The topic of this blog post is choosing wisely, grasshopper. We’re going to talk about how the education of your attorney is so important.
Why is it important? I was recently at a elder law immersion bootcamp in Tampa, Florida, learning advanced planning and strategy with attorneys from across the country. Simply getting the education down there is a great value in itself.
But if I’m just showing up, just taking in the information that’s put out, that’s one thing. That’s really a minor part of what we were doing.
We’re staying up on changes on federal and state laws. This complicated area of law changes all the time. For example, federal regulations and state medicaid laws are constantly updated. As well as tax laws, trust rules, and other things of that nature.
So keeping up to date on those changes, learning cutting edge tools and strategies, the new developments, and new types of trusts, revocable and irrevocable.
Then communicating with other leading attorneys from across the nation who really know their stuff. Getting out of my box in Shelby and the Charlotte area of North Carolina and seeing what other people from around the country are doing. It’s so important to educate yourself in any profession, but it’s definitely something to look at if you’re searching for an attorney.
You want somebody who’s getting out of their comfort zone, who’s not just confining themselves – not dabbling.
Do not dabble in any area of law, especially not elder law. I think any good attorney will tell you this.
In any area you’re thinking about hiring an attorney, one of the greatest benefits is doing what I’m doing right now: talking to other attorneys. And conferring with them outside of the classroom setting, kind of a mastermind group.
Discussing different ideas, kicking things around – how to solve problems for a specific client or different scenarios that we can go through to be a better lawyer or run a better practice.
These things are extremely beneficial, as well as keeping those relationships up. So I can go to that well again and have a bevy of excellent leaders in their field around the country who can solve any problem that comes my way, crush any problem that comes our way.
Whether I know it or have seen it before or not, I’m going to have a deep bench. Some of you have heard me say that before, a really deep bench that I can go to, the groups that I’m involved in. And that’s the benefit of these types of conferences and being involved in national groups in a specific area of law.
Is it the same as if you’re in a nursing home and being cared for by a nursing home attendant? Is it more? What about running errands or if I need to go get groceries or cat food?
Types of Care
There are a number of people that may have arthritis. Arthritis is worse in the morning. Once they get their muscles warmed up and get moving, then they’re solid for the rest of the day – but they need that help.
They could be in an institutional setting, or they could stay at home with just this one thing to help them going. Others need help getting ready for bed at night. But during the daytime, they can do their own tasks.
Still others have a home health aid there 24 hours a day, preparing meals, running the errands, and taking them to the beauty shop. There are live-in programs as well. Someone is there to just live with the client and might be there 7 days a week.
These people need someone there overnight. If they wake up and need to go to the bathroom in the middle of the night, there’s someone to assist them.
Or just that companionship. They want a companion that can sit down with them, read the paper, discuss the news of the day. Watch Jeopardy and Wheel of Fortune together, talk about it and interact.
There’s skilled nursing, taking care of people who might be on a ventilator. These ventilators are only the size of a laptop, but the person can’t breathe without it. Taking care of it, suctioning the trachea – that’s when you really need somebody.
Home Care Technology
Taking care of someone with a ventilator at home was unheard of years ago. There are so many options in home care with the technology today. Personal emergency response systems or a “Help, I’ve fallen and can’t get up” button – it used to be that if you fall down, you press the button. What if I fall down unconscious?
They’ve reverse engineered that now to detect if a person fell. If I don’t push the button, it’s going to respond.
There are medication-dispensing units. I put a medication cup in this box, and at 8 o’clock in the morning, the medicine cup will come down and say, “It’s time to take your 8 o’clock medications.” After 3 times, if I don’t do it, it rings into an operator.
The operator then calls my house and says, “Hey you forgot to take your medicine.” If I don’t answer, then they call my loved one to come and check on me.
The technology in home care is absolutely phenomenal. Military is probably the leader in telehealth. There are programs right now where the University of Washington does cataract surgery on patients in Alaska from Washington via robotic surgery with lasers.
There was a physician in Paris who actually did an appendectomy on a patient in New York. A doctor was standing by as they were demonstrating it. But as we develop that technology more and more, the ability to take care of people in the home is just going to explode.
Everyone wants to stay at home. With these kinds of advances, more and more are going to be able to do that.
That’s the wave of the future – getting away from a centralized hospitals and nursing homes, at least in the cases where it makes sense. There’s obviously still going to be a need for those places, but home care is on the low end of the affordability scale and people want to stay at home.
From a Medicare/Medicaid perspective, there are less resources coming out of the system as well. This is just a burgeoning, exploding industry with a lot of potential in the future.
Advantages of Home Care
Probably the number one reason is “my home is my castle”. It’s where people feel comfortable. If I want to walk around in my underwear, I can walk around in my underwear.
People recuperate better at home. Less infections. Just having that continuity, someone who’s familiar with your health problems, mannerisms, and habits. They can pick up on subtle changes quickly, refer them out to the doctor, get them taken care of – whatever they need to have done.
Let’s discuss who pays for home health care. Other than having money buried in the backyard or digging into your retirement fund, what are the different options? How can you pay for it?
One of the first choices is private funds. The individual has the money to pay for it, and so they pay for it. That’s obviously going to drain your resources, but that is one way that home care gets paid for.
Another way is through the VA administration if the person is a veteran. It’s called a Home Attendant Program. Those benefits are available in an assisted living facility and/or home care. The way to get the ball rolling with that is you get your veteran to the local VA and talk to your primary care physician there.
Typically, that gives relief for 6 to 9 hours a week; 2 to 3 days a week of 3 hours of service. For those individuals, it may be just what they need to keep them at home. Unfortunately, the hours aren’t any longer than that.
The VA program is a great benefit for the veterans who qualify. One of the qualifying factors is you have to have served one day in a wartime period. But you didn’t have to be there.
So Korean War, Vietnam War, and Gulf War – if you served one day of service during a wartime period, you qualify with this program.
Long Term Care Insurance
Another avenue is through long term care insurance policies. Those policies range all over the board. Some of the policies are great. Some are not so good, but there is more standardization with the policies now than there were when they first came out a number of years ago.
With the long term care insurance policy, you’re going to need a physician’s order and at least two activities of daily living that are being performed each day to qualify. Another thing that’s important with the long term care insurance policy is the elimination period. That’s like your deductible.
It’s usually the number of days. You’re going to have a 30-day or 100-day elimination period. But they don’t talk about how much money you have to spend per day.
That means you can strategically get what you need in a shorter period of time, and then when your elimination period is exhausted, you can bump up to the number of hours you qualify for under the long-term care insurance policy. Again, preserving assets – it’s a great way to do that.
If you’re looking at a long-term care insurance policy, you want to look at an inflation rider. If you don’t have that and you have your policy for 30 years, you’re going to get $50 a day. In 30 years, $50 a day is not a whole lot.
So, look for an inflation rider; what are the daily limits.
We’ve talked in another blog about Medicare and Medicaid. The other one is private insurance. Private insurance, depending on the policy, does not cover custodial care most of the time, which a lot of home care falls under. Private insurance policies typically don’t pay for the assistive care or personal care type services.
There may be a skilled nursing benefit, but if it says, “we don’t cover custodial care,” that’s probably going to be the personal care services that someone will receive at home.
Know Your Options
So those are some of the major players that help pay for the services. Just recapping – private funds, long term care insurance policies, private insurance policies, Medicare, and Medicaid.
One reason I do these podcasts, blogs, and seminars is to try to educate people. There are other options where you don’t have to leave the home, and you can protect as many assets as possible.
I call this a really cutting-edge area of law. Things are constantly changing. New tools are being developed everyday to help people.
How are you going to pay for home health care when you or your spouse find yourselves in a situation where one of you might be draining all the assets because of a catastrophic health care incident? Or where someone’s in a situation where they don’t want to come out of their home?
Benefits of Home Care
Being cared for in the home is certainly less dramatic. It also allows you to keep your dignity, staying in the home you’ve worked hard for your entire life. That’s what we’re about: trying to help people preserve their hard earned money and property – and keep their dignity in the process.
There are direct health benefits of staying at home. Less confusion, because it’s in an environment that you’re familiar with. Less infections, because there’s only one or two people in the home. Statistics demonstrate that people recuperate at home better than they do in an institutional setting.
Even just the peace of mind. All of us, if we have a choice, would rather be at home. Most of the time you don’t find people saying, “Please take me out of my home and put me in an institution somewhere.”
There are financial benefits as well. But health care in general costs money. Unless you have really planned for this with long term care insurance – which is not the norm – then you can quickly exhaust your other liquid assets paying for health care, especially as you age.
That’s where Medicare and Medicaid come in, whether separately or working in combination.
The Difference Between Medicare and Medicaid
How do those differ?
They are totally separate programs, Medicare and Medicaid: when they apply, how long Medicare lasts, and when it runs out and Medicaid can come in and take over.
Medicare is basically a health benefit for people who are typically over 65 years of age. If you’re younger than 65 and you have a disability that lasts longer than 2 years, you can qualify for Medicare prior to age 65. Also, with end-stage renal disease, you can get Medicare benefits very quickly and very early on.
Medicaid is really a program designed for the indigent, for those who don’t have the financial means to care for themselves. Carved out of that is a health care program, and typically they fall under Medicaid waivers.
How Medicaid Can Help You
In North Carolina, we have two Medicaid waiver programs for personal care services. That’s going to be assistance in your activities for daily living – bathing, dressing, ambulating, eating, mobility, transferring, and things of that nature.
One is called Personal Care Services or PCS, which you need a doctor’s order for. Typically, in that service, you can get up to 80 hours of services per month, which works out to be about 18 hours a week. Just this year, North Carolina legislator passed a law that allows an additional 40 hours for those with dementia, for a total of 120.
The second program is the CAPDA program. With your activities in daily living, you’re typically going to get upwards of about 36 hours a week, which is more than PCS.
With both of those programs, you’ll have to qualify for Medicaid, whether you’ve already gone through the process or still need to apply. The PCS program can take a couple of months to get on. A couple of years ago, each county was capped out of the number of slots that they had for the CAPDA program.
Then, we have one other Medicaid waiver program, which is private duty nursing and is for RNs and LPNs to take care of people in the home who have catastrophic needs. They need either a tracheostomy and/or a ventilator – pretty high-tech nursing needs.
How Medicare Can Help You
The Medicare side of it is really a totally different program. If you’ve had a qualifying hospital stay, you’ve got to be getting better. But the real advantage to a Medicare program – when you have home health – is that you’re going to get up to a 60 day spell of illness.
It’s called an “intermittent spell of illness”, and that’s going to be paid 100% under your Part A Medicare. You might get nursing services, a physical therapist or occupational therapist, speech language pathologist, or a home health aid that comes and assists with bathing. And that’s going to last for 60 days.
Now, there are times when they can be recertified for an additional 60 days, but it usually caps out at that 60-day period.
When You Need Both
There are programs where Medicare and Medicaid can overlap at the same time. Then there are people that have finished their Medicare service and still need additional services after that. That could be through Medicaid, private pay, or long term care insurance.
And obviously there aren’t the stringent qualification requirements for Medicare like there are for Medicaid. One of the beauties of the Medicare benefit for home health is that it’s paid at 100%. For those individuals who qualify for that, it’s a great program for them.
The Importance of Planning Ahead
One of the most heartbreaking calls that I get is from the people that fall in that gap. They’re over-resourced for Medicaid, and they’re under-resourced to pay for it privately. Perhaps their income level doesn’t allow them to roll over and let Medicaid pay for it. It’s a hard place.
That’s why it’s important to plan ahead and make sure you’re prepared, whether it’s an emergency situation or simply old age.
Practical Tips for Special Needs Planning
Understanding the pitfalls associated with special needs planning is a must for all who assist families with children, grandchildren or other loved ones (such as parents) with special needs.
Tip #1: Special needs beneficiaries require special planning. As a society, we have come a long way since 1987 regarding stereotyping people with special needs and these individuals’ planning requirements, but there remain numerous misconceptions that often result in costly mistakes when planning for special needs beneficiaries. These misperceptions may become even more costly in the future as fiscal pressures cause state and federal governments to cut back funding for people with disabilities. Thus, it is critically important that loved ones proactively and properly plan for these individuals.
The fiscal pressures of the federal and state governments make proactive planning for special needs beneficiaries increasingly more important. It is important not to make the mistakes below that could cause special needs beneficiaries to rely exclusively on shrinking government funds, or that place them in unduly restrictive or ineffective structures.
Tip #2: Don’t disinherit the special needs beneficiary. Many disabled persons receive Supplemental Security Income (“SSI”), Medicaid or other government benefits that provide basic food, shelter and/or medical care. The loved ones of the special needs beneficiaries may have been advised to disinherit them – beneficiaries who need their help most – to protect the public benefits. But these benefits rarely provide more than basic needs. And this solution (which normally involves leaving the inheritance to another sibling) does not allow loved ones to help their special needs beneficiaries after they themselves become incapacitated or die. The best solution is for loved ones to create a special needs trust to hold the inheritance of a special needs beneficiary. A properly drafted special needs trust will protect public benefits a disabled beneficiary may be receiving, and it will provide for proper care of that individual throughout their lifetime.
Tip #3: Don’t rely on siblings to use their money for the benefit of a special needs beneficiary. Many family members rely on their other children to provide, from their own inheritances, for a child with special needs. This can be a very temporary solution, such as during a brief incapacity, if the other children are financially secure and have money to spare. However, it is not a solution that will protect a child with special needs after the death of the parents or when siblings have their own expenses and financial priorities.
For example, what if an inheriting sibling divorces or loses a lawsuit? His or her spouse (or a judgment creditor) may be entitled to half of it and will likely not care for the child with special needs. What if the sibling dies or becomes incapacitated while the child with special needs is still living? Will his or her heirs care for the child with special needs as thoughtfully and completely as the sibling did?
Siblings of a child with special needs often feel a great responsibility for that child and have felt so all of their lives. When parents provide clear instructions and a helpful structure, they lessen the burden on all their children and support a loving and involved relationship among them.
Tip #4: Procrastination can be especially costly for special needs beneficiaries. None of us know when we may die or become incapacitated. It is important for loved ones with a special needs beneficiary to plan early, just as they should for other dependents such as minor children. However, unlike most other beneficiaries, special needs beneficiaries may never be able to compensate for a failure to plan. Minor beneficiaries without special needs can obtain more resources as they reach adulthood and can work to meet essential needs, but special needs beneficiaries may never have that ability.
Tip #5: Don’t ignore a special needs beneficiary when planning. Planning that is not designed with the beneficiary’s special needs in mind will probably render the beneficiary ineligible for essential government benefits. A properly designed special needs trust promotes the comfort and happiness of the special needs beneficiary without sacrificing eligibility.
Special needs can include medical and dental expenses, annual independent check-ups, necessary or desirable equipment (for example, a specially equipped van), training and education, insurance, transportation and essential dietary needs. If the trust is sufficiently funded, the disabled person also can receive funds to be used for quality-of-life-enhancing expenses: the types of benefits families currently provide to their child or other special needs beneficiary. However, the rules often change on the types of expenses that can be paid for by a special needs trust. Therefore it is important to continually seek advice when drafting or administering a special needs trust.
Tip #6: A special needs trust does not have to be inflexible. Some special needs trusts are unnecessarily inflexible and generic. Although an attorney with some knowledge of the area can protect almost any trust from invalidating the beneficiary’s public benefits, many trusts are not customized to the particular beneficiary’s needs. Thus the beneficiary fails to receive the benefits that the parents or others provide while they were alive.
Another frequent mistake occurs when the special needs trust includes a pay-back provision rather than allowing the remainder of the trust to go to others upon the death of the special needs beneficiary. While these pay-back provisions are necessary in certain types of special needs trusts, an attorney who understands this area and knows the difference can save family members and loved ones hundreds of thousands of dollars, or more.
Tip #7: Exercise great caution in selecting a trustee. Loved ones or family members can manage the special needs trust while alive and well if they are willing to serve and have proper training and guidance. Once the family member or loved one is no longer able to serve as trustee, they can choose who will serve according to the instructions provided in the trust. Families or loved ones who create a special needs trust may choose a team of advisors and/or a professional trustee to serve. Whoever they choose, it is crucial that the trustee is financially savvy, well-organized and of course, ethical.
Tip #8: Invite others to contribute to the special needs trust. A key benefit of creating a special needs trust now is that the beneficiary’s extended family and friends can make gifts to the trust or remember the trust as they plan their own estates. For example, these family members and friends can name the special needs trust as the beneficiary of their own assets in their revocable trust or will, and they can also name the special needs trust as a beneficiary of life insurance or retirement benefits. Unfortunately, many extended family members may not be aware that a trust exists, or that they could contribute money to the special needs trust now or as an inheritance later.
Tip #9: This is an ever-changing area of the law. The rules applicable to special needs trusts and planning are constantly changing. For example, the Affordable Care Act now makes private health insurance an option for people with special needs. However, private insurance will still not cover the costs of long-term care and other services or equipment necessary for a loved one with special needs. Thus, even if the family chooses private insurance, the special needs beneficiary may still require Medicaid eligibility, necessitating a special needs trust. Please contact us if you have questions about these options.
Planning for a special needs beneficiary requires particular care and knowledge on the part of the planning team. A properly drafted and funded special needs trust can ensure that a special needs beneficiary has sufficient assets to care for him or her, in a manner intended by loved ones, throughout the beneficiary’s lifetime. Please contact us if you have any questions regarding planning for special needs beneficiaries.
To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer’s particular circumstances.
Recent studies estimate that of people turning 65 by the year 2005, 69% will need some form of long-term medical care. What does this mean to you? Statistically, the odds are you’re going to need some type of prolonged treatment and that’s going to be a huge financial drain on your resources.
Even estates of a half-million to two million dollars could be drawn down to zero with the enormous costs of prolonged healthcare, especially if that care involves some type of specialized treatment in addition to a long-term care or nursing home facility. How can you prepare for or plan around this? You find somebody that can help you, someone that can plan around it. That’s what we’re here for.
Give me a call at (704) 259-7040 to discuss your options.