I want to make available to you a guide titled Managing Someone Else’s Money in Alabama. This guide was adapted from the Consumer Financial Protection Bureau’s (CFPB) Managing Someone Else’s Money guides and tailored to Alabama state law by members of The Alabama Interagency Council for the Prevention of Elder Abuse, Jones School of Law Elder law Clinic at Faulkner University and AARP Alabama. The work was overseen by Clinical Associate Professor John Craft, and his Research Assistant, Lauren Hogeland. Many thanks for their work helping caregivers understand their duties.
Planning for long-term care is an important issue to tackle, and the latest forecast shows that the associated costs of care are reaching well beyond the average person’s means. This makes planning to save an estate an important proposition, and the earlier the planning, the greater the options.
The median cost of a private nursing home room in the United States has increased to $97,455 a year, up 5.5 percent from 2016, according to Genworth’s 2017 Cost of Care Survey. Genworth, an insurer, surveys and publishes long-term care prices across the country annually and provides a benchmark for what caregivers will need to finance long-term care. The company reports that the median cost of a semi-private room in a nursing home is $85,775, up 4.44 percent from 2016.
The price rise was slightly less for assisted living facilities, where the median rate rose 3.36 percent, to $3,750 a month. The national median rate for the services of a home health aide was $22 an hour, up from $20 in 2016, and the cost of adult day care, which provides support services in a protective setting during part of the day, rose from $68 to $70 a day.
For Alabama, the Genworth survey reports that the average semi-private nursing home room in 2017 was $72,996 per year/$6,083 per month (up from $71,172 per year/$5931 per month from 2016), and the average private nursing home room was $77,568 per year /$6,464 per month (up from $75,192 per year/$6,266 per month in 2016). The average assisted living facility was $36,684 per year/$3,057 per month (up from $34,800 per year/$2,900 per month in 2016).
Alaska continues to be the costliest state for nursing home care, with the median annual cost of a private nursing home room totaling $292,000. Oklahoma again was found to be the most affordable state, with a median annual cost of a private room of $63,510.
The 2017 survey was based on responses from more than 15,000 nursing homes, assisted living facilities, adult day health facilities and home care providers. The survey was conducted by phone during May and June of 2017.
We have been working on a publishing project with Middle Alabama Area Agency on Aging (M4A) to produce dementia friendly resources for professionals and caregivers. This booklet was published in June 2017 and can be read here. To download you will need to go to the publishing platform, Issue, to create a free account or download the pdf here. Printed copies may be obtained by contacting M4A at (205) 670-5770 or toll free (866) 570-2998.
Last week I spoke to the alumni social workers group at The University of North Alabama in Florence, Alabama, and shared information about authority and capacity issues for seniors. I promised to post additional information for reference on our web site, so here you have it.
The Alabama Uniform Power of Attorney Act effective January 1, 2012, is found at Alabama Code (1975) Sections 26-1A-101 through 404. The standard power of attorney form is found at Section 26–1A–301. This power is presumed durable without specific language being required like previous powers of attorney.
ALA. CODE § 26-1A-120(a)(3) provides that a person may not require an additional or different form of power of attorney for authority granted in the power of attorney presented, and a person who refuses to effect a transaction in reliance upon an acknowledged power of attorney may be subject a court order mandating that the person effect the transaction. If the document is found to be valid, attorneys fees and costs incurred may be awarded.
The Portable Physician Do Not Attempt Resuscitation Orders regulation is found at Board of Health 420-5-19-.02. Different facilities can continue to use their own forms, but for the order to be portable the statutory form provided in the regulation is required.
The capacity assessment materials I discussed produced by the American Bar Association and American Psychological Association can be found here.
What a great group of social workers I met, and I look forward to speaking again to the group in August.
SSI is the basic federal safety net program for the elderly, blind and disabled, providing them with a minimum guaranteed income. If your resources are above the program’s resource limits of $2,000 for an individual or $3,000 for a married couple, you may be able to “spend down” to qualify for SSI, similar to the process to qualify for the Medicaid program.
If you give away a resource or sell it for less than it is worth in order to get under the SSI resource limit, you may be ineligible for SSI for up to 36 months. The SSA looks at whether or not you have transferred a resource within the previous three years. If you have, it computes a penalty period by dividing the amount of the transfer by your monthly benefit amount.
Thus, if you give your son a $6,000 gift and then apply for a monthly SSI benefit of $600 within three years of the gift, you will not be eligible for SSI for 10 months (6,000/600=10). That 10-month period will begin on the date of the transfer and end 10 months later. In other words, although you can be ineligible for up to 36 months due to a transfer, that is only a cap. The actual period of ineligibility is based on the value of what you transferred divided by the monthly benefit in your state.
You should be aware that transfers may be “cured” by the person to whom you made a gift returning it to you. And, finally, there are certain exceptions to the transfer penalty. These include gifts to:
A spouse (or anyone else for the spouse’s benefit);
A blind or disabled child;
A trust for the benefit of a blind or disabled child;
A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the applicant, under certain circumstances).
In addition, special exceptions apply to the transfer of a home. The SSI applicant may freely transfer his or her home to the following individuals without incurring a transfer penalty:
The applicant’s spouse;
A child who is under age 21 or who is blind or disabled;
Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the applicant, under certain circumstances);
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; or
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.
Taxpayers with long-term care insurance policies can deduct some of their premiums from their income. Whether you can use the deduction requires comparing your medical expenses to your income in a complicated formula.
Premiums for qualified long-term care insurance policies are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10 percent of the insured’s adjusted gross income. In tax year 2016, taxpayers 65 and older only need medical expenses to exceed 7.5 percent of their income, but in 2017, taxpayers 65 and older will have the same 10 percent rule as everyone else.
The amount of long-term care insurance premium that is deductible is based on the taxpayer’s age and changes each year. For the 2016 tax year, taxpayers who are 40 or younger can deduct only $390 a year, taxpayers between 40 and 50 can deduct $730, taxpayers between 50 and 60 can deduct $1460, taxpayers between 60 and 70 can deduct $3,900, and taxpayers who are 70 or older can deduct up to $4,870 in premiums.
What this means is that taxpayers must total all of their medical expenses and compare them to their income. For example, suppose 64-year-old Frank has an adjusted gross income of $30,000 and long-term care premiums totaling $5,000 as well $1,000 in other medical expenses. Ten percent of $30,000 is $3,000. Frank can only deduct any medical expenses that exceed $3,000. The 2016 limit for deducting long-term care premiums is $3,900. That means Frank can only count $3,900 of his long-term care premiums. If he adds the $3,900 in long-term care premiums to the $1,000 in other expenses his total medical expenses are $4,900. He can deduct $1,900 in medical expenses from his income.
If Frank is 70 in 2016, the calculation changes because his medical expenses only need to exceed 7.5 percent of his income, which would be $2,250. The amount of premiums he can deduct is also increased because of his age–he can deduct up to $4,870 in premiums. Subtracting the income limit from his medical expenses ($4,870 in long-term care premiums and $1,000 in other expenses), Frank can deduct $3,620 in medical expenses from his income. In 2017, Frank will only be able to deduct medical expenses that exceeded 10 percent of his income, so the amount he can deduct will go down.
I am frequently asked if a parent can reimburse a child or other individual for expenses paid for the benefit of the parent during the spend down phase preceding application for Medicaid without running into problems with Medicaid. In short, the answer is no unless there is evidence of a debt incurred in the form of a written agreement, promissory note, etc., for which the payment is made. This is a harsh and difficult position for many caregivers who do not think twice of paying moving expenses, deposits, medical expenses, etc., for a parent only to find that later they cannot be reimbursed because they did not make a formal agreement.
A New York appellate court case recently confirmed this application of the Medicaid regulations by allowing a penalty to be imposed on the transfer of assets to a caregiver daughter without presenting a written agreement to evidence the debt. Matter of Krajewski v. Zucker (N.Y. Sup. Ct., App. Div., 3rd Dept., No. 522888, Dec. 8, 2016).
In that case Jessie Krajewski lived with her daughter for two years before entering a nursing home. Ms. Krajewski’s husband withdrew money from their joint bank account to reimburse the daughter for her caregiving expenses. After Ms. Krajewski entered the nursing home, she applied for Medicaid. The state imposed a penalty period based, in part, on the transfers made to her daughter.
Ms. Krajewski appealed, arguing that because the transfers were made to reimburse her daughter for her care, the payments were not made in order to qualify for Medicaid. After a hearing, the state upheld the penalty period, and Ms. Krajewski appealed her case in court.
The N.Y. Supreme Court, Appellate Division, affirmed the agency decision, holding that Ms. Krajewski did not rebut the presumption that the transfers were made in order to qualify for Medicaid. The court found that there was no evidence of a written agreement between Ms. Krajewski and her daughter and the only evidence consisted of handwritten summaries of Ms. Krajewski’s living expenses, which was not enough to rebut the presumption.
The lesson to take from this case is that when a caregiver pays expenses for a person who will be applying for Medicaid, it is essential to have written proof of the debt before reimbursing the caregiver for those expenses. While this is a general rule for transfer of money to a caregiver, be aware of the fact that in Alabama more requirements need to be met to reimburse a family caregiver for actual care provided. If you want to establish such an arrangement it is important to seek legal advice first.
On June 9, 2015, Governor Bentley signed ABLE Act legislation into law in Alabama permitting the state to implement a program to permit developmentally disabled persons to have limited tax free savings without losing public benefits. ABLE stands for Achieving a Better Life Experience, and the act was passed on the federal level in December 2014 permitting each state to set up its own program. Though the program in Alabama has not yet become operable, it will be getting underway in the coming months.
The ABLE Act will permit up to $14,000 per year to be placed in one approved bank account set up for a developmentally disabled person living in Alabama (one who became disabled prior to age 26) with those funds exempt from counting as resources for public benefit purposes. This means that the disabled person can have these funds to use for disability-related expenses without losing his or her public benefits such as SSI or Medicaid. Up to $100,000 can be accumulated in an ABLE account without loss of SSI, and $350,000 can be accumulated in such an account in Alabama without loss of Medicaid (note that this is state specific, and some states may permit an accumulation as high as $425,210 or as low as $235,000 before loss of Medicaid). At the death of the disabled person any funds left in the ABLE account will be payable to Medicaid to repay that agency in amounts up to what the agency paid for the disabled person’s health care costs.
Contributions to an ABLE account are not tax deductible, and income earned by an ABLE account is not taxable.
Stay tuned for more information about these accounts in the coming months or go to the Alabama State Treasury’s ABLE website and sign up for an update notification when accounts are available.
Jan is teaching a two part course on Elder Law at Osher Lifelong Learning Institute at Auburn University (OLLI at Auburn). See page 11 of the OLLI Spring 2016 catalog for the course description. The first session is Wednesday, March 30, 2016, from 10:15 a.m. – 11:45 a.m., and the second will be on Wednesday, April 6, 2016, from 10:15 a.m. – 11:45 a.m. Topics to be covered include Older Americans Act Legal Assistance, Authority Issues and Advance Directive Options, Long-Term Care Planning, Long-Term Care Payment Options Including Medicaid, Special Needs Planning, Probate, Administration of Estates and Funeral Planning. If you aren’t a member of OLLI, check out all the benefits and learning opportunities here.
Materials for the training can be downloaded at elder-law-training-for-olli-at-auburn-033016-60244085 and will be posted at this site soon.
For years I have been arguing with folks who say that older people don’t use the internet and can’t engage through that medium. That didn’t make sense to me. For instance, people who are 70 today were 50 when personal computers began to emerge as a household staple, and they were often more likely to have the resources to explore new technologies coming into the consumer marketplace. People who are 60 today were 40 then and at the height of their careers where the gradual integration of technology was a job requirement. Retirees today connect with old and new friends on Facebook, tweet about their favorite subjects, pin their favorites, check email and text to communicate with family, friends and groups. In fact entire industries of online caregiving have developed. Sadly entire online industries of fraud have also developed requiring a great deal of poise for anyone online to stay safe. With that said, there are people who never went online, but I’m pretty sure that their caregivers, both personal and professional, did. But the question remains, who is not online these days?
I am not the only person wondering about that. A Pew Research Center Study shows that 15 percent of the American population is not online, but the number is shrinking quickly. From that study:
“For example, 86% of adults 65 and older did not go online in 2000; today that figure has been cut in half. And among those without a high school diploma, the share not using the internet dropped from 81% to 33% in the same time period.”
With that said, some people will never go online. Some people never drove a car, but someone gave them a lift. Today we recognize that by 2030 25 percent of the population will be 60+, and almost all of them will be online. Recognizing this trend, The 2015 White House Conference on Aging produced some interesting tech related announcements worth exploring. Among the 2015 WHCoA ideas, is development of a web site named aging.gov:
“to provide older Americans, their families, friends, and other caregivers, a one-stop resource for government-wide information on helping older adults live independent and fulfilling lives. The Web site links to a broad spectrum of Federal information, including how to find local services and resources in your community for everything from healthy aging to elder justice to long-term care, as well as how to find key information on vital programs such as Social Security and Medicare.”
An innovative perspective is provided by The Center for Technology and Aging’s 2014 report (updated) titled The New Era of Connected Aging: A Framework for Understanding Technologies that Support Older Adults Aging in Place. The report provides an overview of how technology can improve the lives of seniors and help them remain in independent living arrangements. The report examines some of the products emerging to support monitoring and management of physiological status and mental health, chronic condition management, technologies to support safe functional status at home, technologies to promote connectedness and products to support caregivers.
The debate is no longer whether technology will be used by and for seniors; the question is how. The challenge will be to use technology to enhance the lives of seniors and their caregivers and promote the well-being and independence of seniors as they age. What an exciting era in which to age and work with seniors!