Trying to plan your North Carolina estate? Get the answers you need to protect your family.

Jackie Bedard has compiled a list of the most frequently asked questions in response those who need help protecting their families with North Carolina estate plans.
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  • How Does the Medicaid Application Work for Nursing Home Care?

    What could be easier? Go down to your local Medicaid office, pick up and fill out an application, turn it in, and you’re qualified. Not exactly. While there are medical, asset, and income qualification issues, other aspects come into play when a caseworker evaluates your application. Here we will discuss some of those issues and highlight the need to understand exactly what the application is asking and how answers will be evaluated.

    “Do you intend to return to your home?” Eight simple words that we all understand. But answering that question incorrectly can convert the home from an exempt asset that does not count against the applicant, into a countable asset that will need to be sold and the money spent on nursing home and medical care. Why?

    The home of a Medicaid applicant only retains its exempt status if the person intends to return to the home. But let’s be honest. Unless a person is discharged to a nursing home to receive a short period of therapy and rehabilitation, that person is not likely to come out of the nursing home. In other words, the applicant knows, the family knows, and the caseworker knows, that the person is not likely ever to return home. Nonetheless, the question needs to be answered with a “yes” or the home loses its exempt status.

    When to file the Medicaid application can be a difficult issue as well due to the convoluted Medicaid laws and regulations. During recent years, rules have changed for qualifying for Medicaid. The two most commonly discussed are the look-back period and the calculation of the penalty period. The look-back period is the time frame during which Medicaid can “look back” at your finances to ensure that you meet all the rules for qualifying for Medicaid. The look-back period is nothing more than the length of time for which Medicaid can require you to provide your financial information.

    An elder law attorney in your state will have a complete list of information that the state requires to be submitted with the Medicaid application. Download our article on why it may make sense to hire an elder care attorney to assist you with the Medicaid application.

    At a minimum, an applicant has to provide proof of citizenship; marital status; death certificate for deceased spouse; a photo ID; copies of social security, Medicare, and health insurance cards; information on any pre-paid funeral or burial plans; and complete and comprehensive financial information for the entire look-back period. This information includes all open or closed bank accounts, all investments, life insurance policies, income information, annuities, and literally everything to do with your finances that occurred during the look-back period.

    People sometimes ask, “How does Medicaid find out about my finances?” The answer is simple: you have to tell them. Failing to do so or hiding assets or income are violations of federal law and, when discovered, will be penalized with fines and possible time in jail. No applicants for Medicaid should do anything other than make full and proper disclosure of all required information. And remember, sometimes it’s best to get help from a professional to plan for Medicaid.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Are Joint Accounts Protected for Medicaid Eligibility Purposes?

    All too often a parent will add a child’s name to bank accounts. Often the parent does this as a matter of convenience, to keep the accounts out of probate, or from a mistaken belief that the accounts are then protected from Medicaid and nursing homes. Generally, the parent does not know the potential problems created by adding the child to the accounts, but there are a few issues that should be considered before creating this type of account.

    When a child’s name is added to an account that child becomes an owner along with the parent. The child could draw out the entire account balance and use the money for himself. Further, if the child gets divorced, the account might be considered by the divorce court as an asset of the child’s to be divided in the divorce proceedings. Even if the court ultimately decides that the spouse of the child is not entitled to any of the account, the account might be tied up in expensive litigation for a long period of time.

    Another thing most people don’t realize when they put a child on an account is that the ownership is usually joint with rights of survivorship. This means that when the parent dies, the account does not pass through the parent’s Will, but instead, the surviving child automatically owns the account. If there is only one child, this might not be a big deal. However, if a parent has multiple children and the parent’s Will leaves the parent’s assets equally to all of the children, then the parent’s intention will not be followed insofar as the co-owned accounts legally go to just one child—the child who was on the account. 

    Furthermore, adding a child to an account does not help with regard to Medicaid and nursing home planning. The entire account balance will still be considered by Medicaid as being owned by the parent except to the extent that the child can prove she actually contributed some of her own money to the account.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Why Proper Estate Planning is Important, Especially if Medicaid is Involved

    Most married couples have what are commonly referred to as reciprocal wills. These wills say give all to wife if husband dies first, and give all to husband if wife dies first, and when both are gone, then to the children. What if the husband is in the nursing home on Medicaid and the wife is healthy at home? They have reciprocal wills, and then, the wife dies first. Who inherits with reciprocal wills? The husband does. What does Medicaid do? It stops paying for the husband’s nursing home care until he has exhausted the money inherited from his wife. The wife, as the community spouse, was able to keep half of their assets up to a certain amount plus the exempt assets such as the house and the car. Now the husband in the nursing home owns all of those assets, and they will have to be spent down to nothing before he can qualify for Medicaid to pay for his care again.

    This unexpected and potentially devastating result could have—and should have—been avoided with the use of bypass planning. While several options exist for bypass planning, such as disinheriting the husband and passing those assets to the next generation, one excellent option is the supplemental needs trust.

    The supplemental needs trust is part of the wife’s estate planning documents and is formally established on her death for the benefit of the nursing home husband. The supplemental needs trust does two very important things. First, it maintains the nursing home husband’s eligibility for governmental benefits such as Medicaid. Second, the supplemental needs trust makes the money in the trust available on behalf of the husband to pay for all the things Medicaid does not pay for such as eyeglasses, hearing aids, dentures, and so on. The wife would choose a trustee for the supplemental needs trust (often an adult child) who would be in charge of using the money for the husband’s benefit according to the guidelines set forth in the trust. In this way, eligibility for benefits is preserved, while the wife has the peace of mind of knowing that she has provided for her husband if she dies first, without all of the money going to nursing home care. The nursing home husband’s quality of life is improved and, often, an inheritance is still available to the couple’s children or grandchildren, since the money is not being spent on nursing home care at a monthly cost often exceeding $5,000.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Should I Let the Nursing Home Help With My Medicaid Planning?

    It is not the job of the Medicaid agency or the nursing home to tell you how to use Medicaid’s rules to help you preserve assets. The Medicaid agency basically processes your application and tells you whether you are approved for Medicaid. Even if the Medicaid agent sees ways you can preserve assets, she is unlikely to tell you.

    Nursing homes receive more pay for people paying out of their own pocket than they do for those on Medicaid. Further, the person at the nursing home that assists the nursing home’s clients in applying for Medicaid is not trained to know the strategies available to preserve assets. Her job for the nursing home is to assist those clients in applying for Medicaid who have spent down their assets by paying their money to the nursing home. Her job does not include telling you all the strategies to keep you from having to pay your money to the nursing home. In fact, she might get in trouble with her employer, the nursing home, if she starts telling you such strategies, assuming she even correctly knows any.

    It makes sense that these institutions should be able to support your understanding and use of Medicaid. So, it’s important to realize that while they work with the program, they can’t provide advice on planning, payment, and best practices. An elder law attorney is your best resource to provide clear and strategic approach to Medicaid. It’s always a good idea to do your research as well.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Why Should I Consider Medicaid Planning?

    Medicaid planning is the art and science of working within the Medicaid laws and rules to preserve assets to improve the quality of life of the person receiving Medicaid benefits, the quality of life of that person’s spouse, and to improve the quality of life of the person’s loved ones. Medicaid planning is analogous to tax planning. Tax planning does not seek to evade paying taxes, it only seeks to minimize the amount of taxes owed through good pre-planning and taking advantage of the rules in the Internal Revenue Code. Medicaid planning works the same way.

    Why do Medicaid planning? A true story illustrates its importance. Two adult daughters visited their mother in the Alzheimer’s unit of the local nursing home. This lovely elderly lady, who needed Medicaid to pay for her care, had hearing aids, the kind that are small and fit inside the ear. While the two daughters talked to her, the mother’s hearing aid fell out. Mom picked it up and held it in the palm of her hand for a moment, looking at it. Her daughters thought she was about to insert it back into her ear. Instead, with a quick movement, the mother popped the hearing aid into her mouth and started to chew. She thought it was a piece of candy! She chewed the hearing aid hard enough to destroy it, to crack the hearing aid’s battery case, and to chip and damage several teeth.

    Who pays to replace the hearing aid? Who pays to repair her teeth? In many states, Medicaid will not pay for such things. Medicaid doesn’t pay for eyeglasses in many states or pays so rarely (one pair of glasses every five years) that it’s tantamount to not paying at all. Medicaid does not pay for clothes. If the Medicaid recipient wants a phone in her room, she pays for it herself. If she wants a television in her room, she pays. Medicaid only allows her to have a personal needs allowance, so small that it tantalizes by what it cannot pay, rather than for what it does pay. Medicaid planning sets funds aside to be used for the benefit of the person who needs help. Medicaid planning improves the quality of the person’s life.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • How Does Medicaid Define Assets Within the Qualification Process?

    The first procedure in the Medicaid qualification process is to divide assets into two categories: (1) exempt and (2) non-exempt or countable. Exempt assets do not count against you in the sense that owning these exempt assets does not affect your qualifying or not qualifying for Medicaid. Medicaid considers non-exempt or countable assets in determining whether you qualify.

    Exempt assets are:

    The most common exempt assets are:

    • Your residence
    • One motor vehicle of reasonable value (although what is a reasonable value can vary from state to state)
    • Pre-paid or irrevocable funeral and burial plans (another area where requirements vary from state to state)
    • The combined cash value of life insurance policies with total face value of $10,000 or less
    • Normal household goods including personal jewelry
    • Certain other assets such as Medicaid-compliant annuities.

    Countable assets are:    

    All other assets are countable with the caveat that some states exempt assets, such as an IRA, that generates income. The income is counted as part of evaluating the income limitations, but the asset is not. Similarly, some states exempt income producing real estate property such as rental houses or farmland. Check with your local elder law attorney for your state’s rules.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Why Should I Hire an Attorney to Prepare and File My Medicaid Application?

    It might be easy to think that filing for Medicaid assistance for nursing home care is as simple as completing the Medicaid application forms, but that is just the start of a time-consuming process that often takes several months.

    Working with an attorney can be critical to the success of your application.  Here are a few reasons how working with our office can be beneficial:

    • We make sure that the client is actually eligible and is filing the application at the correct time.  Due to budget cuts, most county Medicaid offices are understaffed and it can take several months for them to review and approve or deny your application.  Thus, it is critical to make sure that you are eligible.  Otherwise, if the applicable is denied several months after filing it, that’s several months of lost coverage—potentially resulting in tens of thousands of dollars being owed to the nursing home.
       
    • We know what documentation is required to support an application so that we can help assemble and file as thorough an application as possible to reduce delays with application approval.
       
    • Unlike the nursing home, our duty is to act in your best interests.  The private pay rate at most nursing homes is significantly higher than the Medicaid reimbursement rate (the amount that the government pays them for a patient that is approved for Medicaid).  Thus, it’s not really in the nursing homes best interest to help you get your application approved as quickly as possible.
       
    • We conduct a full application “audit” prior to submitting the application to Medicaid.  We review all of the bank statements and supporting information as if we were as caseworker from the Medicaid office to look for any “red flags” that might slow down or jeopardize the application.  If we find any, we’ll work with you to get them properly documented to ensure that your application gets approved as quickly as possible.
       
    • While your application is pending and after the application is approved, you are still responsible for paying a “Patient Monthly Liability,” i.e., your share of the nursing home bill.  We’ll calculate this amount for you to make sure that you don’t fall into arrears while the application is pending.

     

    Spend-Down and Eligibility Planning

    If it is determined that you are not yet eligible for Medicaid, then we can assist you with a Medicaid spend-down plan to achieve Medicaid eligibility.  There may be separate legal fees to create a Medicaid spend-down plan.  As part of the plan, we’ll discuss various Medicaid exemptions and allowable expenditures until assets are reduced sufficiently to qualify for Medicaid.  Legal fees for Medicaid spend-down planning and/or assistance with preparing and filing the Medicaid application are allowable Medicaid spend-down expenses. 

    Pre-Filing of the Application

    Our process begins with working with you to gather the supporting documents for the Medicaid application.  When appropriate, we are happy to contact banks and financial institutions on your behalf to gather supporting financial information (though some banks will charge a fee for this service). While we will do what we can to reduce the burden on you of tracking down information, we will need your involvement in tracking down records such as important biographical information (e.g., birth certificates and similar), but we work with you to try and make this as easy as possible.  We’ll provide you with a thorough checklist of information needed.

    Our office will then conduct a pre-submission “audit” of the application materials and supporting documents to ensure that the client is eligible, that we’re filing at the correct time, and if there are any potential “red flags” in the financial statements, that we have the supporting documents for them.  We’ll also calculate the Patient Monthly Liability for you and instruct you regarding how to pay the nursing home while the application is pending.

    Filing of the Application & Advocating for Eligibility

    Once we file the application, we will handle all follow-up and interaction with the Medicaid office until the application is processed.  Due to budget cuts, many Medicaid offices are understaffed, so the Medicaid application review process can take several months.  During this time, we will follow up on your application status to ensure that it was properly received and filed, that is has been assigned to a caseworker, and what the status of the application processing is. 

    While the application is pending, we’ll answer any questions that might arise from the Medicaid office regarding the application.  We’ll also continue to work with you if any questions arise on your end.

    We are well versed on the Medicaid manual and the various eligibility rules and exemptions.  When we file your application, we include supporting documentation specifically citing the various sections of the Medicaid manual that allow for certain exemptions to ensure that the application is processed in a timely manner and that you receive the exemptions that you are entitled to.

    During the Medicaid application process, it is common for the Medicaid office to send “Requests for Information.”  These letters come with strict deadlines and it is critical to comply with them.  We docket all deadlines, ask for extensions when needed (however the number of exemptions is limited), and work diligently to gather the information requested and submit it in a timely manner.

    Review of Medicaid Approval

    When the Medicaid application is approved, we’ll review the approval letter to ensure that the Patient Monthly Liability was properly calculated.  We’ll also advise you regarding how to ensure that you maintain ongoing Medicaid eligibility and don’t do something to jeopardize your Medicaid status. 

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

     

  • What are the major differences between Social Security, Medicare, and Medicaid?

    Social Security 

    Social Security is a federal program providing retirement, disability, and survivor benefits to wage earners and their spouses, former spouses, widows, widowers and children.  Eligibility for benefits under the program are based up on the wage earner’s work history.  The amount of the monthly Social Security benefit is based upon a number of factors including the number of years worked and the amount of earnings during those years.

    Medicare

    Medicare is a federal health insurance program that provides health care benefits to the following: (1) persons age 65 and older; (2) individuals with certain disabilities that are under the age of 65 years; (3) disabled children of certain wage earners; (4) individuals with permanent kidney failure. 

    There are different parts of Medicare to help cover specific services:

    Medicare Part A

    Part A provides coverage for inpatient hospital stays, limited coverage for rehabilitation in a skilled nursing facility after a hospital stay, hospice care, and some home health care. For most Medicare beneficiaries, there is no monthly premium for Part A

    Medicare Part A does not cover your full bill.  Here is what you are responsible for out-of-pocket for a hospital stay (as of 2017):
    Deductible of $1,316 for each benefit period
    Days 1-60: $0 coinsurance
    Days 61-90: $329 coinsurance per day
    Days 91+: $658 coinsurance per each "lifetime reserve day" after day 90 (up to 60 days over your lifetime)
    After lifetime reserve days have been used: All costs

    For Medicare Part A to cover skilled nursing care, you must first have a qualifying hospital stay of at least 3 days in inpatient status prior to being discharge to the skilled nursing facility for care. If you had a qualifying hospital stay before ending the skilled nursing facility, then here is what you are responsible for out-of-pocket (as of 2017):
    Days 1-20: $0 for each benefit period
    Days 21-100: $164.50 coinsurance per day of each benefit period
    Days 100+: All costs

    Common Mistake: 
    Do not make the mistake of assuming that Medicare will pay for your nursing home care. Medicare covers very little if any, of the nursing home bills of most seniors. If your nursing home stay is not preceded by a 3-day inpatient stay, then Medicare will not cover any of the nursing home bill. Even if your nursing home stay was preceded by a qualifying hospital stay, as you'll see from the figures above, coverage is for a very limited period of time.

    Medicare Part B

    Part B provides coverage for certain doctors' services, outpatient care, medical supplies, and preventative care. Most Medicare Part B beneficiaries pay for the Part B coverage via a monthly premium that is deducted from their monthly Social Security benefits. For 2017, the standard part B premium amount is $134. However, some will pay less than this because a cap on the premium since it increased more than the Social Security cost-of-living-adjustment, while others may pay a higher amount if they have higher income.

    For Part B, you pay a deductible of $183 per year. After you have met your deductible, then you generally will pay 20% of all Medicare-approved services covered by Part B.

    Medicare Part C

    Part C, also known as Medicare Advantage Plans, is a type of Medicare health plan offered by a private company that has a contract with Medicare to provide your Medicare Part A and Part B services. Most Medicare Advantage Plans offer prescription coverage. While there are certain benefits that must be included, each Medicare Advantage plan can charge different out-of-pocket costs and have different rules for you get your health care services.

    Medicare Part D

    Part D adds prescription drug coverage. To get coverage, you must join a plan run by an insurance company or a private company approved by Medicare. The plans can vary in cost and which drugs are covered.
     

    Medicaid

    Medicaid is program for low-income and needy people. It provides coverage to children, the aged, and/or disabled, and others who are eligible to receive assistance. It is derived from federal law, but is administered by the each respective state, thus the rules for North Carolina may vary a bit from rules in other states.  The program is funded by both federal and state funds.  There are various Medicaid coverage programs for different populations. The most common coverages that we see in our office are for seniors needing help with their nursing home care or individuals with special needs that need assistance.

    To read more about Medicaid coverage for nursing home care in North Carolina, check out The Ultimate Guide to Paying for Nursing Home Care in North Carolina authored by Cary elder law attorney, Jackie Bedard.

  • Doesn’t Medicare cover the cost of nursing home care?

    No, this is a common misconception, but Medicare does not cover the cost of long term nursing home care.  Medicare is an insurance program that provides health care benefits to persons who are over the age of 65, or are blind or disabled.  For recipients, it is basically their primary form of health insurance.  But what many seniors fail to understand is that Medicare does NOT pay for long-term care expenses!


    Part of the reason for the confusion is that Medicare does pay for rehabilitation.  If a senior on Medicare has a hospital stay of at least three days and then is admitted to a Skilled Nursing Facility for rehabilitation, Medicare will pay for the care—for a while anyway.  Medicare will only pay for the rehabilitation for a maximum of 100 consecutive days.  Plus, once those days are used up, they’re gone for good. 

    Did you notice that I said a “maximum” of 100 days?  That’s because it’s actually based upon how well the patient responds to the rehabilitation.  The patient must experience some improvement.  If the patient’s health is not improving, Medicare may decide that the condition is long-term and benefits will be cut off—even if you haven’t reached 100 days yet. 

    Another thing that most people don’t realize is that Medicare only fully covers the first 20 days, after that there is a daily deductible of about $140 per day!  So a 100 day stay could still end up costing you over $11,000!  [If you have a Medicare Supplemental Insurance policy, it might help cover some or all of the difference though.]

  • How are nursing home and long term care expenses usually paid?

    Contrary to popular believe, Medicare pays very little of the cost of nursing home and long term care expenses.  The most common forms of payment are either private pay (from your own savings and/or proceeds from a long term care insurance policy) or Medicaid.