May 11

Veteran’s Pension Benefits: Aid & Attendance

What is the Aid and Attendance Pension Benefit?

The Veteran’s Administration (VA) Aid & Attendance (A&A) Pension provides benefits for eligible veterans and/or their surviving spouses who require the regular attendance of another person to assist in eating, bathing, dressing and undressing or taking care of the needs of nature.  Individuals who are blind or are in an Assisted Living Facility may also qualify.  This is a non-service connected program, meaning the veteran does not need to be disabled as a result of his/her wartime service.  The Aid & Attendance Pension can provide up to:

  • $25,525 per year ($2,127/month) to a qualified married veteran
  • $21,531 per year ($1,794/month) to a qualified single veteran
  • $13,836 per year ($1,153/month) to a qualified surviving spouse

Basic Eligibility Criteria:

  1. Active Duty: ninety days of active service, one day of which must have been during wartime
  2. Wartime:  WWI, WWII, Korean War, Vietnam War and Gulf War
  3. Discharged:  Other than dishonorable
  4. Medical Evaluation:  Physician’s evaluation of medical issues
  5. Financial Limitations:  Limited income and assets available; Demonstration of unreimbursed medical expenses

Qualifying for the Aid & Attendance Pension:

The growing popularity of the Aid & Attendance program has created an unfortunate opportunity for individuals and organizations to prey on our elderly veterans and provide misinformation. Exercise caution in the counsel you receive. Rely on accredited Veteran’s Service Officers, accredited attorneys, and legitimate Veteran’s Affairs websites. Check credentials and accreditations prior to divulging private information. Qualifying for this program should be part of a comprehensive long term care plan. Understand that you DO NOT need to purchase an annuity in order to qualify. Repositioning assets or purchasing an annuity to qualify for A&A, without proper advice from a qualified elder law attorney, may create severe tax implications and/or other penalties, may adversely affect your existing estate plan, and may disqualify you for other public benefits such as Medi-Cal.

March 13

Is My Home Really Protected Under Medi-Cal?

“Is My Home Really Protected Under Medi-Cal?”

by

Neil A. Harris, Certified Elder Law Attorney (CELA)

Harris & Plottel, LLP

Perhaps one of the most misunderstood concepts in Medi-Cal is the principal residence exemption.  Unfortunately, discovering the limitations of that exemption often occurs too late for corrective action.  The following is a brief overview of Medi-Cal’s treatment of a principal residence both during life and subsequent to death.

As many of you already know, in determining Medi-Cal eligibility, the Eligibility Worker will divide your assets into two general categories, exempt and non-exempt.  While, under current law, there is no value limit on your exempt assets, the total value of all of your non-exempt will be limited.

In most cases, the most valuable and important exempt asset is your principal residence.  The principal residence is defined as a dwelling, fixed or mobile, located on land or water.  While many people believe that the principal residence is restricted to a house, the exemption is much greater than just a dwelling.  It includes all of the land on which the dwelling is located as well as all of the land and/or buildings that surrounds, is contiguous to or adjoins the land on which the dwelling is located.  The principal residence can be a single family house, a duplex, a ranch or farm of many acres, an apartment complex, the house next door or even the house across the street as long as the residence and house across the street are only separated by a public thoroughfare.  Under current law, there is no principal residence value limitation.  When the yet to be promulgated new Medi-Cal regulations are enacted, the value of the principal residence will be capped at $750,000.00 as determined by the most recent property tax assessment bill.

The principal residence will be considered exempt as long as the Medi-Cal applicant or recipient resides in the residence.  If the applicant or recipient is not able to live in the residence, the residence exemption will continue if the applicant or recipient’s spouse, dependent (under 21 years of age), disabled (as determined by the Social Security Administration) or legally blind child resides in the residence.  If none of the above is possible, the residence will remain exempt as long as the applicant or recipient subjectively intends to return to the residence.  The subjective intent to return is simply a willingness to return if and when the applicant or recipient is able.  The actual ability to or the likelihood of return to the residence is not relevant to continued exemption.  This is an extremely important issue in applying for or maintaining continued eligibility when a person is in a skilled nursing facility.  In almost all cases, when asked if the applicant or recipient intends to return to the residence, the response should be yes even if return is unlikely or impossible.

Even though many people understand that the principal residence is exempt even if the applicant or recipient is not physically living in that residence, some fear that Medi-Cal will impose a lien on the principal residence upon eligibility for Medi-Cal.  In actuality, the State of California is prohibited from placing a lien on the exempt principal residence.  The State may impose a lien where a person is placed in a skilled nursing facility and that person declares that s/he does not intend to return to the residence.  The applicant or recipient may change that declaration at any time and the State is required to remove the lien upon the applicant or recipient’s declaration of intent to return or when the applicant or recipient actually returns to the residence.

While the principal residence exemption exists as long as the applicant or recipient maintains a subjective intent to return, that same exemption does not survive the death of the applicant or recipient’s death.

At the death of the Medi-Cal recipient, the State must be given actual notice of the death by sending a copy of the recipient’s death certificate to the Sacramento office of the California Department of Health Care Services (DHCS).  The State is mandated to recover the Medi-Cal payments made on behalf of any person who received such services after reaching age 55 or for any benefits paid on behalf of any resident of a skilled nursing facility regardless of his/her age.  The State is authorized by federal law to recover the amount paid of Medi-Cal benefits on behalf of a recipient or the value of the assets owned by the recipient at death, whichever is less.  Since the most valuable of the exempt asset allowed to a Medi-Cal recipient is usually the principal residence, most recovery actions are tied to the value of the principal residence.

The State is prohibited from recovery while the deceased Medi-Cal recipient’s spouse is still living.  At the death of the recipient’s spouse, however, the State must be formerly notified of the surviving spouse’s death.  Thereafter, the State will seek recovery of the value of the deceased recipient’s assets (usually an interest in the principal residence) passing to the surviving spouse by Will, Trust, joint tenancy or any other form of succession.  Again, this recovery is limited to the value of the recipient’s assets passing to the surviving spouse not all of the assets owned by the surviving spouse at his/her death.  If the recipient did not own an interest in any assets at his/her death, the State is prohibited from recovery against the surviving spouse at his/her death.

The State is prohibited from any recovery where the Medi-Cal recipient is survived by a dependent, disabled or blind child even if that child does not receive any of the recipient’s assets.

As should be noted from the above discussion, exempting the principal residence is an eligibility issue but that exemption does not normally extend to the recovery process following the recipient’s death.  Good long term care planning should include options for eligibility as well as asset protection from recovery.  Knowledge is the first step in good long term care planning.

July 26

Domestic Partners and Long Term Care Planning

DOMESTIC PARTNERS AND LONG TERM CARE PLANNING

By Neil A. Harris, Certified Elder Law Attorney

While most of us are familiar with the term “Domestic Partners,” many believe that Domestic Partnerships are available only to same sex couples.  Actually, both same sex and older heterosexual couples can take advantage of Domestic Partnerships.  In fact, many older persons find entering into a Domestic Partnership with their later-life partner easier and more advantageous than the more traditional formal marriage.

In 2003, the California legislature passed Assembly Bill 205 (AB205) which provides for the same rights, protections and benefits of spouses to Domestic Partners.  Domestic Partners are defined  as, “two adults who have chosen to share one another’s lives in an intimate and committed relationship of mutual caring.”  The actual Partnership can be established when both persons file a Declaration of Domestic Partnership with California’s Secretary of State and at the time of filing, meet all of the following conditions:

  • Both persons share a common residence
  • Neither person is married to someone else or is a member of another Domestic Partnership
  • The two persons are not related by blood or in a way that would prevent them from being married to each other in California
  • Both persons are at least 18 years of age
  • Both persons are capable or consenting to the Domestic Partnership
  • Either of the following:
    • Both persons are of the same sex, or
    • Each person is of the opposite sex of the other and one of the two is over the age of 62 years at the time of filing

Once the Partnership is established, both Partners are treated in the exact same manner as traditional married spouses under California law.  In fact, most existing California law has been amended to include Domestic Partners in the statutory definition of “spouses.”

Termination of a Domestic Partnership is a formal process, but may not require the filing of a proceeding of dissolution as in the more traditional marriage.

While many same sex couples consider Domestic Partnerships as the only available option to marriage  in California following the California Supreme Court’s recent Proposition 8 decision, a growing number of elderly heterosexual couples view Domestic Partnerships as a more practical solution to traditional marriage.  Since a California Domestic Partnership only effects State law, it is possible that older couples can live in a relationship sanctioned by their State government without adversely affecting any federal benefits earned by either Partner or the previous spouse of either Partner.

While the above State/Federal law distinction may protect the federal benefits belonging to each Partner, that same distinction may serve as a disadvantage should either of the Partners require Medi-Cal Long Term Care benefits.

Since the Partnership is not recognized under federal law, Domestic Partners are considered unmarried individuals and, therefore, subject to the asset transfer and limitations imposed on a single person.  For example, while married persons may freely transfer assets between each other without subjecting those transfers to a Look Back Period or Penalty Period, with few exceptions, the transfer of Medi-Cal non-exempt assets between Partners will result in the imposition of a transfer penalty should either Partner require placement in a skilled nursing facility within thirty (30) months of the transfer.

As to assets limits, a married couple may protect up to $109,560.00 of Medi-Cal non-exempt assets should one of the spouses be placed in a skilled nursing facility (Community Spouse Resource Allowance).  In addition, the non-institutionalized spouse (Well Spouse) is entitled to retain a monthly income allowance of, at least, $2,739.00 from all of the income of both spouses (Minimum Monthly Maintenance Needs Allowance).  All of an institutionalized Partner’s monthly income, with the exception of $35.00 for personal needs and the monthly cost of the ill Partner’s Medicare supplementary insurance, is paid to the skilled nursing facility as the ill Partner’s share of cost.

And finally, in a more traditional marriage, the Well Spouse can seek a Court ordered increase to his/her Community Spouse Resource Allowance where the fixed income available to that Well Spouse alone is less than his/her Minimum Monthly Maintenance Needs Allowance.  No such increase is available to the non-institutionalized Partner.

Obviously, the issue of Domestic Partnership offers both advantages and disadvantages to the participating Partners.  As same sex Partners do not have a current option, this is especially true where an elderly heterosexual couple are the Partners.

As with most complex issues, it is always advisable to seek legal counsel prior to entering into any partnership.

 

For more information, please visit: http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0601-0650/ab_641_cfa_20110421_172524_asm_comm.html

June 13

VA Look Back & Penalty Period Proposed to Congress

VA Look Back & Penalty Period Proposed to Congress

by Nicole R. Plottel

On Wednesday, June 6, 2012, the Government Accountability Office (GAO) released its investigative report and recommendation to Congress that the Department of Veterans Affairs (VA) implement a “look back” and “penalty period” for the VA’s improved pension program.

The VA pension program, which has been in existence since the 1920s and largely unchanged since 1978, has gained heightened popularity in the last few years with the growing number of elderly veterans.  This non-service connected pension provides tax free income to qualifying wartime veterans or their surviving spouses who are elderly or disabled.  The pension amount increases if the claimant is in need of the regular aid and attendance of another person (this is where the popularized term “Aid and Attendance Benefits” comes from).  Currently, an eligible veteran receiving the pension with aid & attendance can receive extra income of up to $20,448.00 per year, an eligible couple up to $24,240.00 per year, and an eligible surviving spouse up to $13,128.00 per year.

In order to qualify for this program, the claimant must meet certain eligibility requirements which include a demonstration of limited income and resources.  Unlike other means-based programs like Medicaid (Medi-Cal in California), the VA does not currently have mechanisms in place to prohibit or penalize claimants from transferring their assets in order to qualify.  As a result, certain financial products unsuitable for the elderly are sold to claimants under the mistaken belief that such purchases are necessary in order to qualify.  The purchase of such financial products and/or the transfers of assets may have severe tax implications and withdrawal penalties, and can cause the claimant to become ineligible for Medicaid.

In an effort to combat this type of misuse, the GAO recommended implementing a “look back” and “penalty period” similar to those already employed in the federal Medicaid Long Term Care System.  Unlike the more favorable thirty (30) month look back period currently used by California’s Medi-Cal program, the federal Medicaid system utilizes a five (5) year or sixty (60) month look back period.  Although there is no indication as to when these recommendations may come into effect, it is almost certain that qualifying for the VA pension will become more difficult in the foreseeable future.  Further, if Congress follows the federal Medicaid guidelines, planning for the VA pension may be even more restrictive than planning for Medi-Cal under current law.  We will keep you apprised of any important developments as they unfold.

For more information on eligibility requirements please visit: http://harrisandplottel.com/services/va-aid-attendance/
For the full GAO report please visit: http://www.gao.gov/assets/600/590848.pdf