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I. Long Term Care Medicaid in Florida

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Title: I. Long Term Care Medicaid in Florida


1
I. Long Term Care Medicaid in Florida
  • After the Deficit Reduction Act of 2005

2
II. 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)

3
II. 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

4
II. 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

5
II. DRA 2005
  • CMS issued guidelines on July 27, 2006
  • Litigation is still pending in several venues

6
III. 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

7
III. 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

8
IV. 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.

9
IV. 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

10
IV. 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

11
IV. The Medicaid ProgramMandatory Coverage
Groups
  • Qualifying Individuals (QI-1)
  • Income between 120 and 135 of FBR
  • Pays monthly Medicare part B until allotment
    depleted.

12
V. Medicaid ProgramOptional Coverage Groups
  • Disabled elderly with incomes below 100 FBR
  • Nursing home residents
  • Medically Needy
  • Working disabled

13
VI. 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

14
VI. 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)

15
VII. Medicaid ProgramAdministrative Process
  • Applications
  • Online and paper
  • Designated Representative
  • Interview
  • Time limits
  • Documents required

16
VII. 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

17
VII. Medicaid ProgramAdministrative Process
  • Appeals
  • To applicable District Court of Appeal
  • Change of Circumstance
  • Report within 10 days
  • Responsibility of Designated Representative

18
VIII. 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

19
VIII. Eligibility for Long Term Care
  • Financial Criteria
  • Income
  • Applicant
  • Income Cap
  • QIT
  • Retroactive eligibility
  • Termination of QIT
  • Community Spouse

20
VIII. Eligibility for Long Term Care
  • Post Eligibility Treatment of Income
  • Personal Needs Allowance
  • Spousal Diversion
  • MMNA
  • Excess Shelter Costs

21
VIII. 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

22
VIII. 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

23
VIII. Eligibility for Long Term Care
  • Lookback, Transfers Penalty Periods
  • Lookback
  • Pre DRA
  • Post DRA
  • Transfer
  • Generally FMV of asset transferred
  • Presumption
  • Rebuttal
  • Hardship

24
VIII. 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

25
VIII. 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!

26
VIII. 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

27
VIII. Eligibility for Long Term Care
  • Exempt Trusts
  • Self Settled d4A trusts
  • Pooled trusts
  • QITs
  • Payback trusts

28
IX. 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

29
IX. Planning
  • Spousal Impoverishment
  • MCCA
  • MMNA
  • Increasing CSRA
  • Income First Rule - DRA
  • Court ordered support
  • Right of refusal

30
IX. 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

31
IX. 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.

32
IX. 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

33
IX. Planning
  • Tax Issues
  • Capital Gain
  • Donor vs donee
  • Loss of step-up in basis at death
  • Sale of home
  • Gift tax
  • Valuation

34
IX. 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

35
IX. Planning
  • Process for implementing PSC
  • Assessment
  • Log
  • Appropriateness of services
  • Cost in community
  • Life expectancy
  • Discount
  • Calculate
  • Authority
  • Written agreement

36
X. 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

37
X. 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)

38
XI. 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

39
XI. 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?

40
XI. 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

41
XI. 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

42
XI. 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

43
XI. 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)

44
XI. 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

45
XI. 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.

46
XI. 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

47
XII. 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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