The Bench & Bar magazine is published to provide members of the KBA with information that will increase their knowledge of the law, improve the practice of law, and assist in improving the quality of legal services for the citizenry.
Issue link: https://kentuckybenchandbar.epubxp.com/i/132126
FEATURE: KENTUCKY'S ELDER LAW not have to be in a Medicaidcertified bed or even in a facility that participates in Medicaid; however, it must be a verifiable long-term-care facility placement, as opposed to assisted living or otherwise. The RA date in Kentucky is when the family of the institutionalized person physically walks into the Medicaid office. Most elderly couples are unaware they are supposed to go to the Medicaid office for an RA, and many wait years before doing so, which can result in exhausting funds, leaving the CS destitute. The law was specifically written to prevent this situation. County Medicaid offices are required to perform a written RA, at the time of the initial meeting in their office. If an instance occurs when a Medicaid office refuses to perform a written RA, such could lead to significant economic loss for the CS, even with verbal assurance indicating otherwise. The CS should not make any large expenditure before receiving the RA. Do not leave the Medicaid office until you have a written RA, form PA-22, in your possession, signed by the caseworker. Kentucky also takes the unusual position that if a nursing home resident comes home for more than 30 days, a new Resource Assessment is required, which again cuts the Community Spouse's remaining resources in half for the second time. This discourages families from attempting to provide home care once a family member has entered a nursing home. 12 Disqualifying Transfers There are regulations intended to prevent a person from giving money away on Monday to reduce countable resources below the $2,000 maximum eligibility amount, then showing up Tuesday to apply for Medicaid. Such transfers are called "disqualifying transfers" because they will generate a period of Medicaid ineligibility, or disqualification, which B&B; • 05.13 period can in some instances last for years. The penalty period begins to run only when a person has exhausted all of his assets and is otherwise eligible for benefits if not for having made the transfer. Note: It is not the date the transfer was made that starts the penalty period running, but the date the applicant is "otherwise eligible." In practice, Kentucky requires an actual application to meet the "otherwise eligible" standard, although there is no such requirement in the federal or state law. Transfers or gifts made more than five years prior to a Medicaid application are outside the look-back period and not subject to Medicaid's review. It is irrelevant if Medicaid is aware of these prior gifts. Disclosure is not necessary. "Transfers for less than fair market value" create a disqualification period, or period of time when Medicaid will not pay, equal to the amount of the transfer divided by the Transferred Resource Factor (TRF). The TRF, is $5,883 (2013), or $193.42/day, and is supposed to equal the average cost of a nursing home in Kentucky. The actual average cost is much higher. It is important to note that calling the gift a "loan" does not relieve the penalty. "Loaning" the money is regarded in Kentucky as gifting unless there is a signed legal note or loan document, a payment schedule, and proof that repayment has been made according to the schedule. Transferring ownership of the house to someone other than the excepted child or qualified sibling is generally a prohibited transaction subject to the same penalty as the transfer of any other resource. Adding another party to a deed is considered a transfer of resources to the extent of the transferred interest. The value of the home is the Fair Market Value (FMV). Kentucky accepts the tax-assessed, Property Valuation Assessment (PVA) value, prior to application of any homestead exemption, as FMV.16 If the home is worth less than the PVA value, it is prudent to get a detailed appraisal from a certified appraiser showing why the home is so valued. This is mandatory for a sale to a related party, such as a resident's child or sibling. It is helpful, but not required, to obtain an itemized cost estimate of the repairs necessary to bring the value of the home back up to the PVA number. For farm property, the accepted value is the Fair Cash Value (FCV) listed on the tax assessment and not the lower agricultural value on which tax is actually paid. MEDICAID ESTATE RECOVERY Every state is required by federal law to institute a program to recover from a Medicaid recipient's estate those Medicaid funds spent on a nursing home on nursing home care, to the extent there are any funds in the estate at death. See 907 KAR 1:585, which defines the Expanded Probate Estate assets currently available to Medicaid as including: "All real and personal property or other assets in which the deceased recipient had legal title or interest at the time of death, to the extent of the recipient's interest, whether the asset was conveyed to a survivor, heir or assign of the deceased recipient through joint tenancy, tenancy in common survivorship, life estate, living trust or other arrangement." Exempt Estate Recovery Assets17 There is no estate recovery when any of the following exists: • Surviving spouse • Minor child • Disabled child of any age on SSDI or disabled under SSI definition, although not actually collecting SSDI • Assets under $10,000 Within a few months of death, Medicaid will send the Personal Representative identified at the time of the Medicaid application, who may well be an attorney, an estate recovery letter asking the estate to repay the state's total portion of Medicaid payments made. If any of the above exemptions applies, check the appropriate box, enclose any requested verification and send it back. Keep a copy. This should end the estate recovery process for this estate. Warn the family about this letter as it can be quite frightening. They do not owe any money; only the expanded probate estate is liable. The Home A Medicaid recipient may own a home at the time of death. If there is a surviving spouse, there is no estate recovery. However, for single residents, the home is only exempt for the first six months of institutionalization. The family then has another six months to sell the property at FMV. Nevertheless, it is not unusual to see single people in the nursing home for years who still own a home. The recertification process is supposed to spot these situations and eventually deny eligibility, but this does not always occur. Medicaid will want the family to clean up and sell the home and then send 100 percent of the proceeds to the State. There is little incentive for the family to do this. The State always has the right to open an estate itself, then clean out the house, sell it, and keep the net proceeds, but as an alternative, may be willing to negotiate the transaction within a framework of standards. If the family wants to keep the property, they, or their legal counsel if applicable, must negotiate an estate recovery settlement with the State and get it in writing. Funds for purchase must be arranged for in order to provide payment to Medicaid. These funds are sent to Medicaid in the form of a check made payable to Kentucky State Treasurer, marked, "Settlement in full for the estate recovery claim of