Stautz Law

Tag: Medicaid

  • What is the Medicaid Estate Recovery Program?

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    Introduction: When Does MERP Matter?

    Good morning. It’s Andy Stautz at Stautz Law. Today I am back for a talk about another probate and estate planning topic. And that is Indiana’s Medicaid Estate Recovery Program, a.k.a. “MERP” M-E-R-P. 

    You need to know about this in two contexts. OK. On the one hand, you need to know about Medicaid estate recovery when you’re doing Medicaid planning. So as an elder law topic. And on the other hand, you need to know about Medicaid estate recovery when you’re doing a probate administration, whether or not the decedent (you know, the person who died) was on Medicaid.  

    Estate Recovery in Medicaid Planning

    OK, so let’s talk about let’s talk about estate recovery in the elder law-Medicaid planning context first, but just briefly. The basic idea there is, in general, right, the government pays for a person’s care while they’re on Medicaid. And after that person dies, Medicaid has the option to make claims against the estate for the value of the care they provided. OK?  

    So it’s kind of like a claw back, I guess, or sort of a recovery to try to defray some of those expenses of Medicaid. So you know the government pays the Medicaid beneficiary during life and then after death, they say, OK, well, what can . . . Can we get some of that back? There are complicated rules about what is and isn’t available to Medicaid estate recovery. And those are outside the scope of today’s talk.  

    You just need to know, you know, it’s not a blanket… They can’t take everything you own. There are exceptions for a surviving spouse who’s living in in the house or, you know, keepsakes and other, like, personal furniture stuff. So lots of rules. We’re not talking about them today, but the basic idea is [that] you plan ahead to try to account for the possibility of future estate recovery and avoid it if possible or you know, make it less. …. harsh on the survivors or heirs and beneficiaries. 

    MERP – “The Unit” – as a Known Creditor in Probate

    On the other side, and this probably comes up more often because it applies not just to people who are on Medicaid, but to everybody. The Indiana Probate Code says anybody who dies older than age 55 has, as a reasonably ascertainable creditor, Medicaid. Basically the probate code, says “You need to assume that anybody older than 55 might have been on Medicaid. And might be subject to Medicaid estate recovery.”  

    That matters because in probate you’ve got a duty to tell all the creditors that you’re administering the estate so that they can come forward with their claims if they have any.  

    So basically, in every probate estate, for someone who dies above the age of 55, you have to mail a noticee to the Medicaid Estate Recovery program. (It’s called “the Unit” in the probate code.) You’ve got to mail notice to the unit. And say, you know, if you’re coming forward with a claim, you need to do it now. (And there are time limits for that, which is again beyond the scope of this talk)  

    But that’s where it comes up. Even if the person who I wasn’t actually on Medicaid. There’s just this presumption, so every pretty much every time you’re going to be sending notice to the unit and on your list of creditors, you know you’re going to say, “Yep, we told the Unit – we told Medicaid Estate recovery”  

    Whether or not they come forward with a claim, it depends on all sorts of other things, but that presumption is there, so that’s where it comes up very often.  

    Conclusion

    So that’s it, concludes my talk. That’s just kind of what Medicaid estate recovery is. MERP, the Unit, in those two different contexts.  

    You’ve got to dig deeper based on what your situation is, but now at least you know what it is, kind of what it does, the reason for it. Hope you’ve enjoyed that talk and call me to discuss your specific case if you need help! Thanks. Bye!

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  • What is a Medicaid “Waiver”?

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    Hi folks, it’s Andy Stautz at Stautz Law. We’re back for another talk: on elder law, this time, or Medicaid law. And it’s a really basic question. So we often hear about Medicaid in the context of long term care. Because as many people know, Medicaid will pay for nursing home care for people who can’t otherwise afford it.  

    What is a Medicaid Waiver?

    Well, in addition to actual in-the-nursing-home care in Indiana, Medicaid will also pay for some people to stay out “in the community” — that is, at home, not in a traditional nursing home context. And that payment or that program is called a Medicaid waiver.  

    When you hear Medicaid waiver, we’re talking about the same type of long term care costs, the same type of medical need. It’s just being met somewhere else. You know, maybe a family member acting as a as a home health aide. There are a variety of other services that can make that possible.  

    Why is is called a Medicaid “Waiver”?

    OK why is it called a waiver Medicaid waiver?  

    You’re not waiving Medicaid, you’re on Medicaid. Well. To understand why it’s called a waiver, you need to know that the federal government, Washington DC, pays money to the states, in this case Indiana, to run their Medicaid program. And because the federal government is the one paying for it (more or less, you know, partially: there’re state contributions), but because the federal government is paying for it, they get to set the conditions of Medicaid.  

    And the usual condition is Medicaid pays for your long term care in a long term care home. But . . . the federal government waives its right to insist on those requirements. And instead, you know, contribute money to the state Medicaid program, even for people who aren’t in that setting, in that nursing home setting. So it’s a waiver of the federal government’s right to, you know, require that every Medicaid recipient be in a nursing home.  

    So that’s the short explanation. Obviously it’s a complicated topic, but all the usual Medicaid planning considerations: eligibility, look back period, all that . . . apply equally to Medicaid waiver. So in general, you should treat it the same and you know you need an experienced estate planning or elder law attorney to help guide you through that 

    I’d welcome your call if you want to talk about it more. But today was just a brief informational chat. Hope to hear from you soon. Bye now.

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  • Use Cases for Supplemental Needs Trusts (SNTs)

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    Good morning. It’s Andy Stautz at Stautz Law. I am back for another discussion of supplemental needs trusts. I’m recording this right on the heels of my first discussion of how supplemental needs trusts came about and what they do.  

    When Do I Need an SNT?

    Today’s topic is OK. I understand what supplemental needs trust is. When do I use one? What should I be thinking about? And obviously this is an individual determination, right? This is why you talk to an estate planning attorney. This is why you should, you know, call me for specific advice about your situation. But today I’m discussing general considerations.  

    SNT Use Case 1: Continuing Family Support

    So the most common use case for an SNT – Probably — is the situation where some family members, let’s say parents, have a disabled child who is receiving benefits. And the parents help support the disabled child with various needs over and above the government benefits while the parents are alive. So parents are living. They’re taking care of their disabled child. That situation is great and can continue indefinitely.  

    Obviously the parents resources don’t count toward the child’s resources when they’re freely given . . . (there’s a separate “deeming” rule that you need to consider) . . . but. In general. There’s no problem with the benefits recipient having too much money because the money is still the parents’, right? It’s just given from time to time as needed.  

    The parents can use discretion. They can decide for themselves, you know how much or when or what for and stay on the right side of the benefit, you know, assets, resources, income rules.  

    Problem is, the parents don’t live forever, so the parents are worried after they die, what happens to their disabled child. How can they keep going with the support they were giving? Yeah. How can they do it?  

    History of SNTs

    So. Uh. It used to be way back, like, pre-1993. Older than I am believe it or not. That there was no statutory authorization for these extra trusts. You could try to get around it, but there’s no alternative. So it was just a matter of perhaps giving an inheritance to a sibling and then saying oh sibling like, please continue taking care of your brother or sister. Lots of potential behavioral problems there, even if it worked legally.  

    When Make an SNT? Testamentary vs. Inter Vivos SNTs

    So the supplemental needs trust steps in there and says OK, well, you can. The parents can in their will create a supplemental needs trust to carry on what they were. You know that extra support they were giving their child.  

    You can create an inter vivos special needs trust and kind of have it all set up working ready to go before death, which has some advantages, obviously, in terms of, you know, probate, smooth transition, you know, continuity there. So that’s one big situation.  

    SNT Use Case 2: Personal Injury SNTs

    The other big situation is. Personal injury or workers compensation victims, plaintiffs. Uh, you know catastrophic accident where there is someone who’s been really injured. Probably then is relying on some government benefits to pay their health care costs.  

    OK, well, what about the money from a settlement? Or a workers compensation reimbursement. Can you save any of that or keep that from all being going right away to existing government-paid bills?  

    And so that’s another common place where setting up a supplemental needs trust is often used.

    Conclusion

    So we’re at 5 minutes. That’s just two use cases, and I didn’t even get into considerations. So we’re just going to have to come back for more later. But I hope you enjoyed this talk.  

    Obviously you need individual advice about your situation, so call or book online so we can talk about your situation, give you specific legal advice. That’s all for now though. Thanks. Bye. 

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  • Supplemental Needs Trusts (SNT) Basics

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    Good morning. It’s Andy Stautz at Stautz Law. I’m back today with another talk about basic estate planning techniques. Today’s topic is Supplemental Needs Trusts or SNTs for short. This is a concept I mentioned in another video and I realized I had never really explained what supplemental needs trusts are or how they work. So we’re going to do that today.  

    What’s the Point of a Supplemental Needs Trust?

    SNTs are a creature of benefits programs, really. So the basic situation is this: Medicaid, Supplemental Security Income are the two big examples of means-tested benefit programs, where the beneficiary receives benefits from the state. (The government, that is.) Because the the beneficiary has no resources, that is, assets, and also no income. You know, within certain low limits.  

    So then the question is, What if a family member or a charitably minded individual–You know, whoever–If you want to give a Medicaid beneficiary and SSI beneficiary some extra help. Maybe that’s a little bit of extra income to buy . . . nicer things than the really bare bones Government benefits will provide.  

    Well, you can’t give the beneficiary that income or those assets outright because they’ll they’ll be disqualified from their benefits. And that’s not a result you want, because for people who receive those benefits, it’s usually a big deal in their in their financial life.  

    So the basic problem then is “OK how do you give a benefit recipient those extra resources without disqualifying them for benefits?” And that’s what the Supplemental Needs Trust was invented to do.  

    It’s called supplemental, because the idea is it’s over and above that bare bones, government benefits level. Right. So it’s a trust to provide a little bit extra to the beneficiary benefits recipient.  

    Why are SNTs Allowed?

    And so as you can imagine, there’s a basic tension there, right? That usually the government wants anybody who can afford it to stay off of those benefits to preserve resources for the people who really need it. So if the government wanted to be really aggressive about that, it would say no, you can’t even have any extra, because as soon as someone wants to give something to you, it means you’ve got more– too much, above the limit.  

    But the policy tension is kind of “OK, but we don’t want to discourage family members from helping their disabled loved ones” or you know, whatever the case, maybe we don’t want to discourage private charity here.  

    Statutory and Legal Authority for SNTs

    So the supplemental needs trust is written into the statute. There are three sections in the Revenue Code that let you make these trusts with specific requirements to make sure that they’re actually supplemental and not, You know, huge disguised gifts that would be disqualifying.  

    So that’s the basic concept and the basic policy tension there. I will explain in future videos — this one’s already getting long — considerations on when to use it. Some alternatives.  

    Conclusion

    But the basic idea is the supplemental needs trust lets you give money, give some extra resources to a person on benefits without disqualifying them from those benefits.  

    Is a Special Needs Trust the Same as a Supplemental Needs Trust?

    And so if you see special needs trust, that’s another name. But I like supplemental needs trust because it emphasizes the purpose of the trust as a supplement to those benefits.  

    So until next time, thanks for watching. This is Andy Stautz at Stautz Law and call me with your questions. 

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  • Who Needs Medicaid Advance Planning?

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    Hi, it’s Andy Stautz with Stautz Law. Today, we’re following up on our Medicaid Advance Planning Basics talk with another… the answer to another important question, which is: who needs Medicaid planning?  

    And it’s very personal, so it’s hard to say specifically whether you in particular should be thinking about Medicaid planning. In general, everybody should think about long term care costs. Because they’re…. You know, if you need a nursing home and it costs $100,000 a year that’s probably more annual spending than your retirement plan really accounts for. So it’s expensive. You should have a plan.  

    For Medicaid advance planning, though, like we talked about, there’s a five year look back period. So you have to transfer your assets out of your estate well in advance of actually needing care. And irrevocably. And based on projections about what you’re going to need in the future. So those are big speed bumps for a lot of people. You know, if you’re not comfortable giving your property irrevocably to a trust, well then probably an asset protection trust isn’t for you.  

    If you don’t have significant assets to protect there’s no point in setting up a trust. If your health care needs are suddenly worse or you have a health problem. Well, advanced planning is probably not going to help you.  

    And if you’re doing great you probably don’t need Medicaid advanced planning.  

    So, behavioral issues aside (with you know, having a trustee you trust; being OK with irrevocability; having some idea of your future care needs) those behavioural issues aside, there’s an asset window. Where if you don’t have anything, it’s not worth paying to set up a trust and all of that. And if you’ve done really well, if you’ve got, you know, several millions of dollars in your retirement accounts or in your estate, you also don’t need Medicaid advance planning. Because hopefully at that point, you know you, you can simply absorb the long term care costs, whatever they are. If your portfolio’s big enough, then you can afford the $100,000 a year or whatever the long term care cost is going to be.  

    And then there’s. . . . an in between area where you’ve got a house and some assets that are substantial enough that you want your heirs and your beneficiaries to get them, but are low enough that you can’t afford long term care on an ongoing basis. That’s the window where it’s worth paying for the protection of Medicaid advance planning with the hope of, you know, your your life’s work going to your children or you know your other beneficiaries instead of to the nursing home.  

    So those are kind of the considerations. Again, it’s very situation dependent.  

    (You know, market returns can affect that. Sometimes you set up a Medicaid asset protection trust and then you don’t need care for 10 years and your investments have doubled. All of a sudden . . . you’re on the upper side where you can comfortably afford it.) 

    To give personal advice, we need to have a personal planning meeting. You can book that online. Or you can just give me a call and I’ll be happy to talk. And we can come up with a plan that’s gonna work for you. So thanks for watching.

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