Managing Medicaid

Recently, the state of New Jersey changed the manner in which Medicaid services are delivered to its residents. New Jersey switched to a method of delivering services to Medicaid beneficiaries known as Medicaid Managed Long Term Services and Support. Because the phrase Medicaid Managed Long Term Services and Support is such an unwieldy name, most people who work with the program simply call it MLTSS.

Medicaid is a federal and state health insurance program for needy individuals. Unlike most health insurance programs, Medicaid will pay for long-term care costs, such as care in a nursing home or an assisted living residence.

The federal agency responsible for administering the Medicaid program describes MLTSS as follows:

“Managed Long Term Services and Supports (MLTSS) refers to the delivery of long term services and supports through capitated Medicaid managed care programs. Increasing numbers of States are using MLTSS as a strategy for expanding home- and community-based services, promoting community inclusion, ensuring quality and increasing efficiency. The number of States with MLTSS programs increased from 8 in 2004 to 16 in 2012, and CMS has experienced increasing interest from States in the form of concept papers, waiver applications and requests for technical assistance.”

In order to qualify for Medicaid services, an individual must have a very limited amount of countable resources and insufficient income to pay for his care. Various techniques exist for qualifying a person who would not otherwise qualify for benefits, and elder law attorneys assist people with these techniques. This practice is commonly known as Medicaid planning.

In my opinion, MLTSS will benefit the needy citizens of New Jersey; however, I also think MLTSS will cause many bumps in the road to the delivery of Medicaid benefits and many more individuals may require the assistance of an attorney in order to ensure that they receive the appropriate level of services.

For instance, Medicaid will pay for long-term care services at home, such as the services of a home health aide. Before the implementation of MLTSS, a person living at home who qualified for benefits would receive approximately four to five hours of services from a home health aide on a daily basis. After MLTSS, what services this person will receive are very much up for grabs.

Because MLTSS is a managed system, the insurance administrator has an incentive to cut services that are delivered to a Medicaid beneficiary because the insurance company makes more money for itself by cutting services to beneficiaries. The more efficient the management company, the better they are perceived to be, but efficient is really just a euphemism for a reduction of services.

The managed system of MLTSS opens up a new need for advocacy on the part of elder law attorneys. For instance, I work with physicians and social workers who can be called upon to assess a person’s needs and, when appropriate, appeal the decision of the MLTSS as to the services it is willing to provide to a Medicaid beneficiary. I believe that when challenged, an opportunity exists to expand substantially the services being provided to Medicaid beneficiaries.

If you are interested in learning more about New Jersey elder law, I have written a book on the subject entitled New Jersey Elder Law: A Resource and Planning Guide. ALM Media Properties, LLC, publishes my book. ALM is the publisher of the New Jersey Law Journal, New Jersey’s premier legal periodical. You can purchase my book by visiting http://www.lawjournalpress.com/player/eBook_310_New_Jersey_Elder_Law__A_Resource_and_Planning_Guide.html.

The Unauthorized Practice of Law

This past week, the Supreme Court of Florida approved an advisory opinion that holds Medicaid planning to be the practice of law. When a non-lawyer provides advice regarding Medicaid planning for a fee, he is engaging in the unauthorized practice of law. This opinion is of great interest to me, because along with other New Jersey lawyers, I am currently attempting to get a similar advisory opinion approved in New Jersey.

Medicaid is a health insurance program for needy individuals. The rules governing the Medicaid program are extremely complex. There are federal and state statutes, federal and state regulations, federal and state court cases, and a myriad of other rules affecting the Medicaid program.

Medicaid eligibility is only available to individuals who have limited assets and income. Many people seek to preserve a portion of their estate through proper planning. This planning is commonly known as Medicaid planning. For years, elder law attorneys have been providing clients advice on Medicaid planning.

Most every nursing home in the state of New Jersey participates in the Medicaid program. If a nursing home participates in the Medicaid program, it must accept up to 45% of its residents on the program; however, that is the minimum. A nursing home is free to have a higher percentage of its residents on Medicaid, and a great many nursing homes do have a much higher percentage of residents who receive Medicaid benefits.

While a nursing home typically receives a lower rate of compensation for its services from Medicaid than it does from a resident who is paying privately, nursing homes are assured payment from Medicaid, whereas payment from private funds is not guaranteed. Because nursing homes are confident that they will receive payment from the Medicaid program for those residents who are Medicaid beneficiaries, nursing homes are, in some ways, happy to have a resident who is a Medicaid beneficiary.

A nursing home is prohibited from treating a Medicaid beneficiary differently than a resident who is paying privately. From a practical standpoint, nursing homes do not treat Medicaid beneficiaries differently.

In the past five years or so, a number of non-attorneys have opened business through which they advise people on how to qualify for Medicaid and assist these individuals with applying for Medicaid. The relationship between these companies and the owners of the nursing homes is a matter of curious concern.

There have been several instances in which nursing home owners insist that a family use a non-attorney Medicaid advisor to apply for Medicaid. The level of insistence, in many instances, has gone far beyond that of an ordinary referral to another business.

Once the family retains the non-attorney Medicaid advisor, the advice they receive is, in many cases, anything but good. I have personally seen numerous instances in which families were not told to do simple things that would have achieved Medicaid eligibility for their family member, such as purchase a prepaid funeral, make a home improvement, purchase a car, purchase a Medicaid-complaint annuity, or transfer assets to a disabled child or family member.

Adding insult to injury, the nursing home, which referred the family to the non-attorney Medicaid advisor, then turns around and sues the family when the nursing home resident doesn’t begin receiving Medicaid benefits when needed.

What the Supreme Court of Florida said is, providing legal advice is the practice of law and when a non-attorney Medicaid advisor provides legal advice for a fee, he is engaging in the unauthorized practice of law. The unauthorized practice of law is a crime. If we can get such an opinion adopted in New Jersey, the public will find a greater level of protection from these individuals who have no place providing legal advice for a fee.

ABLE Act

The federal government recently passed a new law that I think is most aptly described as another tool in the toolkit of options available to disabled individuals. The law is called the ABLE Act of 2014. The word ABLE is an acronym that stands for Achieving a Better Life Experience.

The Social Security Administration defines disability—and I’m paraphrasing here—as the inability to engage in substantially gainful employment as the result of a condition that is expected to result in death or to continue for a period of more than twelve months. Disabled individuals are potentially eligible for a slew of government benefits, such as Social Security disability benefits, Supplemental Security Income (SSI), Medicare, Medicaid, food stamps, and housing assistance.

Some of these programs, such as SSI and Medicaid, are means-tested, meaning that the beneficiary must have a limited amount of income and resources in order to qualify for these programs. The ABLE Act is primarily focused at the means-tested government programs for which a disabled individual may be eligible.

For instance, in order to qualify for Medicaid benefits, a Medicaid beneficiary must have less than $2,000 in countable resources. A resource is what you and I typically call an asset, for instance, a bank account, a brokerage account, an annuity, are all examples of resources. Some resources are non-countable resources, such as a home and a car, but most resources are countable resources, such as bank accounts and stock.

The ABLE Act allows the various states to offer an account, let’s call it an ABLE account, into which countable resources can be placed and those resources will no longer count against the Medicaid beneficiary’s eligibility for Medicaid benefits. Accounts such as this are very helpful because means-tested government benefits provide a bare minimum of assistance to people with disabilities. It would be difficult, if not impossible, for a person with disabilities to live off the assistance these government benefits provide.

An ABLE account has a good number of restrictions. The state in which the disabled person lives must offer ABLE accounts. It is hoped that all states will offer ABLE accounts.

An ABLE account can only be opened for an individual who was classified as disabled before age twenty-six. The individual with disabilities can only have one ABLE account, so multiple family members cannot open their own ABLE accounts for the individual.

In any given year, only the amount of the annual exclusion gift, currently $14,000, can be placed in the ABLE account. The gift does qualify as a present interest gift to the disabled individual if a third-party places the money in the account, though the disabled person can place his own assets in the account. If one cent more than $14,000 per year is placed into the account, then the entire account is disqualified as an ABLE account.

The maximum amount that the account can contain is $100,000 if the disabled person is receiving Supplemental Security Income, which is the federal cash assistance program. If the account holds more than $100,000, then the person is disqualified from SSI. If the beneficiary is not receiving SSI, then the maximum amount that the account can contain is limited to the State’s 529(b) college savings plan limit.

Any money remaining in the account at the time of the beneficiary’s death is subject to estate recovery from the State for the total amount of Medicaid benefits paid to the disabled person during his lifetime.

Given the significant limitations of an ABLE account, these accounts will not be a panacea for disabled persons looking for a solution to their eligibility requirements; however, the accounts can be viewed as one tool in their toolkit.

The Well-Drafted Power of Attorney

One of the most important estate planning documents that a person can have is a durable power of attorney. Few people understand that if they are unable to make financial decisions for themselves, no one can make those decisions for them.

Most people believe that if they are unable to make financial decisions that their spouse can make those decisions for them or that their children would be able to make decisions for them. Some people add a child’s name to their bank accounts with the idea that this will resolve the need for a power of attorney.

The truth of the matter is, if you are unable to make decisions for yourself, neither your spouse nor your children will be able to make decisions for you. And adding a child’s name to a bank account will grant the child access only to that bank account; furthermore, adding someone’s name to your accounts is ill-advised. For instance, if you add your son’s name to your bank accounts and your son gets sued (perhaps he gets into a car accident), then your assets will be exposed to his problems.

What if you add your son’s name to your bank account and your son’s wife files for divorce? The soon-to-be ex-wife might just make a claim for your bank account. In the end, she probably won’t get the account but the anxiety her claim causes you will probably be immeasurable.

People try all types of shortcuts to avoid having a professionally drafted durable power of attorney document, but the question I always ask is, why? A power of attorney costs about $250 to have drafted by an elder law attorney.

With that document, you can be assured that if you ever need someone else to make financial decisions for you, someone will be there. In addition, the person you name to make decisions for you will not be commingling their personal affairs with yours and that person will have an obligation (called a fiduciary obligation) to handle your affairs with the highest duty of care.

So you can better understand what a durable power of attorney document is, I will define some of the words commonly used when discussing a durable power of attorney.

The “principal” is the person who signs the durable power of attorney. The principal names an “agent” to make decisions for him. Typically, the principal will name a primary agent and one or two alternate agents, who will serve if the primary agent is unable to serve. The principal could name co-agents, two or more individuals who will serve as agent at the same time.

A “durable” power of attorney is a power of attorney that remains in full force and effect even if the principal can no longer make decisions for himself. Most powers of attorney are durable. If a power of attorney were not durable, then the agent would be unable to serve just when the principal needed him the most.

Some powers of attorney are “springing” powers of attorney. A springing power of attorney is not effective when the principal signs the document but springs into effectiveness when the principal can no longer handle his affairs. Most powers of attorney are effective immediately.

In my opinion, every person over the age of eighteen should have a power of attorney. Whether it’s a springing power or immediately effective and whether you have one agent, alternate agents, or co-agents is up to you, but most everyone should have a power of attorney.

If you are interested in learning more about New Jersey elder law, I have written a book on the subject entitled New Jersey Elder Law: A Resource and Planning Guide. ALM Media Properties, LLC, publishes my book. ALM is the publisher of the New Jersey Law Journal, New Jersey’s premier legal periodical. You can purchase my book by visiting http://www.lawjournalpress.com/player/eBook_310_New_Jersey_Elder_Law__A_Resource_and_Planning_Guide.html.