Michigan Elder Law & Estate Planning
Help for Michigan Seniors on Estate Planning, Disability Planning, Medicaid and Nursing Homes
From the category archives:
When both spouses of a married couple need nursing home care, the most immediate result is a catastrophic bill of $12,000.00 per month or more. Without the advice of an elder law attorney, the couple will continue to spend down assets until their assets reach just $4,000.00 in cash. Substantially better results can be achieved with some planning, but understanding how to proceed in these circumstances is a delicate matter. The rules are counter-intuitive. [click to continue…]
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The Department of Human Services for the State of Michigan has announced new numbers for 2009. Every year the numbers concerning Medicaid eligibility for long-term care are adjusted to reflect increases in the cost of living.
The new community spouse resource allowance is a minimum of $21,912.00 and a maximum of $109,560.00. This number is important for married persons with a spouse in the nursing home. It determines how much in cash and otherwise non-exempt assets the spouse living in the community will have to spend down before qualifying for Medicaid.
The community spouse income allowance, which is the income that the community spouse can keep each month and not have to pay to the nursing home has been increased from a minimum of $1,750.00 to $2,739.00. The new utility allowance (which provides additional income protection for the community spouse above the minimum protected amount) is $550.00 per month. However, it is important to note that these numbers do not adjust until April of this year. [click to continue…]
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The Centers for Medicare and Medicaid Services (CMS) has published their long-anticipated 5 star rating system for nursing homes. The breadth of the new rating system is astounding: in Michigan alone, complete information can be found on 425 nursing homes. The system offers information on the number of beds available, the types of payment accepted and, most importantly, several indices of nursing home quality. Each nursing home is given an overall rating, as well as ratings on health inspections, staffing, and quality measures.
One quickly wonders how accurate the system really is. Given how much information is in the system, and how many people collected data, it seems difficult to believe that the system will be completely fair, objective and accurate. And indeed, several ratings for facilities that I know well have lower ratings than I would expect. CMS provides this Note to Nursing Homes to explain their methodology in collecting information. It is also helpful to note CMS’s policy that:
Each nursing home is also required by law to have the latest survey results on hand for the public to review. For the most recent survey results, contact the State Survey Agency. Their phone number is in the Helpful Contacts section of this website.
CMS also provides a number of useful publications related to nursing homes and care of the elderly generally. For instance, there is Medicare’s Guide to Choosing a Nursing Home, the Nursing Home Checklist, and a guide to Your Rights as a Nursing Home Resident.
And for those families seeking to avoid nursing home care, CMS has published resources on alternatives to nursing home care.
Private resources are also available to families seeking assistance with care management, financing, nursing home selection and other related issues. For instance, www.wheretofindcare.com is an extensive resource where patients and their families can both locate and comment on a wide variety of medical care providers. As an attorney who works with the elderly regularly, I publish several guides to Nursing Home Care, Hospice Care, and Medicaid Planning. Families with aging members can quickly become overwhelmed with the stress of caring for an aging person and our maze of a health care system. These resources are intended to help families find the information they need as quickly as possible.
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Estate recovery has been permitted under the Federal law since 1965. In 1993, the Federal law was changed to require states to have some form of estate recovery. Since that time, many different kinds of estate recovery programs have been enacted in different states. Michigan became the last state in the union to enact estate recovery when it passed an estate recovery law in September of 2007. Despite being tremendously unpopular, the estate recovery law passed in Michigan during the state’s budget crisis in the fall of 2007.
There are probably two reasons why Michigan adopted estate recovery. First, with the state budget showing severe deficits, law-makers were interested in any possibility of increased revenues. Second, the Federal government was threatening to deny money to fund Michigan’s Medicaid program because Michigan had failed to comply with the 1993 mandate to enact some form of estate recovery. The loss of matching funds from the Federal government would have been a catastrophic blow to Michigan’s already ailing budget.
Whether estate recovery will do anything to balance Michigan’s budget is far from clear at this point. Estate recovery programs are costly to administer and the recovery is often meager. It is hard to say whether recovering an estimated 5% will be worth the trouble:
The Mackinac Center for Public Policy has estimated that Michigan could actually see a savings of up to $85 million per year if it implemented an estate recovery system, which was based on collections nationally from 2004 that totaled $362 million out of the $45.8 billion spent on nursing home Medicaid recipients.
“Oregon had the second highest rate of collection at 5.8 percent, or $13 million of its $238 million Medicaid nursing home care bill. Given the $1.7 billion Michigan spent on Medicaid nursing home care, a 5 percent recovery rate would save taxpayers $85 million,” wrote TaraLynn Velting, an estate attorney with Garan Lucow Miller in Grand Rapids and an adjunct scholar with the Mackinac Center.
There are always unintended consequences to laws that seek to increase revenues. The enactment of estate recovery is likely to contribute to anxiety among seniors and may actually result in more extensive Medicaid planning. Protecting a home from estate recovery often requires a combination of strategies that are only available to families who are proactive and begin the planning process sooner to avoid risk to the home. The net impact of estate recovery could therefore be an increase in the number of people receiving long-term care Medicaid.
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The Michigan Department of Human Services has enacted several changes to the Medicaid eligibility rules recently that impact qualification for long-term care Medicaid.
Perhaps the most important change relates to divested assets (gifts) and the calculation of penalty periods. Generally speaking, the gifting of assets results in a period of ineligibility for Medicaid long-term care. Under previous policy, returning some of the gifted assets would result in a partial cancellation of the penalty period. For example, if a long-term care Medicaid applicant had given away $61,910.00, she would ineligible for Medicaid for 10 months ($61,910.00/$6,191.00=10 months). But if that same person returned $30,955.00 ($6,191.00 x 5), the penalty would be reduced to 5 months. This former policy was known as a “partial cure” of a penalty. [click to continue…]
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The Michigan Department of Community Health announced today that Detroit nursing homes would receive $1.7 million for improvements. See this Free Press article for coverage. I have never visited a nursing home that did not have a dedicated, but heavily-burdened staff. And obviously there is no end to the needs of the nursing home residents. I can imagine that in Detroit in particular, there would be certain areas that would feel an acute scarcity. I am glad that the patients and staff of these facilities will be receiving some help.
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Retirement for many people is defined as the time when they are able to live off of the income from their assets combined with Social Security and perhaps a pension. But anything from a car accident to a stay in long-term care can quickly deplete retirement assets and jeopardize the fruits of a lifetime’s work. This can be particularly devastating for a married couple when one of the spouses falls ill and the assets of both must be devoted to the care of one. Medicaid law permits the Community Spouse (the spouse not in long-term care) to retain a maximum of $104,400.00 in non-exempt assets, but without planning, in many cases that amount can be lower.
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This article provides some preliminary answers to an important question for today’s retirees and elderly: Is long term care insurance a good idea?
In general, I advise clients to get long term care insurance. The effects of being unprepared for this financial tsunami are too overwhelming to do otherwise. But be careful and be informed.
Among your first questions should be the extent of the coverage and the anticipated premium schedule. It is not uncommon to see nursing home care costs increase 10% or more in a single year. It is therefore important to understand how much coverage is needed and how much adequate coverage will cost.
Once you have that information, consider this: a properly drafted and funded asset protection plan will give you all of the benefits of your assets, but fully protect them from the cost of long term care after five years. When you look at the premiums, the escalation of long term care costs, and the uncertainty of the future, an asset protection estate plan combined with 5 years of long term care insurance makes the most sense for many people.
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