Medi-Cal

 

Getting Help When You Need It

 

Jeff Mascitelli is the owner of CarePatrol, a senior placement agency located in Escondido here in San Diego County.  This week, Jeff submitted an article for our Southern California Legal Center newsletter, as a guest writer.  See below for some great information from Jeff and CarePatrol:

Most people tend to wait too long to arrange for support in the care of a loved one with dementia. For many families, support services are sought at the point where the primary caregiver has reached the end of their abilities to cope with the mental stress or physical demands, or at the point at which the primary caregiver’s own health is in jeopardy.

The energy it takes to care for someone with dementia creates both a physical and emotional drain; the caregiver must be diligent in monitoring the needs of someone with memory loss, and the job can quickly take a heavy toll. The underlying stress of not knowing what to expect and not knowing what may happen next erodes the caregiver’s ability to cope with the multiple physical demands of care giving.

Many people find it difficult to ask someone outside their immediate family to assist in providing the necessary care. By transferring some of the care responsibilities to professional caregivers, the family finds that this is exactly what they need in order to be of continued emotional support to their loved one.

There comes a point where one person may not be able to provide all the care needed by someone with Alzheimer’s disease. It may take an additional person, or even a group of people to meet the personal care needs of your loved one.

Learning to place your trust in other people takes time; learning to place your loved one in the trust of caregivers also takes time. No two caregivers will extend care in exactly the same way; being open to allowing care to be provided in a different but appropriate way will let you become comfortable with the new situation as well as helping the person with dementia to make a smooth transition.

Once the transition occurs, it is common for family members to have feelings of guilt. These feelings are a natural progression from being fully responsible to being only partially responsible. The beneficial trade off is that it becomes possible to meet the person’s physical and emotional needs by sharing the responsibilities.

Being committed to this change is essential in helping this transition to occur. It won’t be a perfect situation, but it is a situation, which is necessary to bring enough balance back into life to allow people to function.

The very best providers don’t always have availability, so planning ahead and knowing the various available options is the best way to plan for the future. Arranging for care while the person with memory loss is still able to integrate into their new lifestyle and routines is helpful. Taking a proactive approach to arranging for care is wise. If you’re caring for someone with dementia, chances are you need support. At the very least, you need a scheduled and specific break to care for your own, personal and emotional needs.

Pre-screening and monitoring every assisted living home and assisted living community’s latest Department of Health Services survey is important to finding a safe environment for a loved on.  This also helps assure you that your loved one is receiving the highest quality of care.

Gaining as much knowledge as possible about your current situation, such as healthcare needs, social activities, memory care, location and financial features, to evaluate and discuss available options is a critical part of a placement service.

Jeff Mascitelli can be reached at (760) 494-7800 or via email at jeffm@carepatrol.com if you have any questions about the topics in this article, or if you would like to learn more about care placement and caregivers for your family.

SB 1124 (Hernandez) Vetoed by the Governor

 

There was a pile of bills on Governor Brown’s desk this last week and many were signed that affected residential care facilities for the elderly.  However, one bill was being watched very carefully and it was unfortunately vetoed by the Governor.

SB 1124 (Hernandez) was a bill that would have offered relief for many Medi-Cal beneficiaries who worry about losing their family homes. While the short term savings – $15 million according to the Governor’s budget folks – amount to less than .05% of the overall Medi-Cal budget, the long term consequences of this veto include the destabilization of low income communities, who are the primary targets of Medi-Cal recovery. Forcing the children of Medi-Cal beneficiaries to sell the family home or to sign “voluntary liens” at annual 7% interest rates is simply bad public policy.

A Follow Up to Asset Protection of IRAs and Retirement Accounts

 

In August, I related that the US Supreme Court unanimously ruled in the case of Clark, et ux v. Rameker, Trustee, et al, that funds held in inherited IRAs are NOT “retirement funds” within the meaning of §522(b)(3)(C) and therefore are not protected in bankruptcy.  I thought that an additional comment was important to bring home the devastating effect this decision can have on a child, or other heir, that has or could have a judgment against him/her in the future.

Lets assume that a child has an inherited IRA.  In other words, the parent has passed away and the IRA is payable to the child.  Generally the child would have to withdraw the funds over a five-year period but often there are special provisions are added to trust documents to allow a “stretching” of the IRA over the life expectancy of the child.  The prior law protected the IRA funds from judgment creditors.

However, now the child’s interest in the IRA is attachable by the judgment creditor.  That means that the judgment creditor can take the assets of the IRA in satisfaction of the judgment.  However, withdrawal of IRA funds carries with it a tax consequence.  This is income to the child.  So not only is the IRA lost to the creditor, but the child has to pay income tax on the money that was attached!  And the money wasn’t even his to begin with…it was the parent’s IRA!

A standalone IRA trust has become a very popular estate planning tool to prevent this disastrous result.  Please contact me for further information if you have an interest in protecting your IRA from your children’s creditors.

Is Applying for VA Pension Benefits Always the Right Answer Even if You Can?

 

After working with clients seeking the VA pension with Aid & Attendance, certain client profiles became apparent where the VA pension may not be in the best interest of the client(s).  Any attorney practicing in this arena must be attuned to myriad factors affecting the client’s decision to file a VA pension claim, such as the client’s age, health, prognosis and life expectancy, net worth, income, housing choice (home, assisted living, memory care, board and care, etc.), expected changes to the living condition and more.  In addition, the type of assets that a client holds can be the most important factor in determining whether or not to file a VA claim.

 

As mentioned in previous blogs, VA planning and Medi-Cal (Medicaid) planning are quite different.  Assets that are exempt under the Medi-Cal rules often are not exempt under the VA Pension rules.  One asset causing particular problems in VA planning is the IRA.  In California IRAs are not countable resources (if in pay status for the institutionalized spouse).  However, they are not exempt under VA Pension calculations.  What I have seen is a marked increase in clients presenting me with IRAs of substantial value.  The challenge is to do something with the IRA to make it not countable but without causing huge tax consequences.

 

When dealing with IRAs, there are really two extreme options.  The client can annuitize the IRA by investing the entire IRA into a single premium immediate annuity.  The downside of this approach is that the income generated from the annuity may be too large in relation to the share of cost and thus will not help the client in accessing the VA Pension.  Additionally all the cash is irrevocably tied up in this annuity and the client can no longer access a lump sum if needed.

 

On the other extreme, the client can liquidate the IRA and transfer the funds into an irrevocable trust or to the heirs.  Here there are tax consequences as the entire IRA value will be income in the year of liquidation.  This income may be offset by medical deductions but the larger the IRA the less can be sheltered.

 

An option in the middle may be liquidating some of the IRA and transferring the funds and annuitizing the remainder.  Detailed analysis must be done to find the “sweet spot”, often requiring services of a CPA or accountant to run tax returns based on different scenarios.

 

There are similar issues with deferred annuities that have substantial accrued income in the policies.

 

Clients have to be aware of the extra time the attorney needs to devote to this analysis (which translates into higher legal fees) to best position the client’s assets or to determine that the VA Pension does not make economic sense to pursue.

 

The bottom line is that even though the client could qualify for the VA Pension, the cost of doing so may be too great and thus the advice would be not to pursue the Pension.

New Medicaid Recipients Through Obamacare May Be in for a Surprise

 

Under the Affordable Care Act (ACA, often called “Obamacare”), more Americans may be eligible for Medicaid due to an expansion of coverage.  These new covered individuals would receive direct Medicare coverage, rather than the government subsidized private health insurance discounts found in the state or federal healthcare exchanges.  Low-income individuals ($16,105 annual income or less for an individual person in 2014) would qualify for this direct Medicaid coverage, regardless of their assets.  Many states have opted to implement this new qualification method for coverage, using the expanded income qualification, including California.

The California Department of Health Care Services (DHCS) estimates that by adopting this higher income threshold, there may be as many as two million new people eligible for Medi-Cal (California’s version of Medicaid) in the state.  Furthermore, these individuals do not have the option to choose between Medicaid/Medi-Cal and the premium assistance options, Medicaid/Medi-Cal is the only option for those who fall into the new income categories.

What these new covered individuals might not know is that states do have the option to try and get paid back for the coverage provided, sometimes years in the future.  Although states say that they will not recover (try to get funds back from the covered individual’s estate) against those who receive care when younger than age 55 (California itself is prohibited from doing so), people who receive Medicaid/Medi-Cal at age 55 or older can expect the state to try and recover against their estate when they pass away.  This can be a surprise for families of those who have low income but own their home, or have other assets or savings, especially for the surviving spouse of a deceased covered individual.

Lawmakers have introduced a senate bill in California (SB 1124 Hernandez) that is aiming to stop recovery against these covered groups, but it is still unclear what stance state governments will take.  In the meantime, new coverage recipients may find that their health insurance may cost them or their families more than they expected, even years in the future.