Jan Neal Law Firm, LLC

Alabama Estate, Elder and Special Needs Law


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Medicaid Spousal Income Allowance Increase

Medicaid’s maximum monthly maintenance needs allowance (MMMNA) changes every July.  This is the most in monthly income that a spouse living at home (known as the community spouse) is allowed to have when his or her own income is not enough on which to live, allowing him or her to take some or all of the institutionalized spouse’s income. The minimum monthly maintenance needs allowance as of July 2022 for Alabama is $2289 (up from $2178)  As an example, a community spouse who has income of $1500 whose spouse entering the nursing home has $2200 in income, would be allowed to keep $789 of the institutionalized spouse’s income each month – enough to bring his or her income up to $2289.

As for resource limits established every January, in 2022 the community spouse may keep as much as $137,400 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care. Known as the community spouse resource allowance or CSRA, this is the most that a state may allow a community spouse to retain. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2022 is $27,480.  As of January 2022 Alabama allows the community spouse to keep one-half of the couple’s resources, not to exceed the maximum of $137,400.

If nursing home care is anticipated in the future it is important to calculate the income and resources of a couple to determine the financial impact long term care will have and to plan to retain as much as possible and still qualify for Medicaid coverage.     


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Planning for Burial/Cremation

Alabama allows an individual to prepare an affidavit appointing an agent to deal with disposition of his or her remains at death. This can be a useful document to have when there is the potential for disputes in a blended family concerning where someone should be buried or whether to bury or cremate the remains.

I have written about this affidavit previously on this blog (see https://janneallaw.com/2017/01/06/appointing-an-agent-for-disposal-of-remains-in-alabama/), but it bears repeating due to a development I have seen in recent years.

Often unmarried significant others are making burial/cremation arrangements for a partner, and it comes as a surprise to them to learn that the funeral home will not accept the instructions of the unmarried partner to cremate. Instead the instruction must come from the next of kin. This can be especially problematic when there are estranged children, making the process even more stressful than it already is.

To avoid this problem, when preparing estate planning documents, it is a good idea to have an affidavit prepared or included in your will giving the person of your choice, especially an unmarried partner, the authority to make arrangements in the manner you wish, to include cremation.


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Safety Warning For Adult Portable Bed Rail Models

An advisory issued earlier this month warns people against using a series of adult portable bed rail models after at least three people — including one in a nursing home and another in an assisted living facility — were entangled in them and died of asphyxia.

The U.S. Consumer Product Safety Commission named the following 10 models of Mobility Transfer Systems adult portable bed rails in which it says users may become trapped, resulting in serious injury or death:

  • Freedom Grip (model 501)
  • Freedom Grip Plus (model 502)
  • Freedom Grip Travel (model 505)
  • Reversible Slant Rail (model 600)
  • Transfer Handle (model 2025)
  • Easy Adjustable (model 2500)
  • 30-Inch Security Bed Rail, single-sided (model 5075)
  • 30-Inch Security Bed Rail – Extra Tall, single-sided (model 5075T)
  • 30-Inch SecurityBed Rail, double-sided (model 5085)
  • 30-Inch SecurityBed Rail – Extra Tall, double-sided (model 5085T)

The Commission’s advisory “urges consumers to immediately stop use, disassemble, and dispose of” these bed rails, which have been on the market since 1992 and available through such online retailers as Walmart.com and Amazon.com.

Users can report any incidents related to these rails at www.SaferProducts.gov.


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Supreme Court Rules Medicaid Can Recoup a Larger Share of Injury Settlements

If you are injured due to another person’s negligence and receive Medicaid benefits to pay for care, the state has a legal right to recover the funds it spends on your care from a personal injury settlement or award. Yet in a legal case involving a Floridian teen who was catastrophically injured more than a decade ago, the U.S. Supreme Court this week ruled that states have the right to recover funds that they may spend on future medical expenses, too. 

The decision affects anyone who receives medical care through Medicaid after suffering a disabling injury that results in a lawsuit.  

In 2008, a truck struck 13-year-old Gianinna Gallardo, leaving her in a vegetative state. The state’s Medicaid agency provided $862,688.77 in medical payments on Gallardo’s behalf. Her parents sued the parties responsible, and the case eventually settled for $800,000, of which about $35,000 represented payment for past medical expenses. The settlement also included funds for Gallardo’s future medical expenses, lost wages, and other damages. 

The state Medicaid agency claimed it was entitled to more than $300,000 in medical payments from this settlement, including money that had been specifically allocated for Gallardo’s future medical expenses. 

Gallardo’s parents then sued the agency in federal court, arguing that the state of Florida should be able to recover monies only from that portion of the settlement allocated for past medical expenses. 

When a U.S. district court ruled in favor of Gallardo, the Medicaid agency appealed. A court of appeals reversed the lower court’s decision. Ultimately, the U.S. Supreme Court agreed to hear the case to resolve the conflict. 

In a 7-2 decision, the Supreme Court agreed that the state is allowed to recover benefits for past — as well as future — medical care. Justice Clarence Thomas, who wrote the majority opinion, noted that Medicaid law “distinguishes only between medical and nonmedical care, not between past (paid) medical care payments and future (un-paid) medical care payments.”  

Justices Sonia Sotomayor and Stephen Breyer dissented. They argued that accepting Medicaid shouldn’t leave a beneficiary indebted to the state for future care that may or may not be needed. 

To read the full decision, click here.


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Medicaid Personal Liability

When Nursing Home Medicaid eligibility has been established there is an amount of income that the nursing home resident must pay directly to the nursing home.  After that amount is paid Medicaid picks up the difference in that personal liability and the nursing home Medicaid rate for room and board.    

Before paying the personal liability Medicaid will allow the resident to keep:

  • The personal needs allowance of $30 per month;
  • The spousal minimum monthly maintenance needs allowance (enough money to bring the income of the spouse at home up to $2178);
  • Family maintenance needs allowance (a similar allowance for minor or dependent adult child, a dependent parent or a dependent sibling of either spouse);
  • Costs of necessary medical or remedial care not covered by a third party (e.g. Medicare Part B premium).

These allowances are made to the extent the resident’s income can cover them.  It is entirely possible for the patient to exhaust his or her income before paying any personal liability at all to the nursing home.

It is important to remember that during the time a Medicaid application is pending the resident should pay the estimated personal liability or risk receiving a bill for this amount from the nursing home.  After eligibility is established Medicaid will publish the exact personal liability to use.

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Social Security Retroactive Lump Sum Benefits

If you need a lump sum of cash on hand when you retire, Social Security offers a lump sum payment option that’s worth six months of benefits for those who have waited beyond full retirement age to draw benefits (for those born between 1943 and 1954 full retirement age is 66). Known as retroactive benefits, the maximum that Social Security offers is six months’ worth of back payments in a lump sum.

This may be a good deal depending on your needs and goals, but it does come at a cost. By taking the lump sum, your retirement date and the amount of your monthly benefit are rolled back six months. So it is important to understand the details before requesting the payment.

When you delay taking retirement beyond your full retirement age, you amass “delayed retirement credits” that increase your benefits by 8 percent for every year that you wait, over and above annual inflation adjustments. By taking the retroactive lump sum payment, you lose the delayed credits that you had accumulated over the previous six months, so your monthly benefit will be lower than if you did not take the lump sum. 

Whether you should take the lump sum payment depends on a number of factors, including your life expectancy, your spouse’s needs, and what you will do with the money. Taking the lump sum payment makes more sense if your life expectancy is shorter. In this case, the immediate cash infusion may be more beneficial than bigger monthly payments, especially if you need cash for caregiver expenses. However, if you are married and are the higher earner, you will want to consider your spouse’s needs. If you die, your spouse will receive spousal benefits equal to the monthly amount of your benefits. The higher your benefit, the more your spouse will receive, and that is important when the spouse goes from a two earner household to a one earner. 

You also need to consider what you will do with the lump-sum payment. If you are paying off high-interest debt or investing in something with a good rate of return, the lump sum might be better than having the higher monthly payment. 

For more information about the retroactive benefit see the Online Social Security Handbook found at https://www.ssa.gov/OP_Home/handbook/handbook.15/handbook-1513.html.


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Who Can Make a Will?

A person must be 18 years of age and of sound mind to make a valid will in Alabama.

Although a person does not reach the full age of majority in Alabama until he reaches the age of 19, he can execute a will at age 18.

To have testamentary capacity the person making the will, who is known as the testator, must understand the business and consequences of making a will.  He must be able to remember the property being given in the will, the persons who are his next of kin, and how the property will be disposed of in the will. 

Interestingly, case law in Alabama states that a person may have testamentary capacity while not having the ability to transact ordinary business of life.  This would lead to the conclusion that testamentary capacity is actually lower than capacity required to make a power of attorney.    

Alabama law presumes that all persons 18 and over have the capacity to make a will, but ethics would require an attorney to screen for capacity before preparing a will.  When a will is offered for probate and challenged for lack of capacity, the person challenging the will must prove that the testator lacked testamentary capacity at the time he or she signed the will. 


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Beware Medicare Advantage

Medicare Advantage plans flood the market with advertising leading consumers to believe that they are missing out on the best coverage possible without an Advantage plan as opposed to Original Medicare.

True, Medicare Advantage plans often look attractive because they offer the same basic coverage as original Medicare at a seemingly lower cost, plus some additional benefits and services like vision and dental care that traditional Medicare doesn’t offer. One reason Medicare Advantage plans can offer such enhanced services is because the federal government gives them additional payments compared to Original Medicare.

But, according to the Department of Health and Human Services’ Office of Inspector General, there is a downside to signing up for Medicare Advantage. In an alarming number of instances, private Medicare Advantage plans are denying coverage for medical services that would be covered under original Medicare, according to a federal investigation.  These denials are likely preventing or delaying medically necessary care for tens of thousands of Medicare Advantage beneficiaries each year.

The investigation by the inspector general found that 13 percent of Medicare Advantage plan denials should have been covered under Medicare.  The findings were based on a review by doctors and coding experts of service denials by 15 of the largest Medicare Advantage plans during the first week of June 2019.   Extrapolating from their findings, investigators estimate that nearly 85,000 beneficiary requests for medical care — everything from MRIs to skilled nursing facility care — could have been wrongly denied in 2019.

In an even higher proportion of cases, plans are incorrectly refusing to pay claims. Nearly one-fifth of claims that Medicare Advantage plans initially declined to pay were for services that met Medicare coverage and plan billing rules.  This translates to an estimated 1.5 million refused payments for all of 2019, which delayed or prevented payments for services that providers had already delivered.

Hidden Barriers to Care

Some 26 million Medicare beneficiares were in Medicare Advantage plans as of 2021, more than double the figure a decade ago.  The Congressional Budget Office projects that by 2030 more than half of Medicare beneficiaries will be in a private Medicare plan. Unlike original Medicare, where the federal government is the insurer, Medicare Advantage plans are run by private insurance companies. The government pays the plans a fixed monthly fee to provide services to each Medicare beneficiary under their care. The less money the plans spend on patient care, the more they and their investors make. In this way, plans have an incentive to keep costs down.

For many beneficiaries, Medicare Advantage plans’ most disagreeable cost-cutting strategy is “preauthorization” — the common requirement that doctors and other medical providers obtain the plan’s approval before a beneficiary can receive certain medical services. If the plan administrators disagree that a procedure is medically necessary, the plan may refuse to pay for it.

“[B]eneficiaries enrolled in Medicare Advantage may not be aware that there may be greater barriers to accessing certain types of health care services in Medicare Advantage than in original Medicare,” the report states.

One example highlighted in the report tells of a Medicare Advantage plan that refused to approve a followup MRI to find out whether an adrenal lesion was malignant because the lesion was allegedly too small. In fact, Medicare’s rules do not restrict the use of followup MRIs based on the the size of a lesion. (The plan reversed its initial denial on appeal.)

Denial Appeals Can Work

The report identified two common causes of service denials. First, even though Medicare Advantage plans’ clinical criteria cannot be “more restrictive” than Medicare’s coverage rules, plans often used tighter clinical criteria, such as requiring an x-ray before approving more advanced imaging. Second, plans often claimed that the request for services lacked sufficient documentation, even though investigators who reviewed the denied claims found that the existing medical records were sufficient to support the request.

When a Medicare Advantage plan denies a preauthorization or payment request, the beneficiary can file an appeal with the plan.  The inspector general found that when a beneficiary or provider appealed or disputed the denial of a service that met Medicare’s coverage rules, plans sometimes reversed the denial.  And in certain cases, Medicare Advantage plans corrected their own errors.

The inspector general’s report offers several recommendations for the Centers for Medicare and Medicare Services, which oversees Medicare Advantage plans, including better auditing of plans.   

To read the inspector general’s report, “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,” click here.  


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The Importance of a Will in Second Marriages

If a person dies without a will, or if the will is not probated within five years of death, then property in his or her probate estate will be distributed by rules determined by the legislature, known as the law of intestacy. 

The law of intestacy in Alabama requires that the estate of a person having children by a previous marriage be divided one-half to the current spouse and one-half to the child or children by a previous marriage.  This can create some totally unforeseen consequences for a couple in a second marriage with children by that marriage.  The children of that union will take nothing under the law of intestacy while a child from a previous marriage will take one-half.

It is important to evaluate your individual situation to determine what is at risk if you die without a will and how you can structure your assets to assure your property passes in the manner you prefer.      


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When To Apply For Social Security

Deciding when to draw Social Security can be one of the most important decisions a person can make.  There are different views on the topic.  Some say take it as early as possible while others think full retirement age (age 66 for those born from 1943 to 1954) is best to avoid reduction in benefits.  A smaller group believes that waiting as long as possible is the best choice to maximize benefits.  Only 6.5 percent of Social Security recipients put off collecting their benefits until they reach age 70, the age at which they can collect the maximum benefit.

First recognize that drawing Social Security at age 62 comes at a high price – 30 percent of your benefit amount.  Also recognize that if you are still working, there is an offset of benefits for earnings over $19,560 in 2022 until you reach full retirement age.  You will lose $1 for every $2 you earn over $19,560.  In the year you reach full retirement age you will lose $1 for every $3 you earn above $19,560.  Many think what is the use of drawing and then losing some of those benefits due to work earnings? 

The decision of how long to wait to claim Social Security benefits depends on a number of factors. Besides other income sources in retirement many look at projected longevity.  But Social Security experts advise waiting as long as possible to start collecting benefits, up to age 70.  This is because if you delay taking retirement beyond your full retirement age, you amass “delayed retirement credits” that increase your benefit by 8 percent for every year that you wait, over and above annual inflation adjustments.  Your checks will be about 76 percent more than had you claimed at age 62, the earliest you can file. It’s tough to find a better and more reliable investment than that.

However, keep in mind that if you are collecting benefits based on the work record of a current or ex-spouse, there is no point in waiting until 70 because you will not accrue delayed retirement credits beyond your full retirement age.

Don’t Wait Any Longer Than 70 to Draw Benefits

Delayed retirement credits stop at age 70, so there is no advantage to putting off starting benefits any longer.  Not only won’t your credits increase by claiming after age 70, but if you wait longer than half a year, you’ll start losing monthly benefits you would have otherwise received.  The Social Security Administration (SSA) will pay you retroactively for benefits accrued up to six months after your 70th birthday, but that’s it.  If you wait any longer, benefits you would have received are permanently forfeited.

Realize that the SSA won’t automatically start sending you checks once you turn 70 or any age. You need to apply for benefits. You can do this starting four months before the date that you want your benefits to begin.  To get the maximum amount, you’ll want the benefits to start the month you turn 70.  There is, however, one scenario where benefits will automatically kick in at 70: those who took benefits after reaching their full retirement age and then suspended their benefits to earn delayed credits until age 70.  For them, the SSA should automatically restart benefits at 70.

You can apply online — click here.  If you can’t submit your application online, you can call 1-800-772-1213 (TTY 1-800-325-0778). As of April 7, 2022, SS offices reopened, but going online can save you wait times to file an application.

When will you get your first check?  The SSA issues checks a month behind, so your benefits should start arriving the month after the month you turned 70.  For example, if you were born July 17, you should ask that your benefits start in July and your first check will come in August.  However, those born on the first day of the month get a small bonus: the SSA treats them as if they were born the previous month and starts paying benefits in their birth month.  So, for example, if you were born July 1, you’d request benefits to start in June and the payments would begin in July.

What If You’re Still Working at 70?

Working past age 70 (or any time past your full retirement age, in fact) won’t affect your benefits.  And while you won’t increase your monthly benefit by waiting past age 70 to claim, you could boost it by working in addition to collecting Social Security. This is because the SSA recalculates your benefits each December based on your 35 highest-earning years of work. If your earnings plus your Social Security benefits allow you to replace a lower-earning year, your overall benefit could increase in the annual calculation. But Social Security benefits are taxable, so if you’re earning more money your tax rate may be higher.

In most cases, your Medicare premiums will be deducted from your Social Security check. If you happen to be retiring at age 70 and you’ve been paying Medicare’s high-earner surcharges, keep in mind that you can reverse these surcharges if your income drops far enough. The Social Security Administration uses income reported two years ago to determine a beneficiary’s premiums. If your income decreases significantly due to certain circumstances, including retirement, you can request that the SSA recalculate your benefits and your premium surcharges could be eliminated or reduced. 

For the SSA’s Retirement Benefits page, click here.