Jan Neal Law Firm, LLC

Alabama Estate, Elder and Special Needs Law


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Beware Deceptive Marketing of Medicare Advantage Plans

Medicare Advantage Plans (MA) are a good fit for many people, while they may not be a good idea for others.  I have no problem with Medicare Advantage, but I do have a problem with the deceptive ways these plans are marketed. 

Earlier this year The Center for Medicare and Medicaid Services (CMS) revealed that from 2020 to 2021 the agency received double the complaints from Medicare eligible persons about private sector marketing of MA plans.  These complaints launched a Senate Finance Committee majority staff inquiry in August 2022.  The committee reviewed complaints from 14 states and found that Medicare eligible persons were being “inundated with aggressive marketing tactics as well as false and misleading information, such as:

Seniors shopping at their local grocery store are approached by insurance agents and asked to switch their Medicare coverage or MA plan.

Insurance agents selling new MA plans tell seniors that their doctors are covered by the new plans. Seniors who switch plans find out months later that their doctor is actually out-of-network, and they have to pay out-of-pocket to visit their doctor.

Seniors receive mailers that look like official business from a Federal agency, yet the mailer is a marketing prompt from an MA plan or its agent or broker.


An insurance agent calls seniors 20 times a day, attempting to convince them to switch their Medicare coverage.


Widespread television advertisements with celebrities claim that seniors are missing out on benefits, including higher Social Security payments, in order ot prompt seniors to call MA plan agent or broker hotlines.”

These deceptive Medicare Advantage marketing practices are especially pervasive during open enrollment (October 15 – December 7).  The committee recommends that CMS warn seniors and people living with disabilities of the following:


“Warning 1: USE CAUTION IF CALLING A TV HELPLINE . The Federal Medicare program does not advertise MA plans or benefits on television. These so-called helplines will connect you with an agent or broker. That agent or broker does not have to tell you about all of your options in the Medicare program and does not have to ensure that your plan will meet your needs.


Warning 2: IF YOU THINK YOU HAVE BEEN ENROLLED IN A NEW PLAN THAT DOESN’T WORK FOR YOU, CALL 1-800-MEDICARE FOR HELP. Seniors and people living with disabilities can also get no-cost counseling from the local State Health Insurance Assistance Program (SHIP) or Senior Medicare Patrol (SMP office). In some situations you may be eligible for a special enrollment period to switch back into your original plan During the first three months of the year you can also change your enrollment.


Warning 3: BE CAREFUL WHAT YOU CLICK. Third-Party Marketing Organizations are using sneaky tactics to get your information and then sell your information to agents or brokers who can call you. When in doubt, don’t provide your information on unfamiliar websites or to unfamiliar people. The Medicare Call Center (1-800-MEDICARE) and your local State Health Insurance Assistance Program (SHIP) office can help you understand your Medicare choices and enroll in a plan that will meet
your needs.”

There are multiple policy recommendations made in this report including reinstating requirements over marketing MA plans that were loosened during the Trump Administration. 

The full report, Deceptive Marketing Practices Flourish in Medicare Advantage, can give you good insight on how to protect yourself while shopping for the right Medicare coverage that meets your individual needs.


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Do You Need a Will or a Trust?

I will be speaking on Wills and Trusts at the Shelby County Senior Health and Wellness Exhibition in Columbiana on 10/13/22 from 10:45 – 11:15. The event will be at the First Baptist Church of Columbiana, 208 N Main St, Columbiana 35051 from 9:30 – 1:00. After the presentation I will make available my slide presentation covering the pros and cons of wills vs. trusts on this web site, Facebook and our Slideshare Account.  


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Medicaid Estate Recovery Presentation

You can access the training presentation on Medicaid Estate Recovery in Alabama given today for the Middle Alabama Area Agency on Aging’s Take a Stand for Caregivers series at this web site. You can read or download the presentation.


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Medicaid Estate Recovery Training

I will be providing training on Alabama Medicaid Estate Recovery on Tuesday, 09/20/22, at 10:00 a.m. Central time. If you feel like you could benefit from information on this topic be sure to register with the Middle Alabama Area Agency on Aging. Free CEUs are being offered for social workers, nursing home administrators, occupational therapists and physical therapists.

We will be examining how estate recovery works in Alabama, and who is at risk for losing property to repay benefits Medicaid pays on their behalf.


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Medicaid Caregiver Child Transfer Exemption

When a person applies for Medicaid the agency looks back at transfers the applicant made during the previous five years to determine if any property was given away or transferred for less than the value assigned by Medicaid.  If so, a transfer penalty is incurred, and that means Medicaid will not pay for care for a length of time based on how much was transferred. 

There are some permissible transfers allowed by law resulting in no penalty being imposed. These include:

The home when a child under 21, blind or disabled lives there;
The home when a sibling with an equity interest was residing there for at least one year prior to the institutionalization;
The home when a son or daughter of such claimant who was residing in the applicant’s home for a period of at least two years immediately before the date of applicant’s admission to the medical institution or nursing facility, and who provided care to such claimant which permitted the applicant to reside at home rather than in an institution or facility (the caregiver exemption);

Transfers of money into a Special Needs Trust.

Looking more closely at the caregiver child exemption, you often see children who have lived with the parent for many years to keep them safe at home and out of a nursing home who are concerned about their own security when the parent applies for Medicaid.  If the child can meet the caregiver child standard, the home can be transferred to him or her without penalty, but often there is debt on the home preventing a transfer.  The lesson here is to pay off debt on the home as quickly as possible to be able to take advantage of the caregiver child permissible transfer.

If the transfer cannot be done, and the parent goes in a nursing home, the property counts as a resource.  But if the parent receives Home and Community Based Services through Medicaid the house does not count as a resource until the parent dies.  At that time Medicaid will claim what it paid for the parent through Medicaid Estate Recovery.  The only good news here is the estate recovery can be delayed until the caregiver child no longer lives in the home.    


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Arranging to Pass Personal Property at Death

The person who makes a will is known as the testator.  Rather than requiring the testator to list all of his individual pieces of personal property in a will, some states allow the person to make a list of personal property stating to whom each item should pass.  Known as a personal property memorandum, the document is separate from the will but must be referenced in the will to be legally binding. 

Alabama does not have a provision for this type of distribution, but there is a work-around.

A will may state that the personal representative has complete authority to distribute personal property.  If the personal representative is highly trusted by the testator he or she may be given such a memorandum to follow for the distribution of personal property.  It is important to recognize that the personal representative is not legally bound by this personal property memorandum, but where the testator has a high trust level, he may feel comfortable with such an arrangement.           


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Avoid The Ultimate Co-mingling of Assets

It is standard advice to avoid co-mingle property of an older relative with your own money because it may be necessary to prove what belongs to each.  For instance, if your relative needs to apply for Medicaid it may be difficult to provide a clean trail of his or her assets and expenditures for five years prior to application as is required by Medicaid.

But the ultimate co-mingling is when families live on property owned by the older relative who never partitioned the property to deed individual parcels to the children or grandchildren. It is not unusual to see families who live and operate businesses off the property of an aging mother, father, or grandparent.  This can provide a great family support system and work for all parties involved.  Until it doesn’t. 

If the aging parent becomes sick enough to need nursing home placement and there are not enough liquid resources to pay for that, then the property will need to be liquidated to provide income to pay for nursing home care or to spend down assets before qualifying for Medicaid.  This leaves the relatives living on the property in a very precarious position.

If you are in this position, get legal advice now about what you can do to protect yourself and your aging relative before it becomes an emergency.     


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Is Your Out-of-State Health Care Directive Valid?

Making sure your end-of-life wishes are followed no matter where you happen to be is important. If you move to a different state or split your time between one or more states, you should make sure your advance directive is valid in all the states you frequent.

A medical advance directive gives instructions on the kind of medical care you would like to receive or who should speak for you if you become unable to express your wishes yourself. Each state has its own laws setting forth requirements for valid advance directives and health care proxies. For example, some states require two witnesses, other states require one witness, and some states do not require a witness at all.

Most states have provisions accepting an advance directive that was created in another state. But some states only accept advance directives from states that have similar requirements and other states do not say anything about out-of-state directives. States can also differ on what the terms in an advance directive mean. For example, some states may require specific authorization for certain life-sustaining procedures such as feeding tubes while other states may allow blanket authorization for all procedures.

To find out if your document will work in all the states where you live, consult with an attorney in the state. You may want to prepare documents for each state. 

As for Alabama, health care directives prepared in other states are valid if they comply with Alabama law or the law of the state where created.  Even if an out of state directive is honored, Alabama will not authorize the administration, withholding or withdrawal of health care if prohibited in Alabama.  For instance, in Alabama a health care directive permits the agent to make all decisions the person who made the document could make but does not include psychosurgery, sterilization, abortion when not necessary to preserve the life of the principal, or involuntary hospitalization. Further, the advance directive for healthcare of a patient who is known by the attending physician to be pregnant shall have no effect during the course of the patient’s pregnancy.

Even if you have a valid out of state directive, consider that research may be needed during an emergency to determine whether the out of state document is valid under the laws of the state where prepared since medical professionals will not know without further investigation.  This is why creating a document which complies with the law of each state may be the most straightforward solution. 


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How Gift Giving Can Affect Medicaid

If you will need Medicaid to pay for long-term care for you or your spouse in the next five years, you need to be careful with gift giving because giving away money or property can interfere with your eligibility. 

Under federal Medicaid law, if you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time (called a transfer penalty), depending on how much money you transferred. Even small transfers can affect eligibility. While federal law allows individuals to gift up to $16,000 a year (in 2022) without having to pay a gift tax, Medicaid law still treats that gift as a transfer.  In fact, for every $6600 you give away you will incur a one month period of ineligibility for Medicaid. A month of penalty means Medicaid will not pay for your care, no matter how destitute you are.    

Medicaid reviews all bank records for five years prior to application. Any transfer that you make, however innocent, will come under scrutiny. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it could affect your Medicaid eligibility down the road. Similarly, gifts for Christmas, weddings, birthdays, and graduations can all cause a transfer penalty, however reasonable gifts are usually allowed. If you buy something for a friend or relative, this could also result in a transfer penalty.  Also selling property for less than the tax assessor’s appraised value is considered an uncompensated transfer of the amount for which you sold the property for less than the tax value.  You will need documentation showing that you received fair market value in return for a transferred asset to avoid incurring a penalty. Repaying a debt not supported by a promissory note will also be considered a transfer subject to a penalty.

While most transfers are penalized, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:

  • your spouse
  • a trust for the sole benefit of your child who is blind or permanently disabled
  • a special needs trust for the benefit of the Medicaid applicant

In addition, special exceptions apply to the transfer of a home. The Medicaid applicant’s home may be transferred to the following individuals without incurring a transfer penalty:

  • A spouse
  • A child who is under age 21
  • A child who is blind or disabled (the house does not have to be in a trust)
  • A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home
  • A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.


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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.