He looked into his wife’s eyes and flatly stated, “I’ll put a gun to my head before I ever go to a nursing home.”  But the sad truth is this:  His wife will be the one to bear the burden caused by his long term care needs and her own aging challenges.

This couple are frugal people who worked hard all their lives.  They lived on two Social Security checks, his modest pension, and minimal investments.  They were able to pay their bills and enjoy simple luxuries—until the out-of-pocket expenses of long term care begin to drain what they worked a lifetime to save.

His wife selflessly provides in-home care for her beloved husband, until eventually the day comes when her strength is not enough to pick him up or keep him from wandering away from home.  On that day, it might be a doctor, a discharge planner, or a policeman who looks into her eyes and speaks the harsh truth to her: “I’m sorry, ma’am. You can’t take care of him by yourself any more.”

This poor woman now faces a nightmare as she walks the elder care journey with a frail and declining husband.  First she learns that neither Medicare nor their health insurance provide any payment for home health care costs.  Later, when her husband must be relocated to a long term care facility, she discovers that neither Medicare nor Medicare supplemental insurance will pay the facility’s $3,000 to $8,000 monthly cost.

Quickly, she also learns that Medicaid is not available because she has “too much money.”   Her husband’s care will be offset by Medicaid only if she and her husband meet stringent income and asset limitations.  If they have assets over approximately $101,000, they must “spend down” their life savings, which Medicaid defines as “excess assets.”  When all excess assets have been spent on her husband’s medical care, then Medicaid will also control her monthly income.  She is restricted to $2,500 per month; any income above that must be used to pay for her husband’s care.

Later, when her husband dies, she receives more bad news.  She loses his pension, and as the “survivor spouse” she loses one of their two Social Security checks.  She has spent nearly all of their assets to provide for her husband’s care, and now she can’t even afford to live in her own home.  The nightmare of long-term care has left her impoverished and stolen her independence.

She will now face her own elder care journey alone.  She will not have the luxury of a spouse who will serve her as she served him.  No one will be there to dutifully care for her at home and to delay the day that she must move to a long term care facility.  She will not have the financial resources that he had, because Medicaid called them “excess liquid assets” and she spent those assets on his care.  As a single person, she will not be provided with assistance by the State of Illinois or the federal government until she has become impoverished to the point of a paltry $2,000 or less in total assets. The indignity committed against her does not stop there, for now she must sign over all her income to the nursing home as well, except for a miserly “personal needs allowance” of $30 per month.

The loving wife who faithfully cared for her husband is now out of money and out of options.  $30 per month will not even give her the privilege of having her hair done.  She is alone—and living the nightmare of long term care in America.

Illinois senior citizens may soon be punished by the State of  Illinois when they announce new Medicaid eligibility rules for nursing home (NH) and Supportive Living Facility (SLF) benefits. The goal is to save the state big money by creating new ways to deny fragile senior citizens assistive living or nursing home help. The state wants to impose harsh penalty periods of ineligibility for NH and SLF services for any Illinois senior has given away money or assets during the five years (60 months) prior to a Medicaid application.  Can you imagine being punished for helping your children and grandchildren?

Due to recent unemployment in the younger generations, Illinois seniors have paid loved ones’ medical bills, mortgage payments, tuition, and grocery bills.  Illinois Healthcare and Family Services (HFS) is about to implement rules which will punish seniors whose only “crime” is helping those they love.

The current Illinois Medicaid eligibility rules are fair and include a  “forgiveness factor.”  Seniors who give away money or other assets create an immediate Medicaid penalty period of eligibility. When  a senior is still healthy and/or wealthy enough to cover their own healthcare expenses the ‘penalty’ quickly goes away.  For example, if a senior gives away $10,000 to a loved one, within about three months the senior is “forgiven” for that gift.    BUT—

The new rules have no forgiveness factor. They will impose penalty periods of  ineligibility that will hang over a senior’s head for five years.  If you apply for Medicaid within five years after a gift, you will be punished with non-payment of Medicaid nursing home costs. This will happen even when the senior is ill and impoverished.  Both the senior and the long term care industry will be denied payments.  Can you predict what your health will be in five years?

Illinois must provide law-abiding seniors with fairness and a Medicaid forgiveness factor!

Illinois elder law attorneys have organized a DRA Task Force for Senior Fairness.  Ask Governor Pat Quinn and HFS Director Julie Hamos to be fair to Illinois’ frail senior citizens and long term care providers.  Contact Jessica Bannister at jessica@lawelderlaw.com to become involved!

He is 80 years old but looks like mid-60s.  When I told him that, he remarked, “Thanks, but the old noodle is giving out.  Doctor says I’ve got dementia.”  His wife nodded in vigorous affirmation.  She added, “He goes to the store with a list, but always messes it up.”  She was not trying to be hurtful—rather, she just wanted me to know how things really sit.  This time, he nodded in animated agreement.

They have been clients for years, and they had urgently called to “get their affairs in order.”  He has his brain scan results, and she has emphysema and COPD.  She has already signed a DNR for herself.

As I listened to the facts, she threw me a bombshell.  “I heard about the five-year Medicaid look-back rules, so I cashed in my IRA and gave $10,000 to each of our four adult children.”  I gulped and said, “That was a mistake.  Based on what you have told me about your health and your assets, it is highly likely that one of you will need nursing home care before 2015.  Your gifts to your children will create a six- to eight-month penalty period of ineligibility for Medicaid nursing home benefits.

She asked, “What should we do?”

I answered, “You should call your family members and tell them that you made a mistake and to please give you back the money.”

Her look told me that she would never do that.

Her husband said, “We screwed up, huh?  We should have called you first.”

Most elderly clients who give away money due to a medical crisis will need long-term care within a short period of time.  If you know a client or a client family member who is thinking about giving away assets “to protect them from being lost to nursing home expenses,” please tell them to call an elder law attorney first.  Our firm can be reached at 630-585-5200 or rick@lawelderlaw.com

Medicare and Medicaid sound the same, but they are as different as the two beauty queens you see here. Frankly, it’s surprising how many people don’t recognize the difference between the two.

Few people realize the limitations of Medicare—which winds up costing them a substantial loss of dignity if or when they get hit with long term care expenses. Medicare is the federal health insurance program provided on behalf of persons who are over the age of 65, blind, and/or disabled. Medicare does not provide long term care benefits (nursing home care, for instance). Medicaid, which is a poverty health care program, pays for 50% of the nursing home care in America today.

Medicare only cares about short-term or “acute care” health care. Medicare only cares about your health care expenses if you can get well! Medicare does NOT provide care when a person is diagnosed with a long-term illness and needs nursing home care. Essentially, our senior citizen health care is based on a “diagnosis lottery.” If you are “lucky enough” to have a heart attack or diabetes, then you are covered by Medicare. You are out of luck if you are diagnosed with Alzheimer’s, Parkinson’s, Huntington’s disease, or anything else that lands you in a nursing home. If you need a nursing home and you are not impoverished, you are on your own dime!

So, unfortunately for seniors, the blind, and disabled persons living in 2010, the acute care model does not help them when they are afflicted with long term care costs. Medicaid is the safety net for the impoverished. Once you become sufficiently impoverished, then Medicaid is designed to provide care for you. To qualify for Medicaid nursing home benefits you must be very ill and have no more than $2,000 total assets.

An elder law attorney knows the ins and outs of the public benefit system and can provide the client with solutions that help to fulfill the requirements of the law and still provide a better future for themselves or their loved ones. We help clients fulfill their legal obligations and avoid unnecessary impoverishment due to long term care expenses. If you want more information regarding a specific client situation, please contact us.

This blog is not about strangers lurking in an alley.  Nonetheless, nursing homes are routinely “invaded” in the wee hours and weekends, because they are subject to unannounced night and weekend visits by trained teams of Medicare inspectors.

These snoopy night stalkers show up and  “camp out” in the facility for days.  These teams have full authority to review and audit over 180 different items covering all major aspects of care in a skilled nursing facility.  They inspect the buildings, the medical records, the residents, the cleanliness, the staffing hours per resident, and much, much more.  These investigators are there to find deficiencies, note them, and  report them to the Center of Medicare and Medicaid Services (CMS).  The report is used to provide a rating which is available to the public at the Nursing Home Compare website. 

The website lists each nursing home and assigns a quality rating between 1 and 5 stars.  A 5-star nursing home is heavenly! Unfortunately, a 1-star nursing home is a probably a living hell.

CMS has created this rating system to help seniors and their loved ones see behind the scenes and beyond the nice décor to find a safe and nurturing care facility for a frail senior.
 
The most coveted score is a 5-star Medicare quality rating.  That score is received by only 10% of all skilled nursing home facilities.  There are very few facilities who receive such an award even when they are in the luxury market.  It is even more impressive when a facility which accepts Medicaid residents qualifies as a 5-star-rated Medicare facility.  Recently Tower Hill Healthcare of South Elgin, Illinois announced in their newsletter that they had received a 5-star award.  I was impressed!  Tower Hill is a 206-bed Medicaid-certified skilled care facility with a 31-bed Alzheimer’s wing.

In my next blog, you will be introduced to a 33-year-old orthodox Jewish synagogue cantor and  wedding singer, Jeremy Amster, whose leadership skills have earned the 5-star rating.

The growing popularity of the Veterans Administration (VA) Aid & Attendance program has been fueled by financial services organizations promoting their products with the enthusiastic cooperation of long-term care facilities.  On the surface, it seems to be a great partnership, in that both the financial service organizations and the facilities are helping veterans obtain a benefit that helps pay for their care—right now. Unfortunately, these organizations may fail to take into account the probable long-term Medicaid issues of veterans, as well as the tax and investment-related issues associated with obtaining VA benefits. This short-sightedness could result in a care facility having some liability to a resident for future loss of eligibility for Medicaid benefits. This is what I call the “Medicaid Time Bomb.”

It is common for financial service organizations, under the guise of “supporting aged veterans,” to suggest that excess assets be given away to the veteran’s adult children and then placed in annuities. This is done to meet VA asset limitations.  Unfortunately, if within the next five years the veteran should require long-term custodial care in a nursing home, he or she soon discovers that the rules for obtaining Medicaid benefits are quite different than the rules for obtaining VA benefits.  The veterans can be denied Medicaid benefits and penalized for a period of time, largely due to the gifting of money to their children.

How can the Medicaid penalty situation be resolved?  The only cure is to have the annuities cashed in and returned to the veteran. But wait!  Cashing in an annuity often triggers substantial early-withdrawal penalties.  Due to these early-withdrawal charges, even if the gifted annuity is cashed in, the family will not have enough money from the annuity to cure the Medicaid penalty. When a veteran’s family realizes that the veteran has lost money and may still be ineligible for Medicaid benefits, they are understandably at the loss of both assets and Medicaid benefits. That is what I mean by the Medicaid Time Bomb.

Elder law attorneys owe a fiduciary duty (that’s a high duty of loyalty and protection) to their clients.  When we as elder law attorneys analyze a veteran’s overall situation, we must look at the best interests of our client both today and tomorrow.  We know that an annuity may be an important tool to use in both VA and Medicaid planning. 

A qualified elder law attorney concentrates his or her practice in the areas of estate planning, disability planning, Medicaid, VA benefits, guardianships, and elder abuse issues. Call our office to learn how you can avoid the Medicaid Time Bomb.

Have you been wondering if the proposed Obama-Biden “plan to lower healthcare costs and ensure affordable, accessible, health coverage for all” would provide long-term skilled nursing home care for frail seniors?  The short answer is…no! 

The key features of the plan focus on providing access to healthcare to “over 45 million Americans—including over 8 million children” who lack health insurance.  The Obama-Biden Plan has five main strategies: 

1. Invest in electronic health information technology systems
2. Improve access to prevention and proven disease management programs
3. Ensure that health providers deliver quality care
4. Lower drug and insurance costs
5. Reduce insurance costs for catastrophic illness coverage

Here is the principal goal as highlighted on the Obama website:  “Barack Obama and Joe Biden will guarantee affordable, accessible healthcare coverage for all Americans.”  Despite the presence of the seemingly straightforward words “healthcare coverage” and “all” in the sentence above, it’s critical to understand the definition of those words.  When it comes to healthcare and politics, even simple words may not have a common-sense meaning.  “Healthcare coverage” means “payment for acute healthcare costs.”  Acute care is the type of care given to recover from short-term diseases and accidents. 

In the United States, public healthcare payers, such as Medicare and Tri-Care (for retired military) and the private healthcare insurers, reimburse healthcare providers only for acute care and acute illness rehabilitation.  These payers specifically exclude long-term care in a skilled care nursing home.  Care in a skilled care nursing home is defined as chronic care.  Neither Medicare nor private health insurance pay for chronic care in assisted living facilities or nursing homes.  Unfortunately, the bottom line for America’s frail seniors with a long-term illness is that the word “all” (as defined in the Obama-Biden Healthcare Plan) does not include them. 

Sadly, this means that under our current healthcare program and the Obama proposals, the majority of America’s seniors have no alternative but to pay their own nursing home bills.  If you have Alzheimer’s, Parkinson’s, or another long-term illness—you are still on your own.  Even if Obama-care is enacted, you will be required to pay your own tab for long-term healthcare until you are impoverished enough to qualify for Medicaid.

But there are ways to prevent the impoverishment required to qualify for Medicaid, if you plan far enough ahead.  We recommend that boomers and seniors seriously consider long-term care insurance.  And to avoid some of the worst outcomes, please contact an elder law attorney who can help you plan today for better long-term healthcare tomorrow.

It is no secret that senior citizens are the wealthiest segment of the U.S. population. Much has been written and said about the trillions of dollars that will ‘change generational hands’ as the current seniors pass their wealth to their children/grandchildren. Unfortunately, seniors have to contend with a dirty little secret that was put in place by the current Republican administration when they passed the Deficit Reduction Act of 2005 (DRA).

The DRA made changes in the way that the government will punish seniors for acts of both charity and giving. The Medicaid rules presume when a senior makes a charitable or family gift, that the gift was an attempt to get rid of excess assets in order to qualify for Medicaid nursing home expenses. That’s right—seniors are guilty until proven innocent. The burden of proof is on the seniors to show that when they gave money to their church or child, that they had some other reason than to qualify for Medicaid.

This DRA rule creates a cruel penalty of ineligibility for Medicaid services if and when a senior who gave away money needs nursing home services at any time within 5 years after the gift. Our government has created a punishment for seniors who may suffer chronic long-term illness within 5 years after a gift.

As long as this law is in place, seniors must remember that the IRS gift tax rule allowing gifting up to $13,000 tax-free is only a tax rule. Giving away $13,000 may cause a senior to suffer a loss in nursing home coverage of 2 to 3 months if they need such assistance within 60 months after giving that money away. Thanks to our government, giving may now be hazardous to your health…care!

Artwork by Rhiannon Richardson of the Neighborhood Center of the Arts

What do you do if you’re an elderly parent still caring for a disabled child who can’t care for him or herself?  Last week I wrote about “empty nesters” who have never really had an empty nest. These are parents of children with disabilities such as autism, cerebral palsy, hearing loss, mental retardation, vision impairment, muscular dystrophy, genetic and chromosomal disorders, Down’s syndrome, and fetal alcohol syndrome, to name just a few.  Some disabilities are apparent at birth, and others are caused by accidents or manifest themselves as mental illness later in life, but the end result is the same:  The child is being cared for by a loving parent who worries about who will provide care for that child once the parent is gone.

The most common advice of the attorney who does not practice in the area of special needs trust planning (or what we prefer to call Tender Loving Care (TLC) Trusts) has been for the parent to disinherit the child.  Disinherit means to make sure you leave that disabled child with absolutely no allocation of money directly.  This gives the simplistic idea that one should just leave extra money to one of the other children who will provide care for the disabled child and money management.  Even in the best of families, this is usually a disastrous idea for the following reasons:

• It’s extremely difficult for an individual who receives extra money not to comingle that money with their own, and eventually treat it as their own.  That money would become available in the event that the healthy child becomes divorced or is otherwise subject to loss to a creditor.
• In many families the dynamic is such that the healthy children have some anger or resentment toward the disabled child because that sibling got more attention.  Thus, healthy children may not want the role of caregiver and banker for their disabled sibling.
• And most unfairly, leaving money to one child for disbursement to another child puts a target on the back of the healthy child, in that all complaints and concerns about money will be directed to that individual.

It is the job of the elder law and special needs attorney to assist families like this in developing proper planning so that we can help the parents to create a better way to manage both money and care after they are gone.

A TLC Trust is designed to work in partnership with any public benefits such as Supplemental Security Income and Medicaid.  It is a way for parents to leave money for the needs of their child beyond what public benefits would pay.  A TLC Trust can provide supplemental care for recreation, social activities, pets, special therapies, entertainment, and even vacation opportunities for a child by the use of trust money.  A TLC Trust can also purchase professional care management, which can enhance not only the dignity, but the quality of life of a disabled child. The TLC Trust is a far more loving and caring solution to the challenge of providing for a child with special needs.

Please don’t disinherit your child with a disability; contact an elder law attorney who can assist you in designing a custom plan to meet the very special needs of your child, so that he or she can be given tender loving care after you have passed away.

Alton Nichols and Betty Hall, Photo by David Lassman

Recently, the child of one of my clients told me about a wedding her parents had attended. The wedding was that of a giddy-in-love senior citizen couple. The groom was 82, the bride 87; both living at the same long-term care facility. The bride was heard to gush, “I wanted to marry a younger man this time.”

Love and marriage is wonderful (as is obvious from the photo of Alton Nichols and Betty Hall, pictured above) but for senior citizens it raises very different issues than it does for the young and newly married. One obvious issue is the fact that most seniors already have adult children, and many of those adult children are quite vocal in their concern about their mother or father becoming involved in a new love life. Before mom or dad get married, many children want to make sure that their inheritance is protected.  To that end, many seniors use wills or trusts which direct that assets go to “my kids and grand-kids,” or create pre-marriage-property-settlement agreements (pre-nuptial contracts) which require that the pending bride or groom give up any interest in their new spouse’s assets.

Despite these attempts to safeguard assets for the original families, there is another hidden danger to the family wealth whenever a senior chooses to wed. A trust or pre-nuptial agreement does not protect the assets of one spouse from being drained to pay for an ill spouse’s medical costs, including long-term care costs. The “Common Law of England” required long ago that husbands and wives be legally responsible to pay for each others’ necessaries, and our own government adopted that requirement. Included in those “necessaries” are food, housing, and yes: healthcare. This includes the cost of care when someone is diagnosed with Alzheimer’s, Parkinson’s or any other long-term illness.

To protect themselves from this hidden drain on a lifetime of earnings, healthy vigorous seniors who are considering getting “hitched” must consider the wisdom of purchasing long-term care insurance and perhaps engaging an elder law attorney to assist them with longevity planning. All this must take place before your marriage, so that you have some idea of what your real risks are. Elder law attorneys have many creative legal solutions that go beyond the traditional estate planner’s basic will and trust, which merely deal with the distribution of your assets at the time of your death, avoidance of probate, and minimization of estate taxes.

If you are over 65 and considering saying “I do,” please recognize that you are also promising to pay for your new spouse’s future long-term care medical expenses. “In sickness and in health” is a standard line in most wedding vows, and the state of Illinoise takes that vow and makes it law. In the Chigaco metropolitan area the monthly cost for assisted living expenses ranges from a low of $2,500/month to about $6,000/month, and the cost for skilled nursing home care ranges from $5,500 to $10,000/month, or more.

With these numbers in mind, it’s good to remember that when you say “I do” what you’re really saying is “I’ll pay.”