According to the 2010 Market Survey of Long-Term Care Costs conducted by Metlife, the annual cost of a semi-private room in a Cleveland area nursing home was $75,190 and a private room was $87,600.

Moreover, counter to popular belief, Medicare will not cover prolonged nursing home care. Medicare Part A provides limited coverage for skilled nursing care if certain requirements are met.   However, even if your level of care meets Medicare’s eligibility requirements, Medicare Part A only covers the cost of a skilled nursing facility for up to 20 days, with the possibility of an additional 80 days on a co-payment basis. 

Again, according to Metlife, which based their statistics on the Centers for Disease Control and Prevention, the average nursing home stay is 2.4 years.  Moreover, most nursing home stays are not covered by Medicare at all, as most nursing home residents do not require skilled nursing care, which is a prerequisite to Medicare Part A coverage. 

Since Medicare will not cover the costs of long-term care, many couples will need to turn to Medicaid.

Medicaid is a health insurance program funded with state and federal money, administered by the Ohio Department of Job and Family Services.  For those who qualify, Medicaid covers the cost of long-term care. So how do you qualify your spouse for Medicaid while preserving sufficient resources for you to live on as well?

The planning strategies available to you will depend on timing.  Has your spouse entered a hospital or nursing home and stayed for 30 plus days?  If not, there will be more planning options available then if you wait until after this time has passed.

To put it plainly, when your spouse applies for Medicaid, a resource assessment will be conducted, which takes into consideration all of your property as a married couple, regardless of whose name the property is titled in.  The ill spouse will be able to keep $1,500 and the healthy spouse will be able to protect only one-half of the couple’s assets (excluding your home, car, personal affects and other exempt assets) up to a maximum of $109,560. 

However, if the couple employs planning techniques, they can often save additional assets and enable the healthy spouse to keep additional monthly income.  Remember, giving assets away will result in a penalty period, and should not be done absent the advice and guidance of an elder law attorney. See http://www.randallperla.com/blog/why-do-i-need-to-plan-for-medicaid-ie-why-can%e2%80%99t-i-just-give-my-assets-to-my-children/ One planning technique that may be available to a married couple is the revocable trust.  See http://www.randallperla.com/blog/before-applying-for-medicaid-a-married-couple-should-consider-a-revocable-trust/

For information on additional planning strategies available to married couples, stay tuned to this blog and consider meeting with a Medicaid Planning attorney.

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

Cleveland Medicaid Attorneys

Cleveland Elder Law Attorneys

Cleveland Medicaid Planning Attorneys

• Provide compensation to a trusted loved one who may have had to quit a job, forgo job opportunities or otherwise spend considerable time and energy providing care.
• Minimize problems among relatives as to who will provide necessary care and how it will be paid for.
• Allow the senior to stay in his or her home longer and delay entry into a long-term care facility.
• Avoid gift tax, estate tax and probate on property transferred via Personal Care Agreement.
• Transfer money and assets to a caregiver instead of a long-term care facility and have Medicaid pay for future long-term care needs.

If you are considering drafting a Personal Care Agreement for Medicaid planning purposes, please review the following 8 Key Tips:

1)       Put in it writing.  The agreement should be in writing and signed and dated by both parties.

2)       Be specific.  A proper agreement should set forth the specific services that will be performed, and if possible the days and hours of care.

3)       Be fair.  The services provided must have real value.  Hence, attending birthday parties, celebrating holidays, and Sunday visits    should not be included, especially if you are related, as those types of services are expected to be done for family and friends without compensation.  Instead, services should include things you would hire someone to perform for you, like grocery shopping, cooking, laundry, cleaning, bathing, taking you to the doctor, etc.   Moreover, the compensation for these services should be based upon the going rate and should differ depending on the level of skill needed to perform each service.

4)      Termination terms.  Make sure the agreement states when it is to begin and that either party can end the agreement with sufficient notice.

5)      Forward Looking. The agreement must be for future services and should not include compensation for past services rendered.

6)      Payment.  Monthly or weekly payments are preferred over lump sum payments.

7)      Keep good records.  The services provided and the dates and hours of care should be kept in a log.  Moreover, the caregiver should report the income for tax purposes.  

8)      Don’t wait.  The closer the agreement is executed to the time of Medicaid application, the less legitimate the agreement appears.

If you are drafting a Personal Care Agreement for Medicaid planning purposes or if there is a chance the senior will need Medicaid assistance to pay for long-term care in the future, it is a good idea to have an elder law attorney review the agreement prior to execution.  An elder law attorney can also help you explore other Medicaid planning opportunities as well as assist you with the Medicaid application process.   

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

Cleveland Medicaid Attorneys

Cleveland Elder Law Attorneys

Cleveland Medicaid Planning Attorneys

Cleveland Personal Care Agreement Attorneys

Cleveland Family Caregiver Agreements Attorneys

Cleveland Personal Service Contract Attorneys

So why the lack of enforcement? Beyond the fact that our jails are over-crowded enough as it is, is the fact that with skyrocketing health care costs, it simply isn’t feasible to require adult children to cover the cost of their parent’s astronomical long-term care costs.

According to the 2010 Market Survey of Long-Term Care Costs conducted by Metlife, the annual cost of a semi-private room in a Cleveland area nursing home was $75,190 and a private room was $87,600.

Moreover, counter to popular belief, Medicare will not cover prolonged nursing home care. Medicare Part A provides limited coverage for skilled nursing care if certain requirements are met.   However, even if your level of care meets Medicare’s eligibility requirements, Medicare Part A only covers the cost of a skilled nursing facility for up to 20 days, with the possibility of an additional 80 days on a co-payment basis. 

Again, according to Metlife, which based their statistics on the Centers for Disease Control and Prevention, the average nursing home stay is 2.4 years.  Moreover, most nursing home stays are not covered by Medicare at all, as most nursing home residents do not require skilled nursing care, which is a prerequisite to Medicare Part A coverage. 

Since Medicare will not cover the costs of long-term care, and 70% of people over 65 will need long term care during their lifetimes, many people will need to turn to Medicaid.

Medicaid is a health insurance program funded with state and federal money, administered by the Ohio Department of Job and Family Services.  For those who qualify, Medicaid covers the cost of long-term care. 

And thankfully for adult children all over Ohio and the United Stated, Medicaid does not required adult children to support their aging parents.  Under federal law, states like Ohio, who administer the program, are prohibited from looking at the finances of an applicant’s adult children when determining eligibility.  Hence, you will not be required by Medicaid to contribute to your aging parent’s long term medical costs.

Please keep in mind, though, that because Medicaid’s resource limit is so low (currently $1,500) without proper planning, your parents will have to deplete all their resources before they can qualify. There are many planning opportunities available in order to not only preserve as much of your parents’ savings as possible but also to improve the financial situation of your parents’ spouse, should they need long term care.  A Medicaid Planning attorney can help you explore your Medicaid planning options. 

So what do you think, should adult children be required to help support their aging parents? Please post your thoughts.

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

Cleveland Medicaid Attorneys

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

1.  Running out of money.

2.  Becoming a burden to your family.

3.  Losing control of your life, ie. being forced to move into a nursing home.

What can you do to quash these fears?

Step One is to take stock of your situation.

1.  Finances- Take a piece of paper or spreadsheet and list your assets, debts, and income.

2.  Health- Do you have any current health problems or, given your family history, do you have any health expectations?

3.  Goals- What lifestyle do you envision? If your health declined, do you see yourself receiving care at home, living with a relative, entering a facility, etc.?

Step Two is to seek counsel and make a plan.

Sometimes it takes a village.  You may wish to seek out a financial advisor to assist you in meeting your financial goals.  If your health is declining, you may wish to seek out a care coordinator to explore your care options.  You should also consider seeing an attorney. An attorney can ensure that you have basic estate planning documents in place like a will, health care and financial powers of attorney and can also advise you whether it is in your interest to engage in additional planning. Maybe a trust is right for you. Maybe you should be engaging in long term care planning.  You won’t know until you have explored your options and sought out competent counsel.

Long term care planning can be a particularly valuable method to ensuring peace of mind.  The goal of long term care planning hits right at the fears listed above.  Long term care planning looks at your available resources, your health and your preferences for health care and crafts a plan to avoid becoming a burden to your family or losing control of your care environment.

Step Three is to not let denial, apathy or laziness prevent you from getting started.

It’s no secret that no one likes getting older or the new challenges that come with aging.  But if we’re lucky we all reach are golden years.  Make sure that your seniority is spent how you want it to be. 

So what are your greatest aging fears and what have you done to quash them? Please share below.

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

Cleveland Long Term Care Planning Attorneys

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

Cleveland Medicaid Planning Attorneys

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

Steps:

1. Application (additional application is required for Waiver programs) 

You must file an application with the Department of Job and Family Services in the county where you reside, or if you are in a nursing home, the county where your nursing home is located.

2. Level of Care Assessment

An in-person assessment will be performed by a licensed professional of your ability to perform typical daily tasks of your own. 

For example, you would qualify if you require hands-on assistance with two Activities of Daily Living (ADLs) or hands-on assistance with one ADL and you are unable to self-administer medication or due to cognitive impairment, the presence of another person on a 24 hour basis is required.

 ADLs include bathing, grooming, toileting, dressing and eating.

3. Interview

An interview will be conducted with the applicant or authorized representative where you must produce verification of age and citizenship, resources, income, medical expenses, household expenses.

A great deal of documentation will be needed.  It is a good idea to start collecting the necessary documentation as soon as you are even thinking about applying, as a failure to provide it to the agency in a timely manner could result in your application being delayed or denied. 

The following list is a good place to start:

1.)        Social Security Card

2.)        Proof of Identity (ie. driver’s license, state identification card, etc.)

3.)        Proof of Age (ie. driver’s license, birth certificate, marriage certificate, etc.)

4.)        Proof of Residence (ie. deed, rent receipt, etc.)

5.)        Last receipts for utilities, home insurance and property taxes (gas, electric, etc.)

6.)        Proof of Citizenship (not required if you are receiving SSI or Medicare)

7.)        Proof of Income (social security benefit letter, pension statements, etc.)

8.)        Proof of Assets (bank statements, copies of stock certificates and bonds, etc.)

9.)        Information on any Insurance Policies

10.)     Medicare Card

11.)     Medicare Supplement Card

12.)     Trust Agreements

13.)     Tax Returns (ideally from the last five years) 

For information on what to  expect after your application is submitted see http://www.randallperla.com/blog/i-applied-for-medicaid-now-what/

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

Cleveland Medicaid Attorneys

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

What is Medicaid?

Medicaid is a health insurance program funded with state and federal money, administered by the Ohio Department of Job and Family Services.  For those who qualify, Medicaid covers the cost of long-term care.

Why is Medicaid so Important?

Long-term care is very expensive.  According to the 2010 Market Survey of Long-Term Care Costs conducted by Metlife, the annual cost of a semi-private room in a Cleveland area nursing home was $75,190 and a private room was $87,600.

Moreover, counter to popular belief, Medicare will not cover prolonged nursing home care. Medicare Part A provides limited coverage for skilled nursing care if certain requirements are met.   However, even if your level of care meets Medicare’s eligibility requirements, Medicare Part A only covers the cost of a skilled nursing facility for up to 20 days, with the possibility of an additional 80 days on a co-payment basis. 

Again, according to Metlife, which based their statistics on the Centers for Disease Control and Prevention, the average nursing home stay is 2.4 years.  Moreover, most nursing home stays are not covered by Medicare at all, as most nursing home residents do not require skilled nursing care, which is a prerequisite to Medicare Part A coverage. 

Since Medicare will not cover the costs of long-term care, and 70% of people over 65 will need long term care during their lifetimes, that begs the question, how will the average person pay for long-term care costs? The answer is Medicaid.

So I Understand that Medicaid Pays for Long-Term Care Costs, But How Do You Qualify?

There are a number of eligibility requirements for Medicaid.

1.)  You must be age 65 or older, blind or disabled.

2.)  You must have a nursing home level of care.

3.)  You must meet the income and countable resource limits.

The biggest eligibility issue for most people is number three, income and countable resource limits.

What are the Income and Countable Resource Limits?

Generally speaking, if your monthly income is below the private pay rate, currently set at $6,023, you will meet the income qualifications for nursing home Medicaid. 

Countable resources must currently be below $1,500.

What are Countable Resources?

Countable resources are anything of value that can be converted to cash and used for support like cash, bank accounts, stocks, bonds, retirement accounts, etc.  However, there are certain resources that are exempt.  For example, the home a person lives in is exempt as are household goods and personal effects, an automobile, life insurance if its face value is below $1,500, a burial space for yourself, a spouse or immediate family member, and an irrevocable pre-need burial contract.

So How Can You Qualify for Medicaid If Your Countable Resources are Above the Limit?

Well, for starters, you cannot simply give the assets away. When you apply for Medicaid, the Department of Job and Family Services will ask you whether you made any gifts within the last 5 years.  A gift is anything given away for less than fair market value.  (Keep in mind that lying on a Medicaid application is fraud and a misdemeanor of the first degree and a felony if you receive services as a result.) If you have made any gifts for the purpose of Medicaid eligibility you will be penalized.  For example, if you gave away $100,000 in assets, Medicaid would not pay for your care after you are in a nursing home and otherwise financially eligible for 16.6 months.  This penalty period is determined by dividing the amount of the gift by the current private pay rate of $6,023.

In Medicaid Planning, the first question that must be asked is what are your goals.  Is it to preserve assets for your children, a loyal caregiver or other loved one?  Medicaid planning is not just about ensuring your financial legacy, it is also about your quality of life goals.  Do you want to make sure you have spending money each month? If you deplete your assets on care without planning, you will only have $40 a month to spend on additional personal needs like hair cuts, entertainment, etc.  Do you want to stay in your home as long as possible? Do you want a single room in a care facility?  These are also goals that must be properly planned for.   

Once you have set your goals, the next question is where you are on timing.  When it comes to planning, timing is everything.  As stated, Medicaid has a 5 year look back period.  Do you anticipate needing long-term care within the next 5 years?  Remember, when it comes to Medicaid planning, one size does not fit all.  Whereas a trust might be the way to go for one person, a gifting plan maybe better for others and whereas one strategy may greatly help one person, the same strategy can hurt another.  A plan must be constructed that is tailored to your particular situation.   

What are Some Medicaid Planning Strategies that are Unique to Caregivees?

Personal Care Agreement 

A compact between caregiver and caregivee that says that the caregiver agrees to provide certain care to the caregivee in exchange for specified compensation.  The agreement would set forth the specific responsibilities of the caregiver, including anticipated days and hours of service and the compensation to be paid for that care. 

Advantages of a Formal Agreement:

• Provide compensation to a trusted loved one who may have had to quit a job, forgo job opportunities, or otherwise spent considerable energy and time providing care.
• Minimize problems among relatives as to who bears what responsibilities in regard to the relative and how such care is to be compensated.
• Ensure Medicaid eligibility should a nursing home or other at home caregiver become necessary.  Ie. Spend down now by compensating the caregiver rather than later by paying the nursing home or other at-home caregiver.  Unless there is a proper agreement in place, the State of Ohio will assume that the money paid is a gift or an improper transfer of assets and will impose penalties resulting in ineligibility for Medicaid benefits. 

Why Plan for Medicaid if I’m Providing care?

If there comes a time when you are unable to provide care or nursing home placement is necessary, all of the assets of the caregivee will be considered available.  Moreover, as discussed, the caregivee will not be eligible for Medicaid until all assets are depleted.  Certainly the care you have been and will be providing is just as valuable and worthy of payment as care provided by a future home caretaker or nursing home.  With a personal care agreement in place, the caregivee can pay you now with the assets he or she has and have Medicaid pay for future care.

Are There Any Other Medicaid Planning Strategies that Are Unique to Caregivers?

Yes, if a caregivee goes on Medicaid and a child caregiver resided in the caregivee’s home for at least 2 years immediately before the date the caregivee enters a long-term care facility and the caregiver provided care which permitted the caregivee to reside at home rather than in a long-term care facility, the home may be transferred to that child without penalty.  However, form JFS 03697 “Level of Care Assessment” must be completed and approval obtained before making the transfer.

Will the Caregivee be able to Engage in Medicaid Planning Should He Become Incapacitated?

ONLY if he has the proper Durable Power of Attorney in place!  In order to ensure that he will be able to engage in Medicaid planning, it is essential that he execute a Durable Power of Attorney with provisions specifically giving his attorney-in-fact Medicaid planning powers.  An elder law attorney who is familiar with Medicaid planning strategies is the best person to ensure that the necessary provisions are included.  If he does not have the proper Power of Attorney in place and he becomes incompetent, there is little hope that the assets in his name can be saved from long-term care costs.

For information on how to apply to Medicaid see http://www.randallperla.com/blog/what-is-the-medicaid-application-process/ 

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

Cleveland Medicaid Attorneys

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

Beyond the limited time that Medicare Part A will cover care is the simple fact that it does not cover the majority of nursing home care because most residents of a nursing home do not require skilled care, which is a prerequisite for Medicare Part A coverage.  So, most nursing home resident’s care will never be covered by Medicare Part A at all.  Moreover, once it is determined that Medicare Part A will does not apply, a Medicare supplement policy will not cover nursing home care either.

So that begs the question- if Medicare won’t cover my long-term care costs, how will I pay for it?  After all, the average annual cost of a nursing home room in the Cleveland Metropolitan area is $73,912.50. That’s a lot of money!  You could deplete all your savings on long-term care costs and then apply for Medicaid, which does cover nursing home and other long-term care costs, once you are completely impoverished or you can be proactive, and implement a Medicaid planning strategy that will save your hard-earned money and improve your quality of life and that of your loved ones.  

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

Cleveland Medicaid Planning Attorneys

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

This assertion is false in Ohio and provides a powerful example of how important it is to consult with an attorney knowledgeable in Ohio Medicaid law before proceeding with any planning strategies.  An institutionalized spouse can not convert his spousal share to benefit his wife after the date of institutionalization.  This would likely result in an improper transfer and a penalty period for the institutionalized spouse- meaning Medicaid would not cover his long-term care costs for a set time period.

There are very specific rules that one must follow to purchase annuities and not incur a Medicaid penalty period in Ohio.  More importantly perhaps, one must know when purchasing an annuity for Medicaid Planning purposes is advantageous and when it is not. 

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

Cleveland Medicaid Planning Attorneys

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

Example- John, hearing about the horrors of probate, decides to gift his home, which he purchased in 1951, to his children now, rather than have the home go through the probate process when he dies.  John has likely just made a big mistake.  Under current federal tax law, since John gifted his assets to his children they received the home at John’s cost.  Hence, when the children sell the home, unless they live in the home for two years after John dies, they will have to pay capital gains tax on profit from the sale of the home- that is the difference between how much John paid for the home in 1951 and the sales price.  John could have avoided probate and capital gains by creating a Transfer on Death Designation Affidavit or a trust.  (However, if John or his wife are planning on applying for Medicaid, neither option may be advisable).  

Estate planning is best done by estate planning professionals and it does not need to cost you a fortune.  

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

Cleveland Estate Planning Attorneys

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com