Medicaid planning can be a difficult and confusing process. The following are some common mistakes people make when planning to apply for Medicaid.
1.Thinking it is too late to plan. It is almost never too late to take planning steps, even after a senior has moved to a nursing home. (e.g. Prepay funeral)
2.Giving away assets too early. First, it is your money (or your house, or both). Make sure you take care of yourself first. Do not put your security at risk by putting it in the hands of your children until you must. Precipitous transfers can cause difficult tax and Medicaid problems as well. You may need money to get into a quality place and step up in cost basis. This is especially true for married persons.
3.Ignoring important safe harbors created by Congress. Certain transfers are allowable without jeopardizing Medicaid eligibility. These include: transfers to disabled children, caretaker children, certain siblings, and transfers into a trust for a child who is disabled and under age 65; a transfer to a “payback” trust for yourself if under age 65; and a transfer to a pooled disability trust at any age.
4.Failing to take advantage of protections for the spouse of a nursing home resident. These protections include:
1.The purchase of an immediate annuity,
2.Petitioning for an increased community spouse resource allowance, and in some instances,


3.Petitioning for an increased income allowance, or
4.Refusing to cooperate with the nursing home spouse’s Medicaid application.
5.Applying for Medicaid too early. This can result in a longer ineligibility period in some instances. This is a problem when there have been gifts. It is also a waste of time – and frustrating (very) and a lot of work.
6.Applying for Medicaid too late. This can mean the loss of many months of eligibility. You can only go back three months and only in limited cases.
7.Not understanding how Medicaid affects your home. Nursing home residents do not automatically have to sell their homes in order to qualify for Medicaid, but that does not mean the house is completely protected. The state will likely put a lien on the house while the resident is living and attempt to recover the property after the resident or his/her spouse has passed away.
8.Not getting expert help. This is a complicated field that most people deal with only once in their lives. Tens of thousands of dollars are at stake. It is penny wise and pound foolish not to consult with an attorney who knows how to guide clients through the process. And, in many cases, the attorney’s fee is part of the “spend down”.

Several years ago, a Court of Appeals in Pennsylvania ordered a son to pay the $93,000 nursing home bill of his mother. Pennsylvania is one of several states that make children responsible for the care of their parents. Actually, these laws can be traced back to Colonial America.



28 states have such laws. Ohio, Kentucky and Indiana are 3 of them. Note that all 50 states have laws obligating adults to care for minor children.



These laws fall into 2 categories: Civil and Criminal.




1.In “civil” states, kids can be stuck with the care costs of a parent.




2.In “criminal” states, the kids aren’t stuck with the cost, but they can go to jail for failing to care. This is also called “elder neglect” and “elder abuse.” We will cover that topic in an upcoming program.

There has been news recently in the media about nursing homes suing the children of their residents for the cost of care. For example, there has been a lot of that activity in Western New York. In the last 4 years, over 150

such cases have been filed. I’ve also read about such cases in Washington, D.C.



While Ohio, Kentucky and Indiana have states against elder abuse, they do not have laws that create civil liability for nursing home bills. But, that does not resolve all concerns. You can still be liable for nursing home bills IF you sign ad admission agreement that says you are responsible. There are two ways that can happen:

1)The son/daughter signs the admission agreement in his/her own name as the “responsible party.” Don’t do that. If you are signing on behalf of your parent, sign as POA - - not personally. So sign their name, followed by your name and POA.

2)The admissions agreement says that adult children are liable - - and the adult children sign it. Again, the solution is the same - - DO NOT sign your name alone. Only sign as your parents’ POA.



There are not many of these cases on the books. I couldn’t find any cases in Kentucky. Clearly, it is not enforced. I found a few cases in Ohio.













There was a case back in 1986 where an Ohio nursing home sued a child for civil liability and the court threw the case out because the child had not signed a payment guaranty.






There was also a Warren County case in 2010 where a nursing home sued a wife and son on an unpaid bill and the nursing home won because the wife and son did not contest the claim.



There was also a case right here in Hamilton County where the child took the parent’s house and the nursing home sued. The nursing home won that case because the child took the assets and screwed up the Medicaid benefits so the nursing home was not getting paid.



Finally, there was a case in Cleveland in 2020 where a nursing home sued a resident’s daughter for $70,000 in care costs. The nursing home failed largely because the daughter had checked a box on the admission form that said she would not be responsible for the bills.



One final note: Ohio law presumes that if you care for your parent, it is done so for free. There are many cases where kids made a claim against a




parent’s estate for care. That’s a “no go.” Yes, you can be paid for caring for a parent, but only if the parent agrees in advance – and put it in writing.

Want to make your adult children squirm?


Want to give them the hebegebes?

Then sit them down and tell them about your estate plan. If that doesn’t work tell them how you want your funeral to be done.
Joking, of course. But not really. Your kids won’t like this but they will thank you later - Big Time.


Topics to cover with your kids.


1. List of assets
a. Value

b. Location
c. Any special info
d. Do not forget life insurance







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2.Contents/terms of:
a. Your Will
b. Your Power of Attorney
c. Your Living Will and Power of Attorney for Health Care
i. Talk about end of life
3. Location of key documents

a. Will
b. Power of Attorney
c. Living Will and Power of Attorney for Health Care
d. Tax returns
e. Check book

f. Financial records
g. Life insurance policies
h. Safety deposit box and key 4. Contact information for:
a. Doctors

b. Lawyer
c. CPA
d. Money manager
e. Business partner
5. Special instructions regarding:

a. Special people
2



b. Special mementos

i. Jewelry
ii. Heirlooms
iii. Relevant family history
c. Pets
d. Obligations to a business partner
6. Funeral arrangements - consider preplanning or prepaying your funeral.
This will really help your family.
a. Give instructions for burial, cremation, etc.
b. Gravesite and stone
c. Name of funeral home.

So, you signed your Will and Power of Attorney. Maybe, you have signed a Trust, as well. Good Job! Now, you are all set, right?

Well, not so fast. There is one more step – and it is really important.


Your Will is actually NOT the only way to designate a beneficiary. There are other ways. The Will only affects assets titled in your own name alone. But, your assets are often not titled in your name alone.

Your Will does not affect any asset that you own jointly with others. It also does not affect your retirement accounts or your life insurance. Your Will does not affect annuities. Those assets have their own beneficiary designation. And, just to make things extra complicated, Ohio also allows you to put a separate beneficiary designation on your home, bank accounts, stocks, bonds and cars.

The final step in finishing your estate plan is to look at the title to all of your assets – ALL OF THEM – to be sure it fits all together.

For example, if you plan to leave everything to your spouse, then be sure that your spouse is listed as a co-owner or a beneficiary on all your assets. Check the beneficiary designation on your retirement accounts and life insurance. Check your deed and car title.

On the other hand, maybe this is a second marriage for you and maybe you want to leave your assets half to your second spouse and half to your kids. Better check your life insurance or retirement accounts and be sure they are set up to payout in the same way.

And, look at your deed. Let’s say that your Will leaves half of your assets to your kids, but the house is titled in your name and the name of your second spouse. When you die, your kids are not going to get one-half of the house – and that could be a very big percentage of your estate.

How do you fix that? Well first, you sit down with your spouse and talk it over to be sure that you are on the same page. Then, for second marriages, maybe you put the house into a trust that gives your spouse the right to live in the house after you are gone. Then, when your spouse dies later, the house gets sold and half goes to your kids and half to your spouse’s kids.

Or, another idea is to leave the house to your second spouse and give your kids something else of equal value – like life insurance. That means that you fill out a beneficiary form that names your kids as the beneficiary of the insurance policy. That policy will then go to your kids no matter what your Will says.

Then, tell your spouse and your kids what you did and why. Tell your attorney, as well.

The bottom line here is that after you sign your Will, check the title to your assets to be sure that it all fits together as you wish. Only then, are you really finished.

Some people do not claim their social security benefit until age 70.

WHY??!!

Back when social security started in the 1920’s, FRA was 65. At that time, the average worker lived one year after 65. That has changed – a lot. So, currently full retirement age is being phased up to 67. For example, if you were born between 1943 and 1954, your full retirement age is 66. If you were born in 1955, your retirement age is 66 and 2 months, and that goes up until it reaches 67.


What does that mean? Full retirement age is the age at which you get your “full” retirement benefit from social security. But, you can get less than that or more than that. You can apply for benefits at age 62 – but you will take a significant “haircut”.


Or, you can apply later than FRA and get “extra”. In fact, every year that you wait after FRA, you will get an extra 8% per year – over and above the inflation adjustments.


So, if your FRA is 66 and you wait until 70 to apply for benefits, your

monthly check will go up 32%, plus inflation. That’s why some people wait

– they get a big “kick”. But, after age 70 – no more increases. So do not wait any longer after age 70.
Understand, of course, that you will be receiving those larger checks for fewer years – four years fewer to be exact. So, it will take over ten years to “break even” on this strategy. This is a better bet if you have good health and longevity in your family – and you can afford to wait. So, this strategy is clearly a gamble and those who select it are betting that they will live well into their 80’s.


Note that this only applies to benefits based on your own work record. If you are claiming benefits on your spouse’s work record, don’ t w ai t – you will not get any increase by waiting.


Only about 6½% of folks wait until 70 – so this is an elite group. Congrats to you if you are one of these folks. I am, myself.


But one final note – if you have waited to 70 – apply now. This is not automatic. You must apply. You can apply up to four months before your start date and six months after. Any later than six months and you will lose some of your monthly payments.


To find out more, contact a SSA expert and have him/her run your numbers. There are many SSA experts here in town. Google it.

POWERS OF ATTORNEY

A European epidemiologist recently said that historically pandemics last about two and one-half years. If that applies to Covid, we may be winding down soon. The recent number of new cases would support that prediction.

So are there any “take aways” from all this? There are many. One of them is the importance of Powers of Attorney and Living Wills. With these documents, you can appoint someone you trust to act as your legal agent in case you are out of commission. You can also place limits on your medical treatment.

What is a POA? The word “attorney” roughly translates to “agent”. A Power of Attorney is a document that you sign to name an agent to act on your behalf. In Ohio and Kentucky, the two most common Powers of Attorney are 1) financial and 2) medical.

A financial Power of Attorney appoints an agent to manage your assets and legal affairs. This commonly includes paying bills, filing taxes, managing investments, selling property, and exercising your legal rights.

A medical Power of Attorney authorizes your doctor and hospital to talk to your agent. Without this, federal law prohibits your doctor from discussing your condition with anyone, including your spouse. The medical Power of

Attorney also authorizes the agent to make medical decisions and authorize treatment. It also authorizes the agent to decline treatment.

Medical Powers of Attorney are usually signed in conjunction with a Living Will. The term Living Will is a terrible term. It has little to do with “living” and it does not dispose of your property like a Last Will and Testament. Rather, a Living Will is a set of instructions – an advance directive – to tell the doctor what limits, if any, you place on your treatment if you become terminally ill. In a poll conducted many years ago in Ohio, the vast majority of Ohioans wanted to limit care if terminal. The remaining folks wanted all available treatment, no matter what. The Living Will is where you express your preference – whatever it is.

For example, my Living Will says that if I become terminally ill and nothing can save me and a second doctor confirms my condition, then no respirator, no feeding tube, and no paddles to the heart. Just keep me as comfortable as possible and let me go. Then, my medical Power of Attorney says that my wife has authority to make all other decisions – the non-terminal decisions. Living Wills are very specific and medical Powers of Attorney are very broad. They work as a pair.



Let me tell you a story. Back in March of 2020, a member of my family out east got Covid. This was very early in the pandemic. And she got very sick. She went from the doctor’s office to the emergency room and to the ICU in a matter of hours. She was “out of it”. She was nearly unconscious.

Fortunately, she had both a Living Will and a medical Power of Attorney that named her husband as her agent. Her Living Will said that if terminally ill, she did not want heroic measures taken – no feeding tube and no respirator.

Well, the doctors needed a decision right then and there. Do they put her on a ventilator and a feeding tube or let her go?

Well, as tough as it may seem, the choice was actually pretty clear. Like Ohio and Kentucky, her state law defines a terminal condition as one that is incurable, irreversible and untreatable. Covid is none of those things. It is curable, reversible and treatable. So, her Living Will did not apply.

But, her medical Power of Attorney did apply. Her husband authorized the hospital to put her on a ventilator. It was nip and tuck for ten days. She was very sick. But, she made it through. And, after a short stint in rehab hospital, she was home by late April and is doing well today.

The system works pretty well. But, we each have to do our part by putting the paperwork in place now. It’s easy....

1. Prearranged funerals are an excellent way to leave clear instructions
about what you want. This is remarkably helpful to your loved ones
who will be struggling with their loss. It also minimizes disagreement
among the family about funeral plans.

2. Prepaying the funeral guarantees that the funeral will be paid for and
avoids any confusion or delay over who pays for it.

3. Many prepaid funeral contracts freeze the price – so you are
protected against inflation.

4. It can help qualify someone for Medicaid. To get Medicaid nursing
home benefits, you must reduce your available resources below
$2,000. This process is called “spending down.” Prepaying your
funeral is an excellent way to do that, but to qualify, the funeral
contract must be irrevocable. This is part of a larger strategy called
Exemption Planning. Exemption planning involves paying off debts
and prepaying important expenses.

There are many ways to prepay a funeral:

A. Assign an existing life insurance policy.

B. Buy a life insurance policy for just this purpose – this is very
common and very reliable.

C. Escrow funds to a bank or with the Department of Insurance.

D. Write a check to the funeral home. This one is rather risky –
not recommended.

Finally, you should know that funeral costs have gone way up in the last ten
years. As a result, discount funeral products and services are now
available. If that appeals to you, then check it out before you prepay.

Most seniors prefer to stay at home as long as possible rather than move into a nursing home. For many families, this means eventually hiring a caregiver to look after an aging relative. There are two main ways to hire someone: directly or through a home health agency.

Hiring directly:
When you hire a caregiver directly, you need to consider all the tax and liability issues. As an employer, you are responsible for filing payroll taxes, tax forms, and verifying that the employee can legally work in the United States. If you pay $2,300 or more in wages in 2021 to any one employee, you need to withhold and pay Social Security and Medicare taxes. If you pay more than $1,500 in wages in 2021, you need to pay unemployment taxes. In addition, a private caregiver may not carry his or her own liability insurance or workers’ compensation. If an accident occurs on the job, you could be responsible.

The benefit of hiring a caregiver directly is that you have more control over whom you hire and can choose someone whom you feel is right for your family. Another benefit is that hiring privately is usually cheaper than hiring through a home health agency. But, being the employer has its problems. When your caregiver calls in sick or quits without notice, you are the one

stuck with the problem. That’s a real issue if you work full time or live out of town.

The agency route:
When you hire through a home health agency, the agency is the employer, so you do not need to worry about tax and liability issues. The agency takes care of screening the employees, doing background checks, and providing insurance. In addition, a licensed home care agency must provide training and ongoing supervision to its employees. It can help the employees deal with difficult family situations or changing needs. The agency may also be able to provide back-up if a regular caregiver is not available.

The downside of going through an agency is not having as much input into the selection of the caregiver. Also, caregivers may change or alternate, causing a disruption in care and confusion. And agencies are often more expensive because you are paying them to do all the compliance work and supervision. Finally, I think it is worth the cost.

The pandemic has taught us many, many lessons, one of them the importance of having a power of attorney and a living will. Mark Reckman will explain what those are and what really get into depth here about what you need to be thinking through.

End-of-life planning is always stressful and upsetting, but a necessary conversation people should have with their loved ones. In this recent episode of “Simply Money”, I discuss how families should go about making preparations for the end of one’s life, even if it may seem like the end is nowhere close.

I share a story that’s both sweet and sour regarding a family I worked with in Cincinnati, and a nurse who made the last moments of a man’s life as wonderful as possible.