BY RONALD R. KEARNS, RN, ESQ.
Case managers play a key role in helping patients navigate the complicated maze of the continuum of care from hospital, rehabilitation and then back home. Important legal considerations include having appropriate legal documents such as healthcare proxy, HIPAA authorization and a durable power of attorney; accessing Medicaid and other benefits to help pay for care at home or in a nursing home; protecting assets from potential long-term care costs; and avoiding probate. A referral to an elder law attorney is a valuable resource to help the patient break through any legal and financial barriers to access benefits and to get an appropriate estate plan in place.
Practice Tip: Case managers should refer patients to the website of the National Academy of Elder Law Attorneys (NAELA), where they can search by zip code to find a qualified attorney in their area (www.naela.org).
Estate planning is the process of planning for advanced age or expected or unexpected illnesses or for incapacity. This includes naming trusted individuals to make healthcare decisions, financial decisions, and having a plan to distribute assets after death by having named beneficiaries of retirement and other assets, or by last will and testament, or by a trust.
Who Should Consider an Estate Plan?
While most people wait to do planning until they are more established, have a family and have accumulated some assets, anyone 18 years or older should execute an estate plan. Unfortunately, many people never do any estate planning at all, leaving their estate at risk for passing according to their state’s laws of intestacy (statutes that dictate how probate assets will pass when a person dies without a will).
Since life constantly presents us with unexpected twists and turns, it is better to be proactive about estate planning rather than reactive. Planning provides more options, is less stressful and typically much less expensive.
Legal Documents and Probate Avoidance
If a patient’s mortality is at issue, such as someone receiving hospice services, one goal is to avoid probate. Probate is the legal transfer of assets from the decedent to his or her beneficiaries either by will or by the laws of intestacy (referenced above). An attorney may recommend a number of legal documents, including a healthcare proxy (to avoid guardianship); a HIPAA authorization (so named agents can communicate with the healthcare team); a comprehensive durable power of attorney document (to authorize the named agent to handle the patient’s financial and legal affairs and avoid a conservatorship) a trust (usually revocable for the patient benefit with the goal to avoid probate and pass the trust assets to the patient’s beneficiaries); and a pour-over will leaving everything to the patient’s trust. The goal is to avoid probate so the will never has to be filed but, if an asset is missed, the pour-over will simply directs that asset to the patient’s trust. Other ways to avoid probate on assets include named beneficiaries of financial accounts as well as joint ownership.
Having these legal documents in place, usually avoids the need for guardianship and/or conservatorship proceedings, as well as probate of the estate.
Regardless of a person’s financial status, it is important to have at least the basic estate planning documents in place, which include a healthcare proxy, HIPAA medical authorization, durable power of attorney and last will and testament in the event of an emergency. If a patient has a home or other assets, then adding a trust can be beneficial as well.
Protecting Assets
Many older adults wish to protect their home and other assets from potential long-term care costs. The ideal time to do asset protection planning is when an older adult is healthy, as such strategies are not effective until five years after they are implemented. If the older adult needs nursing home care within five years of doing an irrevocable asset protection plan, they are at risk of being denied Medicaid benefits. Therefore, it is imperative that the older adult has complete trust in their children or other fiduciaries, in the event the gift needs to be returned to the older adult to obtain benefits. Any plan to protect assets such as a home from the costs of a nursing home must be made five years prior to the patient needing nursing home placement. This type of planning usually involves the use of an Irrevocable trust in which the older adult retains the right to income but irrevocably gives up the right to the principal. The goal of typical asset protection plans is to protect the principal for the children.
While nobody wants to spend a lifetime of savings on long-term care costs, the goal of protecting assets for the next generation must be done responsibly. To avoid leaving oneself unprotected while attempting to protect some assets, it is crucial to work with an experienced elder law attorney.
Medicaid, a federal/state program that can help pay for in-home care and nursing home care
Medicaid is a governmental program that pays for a range of benefits for individuals who need assistance with personal care needs, either in the home or in a nursing home. Medicaid will pay for custodial care, which is assistance with ADLs (bathing, dressing, transferring, ambulating, toileting and feeding), if a patient clinically and financially qualifies.
The clinical qualifications for Medicaid are that a patient needs help with at least two out of six ADLs, the most common being bathing and dressing. The financial qualifications for Medicaid vary state by state but, generally for long-term care in a nursing home, the individual can only have $2,000 or less in assets if single and, if married, only have $2,000 or less in assets and the at-home spouse, referred to as the community spouse, can have $157,920 (2025) in countable assets. The primary residence is non-countable for the community spouse and therefore protected. Excess countable assets over $157,920 can be converted into a non-countable income stream for the community spouse, as the community spouse retains his or her income.
For Medicaid benefits at home or in the community, the laws also vary state by state, but generally an individual can only have $2,000 or less in assets and, if married, the community spouse can only have $157,920 (2025) in countable assets (a primary home is non-countable). The applicant’s income usually cannot exceed $2,829 monthly to qualify for the Home and Community Based Medicaid Waiver Program (which is 300% of the SSI Federal Benefit Rate). If a patient is over income, there could be other Medicaid programs that can help pay for care at home; varying benefits exist depending on the state.
Asset transfer rules are different if someone needs a nursing home; the Medicaid agency does a five-year financial audit and is looking for asset transfers in the last five years, referred to as the “five-year look-back” period. There is no penalty to transfer assets to a spouse or a disabled child or to a trust for a disabled child and sometimes to a caregiver adult child. It is important to note that with Community Medicaid for benefits at home, in some states transferring assets to qualify for Medicaid benefits at home is not deemed to be disqualifying.
Medicaid pays for home health aides or personal care attendants (PCAs) to come to a patient’s home to assist with care needs such as showering and getting dressed. Medicaid also pays for attendance at an Adult Day Health program, as well as transportation to and from it. If a patient’s care needs are too extensive and it is not safe for the patient to be at home, Medicaid also pays for long-term care at a nursing home.
Practice Tip: Consider Community Medicaid if a patient needs help with daily care at home with assistance for at least two out of six of their ADLs.
Summary
Case managers can utilize the expertise of an elder law attorney to help their patients access Medicaid benefits to pay for care at home or in a nursing home. A plan could be established to protect assets if desired and appropriate, as well as avoid probate and family court involvement. Important legal documents such as healthcare proxy, HIPAA authorization and durable power of attorney can help prevent guardianship and conservatorship if a patient becomes incapacitated. In addition, guidance can be given on how to avoid probate on assets by having a trust, or joint ownership, or named beneficiaries.
Regardless of financial status, it is imperative to have basic estate planning documents in place to appoint surrogate decision-makers in the event of an emergency, including healthcare proxy, HIPAA authorization, durable power of attorney, and last will and testament.
Having an appropriate estate plan can help make the process of applying for and receiving Medicaid benefits such as in-home care or placement in a long-term care facility much easier. Not only will this save time and stress surrounding the Medicaid application process, if an emergency arises, but a properly implemented estate plan can protect assets that would otherwise be at risk.
Ronald R. Kearns, RN, ESQ., graduated from Fitchburg State College with a Bachelor of Science in Nursing. He has been a registered nurse for the better part of 39 years both in medical-surgical as well as community health nursing. Ron graduated with honors from Suffolk University Law School in 1991 and has been a practicing attorney for 33 years concentrating in elder law, medicaid planning, asset preservation and estate planning for the last 20 years. He is a member of the National Academy of Elder Law Attorneys and the Massachusetts Bar Association. Ron serves as the chairperson on the compliance committee of the Norwell VNA & Hospice. He also is active at his church, chairing both the stewardship and finance committees. Ron utilizes both his nursing and legal backgrounds to help clients devise custom estate and Medicaid plans. He educates professionals on the complex subjects of Medicaid regulations and planning and the importance of advocating for seniors and the disabled. Professionally, Ron also serves as a trustee on many private as well as charitable trusts. Ron and his wife, Karen, have two adult children and live on the South Shore of Boston. Ron enjoys boating, physical fitness, sports, reading and spending time with his family.
Image credit: ISTOCK.COM/DESIGNER491
