To assist caregivers who are making arrangements for long term care a booklet concerning Alabama Medicaid is being made available to provide clarity for some of the issues that may arise and to provide basic information about the application process. The booklet is made available here and will remain available in the Publications section of our website. It can be read online or downloaded and printed.
The Veterans Administration has a federal and state program addressing health care needs of veterans and provides an option for long-term care.
There are four VA nursing facilities in Alabama:
- Bill Nichols State Veterans Home in Alexander City;
- William F. Green State Veterans Home in Bay Minette;
- Floyd E. “Tut” Fann State Veterans Home in Huntsville; and
- Col. Robert L. Howard State Veterans Home in Pell City.
In the VA system State VA and Federal VA contribute toward the charged rate, leaving the veteran responsible for the remainder. Actually this VA system is a highly affordable nursing home care option after the state and federal government provide subsidies.
In 2019 the out of pocket cost for care in the VA facilities in Alexander City, Bay Minette and Huntsville is $355.02 per month, and the out of pocket cost for care in the Pell City facility is $732.
The average wait for a bed is four to five months for Alexander City; six months for Bay Minette; three to four months for Huntsville; and two to three years for Pell City.
In July 2019 The Alabama Department of Veterans Affairs announced plans to build an additional $60 million veteran’s home on 27 acres in one of nine Southeast Alabama Wiregrass counties. The new nursing facility will provide care for 150 – 175 elderly veterans and will be located in either Barbour, Butler, Coffee, Covington, Crenshaw, Dale, Geneva, Houston or Pike County.
The VA is required to provide nursing home care to any veteran who needs that level of care because of a service-connected disability, has a combined disability rating of 70 percent or more or has a disability rating of at least 60 percent and is deemed unemployable or has been rated permanently and totally disabled. Other veterans in need of nursing home care will be provided services if resources are available after the priority groups are served.
You don’t really have to spend down all your resources to qualify for nursing home Medicaid. There are multiple ways to preserve funds. One of those ways is through the use of what I call the Medicaid Spend Down Special Needs Trust.
Usually persons who need nursing home care end up needing Medicaid to pay for that care. Why? Because it is so expensive. Nursing home care can cost between $6000 and $8000 depending on the specific market area in Alabama. At $7000 per month, the average nursing home resident will spend $84,000 in a year. Under these circumstances, most persons will exhaust their resources at a rapid rate rendering them unable to pay for the care they need without the assistance of Medicaid.
There are some funds a married couple can preserve for the spouse who remains at home, but there is still an amount that has to be spent down if a couple has countable assets over $25,000. A single person has to spend all of his or her resources down to $2000 before he or she can qualify for Medicaid. Using up the assets a person saved over a lifetime is known as the dreaded Medicaid “spend down.”
But what many people do not know is that there is a way to qualify for Medicaid to pay for nursing home care in Alabama without the resident having to go through a complete “spend down.” That is through the use of a pooled Special Needs Trust.
There are many types of Special Needs Trusts (SNTs), including trusts for disabled younger persons, disabled children whose parents and grandparents want to provide for their future needs, persons on public benefits who recover money from personal injury lawsuits or who inherit money when a relative dies. Each type of SNT has highly specific requirements. But what they all have in common is the goal of protecting funds for a disabled person without those funds resulting in the loss of public benefits.
With the Medicaid Spend Down SNT, instead of spending down the money required to be spent by Medicaid on nursing home care before eligibility can be established, the money is paid into a SNT and can then be used to pay for special needs not otherwise paid for by Medicaid for the disabled person once he or she becomes eligible. Medicaid eligibility can be immediately established while these funds remain available to pay for special needs for the nursing home resident.
The drawback to this type of trust is the requirement that, on the death of the person for whom the trust was established, Medicaid must be reimbursed from funds remaining in the trust up to the amount Medicaid has paid for the nursing home resident’s care. Still, creating a pool of money to meet the special needs of the nursing home resident after being awarded Medicaid is far better than simply spending down those funds before qualifying for Medicaid and leaving the resident with no resources to pay for special needs. Since Medicaid allows a nursing home resident to keep only $30 of his or her income each month to pay for personal needs, you can see how that is not enough to have needs met without families pitching in to help pay for necessary items.
An example of what the SNT funds can pay for is a private room in a nursing home since Medicaid will only cover a semi-private room. Other special needs might be items and services that can improve the quality of life for the nursing home resident such as hair salon charges, manicures, telephone, newspaper subscriptions, audiobooks, movies, recreation, medical and dental expenses not otherwise covered, special equipment like wheelchairs or specially-equipped vans; therapy or rehabilitation services; training and education, travel, electronic equipment including computers and mobile devices.
With a little planning the quality of life for a nursing home resident can be improved, and the burden for a family’s out of pocket expenses decreased.
Do not be confused with an internet search. The rules are different from state to state. Most states allow a person 65 and older to create a pooled SNT but still penalize transfers into that trust. That is not the case in Alabama.
Contact us for more information about establishing a Medicaid Spend Down SNT.
Some benefits paid by Medicaid, including expenses for long-term care after age 55, can be recouped from the recipient’s estate upon death. The federal government makes estate recovery mandatory, and each state has enacted its own rules to comply with that requirement. A new publication is available to help you understand how Alabama Medicaid Estate Recovery works and what property is at risk for being lost upon death and repayment to Medicaid. This document can be read online or downloaded and printed. It will remain available in the Publications at this web site.
No one wants to plan for it, but death is inevitable. To be sure your loved ones are protected and your assets pass as you wish, you need to understand asset titling and the probate process. This publication is Alabama specific and provides an overview of the ways property can be passed at death. This document can be read online or downloaded and printed. It will remain available in the Publications at this web site.
Making a long-term care placement is often surprisingly complicated for those who have not previously made a placement. Finding an affordable facility to meet the needs of the person in need of care can be a challenge. Planning is critical to know what to look for and to understand cost of care and payment options for various levels of long-term care.
This e-book will provide information for those persons who will be eventually making a placement, and provide specific information for care in Alabama. It will remain available in Publications at this web site.
At the top of this page you will see a link to our Publications. There you will find an e-book recently published, Guide to Alabama Advance Directives. It can be downloaded and printed or read online. It explains the different ways a person can become an agent for another in Alabama and how to evaluate which document you may need. This e-book will remain available at Publications but is being posted here.
Social Security Administration (SSA) has made available many online services. From applying for Social Security benefits to replacing a card, SSA has online tools to help, and if you can get the information you need online you can avoid calling 1-800 Medicare or going to a SSA office where you may have to wait to get help.
To access most of the online services, you need to create a mySocial Security account. This account allows you to receive personalized estimates of future benefits based on your real earnings, see your latest statement, and review your earnings history. You can also request a replacement Social Security or Medicare card, check the status of an application, get direct deposit, change your address. If you are a representative payee, you can use mySocial Security to complete representative payee accounting reports. The graphic above provided by Social Security gives you an overview of all the online services available.
A recent case involving basketball star Caldwell Jones demonstrates the danger in having only one spouse’s name on a reverse mortgage. A federal appeals court has ruled that an insurance company may foreclose on a reverse mortgage after the death of the borrower, Mr. Jones, even though Mr. Jones’ widow is still living in the house. While there are protections in place for non-borrowing spouses, many spouses are still facing foreclosure and eviction.
A reverse mortgage allows homeowners to use the equity in their home to take out a loan, but borrowers must be 62 years or older to qualify for this type of mortgage. If one spouse is under age 62, the younger spouse has to be left off the loan in order for the couple to qualify for a reverse mortgage. Some lenders have actually encouraged couples to put only the older spouse on the mortgage because the couple could borrow more money that way. But couples often did this without realizing the potentially catastrophic implications. If only one spouse’s name was on the mortgage and that spouse died, the surviving spouse would be required to either repay the loan in full or face eviction.
In order to protect non-borrowing spouses, the federal government revised its guidelines for reverse mortgages taken out after August 4, 2014 to allow spouses to stay in the house as long as they meet certain criteria, including proving ownership within 90 days of the borrowers death. In 2015, the federal government allowed lenders to defer foreclosure on a widow or widower and assign the mortgage to the federal government. Advocacy groups looking at reverse mortgage foreclosures have found that despite these new regulations, lenders are still foreclosing on non-borrowing spouses. Of the 591 non-borrowing spouses who have sought help to avoid foreclosure, only 317 received assistance.
These regulations did not help Mr. Jones’ wife, Vanessa. Mr. Jones obtained a reverse mortgage in 2014 on the Georgia home he lived in with his wife. The contract defined the “borrower” to be “Caldwell Jones, Jr., a married man.” Ms. Jones did not put his wife’s name on the reverse mortgage because she was under age 62 at the time of the mortgage. Mr. Jones died later that year, and when Ms. Jones did not repay the loan, the insurer began foreclosure proceedings.
Ms. Jones sued the insurer in federal court to prevent the foreclosure, arguing that federal law prohibited the insurer from foreclosing on the house while she lived in it. Under a provision in federal law, the federal government “may not insure” a reverse mortgage unless the “homeowner” does not have to repay the loan until the homeowner either dies or sells the mortgaged property and defines “homeowner” to include the borrower’s spouse.
On appeal, the 11th Circuit Court of Appeals (Estate of Caldwell Jones, Jr. v. Live Well Financial (U.S. Ct. App., 11th Cir., No. 17-14677, Sept. 5, 2018)) ruled that the federal law in question only covers what the federal government can insure and does not govern the insurer’s right to foreclose. The court agrees with Ms. Jones that the law is intended to safeguard widows and implies that the federal government should not have insured the loan in the first place, but finds that federal law does not cover the insurer’s private right to demand immediate payment and pursue foreclosure.
When purchasing a reverse mortgage, it is always safer to put both spouse’s names on the mortgage. If one spouse is underage when the mortgage is originally taken out, that spouse can be added to the mortgage when he or she reaches age 62.
The Department of Veterans Affairs (VA) has finalized rules that were originally proposed in 2015 that will make it more difficult to qualify for VA pension benefits known as Aid and Attendance and Housebound Benefits. These new rules will change how much an applicant can own and how much an applicant can give away and qualify for benefits by establishing an asset limit, a look-back period, and asset transfer penalties for claimants applying for VA pension benefits that require a showing of financial need.
The VA offers Aid and Attendance as cash payments to low-income veterans (or their spouses) who are in nursing homes or who need help at home with everyday tasks like dressing or bathing.
Currently, to be eligible for Aid and Attendance, a veteran (or the veteran’s surviving spouse) must meet certain income and asset limits. The asset limits aren’t specified, but $80,000 is the amount an applicant is usually allowed to keep. However, unlike with the Medicaid program, there historically have been no penalties if an applicant gives away assets at any time before applying. That is, before now you could transfer assets over $80,000 before applying for benefits, and the transfers would not affect eligibility.
Not so anymore. The new regulations will resemble, to some extent, the existing Medicaid regulations in that the new VA rules set a net worth limit of $123,600, and applicants will be penalized for giving away property within three years of application. This net worth limit of $123,600 will include both the applicant’s countable (non-excluded) assets and his or her income, and net worth will be indexed to inflation in the same way that Social Security increases.
The net worth limit is calculated after first deducting property that will be excluded. Excluded property includes an applicant’s house (up to a two-acre lot and additional acreage if it is not marketable), and it will not count as an asset even if the applicant is currently living in a nursing home. Other exclusions from net worth include payment for medical care from their income, including the payments to assisted living facilities.
The regulations also establish a three-year look-back provision. Applicants will have to disclose all financial transactions they were involved in for three years before the application (similar to the Medicaid five year look-back). Applicants who transferred assets to put themselves below the net worth limit within three years of applying for benefits will be subject to a penalty period that can last as long as five years. This penalty is a period of time during which the person who transferred assets will not be eligible for VA benefits. There are exceptions to the penalty period for fraudulent transfers and for transfers to a trust for a child who is unable to provide “self-support.”
Under the new rules, the VA will determine a penalty period in months by dividing the amount transferred that would have put the applicant over the net worth limit by the maximum annual pension rate (MAPR) for a veteran with one dependent in need of aid and attendance. In 2018 that amount is $2169.67.
For example, assume the net worth limit is $123,600 and an applicant has a net worth of $115,000. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $145,000, which exceeds the net worth limit by $21,400. The penalty period will be calculated based on $21,400, the amount the applicant transferred that put his assets over the net worth limit (145,000-123,600). The transfer subject to penalty would be divided by the 2018 MAPR of $2169.67, resulting in a 9.86 month penalty ($21,400 divided by $2169.67 = 9.86). The penalty begins to run on the first day of the month following the month of transfer.
The new rules go into effect on October 18, 2018. The VA will disregard asset transfers made before that date.
The new regulations may be read at https://www.federalregister.gov/documents/2018/09/18/2018-19895/net-worth-asset-transfers-and-income-exclusions-for-needs-based-benefits