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.
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.
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.
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.
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.
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.
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.
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.
When a person applies for Medicaid to pay for long-term care, either in a nursing home or through the Home and Community Based Waiver (HCBW), Medicaid examines the applicant’s financial transactions for five years preceding the application to determine if any funds were given away or property sold for less than the value assigned by Medicaid. If so, a penalty is calculated by dividing the value of the amount transferred by $6100 (as of 2018) to determine the number of months of ineligibility.
In nursing home Medicaid cases it was always clear that the penalty started to run when the person resided in a nursing facility and would meet all requirements for Medicaid eligibility but for the existence of the penalty for transferring assets. In that situation a person is approved for Medicaid subject to the applicable penalty. He or she is billed privately during the penalty period, often at the peril of relatives who need to come up with funds to pay the bill. When the number of months of penalty assigned runs out, Medicaid will then pay for the resident’s care.
It has not been so clear about how to get the penalty running in HCBW cases. If the penalty cannot run until the person receives HCBW services, but the person cannot receive HCBW because of the transfer of assets, then you can never get past the penalty period. When the application is not taken upon identifying asset transfers, the penalty becomes permanent ineligibility for HCBW services.
On April 17, 2018, the Center for Medicare and Medicaid Services provided revised guidance on how to establish the start date for transfer penalties for HCBW applicants. In that directive CMS indicates that the penalty would begin to run at the point at which a state has: determined that the applicant meets the financial and non-financial requirements for Medicaid eligibility and the level-of-care criteria for the waiver; developed for the individual a person-centered service plan; and identified an available waiver slot for the individual’s placement. The penalty period for that applicant begins no later than the date on which a state has confirmed that all of these requirements are met, and transfers that would be subject to a penalty would be those that were made on or after the 60 months preceding this same date.
It would appear that persons who have transferred assets need to request that the application for HCBW still be taken, a care plan developed and proof provided that a waiver slot is available to establish the date all of these requirements have been met. Hopefully Medicaid will develop procedures to document eligibility for HCBW subject to the penalty so that services can begin when the penalty has run.