September 2, 2014










Medicaid Redesign team Proposes Changes to Medicaid Eligibility in New York

Governor Cuomo recently accepted proposals from New York’s newly created Medicaid Redesign Team (“MRT”). While it is early in the process, and the proposals may not be implemented in their present form or at all, budgeting pressures at all levels of government make it likely that some changes in the Medicaid program will occur. Here are a few of the particularly troubling features of the MRT’s proposals:

Elimination of Spousal/Parental Refusal

Currently, a spouse may refuse to support their spouse who is an applicant for Community Medicaid or Medicaid Home Care. When this occurs, Medicaid is obligated to provide care or services to the applicant, assuming he is eligible (under $13,800 in resources), even if the spouse can afford to pay. The MRT is proposing that the resources and income of the spouse should be considered in determining whether the applicant is eligible for Medicaid. This means that spouses, and parents of disabled children, will be required to spend down virtually all of the household’s assets, and contribute a share of their income, before their ill spouse or disabled child will be eligible to receive care.

5-year “Look Back” for Community Medicaid and Home Care

Currently, the 5-year look back and transfer penalties apply only to applicants for Institutional Medicaid (for Nursing Home Care). Currently, applicants for Community Medicaid or Home Care are able to transfer their assets to family members, friends, or trusts, and thereby become eligible for Community Medicaid benefits. The MRT’s proposal would extend the 5-year look back to Community Medicaid and Home Care, which means that many potential applicants will find that they are ineligible for Medicaid, or subject to a lengthy penalty period before benefits can be obtained.

Estate Recovery

Currently, it is difficult for Medicaid to recover from the estates of medicaid recipients where the recipient has effectively transferred their assets during life to a family member or trust. The proposed law would allow medicaid the ability to seek recovery in these cases.

Impact of these proposals

If these proposals become law, many Medicaid applicants and their families will be severely affected. Some will find their financial situation and lifestyle significantly diminished, and others may find it difficult to pay for even basic living expenses. Many may to apply for food stamps, another program funded by the government.

What to do? Now, more than ever, people who need, or may need (even if they think they will never need it), long-term care should make it a top priority to consult a Long Island Elder Law attorney. Planning may need to be taken earlier than previously seemed necessary. As always, with proper planning, t will still be possible to improve your situation, even if these new measures find their way into law.

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Community Medicaid in New York State

How to Stay at home and protect your assets and income

In New York, the Community Based Medicaid program will pay for the cost of a home health aide. When applying, the local department of social services considered the applicant’s income and assets and whether the Medicaid applicant requires the assistance with the activities of daily living. The following is a breakdown of how DSS evaluates each for a New York Community Medicaid application.

Activities of Daily Living

An individual over the age of 65 is considered “disabled” and therefore entitled to Community Medicaid benefits if they need assistance with the activities of daily living, These include bathing, dressing, toileting and feeding. For most that are interested in Community Medicaid, this is not a difficult a difficult threshold to reach. Any applicant with the onset of dementia or Alzheimer’s or with physical disabilities that limit their ability to live on their own, is sufficiently “disabled” enough to receive Community Medicaid benefits.

Income

Income is calculated by adding the following: Social Security, Pensions, income from rental properties or other investments, and require minimum distributions from retirement accounts. Under Community Medicaid rules in New York, the Medicaid recipient is entitled to keep $787 per month of their income. The remainder of the recipients income is called a “spenddown”. The Medicaid recipient is required spend the remainder on the cost of the aide. Medicaid will pay the difference.

Most of those who can stay at home will have expenses far exceeding the $787 limit. Medicaid understands this and allows for an exception. The often used exception is called a “Pooled Income Trust”.

Clearly, for many recipients of Community Based Medicaid, loss of income would prevent them from remaining in their homes. Enter the Pooled Income Trust. A Pooled Income Trust is similar to a bank account, however it administered by a Non-profit Trust Company, such as NYSARC Trust Services or AHRC.

If Mr. Smith has a monthly income of $2,787 in Social Security and pension income, and he is receiving Medicaid benefits for home care in her Long Island home, he has $2,000 in “excess income” under the current Medicaid rules. As a result, Mr. Smith is required to send a check each month in the amount of $2,000 to his home care agency as a contribution to the cost of his care.

However, when Mr. Smith joins a qualified pooled income trust, his $2,000 check will be sent to the trust instead of his home care agency. The trust will then be able to pay any of Mr. Smith’s expenses, such as his utilities, his food, or his clothing, from his own funds or even the taxes on his Long Island home. Mr. Smith will continue to receive his Medicaid home care, as well.

The pooled income trust contains the funds of many disabled persons and is managed by a non-profit organization that maintains separate accounts for each individual. In order to participate in the trust, the disabled person (or his representative acting under durable power of attorney) signs an agreement with the trust. Under this agreement, upon the beneficiary’s death, if there are any remaining funds they are kept by the trust.

Those who wish to participate in a pooled income trust will have to establish that they are disabled, but findings of disability by the Social Security Administration or by Medicaid are valid for this purpose.

Assets

For Medicaid purposes in New York, assets include any real property owned by the applicant or savings in the form of money markets, CD’s, stocks, bonds, cash values in insurance policies, and other non-retirement investments. When applying for Community Medicaid in New York, the applicant’s total assets must be under $13,800. Clearly, most individuals in New York City, Queens, Brooklyn, and Long Island, are worth more than $13,800.

Many have heard of a five-year look-back period on asset transfers when applying for Medicaid. It is true that a five-year look back period exists – but only for Institutional Medicaid application where the applicant is residing in a nursing home. When applying for Community Based Medicaid applications in New York, there is no five-year look back. Therefore, an applicant can transfer their assets in month and apply for benefits the following month. The best way to transfer assets can only be determined on a case by case scenario. While in some cases it may be appropriate to transfer assets to other family members, including adult children, in other cases it would more advisable to transfer the assets to an Irrevocable Trust.

Most people are not aware of the eligibility requirements for Community Based Medicaid in New York. This is unfortunate because many individuals who could be eligible are spending down their savings on the cost of a home health aide. Whether an individual requires an aide for the first time (perhaps they are leaving a rehab facility) or have had an aide with them and are paying privately, many can eligible for Community Medicaid benefits with the proper planning.

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Probate: What it is and why to avoid it

Probate is the process by which a Last Will & Testament is declared valid. When an individual passes away the named executor of the Will must file a Petition, along with the original Will, with Surrogates Court in the county where the decedent resided. Included with the Petition, the Executor must satisfy certain requirements. One such requirement is to serve notice upon all lawful heirs of the decedent.

The heirs are asked to sign a Waiver of Process and Consent to Probate. By signing this form, the heir is consenting to the appointment of the Petitioning Executor – but is not forfeiting any rights to their inheritance. The lawful heirs are the closest relatives – starting with the spouse, children and grandchildren and if there are not any surviving then parents, siblings and nieces and nephews.

At the conclusion of the proceeding – after the Petition has been filed with the necessary Waiver and Consent forms – the Judge will appoint the Petitioning Executor as Executor. At this time, the Executor can collect the assets of the estate and distribute them according to the terms of the Will. Typically the process is not too difficult. However, there are situations where it may be important.

Disinheriting a child:

During the probate process in New York, a disinherited child will still be asked to sign a waiver and consent form. Because the child is disinherited, it is unlikely they would sign the form. The attorney for the estate will be required to ask the Judge to serve that individual with a Citation. The citation would put the individual on notice that he has the right to appear in Court at a predetermined time. If the individual does not show up, they forfeit their rights to contest the estate. Because of these requirements, the entire process is extended and can last for over 6-12 months. Avoiding probate for New York residents is important if they are disinheriting a child. It will reduce the likelihood that the disinherited child will contest the Will. It will also make life much easier for the other heirs, saving them months of aggravation and thousands of dollars in legal fees.

Property in Multiple States:

Sometimes probate only occurs when the decedent owned property in New York and in another state. In fact, many of my clients own their home in Long Island and a winter home on Florida. When this occurs, the heirs are required to probate the estate in New York and Florida. The entire process will easily last for over 1 year. Further, because two probate proceedings are required, two attorneys would have to be hired, one on New York and the other in Florida. The time and costs associated with two probate proceedings are great reasons to speak with an Estate Planning Attorney in New York to discuss ways to avoid probate.

Second Marriages:

Previously, I mentioned that New York probate proceedings require the inclusion of all lawful heirs. When passing away with a spouse and children, they are all considered lawful heirs. If you are in a second marriage and your will distributes your assets in a way that may upset either your spouse or children from a previous marriage, there is a very good chance that the probate process can be turned into a battleground between the survivors. With proper planning it is possible to avoid probate in these circumstances and make sure that your assets are distributed in accordance with your wishes.

New York probate proceedings are not always difficult. However, in certain situations, it is advisable to seek the advice of counsel and learn how you can make life easier for your heirs. Though it is not a great commentary on our society, unfortunately, money changes people. Most family feuds occur when one family member has passed away and their estate needs to be administered. The probate process in New York is important because it requires all family members to be involved. However, this very requirement also makes the process difficult and expensive. If one of your estate planning goals is to ensure a smooth and inexpensive transition of assets upon your demise, it is advisable to avoid probate – especially in the situations described above.

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New ‘Power of Attorney’ Law – Frequently Asked Questions

By Andrew M. Lamkin, Esq.

On January 27, 2009, Governor Patterson signed into law revisions to the New York laws which powers of attorney. The news laws became effective on September 1, 2009. Many of the changes substantially affect the power of attorney. It is not surprising that, during the execution ceremony, my clients have had many questions regarding some of the changes. The following is a sample of some of the questions I have been posed with.

  1. Is the old Power of Attorney still valid?If the old power of attorney was signed prior to September 1, 2009, it is still valid. However, the new form should be used going forward. Therefore, if you have an unsigned power of attorney, drafted under the old law, you should not sign that form and ask your attorney to prepare a new form for execution.
  2. What is the reason for using the new Power of Attorney form?The purpose of the law is to ensure that the principle is aware of the powers he/she is granting to the agent. The new form also describes the consequences of granting such powers, particularly as it relates to the ability of the agent to make gifts or asset transfers on behalf of the principle.
  3. Is it true that the agents I appoint also need to sign the Power of Attorney? If so, why?Yes, the agent must accept the responsibility and fiduciary duties of serving as an agent. The new form contains instructions to the agent, such as to act in accordance with previous instructions from the principle or in the best interest of the principle, to avoid conflicts that would impair the agents ability to act in the best interest of the principle, keep receipts and a record of all transaction made and keep their property separate from the principles property. While the agent does not need to sign at the same time as the principle, the document is not effective until the date is signed by the agent before a notary public.
  4. Why would I also sign the Statutory Major Gifts Rider?Quite often a Power of Attorney is used to transfer assets out of the name of the principal. The transfer is considered a gift – whether it be given to the agent making the transfer to a 3rd party. In the older version of the POA, the principal could initial next in a box next to the “gifting Power” and thus their agent would have the authority to “gift” on their behalf. The form has additional rider whereby the principal can authorize the agent(s) to gift on his/her behalf. Without using this additional rider (SMGR), the agent will not be allowed to transfer assets on behalf of the principal – thus defeating the purpose of Power of Attorney.
  5. I’ve heard that banks and other financial institutions have in the past refused to accept the Power of Attorney. Are they allowed to do that?It is true that many have previously encountered difficulties with their financial institutions when attempting to use the power of attorney. The new law addresses this issue by making it unlawful to refuse to accept an original (or certified copy of the original) power of attorney. Specifically, the law provides that financial institutions may refuse a power of attorney for “reasonable cause.” The financial institution has reasonable cause if the agent refuses to provide an original or certified copy of the power of attorney, if it has actual knowledge of the death of the principle, if it has actual knowledge of the revocation of the power of attorney, if it has actual knowledge of a report or investigation by the local adult protective services concerning the principle or if it has actual knowledge of the principle incapacity if the power of attorney presented is “Non-Durable.” The new law also goes to the extent to allow a special proceeding to be brought to compel a financial institution to accept the power of attorney.
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