I. Long Term Care Medicaid in Florida

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I. Long Term Care Medicaid in Florida

• After the Deficit Reduction Act of 2005

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II. DRA 2005

• Legislative History
• Major changes to eligibility for LTC
• NAELA analysis of federal law is excellent
• Florida implemented DRA effective 11/1/07
• Areas addressed by DRA
• Look Back extended to 5 years for transfers
  before February 8, 2006 (federal) or 11/1/07
  (state)

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II. DRA 2005

• Purchase of an annuity is a transfer unless
  annuity meets certain criteria (irrevocable,
  non-assignable, payout of P I over life
  expectancy) and State is named as primary
  beneficiary
• If spouse, minor or disabled child then State
  must be in second position
• Promissory notes, mortgages are transfers unless
  pay out in equal installments and prohibit
  cancellation at death
• Purchase of life estate in a home is transfer
  unless buyer lives in home for at least one year
  after purchase

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II. DRA 2005

• Equity in home exceeding 500,000 defeats long
  term care eligibility (States may raise to
  750,000) individual may receive other types of
  Medicaid
• Income first is mandatory before allowing an
  increase in the CSRA
• Continuing Care Retirement Communities (CCRC)
  deposit can be asset and CCRC can require spend
  down as condition for entrance

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II. DRA 2005

• CMS issued guidelines on July 27, 2006
• Litigation is still pending in several venues

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III. The Medicaid ProgramBackground

• Federal/State program
• Basic concept is Coverage Group
• Generally means tested limited income/assets
• Poverty alone is NOT sufficient
• Initial coverage groups SSI AFDC
• Mandatory vs. Optional Groups

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III. The Medicaid ProgramBackground

• Eligibility Formula
• (Coverage group) (Financial Test) Eligibility
• For example
• Pregnant Women income less than 185 of PLIS
  benefits
• Institutionalized individual financial criteria
  long term care benefits

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IV. The Medicaid ProgramMandatory Coverage
Groups

• Mandatory Coverage Groups
• State must provide Medicaid to SSI Recipients w/
  one major exception.
• SSI is a means tested cash assistance program for
  the aged, blind and disabled with limited income
  and assets.
• Income less than maximum Federal Benefit Rate
• Assets limited to 2000 plus exempt assets
• Exempt assets include home, car, burial.

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IV. The Medicaid ProgramMandatory Coverage Groups

• Exception to mandatory Medicaid coverage for SSI
  recipients
• So called 209(b) states may use income, resource
  and disability standards no more restrictive than
  those in place on January 1, 1972 this altering
  the mandatory Medicaid SSI equation
• 209(b) States Connecticut, Illinois, Hawaii,
  Indiana, Minnesota, Missouri, New Hampshire,
  North Dakota, Ohio, Oklahoma Virginia

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IV. The Medicaid ProgramMandatory Coverage
Groups

• Medicare Savings Groups
• Qualified Medicare Beneficiaries (QMB)
• Income at 100 FBR/ Assets 5,000/6,000.
• Pays Medicare premiums, deductibles coinsurance
• Does not pay long term care, drugs, acute care
• Specified Low Income Medicare Beneficiaries
  (SLMB)
• Eligibility criteria same as QMB but income
  between 100FBR and 120 FBR
• Pays only Medicare Part B premium
• Qualified Disabled and Working Individuals (QDWI)
• Disabled individuals who lose Medicare because
  return to work, but continue to be disabled
• Income 200 of FBR/Assets below 200 of SSI rate

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IV. The Medicaid ProgramMandatory Coverage
Groups

• Qualifying Individuals (QI-1)
• Income between 120 and 135 of FBR
• Pays monthly Medicare part B until allotment
  depleted.

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V. Medicaid ProgramOptional Coverage Groups

• Disabled elderly with incomes below 100 FBR
• Nursing home residents
• Medically Needy
• Working disabled

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VI. Medicaid ProgramWaivers

• What is a Waiver? Permits deviation from Federal
  mandates
• Three types of waivers
• Home and Community Based Services (HCBS)
• Freedom of choice Waiver
• Pilot Project Waiver
• See generally www.cms.gov/medicaid/waivers

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VI. Medicaid ProgramWaivers

• Florida Waivers
• Channeling
• Project Aids
• Aged/Disabled Adult
• Developmental Services (DS or DD Waiver)
• Assisted Living
• Long Term Care Community Diversion (Diversion)
• Cystic Fibrosis
• Program for all Inclusive Care for Elderly (PACE)

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VII. Medicaid ProgramAdministrative Process

• Applications
• Online and paper
• Designated Representative
• Interview
• Time limits
• Documents required

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VII. Medicaid ProgramAdministrative Process

• Notice of Case Action
• Triggers appeal rights
• Should state basis for action taken
• Hearings
• Chapter 120 hearings before agency Hearing
  Officer
• De Novo proceeding

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VII. Medicaid ProgramAdministrative Process

• Appeals
• To applicable District Court of Appeal
• Change of Circumstance
• Report within 10 days
• Responsibility of Designated Representative

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VIII. Eligibility for Long Term Care

• Categorical/Technical Criteria
• Aged (65 or older), blind OR disabled
• US citizen, legal alien etc.
• Florida resident
• Medical Criteria
• Institutional residence for 30 continuous days
• CARES evaluation of LOC

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VIII. Eligibility for Long Term Care

• Financial Criteria
• Income
• Applicant
• Income Cap
• QIT
• Retroactive eligibility
• Termination of QIT
• Community Spouse

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VIII. Eligibility for Long Term Care

• Post Eligibility Treatment of Income
• Personal Needs Allowance
• Spousal Diversion
• MMNA
• Excess Shelter Costs

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VIII. Eligibility for Long Term Care

• Assets
• Applicant can own countable assets totaling
  2,000.00
• Community Spouse can own countable assets
  totaling 104,400 (2008)
• Countable assets do NOT include exempt,
  unavailable or certain income producing assets

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VIII. Eligibility for Long Term Care

• Exempt Assets
• Homestead up to 500,000 in equity DRA
• Be sure to distinguish from constitutional
  protection
• Vehicles
• Personal Property
• Life Insurance
• Burial Plan
• Burial Fund
• Life estates - DRA

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VIII. Eligibility for Long Term Care

• Lookback, Transfers Penalty Periods
• Lookback
• Pre DRA
• Post DRA
• Transfer
• Generally FMV of asset transferred
• Presumption
• Rebuttal
• Hardship

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VIII. Eligibility for Long Term Care

• Penalty Period
• Not a fine
• Divisor
• Example
• Pre/Post DRA
• Exempt Transfers
• Transfers for value
• For purposes other than Medicaid
• Hardship
• Life Estate

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VIII. Eligibility for Long Term Care

• Exempt Transfers
• To a spouse or to a third party for sole benefit
  of spouse
• To blind or disabled child or to a trust for the
  benefit of such child
• To trust for benefit of disabled individual under
  age 65
• NOTE Transfers of exempt assets are not
  automatically exempt transfers!

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VIII. Eligibility for Long Term Care

• Trusts assets generally considered available and
  income is counted as income in determining
  patient responsibility
• Transfers to irrevocable trusts may trigger
  transfer penalty
• Revocable living trusts DO NOT protect assets for
  eligibility purposes

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VIII. Eligibility for Long Term Care

• Exempt Trusts
• Self Settled d4A trusts
• Pooled trusts
• QITs
• Payback trusts

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IX. Planning

• General Concepts
• Goal is to protect the elder, NOT the money
• It is OK to use money for elders care that is
  the point.
• It is OK to pay the state back
• It is NOT OK to let Medicaid tail wag the dog

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IX. Planning

• Spousal Impoverishment
• MCCA
• MMNA
• Increasing CSRA
• Income First Rule - DRA
• Court ordered support
• Right of refusal

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IX. Planning

• Spend Down
• Best use of funds concept
• Dont spend for the sake of spending
• Does not involve uncompensated transfers
• Examples
• Purchase or improve exempt assets
• Prepay burial
• Purchase Burial CD

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IX. Planning

• Transfer Issues Post DRA
• Typically between spouses or for benefit of
  disabled children
• Beware adverse consequences such as loss of
  control, security and tax implications
• Ethics
• Transactional Capacity
• Self dealing
• Underlying document authorizing transfer
• POA, Trust, etc.

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IX. Planning

• Disclosure
• It is imperative to be totally candid and
  truthful in disclosing all income, assets and
  transfers during the application process
• Failure to disclose is fraud and may subject the
  applicant or advisor to criminal and/or civil
  penalties
• Benefits may be lost at much later date and
  benefit recovery instituted

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IX. Planning

• Tax Issues
• Capital Gain
• Donor vs donee
• Loss of step-up in basis at death
• Sale of home
• Gift tax
• Valuation

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IX. Planning

• Personal Care Contracts
• Payment for services, not gift.
• Must be arms length transaction
• Cannot be for past services
• Should be considered well before need for
  services in drafting legal documents
• Consider using escrow agent for lump sum payments
• Tax implications

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IX. Planning

• Process for implementing PSC
• Assessment
• Log
• Appropriateness of services
• Cost in community
• Life expectancy
• Discount
• Calculate
• Authority
• Written agreement

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X. Medicaid Estate Recovery

• OBRA 93 required estate recovery
• Definition of estate up to states but must
  include at least probate estate
• Expanded estate may include joint property,
  survivor property, life tenancies, etc.
• Exempt categories of property
• Home if decedent survived by spouse, minor, blind
  or disabled child or if sibling lived there for
  year

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X. Medicaid Estate Recovery

• Florida
• Must notify ACHA upon death of individual 55 or
  older
• State has claim as class three creditor in estate
  for benefits paid during life of decedent
• Claim can only be filed after death and is
  currently limited to probate estate or if those
  assets insufficient, revocable trust assets
• See generally 409.9101 733.212(d) 733.707(1)c
  733.707(3) Fla. Stat. (2005)

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XI. Special Needs Trusts

• Concept simple and based on well thought out
  public policy.
• General rule is that trusts are available and
  income is counted
• Special Needs Trusts are exception to general
  rule
• Revocable Trusts
• Invisible to creditors and for public benefits

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XI. Special Needs Trusts

• Irrevocable Trusts subject to two inquiries
• Could any portion of the trust (income or assets)
  be used for the individuals benefit?
• Is any portion of the trust available to someone
  else?
• Pre DRA look back was 60 months
• This was major exception to three year rule
  generally applicable to transfers for less than
  fair market value
• DRA does not distinguish between transfers to
  trusts or otherwise
• Beware of trusts bearing annuities post DRA?

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XI. Special Needs Trusts

• Types of Special Needs Trusts
• Third Party Trusts
• Funded with assets that do not belong to disabled
  individual
• May be inter vivos or testamentary
• Not subject to payback requirement
• First Party or Self Settled Trusts
• Funded with disabled individuals own assets

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XI. Special Needs Trusts

• Self Settled Trusts
• D4A or Disability Trusts (42 USC 1396p(d)4(A)
• Established by for benefit of disabled individual
  under age 65
• May only be established by parent, grandparent,
  court or guardian
• Must be funded with assets of disabled individual
• Must provide for payback to state for Medicaid
  benefits paid during life

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XI. Special Needs Trusts

• Pooled Trusts (42 USC 1396p(d4(C)
• Established by non-profit
• Maintain separate accounts for each beneficiary
• Established for benefit of disabled individual
• May be created by individual, parent, grandparent
  guardian or the Court
• Individuals funds used to create account
• At death of beneficiary, any funds not retained
  must be used to pay the state back for Medicaid
  benefits paid over life

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XI. Special Needs Trusts

• Execution, Funding and Administration are
  critical to success of SNT
• Examples of Supplemental Needs
• ALF
• Medical, dental, mental health
• Care and Case management services
• Travel
• Companionship
• Professional (Attorney, guardian, accountant)

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XI. Special Needs Trust

• Benefits of SNT
• Preserve critical public benefits for medical
  care
• Significantly increase quality of beneficiarys
  life
• May avoid guardianship
• Trust assets are restricted but invested and less
  likely to be misused by beneficiary, family or
  friends

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XI. Special Needs Trusts

• Some issues to watch out for with SNTs
• Beware of deeming rules when suit is settled for
  minor or spouse
• Selection of Trustee is important
• Administration requires specialized knowledge
• Be wary of over structured settlement of lawsuit
• May end up with insufficient funds to care for
  beneficiary
• Liens must be satisfied before trust is funded
• May take time to obtain these documents
• Payback provision means assets frozen at
  beneficiarys death
• Stinking body rule
• Be sure to notify applicable agencies of funding,
  death of beneficiary etc.

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XI. Special Needs Trusts

• Consider using Trust Protector, Trust Advisor
  and/or Trust Advisory Committee
• Trust Protector may be able to hire and fire
  trustee, serve as mediator, distribution manager,
  obtain service providers, or any or all of these
• Family often best suited for Trust Advisor
• Trust Advisory Committee may be helpful for
  continuity if parent dies, but may be cumbersome
  and expensive

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XII. Conclusion

• Constantly changing statutory, regulatory and
  public policy environment
• Stay in touch with organizations on cutting edge
  of interpretation and advocacy for the aging and
  disabled populations
• NAELA
• AFELA
• Elder Law Section of Florida Bar