Estate Planning and Caring for Elderly Family Members
This kind of event creates much conern for the adult children of elderly parents who reach the point of no longer being able perform the activities of daily living without assistance or supervision. It also raises many issues involving estate planning and financial matters involving the elderly, and how their families provide for the management of the elderly relative's financial and health care needs.
It is always better to address these issues with appropriate planning professionals before the actual needs arise. Providing for health care directives and authorizing trusted family members to handle financial affairs upon incapacity before the need arises can avoid costly, time-consuming, public, and frustrating court supervised guardianships, of the person and the property, that often become unavoidable because the planning has not be completed in advance. There are many occasions through the year where we a new client will begin the conversation with something to the effect of, "my mother had a stroke and she doesn't have a power of attorney, health care power or will in place. What do we do?"
Often when that happens, the only option is to establish a court supervised plenary guardianship over the person and property of that individual. Such a guardianship requires that a family member or close friend be appointed by the probate judge to act in the capacity as the legal guardian of the person, or the legal guardian of the property, or both. The appointment of such a guardian comes when the probate court has determined, after a public evidentiary hearing held by the probate court, that the individual does not have "legal capacity" to manager his or her own affairs.
The court supervised guardianship can often be avoided with the proper use of advance directives. Typical advance directives include, as a minimum, a durable power of attorney , a designation of health care surrogate, a living will, and in some cases a do not resuscitate directive. These documents, to be effective, must be prepared and signed by the elderly indviidual before the stroke, fall, or other event leading to incapacity happens.
The monetary cost of advance directives is a small fraction of the monetary cost of a court-supervised guardianship. The value of avoiding the frustration, aggravation, loss of family control, and public nature of a guardianship is, as they say, "priceless."
Providing day to day care for the elderly relative, after the incapacitating event, as shown by the closing of the skilled nursing facility referneced above, is often problematical. Issues with the level of care and the cost of that care are almost always foremost in the minds of the concerned family members. Difficulties associated with dementia, Alzheimer's, and other diseases, create changes in conduct and relationships that are potentially as dibilitating to the parties involved as the mental and physical impairments are to the elderly.
The challenges faced by such families typically fall within two primary categories: care and financial.
Long Term Care for the Elderly
Care issues are complex and as varied as the people involved. A couple of books that can help families providing care for their elderly relatives are "When the Time Comes", by Paula Span, and "Caring for Your Parents, The Complete Family Guide : Practical Advice You Can trust From the Experts at AARP," by Hugh Delehanty and Elinor Ginzler.
Span's book offers advice on how to deal with the years of caring for an elderly relative. It includes stories of a number of families actually dealing with the reality of being a caregiver to your parent. It specifically deals with the different lifestyle choices for caregiving for the elderly: home care, shared household, assisted living, skilled nursing homes, and hospice.
The AARP guide is more of a step by step guide with basic information necessary to find the right kind of care for your particular circumstances. It also includes an appendix with a list of key documents that are appropriate, and a worksheet to guide you in your planning.
I highly recommend both books for those who are facing the dilemmas associated with long term care for a parent.
Financing Long Term Care for the Elderly
With nursing home cost averaging $200 a day ($6,000/month), in the Jacksonville area, financing long term care is of critical concern to the elderly person who needs long term care. The financial alternatives for long term care are more simple than the options available for care, but potentially as difficult to implement.
There are only three options available for paying for long term care:
- Payment from personal income and assets
- Payment through long term care insurance
- Payment through the Medicaid program
Personal Income and Assets
If there is sufficient income and assets for the elderly person to pay for long term care, then the financial issues are quite simple. You just pay for the long term care whether it is home-based, assisted living, or a skilled nursing facility.
Long Term Care Insurance
If your elderly parent had the opportunity to obtain long term care insurance , then such insurance will provide some, or potentially all, of the financial support needed for the long term care. There are numerous issues involved with long term care insurance. How much benefit to purchase ($100/day; $200/day, etc.?), for what period of time should the coverage be purchased (2 years?, 5 years?, lifetime?), which inflation adjustment rider, whether to include home care benefits, etc. Guidance from an experienced elder law attorney can help in making those decisions. Often the most difficult part of obtaining long term care insurance is qualifying for coverage. If you have chronic illnesses, physical disabilities, or other medical issues, it may be difficult, impossible, or prohibitively expensive to obtain such coverage.
Medicaid Benefits
All too often, the only option for long term care is to qualify for Medicaid benefits under the Institutional Care Program (ICP) , that is a federal public benefits program that is administered by the State of Florida. Qualifying for Medicaid benefits involves a number of requirements. Some are medical. The ICP program only pays for skilled nursing care - not assisted living or home care. While there are some Medicaid benefits programs that provide assisted living or home care benefits, those are very limited in scope and suffer from signficant budgetary constratints. When the elderly person has qualified for Medicaid benefits under ICP, all of the resident's income must be paid to the nursing home, and the State of Florida covers all of the remaining cost of the skilled nursing facility and virtually all of the resident's medical care needs (there are some non-critical exceptions).
Assuming the elderly person is in a skilled nursing facility, there are two financial tests that must be met to qualify for Medicaid benefits:
- Monthly income must not exceed the allowable amount (currently $2,002/month)
- Countable assets must be less than $2,000
Income Test
If the elderly person's income exceeds the allowable monthly income amount, Florida allows qualification for Medicaid through the use of a "Qualified Income Trust (QIT)", sometimes called a "Miller Trust." A gross oversimplication of the use of a QIT is this: all of the elderly resident's income is paid to the nursing home monthly, through the QIT, except the amount allowed monthly for a personal allowance - which currently is $35 per month, in Florida. A Qualified Income Trust is a legal document that must be prepared by an attorney. If the QIT is not properly drafted and implemented, the elderly resident cannot qualify for Medicaid benefits.
Asset Test
To qualify for Medicaid benefits under ICP, the resident of the skilled nursing facility must have "countable" assets of less than $2,000. If married, and the spouse is not living in a nursing home, the spouse can have no more than $109,560 of "countable" assets for the spouse who is living in the nursing home to qualify for Medicaid benefits.
If either the spouse living in the nursing home, or the spouse not living in the nursing home, have "countable" assets in excess of the allowable amount, a Medicaid planning attorney can help the family develop a "Medicaid spenddown plan" that will allow the skilled nursing home resident to qualify for Medicaid benefits. A proper Medicaid spenddown plan will allow the family to legally preserve assets that can be used to take care of the non-medical needs of the resident of the nursing home, the needs of the spouse who is not living in the nursing home, or other family members.
The rules for developing a Medicaid spenddown plan are complex - having been likened to the Internal Revenue Code by various judges. Proper compliance with the rules is critical. A misinterpretation or misapplication of the Medicaid planning rules not only could disqualify a person from Medicaid benefit eligibility for years, but could also result in a criminal prosecution for Medicaid fraud.
If you, a family member or friend, may need care in a skilled nursing facility, and you have assets beyond the allowable limits and want to preserve those assets for your loved ones by qualifying the nursing home resident for Medicaid benefits, you should consult with a Florida elder law attorney as soon as possible. If you are in the Jacksonville or Northeast Florida area, we can assist you with Medicaid spenddown planning.
Categories: Health Care Power of Attorney, Guardianship, Designation of Health Care Surrogate, estate planning, Do Not Resucitate Order, Advance Directives in Florida, Durable Power of Attorney, Qualified Income Trust, Personal Care Contracts
Tags: plenary guardianship Medicaid spenddown plan designation of health care surrogate guardianship of the property guardianship of the person health care power of attorney advance directives power of attorney Medicaid planning Florida estate planning attorney
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