Title: I. Long Term Care Medicaid in Florida
1I. Long Term Care Medicaid in Florida
- After the Deficit Reduction Act of 2005
2II. DRA 2005
- Legislative History
- Major changes to eligibility for LTC
- NAELA analysis of federal law is excellent
- Florida implemented DRA effective 11/1/07
- Areas addressed by DRA
- Look Back extended to 5 years for transfers
before February 8, 2006 (federal) or 11/1/07
(state)
3II. DRA 2005
- Purchase of an annuity is a transfer unless
annuity meets certain criteria (irrevocable,
non-assignable, payout of P I over life
expectancy) and State is named as primary
beneficiary - If spouse, minor or disabled child then State
must be in second position - Promissory notes, mortgages are transfers unless
pay out in equal installments and prohibit
cancellation at death - Purchase of life estate in a home is transfer
unless buyer lives in home for at least one year
after purchase
4II. DRA 2005
- Equity in home exceeding 500,000 defeats long
term care eligibility (States may raise to
750,000) individual may receive other types of
Medicaid - Income first is mandatory before allowing an
increase in the CSRA - Continuing Care Retirement Communities (CCRC)
deposit can be asset and CCRC can require spend
down as condition for entrance
5II. DRA 2005
- CMS issued guidelines on July 27, 2006
- Litigation is still pending in several venues
6III. The Medicaid ProgramBackground
- Federal/State program
- Basic concept is Coverage Group
- Generally means tested limited income/assets
- Poverty alone is NOT sufficient
- Initial coverage groups SSI AFDC
- Mandatory vs. Optional Groups
7III. The Medicaid ProgramBackground
- Eligibility Formula
- (Coverage group) (Financial Test) Eligibility
- For example
- Pregnant Women income less than 185 of PLIS
benefits - Institutionalized individual financial criteria
long term care benefits
8IV. The Medicaid ProgramMandatory Coverage
Groups
- Mandatory Coverage Groups
- State must provide Medicaid to SSI Recipients w/
one major exception. - SSI is a means tested cash assistance program for
the aged, blind and disabled with limited income
and assets. - Income less than maximum Federal Benefit Rate
- Assets limited to 2000 plus exempt assets
- Exempt assets include home, car, burial.
9IV. The Medicaid ProgramMandatory Coverage Groups
- Exception to mandatory Medicaid coverage for SSI
recipients - So called 209(b) states may use income, resource
and disability standards no more restrictive than
those in place on January 1, 1972 this altering
the mandatory Medicaid SSI equation - 209(b) States Connecticut, Illinois, Hawaii,
Indiana, Minnesota, Missouri, New Hampshire,
North Dakota, Ohio, Oklahoma Virginia
10IV. The Medicaid ProgramMandatory Coverage
Groups
- Medicare Savings Groups
- Qualified Medicare Beneficiaries (QMB)
- Income at 100 FBR/ Assets 5,000/6,000.
- Pays Medicare premiums, deductibles coinsurance
- Does not pay long term care, drugs, acute care
- Specified Low Income Medicare Beneficiaries
(SLMB) - Eligibility criteria same as QMB but income
between 100FBR and 120 FBR - Pays only Medicare Part B premium
- Qualified Disabled and Working Individuals (QDWI)
- Disabled individuals who lose Medicare because
return to work, but continue to be disabled - Income 200 of FBR/Assets below 200 of SSI rate
11IV. The Medicaid ProgramMandatory Coverage
Groups
- Qualifying Individuals (QI-1)
- Income between 120 and 135 of FBR
- Pays monthly Medicare part B until allotment
depleted.
12V. Medicaid ProgramOptional Coverage Groups
- Disabled elderly with incomes below 100 FBR
- Nursing home residents
- Medically Needy
- Working disabled
13VI. Medicaid ProgramWaivers
- What is a Waiver? Permits deviation from Federal
mandates - Three types of waivers
- Home and Community Based Services (HCBS)
- Freedom of choice Waiver
- Pilot Project Waiver
- See generally www.cms.gov/medicaid/waivers
14VI. Medicaid ProgramWaivers
- Florida Waivers
- Channeling
- Project Aids
- Aged/Disabled Adult
- Developmental Services (DS or DD Waiver)
- Assisted Living
- Long Term Care Community Diversion (Diversion)
- Cystic Fibrosis
- Program for all Inclusive Care for Elderly (PACE)
15VII. Medicaid ProgramAdministrative Process
- Applications
- Online and paper
- Designated Representative
- Interview
- Time limits
- Documents required
16VII. Medicaid ProgramAdministrative Process
- Notice of Case Action
- Triggers appeal rights
- Should state basis for action taken
- Hearings
- Chapter 120 hearings before agency Hearing
Officer - De Novo proceeding
17VII. Medicaid ProgramAdministrative Process
- Appeals
- To applicable District Court of Appeal
- Change of Circumstance
- Report within 10 days
- Responsibility of Designated Representative
18VIII. Eligibility for Long Term Care
- Categorical/Technical Criteria
- Aged (65 or older), blind OR disabled
- US citizen, legal alien etc.
- Florida resident
- Medical Criteria
- Institutional residence for 30 continuous days
- CARES evaluation of LOC
19VIII. Eligibility for Long Term Care
- Financial Criteria
- Income
- Applicant
- Income Cap
- QIT
- Retroactive eligibility
- Termination of QIT
- Community Spouse
20VIII. Eligibility for Long Term Care
- Post Eligibility Treatment of Income
- Personal Needs Allowance
- Spousal Diversion
- MMNA
- Excess Shelter Costs
21VIII. Eligibility for Long Term Care
- Assets
- Applicant can own countable assets totaling
2,000.00 - Community Spouse can own countable assets
totaling 104,400 (2008) - Countable assets do NOT include exempt,
unavailable or certain income producing assets
22VIII. Eligibility for Long Term Care
- Exempt Assets
- Homestead up to 500,000 in equity DRA
- Be sure to distinguish from constitutional
protection - Vehicles
- Personal Property
- Life Insurance
- Burial Plan
- Burial Fund
- Life estates - DRA
23VIII. Eligibility for Long Term Care
- Lookback, Transfers Penalty Periods
- Lookback
- Pre DRA
- Post DRA
- Transfer
- Generally FMV of asset transferred
- Presumption
- Rebuttal
- Hardship
24VIII. Eligibility for Long Term Care
- Penalty Period
- Not a fine
- Divisor
- Example
- Pre/Post DRA
- Exempt Transfers
- Transfers for value
- For purposes other than Medicaid
- Hardship
- Life Estate
25VIII. Eligibility for Long Term Care
- Exempt Transfers
- To a spouse or to a third party for sole benefit
of spouse - To blind or disabled child or to a trust for the
benefit of such child - To trust for benefit of disabled individual under
age 65 - NOTE Transfers of exempt assets are not
automatically exempt transfers!
26VIII. Eligibility for Long Term Care
- Trusts assets generally considered available and
income is counted as income in determining
patient responsibility - Transfers to irrevocable trusts may trigger
transfer penalty - Revocable living trusts DO NOT protect assets for
eligibility purposes -
27VIII. Eligibility for Long Term Care
- Exempt Trusts
- Self Settled d4A trusts
- Pooled trusts
- QITs
- Payback trusts
28IX. Planning
- General Concepts
- Goal is to protect the elder, NOT the money
- It is OK to use money for elders care that is
the point. - It is OK to pay the state back
- It is NOT OK to let Medicaid tail wag the dog
29IX. Planning
- Spousal Impoverishment
- MCCA
- MMNA
- Increasing CSRA
- Income First Rule - DRA
- Court ordered support
- Right of refusal
30IX. Planning
- Spend Down
- Best use of funds concept
- Dont spend for the sake of spending
- Does not involve uncompensated transfers
- Examples
- Purchase or improve exempt assets
- Prepay burial
- Purchase Burial CD
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31IX. Planning
- Transfer Issues Post DRA
- Typically between spouses or for benefit of
disabled children - Beware adverse consequences such as loss of
control, security and tax implications - Ethics
- Transactional Capacity
- Self dealing
- Underlying document authorizing transfer
- POA, Trust, etc.
32IX. Planning
- Disclosure
- It is imperative to be totally candid and
truthful in disclosing all income, assets and
transfers during the application process - Failure to disclose is fraud and may subject the
applicant or advisor to criminal and/or civil
penalties - Benefits may be lost at much later date and
benefit recovery instituted
33IX. Planning
- Tax Issues
- Capital Gain
- Donor vs donee
- Loss of step-up in basis at death
- Sale of home
- Gift tax
- Valuation
34IX. Planning
- Personal Care Contracts
- Payment for services, not gift.
- Must be arms length transaction
- Cannot be for past services
- Should be considered well before need for
services in drafting legal documents - Consider using escrow agent for lump sum payments
- Tax implications
35IX. Planning
- Process for implementing PSC
- Assessment
- Log
- Appropriateness of services
- Cost in community
- Life expectancy
- Discount
- Calculate
- Authority
- Written agreement
36X. Medicaid Estate Recovery
- OBRA 93 required estate recovery
- Definition of estate up to states but must
include at least probate estate - Expanded estate may include joint property,
survivor property, life tenancies, etc. - Exempt categories of property
- Home if decedent survived by spouse, minor, blind
or disabled child or if sibling lived there for
year -
37X. Medicaid Estate Recovery
- Florida
- Must notify ACHA upon death of individual 55 or
older - State has claim as class three creditor in estate
for benefits paid during life of decedent - Claim can only be filed after death and is
currently limited to probate estate or if those
assets insufficient, revocable trust assets - See generally 409.9101 733.212(d) 733.707(1)c
733.707(3) Fla. Stat. (2005)
38XI. Special Needs Trusts
- Concept simple and based on well thought out
public policy. - General rule is that trusts are available and
income is counted - Special Needs Trusts are exception to general
rule - Revocable Trusts
- Invisible to creditors and for public benefits
39XI. Special Needs Trusts
- Irrevocable Trusts subject to two inquiries
- Could any portion of the trust (income or assets)
be used for the individuals benefit? - Is any portion of the trust available to someone
else? - Pre DRA look back was 60 months
- This was major exception to three year rule
generally applicable to transfers for less than
fair market value - DRA does not distinguish between transfers to
trusts or otherwise - Beware of trusts bearing annuities post DRA?
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40XI. Special Needs Trusts
- Types of Special Needs Trusts
- Third Party Trusts
- Funded with assets that do not belong to disabled
individual - May be inter vivos or testamentary
- Not subject to payback requirement
- First Party or Self Settled Trusts
- Funded with disabled individuals own assets
41XI. Special Needs Trusts
- Self Settled Trusts
- D4A or Disability Trusts (42 USC 1396p(d)4(A)
- Established by for benefit of disabled individual
under age 65 - May only be established by parent, grandparent,
court or guardian - Must be funded with assets of disabled individual
- Must provide for payback to state for Medicaid
benefits paid during life
42XI. Special Needs Trusts
- Pooled Trusts (42 USC 1396p(d4(C)
- Established by non-profit
- Maintain separate accounts for each beneficiary
- Established for benefit of disabled individual
- May be created by individual, parent, grandparent
guardian or the Court - Individuals funds used to create account
- At death of beneficiary, any funds not retained
must be used to pay the state back for Medicaid
benefits paid over life
43XI. Special Needs Trusts
- Execution, Funding and Administration are
critical to success of SNT - Examples of Supplemental Needs
- ALF
- Medical, dental, mental health
- Care and Case management services
- Travel
- Companionship
- Professional (Attorney, guardian, accountant)
44XI. Special Needs Trust
- Benefits of SNT
- Preserve critical public benefits for medical
care - Significantly increase quality of beneficiarys
life - May avoid guardianship
- Trust assets are restricted but invested and less
likely to be misused by beneficiary, family or
friends
45XI. Special Needs Trusts
- Some issues to watch out for with SNTs
- Beware of deeming rules when suit is settled for
minor or spouse - Selection of Trustee is important
- Administration requires specialized knowledge
- Be wary of over structured settlement of lawsuit
- May end up with insufficient funds to care for
beneficiary - Liens must be satisfied before trust is funded
- May take time to obtain these documents
- Payback provision means assets frozen at
beneficiarys death - Stinking body rule
- Be sure to notify applicable agencies of funding,
death of beneficiary etc.
46XI. Special Needs Trusts
- Consider using Trust Protector, Trust Advisor
and/or Trust Advisory Committee - Trust Protector may be able to hire and fire
trustee, serve as mediator, distribution manager,
obtain service providers, or any or all of these - Family often best suited for Trust Advisor
- Trust Advisory Committee may be helpful for
continuity if parent dies, but may be cumbersome
and expensive
47XII. Conclusion
- Constantly changing statutory, regulatory and
public policy environment - Stay in touch with organizations on cutting edge
of interpretation and advocacy for the aging and
disabled populations - NAELA
- AFELA
- Elder Law Section of Florida Bar
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