Gentlemen and Ladies:
I hope you enjoy this Elder Law Update. This update is designed to bring you current on a potpourri of topics and issues that we have been keeping an eye on for the last month of November 2009. We wish to thank our readership and colleagues for their confidence in us and for providing us with referrals over the last year. We will be sure to maintain your confidence and respect in the forthcoming year.
1. No Increases! For the first time since 1989 the CMS (The Centers for Medicare and Medicaid Services) indicated there would be no increase in the community spouse resource allowance (CSRA) and the maximum monthly needs allowance for 2010. Thereby, they will remain at the same levels they were for 2009, which are $109,560 for assets and $2,739 for income, respectively.
The take-away: Remember these numbers— we will continue to use them in our 2010 calculations for long-term care planning.
2. Estate tax update. There is some buzz in the Capitol indicating that there will be a bill introduced that will make the 2009 estate tax rules ($3.5 million estate tax exemption) permanent. No word on whether or not this will pass.
The take-away: Estate tax planning as of this moment still has that topsy turvey quality because we don’t know ultimately what the estate tax exemption may be.
3. Long-Term Care in the Health Legislation. We welcome the presence of long-term care provisions in the health care reform legislation. Both the House and Senate have provisions that will protect nursing home residents and other long-term care recipients from abuses and provide families of nursing home residents more information about the nursing home that their loved one may be in. Both bills require background checks for nursing home staff and more public disclosure will be required for those who own and operate facilities.
The Senate bill has a specific provision that is designed to end “Medicaid’s institutional bias”. This “bias” refers to the fact that many elderly and disabled individuals have been unable to obtain assistance through the Medicaid program, unless in a nursing home environment. Such bill would provide more federal money for community service and support of Medicaid recipients in their home. There is a general push in the Senate bill to make long-term care services available in the communities, as well as in institutions.
The take-away: While the public option has taken most of the air out of the health care debate, it is comforting to know that at least there are some beginning discussions about long-term care in both the House and Senate bills. Neither may go far enough at this point, but at least the nation is finally engaging in a dialogue about long-term care.
The Class Act feature of one of the bills provides that, after paying a modest monthly premium for five years, citizens could be covered under the program to be eligible to receive benefits equal to about $50 per day for a range of services that would help them stay in their homes. $50 per day is inadequate in the minds of most long-term care planning attorneys, but at least it’s a start.
4. Annuities Worked in This Case. In a recent Third Court of Appeals decision, the CA3 affirmed the U.S. District Court Ruling allowing a community spouse to purchase a DRA (Deficit Reduction Act) compliant annuity to protect savings from the cost of her husband’s nursing home care.
The take-away: It appears that, at least in the state of Pennsylvania a community spouse may purchase a DRA compliant annuity of unlimited value to reposition excess assets into a protected income stream for Medicaid purposes. Annuities are not good in all cases, but can work well in some cases.
5. Home Care. No surprise, a recent article indicates that the elderly are more likely to be happy when they are receiving informal care in the home from a family member than when receiving formal care in a skilled care facility from health professionals.
The take-away: I think we will see a shift in long-term care planning in the future that will provide in home care through the expansion of the Medicaid and Medicare programs to allow for such care. Hopefully, it will result in less cost and more satisfaction for the public at large.
Note: There will be circumstances in which various needy long-term care recipients will have to be in a skilled care facility. But for those cases that are not so extreme, home care and the funding of in home care is a welcome alternative if it can be implemented and funded.
6. Long-Term Care Insurance Update. A recent report indicates that Americans are purchasing more affordable long-term care insurance.
The take-away: We continue to recommend to all our clients and prospective clients that they purchase long-term care insurance. Not everybody will qualify, but everybody should at least try to purchase it.
The IRS also recently reviewed its limits for deductibility of long-term care insurance premiums thereby providing a tax incentive for the purchase of long-term care insurance. Keep in mind that the average cost of a nursing home is approaching on a national basis approximately $80,000 per year. When compared to long-term care insurance premiums of $2,000 to $7,000, for example, long-term care insurance, comparatively speaking, looks like a smart purchase.
7. All Veterans Should Know About This. Let’s discuss the Veteran’s Pension Benefit (this is commonly referred to Aid and Attendance). It is estimated by some that approximately 11.5 million seniors, which is 33% of all people over 65, could qualify for pension or death pension by meeting the tests set out by the VA Administration for war veterans or their surviving spouses. The bad news is that not many people are aware of this benefit or know how to apply for it. Only 4.7 percent of individuals that could qualify for this benefit are actually seeking it.
What is this benefit? These are disability income programs available for veterans or their single surviving spouses. The veteran has to have served on active duty at least 90 days, with one of those days being during a period of war. Service in combat is not required; only that the veteran was in the service during war time and was honorably discharged. There is an additional benefit called Compensation. Compensation is only for veterans who are disabled because of injury or illness incurred while on active duty. A veteran cannot receive pension and compensation at the same. The decision has to be made as to which benefit is better for the war veteran. In order for the veteran to receive a pension benefit there is a medical needs test and also an income test, as well as an asset test. Suffice it to say, it is complex calculation but it is worth pursuing for most vets.
The take-away: Advise every vet that you represent to look into the availability of this pension benefit. Not every vet will qualify because they may have too much in the way of income or assets. As a general rule, household assets cannot exceed $80,000, but there is no limit on how the vet can transfer these assets in order to qualify for the benefit. This obviously needs to be done very carefully with a long-term care planning attorney that understands the VA rules on Aid and Attendance. Spread the word to all the vets that you know so that they can look into this for themselves.
P.S. Also, don’t miss our new workshop: “Don’t Go Broke in a Nursing Home” and “The Elder Care Journey”.
Long Term Care Planning Attorneys
The “3 Phase” Lawyers
Legal Counsel Assisting You in the 3 Phases of Your Life:
– Maturing Years – Will, Trust, Taxes, and Asset Protection
– Senior Years – Long Term Care: Pre-Planning and Crisis Planning
– Post Death Years – Estate, Probate, and Trust Administration
“Educate to Motivate”
Anthony B. Ferraro
The Law Offices of Anthony B. Ferraro, LLC
The Estate & Trust, Elder and Asset Protection Law Firm
Columbia Centre I
5600 N. River Road, Suite 764
Rosemont, IL 60018
PH (847) 292-1220
FAX (847) 292-1221
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This document is for discussion purposes only and is not intended to be, nor should it be, considered as legal advice. You should never attempt Medicaid planning, Estate Planning, Probate, or Estate and Trust Administration without the advice of competent legal counsel.