Welcome to Jan Neal Law Firm LLC, located at 207 N. 4th Street, Opelika, Alabama 36801 where you can find the latest news concerning Probate, Elder and Special Needs Law in Alabama. Contact Jan at 334-745-2779 or toll free 1-800-270-7635 or email her at neal@janneallaw.com, jbneal@icloud.com, jbneal@me.com.
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Congress enacted the Families First Coronavirus Response Act (FFCRA) in March 2020. The FFCRA prohibits states from disenrolling Medicaid recipients until the public health emergency (PHE) ends. In addition to the ban on disenrollment, the FFCRA stopped the redetermination of eligibility. This kept more than 20 million people covered by health insurance during the COVID-19 pandemic.
The PHE has been extended several times. The latest extension expires on January 11, 2023.
When the PHE ends the FFCRA provisions that keep low-income people insured will end, leaving many people without benefits after the redetermination of eligibility resumes. During the PHE States could only disenroll people if they were no longer a state resident or if the recipient voluntarily left the program. But after the PHE ends procedures will return to pre-pandemic business as usual requiring people to renew their Medicaid coverage every year by confirming to state officials that they still meet income and other eligibility requirements. Change in income and/or resources could render some Medicaid recipients no longer eligible for benefits. Having an outdated address with Medicaid could also result in a loss of benefits if the person on benefits cannot be located for a redetermination.
The Alabama Medicaid Agency warns that you need to have your current address on file with the agency in order to receive notice of changes in benefits. Otherwise recipients could show up at a doctor’s office or pharmacy to find out their coverage was cancelled because they did not complete their Medicaid renewal form.
Go to this publication for Alabama Medicaid’s notice of Planning for the COVID-19 PHE Unwinding:
The Alabama Small Estates Act allows the personal property of a deceased person to be distributed to the surviving spouse or appropriate next of kin through a court proceeding in a summary manner without full probate or administration. Summary distribution makes the passing of a small estate significantly faster.
The requirements to use this process depends on what is in the estate and its value. No real property can be passed by summary distribution, and the personal property has to be of limited value.
Every March the permitted value to use summary distribution is published by the State Finance Director based on the Consumer Price Index. As of March 1, 2022, the value of the estate cannot exceed $32,047 (up $1439 from the 2021 limit of $30,608).
This process is frequently used for small estates where someone leaves a bank account with no joint owner or payable on death designation. If the person had a will, it is included in the filing to control to whom the property will be distributed, and if he or she did not have a will, the property will pass by intestate succession (the state prescribed order of distribution when a deceased has no will).
A will has no legal effect if not filed with the court and accepted as a legitimate document meeting the testamentary requirements (which is known as probate). Many people do not know this, and they do not know that a will must be probated within five years of death.
If the will is not filed within five years of death, then the law of intestacy determines where property passes, and it may result in very unfortunate consequences for the intended beneficiaries.
The best way to explain this is an example:
Mrs. Smith’s husband died last year, and she decided to update her will. They owned multiple pieces of property, most of which they owned as joint tenants with right of survivorship (meaning that when the first owner dies, the other will automatically own all of the property). But the one piece of property on which their home is located was owned by her husband without right of survivorship. Since most people don’t sit around reading deeds after the death of a spouse, Mrs. Smith did not know this until the deeds were produced to rewrite her will. Her husband’s will left everything to her, so if his will is probated, no problem. But if his will is not probated within five years, she will own her home property jointly with his children by a previous marriage. Not only will she be unable direct all of the property to pass to the children of this marriage at her death, if she wants to downsize she will not be able to sell the property without the agreement of her husband’s children by a previous marriage. And if those children agree to sell, she will only get half of the proceeds from the sale. This could have been a serious problem for Mrs. Smith if she had not found this need to probate her husband’s will within five years of his death.
The best practice is to always check to see if a will needs to be probated rather than assuming it does not. With that said, not all wills need to be probated. For instance, there may be nothing in the probate estate to pass because all assets were jointly titled in bank accounts, and the home was owned by the spouses as joint tenants with right of survivorship. But if there is property that does not automatically pass to others, take action sooner, rather than later, to determine what you need to do.
Medigap premiums for plans from insurance companies offering the same benefits vary widely, so it pays to be a smart shopper.
So why do you need a Medigap? You need this supplemental coverage to cover the Medicare gaps in coverage. With all the deductibles, copayments and coverage exclusions, Medicare pays for only about half of the medical costs for Medicare eligible persons. Much of the balance not covered by Medicare can be covered by purchasing a Medigap insurance policy.
As always with Medicare, timing is important. A Medicare recipient cannot be denied a Medigap policy if he or she applies for one within six months of enrolling in Medicare Part B. Otherwise, claims relating to pre-existing conditions can be denied only during the first six months that the policy is in effect. However, federal law does not require that fee-for-service Medigap policies be offered to those who enroll in Medicare Part B because they are disabled, although some states require the insurance companies to offer at least one kind of Medigap policy to people with Medicare under 65. Alabama is not one of those states.
Medigap policies do not fill all the gaps in Medicare coverage. The biggest gap they fail to bridge is for custodial care in a nursing facility or for skilled care in a nursing home beyond the first 100 days. For coverage of this type of care, you must either purchase long-term care insurance or qualify for Medicaid coverage.
Federal law requires that each insurance company offers the same benefits for each of the Medigap plans lettered A through M, but each company sets its own premium rates. The 8 available Medigap policy packages are identified by the letters A, B, D, G, K, L, M, and N. Plans E, H, I, and J are no longer sold, but, if those who already had that plan when discontinued were allowed to keep that coverage. As of January 1, 2020, Medigap plans sold to people new to Medicare were not allowed to cover the Part B deductible. Because of this, Plans C and F were no longer available to people who are new to Medicare on or after January 1, 2020, but those who already had either of these two plans were able to keep their plans.
A Medigap insurance company sets premiums in three ways:
When choosing a Medigap plan, compare the different benefits each plan offers and the price for each company’s plan. Consider your current health status, what your health care needs might be in the years to come, as well as your future health care budget.
Premiums vary drastically from state to state. For instance, The American Association for Medicare Supplement Insurance found that in 2022 the lowest costs for a female age 65 ranged from $99.24 per month in Dallas to $278.25 per month in New York City.
When shopping for a Medigap policy, get quotes from two or more insurance agents working for different insurance brokers. Every insurance broker may not represent all of the insurers offering a plan in the state or city where you live.
It will take time to shop around, but the money you save will be worth it.
You can get a good deal of information from the internet, but it is not always accurate for your state. An example is the Physician Order for Life Sustaining Treatment (POLST) for Alabama. This is an advance directive agreement between a doctor and a patient with advanced, chronic, or end-stage illness stating the patient’s choices for treatment. A doctor signing the form turns those choices into physician orders to assure that the patient gets only the treatment he or she wants. It is known as a portable medical order.
There are a number of states which recognize this national form first developed in 1991 in Oregon, but Alabama is not one of them. The closest thing Alabama has is a portable DNAR (Do Not Attempt Resuscitation) which only instructs health care providers not to perform cardiopulmonary resuscitation (CPR) if a patient’s breathing stops or if the patient’s heart stops beating.
According to the Alabama Department of Public Health, A POLST form from another state (or downloaded from the internet) cannot be a substitute for the Alabama Portable DNAR form published by Health Department. If a hospital or other health care entity wants to use its own DNAR rather than the Health Department form, it can, but it will not be portable from facility to facility.
If you want specific treatments honored in Alabama you need to either name an agent who knows your wishes to act for you as your health care proxy or prepare a detailed Advance Directive For Health Care, but no doctor will sign off on it.
You may have read a widely circulated post on Facebook that would make you think you should prepare a Transfer on Death Deed (TODD) to pass your property when you die without the need for probate. And you can download and prepare such a document at various online locations. See https://www.templateroller.com/template/2142576/transfer-on-death-deed-form-alabama.html. The only problem is Alabama does not have a TODD statute, so any such deed would have no validity.
As of January 14, 2022, twenty-nine states, along with the District of Columbia and the U.S. Virgin Islands, have some form of TODD. Alabama is not one of them, and neither is Georgia or Florida. Mississippi, bordering Alabama, does have a TODD statute, and, as of January 14, 2022, a TODD statute was pending in Tennessee.
There are other ways to pass property while avoiding probate, but be aware of the fact that the TODD is not available in Alabama.
A life estate deed can be a great tool for passing property after death. A couple might give the property to their children and reserve a life estate for themselves until the last of the two dies. The couple retains their homestead exemption status for life, and at death the property will automatically belong to the children without the need to probate anyone’s will. Also the child will have a stepped up tax basis in the property which is the fair market value on the date of death of the last life tenant. An additional benefit is the fact that Medicaid will not count the life estate as a resource if the life estate deed was executed five years prior to Medicaid application, and the property would not be subject to Medicaid Estate Recovery since it will never be probate property. That all sounds like a win, win situation, right?
It is, except for one thing. If the couple decides to sell the property they will need the children to sign off on the sale because the children are now joint owners with the parents. The parents own use of the property NOW, and the children, as remaindermen, own the FUTURE use of the property.
Often a life estate deed is given with the goal of keeping property in the family, but that is not always the case. Sometimes the life tenants want to sell the property to obtain funds for any number of purposes. With this in mind, before signing a life estate deed it is important to make sure the remaindermen would be willing to relinquish their interest and sign off on any sale of the property.
Late yesterday, after much congressional protest, the administration reversed course and announced that tax filing will not be required for Social Security recipients to receive their stimulus payments.
It is not clear if this course reversal applies to those on Veteran’s Benefits and SSI, but it would be surprising if it did not. We will keep you posted.
A new law has passed as part of the federal budget bill that makes major changes to retirement plans. The new law is designed to provide more incentives to save for retirement, but it may require workers to rethink some of their planning.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act changes the law surrounding retirement plans in several ways:
Given these changes, workers need to immediately reevaluate their estate plans. Some people have used stretch IRAs as an estate planning tool to pass assets to their children and grandchildren. One way of doing this has been to name a trust as the IRA’s beneficiary, and these trusts may have to be reformed to conform to the new rules. If a stretch IRA is part of your estate plan, it may be time to reconsider your existing plan.
To read the legislation, click here. For more on the new law, click here and here.
Starting in January 2020, Medicare will reimburse home health agencies at a lower rate when they provide care for patients who have not been admitted to a hospital first. Does this sound familiar? It should because it is a continuation of the observation status problem faced by Medicare patients who are not formally admitted to hospitals for at least three nights. Those patients who only stay at the hospital on an observation status are not eligible for limited skilled care Medicare coverage in long-term care facilities following hospital discharge.
Now the problem extends to people trying to obtain home health care services paid by Medicare. The new rule will require reimbursement for home health care agencies at a significantly lower rate for patients who do no satisfy the hospitalization admission standard. CMS estimates that it will pay home health agencies approximately 19 percent more for a patient who hires the home health agency directly after leaving a hospital than a patient who was never in the hospital or was only an outpatient on observation status. That estimate may be low. The Center for Medicare Advocacy estimates a 25 percent lower payment for patients who do not satisfy the hospital admission requirement.
This lower reimbursement rate means that home health agencies may be reluctant to provide care for patients who were under observation status or who haven’t been in a hospital at all.
Hospitals are required to provide notice to patients if they are under observation for more than 24 hours.
For more information about the new rule from the Center for Medicare Advocacy, click here.
Jan Neal Law Firm, LLC 
