Long Term Care in New Jersey: Legal and Financial Issues Presented by Donald D. Vanarelli, Esq. Certified Elder Law Attorney Registered Guardian Accredited Professional Mediator

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Long Term Care in New JerseyLegal and Financial
IssuesPresented by Donald
D. Vanarelli, Esq. Certified Elder Law
AttorneyRegistered GuardianAccredited
Professional Mediator
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Overview of Government Sources for Long Term Care
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A Truth Almost Everyone Must Face
Most older people develop physical or mental
impairments which at some point prevent them from
living completely independent lives.
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Long Term Care
Long Term Care refers to the kind of care a
person needs when he or she is unable to care for
himself or herself due to illness, frailty or
cognitive impairment.
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Long Term Care
Long Term Care is different from traditional
medical care. Long term care helps one live as
he or she is now it may not help to improve or
correct medical problems.
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If you cannot live independently, what care
options are available?
1. Stay at home - Home Health Care 2. Move in
with Family 3. Assisted Living Facility 4.
CCRC 5. Nursing Home
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The Need for Long Term Care

• 1 of 2 women and 1 of 3 men who reach the age
  of 65 will use a nursing home at some point
  during their lives.
• 40 of nursing home residents are between 18
  and 64 years of age.
• Average stay in NH - 2.9 years
• 7 in 10 individuals will need home health care.

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The Cost of Long Term Care
Average cost of 24 hour Home Health Aides
provided by an agency - 4,500 per month, or
54,000 per year. Range of costs charged by
Assisted Living facilities - 4,500 - 6,500 per
month, or 54,000 - 78,000 per year. Typical
cost of Nursing Home care in New Jersey - 8,000
per month, or 96,000 per year.
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Who Pays For Long Term Care?
1. Private Pay 49 2. Medicaid 44 3.
VA Benefits 4 4. Medicare 2 5.
Private Long Term Care Insurance 1
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Long Term Care CostsCovered by Medicare
1. Home Health Care 2. Nursing Home Care
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Medicare - Home Health Care Aides

• Covers up to 100 home visits per spell of
  illness.
• Preconditions to payment prior hospital stay
  of at least 3 days and home health care initiated
  within 14 days of discharge.
• Beneficiary must be homebound and need skilled
  nursing care, physical or speech therapy, NOT
  custodial care.

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Medicare Payment of Nursing Home Care

• Immediate prior hospital stay of 3 days
• Admitted to NH within 30 days of hospital
  discharge
• Covers, skilled nursing care or rehabilitation
  only, NOT custodial care.

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Custodial Care
Custodial Care (sometimes called Personal
Care) is the level of care provided in ALFs and
NHs. Custodial Care helps one with activities of
daily living (ADLs). ADLs include bathing,
eating, dressing, toileting, continence and
transferring. Medicare does NOT pay for
custodial care. Compare Custodial Care vs.
Skilled Nursing Care
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How Much Does Medicare Pay?

• Maximum Coverage - 100 days
• Day 1-20 - Medicare pays 100 of covered charges
• Day 21-100 - Medicare pays all covered charges,
  except coinsurance amount. Year 2008 coinsurance
  payment 128/day, or about 3,840/month
• Day 101 - on your own

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Medigap Policies
Medigap policies fill in the gaps in Medicare
coverage, but do NOT extend coverage for long
term care needs beyond what Medicare provides.
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Compare Medicare and Medicaid

• Medicare is an insurance program. Medicaid is
  a welfare program.
• Medicare is for elderly and disabled people
  regardless of their income or resources.
  Medicaid is for elderly and disabled people with
  low income and resources.

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Medicaid
Joint Federal and State Program Provides
medical assistance for financially eligible
persons who are aged, blind or disabled.
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General Eligibility
1. U.S. Citizen or legal alien 2. New Jersey
Resident 3. Age 65 or older, blind or
disabled 4. Financial Limitations
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Income and Resources Limits
Income - all income is counted in determining
eligibility Income cap - Community Medicaid
programs which pay for home health aides and care
in Assisted Living facilities have an income cap.
In 2008, the cap is 1,911/month. No cap for
Nursing Home Medicaid.
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Resource Limits
Countable resources - all assets in the sole
name of applicant, in the sole name of spouse, or
in joint names, either with the spouse or another
person. Includes pension and retirement assets
of BOTH the applicant and spouse. Resource
Limits - 2,000 for an individual and 3,000 for
a couple. Excess resources - must be spent
down.
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Transfer of Resource Rules
Instead of spending down excess resources on
long term care costs, some have attempted to
achieve Medicaid eligibility and preserve assets
by making gifts to family members and others.
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Transfer of Resource Rules
To prevent gifting of assets, Medicaid imposes a
penalty period, or period of ineligibility for
Medicaid, for all gifts made within the lookback
period.
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Estate Recovery The Medicaid Lien
Federal and State law requires the States to
seek, from the estate of a deceased Medicaid
recipient, recovery of all Medicaid benefits paid
when the recipient was 55 years of age or older
when the Medicaid benefits were received.
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Comparing Medicare and Medicaid Coverage for
Long-Term Care Costs
Medicare covers home health aides and nursing
home costs for many people, but only for a short
time. No financial limits. Medicaid covers
home health aides, assisted living facilities and
nursing homes, but only for aged, blind and
disabled people who meet strict financial limits.
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Long Term Care Planning
Includes LTCI Wills Advance Medical
Directives Powers of Attorney Trusts Guardianships
for incapacitated persons Asset
Inventory Restructuring of assets
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Estate Planning When A Spouse Is Confronting
Health Issues
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Estate Planning ForThe Healthy Spouse
When one spouse is a resident of a nursing home
or medical institution, the community spouse
may utilize various strategies to protect and
retain resources for the family without
jeopardizing the institutionalized spouses
Medicaid eligibility.
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Asset Titling-Deeds, Bank Accounts and Life
Insurance
Transfer Title of Principal Residence to CS- this
is an exempt transfer when determining
eligibility of IS. -Significant estate
planning measure -Home will escape Medicaid
lien
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Spend Down

• Pre-Pay Real Estate Taxes
• Pre-Pay Homeowners Insurance
• Pay Off Debts
• Pay For Services

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Convert Countable To Non-Countable Assets

• Buy household goods and personal effects
• Make home repairs and improvements
• Purchase a more expensive home
• Purchase life estate from children
• Purchase a new car
• Buy cemetery plot
• Pre-pay funeral

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Retitling of Bank Accountsand Life Insurance

• Life Insurance
• Change beneficiary designation to a third party
• Assign policy to funeral home
• Assign policy to children
• Borrow Cash Value
• Bank Accounts
• Change bank accounts to exclude name of
  institutionalized spouse

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Changing CSs Will to Exclude Disabled Spouse

• If institutionalized spouse is named beneficiary
  of CSs Will and CS passes away first, IS may be
  ineligible for Medicaid
• Elective Share Issue

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Durable Power of Attorney with Gift-Giving Power

• POA - Legal instrument which authorizes an
  agent to perform specific acts documented in
  the POA on behalf of the principal.
• NJ statute specifically authorizes an agent
  under POA to conduct banking transactions.
• To execute POA, principal must understand
  nature and effect of appointing an agent.
• Durable POA is not affected when principal
  becomes disabled. Must specifically so state in
  document.

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Durable Power of Attorney with Gift-giving
Power, contd

• Plan ahead to avoid guardianship proceeding-In re
  Keri issues
• Gifting powers must be specifically granted to
  the agent for purposes of Medicaid planning.
• Tailor gifting provisions to include other
  siblings or alternate agent in process to avoid
  appearance of self-dealing.

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Exempt Transfers

• Transfer Home To
• CS
• Disabled Child
• Caregiver Child
• Sibling with an equity interest
• Transfer Non-Home Assets To
• CS
• Disabled Child

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Exempt Transfers,contd

• Transfer To Trust for Disabled Child
• Disability Annuity Trust
• (d) (4) (A) Trust
• Pooled Trust

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Transfer For Value-No Penalty

• Purchase Commercial Annuity
• Spousal Annuity Trust
• Private annuity
• SCIN
• Sell Remainder interest in seniors home
• Buy Life Estate in childs home

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Transfer For Value, contd

• Board and Care Agreement
• Life Care Contract
• Family Reverse Mortgages
• Interest-Only Note

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Countable Transfers - Result in Penalty

• Large transfer
• Half-a-loaf transfer
• Monthly or Sequential transfers
• Transfer home, retain life estate

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Thank You For Your Attention

• Questions or Comments?