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November 2018

To qualify for Medicaid, you must meet both the asset and income eligibility rules. In our last blog, we discussed the 2018 Medicaid asset rules.   Now let us review some of the Medicaid income rules. 

To understand the income rules, you will need a little Medicaid background.  A “Community Spouse” is the term used for a healthy spouse of a Medicaid applicant who is living in the community.  The spouse applying for Medicaid is referred to as the “Institutionalized Spouse.”  The income rules vary between Medicaid for a nursing home and Medicaid for home care.  We will start with nursing home Medicaid.

First, the Community Spouse’s income is disregarded.  That is right, the Community Spouse is allowed to keep all the income that is in the Community Spouse’s name.  The income of the Institutionalized Spouse must be spent on the Institutionalized Spouse’s medical expenses including nursing home charges.  The amount the Institutionalized Spouse must pay is referred to as “Applied Income.” There are 2 exceptions to the income of the institutionalized spouse paying the nursing home charges.  One is the $60 per month personal needs allowance. The other exception is Community Spouse Allowance. 

How to Calculate the Community Spouse Allowance

As with most things related to Medicaid, calculating the Community Spouse Allowance is a complicated procedure.  To begin, we must first add up the Community Spouse’s rent, mortgage, and condo fees (if applicable), real property taxes, and house insurance.  We then add the standard Utility Allowance to this sum.  See below for the latest allowance figures.  From this total, we subtract the standard Shelter Allowance.  This gives us the monthly Excess Shelter Costs of the Community Spouse.  The Excess Shelter Costs are then added to the Minimum Monthly Maintenance Needs Allowance.  This total cannot be higher than the Maximum Monthly Maintenance Needs Allowance.  We then subtract the Community Spouse’s actual income from this figure.  If the result is a positive number, then this is the amount of the Community Spouse Allowance. The Community Spouse Allowance is diverted each month from the Institutionalized Spouse’s income to the Community Spouse.  This in turn reduces the Applied Income paid to the nursing home each month. The State of Connecticut will pay the balance of the nursing home bill.  If the result is a negative number, then there is no Community Spouse Allowance. 

CT Medicaid Income Numbers 2018

 

Let us look at an example of how calculating the community spouse allowance works.  John is the Institutionalized Spouse and Margaret is the Community Spouse.  John earns $4,000 per month income from social security and his pension.  Margaret earns $1,000 per month in social security income.  Margaret’s mortgage is $1,000 per month.  Her real estate taxes are $500 per month, and her homeowner’s insurance is $200 per month.  With the average cost of nursing home care in Connecticut reaching $12,851 in 2018, John will need Medicaid coverage to afford this cost.  The following is the calculation of the Community Spouse Allowance:

example of calculating of the Community Spouse Allowance

Because the Tentative Monthly Maintenance Needs Allowance is greater than the maximum Monthly Maintenance Needs Allowance of $3,090, Margaret’s MMNA is only $3,090. From that, we subtract Margaret’s monthly gross income of $1,000 to arrive at her Community Spouse Allowance of $2,090. Because John’s monthly gross income of $4,000 exceeds Margaret’s Community Spouse Allowance of $2,090, Margaret can keep $2,090 of John’s income each month.  That leaves $1,910 per month for John.  John receives his personal needs allowance ($60 as of 7/1/18), pays his Medicare premium of $105.90 and the remaining amount, $1,744.10, is John’s Applied Income that he must pay each month toward his nursing home costs.

If John did not have sufficient income to pay the Community Spouse Allowance, Margaret could seek to keep more of the couple’s assets to generate the income shortfall.  She would need to request a Fair Hearing and present evidence of her need to retain more of the couple’s assets to generate sufficient income.

Now let’s discuss what would happen if John applied for Medicaid to pay for home care instead of nursing home care.  As stated in the table above, the income limit for Medicaid under the Connecticut Home Care Program for Elders is only $2,250 per month.  John’s income exceeds the cap. Consequently, John would not qualify for Medicaid under the Home Care Program unless he diverts the $1,720 of excess income to a Pooled Trust.  For more details on Pooled Trusts, see our blog, "What is a First-Party Special Needs Trust?"

If you would like more information on whether you or a loved one qualify for Medicaid, contact the elder law attorneys at Cipparone & Zaccaro, PC to discuss your situation. Call (860) 442-0150 today.

 

To qualify for Medicaid (also known as Title 19), you must meet both the asset and income eligibility rules. In a companion blog, we discussed the 2018 Medicaid income rules.   Now let us review the Medicaid asset rules.

First, you will need a little Medicaid background.  A “Community Spouse” is the term used for a healthy spouse of a Medicaid applicant.  The spouse applying for Medicaid is referred to as the “Institutionalized Spouse.”  Certain assets are “excluded assets” when determining Medicaid eligibility.  The rest of the couple’s assets are considered “countable assets.”  When a married person applies for Medicaid, the institutionalized spouse will not qualify until the couple’s combined assets are within certain eligibility limits. The amount the couple must spend to qualify for Title 19 is called “the spend down amount.”

The Institutionalized Spouse only gets to keep $1,600 in assets (Institutionalized Spouse Asset Limit).  However, the Community Spouse can keep the “Community Spouse Protected Amount” (referred to in some states as the “Community Spouse Resource Allowance”). The first two numbers in the chart below help determine the Community Spouse Protected Amount (“CSPA”). 

To determine the CSPA, all of the couple’s countable assets, regardless of which spouse owns the asset, are added up.  This total is then divided in two portions.  One portion is preliminarily allocated to each spouse.  The Community Spouse portion is then measured against the Maximum CSPA and the Minimum CSPA figures.  The Community Spouse portion must fall between the Maximum CSPA and Minimum CSPA.  There are only three possible scenarios.  So, let us look at three scenarios.

Updated CT Medicaid Numbers for 2018

Scenario #1:  Below the Minimum CSPA - If Couple has $40,000 in countable assets, then CSPA = $24,720

$40,000 ÷ 2 = $20,000
$20,000 falls below the CSPA Minimum of $24,720.  Therefore, the Community Spouse gets to keep more than ½ of the couple’s countable assets.  The Community Spouse gets to keep the CSPA Minimum of $24,720.  The Institutionalized Spouse gets to keep $1,600.  The spend down amount is $13,680 [$40,000 – ($24,720 + $1,600)]

Scenario #2:  In-between the Minimum CSPA and Maximum CSPA- Couple has $100,000 in countable assets, then CSPA = $50,000

$100,000 ÷ 2 = $50,000
$50,000 falls between the CSPA Minimum of $24,720 and the CSPA Maximum of $123,600.  Therefore, the Community Spouse gets to keep $50,000 of the couple’s combined countable assets.  The Institutionalized Spouse gets to keep $1,600.  The spend down amount is $48,400 [$100,000 – ($50,000 + $1,600)]

Scenario #3:  Above the Maximum CSPA - Couple has $300,000 in countable assets, then CSPA = $123,600

$300,000 ÷ 2 = $150,000
$150,000 falls above the CSPA Maximum of $123,600.  Therefore, the Community Spouse only gets to keep $123,600 of the couple’s combined countable assets. The Institutionalized Spouse gets to keep $1,600.  The spend down amount is $174,800 [$300,000 – ($123,600 + $1,600)]

The balance of the couple’s countable assets must be spent down or converted into excluded assets to achieve Medicaid eligibility (unless the CSPA is increased through a showing of need at a Fair Hearing). The process of reducing countable assets to within eligibility limits is often referred to as an asset “Spend Down” See our blog entitled What is a Medicaid Spend Down for how to spend down to qualify for Medicaid.

If you would like more information on whether you or a loved one qualify for Medicaid, contact the elder law attorneys at Cipparone & Zaccaro, PC to discuss your situation. Call (860) 442-0150 today.

It’s important to choose the right people to carry out your intent under a will.  Your will appoints an executor who is the person you’ve chosen to wind up your estate at your death.  You may also appoint a trustee under a will or a trustee under a Revocable Trust. A Trustee manages assets for a beneficiary of your property.  Often, the executor and the trustee can be the same person but it doesn’t have to be that way.   You can name two different people to serve in those capacities.  What happens if you make the wrong choice and the person you’ve chosen is unable to perform his duties as your fiduciary?  Consider this scenario.

Many years ago, Harold created a will with a testamentary trust.  Harold was a hard worker and managed to accumulate several assets during his life, most of which were tied up in real estate.  Harold went to the lawyer that his father used when he was alive.  That lawyer created a will and the will had a testamentary trust provision under which Harold appointed his son (a truck driver by trade) as trustee over the remainder of Harold’s estate.  The trust was for the benefit of Harold’s wife, Barbara.  Harold then died and whatever he owned was now placed in this testamentary trust.  The probate court then appointed Harold’s son, Frank, as the trustee of this trust, as was Harold’s wish under the will.  Unfortunately, Barbara was old, frail and bed-ridden when Harold died and she also suffered from severe dementia.  Thus, she was unable to act as a check and balance over the testamentary trust that her husband created for her.  As for Frank, he was relatively unsophisticated and relied on the lawyer who drafted the will, to guide him through his responsibilities.


One year after the probate court appointed Frank, a periodic accounting was due to the court.  Since Frank was not a lawyer, he had no idea regarding what the court expected of him.  So he went to the lawyer who created the will and asked him for help in putting that together.  Unfortunately for Frank, the lawyer never drafted the periodic account and Frank received a notice from the court, reminding him that the account was now overdue.  Strike one.  In that notice, the court established a new deadline for receipt of the periodic account and told Frank that if it did not receive the account by that deadline, Frank risked being removed as the trustee.  The second deadline came and went and when Frank asked his lawyer about the status of the periodic account, the lawyer hastily put one together, had Frank sign it as trustee and then submitted it to the court.  The court was not pleased with the accounting, as it was tardy and it was fraught with errors and omissions.  The court sent Frank another notice, setting a new deadline and this time, advised Frank that if it did not receive an accurate periodic account, Frank would be removed as trustee.  Strike two.  Frank was in an awkward position.  He knew he had to answer to the court but he was also trying to honor his father’s wish, by putting his trust in the very lawyer who drafted his father’s will.  Unfortunately, Frank missed the third deadline and once again, his lawyer hastily drafted a new periodic account - riddled with mistakes – and filed it two weeks after the deadline.  The court was left with no choice but to remove Frank as the trustee.


Connecticut General Statutes § 45a-242(a) states that the probate court may – on its own motion – remove any fiduciary if (1) the fiduciary becomes incapable of executing his trust, neglects to perform his duties or wastes the estate, (2) there is a lack of cooperation among co-fiduciaries that substantially impairs the estate, (3) the fiduciary is unfit or unwilling to perform or he persistently fails to administer the estate effectively or (4) there is a substantial change of circumstances, removal is requested by the beneficiaries or the court determines that removal is in the best interests of the beneficiaries and there is a suitable replacement available.  The probate court will appoint a suitable person to act as a successor fiduciary, in place of the person being removed.


In this case, the court removed Frank as trustee and appointed an experienced estate attorney to act in the capacity as successor trustee.  That person then marshaled the assets of the testamentary trust and was able to provide the probate court with an accurate periodic account. The new probate attorney protected the trust estate and the beneficiaries’ interests in that estate.


This story demonstrates how important it is to choose the right person to act in the best interests of your estate, as well as in the best interests of your loved ones.  It also illustrates how important it is to choose a competent lawyer to help you, not only with your estate plan but also with the administration of your estate after you’re gone.  If you have questions about making a will, creating a trust, choosing a fiduciary, or preparing an accounting, please contact the experienced estate planning attorneys at Cipparone & Zaccaro, PC.  We’d be happy to help you.

In 1993, Suzanne executed a will that left 50% of her estate to her son – Dan – and 50% to her granddaughter, Nicole.  Suzanne began to suffer from hallucinations in 1995.  Approximately one year later, Suzanne executed a power of attorney authorizing Nicole to handle her real estate transactions.  At the time, Suzanne owned a home in New London.  Everyone knew that she was executing this power of attorney in favor of her granddaughter.

A couple of days after she executed it, Suzanne was admitted to the hospital with hallucinations.  While at the hospital, a doctor diagnosed her with mild senile dementia.  Several months later, Nicole sold Suzanne’s home for $150,000 and purchased a condominium in Waterford for $100,000.  Title to the condominium was in the name of Suzanne and Nicole’s mother (Darcy) as joint tenants with rights of survivorship.  Suzanne remained in the condominium until her death five years later.

After Suzanne’s death, Darcy became the sole owner of the condominium. Dan sued Darcy as well as Nicole.  In that lawsuit, he asked the court to impose a constructive trust on the condominium and any cash left over from the sale of Suzanne’s home in New London. Dan claimed that Darcy and Nicole intended to deprive Suzanne’s estate of its principal asset (the house in New London) and as a result, he lost out on his 50% interest in his mother’s estate.  At the heart of Dan’s claim was that Suzanne lacked the mental capacity to knowingly execute her power of attorney.

At trial, several witnesses testified to Suzanne’s mental capacity.  One of the witnesses was the doctor who treated her when she was admitted to the hospital.  That doctor testified that after Suzanne was admitted, he diagnosed her with mild dementia.  Also, after reviewing her medical records, the doctor testified that in his opinion, she suffered from moderate stage Alzheimer’s Disease.  Nevertheless, he also testified that Suzanne’s situation was fluid and that she could be lucid at times.  Finally, the court considered the records of the visiting health care providers who rendered care to Suzanne in the months leading up to her admission to the hospital.  Those records indicated that Suzanne experienced occasional hallucinations and moments of confusion.

In deciding Dan’s case, the court cited to another case for the proposition that there is a presumption of sanity in the performance of legal acts.  The court then stated that the medical evidence offered by Dan fell short of overcoming this presumption and concluded that he failed to prove his mother was incapable of executing her power of attorney.  Since the court found that Suzanne had the capacity to execute her power of attorney, that meant that Nicole was properly authorized to sell the home in New London and purchase the condominium in Waterford.

The issue of capacity is one that comes up in my practice over and over again.  The burden of proving a lack of capacity is onerous and difficult.  Every case stands on its own facts.  Ultimately, a court must determine whether someone has the capacity to execute a legal document and this determination is done with the understanding that there is a presumption in favor of capacity.  At Cipparone & Zaccaro, PC, we have a good deal of experience handling disputes over the use of a power of attorney.  If you have questions related to capacity, please don’t hesitate to give us a call.  We’d be happy to analyze the facts of your case and advise you according to the law.