Cheryl Chapman Henderson, LLC

Massachusetts Looks at Changing Special Needs Trusts

“Hundreds of disabled seniors in Massachusetts may soon face a daunting choice. if they want services under the state’s Medicaid program.”

A recent article in The Boston Globe, “MassHealth may force seniors to make hard choice,” explains that disabled seniors in the state may need to scrap the trusts they created to pay for extra services, like home health aides, or risk losing public benefits.

MassHealth, the state’s Medicaid health insurance program for nearly two million low-income and disabled residents, is contemplating changes to its eligibility requirements that would make it harder for residents over age 65 to establish special-needs trust (SNTs) accounts and still qualify for nursing home care and other health services from state and federal government programs.

Massachusetts officials say the proposed changes are designed to ensure that the state’s Medicaid rules adhere to the 2008 federal Medicaid guidelines, along with reducing the strain on the $15 billion MassHealth budget. These changes would require disabled seniors to spend down their personal financial resources, including money that’s held in a trust, before using MassHealth.

“As part of our regulations review, MassHealth proposed some clarifications to its eligibility regulations to ensure compliance with both federal and state law,” said Sharon Torgerson, a spokeswoman for MassHealth.

Advocates for disabled seniors say the changes will deny some residents small comforts that improve their quality of life. This change, they argue, could wind up costing the state more money by making those who are living independently move into more expensive nursing home care financed by taxpayers.

Individuals must get approval from their trust administrators to spend money, and they typically must submit bills for expenses like dental work not covered under Medicaid, health aides, clothing, and utilities.

The median annual cost for a shared room at a nursing home facility in Massachusetts in 2016 was about $135,000, according to an annual survey conducted by Genworth Financial, Inc.

Trusts have traditionally been a method for disabled seniors and their families to plan for long-term care—particularly if they have complex needs but don’t have children to help with expenses. To qualify for the state program in Massachusetts, an individual’s assets can’t exceed $2,000, and monthly income is limited to $100. Trust money had traditionally been exempt from those eligibility requirements.

However, in 2008, the federal Centers for Medicare & Medicaid Services clarified the rules, telling states that, in general, disabled individuals over 65 couldn’t transfer money into a pooled trust without a penalty. Essentially, that meant they couldn’t go on Medicaid until they had used up their assets. Officials explain that there are other factors considered in determining Medicaid eligibility, like the amount of money in a trust and why it was deposited.

Pooled trusts and transfers are complicated issues. These transfers don’t automatically make someone ineligible for Medicaid, a spokeswoman for the Centers for Medicare & Medicaid Services explained.

Massachusetts health officials in December held a hearing on the proposed changes. They’re considering comments from the public before making a final decision.

Reference: Boston Globe (January 3, 2017) “MassHealth may force seniors to make hard choice”

Retired California Judge at the Center of Probate Fight

“Retired Orange County Superior Court Judge Betty Lou Lamoreaux was such a force in juvenile justice that the seven-story family court building bears her name.”

As The Orange County (CA) Register explains in a recent article, “The perils of probate court: Former judge with Alzheimer's could lose her life savings,” Judge Lamoreaux is now in danger of being financially ruined. And this is caused partially by the justice system to which she dedicated her life. Lamoreaux, who is 92, has Alzheimer’s dementia, and her family – primarily her nieces and nephews –is trying to care for her and preserve her estate. Lamoreaux has no children. However, the family has disagreed over how best to do that and about who should be in charge of her money. Consequently, a court battle has ensued.

Remarkably, the Lamoreaux dispute has included three judges and nine lawyers and related professionals, with more attorneys planning to join in the case. Some in the family worry that the probate fight could result in attorney fees gobbling up “Auntie Lou’s” nest egg – forcing her to sell her $1.8 million house in Newport Beach. They argue that the probate court’s rules are the problem.

“The very court system she served, and was honored by, is now bilking her of her life savings,” says Duff McGrath, her 58-year-old nephew and a trustee.

These frustrations are felt by others in probate court, where the affairs of a loved one can be removed from family members and assigned to experts at expensive rates. Each year, about 5,000 probate-guardianship cases slog through probate court in Orange County.

Typically, the work is conducted by qualified and sincere professionals attempting to protect their clients, but the process of turning a person’s affairs over to lawyers and can get expensive, even when fees must be approved by the court.

Until a few years ago, Lamoreaux shared her home with her 87-year-old sister and a niece. As her dementia got worse, the home fell into disrepair, to the point of being unhealthy, according to court records. McGrath and other family members went to probate court in 2015 in an attempt to get a court order that would give them the authority to keep Lamoreaux from those they felt would do her harm. McGrath moved Lamoreaux from her house to a senior living center while her home was undergoing repairs. The court responded by appointing two people to the case, an attorney and a guardian, also an attorney, to represent Lamoreaux. That’s when the real trouble started.

The court appointees, after speaking with Lamoreaux, thought she wanted to move back home with her sister. A judge agreed and ordered McGrath to help her move back home. McGrath has appealed that order and hired his own legal team. They argued that Lamoreaux should stay at the center, which has the expertise and facilities to care for her properly.

As Lamoreaux’s case moved forward, additional professional consultants, a fiduciary, and more lawyers – all charging from $200 to $450 an hour – were added. McGrath said the total, when everybody is working, including his attorneys, adds up to about $3,000 an hour.

Lamoreaux’s fate now is in the hands of a judge, who will decide whether McGrath should be removed from his trustee position. According to court records, Lamoreaux’s doctor said she shouldn’t be moved at this time, and she repeatedly tells friends that she wants to stay at the center. The attorney appointed by the court to represent Lamoreaux asked for an emergency hearing to determine if McGrath should be removed as trustee and replaced with a yet another professional.

Reference: The Orange County (CA) Register (October 18, 2016) “The perils of probate court: Former judge with Alzheimer's could lose her life savings”

Elder Law Attorneys Help Seniors and Their Families

“How do I pay for long-term care when I don’t have much money?”

The (Fort Worth TX) Star-Telegram recently published an article, “Elder care attorneys can help with long-term care, Medicaid.” The article explained that this segment of the legal profession focuses on the needs of older and disabled adults. Elder law attorneys focus on issues of guardianship, estate planning, probate, veteran’s benefits and Medicaid.

One thing that most seniors don’t plan for is long-term care. Many people are trying to pay for long-term nursing care. A focus of elder law is how an elderly person can pay for it. With this in mind, the majority of long-term care is paid for by Medicaid, so understanding how that program integrates with estate planning is important. For example, you wouldn’t want a bequest in someone’s estate planning to adversely impact your Medicaid planning. A family member may be ineligible for Medicaid if they inherit something.

Completing the Medicaid application can also be a challenge. Elder law attorneys see many of their clients’ applications initially denied. An experienced attorney may be successful on appeal. It might be a mistake at Health and Human Services (HHS). The best way to do this is to ask for the assistance of an elder law attorney. People who apply on their own may be denied and won’t question it—or even realize that they can question it.

Some people worry that their parent will go broke before they need costly end-of-life care and they’re afraid that Medicaid patients received substandard care. However, they should receive the exact same care as a private pay or short-term disability in the nursing home. Even so, you should look at several facilities, speak with residents and staff, and observe the conditions before making a choice.

There is also a lot of bad information floating around about Medicaid eligibility. Some folks believe they won’t qualify. However, some assets, like a house and vehicles, are exempt when qualifying for Medicaid. This allows the community spouse — the one remaining at home — to continue to support themselves.

Also, there are a few elder law attorneys who receive an extra certification called a Certified Elder Law Attorney, or CELA. It’s a national certification program that requires five years of practice in elder law and a written exam.

Reference: The (Fort Worth TX) Star-Telegram (October 14, 2016) “Elder care attorneys can help with long-term care, Medicaid”

Make a Plan to Make a Plan for Retirement

“You thought you’d planned for everything, but these things might still sneak up on you in retirement.”

Everyone’s busy with families, careers, home-buying, and then one day, college for the kids. It shouldn’t be too surprising that retirement planning takes a back seat, says The Washington Post in a recent article, “It takes a lot of work to be ready to retire. Don’t forget these things.”

While there are some who don’t begin considering retirement until they reach their 50s, it’s not too late to get started on your retirement planning. But a late start may mean you may have to face some unfortunate realities.

Retirement can be overwhelming. Let’s look at those things some forget to plan or didn’t even realize they needed to plan. First, some people aren’t prepared emotionally to retire. You need to determine how you will spend your time and what it might cost.

Medicare. You must enroll in Medicare at 65, but if you delay until 66, you’ll have to take the initiative because it’s not automatic. If you’re late, there’s a 10% penalty for every 12 months you snooze. If you wait 24 months, there’s a 20% permanent penalty because you forgot to re-enroll. Enrollment is three months before to three months after your 65^th birthday. If you delay taking Social Security, you’ll have to enroll in Medicare on your own.

Health-Care Costs. Studies show that health care will cost about $250,000 for a couple in retirement, or about $5,000 per year per person. People frequently underestimate health-care costs in retirement—they forget prescription drug and long-term care costs—which can use up a lot of money. The same is true of dental expenses, and Medicare doesn’t cover dental.

Major Purchases and Repairs. Some fail to account for major purchases, such as home repair and upkeep. Many retirees are caught short on the occasional large purchase, so examine your budget annually to be sure you consider things that come up quarterly or semiannually. Remember that life events like weddings, graduations, and spoiling the grandkids can be major unanticipated costs.

Planning for a Long Life. This is very important because if you will live to age 90, will your money last? There are many things to consideration when you think about 25 years in retirement, like long-term care.

Estate Planning. Estate plans aren’t just for the wealthy, and if you’re not pro-active, all those decisions will be made for you by the state. Create a will, be certain that your beneficiaries are correct and up to date, and make sure you have a power of attorney and health-care directive.

Reference: The Washington Post (October 15, 2016) “It takes a lot of work to be ready to retire. Don’t forget these things.”

Finally, New Rules for Nursing Homes

“After 25 years without changes in basic rules, the nursing home industry is finally being forced to reveal hidden wrongs that happen to residents.”

As a recent Forbes article titled “The End of Secrecy in Nursing Home Wrongdoing” explains, until now consumers were required to sign arbitration agreements when admitted to a nursing home. Most folks don’t realize these agreements prohibited the family from bringing a lawsuit if anything went wrong in a nursing home. Instead, the family would be required to go to arbitration, where the outcomes weren’t known outside of those connected to the arbitration hearing. Consequently, if a nursing home neglected or harmed one of its residents, then nobody would know how the arbitrator decided such a case.

But these practices have finally changed, as well as some other important rules.

Although no one wants to live in a nursing home, after surgery, serious illness, or an accident—or because a loved one requires nursing care 24/7—nursing homes are a necessary part of our health care system. They should be safe, comfortable places.

The new rules require nursing homes to properly train and staff their facilities, as well as protect vulnerable people from dangerous other residents who might harm someone if not carefully supervised by skilled staff. The facilities are required to spend the money to retain enough workers and train them on how to properly do the job.

The Federal Center for Medicare and Medicaid Services issued the revised rules, which impact more than 15,000 long-term care homes that accept Medicare and Medicaid across the U.S. Sadly, the worst nursing homes won’t realistically comply with the new rules; they didn’t follow the old ones. But to receive payment from Medicare and Medicaid, all nursing homes must adhere to better standards or they’ll lose money.

Anyone with an aging parent or other loved one who must go to a nursing home is likely to be safer now than before these rules came into effect. Rules aren’t a guarantee of safety, but no one placing a loved one in a nursing home can be forced into signing an agreement to arbitrate an issue, instead of having their day in court.

Reference: Forbes (September 29, 2016) “The End of Secrecy in Nursing Home Wrongdoing”

Medicare’s Observation Status Can Have You Seeing Extra Dollar Signs

“You are in the hospital for tests after experiencing dizziness. You are nervous about what the tests will show, but at least you do not have to worry about hospital bills–you have Medicare, so you can relax about healthcare coverage. Or can you?”

If you’re in the hospital under “observation status,” which is a Medicare designation applied to patients deemed insufficiently ill for formal admission, but still too sick to be allowed to go home, you need to take note. Observation status can mean thousands of dollars in higher costs, particularly if you require post-hospital nursing care.

As Money’s article “The Medicare Quirk That Can Cost You Thousands” explains, Medicare covers care in skilled nursing facilities. Unfortunately, that’s only for patients who are first admitted to a hospital for three consecutive days.

Hospitals have applied this status to avoid costly penalties from Medicare for improper admissions. The number of Medicare patients classified as under observation has skyrocketed and has created pushback from Medicare enrollees and advocacy groups.

A new law, “the Notice Act,” requires hospitals to notify patients if they stay in the hospital more than 24 hours without being formally admitted. Patients will begin to get this notice beginning in January 2017. Moreover, hospitals will be required to inform patients verbally and in writing if they are on observation status for more than 24 hours.

The written notification is called the Medicare Outpatient Observation Notice (“MOON”), and also explains the cost implications of receiving hospital services as an outpatient.

The costs of observation status can impact any enrollee on traditional fee-for-service Medicare. The program typically covers up to a maximum of 100 days of care in a skilled nursing facility following a hospital admission. It will pay 100% for the first 20 days; patients are responsible for a daily $161 co-pay for the next 80 days. However, patients who leave the hospital for a nursing facility after an observation will pay the full cost out of pocket. And skilled nursing care costs are substantial and continue to rise.

Observation status also has an impact on the coverage of drug usage in the hospital. Medicare Part B would cover drug usage for the specific problem related to the hospitalization, subject to the Part B 20% co-pay. For routine drugs taken at home, the practices vary. Some hospitals let patients bring their own drugs from home, others don’t, and charge much more than you’d pay at your pharmacy.

A broader solution to the observation status has had a lot of support, and bipartisan legislation was introduced in the U.S. House and Senate that would require time spent in observation to be counted towards meeting the three-day prior inpatient stay necessary to qualify for Medicare coverage. The bill counts the time in hospital, no matter what. If you are in the hospital for three midnights, you’ve met the requirement.

Reference: Money (September 29, 2016) “The Medicare Quirk That Can Cost You Thousands”

“SNF” Doesn’t Stand for “Sunday Night Football” When Talking About Medicaid and Medicare

“As the mythical movie boxer, Rocky Balboa, reminded us, ‘Time takes everybody out, time’s undefeated.’”

Can you believe the average cost for a one-bedroom unit in an assisted living facility is nearly $42,000 a year in our country?

These long-term-care costs could knock even Rocky out of the ring.

With many Americans hitting retirement age, they may be concerned about how to plan for future financial needs. While there’s a lot of literature available about retirement saving, many seniors don’t accurately measure the significant cost of post-retirement medical care. They simply expect Medicare to cover the costs. However, Medicare is very strict as to the types of long-term care it covers. The program only covers stays in skilled nursing facilities and hospice care under certain strict circumstances.

The Deseret News recently published the article, “How to cover the cost of long-term care,” which reported that for skilled nursing facility (“SNF”) coverage a beneficiary is required to be admitted to a hospital for at least three days, then discharged with a condition that requires skilled nursing level care.

Medicare will cover all of the expense for the first 20 days of the stay. The program then charges a $161 co-pay for every day up to 100 days. Once a patient reaches 100 days, he or she must cover the entire cost after the initially covered 100 days. But if he or she is out of an SNF for more than 60 days, the coverage resets and they can be admitted for another 100 days after a three-day hospital admission. Simple, right?

Medicare covers most types of hospice coverage when a patient has received a terminal illness diagnosis and is not projected to live more than six months. This will encompass the patient’s medication, support services, and services such as grief counseling. Medicare will also pay for short-term hospital stays and inpatient care for caregiver respite. In addition to Medicare, the federal government also provides some coverage through Veterans Affairs (VA). But unlike Medicare and the VA, Medicaid can assist those seniors who qualify with most types of long-term care.

Medicaid is administered by the states, so the benefits and eligibility will vary. However, most of these programs are given incentives for administering alternative programs that let seniors stay at home or with a family member. If the beneficiary qualifies, family members providing their care may be certified as providers and reimbursed for their efforts by Medicaid.

One option for the proactive is purchasing long-term care insurance to cover the costs. However, if that coverage is too expensive because you’re late in buying a policy or you have pre-existing health issues, you should look at other options like Medicaid. If you go that route, you may need to transfer assets and income to trusts or family members. Speak with a competent elder law attorney before you make any moves.

Without a doubt, long-term medical care costs may be an issue for many in retirement. Start to plan early so you’re prepared.

Reference: Deseret News (Sept. 27, 2016) “How to cover the cost of long-term care”

NFLers Huddle Up: Make a Game Plan for Possible Dementia

“This one’s for you, Peyton Manning, and you, DeAngelo Williams, and you, Jadeveon Clowney, and all NFL players and alumni: Do yourselves a favor and pay attention to the Sam Huff case.”

 

A recent Washington Post article, entitled “Today’s NFL players should look hard at Sam Huff’s case; they could be next,” says you should prepare for a time when you might become incapacitated as a result of your career. Fail to make proper plans and a judge could end up determining where you live.

The NFL estimates that a player has about a 30% chance of contracting Alzheimer’s or dementia. Players receive literature from the NFL Players Association about concussions and advice from agents and lawyers about estate-planning, but they rarely see the real picture of how people will treat you with a stigmatizing brain disease.

You need to make a game plan, or a judge will decide if you’ve been abused, neglected or exploited. Enter Sam Huff, who’s a Hall of Fame linebacker who was very successful after football. He was a VP at Marriott and enjoyed thoroughbred horse breeding. He lived on his horse farm in Middleburg, Va., for 30 years with his partner, Carol Holden, until 2012 when dementia was diagnosed.

Huff’s daughter, Catherine, is seeking legal power to make all of Huff’s life and health-care decisions for him. Carol filed an emergency petition seeking to return him to his home and to her guardianship. There’s a court hearing scheduled.

Can you believe that of the 1,600 players in the NFL each season, more than 500 will contract some form of dementia. Here's a suggested blueprint for how to protect yourself, which may be just as important as wearing a helmet in action.

Here is some advice from the article whether you played on Sunday or caught the games on television:

Find a lawyer with experience in estate planning for Alzheimer’s and heed his or her advice. You need a specialist because Alzheimer’s planning requires a very thorough interdisciplinary legal knowledge, as well as insight into medical and criminal scenarios. An attorney experienced with dementia issues can educate you on why you shouldn’t give your child or spouse durable power of attorney without some type of neutral oversight.

Don’t create family problems. Appoint an independent third party “protector.” This can be a valued friend who has sound judgment and can monitor the conduct of the trustee over your trust and the attorney in fact under your financial power of attorney. This is a pretty new idea, but it helps to address potential financial abuse. A protector can make sure that any actions are in your best interests.

Declare legally that if there’s any change to your estate plan after your diagnosis, there needs to be a medical evaluation to ensure it’s your decision. Changes can be manipulations, especially if your power-of-attorney is also a beneficiary.

Legally provide that a geriatric care social worker be employed to facilitate your care. All of the agencies, facilities, and services create confusion and frustration for family members trying to help. But a geriatric care expert has the knowledge, social service resources, and experience to take care of living arrangements and quality care, which can ease the strain on the family.

Determine your wishes and provide for them. If you really want to live at home, look into how to do so with dementia and set aside the money. You might decide you want to live in a facility. Be sure you state in your estate plan that the location has a good nurse-to-patient ratio and specifically trained Alzheimer’s care.

While Huff’s situation shows there’s no such thing as a foolproof solution, you can start by working with a credible dementia-knowledgeable attorney.

Reference: Washington Post (Sept. 15, 2016) “Today’s NFL players should look hard at Sam Huff’s case; they could be next”

Like Gene Wilder, Many Opt to Keep Alzheimer's Disease a Secret

“Because cognitive impairment is likely for most people as they age, advisers shouldn't wait for signs to start planning.”

Comedic actor Gene Wilder, who died last week at age 83 from complications of Alzheimer's disease, didn’t tell anyone about his illness for at least three years. That's common, reports Investment News in “Hiding Alzheimer's, like Gene Wilder did, is natural, so prepare for it with all clients.”

The star of Willy Wonka and the Chocolate Factory and many other successful comedies is said to have wanted his fans to keep laughing over his life's work instead of being sad about his failing health.

Most Alzheimer's patients will hide their symptoms as long as they can because they'll lose control of their lives if their family or friends are under the impression they can’t take care of things on their own.

The first thing to recognize is that cognitive impairment is a significant risk. Financial advisers and elder law attorneys should take steps to protect these clients' finances from the impact of debilitating conditions like Alzheimer's. This is best accomplished before they notice any changes in the individual’s behavior. With dementia and Alzheimer's so common in the elderly, criminals frequently target older individuals because they can more easily be swayed into releasing money or disclosing personal information.

The first thing elder law attorneys will do is have their clients execute a legal document that lists the family members or friends whom the attorney can contact to discuss private information if he or she believes the client is starting to have cognitive problems. Clients may need some time to consider this difficult issue. However, if they refuse to provide this information, financial planners will often require them to sign a different document that releases the adviser from liability if the client is harmed because of his or her cognitive decline.

Get the complete legal picture from an experienced elder law attorney.

Advisers may also have a checklist to complete each year about their clients to monitor changes and document them over time. When they see “red flags,” like a client with memory loss or difficulty understanding the consequences of decisions, advisers may ask that a trusted contact start attending planning meetings.

Hearing a professional tell you he or she thinks you might have dementia is never welcome news, but this may be the opportunity to get medical assistance and to plan ahead for potential issues in the future.

Reference: Investment News (September 1, 2016) “Hiding Alzheimer's, like Gene Wilder did, is natural, so prepare for it with all clients”

Retirement Planning with a Special Needs Child

“As the life expectancy of disabled adults increases, it’s increasingly complicating one issue for their aging parents: retirement planning.”

Having a special needs child adds complexity to retirement planning. Parents must pay attention to minute but critical details—like beneficiary designations for their workplace 401(k)—while trying to save as much as possible for their own retirement and at the same time trying to ensure that their child will have care after they’re gone.

A recent MarketWatch article, “Parents of special needs children plan for two futures,” says that you’re planning for two lifetimes. In 2030, there will be approximately 1.2 million adults age 60 and older in the U.S. with developmental disabilities. That’s about twice as many of the 642,000 who fit that profile in 2000, according to 2012 research by the University of Illinois at Chicago. Also, according to the National Down Syndrome Society, today people with Down syndrome have a life expectancy of 60, compared with just 25 in 1983.

It’s critical that parents make certain that any savings and investments won’t disqualify their child from means-tested government benefits, which can impact the parents’ ability to save for retirement. To avoid this, parents should ask an elder law or estate planning attorney to help them create a special needs trust. The assets held in the trust for the disabled person won’t affect his or her eligibility for government benefits.

But remember, rather than naming a special needs child as the direct beneficiary of any asset, parents with a special needs trust for their child should name the trust the beneficiary. Parents can use their 401(k) or IRA funds as needed during retirement and any remaining funds will flow to their beneficiary only on their death.

There’s also a 529 ABLE account, which can hold up to $100,000 in assets without jeopardizing a special-needs adult’s eligibility for means-tested government benefits. Families are able to contribute up to the maximum gift exclusion each year.

At some point, parents themselves will need care—in addition to their child. Diminished capacity in aging parents can mean a need for outside help, which can be very costly. Parents should consider getting long-term care insurance coverage at age 50. That’s when they’re still healthy enough to pass medical underwriting but may no longer have large expenses like a home mortgage or college tuitions for other children.

Although expensive, long-term care policyholders can realize certain tax breaks. The IRS stipulates that qualified long-term care insurance premiums are an expense that can be funded through health savings accounts up to certain limits. Plus, long-term care expenses themselves can be paid out of an HSA, provided they meet certain criteria. HSAs offer other tax advantages. The money isn’t taxed when deposited but appreciates on a tax-deferred basis, and it can be withdrawn tax-free to pay for qualifying medical expenses now or in retirement.

The best way to ensure your financial decisions will not negatively impact your child’s eligibility for means-tested benefits is to work with an experienced elder law attorney.

Reference: MarketWatch (July 7, 2016) “Parents of special needs children plan for two futures”