Dear Bob,

As I watched last night's debate between Barack Obama and Hillary Clinton I thought:  February is upon us . . . Love is in the air! Happy Valentine's Day!

Speaking of "love in the air", we continue to unpack the new Medicaid rules post-DRA. I was speaking to a Medicaid caseworker this morning and we were discussing the new rules and how it would likely take all of us working together to make sense of them.

My discussion of the new Medicaid rules continues with the third installment below. This month's topic pertains to trusts and when they are or are not countable. If you missed the first two installments you can go to the Elder Law Update boneyard (archives) by clicking HERE. My ultimate aim is to edit all of the installments into a single downloadable document.

Dr. Beth is back this month with a physician's view on Medigap insurance. After reading her article, you can learn much more by going to the Mason Law Medicare Corner where you'll find a stockpile of information.

Social Security Guy Warren Coble has an interesting piece below on appealing adverse Social Security disability decisions. Hats off to Warren, by the way. Last month he spoke on Social Security issues at the Wake Forest Elder Law forum. I told him not to worry about talking to a bunch of lawyers . . . and I was right.  He knocked one out of the park (I was referring to Warren's talk - he didn't lay a finger on any lawyer, let alone knock anyone out of the park). I've heard nothing but rave reviews.

Savannah private banker Rose deVries explains the basics of reverse mortgages below. Her article is clear, and you won't need to send off and get a free DVD to have Robert Wagner explain how they work.

Last month was a big month for Elder Law Update. I spoke to both the Savannah Chapter of the National Association of Insurance and Financial Advisors and the Savannah Bar Association about Medicaid Basics for financial advisors and general practice attorneys. As a result of those engagements, we have 60 new readers . . . so now I really need to be careful! If you are one of the new readers: Welcome! I also welcome letters and articles.

Remember you may visit the archives for back issues. And if you believe someone you know might be interested in Elder Law Update I hope you'll forward this newsletter (there is a convenient "Forward email" link at the bottom of the newsletter).

Finally, I came across an interesting article in Kiplinger's about planning for disabled family members. It is a simple explanation of some of the things I do to help such families.  I've added a link to the article under This Month's Favorite Links on the left.

Bob Mason
Certified Elder Law Attorney
 

Certified by the National Elder Law Foundation, recognized by the American Bar Association as the certifying entity for specialization in  Elder Law.

MEDICAID BASICS AFTER DEFICIT REDUCTION ACT: Part III
 

This is a multipart series that will delve into the whacky world of Medicaid nursing home benefits after the Deficit Reduction Act. I don't know how many installments we will have . . . enough to get the job done.

A Reminder From The Last Installment

The basic rule of nursing home Medicaid eligibility is that an applicant, whether single or married, may have no more than $2,000 in "countable" assets in his or her name. If the applicant is married, the spouse is called the Community Spouse, and there are rules concerning how many countable assets the Community Spouse may keep. Those rules will be discussed in a later installment. "Countable" assets generally include all belongings except for (1) personal possessions, such as clothing, furniture, and jewelry, (2) one motor vehicle, (3) the applicant's principal residence, and (4) assets that are considered inaccessible for one reason or another.

Keep in mind, the rules discussed in this part relate to qualifying for Medicaid and have nothing to do with transferring those assets or whether those assets might be subject to estate recovery upon the death of the applicant. Those rules will be discussed in later installments.
 

The Medicaid trust rules are extremely complex. Please do not rely upon this simple explanation for a definitive answer.
 

Was the trust was funded by the applicant or the applicant's spouse?
 

General Rule:  If an applicant is the beneficiary of a trust funded with his assets or the assets his spouse, the trust will be countable to the applicant. Of course, a number of significant exceptions apply.
 

Exception 1: Was the trust funded by a spouse's will? If so, and if the trust was properly designed as a discretionary trust (meaning the trustee is not legally obligated to distribute anything at all to the beneficiary), the assets in the trust will not be countable.
 

Exception 2: If not funded by will, does the trust allow the trustee to distribute anything from any part of the trust under any conceivable circumstance? If the answer is "no" the trust is not countable. If the answer is "yes" with respect to any part of the trust, that part of the trust is countable.
 

A trust may have different parts. Part A or Part B. Perhaps parts for different beneficiaries. Importantly, most trusts have "income" and "principal". A trust may prohibit distributions of principal under any circumstances but allow or require distributions of income. The "principal" would not be "countable" and the income, of course, would be.
 

Really Important Note: If an applicant or her spouse sets up an "Exception 2" trust that prohibits any distributions to the applicant or the spouse, it may not be a countable asset, but the trust certainly will raise transfer of assets concerns when it is established, especially if the trust was set up within the last five years.
 

Exception 3: If the trust was funded with the applicant's own assets and the applicant is under age 65 at the time the trust is set up, then the trust might qualify as a "self-settled special needs trust". More on those later. See also my further explanation of special needs trusts on the Mason Law website by clicking HERE.
 

Was The Trust Funded By Someone Else?
 

If a trust set up by someone other than the applicant or her spouse, will the assets be counted? Answer: It depends.
 

General Rule: If a trust set up by someone other than the applicant or her spouse requires the trustee to distribute assets under certain circumstances, the assets that are required to be distributed will be countable if those circumstances occur.
 

Common Example: Mom sets up a trust for daughter that requires assets to be distributed for the "health, education and maintenance" of the daughter. The trusts assets will be countable if daughter needs to go into a nursing home.
 

Common Example: If the trust says my trustee may not distribute to daughter in any manner that would disqualify her for nursing home benefits under Medicaid, but may distribute for other reasons, the trust assets will not be counted. These types of trusts are commonly referred to as "third party special needs trust". See also my further explanation of special needs trusts on the Mason Law website by clicking HERE.
 

Next Issue . . .
 

We'll wind up the discussion of Medicaid asset rules for a married couple in the next issue.

SHOULD I OR SHOULDN'T I (GET SECONDARY INSURANCE)?
 

Beth Hodges, M.D.
 

Many patients reaching that magic age of 65 ask me whether they should get a secondary insurance or just rely on Medicare for their insurance needs. While I greatly prefer to confine my advice to what I can detect with my stethoscope, I have picked up a few pearls I can share if you are facing this decision with a loved one.

Yes, Medicare secondary insurances can be expensive. The most common premiums I hear about are around $150 to $350 monthly. Some are less, but I haven't often heard of any higher ones. Still, on a fixed income, that can take a big bite out of the budget. So, why do it?

Well, the first thing a Medicare secondary insurance does is to pick up the annual Medicare deductible, which is $135 for 2008. Some secondaries will also cover the cost of an annual physical, which Medicare deems the responsibility of the patient. It is not that Medicare does not feel an annual physical is unnecessary. They simply feel it is not their (Medicare's) responsibility to pay for it.

Secondary insurance policies also pick up the 20% of the allowable charges for office visits and procedures. Hospital stays can be a bit more dramatic, financially: The patient's portion can be up to $1,024 for the first 60 days, $256 a day from day 61 through day 90, and $512 a day thereafter.  And let's face it, most of our elderly end up in the hospital from time to time. Their hospitalizations also tend to be longer and more expensive than a younger person's.

Most secondary insurances also come with a prescription plan, often better (i.e., less restrictive) than the Part D prescription plans currently available.

As Dr Shevlin noted in a previous article, there are currently several Medicare HMO's available for a small monthly premium (I have heard one example of around $35 a month) in lieu of a secondary insurance. Someone who elects that option does not have to worry about the 80/20 percent rule. The main caution I would urge is to find out what local facilities/service providers contract with that HMO. For us in Randolph County, North Carolina, that would be around zero, leading to a tremendous problem if the elder in question needs home health or other services. Believe me, the agent trying to sell Grandma that HMO contract will fail to mention that little factoid.

I hope this information is helpful to those trying to negotiate the maze of insurance options now available to our elderly.
 

[The Mason Law website carries much additional information concerning Medigap Plans, Medicare Advanatage Plans, and Medicare in general  - click HERE to go there now. Editor ]

Beth Hodges, M.D., is a principal in Hodges Family Practice with offices in Asheboro and Ramseur, North Carolina.
 

We have previously discussed filing for disability benefits, determining onset date, eligibility date, and insured status requirements. Now let's discuss disability appeals.
 

You can appeal any adverse decision issued by Social Security. But you have to follow the process.
 

Individuals have the right to be represented during both the initial application and all appeal processes. However, most individuals proceed through the initial application and first appeal without representation.
 

After the initial application, there are 4 basic levels of appeal. Time limits on filing appeals make it imperative that individuals pursue their appeals as soon as possible after receipt of the adverse decision. Social Security will always issue a written decision on both the initial application and any subsequent appeal. Most initial disability decisions are issued within 3 to 5 months, but can take longer. Individuals have only 60 days to appeal the decision.

The first level of appeal is a reconsideration. The reconsideration is supposed to be a complete review of the claim by someone who did not take part in the first decision. Unfortunately, the truth is that many (however, not all) reconsiderations merely appear to be "rubber stamp" affirmations of the initial decision. Most reconsiderations involve a review of the claims file without the need for the applicant to be present. Average processing time for reconsiderations is 2 to 3 months. Again, adverse decisions are appealable within 60 days.
 

The second appeal is a "hearing" before an Administrative Law Judge (ALJ) who had no part in the initial decision or the reconsideration. The hearing is usually held within 75 miles of the applicant's home. The applicant and a representative may go to the hearing and explain the case in person to the Administrative Law Judge. The ALJ will question the applicant and any witnesses. It is important to have all medical information submitted as soon as possible so that the ALJ can consider all relevant evidence. It is almost always in the client's interest to attend the hearing. Currently, time frames on hearings are ranging upwards of 24 to 30 months. Recent applications decided under the "electronic folder" guidelines result in faster hearings, but are still taking 12 to 15 months to get to the ALJ for a decision. Again, a written decision will be issued with a standard 60 day appeal period. I highly recommend being represented at this level of appeal, as the representative knows how to present the information that the ALJ is looking for to be able to approve the case.
 

The final administrative appeal (prior to going to Federal Court) is an Appeals Council Review. The Appeals Council reviews appeals of ALJ decisions from the entire United States. The Council's headquarters are in Arlington, Virginia. There are no appearances before the Appeals Council; it is entirely a paper appeal. The Appeals Council looks at all requests for review, but it may deny a request if it believes the hearing decision was correct. If the Appeals Council decides to review the case, it will either decide the case itself, or return it to an ALJ for further review. Sending the case back to the ALJ is called a "remand". Again, time frames vary, but 6 months for the Appeals Council decision is not unusual. Written decisions are issued in every case.
 

If the Appeals Council decision is unfavorable, the last step of appeal is to Federal District Court. This requires the services of an attorney, resulting in a case being opened in the Federal Court system. Very few applicants take their case this far due to the prohibitive cost factors. Again, the time frames extend for many months into years for the case to be heard and a decision issued.
 

A really good website I've come across by a representative is called Social Security Disability Benefits: How to Apply, How to Win. I have reviewed a lot of the information on this website and it is quite accurate in the depictions of the appeals processes, and the nightmare that individuals have to endure to pursue benefits. While the web-site owner is trying to sell a book and video (neither of which I have personally previewed, and therefore cannot necessarily recommend) the content of the web-site is both educational and informative.

[The site that Warren references is packed full of useful information for anyone facing the disability application and appeals process, but the author of that site also urges that the difference between "going it alone" and having capable, experienced representation is the difference between a 65% national average success rate and a 96% success rate.  Editor]
 

Dear Bob,

As I watched last night's debate between Barack Obama and Hillary Clinton I thought:  February is upon us . . . Love is in the air! Happy Valentine's Day!

Speaking of "love in the air", we continue to unpack the new Medicaid rules post-DRA. I was speaking to a Medicaid caseworker this morning and we were discussing the new rules and how it would likely take all of us working together to make sense of them.

My discussion of the new Medicaid rules continues with the third installment below. This month's topic pertains to trusts and when they are or are not countable. If you missed the first two installments you can go to the Elder Law Update boneyard (archives) by clicking HERE. My ultimate aim is to edit all of the installments into a single downloadable document.

Dr. Beth is back this month with a physician's view on Medigap insurance. After reading her article, you can learn much more by going to the Mason Law Medicare Corner where you'll find a stockpile of information.

Social Security Guy Warren Coble has an interesting piece below on appealing adverse Social Security disability decisions. Hats off to Warren, by the way. Last month he spoke on Social Security issues at the Wake Forest Elder Law forum. I told him not to worry about talking to a bunch of lawyers . . . and I was right.  He knocked one out of the park (I was referring to Warren's talk - he didn't lay a finger on any lawyer, let alone knock anyone out of the park). I've heard nothing but rave reviews.

Savannah private banker Rose deVries explains the basics of reverse mortgages below. Her article is clear, and you won't need to send off and get a free DVD to have Robert Wagner explain how they work.

Last month was a big month for Elder Law Update. I spoke to both the Savannah Chapter of the National Association of Insurance and Financial Advisors and the Savannah Bar Association about Medicaid Basics for financial advisors and general practice attorneys. As a result of those engagements, we have 60 new readers . . . so now I really need to be careful! If you are one of the new readers: Welcome! I also welcome letters and articles.

Remember you may visit the archives for back issues. And if you believe someone you know might be interested in Elder Law Update I hope you'll forward this newsletter (there is a convenient "Forward email" link at the bottom of the newsletter).

Finally, I came across an interesting article in Kiplinger's about planning for disabled family members. It is a simple explanation of some of the things I do to help such families.  I've added a link to the article under This Month's Favorite Links on the left.

Bob Mason
Certified Elder Law Attorney
 

Certified by the National Elder Law Foundation, recognized by the American Bar Association as the certifying entity for specialization in  Elder Law.

MEDICAID BASICS AFTER DEFICIT REDUCTION ACT: Part III
 

This is a multipart series that will delve into the whacky world of Medicaid nursing home benefits after the Deficit Reduction Act. I don't know how many installments we will have . . . enough to get the job done.

A Reminder From The Last Installment

The basic rule of nursing home Medicaid eligibility is that an applicant, whether single or married, may have no more than $2,000 in "countable" assets in his or her name. If the applicant is married, the spouse is called the Community Spouse, and there are rules concerning how many countable assets the Community Spouse may keep. Those rules will be discussed in a later installment. "Countable" assets generally include all belongings except for (1) personal possessions, such as clothing, furniture, and jewelry, (2) one motor vehicle, (3) the applicant's principal residence, and (4) assets that are considered inaccessible for one reason or another.

Keep in mind, the rules discussed in this part relate to qualifying for Medicaid and have nothing to do with transferring those assets or whether those assets might be subject to estate recovery upon the death of the applicant. Those rules will be discussed in later installments.
 

The Medicaid trust rules are extremely complex. Please do not rely upon this simple explanation for a definitive answer.
 

Was the trust was funded by the applicant or the applicant's spouse?
 

General Rule:  If an applicant is the beneficiary of a trust funded with his assets or the assets his spouse, the trust will be countable to the applicant. Of course, a number of significant exceptions apply.
 

Exception 1: Was the trust funded by a spouse's will? If so, and if the trust was properly designed as a discretionary trust (meaning the trustee is not legally obligated to distribute anything at all to the beneficiary), the assets in the trust will not be countable.
 

Exception 2: If not funded by will, does the trust allow the trustee to distribute anything from any part of the trust under any conceivable circumstance? If the answer is "no" the trust is not countable. If the answer is "yes" with respect to any part of the trust, that part of the trust is countable.
 

A trust may have different parts. Part A or Part B. Perhaps parts for different beneficiaries. Importantly, most trusts have "income" and "principal". A trust may prohibit distributions of principal under any circumstances but allow or require distributions of income. The "principal" would not be "countable" and the income, of course, would be.
 

Really Important Note: If an applicant or her spouse sets up an "Exception 2" trust that prohibits any distributions to the applicant or the spouse, it may not be a countable asset, but the trust certainly will raise transfer of assets concerns when it is established, especially if the trust was set up within the last five years.
 

Exception 3: If the trust was funded with the applicant's own assets and the applicant is under age 65 at the time the trust is set up, then the trust might qualify as a "self-settled special needs trust". More on those later. See also my further explanation of special needs trusts on the Mason Law website by clicking HERE.
 

Was The Trust Funded By Someone Else?
 

If a trust set up by someone other than the applicant or her spouse, will the assets be counted? Answer: It depends.
 

General Rule: If a trust set up by someone other than the applicant or her spouse requires the trustee to distribute assets under certain circumstances, the assets that are required to be distributed will be countable if those circumstances occur.
 

Common Example: Mom sets up a trust for daughter that requires assets to be distributed for the "health, education and maintenance" of the daughter. The trusts assets will be countable if daughter needs to go into a nursing home.
 

Common Example: If the trust says my trustee may not distribute to daughter in any manner that would disqualify her for nursing home benefits under Medicaid, but may distribute for other reasons, the trust assets will not be counted. These types of trusts are commonly referred to as "third party special needs trust". See also my further explanation of special needs trusts on the Mason Law website by clicking HERE.
 

Next Issue . . .
 

We'll wind up the discussion of Medicaid asset rules for a married couple in the next issue.

SHOULD I OR SHOULDN'T I (GET SECONDARY INSURANCE)?
 

Beth Hodges, M.D.
 

Many patients reaching that magic age of 65 ask me whether they should get a secondary insurance or just rely on Medicare for their insurance needs. While I greatly prefer to confine my advice to what I can detect with my stethoscope, I have picked up a few pearls I can share if you are facing this decision with a loved one.

Yes, Medicare secondary insurances can be expensive. The most common premiums I hear about are around $150 to $350 monthly. Some are less, but I haven't often heard of any higher ones. Still, on a fixed income, that can take a big bite out of the budget. So, why do it?

Well, the first thing a Medicare secondary insurance does is to pick up the annual Medicare deductible, which is $135 for 2008. Some secondaries will also cover the cost of an annual physical, which Medicare deems the responsibility of the patient. It is not that Medicare does not feel an annual physical is unnecessary. They simply feel it is not their (Medicare's) responsibility to pay for it.

Secondary insurance policies also pick up the 20% of the allowable charges for office visits and procedures. Hospital stays can be a bit more dramatic, financially: The patient's portion can be up to $1,024 for the first 60 days, $256 a day from day 61 through day 90, and $512 a day thereafter.  And let's face it, most of our elderly end up in the hospital from time to time. Their hospitalizations also tend to be longer and more expensive than a younger person's.

Most secondary insurances also come with a prescription plan, often better (i.e., less restrictive) than the Part D prescription plans currently available.

As Dr Shevlin noted in a previous article, there are currently several Medicare HMO's available for a small monthly premium (I have heard one example of around $35 a month) in lieu of a secondary insurance. Someone who elects that option does not have to worry about the 80/20 percent rule. The main caution I would urge is to find out what local facilities/service providers contract with that HMO. For us in Randolph County, North Carolina, that would be around zero, leading to a tremendous problem if the elder in question needs home health or other services. Believe me, the agent trying to sell Grandma that HMO contract will fail to mention that little factoid.

I hope this information is helpful to those trying to negotiate the maze of insurance options now available to our elderly.
 

[The Mason Law website carries much additional information concerning Medigap Plans, Medicare Advanatage Plans, and Medicare in general  - click HERE to go there now. Editor ]

Beth Hodges, M.D., is a principal in Hodges Family Practice with offices in Asheboro and Ramseur, North Carolina.
 

We have previously discussed filing for disability benefits, determining onset date, eligibility date, and insured status requirements. Now let's discuss disability appeals.
 

You can appeal any adverse decision issued by Social Security. But you have to follow the process.
 

Individuals have the right to be represented during both the initial application and all appeal processes. However, most individuals proceed through the initial application and first appeal without representation.
 

After the initial application, there are 4 basic levels of appeal. Time limits on filing appeals make it imperative that individuals pursue their appeals as soon as possible after receipt of the adverse decision. Social Security will always issue a written decision on both the initial application and any subsequent appeal. Most initial disability decisions are issued within 3 to 5 months, but can take longer. Individuals have only 60 days to appeal the decision.

The first level of appeal is a reconsideration. The reconsideration is supposed to be a complete review of the claim by someone who did not take part in the first decision. Unfortunately, the truth is that many (however, not all) reconsiderations merely appear to be "rubber stamp" affirmations of the initial decision. Most reconsiderations involve a review of the claims file without the need for the applicant to be present. Average processing time for reconsiderations is 2 to 3 months. Again, adverse decisions are appealable within 60 days.
 

The second appeal is a "hearing" before an Administrative Law Judge (ALJ) who had no part in the initial decision or the reconsideration. The hearing is usually held within 75 miles of the applicant's home. The applicant and a representative may go to the hearing and explain the case in person to the Administrative Law Judge. The ALJ will question the applicant and any witnesses. It is important to have all medical information submitted as soon as possible so that the ALJ can consider all relevant evidence. It is almost always in the client's interest to attend the hearing. Currently, time frames on hearings are ranging upwards of 24 to 30 months. Recent applications decided under the "electronic folder" guidelines result in faster hearings, but are still taking 12 to 15 months to get to the ALJ for a decision. Again, a written decision will be issued with a standard 60 day appeal period. I highly recommend being represented at this level of appeal, as the representative knows how to present the information that the ALJ is looking for to be able to approve the case.
 

The final administrative appeal (prior to going to Federal Court) is an Appeals Council Review. The Appeals Council reviews appeals of ALJ decisions from the entire United States. The Council's headquarters are in Arlington, Virginia. There are no appearances before the Appeals Council; it is entirely a paper appeal. The Appeals Council looks at all requests for review, but it may deny a request if it believes the hearing decision was correct. If the Appeals Council decides to review the case, it will either decide the case itself, or return it to an ALJ for further review. Sending the case back to the ALJ is called a "remand". Again, time frames vary, but 6 months for the Appeals Council decision is not unusual. Written decisions are issued in every case.
 

If the Appeals Council decision is unfavorable, the last step of appeal is to Federal District Court. This requires the services of an attorney, resulting in a case being opened in the Federal Court system. Very few applicants take their case this far due to the prohibitive cost factors. Again, the time frames extend for many months into years for the case to be heard and a decision issued.
 

A really good website I've come across by a representative is called Social Security Disability Benefits: How to Apply, How to Win. I have reviewed a lot of the information on this website and it is quite accurate in the depictions of the appeals processes, and the nightmare that individuals have to endure to pursue benefits. While the web-site owner is trying to sell a book and video (neither of which I have personally previewed, and therefore cannot necessarily recommend) the content of the web-site is both educational and informative.

[The site that Warren references is packed full of useful information for anyone facing the disability application and appeals process, but the author of that site also urges that the difference between "going it alone" and having capable, experienced representation is the difference between a 65% national average success rate and a 96% success rate.  Editor]