Daniel Timins, Esq., CFP®

dan@timinslaw.com

450 7th Avenue, Suite 1500

New York, NY 10123

(212) 683-3560

� All information contained in these pages is for informational purposes only. It should not be considered legal advise. Please consult an attorney before taking any steps based on this information.

◦ MEDICARE:

� An “Entitlement ProgramEntitlement ProgramEntitlement ProgramEntitlement Program” – you paid for it, you get it

� Pays for HEALTH care

◦ MEDICAID:

� A “Needs Based ProgramNeeds Based ProgramNeeds Based ProgramNeeds Based Program”

� (1) Must have the physical / mental need

� (2) “Means Tested”: must meet asset & income limits

� Pays for PERSONAL care / Activities of Daily Living

� PART A: Inpatient Hospital CarePay up to $407 per month (if “Ineligible”)

� PART B: Supplemental Medical InsurancePay $104.90 - $335.70 per month (see future slide)

� PART C: Managed CareCost varies by plan

� PART D: Prescription Drug Benefits◦ $0-$50 per month; cost varies by plan; higher-

income consumers often pay more

� Operating expenses

� Semi-private room and meals

� Nursing services

� Social services

� Use of hospital equipment

� Rehabilitation services

� Diagnostic testing

� Skilled Nursing Facility◦ Physician must certify rehab is needed for a

hospital treatment in last 30 days

◦ There is an ~ $157.50 per day coinsurance charge for day 21 – 100

� Home Health Care◦ Pays for full cost up to 100 home visits, but MUST

occur after a hospital or skilled nursing facility stay

◦ Recipient MUST be confined at home

◦ PART B may cover additional expenses

� “Luxury” and Elective surgeries

� Most services performed outside of US

� Procedures performed in federal facilities

� (1) Everyone aged 65 and older who is receiving a monthly Social Security (including survivor’s benefits), or

� (2) People aged 65 and over who have deferred receiving Social Security retirement benefits (must apply for Medicare; others in “pay status” are automatically enrolled), or

� (3) 65 year old civilian employees of the federal government who did not elect into the Social Security system under the 1983 law, or

� (4) People who receive or are eligible to receive railroad retirement benefits, or

� (5) Any spouse aged 65 and over of a fully insured worker who is at least aged 62

� What if I am not eligible for PART A? What if I am not eligible for PART A? What if I am not eligible for PART A? What if I am not eligible for PART A? ���� You You You You have to pay for ithave to pay for ithave to pay for ithave to pay for it!!!!

� If insured worked for less than 30 quarters of his or her life:◦ Can voluntarily enroll by paying premiums of

approximately $407 per month◦ Premium can increase monthly

� If insured worked between 30 and 39 quarters of his or her life◦ Can voluntarily enroll by paying premiums of

approximately $290 per month◦ Premium can increase monthly

� Covers hospital expenses for up to 90 days for each “benefit period” (spell of illness)◦ A “benefit period” ends only AFTER recipient has been

out of a hospital OR skilled nursing facility for 60 consecutive days◦ At that time a new benefit period begins◦ First 60 days of benefit period are paid in full with an

~ $1,260 deductible◦ Next 30 days of benefit period are paid in full with an

~ $315 coinsurance charge for EACH day

�

� Also, there is an additional 60 “lifetime reserve days” over an individual’s lifetime◦ $630 coinsurance per day◦ Recipient can choose when to use these days

� Physician and Surgeon fees

� Diagnostic tests in hospitals and Dr. offices

� Physical or occupational therapy

� Radiation therapy

� Medical supplies and devices

� Ambulance service

� Pap smears and one yearly mammogram

� Flu and pneumonia vaccinations

� Emergency room care

� Drugs that CANNOT be self-administered

� Custodial care

� Routine physical, eye & hearing exams and tests

� Eye glasses and hearing aids◦ (potential 1 time exemption for hearing aids)

� Routine foot care and orthopedic shoes

� Immunizations

� Cosmetic surgery

� Dental care and dentures

Monthly premiums for PART B are based on yourincome…

…but beware of a drastic bump-up on 30% of peoplein 2016

If your yearly income in 2013 (for what you pay in 2015) wasIf your yearly income in 2013 (for what you pay in 2015) wasIf your yearly income in 2013 (for what you pay in 2015) wasIf your yearly income in 2013 (for what you pay in 2015) wasYou pay You pay You pay You pay ((((in 2015)in 2015)in 2015)in 2015)

You MAY pay

(in 2016)File individual File individual File individual File individual

tax returntax returntax returntax returnFile joint tax returnFile joint tax returnFile joint tax returnFile joint tax return

File married & separate tax File married & separate tax File married & separate tax File married & separate tax returnreturnreturnreturn

$85,000 or less $170,000 or less $85,000 or less $104.90$104.90$104.90$104.90 $105$105$105$105----$160$160$160$160

above $85,000 up to $107,000

above $170,000 up to $214,000

Not applicable $146.90 $223.00

above $107,000 up to $160,000

above $214,000 up to $320,000

Not applicable $209.80 $318.60

above $160,000 up to $214,000

above $320,000 up to $428,000

above $85,000 and up to $129,000 $272.70 $414.20

above $214,000 above $428,000 above $129,000 $335.70 $509.80

� PART B pays 80% of approved medical expenses after an $147 annual deductable

� Like PART A, PART B is automatic at age 65◦ If you do not want PART B you must reject it in

writing by2 months of receiving Medicare Notice

◦ If you change your mind later you have to pay for past-years (expensive)

� Participants can elect to have Medicare benefits provided by a managed care plan

◦ An HMO, PPO or insurance company (but MUST use a preferred provider unless an emergency)

◦ The Participant still pays PART B premiums, and usually pays more for PART C…

◦ …BUT deductibles are usually eliminated and copays are lowered to reasonable amounts

◦ A Medigap policy may not be necessary (because coverage is often redundant)

� Benefits must be at least equal to (and sometimes better than) those available under Medicare

� Additional Benefits:◦ Prescription drugs

◦ Eyeglasses and hearing aids

◦ routine physical exams

� You MUST have PART D unless you have You MUST have PART D unless you have You MUST have PART D unless you have You MUST have PART D unless you have supplemental health supplemental health supplemental health supplemental health insuranceinsuranceinsuranceinsurance

� A voluntary program available to all people entitled to PART A and enrolled in PART B

� Run through private plans that develop a list of covered drugs◦ Plans do NOT need to cover EVERY prescription drug…◦ …BUT must cover at least TWO in each therapeutic

category and class

� Premium is approximately $50 per month (depending on the chosen plan)

� ACTIVITIES OF DAILY LIVING (“ADLs”)ACTIVITIES OF DAILY LIVING (“ADLs”)ACTIVITIES OF DAILY LIVING (“ADLs”)ACTIVITIES OF DAILY LIVING (“ADLs”)

◦ Transferring (Walking)

◦ Bathing

◦ Dressing

◦ Eating

◦ Continence

◦ Toileting

� Healthy Married Couple: When some aging illness is diagnosed or no earlier than 70s

� Single Person with No Kids: NEVER (Private pay caregiving is better than Medicaid care)

� Disabled Family Member: Immediately

� Disabled Minor Family Member: Prior to them attaining age 18

The type of Medicaid benefit youThe type of Medicaid benefit youThe type of Medicaid benefit youThe type of Medicaid benefit you receive determines “look back” periods receive determines “look back” periods receive determines “look back” periods receive determines “look back” periods (I.e. the penalty for transferring assets)(I.e. the penalty for transferring assets)(I.e. the penalty for transferring assets)(I.e. the penalty for transferring assets)

Home / CommunityHome / CommunityHome / CommunityHome / Community CareCareCareCarePersonal care, physical therapy, Personal care, physical therapy, Personal care, physical therapy, Personal care, physical therapy, home health care and home health home health care and home health home health care and home health home health care and home health aid services;aid services;aid services;aid services; cccclinical or outlinical or outlinical or outlinical or out----patient patient patient patient basis; includes physicians, dentists, basis; includes physicians, dentists, basis; includes physicians, dentists, basis; includes physicians, dentists, pharmaceutical, nurserypharmaceutical, nurserypharmaceutical, nurserypharmaceutical, nursery

Institutional CareInstitutional CareInstitutional CareInstitutional CareHospitals, medical facilities, Hospitals, medical facilities, Hospitals, medical facilities, Hospitals, medical facilities, nursing homes nursing homes nursing homes nursing homes

You have to give away Money (gifting)You have to give away Money (gifting)You have to give away Money (gifting)You have to give away Money (gifting)

AND / ORAND / ORAND / ORAND / OR

You have to give up control of spendingYou have to give up control of spendingYou have to give up control of spendingYou have to give up control of spending

ASSETSASSETSASSETSASSETS

$14,850$14,850$14,850$14,850 in the recipient’s name

EXCEPTIONS:•“Burial Allowance” of $1,500•Life Insurance: $1,500 cash value•Personal Property (unlimited)•Client’s House Client’s House Client’s House Client’s House (ONLY for Home & Community care)•Supplemental Needs TrustsSupplemental Needs TrustsSupplemental Needs TrustsSupplemental Needs Trusts•Medicaid TrustsMedicaid TrustsMedicaid TrustsMedicaid Trusts

•Retirement Plans Retirement Plans Retirement Plans Retirement Plans (IRAs) are exempted from assets if they are in “payout status” (Required Minimum Distributions or Separate and Equal Periodic Payments if recipient is under age 59 ½), in which case payments are included in Income

MONTHLYMONTHLYMONTHLYMONTHLY INCOMEINCOMEINCOMEINCOME

HOME CARE: $825 per month$825 per month$825 per month$825 per month• Any excess income must go to the recipient’s “SPEND DOWN”“SPEND DOWN”“SPEND DOWN”“SPEND DOWN”

• Often goes to a “POOLED TRUST”

INSTITUTIONAL: ALL of the recipient’s monthly income in excess of$50 must be paid to the NH to offset Medicaid payments

DepartmentDepartmentDepartmentDepartment of Social Services and Medicaid impose a “of Social Services and Medicaid impose a “of Social Services and Medicaid impose a “of Social Services and Medicaid impose a “LookbackLookbackLookbackLookback Period” for Period” for Period” for Period” for transferring assets outside of the proposed recipient’s nametransferring assets outside of the proposed recipient’s nametransferring assets outside of the proposed recipient’s nametransferring assets outside of the proposed recipient’s name

Home & Community CareHome & Community CareHome & Community CareHome & Community Care3 MONTH 3 MONTH 3 MONTH 3 MONTH LookbackLookbackLookbackLookback

One Strategy:Transfer all financial assets (except $14,850) to a non-spouse, wait one month for bank statements to be updated, then apply for Home Care.

DOWNSIDE: If the recipient needs Nursing Home care… the 5 Year Look back rule applies

NursingNursingNursingNursing HomeHomeHomeHome5 Year5 Year5 Year5 Year LookbackLookbackLookbackLookback PeriodPeriodPeriodPeriod, and the Homestead, and the Homestead, and the Homestead, and the Homesteadcan be attached by Medicaidcan be attached by Medicaidcan be attached by Medicaidcan be attached by Medicaid

EXAMPLE: In January, 2011 Mary transfers her Coop and most of her assets to her son Joe (total of $280,000), and applies for Home Care. In March 2015 Mary goes to a Nursing Home. She failed to make the 5 year Lookback (4 years & 2 months). Nursing Home Care in Manhattan equals approximately $12,000 per month.

$280,000 (amount gifted) = 23.3 MONTH$12,000 (monthly benefit) “Penalty Period”

Medicaid will not pay Mary’s Nursing Home benefits for 23 months. ..and Joe is liableJoe is liableJoe is liableJoe is liable. Joe should have paid for Mary’s care for 10 more months to get through Mary’s Lookback Period.

DifferentDifferentDifferentDifferent Types of Trusts are required for ASSETS and INCOMETypes of Trusts are required for ASSETS and INCOMETypes of Trusts are required for ASSETS and INCOMETypes of Trusts are required for ASSETS and INCOMEBoth require giving up controlBoth require giving up controlBoth require giving up controlBoth require giving up control

“MAPT”: Medicaid Asset “MAPT”: Medicaid Asset “MAPT”: Medicaid Asset “MAPT”: Medicaid Asset Protection Trust Protection Trust Protection Trust Protection Trust

• Protects & transfers assets• Your choice of Trustee

(anyone except you & spouse)• Your beneficiaries keep the

assets at your death

� Assets MUST adhere to look back periods, so do in advance

Pooled TrustPooled TrustPooled TrustPooled Trust

• Hold excess income “Spend Down”• You choose the Not-For-Profit

agency that runs the trust• The agency keeps any excess

assets left at the time of death

� Needs to be done around the time you apply for Medicaid benefits

� NO principle can be distributed◦ Income distributions are optional

◦ A pure “Asset Transfer vehicle”

◦ Perfect for illiquid assets, such as real estate

� Elder client is Beneficiary & Creator

� Child(ren) is the Trustee

� Look-Back Period still applies◦ Does NOT work at the last minute – need to planneed to planneed to planneed to plan

� Deed & account changes required; separate tax return may be needed for invested assets

� Step-up in basis is maintained at client’s death

� Assets are protected from children’s creditors

� Client qualifies for Medicaid based on Look Back period (Home / Institutional Care)

� Trust can hold almost any Asset◦ Example: LLP Fractional ownership of NYC parking

garages, investment real estate, investments

� For 3rd Party Money (Ex: Parent’s $)◦ Inter Vivos Supplementary Needs Trusts

◦ Testamentary SNTs (in Will)

� For 1st Party Money (the Recipient’s $)◦ Pooled Trusts (payback provisions apply)

◦ Inter Vivos SNTs (payback provisions apply)

◦ Promissory Notes (protects 40%-45%)

� The “Community Spouse” is entitled to some assets and income, but they are limited

� If spouse is in a Nursing Home:◦ $2,931 of income per month◦ $74,820 - $117,240 of resources

� If spouse has Home Care:◦ Combined income of $1,192 per month

� During the Medicaid Application process the well spouse may exercise a “Spousal Refusal” to avoid inclusion of his/her assets and income◦ Medicaid may accept this, but will have a claim against the well

spouse when he/she dies

� New “Spousal Impoverishment” rules avoid liens

1.1.1.1. Determining HOW MUCH to transferDetermining HOW MUCH to transferDetermining HOW MUCH to transferDetermining HOW MUCH to transfer

◦ Proper income generation still required

2. Knowledge of Cost Basis / Capital Gains

taxes is more important than ever

3. Identifying ALL of the assets, income &

gifting is ESSENTIAL

� Execute POAs & HCPs early

� Gift early / Fund Trusts early

� Pre-pay burials

� Look into child / sibling care givers for

homestead exemption

� Look at disabled parent / child pairs

� Fund IRAs / Retirement as much as possible

� Roth IRA Conversations do NOT avoid RMDs / 72t SEPP◦ STILL have to take Required Minimum Distributions

� Commercial Annuities are HORRIBLE for Medicaid Planning (unless in IRAs)

� Large cash values in Life Insurance policies are also bad - $1,500 limit on cash value

� An Employee?◦ You “Hire” someone at 30 Hours Per Week◦ Need Worker’s Comp / Disability◦ Withhold for Payroll Taxes◦ Should have a Time Card

� If You Don’t…◦ Worker’s Comp can GET YOU◦ IRS / NY Tax authority can GET YOU◦ Care Giver can GET YOU

� “This is a family friend”

� “She only accepts cash”

� “We pay her under the table”

� “Mom doesn’t like ________”

� “We have known her forever”

� “A friend recommended her”

� “She can work 24 / 7”

1. Hire an OUTSTIDE Social Worker◦ Not biased toward care hours

2. Use an AGENCY for Care Givers

1. IF you choose an unlicensed Care Giver:◦ Background Check!!!

◦ Do ALL things on prior page

◦ Keep receipts: Care may be Tax Deductible

◦ Do NOT pay cash

◦ Remove jewelry & financial statements