Before you know it, spring will be here. While getting ready for spring cleaning and tax season, we suggest you take a few moments to review your legal documents:

• Can you find your original Will(s)?
• Does your Will say what you want to say? Is your property going to the person(s) you wish to receive it?
• Have you adopted a child or given birth to a child but not changed your Will to provide for that child or children while under the age of at least 21?
• If a family member has become disabled, does he or she need a special needs trust (SNT) to shelter the inheritance they will receive from you?
• Do you want to provide for your grandchildren and their future education? If yes, have you made arrangements yet to do so?
• Can you locate your Health Care Proxy? Do you need to update your agent designations because an agent is no longer available?
• Can you find your original Power of Attorney (for financial management)?
• Do you need to update your Power of Attorney agent designations because someone has died or had a personal change of circumstance and can no longer assist you?

A legal consultation to review these questions and your legal papers may be in order – even if no changes are needed. In addition to giving you peace of mind, it will also ensure that your children and/or designated agents are aware of these documents and their own legal responsibilities to you.

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My office provides legal representation and counsel to families with disabled children in a wide range of legal areas – from estate planning to 17A guardianship to government entitlements. In my prior blogs, I have discussed the transition from SSI to Disabled Adult Child social security (DAC benefit) after a parent dies, retires or becomes disabled.

If a parent dies before the disabled child is age 18, your child receives social security as a minor. At age 18, your disabled child must convert to adult social security based upon his/her disability by applying for social security. Once converted, the monthly payment is derived from the deceased parent.

But what about Medicaid? It is not automatically granted as with SSI. Instead, you must apply for Medicaid at the local Department of Social Services office.

Many families are concerned that Medicaid will ask the surviving parent to contribute toward the cost of their disabled child’s care or benefits. In fact, New York Social Services Law states that parents are legally responsible for the support of a child under age 21.

But there are important exceptions and you cannot depend upon the local Medicaid worker to remember these. Medicaid guidelines and regulations provide that a parent is legally responsible for the child’s support and payment of care unless:

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Unfortunately, not all lawsuits are successful. In January 2010, in the case of Jennings/Hammond vs. NYS and Nassau County Department of Social Services, the NYS Appellate Division determined that Mrs. Hammond, a senior citizen receiving Medicaid to pay for her care in a nursing home, cannot contribute her monthly income to a pay back supplemental needs trust (SNT) used for the sole benefit of her disabled adult son.

In prior blogs I have discussed the pay back SNT to hold assets for the benefit of a disabled individual under age 65. The law also refers to a trust for the ‘sole benefit’ of a disabled individual. Those trusts, which were used to receive monthly income from a senior for the benefit of their disabled family member, also contained statutory language used in SNTs. It is this type of trust and the contribution of monthly income from the senior for the disabled child that was at the heart of the legal dispute in the Jennings case.

With the assistance of my office, in 2004 Mrs. Hammond established a pay back SNT to shelter her monthly social security and widow’s pension for the sole benefit of her developmentally disabled adult son Freddie’s support. Shortly after the trust was established, Mrs. Hammond entered a nursing home for her own care and lived there for more than 4 years until her death on January 20, 2009.

As part of her Medicaid application to pay for her own care, Mrs. Hammond’s home was legally transferred to her son Freddie (Medicaid permits a home and all assets to be transferred to a disabled child or adult child). Freddie needed his mother’s monthly income to be able to remain in the home and pay for its upkeep and taxes. My office set up a ‘sole benefit trust’ with Freddie as sole beneficiary.

Each month, the trustee – Freddie’s cousin, Mr. Jennings – deposited Mrs. Hammond’s social security benefits and widow’s pension into the trust after the monies were received by Mrs. Hammond. Medicaid accepted the application to pay for Mrs. Hammond’s care, but refused to permit her income to be deposited for Freddie’s use into the sole benefit trust.

My office represented Mr. Jennings at an administrative hearing, but the NYS Department of Social Services agreed with the Nassau Medicaid department. My office then filed a petition in Nassau Supreme Court challenging Medicaid’s decision. We won the case.

However, the NYS Attorney General subsequently filed an appeal and the case was argued before the NYS Appellate Division in October 2008. On January 5, 2010, the Appellate Division issued its decision agreeing with the Attorney General and the Medicaid departments. The court held – with only one dissenting opinion – that Mrs. Hammond could not support her disabled son, Freddie, by transferring her monthly income to a trust for his sole benefit nor to a pay back supplemental needs trust for his benefit. The court found that when any senior applies for Medicaid to pay for their own nursing home care, Medicaid has the authority and right to demand that all of the senior’s income – except a $50 per month allowance – be paid toward the cost of their own care. While this lawsuit was not a class action suit, the Appellate Division in our region, called the Second Department, has state-wide impact. It is unlikely that another court will not follow this decision.

If you support a disabled child, are other Medicaid planning options available to you as a result of the Jennings/Hammond case?

If your resources are limited and your income will ‘die’ with you, a SNT may still be essential for your disabled child. Mrs. Hammond did not have any funds before she entered the nursing home, nor had she and her late husband done any estate planning – most likely because they were part of the ‘working poor’ on Long Island.

If you can afford to do so, life insurance on the senior’s life may provide a source of after-death financial support for a disabled adult child. My law office can provide legal counsel on the use of life insurance when other resources are limited.

Mrs. Hammond received excellent care the last 4 years of her life in the nursing home. Freddie, now 56 years old, may not be able to remain in the family home because of the debt owed to the nursing home, yet another outcome of losing in this case.

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In December 2009, the Nassau County, New York Surrogate Court ruled that my disabled client, “J”, was entitled to have his inheritance placed into a third party (non-pay back) supplemental needs trust (SNT) for his benefit, even though “Mrs. R”, his mother, did not include a trust within her Will document.  The Surrogate’s Court held that Mrs. R’s Will should be interpreted and reformed to provide for an SNT for J’s benefit to protect his inheritance from government and Medicaid claims.

The background for this case started with a Will prepared by Mrs. R and her attorney. This Will required the Executor to determine whether any of Mrs. R’s sons were affected by circumstances that would make receipt of their inheritance ‘contrary to their interests’.  The Will stated: “Circumstances in the beneficiary’s life which would justify exercising that discretion include, without limitation…living under a form of government entitlements or other condition making it likely that the assets to be distributed would be subject to confiscation…”  If the Executor determined that this situation existed at her death, the Executor “may establish a trust or other such device…for the purpose of supplementing such entitlements.”

What was missing?  The actual trust provisions within the Will, itself.

What was at risk? One of Mrs. R’s sons, J, had become disabled before Mrs. R’s death and was living with his mother after a diagnosis of renal kidney failure, as well as a kidney transplant procedure and recovery period.  J was already receiving social security disability, Medicaid and Medicare at the time of his mother’s death.

Instead of asking to establish a pay back SNT and transferring the inheritance to that trust, my law office filed a petition asking the court to interpret Mrs. R’s intention and reform her Will to permit the Executor to establish a ‘third party’ non-pay back SNT.  That is, anything remaining in the trust at J’s death would be paid over to his brothers – who now help care for him -  instead of to Medicaid – exactly as Mrs. R desired and expressed in her Will.

The court agreed, finding that Mrs. R’s Will was clear about her intention to preserve her already disabled son’s inheritance, to supplement the use of the inheritance, and to not have it spent down in lieu of government entitlements such as Medicaid.

Is there a less costly way to provide for the contingency of disability in your family’s future? In some situations, my office drafts flexibility into the Will if the level of impairment is not clear in an heir or other family member.  Sometimes known as a ‘trigger’ provision, it is possible to permit an Executor or other specified person to determine whether an heir is impaired or suffering from a chronic illness which might lead to reliance on government benefits or which makes management of an inheritance difficult or imprudent.

In such cases, the Will does contain the ‘what if’ SNT trust provisions within the document itself.  That way, you do not have to ask a Surrogate’s Court to interpret both the Will and the deceased’s intentions at the time the Will was made. 

It is important to know that each Surrogate Court in each county of New York State has the option to interpret the law differently. Thus, a different result than the one described here for J might have been reached in another county.  

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It is a sound-byte with which we are all familiar – the ‘sandwich generation’ – an adult child is sandwiched between caring for elderly parents and caring for his or her own family. One question I am often asked by an adult child is whether their elderly parent or parents should come to live in their home with their own family.

After consulting with my law office about legal aspects of this decision, here are some factors to consider:

1) What are your parent(s) wishes? If your mother or father wants to live with you, how do your siblings feel about this? If your parent has a spouse, is this their first, second or third marriage? Do they have a pre-nuptial agreement that affects or is affected by these decisions?

• In some families, one adult child lives closer to the parents than the other(s), which can result in a tug of war over the parent. Avoid provoking the type of overt sibling rivalry immortalized by Tommy Smothers’ signature line, “Mom always liked you best…”.

• Will the move disrupt your parent’s enjoyable routines at a senior center, with lifetime friends and neighbors, in a worship circle or other deep social connections?

• If this is not your parent’s first marriage, you need to bring the entire family into the discussion if inheritance rights will be affected by the move and possible financial transactions (discussed in this blog).

• Is your parent presently capable of making an informed choice?

• If your parent is capable of making this decision, do other family members need assurance that they will retain unlimited access and visits with the parent even after the parent moves into your home?

2) What type of living arrangements are available for your parent in your home?

• Is your home large enough or suitable for your elderly parent? Are there stairs, which must be negotiated; if yes, can ramps or chair lifts be installed if the parent has difficulty walking or climbing?

• Is there more than one bathroom so your parent can have privacy? If you have just one bathroom and teenagers live with you, will a single bathroom serve your entire family’s needs when your parent comes to live with you?

3) If your parent owns their own home (single-family, cooperative, condominium) and it will be sold when they move in with you, what decisions will be made for the proceeds of the sale? This is the most difficult legal question to answer, given the impending costs associated with the parent becoming part of your household. This definitely requires a well thought-out plan in order to avoid litigation between family members.

• Some families use the proceeds from the sale of the parents’ home to build an addition to their home, designed for the parent’s current and future needs. As long as the parent resides with you and lives in the house addition for at least one year, the use of the monies may not be considered an impermissible (uncompensated) transfer by Medicaid if nursing home care is required in the future.

• Some families do not need to build an addition to their home, but still ask the parent to purchase a life estate in the child’s home in lieu of rent, to offset future living expenses. This can cover the costs of increased heating, water and other utility usage, food, etc.

• My office has the expertise to determine the value of the senior’s life estate in conjunction with the appraised value of the child’s home, to determine the appropriate purchase price. Remember, too, that the parent must reside with the child for at least one year so that it is not considered an impermissible transfer by Medicaid if future nursing home care is needed.

• For some families, the best solution is for the parent and child to both sell their homes and purchase a larger home together. Again, a legal consultation with my office is important to protect the investment, if future nursing home care is required. As a general rule, the parent must be listed on the deed to the new home in proportion to their investment and must live in the home for at least one year if Medicaid in a nursing home is required in the future. If the investment leaves cash for your parent, there must be additional planning to protect the cash and provide security for your parent’s assistance in the new home.

4) What if your parent does not own a home?

• A legal consultation is even more critical to determine the best options for providing a safe and appropriate living arrangement for your parents. In some cases, my office will apply for Medicaid personal care or home health aide assistance for the senior in the adult child’s home. Medicaid cannot place a lien on the adult child’s home nor request a contribution against the child’s assets for the care provided to the parent.

• In some cases, the family will decide that Medicaid is not required for home care because the adult child can provide the assistance needed to the parent, such as food shopping, laundry, light housekeeping, medication management, transportation to doctors and to a senior center, etc. A legal consultation with my office can help you determine if it is appropriate for an attorney to write a personal care contract compensating the adult child for delivering specific services at a specified rate, plus a rental agreement. These contracts are legally recognized by Medicaid and are not considered an impermissible transfer of income and resources if Medicaid nursing home care is needed in the future.

The most important aspect to deciding if you can care for your parent in your home involves having a frank and open discussion with your parent(s), your siblings and an attorney about the parent’s care needs and your personal family circumstances, to minimize the impact of your ‘sandwich generation’ status on you and your entire family.

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It is important to be informed about the documents you need to gather for your Medicaid applications in Nassau and Suffolk Counties and the New York City boroughs, before contacting my office to handle the submission process for you.

I’ve organized the required documentation you need by topic:

Identity and Citizenship
• Social Security and Medicare cards, passport or birth certificate
• Immigration certificate or residence card (formerly called ‘green cards’)
• Income instances
• Family composition such as marriage or divorce paperwork, death certificate.

Residence
• Voter registration
• Rental lease
• Home ownership or tax bill, utility bills
• Library card

Resources and Income
As discussed in my prior blogs, your required financial documentation will vary according to the Medicaid application for which you are submitting.
• Nursing home assistance: up to 60 months of documents must be collected
• Home and community assistance: 3 months of documents are needed

Transfers of Assets
• All transfers or gifts or trusts must be reviewed and disclosed. Failure to do so is a federal crime known as ‘Medicaid fraud’.
• Lawful transfers include transfers between married couples; transfers to adult disabled children; transfers of a home under particular circumstances to an adult caregiver child or a sibling who co-owns part of the home with the Medicaid applicant.
• New York State recognizes same-sex marriages legally entered into in states outside of New York (Note: New York does not, at present, give same-sex couples the right to marry). For Medicaid purposes, this means transfers of assets between a same-sex married couple are lawful without incurring a period of ineligibility for the Medicaid applicant.

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Continuing from the last blog posting, here are steps your family can follow to plan a “happier ending” and avoid future legal battles over a parent in a guardianship proceeding.

• Make sure your family knows you have prepared legal documents with my office or other legal counsel.

• Tell your family where your original power of attorney is safely kept.

• Under New York State’s new power of attorney law effective Sept. 1, 2009, the agent’s or, if more than one, the agents’ authority to act as power of attorney begins when they sign the power of attorney document in the presence of a notary. Given the new law, I now ask my clients if they want their chosen agent(s) to have immediate authority or future authority for management of financial affairs. A letter is then sent – with the client’s permission – to the selected agent(s) specifying their role, duties, and when the power takes effect.

• If you prepared a validly executed power of attorney before Sept. 1, 2009, your agent’s or agents' authority to act is immediate. However, without the original document in hand, it would be difficult to manage your financial affairs. I therefore recommend you tell your ‘need-to-know’ family members the name of the agent(s) you selected and where the legal document is stored.

• Be sure your entire family knows that the child or children selected as agent have a special legal relationship with you called a ‘fiduciary relationship’. Your family and agent(s) should also understand that the agent(s) may only act in your best interests; your agent(s) must keep your property separate and distinct from any assets they own; and your agent(s) must keep a record of all receipts, payments, and transactions conducted for you as your principal.

Of course, sometimes family conflicts just cannot be avoided due to personalities, personal interests, health or family history. In these situations, your legal counsel must be experienced in paying particular attention to the specifics of those family issues so alternate steps can be taken to prevent or mitigate difficult legal proceedings.

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Recently, I have represented several families in Article 81 legal guardianship proceedings involving serious family disputes. Interestingly, the disputes all follow the same scenario:

• A parent prepares a durable power of attorney to provide for their future financial management in the event of incapacity and the inability to take care of this aspect of daily life.
• Perhaps the parent selects just one of their children as their agent or successor agent after the death or incapacity of their spouse, to be in charge.
• Many years later, the parent becomes ill or mentally incapacitated.
• Anger, lack of communication between siblings or other family members, or misuse of the power of attorney by the designated agent leads to bitter, protracted, and costly legal proceedings among family members.

Can such legal battles and angst be prevented or avoided? 

For some families, the answer is, sadly, "No". Longtime disputes between parents and siblings pre-date the issues surrounding the guardianship proceeding. Litigation is the bandaid to repair the damage.

What steps can families take in their planning to avoid future legal battles? 

I will cover this in my next blog.

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These Top Five Medicaid Reminders will help you be prepared if you or a loved one requires nursing home care.

1. Documentation for nursing home applications will continue to increase towards a full 60-month Look Back. So whenever the spring cleaning urge strikes you – any time of the year – remember to save at least the last 5 years of financial documentation, in case Medicaid is required for nursing home care. The documents you must save are your financial statements, checks, check registers and all paid bills. My office prepares and submits Medicaid applications, and can counsel and assist families who are missing mandatory Medicaid documentation.

2. If your family member suddenly requires nursing home care, prudent but complex planning is still an option. A variety of legal techniques can be beneficial, including Medicaid-qualifying commercial annuities and promissory note plans. In each situation, a portion of assets may be preserved while the other portion is used to privately pay for nursing home care.

3. Medicaid continues to permit lawful transfers between spouses, to disabled adult children, and to certain types of special needs trusts (generally called Pay Back Special Needs Trusts). Medicaid also allows transfers of a family home to a caregiver child or sibling in equity ownership under certain conditions. For Medicaid purposes, “spouses” include same sex couples married legally outside of New York State.

4. The purchase of non-retirement annuities continues to be problematic with regard to Medicaid. Annuities purchased after February 2006 must list Medicaid as the beneficiary if there is no living spouse; if there is a spouse, Medicaid must be the second beneficiary. Always seek expert legal counsel when considering investing in an annuity. My office can help determine the Medicaid consequences for you.

5. The 2010 income and resource guidelines for Medicaid programs (other than SSI) continue at the same levels as 2009. The Medicaid applicant may own $13, 800 in resources – beyond the permitted resources, such as retirement accounts, family home and burial plot. Income is limited to $767 per month if you are not in a nursing home. Applicants for home-based and community Medicaid are advised to consider lawfully sheltering excess income in a pooled income trust so they can have sufficient income to remain in their private home or apartment.

You’re welcome to telephone my office about setting up an appointment for legal representation and counsel in Medicaid applications for nursing home and home care, irrevocable Medicaid trusts and planning.

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Today’s blog continues last week’s topic of how I approach a Will with my clients.

What if a Will isn’t right for you?
If your estate planning focuses on finding cost-effective ways to administer your estate after your death, a Will might not be the most useful instrument for you.

If you own real estate outside of New York State and want to avoid multiple probate proceedings as well as legal fees and court costs, a Revocable Living Trust may be the alternate answer. We can create such a Trust and provide for inheritance tax planning, if needed, as well as special needs planning and minors’ trusts. It also can help you avoid the delays and costs involved in a lengthy search for missing or lost family members. Perhaps most important, trusts can often help avoid costly Will contests among your heirs.

My estate is very simple. Do I still need a Will?
You may not need a Will or a Trust if your assets are very simple: one home; one or two bank accounts; a retirement account and/or investment account; no tax planning is required; the family tree is known; and no minor children or disabled family members. In this scenario, our discussion will center on titling your assets to add beneficiaries so that no Will is needed and there is no probate.

How will you pay for long term care if nursing home care is needed?
Wills do not protect your assets if Medicaid or other medical costs become necessary in the future due to aging or illness. If you do not have long term care insurance, our discussion will include protection of your assets into an Irrevocable Living Trust. You need to understand that Medicaid laws are strict. Any transfers – by outright gift or to an irrevocable trust – mean that you will not be eligible for nursing home care paid for by Medicaid for a full 5 years following the transfers.

Do you need a Will? The decision is yours. A legal consultation with my office will help you determine which approach and which legal tools will provide you and your family with the future security you seek.

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Not all marriages last a lifetime, but New York law has often overlooked this reality. Couples preparing wills that leave their estates to each other could rely on New York law to ‘disqualify’ a former spouse after divorce if no other will was drafted. But, if no changes were made to the beneficiary designations on life insurance, revocable living trusts, or TOD (transfer on death) designations for investment accounts, the former spouse would inherit these assets.

In July 2008, New York State Governor Paterson signed into law a bill, which extends the effect of divorce to non-probate beneficiary designations and appointments. The new law provides that upon divorce – entering a judgment of divorce – a former spouse’s designation as beneficiary on a revocable living trust, TOD for investment accounts, life insurance, and pension or retirement plans (to the extent permitted under other laws), is cancelled or revoked without a further beneficiary designation.

Additionally, if the former spouse is designated as an executor, trustee, agent under a health care proxy, agent under a power of attorney, or agent to dispose of remains after death, those fiduciary appointments are also cancelled. However, a spouse can ‘opt out’ of the new law if they decide to continue the fiduciary designations for the former spouse as executor, etc.

For designations of beneficiary which take affect at death (for example, life insurance, TOD accounts), the law applies to persons who die after July 7, 2008 even if the divorce was finalized before then.

For designations of a former spouse in current living documents – such as an agent on a power of attorney – the revocation takes effect after the divorce is finalized. This means that if one spouse dies during the matrimonial proceeding, but before the divorce is finalized, full beneficiary and fiduciary rights will remain in place as written. If you are in the midst of a divorce or contemplating separation, it is important to review your estate planning documents to see if changes should be made.

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I am the eldest of three children. Fortunately, my parents, Murray and Louise, ages 81 and 79 respectively, are healthy, independent, financially secure and have children and grandchildren who are lovingly devoted to them.

Recently, my parents asked me to come to their home to ‘show me where everything is.’ “Where what is?” I asked. After all, I am an elder law attorney. I advise my clients and their children about planning for future care and independence, lawfully sheltering assets if Medicaid is required for care, and keeping their legal lives organized. My parents had taken my advice and now they wanted to show me what I did not know.

So we spent an afternoon reviewing their carefully organized notebook of instructions, the location of their financial documents (their legal documents are in my office safe), their files of other important papers, and more.

Not a day goes by when I don’t learn something new, and I hope these planning pointers from my own family’s experience will help you and your family:

1) Basic identification. Make sure you keep your financial information and personal data in a safe place in your home. Tell your family where this is and provide them with access to keys or passwords as needed. For your death certificate, your children or other designated family members will need to provide your exact birth date, social security number, your parents’ full legal names and your mother’s maiden name.

2) Burial wishes. Many families dismiss this as an unpleasant topic, but it must be addressed. Section 4201 of the NYS Public Health Law – Appointment of Agent to Control Disposition of Remains – permits you to place your burial wishes in writing and designate an agent to carry out your wishes. Even in the most loving families, the decision for cremation, in particular, may cause strong disagreements. If you are selecting cremation, remember to tell your family or agent specifically where you want your ashes scattered or disposed – and write down your instructions.

3) Legal documents. Review all of your legal documents – powers of attorney, health care proxy, burial wishes, wills, trusts, etc. – to make sure your documents are still valid and enforceable, and that they express your current wishes. Remember, you cannot make changes by hand to your own legal documents, including a will. Any changes must be typed and notarized to be enforceable. Make time to properly update these documents to save your loved ones undue stress and distress when you are gone.

4) Cash. If you are concerned about your family not having adequate cash to pay your immediate estate or burial expenses, consider opening a separate bank account for a family member entitled ‘POD’ (payable on death) or adding a designated family member as co-owner for your own account. I urge you to discuss this decision with your entire family so no one person mistakenly accuses another of overreaching or illegally influencing you in selecting who controls the cash.

5) Keys to the kingdom. Give someone in your family an extra key to your home or tell them where your spare key is ‘hidden.’ The same should be arranged for the extra key to your bank safe deposit box, in order to avoid expensive bank fees for opening the box after your death.

6) Smile – Laugh. Remember to keep your sense of humor throughout this potentially distressing planning process. To relieve the tension of our discussions, my parents and I spent time laughing together about some of their decisions. No one, not even this elder law attorney, wants to be reminded of their parents’ aging and difficult future decisions. But a pinch of humor helps.

If you have questions about putting together a plan for your family, please call my office.

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The annual enrollment period for drug coverage for Medicare beneficiaries runs from November 15 through December 31, 2009. Seniors with ‘creditable prescription drug coverage’ – including coverage through the Veterans administration and employee retirement plans – do not have to enroll in a Medicare D drug plan.

If you do not enroll, you will be assessed a 1 percent penalty each month until you eventually do enroll. Your monthly premium is calculated to include the addition of the penalty. If you are going to change your drug plan to another private insurer, I suggest you compare plans on the government website www.medicare.gov. Or, if you do not have access to a computer and the Internet, call the Medicare Rights Center at 1-800-333-4114. If their information is useful and you are able to go online, visit them at www.medicarerights.org to make a donation so others can benefit from their services, too.

The Medicare Prescription Drug Law requires that each drug plan have a drug formulary, or list, as well as a network of pharmacies that dispense for their subscribers. Today, most drug plans use mail order for drug delivery. The drug formulary must include all or ‘substantially all’ drugs in these six classes – anti-depressants, anti-psychotics, anti-convulsants, immuno-suppressants, anti-cancer and anti-retroviral medications.

Unfortunately, until the law is changed, a drug plan can change its formulary but must give you 60 days notice. The Medicare drug law also pushes consumers to try less expensive drugs before costlier alternatives are offered; generally a drug must be shown to be ineffective in your treatment before you are authorized for a more expensive medication. Some drug plans also limit quantities or dosages. Certain drugs are generally excluded, such as benzodiazepines (depressants), barbiturates, drugs for weight loss or weight gain (other than related to a specific diagnosis), and over-the-counter drugs and vitamins.

If you have Medicare Part D, you may be at risk of falling into the coverage gap – the period in which drug costs (deductible plus co-pays) must be fully paid by the consumer. According to a Nov. 2008 Wall Street Journal Health Blog article, “Almost three years since the addition of drug coverage to Medicare, seniors remain confused about the infamous coverage gap known as the ‘doughnut hole’. Almost two-thirds of enrollees in Medicare Part D don’t fully understand the concept. More alarmingly, more than one-in-four either don’t know what the coverage gap is or how it works, according to a national survey of 1,000 Medicare Part D participants done for Medco Health Solutions, the big manager of pharmacy benefits.”

The coverage gap will open up after beneficiaries and their drug plans have spent $2,700 on medications in 2009. Seniors are then responsible for the next $4,350. After that, the drug plans picks up most of the tab. The law has not changed the doughnut hole.

Extra help and partial help with drug costs is available, but you must separately apply for this assistance through Social Security by calling 1-800-772-1213 or completing the online form on the www.ssa.gov website. In New York State, additional assistance with drug costs is available through EPIC (Elderly Pharmaceutical Insurance Coverage).

Information is also available through your local senior citizen program or online at the New York State Department of Health website.

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In my last blog posting, I described the federal court case, Stein vs. Nassau County, where a Long Island federal court judge addressed the legality of when a New York State health care agent has the authority to make health care decisions outside of a hospital setting. Mrs. Stein sued Nassau County, alleging that as her husband’s designated health care proxy (also called the agent), she was legally authorized to make all health care decisions for him when he was incapacitated. Here is the outcome of the case.

First, Nassau County argued that the health care proxy was not valid outside of a hospital or medical setting, which was called a ‘pre-hospital setting’ in the court’s written decision. The federal court disagreed with this legal argument.

Second, Nassau County argued that the ability of a health care agent – Mrs. Stein, in this case – to make health care decisions is limited by the requirement for the agent to first consult with a medical professional. The federal judge stated that this interpretation of the law might be too narrow because it is the legal standard applied when a health care agent (or other family member) consents to a Do Not Resuscitate (DNR) order.

But the federal judge left open for additional trial testimony and review an important question: before the health care agent makes a decision, must he or she consult with a medical professional, including a licensed physician, registered nurse, licensed psychologist, or licensed or clinical social worker and if so, how is this proven outside of a hospital or other medical facility such as a nursing home or group home? Commentary: Based upon my legal experience, this aspect of the federal decision is troubling.

Most family members who sign a health care proxy expect their designated agent to be legally able to make all decisions for them if they are not capable of “informed medical consent”. Such incapacity might stem from Alzheimer’s Disease or other serious illness, or may be temporary due to lack of consciousness, such as in the case of Mr. Stein.

I advise my clients to provide a clearly readable copy of their health care proxy to their physicians and all other medical treatment-related professionals. But until now, the designated agent has not been expected to ask medical professionals for written ‘proof’ to attach to the legal proxy document attesting that the agent has consulted with the professional before making medical decisions.

And further, if the proof is written and attached, the federal court’s decision leaves open the question of how specific the proof of consultation must be. Is it a general statement written on medical letterhead ascertaining that the medical professional has simply been consulted by the agent? Or is it a statement that the professional has been consulted on a specific or general medical condition that is named in the statement?

Given the impact of this decision – and these various unaddressed issues – I will be working with the New York State Bar Association’s Elder Law Section to resolve these important questions and, if necessary, to propose changes to state legislation.

Follow-up on the Stein case: Both Mrs. Stein and Nassau County have filed additional appeals of the court’s decision in this matter. A determination is pending from the federal court. When the decision is available, I will present it in this blog.

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In Stein vs. Nassau County, a case of first impression, a Long Island federal court judge addressed the authority of the agent on a New York State health care proxy to make decisions outside of a hospital setting. Mrs. Stein, an attorney, was the designated health care proxy for her husband. Observing Mr. Stein’s increasing listlessness and non-responsiveness after his return home from a prolonged hospitalization, Mrs. Stein made the decision to bring him back to the hospital. She called for assistance through the 911 emergency services hotline.

When police officers and ambulance EMS staff arrived at the Stein residence, Mrs. Stein asked them to transport her husband back to the same hospital he had just left, and presented them with her health care proxy. After the EMS workers refused to honor the health care proxy, they physically removed Mrs. Stein from the bedroom and restrained her from interfering. They then proceeded to transport Mr. Stein to a hospital that they determined was located 3 minutes and 2 miles closer to his home than the hospital where he was previously treated. Eventually, after several tests and repeated tests, the second hospital decided to transport Mr. Stein back to the original hospital.

Mrs. Stein sued Nassau County, alleging that she was in fact authorized to make all health care decisions for her husband, who later died, since he was incapacitated at the time she called 911 and unable to make his own medical decisions. She further charged that the County’s actions violated her constitutional rights, and that the County was negligent in taking her husband to the second hospital rather than the first hospital that had treated him as she requested.

Next week’s blog will report the outcome of this case.

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In September 2008, after dismissing a petition under 17A of the Surrogate Court Procedures Act, the New York County Surrogate’s Court in New York State instructed the parents of Chaim A.K. to petition the Supreme Court to be appointed his guardians under Mental Hygiene Law Article 81.

The dismissal was based on the Court’s decision that mental illness was the reason Chaim was unable to manage his own health care decisions, rather than the diagnosis of developmental disability. In dismissing the case, the Surrogate’s decision reviewed the legislative history of both 17A and Article 81 guardianship proceedings. The decision also discussed procedural due process shortcomings of the 17A guardianship when a child or adult is dual-diagnosed with developmental disability/mental retardation as well as mental illness.

In Matter of Chaim A.K., the Surrogate’s Court found that Chaim’s diagnosis of developmental disability (I.Q. of 59) was outweighed by the presence of severe emotional and psychological problems. These problems included impulsivity, attention deficit disorder, audio and visual hallucinations, self-mutilating behavior, suicidal gestures and attempts, depression, anxiety and psychosis.

The court’s decision is noteworthy on multiple levels. It reviews the history of 17A and its implications for an individual with a diagnosis of mental retardation or developmental disability. The decision also contrasts the non-variable power and authority given to guardians of a developmentally disabled person, versus the tailoring of authority for guardians of a multi-impaired or disabled/mentally ill incapacitated person.

The Court also acknowledged the difference in costs, such as legal fees for an attorney and court filing fees, between the 17A and Article 81 guardianships, the necessity of a court hearing, and overall differences in paperwork complexity. I will address the full details of this important decision in the next edition of my newsletter, The Polner Abrahams Report.

Bottom line: If your child has dual diagnoses of developmental disability and mental illness, you need to discuss the most appropriate legal guardianship options with your child’s treatment professionals and a qualified attorney. Considerations include which diagnosis impairs your child’s ability to make medical decisions and which guardianship will provide more options, through a court, as necessary, to ensure your child receives the best medical or psychiatric treatment for their entire adult lives.

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Recently I had the experience of providing non-legal advocacy to the parents of a medically fragile toddler. My clients, a young working couple, live in Queens County, New York, and so their experience may not mirror families on Long Island or other parts of our state.

This was the scenario. The couple’s son was born severely disabled and a medical malpractice lawsuit against a hospital and doctors was in its early stages. Their son, brain injured and requiring round-the-clock care, had been well cared for at a children’s specialty hospital. But the couple wanted to bring their son home even though extensive skilled nursing care would be needed, as well as supplies and equipment.

Simple, I thought – apply for New York State’s Care At Home Medicaid program.

Neither the husband nor the wife were able to tell me if an application had already been made for the program. The only thing they knew for certain was that a discharge notice had been received from the hospital and no services or supplies were in place for their son at home.

First, the discharge notice was challenged. All hospital discharge notices must be in writing and there must also be a written discharge plan for a patient. The notice was determined invalid by the NYS Department of Health, thus delaying their son’s discharge home.

I then approached a friend and colleague at Project DOCC (watch for more about this in a future blog posting) for advice. “Who is their case manager?” she asked me. I returned to the couple and they shook their heads, asking, “What’s a case manager?” A case manager, I informed them, is your advocate to help you navigate this system of care, arrange services and teach you to become an effective advocate for care for your son.

On the Internet, I later learned that the information about the Care At Home programs – including telephone numbers in New York City - has not been updated as of 2009. At present, NYC Medicaid, also known as “HRA”, does not have staff to answer the telephone line for the Care At Home Waiver and there is no answering machine.

Finally, I reached the Care At Home Medicaid program located within the specialty hospital, although a distinct and independent program. The intake worker – seasoned, experienced and still compassionate about her families – confirmed that the application for Care At Home had been submitted by the hospital for the couple’s son, but she did not know why the parents had not been informed. She confirmed that the New York City program’s website was not up-to-date. Thankfully, she said, this family’s son had already qualified for SSI (disability) and did not have to separately apply for Medicaid. She also offered a hint – do not take any hospital discharge until you receive a nursing evaluation determining that the number of hours per day, days per week, and equipment, are all in place for proper home care.

Lastly, she told me that NYC was trying to develop systems and steps for processing Care At Home applications when traditional Medicaid applications are required for the disabled child. Like many agencies, NYC Medicaid is understaffed.

“What about getting a case manager?” I asked naively. The intake worker chuckled and said, yes, that would come. But, in most cases, the services are put in place before the case manager is assigned to the family.

In conclusion, it is important to understand that the law is sometimes only a starting point. It protects families and their children from arbitrary discharge notices from hospitals, proven medical malpractice, etc. However, legislative funding, staffing, and training are needed to retain programs for medically fragile children in New York State. My brief education in the non-legal advocacy role pales when compared to the arduous road these families, including my young working couple, must travel daily. At least my clients were left in the competent hands of the experienced Care At Home intake worker at the specialty hospital. This family may ultimately be one of the lucky ones.

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Under both SSI and Medicaid rules, certain types of income can be irrevocably assigned to a Pay Back Supplemental Needs Trust. These may include: 

• Monies resulting from an accident or medical malpractice suit, called a ‘structured settlement’.

• Funds from a divorce action. In instances where maintenance, formerly called ‘alimony’, is awarded, a court may be asked to assign the payments to a Trust for the benefit of a disabled party to the divorce.

• Funds from a QDRO – qualified domestic relations order – dividing a 401k or IRA or other pension funds attributable to a disabled party to the divorce. SSI and Social Security have strict requirements for the court’s order. The first step is to make sure that the source of income – such as a pension – can legally be assigned. This should be done even if the right to pension monies will not begin until the employee retires in the future.

• In some divorce proceedings, the parties may enter into a stipulation of settlement dividing the marital assets and maintenance. In those situations, the court must still ‘so order’ (confirm) the stipulation irrevocably assigning the maintenance and other income stream in the future, so that the requirements under SSI and Medicaid are met and eligibility for those benefits continues.

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In prior blogs I have discussed legally sheltering your income in a Pooled Income Trust for seniors and persons with disabilities under age 65, and in a Pay Back Supplemental Needs Trust for persons under age 65 who are disabled. 

A recent federal court decision, Wong v. Daines, et al, held that income could not be added to a Pay Back Supplemental Needs Trust once the disabled person under age 65 entered a nursing home and began to receive Medicaid benefits for payment of care. However, the decision does not change an important rule under SSI. That rule states that income that is irrevocably assigned to a Trust is not counted as income.  The rule also means that irrevocably assigned income can continue after the disabled person enters a nursing home (and until age 65 years).

What does this mean? SSI is a cash benefit for disabled poor persons. New York State follows the rules and guidelines in the SSI program for persons receiving Medicaid in nursing homes and other types of health institutions. Two kinds of income can never be assigned: social security benefits (retirement, disability) and SSI cash benefit. And while other kinds of income can be assigned, it may be up to a court to order the ‘irrevocable assignment.’ 

In my next posting, I will discuss those types of income and assignment to a Pay Back Supplemental Needs Trust.

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Transfer of the ownership of your home to a child or other family member as a Life Estate Deed Transfer means that you have given away part of your home while still keeping the very important right to live in the home.  The part of the deed given to your child or children (or any family member) is called the ‘remainder interest.’ This form of Medicaid planning requires the preparation and recording of a deed.  

Under the Life Estate, while you live in your home, you are entitled to real estate tax reductions such as the Veteran and STAR exemptions. As with the Irrevocable Living Trust or any gift, you will not qualify for Medicaid for five years from the date of the transfer unless the home has been transferred to a disabled adult child, a minor, or a ‘caregiver child’ who lived with you in your home for two years before you entered a nursing home. There are also important exceptions to Medicaid’s five year penalty for siblings who live together.

One drawback to this strategy is that if the home is sold during your lifetime, your  remainder persons will receive some of the sale proceeds and may pay income tax on that portion, and you will receive the balance of the sale proceeds. If you then require nursing home care, the money you received from the sale may make you ineligible for Medicaid until that money is spent down to pay for your care.  

Your home may also be at risk if your child, or other remainder person to your home is transferred, has creditor or marital issues, or their own personal health or substance abuse problems.  

An important advantage of the Life Estate Deed Transfer over an Irrevocable Living Trust for the home is that a reverse mortgage is available when a home is transferred and the Life Estate is retained by the senior.  A reverse mortgage is an important source of funds to keep you in your home. Many families use the reverse mortgage to pay for private home care in conjunction with New York State’s Medicaid home care assistance program if live-in care is required.      

Taking time to create a well-crafted, professionally advised legal plan for yourself and your home is an important step that you should consider while you are healthy, and before you experience serious illness or a mental health decline.

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For many of my clients, the most valuable asset owned is the family home – whether a private dwelling, a condominium or cooperative apartment. Advance planning is essential to protect your family home and its value regardless of which type you own. With proper planning, you will be able to remain at home throughout your lifetime. Planning to protect your options and your home now includes the purchase of Long Term Care Insurance, sometimes known as ‘nursing home’ insurance. These policies can provide protection from the high cost of nursing homes and home care, should you need it in the future.

What if you can’t afford long term care insurance or do not qualify medically?

What other options do you have?

Since February 2006, federal law has made it more difficult to plan to protect your assets if you require nursing home care. If you are not already in a nursing home, all asset transfers or gifts – no matter how small – will disqualify you for five years from receiving Medicaid for your nursing home care. Please note that if your family member is already in a nursing home, the rules are different and very complex (not addressed in this blog posting).

One option is to create an Irrevocable Living Trust and transfer your home, by deed, to the Trust. Although the creator of the Trust may not act as the Trustee, a well-drafted Trust retains certain rights to give you some authority and flexibility for the future. For example, such a Trust will allow you to keep the Veterans benefit real estate tax reduction and STAR program exemptions. If you decide to sell the home, your Trustee may purchase another home or residence for you or for your spouse. The Trust may also permit you to reserve certain limited powers of change so you have the ability to alter your designation of who will inherit from your Trust. One cautionary note – you will need approval of a cooperative board and its legal counsel before transferring ‘shares’ to an irrevocable living trust. Many coops decline to permit owners to use an irrevocable living trust for cooperative shares and other strategies for preserving the coop unit may be needed.

Many of my clients select family members or their children to serve as Trustee, which is a fiduciary role. This means your home is not at risk if your Trustee (even if it is your child) has their own creditor or marital issues or personal health problems. Your Irrevocable Living Trust can be drafted to minimize or eliminate both inheritance tax and income taxes on the sale of your home. If the home is sold while you are already in a nursing home, the proceeds of the home sale are protected from being taken by Medicaid. Remember: The Medicaid penalty for all asset transfers and gifts is five years!

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I am encouraged by the positive feedback to this Blog, which I have been writing for a few months now. Periodically, I will step back and ask, “How can I make this Blog better so it serves your informational needs?”

Please know that while I am not permitted to provide answers to specific legal questions, I can address issues of general interest in the areas my practice covers:

• Elder law
• Special needs planning
• Guardianship legal proceedings
• Government benefits
• Estate and tax planning

Certain Blog topics, such as Traumatic Brain Injury (TBI) covered in several recent Blogs, will be further explored on my Internet radio show, “Focus On Law”. You can access past shows around-the-clock, at your convenience, on this website.

Do you have a legal topic in my practice areas that you would like to see addressed in my Blog? Please email your topic, as well as your feedback on previous Blog topics, to info@BPAbrahamsLaw.com.

I look forward to hearing from you.

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Generally, the U.S. Constitution guarantees that each citizen has the right to choose where we live in the United States. But what if you are receiving Medicaid in New York State in one county and move to another county? Medicaid refers to this as moving from one ‘Medicaid district’ to another district of residence.

In 2008, the Luberto v. Daines lawsuit was settled to guarantee no gap in medical coverage and no unduly cumbersome reapplication for Medicaid benefits for recipients who change their county of residence. The new policy and settlement applies to individuals who are eligible for or are receiving SSI cash benefits. The change in practice, effective October 20, 2008, is also designed to prevent an overlap of Medicaid payments by the former district and the new district.

The settlement does not change the rule for applicants for nursing home care who sold their home located in one county, lived in assisted living in another county, and then enter a nursing home in yet another county. The Medicaid district responsible for processing the application is the district where the senior lived before moving to assisted living or the adult home. It does not change the rule for non-SSI persons, which prohibits an individual from entering the state for the purpose of securing welfare benefits, including Medicaid.

Care must be taken when moving a family member from their retirement location outside New York State into New York State if Medicaid – home assistance or nursing home care – will be needed. Please consult a qualified attorney.

The rules for SSI recipients are complex and also take into consideration persons who are receiving Medicaid-only pending an SSI determination by Social Security, and SSI recipients who move from the community to a nursing home in another county. An SSI recipient does not receive a cash benefit once he or she enters the nursing home, other than a small monthly personal allowance.

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What is the difference between TBI Medicaid program and more typical Medicaid services with home care? The heart of these differences lies in coverage by Medicaid of ‘waivered’ services. Those services include items that would not be paid for by Medicaid (nor typically by Medicare):

Since 1995, TBI program participants have been treated the same as Medicaid nursing home program participants when the applicant is married. This is referred to as ‘spousal protections.’ The non-applying spouse is permitted to keep $2,739 per month of income (in 2009). If monthly income is more than this level, spousal refusal is permitted. If monthly income is less than the state’s level, income is allocated from the TBI/Medicaid spouse’s income to increase the ‘community spouse’s’ income. Similarly, the non-applying spouse is permitted to keep liquid resources up to $109,560 (in 2009).

However, applicants and recipients should note that several months ago the federal Medicaid office informed New York State that it would no longer allow spousal protections in this program, or other waivered services programs such as Lombardi (covered in a previous Blog).

The spousal protections have been extended to October 12, 2009. The result will be similar to what exists in the New York State Community Medicaid and Home Care program. Careful planning with a qualified attorney is essential for legally sheltering income for the family unit.

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