Nursing Home Costs Rise Sharply in 2017

The median cost of a private nursing home room in the United States has increased to $97,455 a year, up 5.5 percent from 2016, according to Genworth’s 2017 Cost of Care survey, which the insurer conducts annually. Genworth reports that the median cost of a semi-private room in a nursing home is $85,775, up 4.44 percent from 2016. The rise in prices is much larger than the 1.24 percent and 2.27 percent gains, respectively, in 2016.

The price rise was slightly less for assisted living facilities, where the median rate rose 3.36 percent, to $3,750 a month. The national median rate for the services of a home health aide was $22 an hour, up from $20 in 2016, and the cost of adult day care, which provides support services in a protective setting during part of the day, rose from $68 to $70 a day.

Alaska continues to be the costliest state for nursing home care, with the median annual cost of a private nursing home room totaling $292,000. Oklahoma again was found to be the most affordable state, with a median annual cost of a private room of $63,510.

The 2017 survey was based on responses from more than 15,000 nursing homes, assisted living facilities, adult day health facilities and home care providers. The survey was conducted by phone during May and June of 2017.

As the survey indicates, nursing home care is growing ever more expensive. Contact your elder law attorney to learn how you can protect some or all of your family’s assets.

For more on Genworth’s 2017 Cost of Care Survey, including costs for your state, click here.

This article was reprinted with the permission of ElderLawAnswers.com.  If you have any questions regarding the material in this article and how it applies to Iowa residents, please contact Pearson Bollman Law at 515-727-0986.

What Expenses Can ABLE Accounts Pay For?

In passing the Achieving a Better Life Experience (ABLE) Act in 2014, Congress created a new way for potentially millions of people with special needs to save for disability related expenses without jeopardizing their eligibility for federal public benefit programs.

In fact, these savings plans, popularly known as ABLE accounts, may be used for an even broader array of products and services than many beneficiaries may realize – including housing expenses, bus fare, financial management services or even, potentially, a smart phone.

The ABLE Act itself defines “qualified disability expenses” as “expenses related to the eligible individual’s blindness or disability which are made for the benefit of an eligible individual who is the designated beneficiary.” It then goes on to list a range of categories of potential uses for funds set aside in ABLE accounts, including:

“Education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses, which are approved by the Secretary under regulations and consistent with the purposes of this section.”

In subsequent proposed regulations released in June 2015, the Treasury Department and Internal Revenue Service (IRS) reiterated that the term “qualifying disability expenses” should be “broadly construed” to include any benefit related to the designated beneficiary “in maintaining or improving his or her health, independence, or quality of life.”

This means that there is no requirement that the benefit be medically necessary, such as is the case when determining health care services covered by Medicaid, or that it benefit no one but the designated individual. As an example, the regulations specify that a smart phone could qualify as a covered expenses, provided that it serves as “effective and safe communication or navigation aid for a child with autism.”

Originally, the proposed regulations would have also required states to establish safeguards for ensuring that ABLE funds are only used for qualifying expenses, presumably by requiring beneficiaries to obtain pre-approval before distributing funds. In response to a backlash from disability advocates, many who feared that such requirements would be unduly burdensome, the Treasury Department and IRS rescinded this requirement in a notice issued November 2015.  So as things stand now, you don’t need to get approval to withdraw funds and pay for a qualified disability expense.

The Obama administration, however, never issued final regulations, although the IRS has stated that “[u]ntil the issuance of final regulations, taxpayers and qualified ABLE programs may rely on these proposed regulations.”

To protect against future inquiries from the IRS, the ABLE National Resource Center recommends that beneficiaries maintain detailed records of expenses paid for by ABLE account assets, as well as how these expenses relate to their disabilities in case the expenditures are ever questioned by the IRS.  Misuse of ABLE account funds could result in tax penalties and possible loss of public benefits.

Click here to watch a video and read a fact sheet about qualifying disability expenses from the ABLE National Resource Center.

For help in setting up an ABLE account or to find out whether something you want to use the account for is a qualified disability expense, contact your special needs planner.

This article was reprinted with the permission of SpecialNeedsAnswers.com.  Iowa’s ABLE program is described at http://www.ablenrc.org/state-review/iowa.  If you have any questions regarding the material in this article and how it applies to Iowa residents, please contact Pearson Bollman Law at 515-727-0986.

Funeral Planning

This spring, after more than 100 years of life, my great grandmother passed away.  She left a legacy of stories and traditions that will live on in our family.  What she didn’t leave, however, were directions for her funeral arrangements.  When the family began planning her memorial service, one thing became crystal clear:  a lot of people had different ideas about what she would have wanted at her funeral.  This resulted in a lot of confusion, disagreement, and ultimately hurt feelings about what was or was not going to be included in her service and who was going to do or say what.

In order to avoid these sorts of situations for our families, we can ensure that our estates are properly planned for and that actual funeral arrangements are in place.  My great grandmother had more than enough time to write down what she wanted for her memorial.  This was a person who spent more time retired than she did in the work force; she just didn’t think to do it.  The link below is to an article that deals with funeral planning, and is helpful if you are looking for a place to start.

http://estate.findlaw.com/planning-an-estate/funeral-planning-guide-faq.html

Additionally, all of our estate planning documents include a section for memorial instructions.  This way, your family can easily find your wishes at the time of your passing.

Iowa Requests Waiver of Retroactive Medicaid Requirement

Iowa officials are asking the Centers for Medicare and Medicaid Services to waive the requirement that the state provide three months of retroactive Medicaid coverage to eligible Medicaid recipients. CMS is currently accepting comments about this proposal.

Medicaid law allows a Medicaid applicant to be eligible for benefits for up to three months before the month of the application if the applicant met eligibility requirements at the earlier time. This helps people who are unexpectedly admitted to a nursing home and can’t file a Medicaid application right away.

Iowa’s amendment proposes “eliminating the three-month period of retroactive eligibility for all Medicaid beneficiaries effective for new applications or new add-on requests.” Medicaid would pay only for care starting the first day of the month of the application. The senior advocacy group Justice in Aging warns that if CMS accepts Iowa’s proposal, not only will low-income Iowans be harmed, but other states may decide to follow suit, affecting low-income recipients nationwide. CMS is accepting comments on this waiver until September 7, 2017. Justice in Aging has sample comments available. The Iowa Health Care Association said it knows of no other state for which CMS has taken away this benefit.

For a Des Moines Register article on Iowa’s request and local opposition to it, click here.

This article was reprinted with the permission of ElderLawAnswers.com.  If you have any questions regarding the material in this article, please contact Pearson Bollman Law at 515-727-0986.

Campaign Launches to Boost Enrollment in ABLE Accounts

New savings accounts for families of people with disabilities, known as ABLE accounts, are rapidly becoming available nationwide as programs continue to roll out on a state-by-state basis. But this new savings option, as potentially revolutionary as it is, contains many nuances and caveats, and is not available to everyone.

To help consumers navigate the ABLE process and accelerate the opening of accounts by eligible individuals, the ABLE National Resource Center has launched an education and information campaign called #ABLEtoSave.

“ABLE accounts are a down payment on freedom for millions of individuals with disabilities and their families,” Christopher J. Rodriguez, the Center’s director, said in a news release. “Yet, public knowledge of ABLE accounts is somewhat lacking and enrollment in ABLE programs still has significant room for growth.”

Congress passed the Achieving a Better Life Experience (ABLE) Act in 2014, amending the Internal Revenue Code to allow families to create new tax savings plans, modeled after the popular 529 savings plans for higher education, for paying for disability related expenses.  Families enrolled in ABLE plans can contribute up to $14,000 annually to these accounts, and up to $100,000 in total, without jeopardizing the account beneficiary’s eligibility for Supplemental Security Income (SSI), Medicaid and other crucial government benefit programs.

Forty-nine states have passed legislation creating their own ABLE programs. Twenty-seven of these programs are up and running, with New York State launching its program most recently, on August 10.

As part of its #ABLEtoSave program, throughout the month of August the Center rolled out videos and fact sheets focused on five main topics: 1) What Is ABLE?; 2) Who Is Eligible?; 3) What Can Funds Be Used For?; 4) How Do I Manage My Account?; and 5) How Do I Enroll?  The Center has also released an #ABLEtoSave toolkit for those who want to get the message out about the benefits of ABLE accounts for people with disabilities and their families.

“The goal of the #ABLEtoSave campaign is to significantly boost public knowledge about ABLE accounts and ultimately increase the amount of ABLE accounts opened across all ABLE programs,” Rodriguez said in the news release.

Click here for more information on the #ABLEtoSave campaign.

Read more articles about the pros and cons of ABLE accountshow three state programs differ, and practical uses for an ABLE account.

This article was reprinted with the permission of ElderLawAnswers.com.  Iowa’s ABLE program is described at http://www.ablenrc.org/state-review/iowa.  If you have any questions regarding the material in this article and how it applies to Iowa residents, please contact Pearson Bollman Law at 515-727-0986.

Final Exam

In the last two articles (here and here), I discussed what to do after a loved one dies – a loved one who died unexpectedly and had done no planning. This article is going to discuss planning for your death. A couple in their 90s came in to prepare, as they said, for their “final exam.” That is what we are going to discuss – your final exam and how to prepare for it.

Advance planning of funeral and memorial services. What do you want? A traditional funeral followed by burial or cremation? Or direct cremation with a memorial service at a later time? You can relay this information to the person you want to take care of it or you can visit a funeral home for advanced planning. Under Iowa law you can sign a form (Declaration of Designee for Final Disposition) saying who you want to make the decisions regarding disposition of your remains and planning your funeral or memorial services.

Organ donation. Indicate on your driver’s license if you want to be an organ donor. Make a copy of your driver’s license for your records and let your family know.

Obituary. Information for your obituary. Funeral homes usually have a form to be filled out for use in the obituary. You can get the form prior to death and complete it or write your own obituary. Some of my clients update their obituaries annually before they go south for the winter.

Charities. Names of your favorite charities that you want any memorials to go to.

List of people to call upon your death. Names and phone numbers of all the friends and family you want to be notified of your death.

Estate Planning Documents. Will or Trust Agreement setting forth the person or persons in charge of your affairs after your death and how your assets are to be distributed. This should include a list of your personal possessions (china, jewelry, antiques) and who you want each item to be given to.

List of assets. A detailed list of your assets and any loans outstanding and credit card accounts (make copies of the credit cards). This should include bank names and account numbers for all bank accounts, name of broker and account numbers for investment accounts, IRAs, pensions, and names of insurance companies and policy numbers for all insurance and annuity policies. If you don’t have any life insurance or annuity policies, say so, so that your executor or trustee doesn’t waste time looking for them.

Assets you no longer have. Do not keep information regarding assets you no longer have. This happens all the time; people keep insurance policies that are no longer in force.

Safe deposit box. Where it is, the key to it and what is in it. You need to have someone else “on” the safe deposit box with you. Having the key won’t be enough.

Passwords. A current list of all of your passwords.

Where to keep. All of the above needs to be in one place – a file drawer in your desk, a file cabinet, a safe at home, a separate file box or a binder. If it isn’t in this one place, there needs to be a reference in this one place to where it is located. For example, you may keep your Will in your safe deposit box. If so, keep a copy of your Will in this one place, with a note on the copy that the original is in the safe deposit box.

Using a Prepaid Funeral Contract to Spend Down Assets for Medicaid

No one wants to think about his or her death, but a little preparation in the form of a prepaid funeral contract can be useful. In addition to helping your family after your death, a prepaid funeral contract can be a good way to spend down assets in order to qualify for Medicaid.

A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for: embalming and restoration, room for the funeral service, casket, vault or grave liner, cremation, transportation, permits, headstones, death certificates, and obituaries, among other things.

One benefit of a prepaid funeral contract is that you are paying now for a service that may increase in price—possibly saving your family money. You are also saving your family from having to make arrangements after you die, which can be difficult and time-consuming. And, if you are planning on applying for Medicaid, a prepaid funeral contract can be a way to spend down your assets.

Medicaid applicants must spend down their available assets until they reach the qualifying level ($2,000 in Iowa). By purchasing a prepaid funeral contract, you can turn available assets into an exempt asset that won’t affect your eligibility. In order for a prepaid funeral contract to be exempt from Medicaid asset rules, the contract must be irrevocable. That means you can’t change it or cancel it once it is signed.

Before purchasing a contract, you should shop around and compare prices to make sure it is the right contract for you. Buyers need to be careful that they are buying from a reputable company and need to ask for a price list to make sure they are not overpaying.

For information from the Federal Trade Commission on shopping for funeral services, click here.

 

This article was reprinted with the permission of ElderLawAnswers.com.  If you have any questions regarding the material and how it applies to Iowa residents, please contact Pearson Bollman Law at 515-727-0986.

Mass. Supreme Court Reverses Ruling on Trust Home Usage

Reversing a lower court, Massachusetts’ highest court ruled that two Medicaid applicants’ trusts were not available assets even though the applicants retained the right to use the houses that were put into the trusts. Daley v. Secretary of the Executive Office of Health and Human Services (Mass., No. SJC-12200, May 30, 2017) and Nadeau v. Director of the Office of Medicaid (Mass., No. SJC-12205, May 30, 2017).

James and Mary Daley created an irrevocable trust. They conveyed their interest in their condominium to the trust, but retained a life estate in the property. Seven years later, Mr. Daley was admitted to a nursing home and applied for Medicaid benefits. The state denied him benefits after determining that the trust was an available asset. Lionel Nadeau and his wife created an irrevocable trust and transferred their house into the trust. The trust provided that the Nadeaus had the right to use and occupy the house, which they did until Mr. Nadeau entered a nursing home and applied for Medicaid benefits. As with the Daleys, the state considered the trust a countable asset and denied benefits.

The Daleys and the Nadeaus appealed, but following hearings the state ruled that the trusts were available assets because the Daleys and Nadeaus had the right to occupy and use the properties that were in the trusts. In separate rulings, Massachusetts trial courts held that both trusts were available assets. (Daley v. SuddersMass. Super. Ct., No. 15–CV–0188–D, Dec. 24, 2015 and Nadeau v. ThornMass. Super. Ct., No. 14-DV-02278C, Dec. 30, 2015). The Daleys and Nadeaus appealed and the Massachusetts Supreme Judicial decided both cases together.

The Massachusetts Supreme Judicial court reversed the judgement, holding that the trusts are not available assets. According to the court, “where a trust grants the use or occupancy of a home to the grantors [as in the Nadeau’s case], it is effectively making a payment to the grantors in the amount of the fair rental value of that property.” The court adds that these payments “do not affect an applicant’s eligibility for Medicaid long-term care benefits, but they may affect how much the applicant is required to contribute to the payment for that care.” In the Daleys’ case, the court rules that because the Daleys hold a life estate, their use of the home is not considered income and “the continued use of the home by the applicant pursuant to his or her life estate interest does not make the remainder interest in the property owned by the trust available to the applicant.”

Maryland ElderLawAnswers member attorney Ron M. Landsman joined the briefing and argument.

In reaching its conclusion in the Daley case, the court cites the Elder Law section of West’s Massachusetts Practice series, written by Harry S. Margolis and Jeffrey A. Bloom of the Boston firm of Margolis & Bloom, LLP.

For the full text of this decision, go to: www.mass.gov/courts/docs/sjc/reporter-of-decisions/new-opinions/12200.pdf

This article was reprinted with the permission of ElderLawAnswers.com.  If you have any questions regarding the material and how it applies to Iowa residents, please contact Pearson Bollman Law at 515-727-0986.

Guardianship and Conservatorship

Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of making responsible decisions due to a mental disability, the court will appoint a substitute decision maker, often called a “guardian,” but in some states called a “conservator” or other term. Guardianship is a legal relationship between a competent adult (the “guardian”) and a person who because of incapacity is no longer able to take care of his or her own affairs (the “ward”).

The guardian can be authorized to make legal, financial, and health care decisions for the ward. Depending on the terms of the guardianship and state practices, the guardian may or may not have to seek court approval for various decisions. In many states, a person appointed only to handle finances is called a “conservator.”

Some incapacitated individuals can make responsible decisions in some areas of their lives but not others. In such cases, the court may give the guardian decision making power over only those areas in which the incapacitated person is unable to make responsible decisions (a so-called “limited guardianship”). In other words, the guardian may exercise only those rights that have been removed from the ward and delegated to the guardian.

Incapacity

The standard under which a person is deemed to require a guardian differs from state to state. In some states the standards are different, depending on whether a complete guardianship or a conservatorship over finances only is being sought. Generally a person is judged to be in need of guardianship when he or she shows a lack of capacity to make responsible decisions. A person cannot be declared incompetent simply because he or she makes irresponsible or foolish decisions, but only if the person is shown to lack the capacity to make sound decisions. For example, a person may not be declared incompetent simply because he spends money in ways that seem odd to someone else. Also, a developmental disability or mental illness is not, by itself, enough to declare a person incompetent.

Process

In most states, anyone interested in the proposed ward’s well-being can request a guardianship. An attorney is usually retained to file a petition for a hearing in the probate court in the proposed ward’s county of residence. Protections for the proposed ward vary greatly from state to state, with some simply requiring that notice of the proceeding be provided and others requiring the proposed ward’s presence at the hearing. The proposed ward is usually entitled to legal representation at the hearing, and the court will appoint an attorney if the allegedly incapacitated person cannot afford a lawyer.

At the hearing, the court attempts to determine if the proposed ward is incapacitated and, if so, to what extent the individual requires assistance. If the court determines that the proposed ward is indeed incapacitated, the court then decides if the person seeking the role of guardian will be a responsible guardian.

A guardian can be any competent adult — the ward’s spouse, another family member, a friend, a neighbor, or a professional guardian (an unrelated person who has received special training). A competent individual may nominate a proposed guardian through a durable power of attorney in case she ever needs a guardian.

The guardian need not be a person at all — it can be a non-profit agency or a public or private corporation. If a person is found to be incapacitated and a suitable guardian cannot be found, courts in many states can appoint a public guardian, a publicly financed agency that serves this purpose. In naming someone to serve as a guardian, courts give first consideration to those who play a significant role in the ward’s life — people who are both aware of and sensitive to the ward’s needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.

Reporting Requirements

Courts often give guardians broad authority to manage the ward’s affairs. In addition to lacking the power to decide how money is spent or managed, where to live and what medical care he or she should receive, wards also may not have the right to vote, marry or divorce, or carry a driver’s license. Guardians are expected to act in the best interests of the ward, but given the guardian’s often broad authority, there is the potential for abuse. For this reason, courts hold guardians accountable for their actions to ensure that they don’t take advantage of or neglect the ward.

The guardian of the property inventories the ward’s property, invests the ward’s funds so that they can be used for the ward’s support, and files regular, detailed reports with the court. A guardian of the property also must obtain court approval for certain financial transactions. Guardians must file an annual account of how they have handled the ward’s finances. In some states guardians must also give an annual report on the ward’s status. Guardians must offer proof that they made adequate residential arrangements for the ward, that they provided sufficient health care and treatment services, and that they made available educational and training programs, as needed. Guardians who cannot prove that they have adequately cared for the ward may be removed and replaced by another guardian.

Alternatives to Guardianship

Because guardianship involves a profound loss of freedom and dignity, state laws require that guardianship be imposed only when less restrictive alternatives have been tried and proven to be ineffective. Less restrictive alternatives that should be considered before pursuing guardianship include:

Power of Attorney. A power of attorney is the grant of legal rights and powers by a person (the principal) to another (the agent or attorney-in-fact). The attorney-in-fact, in effect, stands in the shoes of the principal and acts for him or her on financial, business or other matters. In most cases, even when the power of attorney is immediately effective, the principal does not intend for it to be used unless and until he or she becomes incapacitated.  (For more on powers of attorney, click here.)

Representative or Protective Payee. This is a person appointed to manage Social Security, Veterans’ Administration, Railroad Retirement, welfare or other state or federal benefits or entitlement program payments on behalf of an individual.

Conservatorship. In some states this proceeding can be voluntary, where the person needing assistance with finances petitions the probate court to appoint a specific person (the conservator) to manage his or her financial affairs. The court must determine that the conservatee is unable to manage his or her own financial affairs, but nevertheless has the capacity to make the decision to have a conservator appointed to handle his or her affairs.

Revocable trust. A revocable or “living” trust can be set up to hold an older person’s assets, with a relative, friend or financial institution serving as trustee. Alternatively, the older person can be a co-trustee of the trust with another individual who will take over the duties of trustee should the older person become incapacitated.

This article was reprinted with the permission of ElderLawAnswers.com.  If you have any questions regarding the material and how it applies to Iowa residents, please contact Pearson Bollman Law at 515-727-0986.