Medicare versus Medicaid

A reader recently asked for an explanation of the differences between the Medicare and Medicaid programs. The following are excerpts from my book, New Jersey Elder Law: A Planning and Resource Guide.

Medicare is a federal health insurance program for qualified aged and disabled individuals. Medicare is funded through deductions from a future beneficiary’s wages. Generally speaking, Medicare is available to individuals who are 65 years of age or older and who are entitled to Social Security benefits. Medicare is also available to individuals who are disabled and who have been receiving Social Security disability benefits for not less than 24 months. Medicare coverage is broken down into parts. Each part provides a different bundle of coverage for health care costs.

Part A

Part A provides in-patient hospital care, in-patient care in a skilled nursing facility, home health care services and hospice care. As an elder law attorney, the skilled nursing facility (SNF) coverage will be the Part A Medicare coverage with which you and your clients will have the most interaction.

Skilled Nursing Facility Services

A skilled nursing facility is, in most instances, the rehabilitative section of a nursing facility or nursing home. The family member of a client will come to you and say, “Mom is in a rehab center right now, but we are thinking about moving her to a nursing home.” The fact of the matter is that mom is already in a nursing home, she’s simply in the wing or section of the nursing home that the nursing home has designated as its skilled nursing/rehabilitative care section.

Days of Coverage

Medicare Part A coverage will provide up to 100 days of SNF care per spell of illness for in-patients requiring skilled or rehabilitative services. A spell of illness begins when the patient received Medicare covered services as an in-patient in a hospital and ends when the patient has spent 60 days outside of the hospital or SNF or ceased receiving Medicare-covered services in the nursing facility.

In order to receive SNF coverage, the patient must have been hospitalized for at least three days and must enter the SNF within 30 days of being discharged from the hospital for skilled or rehabilitative care. From a practical standpoint, most of your clients will be discharged directly from the hospital to the SNF. A physician must certify that the skilled or rehabilitative care in the SNF is necessary.

Assuming these criteria are met, during a spell of illness, the patient is entitled to full coverage for days 1 through 20. For days 21 through 100 there is a co-payment that is the responsibility of the patient. The co-payment typically increases on an annual basis. In 2015, the daily co-payment is $157.50.

Full Time Rehabilitation

In order to receive Part A coverage in a SNF, the patient must require skilled or rehabilitative services on a daily basis and the care must only be available in a SNF. A daily basis means five days per week.

Medicaid

Medicaid is a federal-state cooperative health payment plan for needy individuals. The federal government offers the various states the opportunity to participate in the Medicaid program. A state is not required to participate in the program. Of course, if a state does not participate in the program, then the State will not receive federal monies for Medicaid. The federal government often contributes more than 50% of the costs associated with the Medicaid program. New Jersey does participate in the Medicaid program and offers various programs of Medicaid to its citizenry.

In order to qualify for Medicaid, an applicant must have limited assets and income. The assets figure is typically very low, frequently no more than $2,000 countable assets. The income figures vary widely depending upon the program of Medicaid from which the applicant seeks benefits.

Unlike Medicare, Medicaid will pay for long-term custodial care, such as care in a nursing home, that may last for years and years.

If you are interested in obtaining my book, you can contact the New Jersey Law Journal at 973-642-0075 or contact Doug Brown at dabrown@alm.com.

 

 

Requirements of a Will

Most people understand the purpose of a last will and testament. A Will is a document the primary purpose of which is to pass a person’s assets to other people or institutions, such as charities, after his death.

Few documents are as personal as a Will. A Will can control all of the assets that a person owns after his death, and it is a document that can shape a person’s legacy, both literally and figuratively.

Given its importance and its ability to control a tremendous amount of wealth, there are certain standards that govern what constitutes a Will and the manner in which a Will must be signed. The following excerpts are taken from my book, New Jersey Elder Law: A Planning and Resource Guide.

Self-Proving Will

A Will that satisfies the requirements of N.J.S.A. 3B:3-2 can be made self-proving if the Will satisfies several other requirements. If a Will is self-proving, the proponent of the Will after the death of the testator does not have to prove the genuineness of the signatures of the testator or the witnesses; the original Will can simply be admitted to probate before the appropriate surrogate without further proof as to its validity or genuineness; this is called submitting a Will to probate in “common form.”

In order to be self-proving, the testator must sign an acknowledgement of the Will and the witnesses must sign affidavits and all of the signatures must be acknowledged before an individual authorized to take oaths, such as a notary public or attorney-at-law. The wording of the testator’s acknowledgement and the affidavits of the witnesses is provided in the self-proving statute. Holographic Will

A holographic Will is an exception to the general requirements of a Will that are discussed immediately above. A holographic Will is a Will the material portions of which are in the testator’s handwriting. In order to be valid, a holographic Will must also be signed by the testator.

Writing Intended to Be a Will

A Will that does not satisfy the requirements of N.J.S.A. 3B:3-2 (either as a “standard will” or a holographic Will) may still be considered a “writing intended to be a Will.” In order to be considered a writing intended to be a Will, the proponent of the document must establish by clear and convincing evidence that the decedent intended the document to constitute his Will.

The case law interpreting the writing intended to be a Will statute is still evolving. A document that the testator failed to sign has been held to be a writing intended to be Will. A photocopy of a letter with notations in the margin may be admitted to probate as a writing intended to be a Will.

Who May Witness a Will?

The basic requirements of a Will are that the signature of the testator or the testator’s acknowledgement of his signature or his acknowledgement of the document as his Will be witnessed by two people. But what are the requirements to be a witness?

The general rule is that any person competent to be a witness may act as a witness to a Will and testify regarding the execution of the Will. Since young children have been held to be competent witnesses, the general requirements of a witness are not very high.

Furthermore, a statute specifically permits an individual who is interested in the Will to be a witness. In other words, one of the beneficiaries of the Will could be a witness to the testator’s signature or his acknowledgement.

Most practitioners would not permit a young child to act as a witness to a Will or someone under the age of eighteen for that matter, though the law does not prohibit using individuals under the age of eighteen. Moreover, experienced practitioners would not use an interested party to be a witness to the Will if there is some expectation that the Will may be challenged.

For instance, it would be perfectly acceptable to use an adult child of the testator as one of the witnesses to the Will if the Will devises everything equally to the all the children. On the other hand, using an interested party to a Will that disinherits one of the testator’s children would not be advisable.

If you are interested in these issues or other legal issues affecting the elderly, then I suggest that you purchase my book, which you can do by contacting the New Jersey Law Journal at 973-642-0075 or contact Doug Brown at dabrown@alm.com.

Recent Case Unfavorable to Caregiver Agreements

The other week, the Superior Court of New Jersey, Appellate Division, decided a case that sounds the death knell for caregiver agreements as a means of Medicaid planning. Medicaid is a health payment program for needy individuals. Unlike private health insurance programs, Medicaid will pay for long-term care, such as care in a nursing home.

In order to qualify for Medicaid benefits, a Medicaid beneficiary must have limited resources, typically less than $2,000. When faced with the prospect of paying a nursing home $12,000 a month, many people who never thought they would qualify for Medicaid—or want to qualify—seek to expedite their eligibility for the program.

Medicaid planning is all about expediting an individual’s eligibility for Medicaid. Many Medicaid planning techniques involving transferring assets away from a potential Medicaid beneficiary to his family. Because people give away their assets in the hopes of qualifying for Medicaid benefits, the Medicaid law has evolved in a way that punishes a Medicaid applicant who has given away his assets before filing an application for benefits.

If you know anything about Medicaid, you have probably heard of the “lookback period.” The lookback period is the period of time that Medicaid looks at to see if a Medicaid applicant has made any uncompensated asset transfers prior to applying for Medicaid. Since 2006, the lookback period has been five years.

From a practical standpoint what this means is, if a Medicaid applicant gave away any asset (money, stocks, bonds, a house, a car) during the five year period of time immediately before applying for Medicaid benefits, then the Medicaid office will punish that applicant by making him ineligible for Medicaid benefits. This punishment is known as a “penalty period.”

A penalty period is a period of time during which a Medicaid applicant is ineligible for Medicaid benefits. The length of the penalty period depends upon the value of the assets that the applicant gave away during the lookback period. For simplicity sake, for every $10,000 of asset value that an applicant gave away during the lookback period, he is ineligible for one month of Medicaid benefits. So, for instance, if Mr. Smith gave $50,000 from his checking account to his son during the lookback period, then Mr. Smith would be ineligible for Medicaid benefits for five months.

If Mr. Smith were residing in a nursing home, then he would have to find another means of paying for his care. If Mr. Smith did not have the ability to pay for his care, then the nursing home could evict him for non-payment.

Many people who file applications for Medicaid benefits have needed long-term care for years. Oftentimes, a family member has been providing this care to the Medicaid applicant. Sometimes, the applicant has paid the family member for the care that she provided to him. So, for instance, Mr. Smith might pay his daughter for living in the daughter’s house (rent) and for the care that the daughter provided to Mr. Smith (say at the rate of $15 per hour).

There is a New Jersey Medicaid regulation that creates a presumption that any care provided by a family member is provided for free unless the family member and the Medicaid applicant have a signed caregiver agreement. For years, elder law attorneys have used caregiver agreements as a means of transferring money from a potential Medicaid applicant (Mr. Smith) to his family (his daughter) by providing a reasonable rate of compensation to the family member who is providing the care.

In my practice, I have never used these agreements too frequently. When I tell clients that the child has to pay income tax on the compensation, clients have always shown a lack of interest in the technique. But some attorneys have used these agreement quite regularly.

For years now, our Medicaid office has consistently found reasons to shoot down the compensation provided under such agreements and claim that the money was gifted, and our courts have supported those holdings. The other week, the Appellate Division, once again, upheld the Medicaid department’s treatment of caregiver compensation as a gift, and quite frankly, I find the reasoning in the case to signal the death knell for planning with such agreements. This is not to say that agree with the decision, but the reasoning the Medicaid office and our courts have used is nearly impossible to overcome unless you are willing to sue the state in federal court.

An Excerpt from My Book

The following is an excerpt from my book, New Jersey Elder Law: A Resource and Planning Guide. The book is published by ALM Media. ALM is the publisher of the New Jersey Law Journal¸ the leading New Jersey legal periodical. If I do say so myself, the book contains a great deal of information for those individuals who are generally interested in the articles that I write in this paper.

If you are interested in obtaining my book, you can contact the New Jersey Law Journal at 973-642-0075 or contact Doug Brown at dabrown@alm.com.

 

8:7-2    The Pre-Admission Screen (PAS)

 

In addition to the financial criteria (resources and income), an applicant for institutional level care services must have a need for care from a health perspective. The law that imposes this criterion is the Pre-Admission Screen Act. A Pre-Admission Screen is called a PAS (pronounced Pass).

 

8:7-2.a.                        Activities of Daily Living

 

A PAS is issued to an applicant if the applicant either requires hands-on assistance with three or more activities of daily living (ADLs) or has cognitive impairments that affect his ability to perform independently three or more ADLs. There are six ADLs: clothing, bathing, toileting, eating, transferring, and mobility. These are the only activities of daily living that matter when making the PAS assessment.

There are also instrumental activities of daily living (IADLs). IADLs are activities such as meal preparation and medication administration. Most people believe that if a person cannot prepare their own meals or cannot take their medications properly they need help, but the inability to perform IADLs does not get an applicant for Medicaid a PAS.

The Office of Community Choice Options (OCCO)—which is an office of the Division of Aging Services, part of the Department of Health and Senior Services—employs nurses who make the assessment as to whether or not an applicant for Medicaid benefits qualifies for a PAS. From a practical standpoint, OCCO believes that it is the only entity that can make such an assessment. In other words, even if the applicant’s physician attested to the fact that the applicant required hands-on assistance with 3 or more ADLs, OCCO believes that it is the one and only entity that can make that determination and if that office does not believe that the applicant requires hands-on assistance with 3 ADLs, then the applicant does not qualify for Medicaid benefits.

This can be confusing because the county board of social services will ask the applicant to have his physician complete a medical assessment form called a PA-4. Essentially, the PA-4 is just a preliminary screening tool. The physician is attesting to the fact that the applicant may require care in a nursing facility or assisted living residence within the next 30 days.

The PA-4, though, is really an elimination tool, not an eligibility tool. If the physician attests that the applicant will not require care in a nursing home or assisted living residence in the next 30 days, then his application will be denied; however, if the physician attests to the fact that the applicant may need such care in the next 30 days, then the application can proceed, and OCCO will make its own assessment.

If you or someone you love is interested in the Medicaid program or the administration of a deceased individual’s estate or in drafting a proper Will, power of attorney, or living will, then my book is a must read for you. These areas of the law are fraught with pitfalls. In my book, I provide you with an understanding of these areas of the laws and helpful tips for navigating your way through the legal issues affecting the elderly and disabled.