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Maine Elder Law Updates Please click on link above or scroll down this page for information about final rules effective April 1, 2007 which will make very significant changes to the way eligibility is determined for those seeking MaineCare coverage for long term care services in nursing homes and assisted living facilities, or those seeking benefits under the MedWaiver program for nursing home level services received at home. Our client alert identifies categories of clients that should consult with an elder law attorney to review their long term care planning goals in light of these new rules. In particular, clients who have Wills with Special Needs Trusts, or who currently, or who may in the future, seek payment for personal care services provided to a relative should seek advice about how these rule changes will affect them.
URGENT Client Alert: April 12, 2007 We are sending out this client alert to clients who may have personal care agreements in place, or who are considering personal care agreements, to compensate family members for care provided to an elderly or disabled individual. This letter may not be relevant to your situation anymore. The purpose of this client alert is to advise you of significant changes to the MaineCare rules relating to such personal care agreements. The changes became effective April 1, 2007. These changes make it crucial that you contact us or another elder law attorney to review your particular situation and determine if additional steps are necessary to allow for compensation to family members for care provided. Effective April 1, 2007, MaineCare has revised its rules relating to personal care agreements and now will require substantial additional documentation to support payments made to family members under such an agreement. Although MaineCare has always required that such agreements be in writing, the new rules impose several new requirements. Failure to comply with the detailed requirements of the new rules will result in the elderly or disabled individual being unable to obtain MaineCare eligibility should they need long term care in the future. Payments made to family members that do not comply with the new requirements will be treated as gifts, and will create a period of ineligibility for MaineCare because of the new transfer penalty requirements of these rules. If you have entered into a personal care agreement with one or more family members, please obtain legal advice as soon as possible to determine how these new requirements will affect you. * * * * * * * * * *
Client Alert: April 1, 2007 The Department of Health and Human Services (the Department) has recently adopted major changes to its eligibility rules for the MaineCare program that provides coverage for long term care services to qualifying individuals residing in nursing homes or assisted living facilities, or that receive nursing home services in their homes under the MedWaiver program. The rules will become effective April 1, 2007. These rules will have a significant impact on eligibility for long term care services, making it harder to qualify for reimbursement of the substantial costs for long term care services. Many of the changes are required under the federal Deficit Reduction Act (DRA) passed February 8, 2006. Some of the key changes in the rules, and our recommendations to clients for further action are: • The rule implements the DRA requirement that any penalties for gifts made on or after February 8, 2006 will not begin to run until the applicant (or spouse) is in a long term care facility and otherwise eligible for MaineCare but for the gift. We expect this change will pose significant hardships for individuals who have made gifts on or after February 8, 2006 without realizing the harsh consequences when they later need long term care and have insufficient funds to pay for that care while the penalty period runs. If even minor gifts are made to charities, family members or others that total more than $500 in any calendar quarter, these gifts may adversely impact a MaineCare application for up to five years from the date of the gift. If you are currently involved in gifting of assets, or expect to do so in the future, you should contact an elder law attorney to understand how those gifts will adversely affect your future eligibility for MaineCare. • In a significant departure from current Maine law, the rule specifies that when a spouse dies and the deceased spouse's Will does not leave their estate to the surviving spouse, the surviving spouse may be treated as having made a substantial gift of assets if he or she does not seek to avoid the results of the Will by claiming a portion of the deceased spouse's estate. This situation may arise when spouses have Wills that include special needs trusts to provide for the surviving spouse and enhance his or her life while not counting as an asset under MaineCare, when a couple has complex trusts in their Wills for the purpose of minimizing estate taxes, or when a spouse's Will bypasses the surviving spouse for other reasons. Clients who have Wills with special needs trusts, estate tax planning Wills, or Wills that purposely exclude a surviving spouse should consult immediately with an elder law attorney to understand how this change will affect them. • The rule implements the new 5 year look-back window for non-exempt transfers for all MaineCare long term care applications. This 5-year look-back will be implemented gradually. Until February 8, 2009, the existing 3-year look-back will apply. The 5-year look-back will result in many more transactions being scrutinized by the Department for possible gifting penalties, and will make it important to retain all financial records for at least 5 years. • Substantial changes have been made to the rule relating to the provision of personal care services provided by family members. Under prior rules, so long as a written contract existed between the elder and the family member providing the services, and so long as the services are compensated at fair market value and are verifiable and documented, payment for such services was not considered a gift. Under the new rule, in addition to the requirements above, there must now be a signed statement that the services are recommended by the elder's doctor as necessary to prevent the transfer of the elder to a nursing home or assisted living facility, and the Department must verify the written contract. It is not clear whether pre-approval of the contract is required. Any person who is now paying a family member or may pay a family member in the future for help to stay at home should consult with an elder law attorney immediately to understand how those payments will be treated if and when MaineCare is needed. Even clients with existing written contracts to pay for personal care services should seek advice about what additional measures are required to ensure that ongoing payments will not be treated as gifts that may make the person ineligible for MaineCare in the future. • The rule revises how gifting penalties are calculated, eliminating the practice of rounding down and ignoring any fractional amounts. The rule will require that applicants apply any fractional penalty amounts to their cost of care contribution in the first month of eligibility for MaineCare. • The rule changes how annuities are counted when determining whether a MaineCare applicant or spouse meets the threshold for countable assets. The changes require that among other criteria, for annuities purchased on or after February 8, 2006, MaineCare be named as the remainder beneficiary behind any surviving spouse or minor or disabled child for any remaining annuity payments on the death of the annuitant. Failure to meet the complex requirements of the new rule may result in a penalty for MaineCare eligibility. Clients who are planning to purchase or annuitize an annuity should consult with an elder law attorney to ensure that they do not inadvertently create a penalty. • The rule implements a DRA requirement changing the definition of primary residence. Under the new requirement, individuals with an equity interest in their home of greater than $750,000 would be ineligible for MaineCare unless a spouse or a dependent or disabled child is living there. If the applicant spends down the equity in excess of $750,000, then he or she could be eligible. This requirement will apply to all new MaineCare applications, and also to existing recipients of MaineCare whose eligibility status may change at their annual review if they have retained a home worth more than $750,000. • The rule makes changes to the definitions of life estates, mortgages and promissory notes, and reverse mortgages. • The rule provides that entrance loans to life care communities and continuing care retirement communities are available assets in most cases and therefore cannot be exempt as primary residences. • The rule implements standards for obtaining a hardship waiver if an applicant is ineligible for MaineCare benefits. We expect that, with the new harsher penalty provisions and longer look-back period, the number of applicants needing to seek hardship waivers will increase. * * * * * * * * * * A client alert cannot cover all of the many changes to the MaineCare rules that may affect your particular situation, but we strongly encourage our own clients and others that may be affected by these substantial changes to seek advice on how to continue to meet their estate and long term care planning goals in light of the significant changes to the MaineCare eligibility rules. * * * * * * * * * * The Law Office of Patricia A. Nelson-Reade has extensive experience in advising clients on estate tax planning, and can assist in determining a plan that best meets the individual needs of its clients and their families. Please contact us at 207-828-1597 if you would like to set up an appointment to review how the changes in Maine law may affect your estate planning needs. |
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