National Healthcare Decisions Day – April 16, 2019

National Healthcare Decisions Day – April 16, 2019

National Healthcare Decisions Day was founded in 2008 to inspire, educate and empower the public and providers about the importance of advance care planning and encourage individuals to express their wishes regarding their healthcare and end of life decisions. Advance care planning is crucial to ensure that you are able to receive the type of medical care you want if you are unable to speak for yourself due to illness or injury.

A 2018 survey completed by The Conversation Project (a public engagement initiative offering resources to begin communications with loved ones about advanced directives) found that while 92% of Americans say it’s important to discuss their wishes for end-of-life care, only 32% have actually had such a conversation.

In recognition of NHDD , the Wisconsin State Bar is offering a free publication from April 3–19, called A Gift to Your Family: Planning Ahead for Future Health Needs, as a guide to end-of-life decisions, Health Care Powers of Attorney, Living Wills, Declarations to Physicians and Organ Donation.

Contact us for more information regarding the legal documents that are necessary to insure that your loved ones can act on your wishes and make the best decisions possible.

 

We believe that the place for this to begin is at the kitchen table—not in the intensive care unit—with the people we love, before it’s too late.
The Conversation Project

Long-Term Care and Insurance Considerations

Long-Term Care and Insurance Considerations

Clients often seek the advice of an elder law attorney regarding the best protection for their assets in the event they need long-term care in a nursing home or assisted living facility. Since Medicare does not pay for long-term custodial care, having enough to pay for several months to several years of care in a facility is a serious concern for many seniors.

If you have minimal assets, you may qualify for Wisconsin’s Medicaid program to pay for care. But what if your assets exceed the limits for Medicaid qualification? Should you purchase long-term care insurance, or a combination of life insurance and long-term care insurance (called “hybrid” policies)? Factors to consider when choosing between the two include your current health status, available financial resources and your risk tolerance.

With traditional long-term care insurance, you will pay a monthly (or sometimes annual) premium. If you end up needing long-term care, the policy pays out a daily or monthly benefit, up to a lifetime maximum. If you never need long-term care, you end up with no return on the premiums you have paid. While this is the nature of many types of insurance (auto, home, term life), some find the “use-it-or-lose-it” strategy difficult to swallow.

As an alternative, some individuals will purchase so-called hybrid policies. These are policies that combine long-term care insurance with permanent life insurance policies that include a savings/investment component that builds over time. If you end up needing long-term care, you withdraw funds from the policy as they are needed, and the insurance company continues to pay for your care when those funds run out. If you never need long-term care, the funds are still available during your lifetime, and if you die without having expended the funds, your heirs receive the funds upon your death.

Typically, it is easier to qualify for hybrid type coverage because traditional long-term care insurance has stricter underwriting requirements and, therefore, the status of your health will be a consideration in which type of product to invest. Affordability may also be a factor. Hybrid policies are paid over a much shorter period of time, so you will not be able to stretch payments out as long as you would with traditional long-term care insurance, which means you will need to consider available resources. Individuals with more substantial resources may wish to look at alternative investments.

You should also inquire as to whether the payments you will be making are tax deductible. Payments for some hybrid products may not be deductible. Finally, be sure to consult with your attorney, accountant, and financial advisor as to the legal, financial, and tax consequences of your purchase before you make your final decision.

 

Transferring the Residence to a Caregiver Child-Exception to Divestment

Transferring the Residence to a Caregiver Child-Exception to Divestment

I’m often asked whether transferring a parent’s residence to an adult child or children will “save the house from the nursing home.” Parents have heard that their friends or other relatives have made such a transfer in order to protect the residence, or to avoid having to sell it to pay for expensive nursing home care. While such a transfer may be appropriate in some cases, many families do not realize that if the parent applies for Medical Assistance benefits within five years of making such a transfer, they will actually be ineligible for benefits for a period of time due to making a disqualifying divestment.

A divestment is the disposing of assets for less than fair market value. If an applicant for Medical Assistance has divested assets, a disqualification period results based on the value of the assets transferred. The penalty period is calculated by dividing the total divested amount by the statewide average nursing home cost of care (at the time of this article’s posting $252.95 per day) in effect at the time of the Medical Assistance application. This number is the number of days of disqualification.

There is an exception under the divestment rules, however, for transfers of a home to a caregiver child. This exception allows adult children to care for their parent at home as opposed to moving them into a nursing home or assisted living facility, while at the same time compensating the child for their caregiving in the form of a transfer of the parent’s home. The home would otherwise have to be sold and the proceeds used to pay for long-term care.

In order to qualify for the caregiver child exception, the caregiver child must live in the home with his or her parent for at least two years immediately preceding the parent’s admission to a nursing home or assisted living facility. The level of care that the child provides must be the type of care that would ordinarily have required living in assisted living or a nursing home, but for the care provided by the child. Such care may include monitoring medications, providing meals, providing assistance with activities of daily living, such as bathing, dressing, and using the bathroom, and ensuring the health and safety of the parent.

Documentation of the level of care must be provided in the form of a notarized statement indicating that the parent was able to remain in his or her home because of the care provided by the child. The statement must be either from the parent’s physician or from an individual (other than the caregiver child) who has personal knowledge of his or her living circumstances.

It is important to consult with an elder law attorney before making a transfer of the residence to discuss the tax and other ramifications, as well as to ensure that the requirements to meet the caregiver child exception are properly followed.

Family Caregiver Contracts

Family Caregiver Contracts

When an ill or older relative needs help with daily activities and personal care, selecting an at-home caregiver can be a worrisome task. Who will provide care? How will they be compensated? What if the older relative needs not just occasional, but full-time care? To alleviate these concerns, a growing number of adult children are becoming caregivers for aging parents.

Although many adult children or grandchildren feel a strong sense of duty to provide care for their loved one, being a caregiver can be extremely time consuming. Providing care to an aging parent may make it difficult for the caregiver to meet other commitments, and may even result in sacrificing employment in order to provide the necessary care.

While many individuals are willing to voluntarily care for a loved one without any promise of compensation, a growing number of families are entering into Caregiver Contracts. A Caregiver Contract is a formal agreement among family members to compensate a person providing care.

A Caregiver Contract has several advantages. In addition to providing financial resources to the family member doing the work, particularly where the caregiver has given up other employment, it assures other family members that caregiving is fairly compensated and describes the care and personal services that are expected in return for a specific amount of compensation. This can alleviate family concerns over who will provide care and how much money will change hands, as well as avoid potential misunderstandings over the loved one’s reduction in assets (and the amount of money that would otherwise be inherited upon death).

Such contracts are also a key part of Medicaid planning, helping to spend down savings so that the recipient of care might more easily be able to qualify for Medicaid benefits. More importantly, without a Caregiver Contract, payments made to a family member for providing care will be considered a “divestment” for Medicaid eligibility, resulting in an ineligibility period. While payments to unrelated third parties for caregiving and personal services are not divestments, caregiving provided by a relative is considered gratuitous absent a contract that meets certain requirements.

Under the Medicaid rules, all payments to relatives for care and services made within five years of an application for Medicaid will be considered a divestment, unless all of the following are true:

•  The services directly benefited the individual applying for benefits.

•  The payment did not exceed reasonable compensation (prevailing local market rate) for the services provided.

•  If the total payment made to the family member is greater than ten percent (10%) of Medicaid’s Community Spouse Resource Allowance, the institutionalized person must have a written, notarized agreement with the relative. (This threshold will range from $5,000 – $11,922).

•  The agreement must specify the services and the amount to be paid and exist prior to the time any services are provided.

In addition to the requirements under the Medicaid rules, a properly drafted Caregiver Contract should contain provisions regarding the type of care, location of the care, terms and frequency of compensation, length of the agreement, income tax reporting issues and provisions for modification or termination. Contracts, even with family members, are legal documents. It is important to get your attorney’s help in drafting the contract to avoid omitting important terms, to provide proper documentation, and to seek advice about qualifying for Medicaid in the future.

Medicaid Program – Partial Repeal of Wisconsin Act 20

Medicaid Program – Partial Repeal of Wisconsin Act 20

On June 30, 2013, the Wisconsin Legislature passed Wisconsin Act 20. As noted in our fall issue, the new law dramatically changed certain aspects of the State’s Medicaid program for individuals who need long-term care. In general, the changes were aimed at allowing the State broader authority to recover funds paid on behalf of long-term care Medicaid recipients. Wisconsin Act 20 impacted a wide variety of laws, including laws relating to estate recovery, trusts, jointly-held property and life estates. The Act was accompanied by much controversy, and both the Elder Law Section of the State Bar and Wisconsin’s Chapter of the National Academy of Elder Law Attorneys advocated for a repeal or partial repeal of the new law.

As of this past December, the Wisconsin Legislature enacted a partial repeal of Wisconsin Act 20. The partial repeal is contained in Wisconsin Act 92, which adopts a modified version of the Uniform Trust Code and was enacted on December 13, 2013. Below is a summary of the provisions that were repealed.

  1. Wisconsin Act 20 provided that “exempt” assets (assets that do not impact a person’s eligibility for Medicare) could not be transferred to another person without the imposition of a divestment penalty. This provision has been repealed.
  2. Section 49.453(4c) of the Wisconsin Statutes, which was enacted under Wisconsin Act 20, imposed a divestment penalty on persons who entered into a promissory note or loan agreement with a “presumptive heir,” such as a child. This provision has been repealed.
  3. The provision that expanded the definition of what property may be subject to a claim by the State for recovery of funds paid on behalf of a long-term care Medicaid recipient has been amended to include “revocable trusts” rather than “living trusts,” and irrevocable trusts are now specifically excluded.
  4. Under Wisconsin Act 20, the State was allowed to recover funds paid on behalf of a long-term care Medicaid recipient from the estate of his or her surviving spouse using all real and personal property in which the surviving spouse had an ownership interest at the recipient’s death, including a marital property interest the surviving spouse had at any time within five years before the recipient’s application for benefits. This provision has been repealed.
  5. Wisconsin Act 20 also precluded the State from issuing undue hardship waivers to prevent recovery from the estate of a non-recipient surviving spouse. This provision has been repealed to allow waivers for hardship.
  6. The provision that allowed the State to void certain transfers of real property under Wis. Stats., § 49.4962, has been repealed.
  7. The provision that allowed the State to record a “request for notice” if certain real property in which a long-term care Medicaid recipient has an interest is transferred or encumbered has been repealed.
  8. Wisconsin Act 20 required trustees to provide the State notice of the death of a living trust settlor if either he or she, or his or her predeceased spouse, was the recipient of long-term care Medicaid benefits. This provision has been repealed.
  9. The requirement that trustees provide the State notice of the death of a beneficiary of a self-settled special needs or pooled trust if he or she was the recipient of long-term care Medicaid benefits has also been repealed.
  10. Wisconsin Act 20 held trustees personally liable to the State for any costs incurred in recovering funds paid on behalf of a long-term care Medicaid recipient from property distributed from the trust before any repayment to the State was made, and for any funds that the State was unable to recover from the persons to whom the property was distributed. This provision has been repealed.
  11. The provision that allowed the trustee of a pooled trust to retain only 30% of the balance of the trust after the death of a beneficiary who was the recipient of long-term care Medicaid has been repealed.

While the above provisions have been repealed, many of the changes that Wisconsin Act 20 made to Wisconsin’s Medicaid laws remain in effect today and have important implications for long-term care planning.

Medicaid and Long-Term Care Planning – Important Changes

Medicaid and Long-Term Care Planning – Important Changes

Wisconsin’s 2013-2015 Budget passed as Wisconsin Act 20 on June 30, 2013 and was published on July 1, 2013.  The new law contains sweeping changes to certain aspects of the Medicaid program for individuals who need long-term care.  Many questions have been raised, not only about the content of the new law and its effect on individuals who will become eligible for Medicaid benefits in the future, but also about the effective date of the changes, and whether the new law will affect those individuals who are already receiving benefits or who have already used planning techniques that were allowed under the old law.  Part of the confusion stems from a delay in the actual implementation of the changes.

Procedural Issues/Effective Date of Implementation
A delay in effective date was written into the law that required Wisconsin’s Joint Committee on Finance (JCF) to approve an implementation plan that would be submitted by the Department of Health Services (DHS). In other words, the law was expected to become effective only after guidelines were in place for its implementation.  In the meantime, the Elder Law Section of the State Bar and Wisconsin’s Chapter of the National Academy of Elder Law Attorneys advocated for a repeal or partial repeal of the new law which appears to violate several provisions of federal law.

Instead, on September 4, 2013, the DHS wrote a letter to the JCF requesting complete and immediate implementation of the new law, without developing a plan to address concerns and procedural issues.  A hearing was held on the DHS’s motion for immediate implementation on September 18, 2013.  The JCF granted the motion and gave the DHS permission to proceed immediately to implement the new law.  The begin date for the implementation of the new law was October 1, 2013.

Limitations on Implementation
However, the permission to move forward was limited in certain areas of the new law. While the limitation prevents the DHS from acting on certain portions of the new law, those sections are not repealed. So while the law has still been changed, the DHS cannot enforce certain provisions.  Nothing prevents the DHS from requesting implementation of these provisions in the future. The provisions that the DHS currently cannot enforce are:

1.   Prohibition Against Transfer of Exempt Resources. Under the old law, certain assets were considered “exempt” in determining whether or not a person could become eligible for Medicaid.  These exempt assets, such as vehicles, personal property, and certain business assets, could be transferred without imposing a divestment penalty against the individual who transferred them. The new law prevents the transfer of such exempt resources.  As an example of the confusion that results from the lack of repeal, in this case, the new law provides that the transfer of exempt assets is a divestment, but the DHS cannot impose a penalty period, because this portion of the law was not allowed to be implemented.

2.  Provisions Relating to Voiding Real Estate Transfers and Notices Related to Real Estate. The new law allows the DHS to record a “Request for Notice of Transfer or Encumbrance and Notice of Potential Claim” on any real property in which a recipient of Medicaid has a current ownership interest, including a marital property interest, as well as any interest owned within five (5) years before the individual applied for Medicaid. Again, these provisions remain law, but cannot yet be enforced.

3.  Provisions Regarding Trusts. The new law requires trustees of certain trusts to give notice to the DHS of the death of the Settlor (for Living Trusts) or the beneficiary (for Special Needs Trusts).  Again, the DHS is not allowed to enforce this portion of the law; however, the law regarding the notice provisions still stands, raising serious questions for Trustees of these types of Trusts.

4.  Promissory Notes. The new law provides that it is a divestment to enter into a promissory note/loan agreement with a “presumptive heir” such as a child.  This provision, while it remains law, cannot be enforced.  If enforced in the future, and coupled with the potential enforcement of the new law preventing transfer of exempt assets, the transfer of family farms and businesses may be seriously impacted since many family farms and businesses are transferred to a child or other relative through gifts and promissory notes, or a combination of the two.

All other aspects of the new law relating to recovering funds from a Medicaid recipient’s spouse have been authorized and will be enforced.  A brief summary of each of these provisions follows.

Estate Recovery in the Estate of the Surviving Spouse.  Under the new law, once an individual qualifies for Medicaid, estate recovery has been expanded to reach into the estate of the surviving spouse to recover benefits paid on behalf of the spouse who received benefits.  The new law presumes that all real and personal property in which the surviving spouse had an ownership interest at the recipient spouse’s death, including a marital property interest in property the surviving spouse had at any time within five years before the recipient applied for public assistance, is recoverable property.

Restrictions on Gifts by Spouse of Medicaid Recipient.  Further, under the old law, once an individual qualified for Medicaid, the spouse was free to gift assets that were assigned to him or her as part of the Community Spouse Resource Allowance.  These types of transfers would not impact the spouse receiving Medicaid.  Under the new law, anything the spouse gives away within five years after the institutionalized spouse qualifies for Medicaid will be a divestment that will cause the institutionalized spouse to lose Medicaid.

Change in Start Date of Ineligibility Period.  The new law delays the start date for periods of ineligibility.  The period of ineligibility now begins the first day of the month following the month in which the individual receives advanced notice of that period of ineligibility.

Partial Cures Abolished.  Another expansive change under the new law is the removal of the ability to partially cure a divestment ineligibility period by returning a portion of the transferred or “divested assets.”  Under the new law, all assets, or cash equal to the value of the assets that were transferred, must be returned in order to cure a divestment penalty period.

Spousal Refusal Abolished.  Spouses may no longer refuse to cooperate in a Medicaid application.  Under the old law, if a spouse refused to disclose assets, the applicant was treated as a single person and the spouse could not be forced to provide support to the Medicaid recipient.  The new law requires the spouse to provide the total value of assets and information on income and resource transfers.  Marital Property Agreements continue to be disregarded for Medicaid eligibility purposes.

Minimum Monthly Income Calculations.  The new law provides that if the spouse of an applicant asks to increase the minimum monthly maintenance needs allowance above the currently allowed amount, the DHS must evaluate the potential earnings of any retained assets as if they are invested in a single premium lifetime annuity.

Real Property/Life Estate Changes.  The new law also seriously impacts life estates and jointly held property.