Elder law is a relatively recent, but very specialized, subject of the law which treats issues of importance to our elderly population - which is the fastest growing segment of the U.S. population, including Nebraska. Particular issues which are found within elder law include: disability planning; estate planning; grandchildren concerns; health care decisions; long-term care insurance; Medicaid planning; Medicaid compliance; Medicare understanding; nursing home issues; retirement living; retirement planning; Social Security concerns and Veteran’s benefits. Because seniors are living longer and are more active, they have a new set of legal concerns that would not have been addressed by earlier generations. It may be that, years ago, drawing a will and planning an estate was essentially all that a senior had to consider. Now, however, concerns for housing, future medical care, and fears about being incapacitated all show up on the doorstep of the elderly. While many of the concerns for elders are common to other areas of law (such as estate planning which is a subject already addressed in this law firm’s “practice areas”), the concentration of issues for elders, spoken of here, is given special attention in this law firm. Read further on the selected areas of “Medicaid Planning and Compliance”, and “Retirement Planning”.
1. Medicaid Planning and Compliance:
a. Medicaid for Nebraskans is administered by Health and Human Services (a Nebraska State agency-HHS), and specifically the division of Medicaid and long term care. This department has many responsibilities. The scope of Medicaid as it applies to assistance is found in Title 469 which is the regulatory framework patterned after Nebraska statutes.
b. Medicaid provides health care services to eligible elderly and disabled individuals and eligible low-income pregnant woman, parents and children. Presently, Medicaid provides health care for more than 1 in every 10 Nebraskans.
c. Application for assistance starts with a several page document, complete with a set of questions that begins the division’s inquiry into the possibility of helping.
d. This law firm will assist a client who is interested in seeking assistance and, from experience, we know that this process can become confusing and concerning. Notably, because the client as an applicant is usually found in a stressful situation and can use legal counsel.
e. Chapter 2 of Title 469 treats eligibility requirements, and it is in this section where an appropriate gathering of information must begin. Examples:
- A face to face interview is required.
- A Nebraska residency must be established.
- Available resources (money and property) is a central element of inquiry on the application. This is an inclusive determination which looks at: cash, savings, stocks, bonds, investments, notes receivable, mortgages, land contracts, and more. Verification with regard to these resources is required.
- On the other hand, certain resources are considered “excluded,” which means that if the applicant would have one or more of these, then such ownership would not be a disqualification for benefits. This excluded list is modest, but it does include: Real property which is occupied as the home. Household goods within the home. A small amount of cash. Surrender value in a life insurance policy. Burial expense insurance policy. Certain irrevocable trusts. And more.
- Another definition is property owned by or distributed to a spouse, referred to as the community spouse. Essentially, the property of the community spouse who is not seeking an application for assistance is considered along with the property attributed to the applicant.
- When the spouse who resides in a specified living arrangement is eligible for medical assistance, a designation of resources is prepared which lists the amount of resources retained by each spouse. A required transfer of ownership between the spouses may be necessary.
- Special rules relate to whether they will be present a Trust, a guardianship/conservatorship and annuities. With these, special verification is required.
- Specifically, regarding Trusts, there will be different results depending upon whether that Trust is revocable or irrevocable. Special attention is given to this subject of Trusts because, in the past, some applicants incorrectly made application for assistance from HHS in the circumstance where property of the applicant had previously been transferred to a Trust with the objective of retaining a small interest which would then make it appear that the applicant was eligible for assistance because of a lack of ownership in the underlying property. This, then, gets into the subject of deprivation of resources, which could be the circumstance in which the applicant had intentionally deprived him/her of property ownership so as to become eligible for assistance.
- Part 2 of Title of 469 is many pages in length, is very complete in its determination of how eligibility will be determined. Appropriate planning in advance of a potential requirement for assistance is recommended.
2. Retirement Planning:
a. Retirement planning is as simple as making certain that the client has enough resources to maintain the chosen standard of living, during the retirement years. However, the process to get there, successfully, holds many considerations and requires the help of professional. This law firm wishes be a part of this process.
b. Qualified advisors - which are identified from many sources with different titles - can be helpful in making long term plans. However, a variety of professionals should be accessed so that the client is comfortable in getting good advice. Getting proper advice includes: defining goals; considering all resources; keeping a keen eye on personal and business planning which will ultimately figure into the end result.
c. A critical feature of retirement planning is to calculate the need to receive minimum distributions following the person’s attaining the age of 70½. In many retirement scenarios, the individual has forgotten to address this long term. The required withdrawal of retirement funds becomes taxable income in the year of distribution. Not as well known as the 70½ age is the age of 59 ½ which relates to early withdrawal. If funds are withdrawn before 59½ there could be a withdrawal penalty of 10% in addition to the taxes that would normally be due upon the withdrawal. These early and later ages are pointed out because much retirement planning has to be fitted within these basic rules.
d. Particularly useful in family planning is the Roth and Education IRA’s, both put in place by congress in 1997. The Roth IRA, in effect, turns a traditional IRA on its head. Traditional IRA’s permit the taxpayer to shelter their pre-tax earnings, but then taxes earnings upon withdrawal. The Roth IRA is used for after-tax savings, but both the original deposits and the earnings on them are not taxed on withdrawal. And, Roth IRA’s are available to taxpayers already contributing to a plan such as at the workplace. And, in Roth, there is no minimum distribution requirement upon reaching retirement age; in other words you don’t have to make any withdrawals at all during your lifetime. However, there are certain eligibility requirements for a Roth-adjusted gross income qualification. Similar to the Roth IRA, the Education IRA permits individuals to set aside up to $2,000.00 annually for a child’s educational expenses with earnings tax free. This will be of special interest to grandparents contributing to grandchildren education. There are adjusted gross income qualifications.
e. Another retirement planning technique, designed to preserve wealth rather than to create it, is to determine how to limit estate taxes should the client’s estate be subject to death taxes. The traditional theory of gifting property, likely to a family member, even in retirement years of the donor is very useful. The per person donee exemption can add up to a real tax saving benefit for the client.
f. Annuities are well known as a retirement planning device. For older investors, immediate annuities can be used to guarantee and assure retirement income. Annuities are investment vehicles purchased through insurance companies. These come in many forms, but generally fall into two categories, deferred annuity and the, just mentioned, immediate annuity.
g. No discussion about retirement planning is complete without careful attention to the appropriate use of a business and/or health care power of attorney. The selection of the holder of that power and the special features of how the power is written is of real importance to the client wishing to be certain that future plans are carried out. The determination of health care decisions made by the agent who holds the power is, now, well known, but every circumstance requires special attention to the language used.