Category: Medicaid Connecticut

Understanding Life Insurance Policies And How They Relate To Medicaid

Post author By sps
Post date December 3, 2014

Understanding Life Insurance Policies And How They Relate To Medicaid

When an individual is applying for Medicaid and has assets that exceed Medicaid’s resource limit, a Medicaid spend-down is necessary. Assets in excess of the allowable amount must be spent down in order to achieve financial eligibility. Some kinds of life insurance policies are included in the spend-down with a few exceptions. Below is a breakdown of what needs to be liquidated in order to be eligible for Medicaid.

There are two popular types of life insurance policies that have different effects on the Medicaid application process.

Term Life Insurance Policies:

Term Life Insurance Policies have premiums that increase as the individual’s age increases. These policies only carry a death benefit. They are also referred to as protection policies; their purpose is to assist the beneficiaries in the event of the policy holder’s sudden death. Since there is no current cash value in term policies they are not considered an asset according to NJ Medicaid guidelines. These policies may remain active and will not impede one’s Medicaid eligibility. Once an individual is on Medicaid he/she will have minimal assets and may not have the money to cover the monthly premiums. Some beneficiaries choose to cover the monthly premiums so that they can ultimately benefit from the death benefit once the Medicaid recipient passes.

Whole Life Insurance Policies:

Whole Life insurance policies generally have fixed premiums, death benefit and cash value reserves. These policies may be liquidated at any time. Being that they carry a current cash value, they are not exempt from the Medicaid spend-down and must be liquidated in order to meet Medicaid’s financial eligibility requirements. There is one exception to the rule! If the Whole Life Policy has a face value of less than $1,500.00, regardless of the cash surrender value, it is exempt from the Medicaid spend down and may remain open and active. “Face Value” is the original death benefit amount on the day the policy was purchased, prior to the policy holder making monthly premiums. While the policy is active it will accumulate cash value from the premiums as well as dividends from reinvestment money. The cash value may exceed the original death benefit (or Face Value). Once the policyholder passes, the beneficiaries will then be able to claim the total death benefit from the policy.

Medicaid Connecticut Medicaid New Jersey Medicaid New York

Utilizing A Special Needs Trust With The Excess “Spend-Down” Money

Post author By sps
Post date November 24, 2014

In order for an individual to be eligible for Medicaid, there are financial standards that need to be met. Many Medicaid applicants will have to spend some of their assets in order to meet Medicaid’s financial threshold. There are a few excludable resources that are exempt from the Medicaid spend down. These assets can be retained by the Medicaid applicant and will not impede Medicaid eligibility. An individuals personal possessions, a prepaid irrevocable funeral trust, and a special needs trust for a disable child are just a few excludable resources when applying for Medicaid.

Today we will discuss utilizing a special needs trust with the excess “spend-down” money. When a Medicaid applicant has a disabled child, a special needs trust allows the transference of assets from a parent to the child without jeopardizing the child’s government benefits.

Special needs trusts are also referred to as “supplemental care trust”. These trusts supplement the disabled child’s Supplemental Security Insurance (SSI) and Medicaid benefits. The money in a special need trust may only be used for specific items or services. The trust is meant to supplement and not pay for basics such as food and shelter. Some things that may be purchased through a special needs trust include:

• Home modifications to assist the disabled
• Medical treatments and equipment not already covered by government assistance programs.
• Education and recreation equipment
• Computers
• Musical instruments
• Sports equipment
• Travel expenses
• Prepaid funeral

When a parent creates a special needs trust for a disabled child, he/ she chooses a trustee. A trustee is an individual or institution who manages the assets in the trust. The trustee’s responsibility is to follow the terms and guidelines outlined in the trust as well as transferring the funds from the trust to the beneficiary or disabled child. A trustee can be a family member, attorney, bank or anyone that one chooses to assign as a trustee.

The trust restricts the beneficiary (or disabled child) and parent access to the assets in the trust. Only the trustee would have accessibility to the funds and therefore it’s considered an unattainable asset for both the parent and disabled child. To summarize, the Medicaid Applicant who transfers assets to a special needs trust for a child will not incur a Medicaid penalty. Additionally, the recipient will not jeopardize the government benefits which they receive.

Medicaid Connecticut

Connecticut – Prepaying A Funeral & Burial Plot For Medicaid Purposes

Post author By sps
Post date November 12, 2014

When one is applying for Medicaid / Title XIX, there are very limited assets that one may keep and still be eligible for the Medicaid benefit. In CT, the asset limit is $1,600 for a single individual. Nursing homes have an average daily rate of $390 a day, causing many to be in need of Medicaid at some point in their later years. Some people think they can give all their money to their children or others and still be eligible for Medicaid. They are wrong. Medicaid will not allow an individual to transfer assets within the five years prior to their Medicaid eligibility date. There are exceptions in which Medicaid will allow applicants to preserve assets.

Prepaid Irrevocable Funeral Trust /Prepaid Funeral Contract

Prepaying a funeral is just one of the very few exceptions of transferring assets. One may prepay up to $10,000 towards their funeral (2020). The funds set aside for the prepaid funeral must be put in an irrevocable funeral trust. This means that the trust is non-refundable and cannot be cashed in at any time. The funeral trust is portable and can be transferred to another licensed funeral home if one desires to do so.

Revocable Burial Allowance / Revocable Burial Space Contract

One may also set aside funds for their burial plot and burial items that are placed in a revocable trust, there is no limit on how much money one can spend on this. Some items that can be included are:

• Burial Plot; opening and closing expenses
• Headstone or Marker
• Crypt, Mausoleum
• Casket or Urn

These purchases do not have to be placed in an irrevocable trust – meaning that they can be refundable. If one refunds the purchases when the individual is already on Medicaid the funds must be given to the State. If the funds are not given to the State, the Medicaid recipient may be over the $1,600 asset limit and can potentially lose their Medicaid benefits. As long as the funds remain in the revocable trust, it will not impede the individuals Medicaid eligibility.
There are some other exempt assets that Medicaid allows an individual to keep. Look out for future posts on exempt assets and allowable Medicaid spend downs.

Medicaid Connecticut

Prepaid Funeral Contract That Was Not Set Up Irrevocable

Post author By sps
Post date October 22, 2014

In Mid-April , Senior Planning Services was contacted by an attorney who was the POA (Power of Attorney) for a resident that had been in a nursing home for about a year. At the time the case was retained, the clients had thirty five thousand dollars remaining in assets and an outstanding bill at the nursing home for thirty thousand dollars.
Senior Planning Services caseworker, Devorah, understood from reviewing the case that the client would need coverage pretty soon. After a Senior Planning Medicaid Specialist met with the client’s attorney, Senior Planning Services was given copies of the latest bank statement held by Peoples Bank as well as paperwork for an Amerprise account that had since been liquidated.
The specialist was also informed about a prearranged funeral. The client was receiving $1100 in social security income and an additional $150 from a pension.

Devorah immediately got to work. The first thing she tackled was ensuring that the skilled nursing facility’s bill was paid in full. After briefing through some of the clients information and financials, Devorah understood that the client would need to be spent down to $1600 by the end of the month. This would secure an April eligibility date for the client.

Devorah needed to move quickly and she immediately got to it . She reached out to the facility for an accurate updated bill. She forwarded it to the POA and advised him to pay the facility as soon as possible to ensure that the funds were actually out of the bank account by month’s end. In a situation like this, it’s best to get a cashier’s check from the bank, or withdraw in cash. This way the funds clear the account immediately.

Devorah then requested Pension verification from the company that was administering the client’s pension. She phoned People Bank’s back office to obtain five years of the client’s checking account history and reached out to Ameriprise to obtain statements from them as well. Then, Devorah proceeded to contact the funeral home for verification of the pre-arranged funeral and to confirm that it was set up properly according to the Title XIX guidelines. Upon receiving the verification, Devorah discovered that the prepaid funeral contract was not set up properly. Devorah had the funeral home re-arrange the contract with a list of how the funds would be allocated, and had the new contract sent to the POA to sign.

Upon receiving the People’s banks statements, Devorah discovered a savings account as well. She reviewed all statements and made certain that there were no questionable transactions according to Medicaid guidelines. She also reviewed all the Ameriprise statements to make certain that all monies withdrawn from this account were deposited to the Peoples bank account. Lastly, she filled out the application and had the POA look it over and sign. Devorah gathered all documents and organized it to be mailed to the correct regional office.

CW contacted Devorah via mail with a letter requesting that the funeral contract be written a different way. Devorah reached out to the funeral home who arranged this and sent her a corrected copy.

Devorah had it forwarded to the case worker.

The approval was granted two days later.

Senior Planning Services thanks Devorah for her outstanding work.

Medicaid Connecticut Medicaid New Jersey Medicaid New York Medicaid Pennsylvania

Medicaid Spend Down and Special Needs Trust

Post author By sps
Post date September 16, 2014

In order for an individual to be eligible for Medicaid, there are financial standards that need to be met. Many Medicaid applicants will have to spend some of their assets in order to meet Medicaid’s financial threshold. There are a few excludable resources that are exempt from the Medicaid Spend down. These assets can be kept by the Medicaid applicant and will not impede Medicaid eligibility. An individual’s personal possessions, a prepaid irrevocable funeral trust and a special needs trust for a disabled child, are just a few excludable resources when applying for Medicaid.

Today we will discuss utilizing a special needs trust with the excess “spend-down” money. When a Medicaid applicant has a disabled child a special needs trust allows the transference of assets from a parent to the child without jeopardizing the child’s government benefits.

Special needs trusts are also referred to as “supplemental care trust” these trusts supplement the disabled child’s supplemental security insurance (SSI) and Medicaid benefits. The money in a special need trust may only be used for specific items or services. The trust is meant to supplement, and not pay for basics such as food and shelter. Some things that may be purchased through a special needs trust include:

Home modifications to assist the disabled,
Medical treatments and equipment not already covered by government assistance programs.
Education and recreation equipment
Computers
Musical instruments
Sports equipment
Travel expenses
Prepaid funeral

When a parent creates a special needs trust for a disabled child, He/ She chooses a trustee. A trustee is an individual or institution who manages the assets in the trust. The trustee’s responsibility is to follow the terms and guidelines outlined in the trust as well as transferring the funds from the trust to the beneficiary or disabled child. A trustee can be a family member, attorney, bank or anyone that one chooses to assign as a trustee.

The trust is an excludable resource for government benefits for both the parent applying for adult Medicaid and the disabled child receiving SSI and Medicaid benefits. The trust restricts the beneficiary (or Disabled child) and parent access to the assets in the trust. Only the trustee would have accessibility to the funds and therefore it’s considered an unattainable asset for both the parent and disabled child. It is for this reason that it will not impede Medicaid eligibility for either.

One should consult with a competent elder care attorney for advise on if and when such planning strategies are advisable.

Gifting Medicaid Connecticut Medicaid New Jersey Medicaid Pennsylvania

Medicaid Planning – “Failing to plan is planning to fail”

Post author By sps
Post date September 3, 2014

If a hiker was setting out to cross Arizona’s Sonoran Desert, he would begin by planning weeks or even months in advance. He would be certain to pack all necessities such as water, clothing, a trail map, sun hats and anything that may be needed along the way. He will take the time to educate himself on the plants, snakes and scorpions that are found in the Sonoran desert.

As an avid hiker, I often reference hiking metaphorically as an analogy easily understood. I find that it helps folks mentally prepare for the Medicaid application mindset. When asked by prospective applicants “at what point should I start thinking about Medicaid for myself or my loved one?” I reference the Sonoran desert. Certainly, the time to think about the process is well in advance. Otherwise, if you wait too long, you are like the poor desert hiker who hasn’t prepared. Certainly, this is not an enviable position to be in. Alan Lakein once said ” Failing to plan is planning to fail.”

In order to help folks prepare for the Medicaid journey I would like shed light on some guideline that can positively impact prospective Medicaid applicants.

Medicaid guidelines dictate that an applicant may not gift money within the five years prior to Medicaid eligibility, generally referred to as the five year ”look-back” period. However, many mix up the Gift Tax Exclusion Act with the Medicaid gifting laws and believe that gifting $13,000 annually is permitted for Medicaid purposes. For the IRS it is permitted, but for Medicaid purposes it is not. Should Medicaid identify any transfers or gifts in the applicants reviewed financial history, Medicaid will impose a penalty. A penalty period is a defined period of time in which Medicaid will not pay for care. The penalty period is calculated based upon the amount of funds that were gifted or transferred divided by the penalty divisor. The divisor is a figure derived from the average cost of care at a nursing home.

Most of us generally don’t know whether we will be needing Medicaid for ourselves or our loved ones over the next five years. Therefore, planning in advance is crucial in order to preserves ones assets. There are numerous asset preservation opportunities that Medicaid guidelines afford applicants. There are spousal rules that protect the community spouse. There are rules that protect disabled children. There are possible methods of preserving the home in certain instances. There are options that require forethought and planning in order to successfully achieve the desired goals.

When I am given the opportunity to speak to the senior population, the above is something that I always stress to prospective applicants. Understanding the rules and the possible scenarios that may arise ranks as the most critical aspects of a successful Medicaid outcome. Prospective applicants need to be ahead of their needs or risk finding themselves In the Sonoran desert without their sunscreen.