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ALZHEIMER’S ASSOCIATION2012SPRING CAREGIVER CONFERENCE

CHANGES IN MEDICARE/MEDICAID

AND HEALTH CARE

DECISION MAKING ON A STATE AND NATIONAL LEVEL

KEITH P. HUFFMAN

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Advance Directives for health care

Basic estate planning needs for families faced with Alzheimer’s Disease

Planning for the cost of nursing home care

Planning for Medicaid waiver services to allow families to age in place

TODAY’S

PRESENTATION

AROADMAP

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VA benefits available to help with the cost of care

Early onset Alzheimer’s Disease and the Social Security Compassionate Allowance Initiative

Caregiver Agreements and the IRS Household Employee Rules

TODAY’S

PRESENTATION

AROADMAP

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Under-standing Advance Directives

ADVANCE DIRECTIVES

&HOSPITAL POLICIES

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Advance DirectivesHealth Care

RepresentativeHealth Care Power of

AttorneyLiving WillLife Prolonging

Procedure DirectiveOut of Hospital DNRPsychiatric Advance

DirectiveOrgan and Tissue

DonationFuneral Directives

Hospital PoliciesAND: Allow Natural DeathDNR: Do Not ResuscitateNo-Code/Physician

When death is Imminent

Coming Soon:

P.O.S.T.Physician’s Order

for Scope of Treatment

UNDERSTANDING ADVANCE DIRECTIVES

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Directs who is to make health care

decisions in the event you are unable to

Not a substitute for a discussionHealth care professionals may ask if you have a living will, but these are of little value for ongoing health care concerns.

Health care by committee

is not a proper plan

HEALTH CARE REPRESENTATIVE(AND OTHER ADVANCE DIRECTIVES)

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Using Various Instruments

BASIC ESTATE PLANNING NEEDS

FOR FAMILIES FACED WITH ALZHEIMER’S

DISEASE.

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Powers of AttorneyWillsTrustsBeneficiary Designation Instruments

Nursing Home Cost Planning

TESTAMENTAR

Y INSTRUMENTS

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Durable

Immediately Effective

Unlimited

Contains a Gifting Clause

POWER OF ATTORNEYMOST USEFUL WHEN IT IS:

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Like almost everything—they have varying degrees of complexity

WILLS

And Everything In-between…

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TrustsSpecial Needs TrustsPour-over Provisions

WILLSWHAT CAN MAKE THEM MORE

COMPLEX?

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Inter vivos Trusts: A trust made during your lifetime.Revocable TrustIrrevocable TrustPour-over Trust: Receives property from a will

Testamentary Trust: Created under the terms of a will and does not take effect until the settlor dies

TRUSTSCOMMON TYPES

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Commonly: Transfer on Death or Payable on DeathSavings Accounts, Checking accounts, Certificates of Deposit (CDs) Most anything at a Financial Institution

Transfer on Death Property ActAllows you to add Transfer on Death to just about anythingReal EstateTitled VehiclesSecurities

BENEFICIARY DESIGNATION INSTRUMENTS

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WHO NEEDS LONG-TERM CARE?

PLANNING FOR THE COST OF NURSING

HOME CARE.

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In 2012, the average cost of nursing home care is $5,139.00/mo; that is on average $61,668.00/year.

Long Term Care insurance is a way to protect assets from the cost of nursing home care if you can afford it. However, most do not have such insurance.

Medicaid can also pay for care A Power of Attorney is the crucial document in this

planning So long as that is in place, little need be done until

someone needs nursing home care.

NURSING HOME COST PLANNING

DEFICIT REDUCTION ACT OF 2005SIGNED FEBRUARY 8, 2006ENACTED IN INDIANA NOVEMBER 1, 2009

DRA

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The DRA is a Federal Law that requires Indiana to change many of the current Medicaid laws

The Look Back Period for gifts changes from 3 years prior to application to 5 years

Changes the treatment of gifts and the imposition of a period of Medicaid ineligibility

Imposes a penalty period for any small gift or charitable donation

Changes the way annuities are treated Requires Indiana to be named as the first beneficiary for

repayment of funds paid out for the annuitant or his spouse.

WHAT IS THE DEFICIT REDUCTION ACT?

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MomGifts $100 to 4 children at Christmas & for each birthday

Gifts $200 monthly to her churchGifts $300 annually to United Way

Annual gifts $2,300 over $1,200 permitted$2,300 ÷ 5,139 = .45 month penalty or 13.68 days, rounded up to 14 days

EXAMPLE

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PENALTY START DATE

For transfers of property after October 31, 2009, the penalty begins when:

Mom is in the nursing home;Mom is qualified for Medicaid;Mom applies for Medicaid to help pay for her care; and

Mom is turned down for Medicaid only because of the gift

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State of Indiana must be named as the primary beneficiary unless there is:A spouseA minor child; orA disabled child

If any of these are named primary, the State can be named secondary

Applies to all non-qualified annuities purchased on or after November 1, 2009

ANNUITY RULES

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The following transactions bring old annuities under the November 1, 2009, rules:

You put more money in;You take some money out;You change the ownership;You annuitize the policy; orYou change the distribution of the annuity

EXISTING NON-QUALIFIED ANNUITIES

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ALLOWING FAMILIES TO AGE IN PLACE

PLANNING FOR MEDICAID WAIVER

SERVICES

Provides Medicaid covered services in the community for those individuals who meet the financial criteria for Medicaid eligibility and meet the need for nursing home level of care. Services may include home health care, adult day care & respite care.

Some assisted living facilities participate in the Waiver Program.

THE MEDICAID WAIVER PROGRAM

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The spousal impoverishment rules apply to the waiver program. This means Mom or Dad can obtain help for these expenses without having to consider nursing home care and without going broke.

THE MEDICAID WAIVER PROGRAM

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TO HELP WITH THE COST OF CARE

VA BENEFITS AVAILABLE

Aid & Attendance AwardMonthly PensionServed 90 days in military including one day while we were at war

VA BENEFITS

The Aid & Attendance Award provides benefits of up to $1,703 per month to a veteran; $1,094 per month to a surviving spouse; $2,019 per month to a couple; or $2,631 to a veteran married to another veteran.  For many, this award can make the difference between a comfortable retirement and constant worries about making ends meet.

VA BENEFITS

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EXPANDING TO COVER EARLY ONSET ALZHEIMER’S DISEASE

SOCIAL SECURITY COMPASSIONATE

ALLOWANCE INITIATIVE

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“Social Security has an obligation to provide benefits quickly to applicants whose medical conditions are so serious that their conditions obviously meet disability standards.” http://www.ssa.gov/compassionateallowances

Although applicants still have to meet other criteria to qualify for Social Security Disability (SSDI) and Supplemental Security Income (SSI), by adding Early-Onset Alzheimer's to the initiative, individuals diagnosed with Early-Onset (younger-onset) Alzheimer’s are considered eligible when it comes to the disability criterion just by the virtue of the disease.

SSA’S COMPASSIONATE ALLOWANCE INITIATIVE

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KEEPING MOM AND DAD AT HOME

CAREGIVER AGREEMENTS AND

THE IRS HOUSEHOLD EMPLOYEE RULES

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Can many times be used instead of making gifts with more benefits for all members of the familyMom and Dad are much more likely to live at home.

Mom and Dad do not burden their children.The child (daughter and/or son) providing the services is fairly compensated among the siblings.

Mom and Dad’s money stays in the family instead of being spent at the nursing home.

Compliance with all taxes and Medicaid laws

PERSONAL SERVICE (CAREGIVER) AGREEMENTS

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Personal Service Agreements have tax implications and therefore should be prepared by an experienced Elder Law Attorney

Tax implications to consider:Social Security TaxMedicare TaxFederal WithholdingsState Income TaxesEtc.

IRS HOUSEHOLD EMPLOYEE RULES

Insist those you care for consult with an experienced Elder Law Attorney to review their current legal documents and draft new ones, if necessary.

Provide information to those who want to develop a plan for how to cover the cost of long term care or home care.

Encourage Discussion “Talk to your family/children about your wishes”.

Hire or Associate with a geriatric care manager for assistance with placement options and caregiving issues.

HOW TO PLAN FOR THE FUTURE