Attorney Robert Longstreet of Longstreet Elder Law & Estate Planning, P.C. shares insight on recent developments in the Medicaid, health care and elder law area.

1. BY
ROBERT J. LONGSTREET, ATTORNEY AT

2. MEDICAID VS. MEDICAREMEDICAID VS. MEDICARE
 MEDICAID IS A LARGE GOVERNMENT
HEALTH INSURANCE PROGRAM
 DIFFERENT FROM MEDICARE IN THAT
MEDICAID ELIGIBILITY REQUIRES AGED
OR DISABLED + STRICT FINANCIAL
ELIGIBILITY REQUIREMENTS
 COOPERATIVE FEDERAL & STATE
PROGRAM
 FEDERAL LAW PROVIDES BROAD
PARAMETERS, STATE PROVIDES SPECIFIC
RULES AND ADMINISTERS ELIGIBILITY

3. MEDICAID
• In Michigan, Medicaid implemented by
county DHS (Department of Human
Services) Offices.
• Many Medicaid Programs for various
populations.
• Medicaid Long Term Care Programs:
 Nursing Home (NH) Medicaid
 MI Choice Waiver

4. • MEDICAID DOES PAY FOR LONG
TERM NURSING HOME STAYS FOR
SENIORS WHO QUALIFY
• BUT MEDICAID IS ‘MEANS TESTED’,
MEANING THE STATE WILL LOOK AT
ASSETS AND INCOME
(FOUR TESTS TO PASS… WE’LL
DISCUSS IN A FEW MINUTES)

5. WHY DO WE CARE ABOUT
MEDICAID ELIBILITY?
• 0ver 6,000 people turn 65 every day, and
40% of these people will spend time in a
nursing home.
• The average cost in 2014 for 1 month in a
nursing home in the State of Michigan?
$7,867.00

6. MEDICAID QUALIFICATION
REQUIREMENTS
• Must be 65 years or older or disabled, blind
or receiving SSI
• Must be a resident of the State of Michigan
• Income must be below the monthly private
pay cost of the nursing home ($7,867)
• An applicant cannot own more than $2,000
of countable assets (individually or with
spouse)

7. AND IF YOU QUALIFY…
• The nursing home patient is allowed to keep
$60.00 per month for ‘personals’
• The remainder of the patient’s income goes to
the nursing home
• MEDICAID will pay the remainder of the
nursing home bill

8. THIS SOUNDS
HORRIBLE!!!!

9. SOME GOOD NEWS
• NOT ALL ASSETS ARE “COUNTABLE”
• THESE ARE ASSETS A PERSON CAN
OWN AND STILL RECEIVE MEDICAID
BENEFITS
HOMESTEAD
ONE AUTOMOBILE
PERSONAL PROPERTY
PREPAID FUNERAL CONTRACTS

10. HOMESTEAD EXEMPTION
• HOMESTEAD INCLUDES HOME AND ANY CONTIGUOUS LAND
• CAN BE SEPARATED BY ROAD OR RIVER, BUT NOT BY
ANOTHER’S LAND
• NEED NOT BE IN MICHIGAN
• FOR A SINGLE PERSON: LESS THAN $536,000 IN EQUITY VALUE
• NO VALUE CAP IF OCCUPIED BY SPOUSE, DISABLED CHILD, OR
CHILD UNDER 21.

11. • OF ANY VALUE
ONE AUTOMOBILE

12. PERSONAL PROPERTY
CLOTHING
JEWELRY
HOME APPLIANCES
FURNITURE

13. PRE-PAID FUNERAL
CONTRACTS
MUST BE IRREVOCABLE
FOR HUSBAND AND WIFE
CAN INCLUDE BURIAL PLOTS
FOR ENTIRE FAMILY

14. EVERYTHING ELSE IS A
“COUNTABLE ASSET”
• CHECKING ACCOUNTS
• SAVINGS ACCOUNTS
• CERTIFICATE OF DEPOSITS
• OTHER REAL ESTATE (BESIDES
HOMESTEAD)
• STOCKS, BONDS, ETC.

15. VALUING COUNTABLE ASSETS
Joint Assets
• Joint with Spouse = All counts
• Joint with Non-Spouse
 For Bank Accounts = All counts
unless demonstrate contribution
 Real Estate, Stocks and Mutual
Funds = valued in proportion to
ownership

16. Valuing Countable Assets
• Retirement Funds and Annuities
– If the owner can make a withdraw, the value is the
amount that can be withdrawn, reduced by any
withdrawal penalty (but not reduced for taxes
owing).
– Annuity in pay status or pension that pay monthly
benefit (with no right of withdrawal) in treated as
income.

17. EXTRA EXEMPTION
FOR “COMMUNITY” SPOUSE
OF REMAINING ASSETS, SPOUSE IS
ENTITLED TO KEEP:
½ THE COUNTABLE ASSETS
UP TO A MAXIMUM OF $117,240
**UNLESS A HIGHER AMOUNT IS
ESTABLISHED BY THE COURT**

18. EXAMPLE: Mr. Brown is entering a long
term care facility. Mr. and Mrs. Brown
own the following assets:
• HOME ($180,000)
• ONE CAR
• PERSONAL PROPERTY
• PRE-PAID FUNERAL
• $100,000 cd (Mr. Brown)
• $20,000 savings (Mrs.
Brown)
• $35,000 CDs (joint)
• $7,000 checking (joint)

19. IF MR. BROWN APPLIED FOR
MEDICAID:
• MR. BROWN COULD KEEP $2,000
• MRS. BROWN (THE COMMUNITY SPOUSE)
COULD KEEP:
THE HOUSE
THE CAR
THE PREPAID FUNERAL
PERSONAL PROPERTY
$80,000 IN CASH

20. WHAT ABOUT INCOME?
• MR. BROWN GETS
TO KEEP $60.00 PER
MONTH
• IF MR. BROWN
WERE SINGLE, THE
REMAINDER OF HIS
INCOME WOULD GO
TO THE NURSING
HOME BILL
• MRS. BROWN GETS
TO KEEP ALL OF
HER INCOME
• PLUS, ENOUGH OF
MR. BROWN’S
INCOME TO PAY
HER MONTHLY
BILLS (APPOX.
$1,500 - $2,500 PER
MONTH)

21. WHAT ABOUT THE REMAINING
$80,000 THE BROWNS OWN?

22. WHAT ABOUT THE REMAINING
$80,000 THE BROWNS OWN?
• THEY COULD SPEND IT ON THETHEY COULD SPEND IT ON THE
NURSING HOME (APPROX. 1 YEAR)NURSING HOME (APPROX. 1 YEAR)
• OR THEY MIGHT BE TEMPTED TOOR THEY MIGHT BE TEMPTED TO
GIFT THE MONEY TO RELATIVES…..GIFT THE MONEY TO RELATIVES…..

23. MEDICAID PENALIZES GIFTS
• ON MEDICAID APPLICATION, ASKED IF
MEDICAID APPLICANT HAS GIVEN AWAY
ASSETS IN LAST 60 MONTHS
• FOR TRANSFERS BEFORE FEBRUARY 8, 2006,
ONLY ASKED ABOUT LAST 36 MONTHS
• IF YES, APPLICANT PENALIZED FOR AMOUNT
OF TIME GIFTED MONEY COULD HAVE PAID
FOR NURSING HOME STAY
• GIFT AMOUNT / $7,867 = Penalty Time

24. IF MR. BROWN GIFTS
REMAINING $80,000 TO CHILD
• AND MR. BROWN APPLIES FOR
MEDICAID WITHIN 60 MONTHS OF GIFT
• $80,000 / $7,867 = 10.2 MONTH PENALTY
• RESULT: MR. BROWN WILL NEED TO
GET THE MONEY BACK TO PAY FOR
NURSING HOME STAY!

25. SO WHAT IS LEFT FOR CLIENTSSO WHAT IS LEFT FOR CLIENTS
TO DO?TO DO?
FOR A SINGLE CLIENT
CONVERSION: Transfer countable assets to an
exempt asset.
EX: Purchase a pre-paid funeral.
TRANSFER TO DISABLED CHILD:
A transfer to a *disabled individual* is not a
“divestment.” **interestingly, MI does not
distinguish between child and individual**

26. FOR A SINGLE CLIENT
• “HALF-A-LOAF” METHOD
• GIFT APPROXIMATELY 60% OF ASSETS
• REMAINING 40% USED TO COVER THE
PENALTY PERIOD
• EX: MR. X HAS $100,000 IN COUNTABLE
ASSETS. WE HELP HIM GIFT $60,000
AND USE $40,000 TO COVER THE 8.5
MONTH PENALTY PERIOD.

27. FOR MARRIED CLIENT
• TAKE ADVANTAGE OF FULL
COMMUNITY SPOUSE ALLOWANCE (1/2
OF COUNTABLE ASSETS)
• WE THEN DRAFT AN “IRREVOCABLE
ANNUITY TRUST” TO HOLD
REMAINING ASSETS FOR SPOUSE
• TRUST PAYS OUT REMAINING FUNDS
TO SPOUSE BASED ON LIFE
EXPECTANCY

28. AS AAS A
REVIEW…REVIEW…
REMEMBERREMEMBER
MR. AND MRS.MR. AND MRS.
BROWN?BROWN?

29. EXAMPLE: Mr. Brown is entering a long
term care facility. Mr. and Mrs. Brown
own the following assets:
• HOME ($180,000)
• ONE CAR
• PERSONAL PROPERTY
• PRE-PAID FUNERAL
• $100,000 cd (Mr. Brown)
• $20,000 savings (Mrs.
Brown)
• $35,000 CDs (Jointly)
• $7,000 checking (Jointly)

30. Mr. Brown is Medicaid Eligible
MR. BROWN
• GETS TO KEEP $2,000
• $60 PER MONTH OF HIS INCOME FOR
MISCELLANEOUS

31. MRS. BROWN
• HOUSE, CAR, PRE-PAID FUNERAL AND
PERSONAL PROPERTY
• COMMUNITY SPOUSE ALLOWANCE (1/2
COUNTABLE ASSETS) $80,000***
• REMAINING $80,000 IN IRREVOCABLE
TRUST PAID TO HER ANNUITY STYLE
• ALL OF HER INCOME, PLUS ENOUGH OF
MR. BROWN’S INCOME TO PAY
MONTHLY BILLS

32. POST PLANNING IS KEYPOST PLANNING IS KEY
FOR MRS. BROWN…FOR MRS. BROWN…
HER ESTATE PLANHER ESTATE PLAN
NEEDS TO SUPPORT MR.NEEDS TO SUPPORT MR.
BROWNBROWN’S CONTINUED’S CONTINUED
MEDICAID ELIGIBILITYMEDICAID ELIGIBILITY
•Community Spouse TrustCommunity Spouse Trust
•Testamentary TrustTestamentary Trust

33. Estate Recovery
• Only applies to:
– Persons on Medicaid in Nursing Homes or
receiving care through long term care
programs including:
• MI Choice Waiver Services
• Home Help
• Home Health
• PACE
– Over the age of 55

34. Estate Recovery
• Normally talking about
the house, as that is
typically the only asset
of significant value
owned by a Medicaid
beneficiary

35. Estate Recovery
• Every state is different.
• 2007 Michigan law provides favorable
exceptions:
– Only applies to “probate assets”
– Exclude 50% of average value of home in the
county.
– Spouse or disabled child residing in home
delays implementation.
– Caregiver relative residing in home delays
implementation.

36. What We Do
• Avoid probate by using ladybird deeds and other
non-probate arrangements.
• Transfer homes to disabled or caregiver children
where possible.
• Where no estate, provide minimal information
and return questionnaire with death certificate
and cover letter.
• Where there is an estate, complete
questionnaire with nominal information (sign it?
not required).
• Disallow the claim when filed.

37. Two Powerhouse Methods
You Can Do NOW
• Power of Attorney with Extraordinary Powers
– Authority to make gifts
– Authority to create trusts
• Community Spouse Estate Planning
– Nursing home spouse should not be beneficiary
– Create testamentary trust to care for NH spouse

38. IF YOU HAVE A NURSING HOME
ISSUE….
ROBERT J. LONGSTREET
GEE & LONGSTREET, LLP
269-945-3495
607 N. BROADWAY
HASTINGS
rlongstreet@geelongstreetlaw.com
www.longstreetlegalservices.com
LongstreetElderLaw.com
(269) 945-3495