.  Let’s examine why.             The existence of a caregiver agreement, by itself, does not insure that transfers from Mom to Daughter will be treated as “for value” payments.  The agreement must be reasonable.  That means that Daughter must be paid at market rates.  What would it cost to hire a caregiver on the open market?  If it costs $15 per hour Daughter cannot be paid $50 an hour.  The court also noted that Daughter cannot be paid a rate equivalent to the cost of a licensed aide if

            When having a conversation about long term care and qualifying for Medicaid, every so often the topic turns to paying a family member to care for Mom or Dad. Is it a permitted Medicaid spend down?             In many cases the discussion occurs after the services have already been provided – often for years. When I explain the Medicaid spend down requirements, the child wonders whether he/she could have been paid for the services performed for Mom or Dad. If so, can we go back now and calculate that amount and “pay” the child now for past services?             The answer to that is an emphatic “no”. Services performed at the time for which no payment was made are presumed to have been made “out of love or kindness”, what families do for each other each day. No payment was contemplated nor is any expected. Medicaid views any “payments” to be gifts or what it calls transfer for less than fair value. A Medicaid penalty will result.       But, what about an agreement going forward?  Can families enter into contractual agreements in which the parent pays the child for care?  If properly drafted and reasonable payments are made, I have always considered

                Last week I said I would share with you my experiences filing applications with Qualified Income Trusts (Miller Trusts) which are required when an applicant has income over Medicaid’s  strict income cap ($2199 for 2015).                 The rules are very technical.  Income can’t be split.  If I receive $1500 from Social Security and $1600 from a pension I can’t simply transfer $1000, the excess income over $2199, to the QIT each month.  I must transfer one whole source of income to the trust.  In other words, I can’t split any one source of income.  The whole Social Security amount or the whole pension amount must be transferred.                 In some counties there seemed to be confusion about which applications needed QITs and which didn’t.  Filing an application for a Medicaid start date of November 1, 2014, before the regulations changed did not require a QIT, however, I had more than one caseworker tell me in January or April, 2015, when they were still reviewing our application that now a QIT was required.   They were wrong.                 Applications filed requesting Medicaid pickup dates before December 1, 2015 do not require a QIT.  They are approved under New Jersey’s Medically Needy Medicaid program.  Likewise,

            It has been 7 months now since New Jersey eliminated its Medically Needy Medicaid program and as a result brought back Miller trusts. I detailed the changes in my posts of October 13 and October 20, 2014. The changes actually went into effect December 1, 2014. How have these changes been implemented? I am always skeptical of how smoothly the state will integrate any changes. New Jersey doesn’t have a good track record there and I was fearful that there would be problems. I wasn’t wrong and I will share with you some of my experiences to date.             Before I do that, however, let’s briefly review the changes. Medicaid has a strict income cap ($2199/mo in 2015). For applicants with gross income exceeding that number, they are ineligible for Medicaid under what is called the “Medicaid Only” program. When we talk about income, we are focused generally on Social Security and pensions, those sources that are received as long as you live and only change for cost of living increases. You can’t call up Social Security and ask for less money. There was, however, a second Medicaid program that covered nursing home care for individuals over the income limit, what