Elder Law is a specialized area that involves counseling and assisting seniors and their families regarding financing long term care and managing incapacity with an emphasis on providing the highest quality of life to the elderly or incapacitated person. Wes Fitzwater was one of a handful of Oregon attorneys who developed and focused the practice of law that is now known as Elder Law. The attorneys at Fitzwater Law are here to assist you and your family with guardianships, conservatorships and Medicaid planning.
What is a Guardianship?
What Is A Guardian?
A guardian is a person named by the court who has the authority and duty to make personal and health care decisions for a minor (under 18 years) or adult incapacitated person (the 'protected person'). A guardian may determine where the protected person will reside and what medical care he or she will receive. The court may appoint a guardian either with unlimited authority, or only for specific actions.A guardian generally does not make financial decisions. The court may appoint a conservator to manage the finances of the protected person.
Common Terms Used In A Guardianship Proceeding
Oregon law divides the functions of a court-appointed surrogate decision-maker into guardianship of a minor or protected person and conservatorship to manage a minor´s or protected person´s estate. However, it is common for a person to need both a guardian and a conservator.
Guardian: The person appointed by the court to make personal, medical, health care, and placement decisions for a minor (under 18 years) or an adult incapacitated person.
Conservator: The person appointed by the court to manage the finances of a person who is unable to do so for reasons such as minority, mental illness, physical disability, or chronic intoxication.
Fiduciary: A person appointed by the court to act as a guardian, conservator, temporary guardian, temporary conservator, or a combination or limitation of each.
Professional Fiduciary: A person paid to act as a fiduciary for three or more minors or protected persons at a time, who are not related to the fiduciary.
Respondent: A person for whom a guardianship and/or conservatorship is proposed.
Protected Person: A person (formerly respondent) for whom a guardian and/or conservator has been appointed.
Court Visitor: A neutral, trained individual, who is assigned by the court to interview the people involved in the guardianship proceeding and report back to the court.
When Is Guardianship Required?
When is a person no longer capable of making decisions for himself or herself? A guardian is necessary when an individual lacks the capacity to make adequate decisions involving his or her care and safety. When is a person no longer capable of making decisions for himself or herself? This is perhaps the most difficult question for a family to make, or for an elder law attorney to answer.Oregon law defines 'incapacity' in ORS 125.005 as:'a condition in which a person´s ability to receive and evaluate information effectively or to communicate decisions is impaired to such an extent that the person presently lacks the capacity to meet the essential requirements for the person´s physical health or safety.Meeting the essential requirements for physical health and safety´ means those actions necessary to provide the health care, food, shelter, clothing, personal hygiene and other care without which serious physical injury or illness is likely to occur.'The court evaluates information from doctors, psychologists, public social workers, private case managers, family, and friends. The court will appoint a neutral, trained individual, known as the court visitor, who will interview the people involved in the guardianship proceeding and report back to the court.
IMPORTANT NOTE: A medical diagnosis of dementia (i.e. Alzheimer´s, organic brain syndrome, etc.) does not, in and of itself, constitute a legal finding of incapacity. Until a court legally determines that an individual is incapacitated, that person retains all of his or her rights and decision-making abilities. Without a legal determination of incapacity, the person has the right to make bad decisions, including decisions that might lead to injury, illness, harm or abuse, such as refusing assistance, case management, placement, medical treatment, and other forms of help. In a situation where a finding of incapacity has not yet been made by a court, the only hope is to convince the person to make the 'right' decisions for himself or herself and his or her future.
How Is A Guardian Appointed? The petitioner, usually with the assistance of an attorney, begins the guardianship appointment process by filing a petition with the court. The petition must contain specific facts supporting allegations of incapacity.A copy of the petition must be personally served on the respondent, together with information about the right to object to the petition, the right to request a hearing, and the right to retain an attorney. The petitioner must also notify the respondent´s spouse, parents, adult children, cohabitant, trustee, health care representative, and attorney for the respondent, if any.If anyone files an objection to the petition, the judge will hold a hearing. At the hearing, the judge will decide whether a legal basis exists for appointing a guardian, and if so, who will serve as guardian. Few objections are actually filed. If no one files an objection, 15 days after service, the petitioner´s attorney can submit a limited judgment for the judge to sign. The limited judgment appoints a guardian for the respondent (protected person).
What If It Is An Emergency?
Oregon law allows the appointment of a temporary guardian in an emergency situation, which is defined as 'an immediate and serious danger to life or health or danger to the estate.' It requires 'clear and convincing' evidence of that emergency, and two days´ advance notice of application to the court, except where the emergency necessitates an immediate appointment. The duration of a temporary guardianship is 30 days, with a possible 30-day extension. During this 30-day temporary appointment period, the guardian can petition the court for permanent appointment.
Who Can Or Should Serve As Guardian?
The proposed guardian must be 'suitable' (not defined in the statute) and 'willing to serve', and must inform the court if he or she has filed for bankruptcy or been convicted of a felony or a Class A misdemeanor. The proposed guardian must state whether he/she is currently providing services to the respondent. People who cannot serve are: an incompetent; a minor; a suspended or disbarred lawyer; a state court judge; or an owner, administrator, or employee of a nursing home, adult foster home, residential care facility, or assisted living facility in which the protected person is living.In most cases, a spouse, adult child, other relative, or partner is appointed to serve as guardian. If none of the aforementioned are available or are not suitable to serve, the court may look to other options.A professional fiduciary is also a good choice to serve as guardian. Professional fiduciaries receive referrals from a variety of sources to act as guardians for people who have the funds to pay for their services. Professional fiduciaries can provide the 'neutral party' often needed in cases involving difficult family dynamics. Fitzwater Law, is proud to be a member of the Guardianship/Conservatorship Association of Oregon. The Association´s website at www.gcaoregon.org can provide more information about professional fiduciaries.
What Are The Duties Of A Guardian?
1. Take Custody of the Protected Person. The guardian must control the minor´s or protected person´s activities, determine where he or she will live, and provide for his or her safety.
2. Make Health Care Decisions for the Protected Person. The guardian must always seek to carry out the minor´s or protected person´s known wishes.
3. Take Reasonable Care of the Minor´s/Protected Person´s Personal Effects. This duty does not apply to the guardian if a conservator has been appointed.
4. Receive Money and Personal Property for the Minor/Protected Person, and Apply That to His or Her Support, Care, and Education. This duty lies primarily with the conservator. However, the guardian must inform the conservator about the minor´s or protected person´s ongoing needs for support, daily care, past debts, current expenses, and current and future medical needs, and keep track of what funds are necessary for these expenses.
5. Make Advance Funeral and Burial Arrangements and Control Disposition of the Remains of the Minor/ Protected Person in the Event of Death.
6. Responsibilities to the Court. Each year, the guardian must file a report detailing the mental and physical condition of the minor or protected person, where he or she resides, what kind of services the minor or protected person receives, etc. The guardian must also give the court advance written notice any time the minor or protected person moves to a new residential care facility or mental health treatment facility.
The Advance Directive Or A POLST Form?
The guardian needs to find out if the protected person has an Advance Directive for health care, and/or a POLST form completed by a physician. The guardian should then consult with an attorney regarding how to interpret and follow these documents. In some cases, the health care representative appointed by the Advance Directive may have priority over the guardian for certain health care decisions.
What Are The Costs Involved?
Expenses associated with a guardianship include the court´s filing fee, fees for serving documents on the proposed minor or protected person, the court visitor´s fee, and attorney fees. Other costs sometimes necessary to establish the guardianship include medical evaluations, psychological testing, and/or functional assessments. Often these expenses can be reimbursed from the minor´s or protected person´s funds after the court appoints a guardian. Once the guardianship has been established, the court may approve payment for the guardian’s time and out-of-pocket expenses.Attorney fees must be approved by the court before those fees are paid from the protected person’s assets. The range of attorney fees can vary greatly depending on the case. The attorney for the guardian submits a detailed description of all attorney and staff time to the court. The court reviews the attorney´s documents and gives the guardian (or conservator) permission to pay his or her attorney.
What is a Conservatorship?
What Is A Conservator?
A conservator is a person appointed by the court with the authority and duty to manage the financial affairs of a person needing protection, such as a minor (under 18 years) or an adult incapacitated person (the 'protected person').A conservator may be appointed for an adult if a judge determines that the individual lacks the capacity to manage his/her financial resources. The conservator can be an individual (family member or trusted friend), bank, trust company, or professional fiduciary. The conservator is empowered to take possession of the protected person´s assets and income, and provides for payment of the protected person´s expenses.The conservator becomes the sole financial decision-maker for the protected person. The protected person loses all control of his or her property and assets, except for a few limited powers in certain situations. Sometimes a protected person may be competent to make a Will, or change beneficiaries of life insurance and annuity policies. The conservator may also give the protected person access to a limited amount of funds for personal use.
Common Terms Used In A Conservatorship Proceeding
Conservator: The person appointed by the court to manage the finances of someone who is unable to do so for reasons such as minority (under age 18), mental incapacity, illness, physical disability, or chronic intoxication. (Please note that 'advanced age' is not, in and of itself, a valid reason for conservatorship.)
Guardian: The person appointed by the court to make personal, medical, health care, and placement decisions for a minor (under 18 years) or an adult incapacitated person.
Fiduciary: A person appointed by the court to act as a guardian, conservator, temporary guardian, temporary conservator or a combination or limitation of each.
Professional Fiduciary: A person paid to act as a fiduciary for three or more protected persons at a time, who are not related to the fiduciary.
Respondent: A person for whom a guardianship and/or conservatorship is proposed.
Protected Person: A person (formerly the respondent) for whom a guardian and/or conservator has been appointed.
Court Visitor: A neutral, trained individual, who is assigned by the court to interview the people involved in the guardianship proceeding and report back to the court. (Note: only necessary in guardianship proceedings.)
When Is A Conservatorship Required?
A conservator is necessary when an individual lacks the capacity to manage his or her financial resources. Oregon law defines 'financially incapable' in ORS 125.005 as:'a condition in which a person is unable to manage financial resources of the person effectively for reasons including, but not limited to, mental illness, mental retardation, physical illness or disability, chronic use of drugs or controlled substances, chronic intoxication, confinement, detention by a foreign power or disappearance.Manage financial resources´ means those actions necessary to obtain, administer and dispose of real and personal property, intangible property, business property, benefits and income.'The court evaluates information from doctors, psychologists, public social workers, private case managers, family, and friends to assist in determining whether the person is 'financially incapable.'
Important Note: A medical diagnosis of dementia (i.e. Alzheimer´s, organic brain syndrome, etc.) does not, in and of itself, constitute a legal finding of financial incapacity. Until a court legally determines that an individual is incapacitated, that person retains all of his or her rights and decision-making abilities. This includes the right to make bad financial decisions and be subjected to possible financial abuse. In a situation where a finding of incapacity has not yet been made by a court, the only solution is to convince the person to make the 'right' decisions for himself or herself and his or her future and hope that the person is not a subject of abuse.
How Is A Conservator Appointed?
The procedure for the establishment of a conservatorship is similar to that of guardianship. (In fact, the two powers are often requested at the same time.) Unlike guardianship, the appointment of a conservator does not require an investigation by a court visitor. The appointment of a conservator does, however, require that the conservator be bonded.
Important Note: The authority of a guardian (where a conservator has not been appointed) is primarily for health and personal decisions. Some limited financial powers exist. However, generally speaking, a guardian cannot handle financial matters in excess of $10,000. Therefore, a guardian (who has not been appointed as a conservator) does not have the authority to handle real property transactions for the protected person.The petitioner (typically the proposed conservator), usually with the assistance of an attorney, begins the conservatorship appointment process by filing a petition with the court. The petition must contain specific facts supporting allegations of incapacity.A copy of the petition must be personally served on the respondent, along with information about the right to object, the right to request a hearing, and the right to retain an attorney. The petitioner must also notify the respondent´s spouse, parents, adult children, cohabitant, trustee, health care representative, or attorney of the respondent, if any.If anyone files an objection to the petition, the judge will hold a hearing. At the hearing, the judge will decide whether a legal basis exists for appointing a conservator, and if so, who the most appropriate person is to serve as conservator. Few objections are actually filed.If no one files an objection, 15 days after service, the petitioner´s attorney can submit a limited judgment for the judge to sign. The limited judgment appoints a conservator for the respondent (minor or protected person).
What If It Is An Emergency?
Normally, the procedure for the appointment of a permanent conservator takes approximately 20-30 days to complete.Oregon law also allows the immediate appointment of a temporary conservator in an emergency situation. A court can appoint a temporary conservator within two to three days, if the court determines that an emergency exists and that the assets and property of the protected person are at risk. Examples of situations requiring a temporary conservator include irreparable financial abuse, or where emergency access to funds is necessary to pay for medical treatment. Appointment of a temporary conservator can also be used to freeze or limit access to bank accounts and investments while an investigation into elder abuse is being conducted. Temporary conservatorships are less common than temporary guardianships, but the process is similar.
Who Can Or Should Serve As Conservator?
The proposed conservator must be 'suitable' (not defined in the statute) and 'willing to serve,' and inform the court if he/she has filed for bankruptcy or been convicted of a crime. The proposed conservator must state whether he/she is currently providing services to the respondent. People who cannot serve are: an incompetent; a minor; a suspended or disbarred lawyer; a state court judge; or an owner, administrator, or employee of a nursing home, adult foster home, residential care facility, or assisted living facility in which the protected person is living.In most cases, a spouse, adult child, other relative, or partner is appointed to serve as conservator. If none of the aforementioned are available or are not suitable to serve, the court may look to other options. Banks and trust companies are often good choices to act as conservators in larger estates.The Veteran´s Administration (VA) serves as conservator for some disabled veterans. A professional fiduciary is also a good choice to serve as conservator. Professional fiduciaries receive referrals from a variety of sources to act as conservators for people who have the funds to pay for their services.Professional fiduciaries can provide the 'neutral party' often needed in cases involving difficult family dynamics.Fitzwater Law is proud to be a member of the Guardian/Conservator Association of Oregon. The Association´s website at www.gcaoregon.org can provide more information about professional fiduciaries.
What Are The Duties Of A Conservator?
1. Take Possession of All Property and Income of the Protected Person. This includes such tasks as reviewing all of the person´s available records, giving the court a complete list of assets, and continuously reviewing all mail.
2. Place All Funds Into Conservatorship Accounts. The conservator must change all accounts to reflect that they are held in a conservatorship, but continue to use the protected person´s Social Security number on the accounts. The conservator must provide copies of the front and back of all cancelled checks to the attorney for later filing with the court.
3. Make Prudent Investments With the Conservatorship Assets. The conservator must evaluate the protected person´s assets and projected needs, and then structure the investment portfolio appropriately. The conservator´s duty is to the protected person first and foremost - ahead of protecting someone´s inheritance.
4. Receive Money and Personal Property for the Protected Person, and Apply That to His or Her Support, Care, and Education. The conservator must verify the status of Social Security and/or pension income, past and present income taxes, real property income and expenses (including rent, property taxes, and homeowner´s insurance), medical care expenses, divorce obligations, spousal support, and ongoing care needs.
5. Responsibilities to the Court. Within 90 days of becoming appointed, the conservator must file a formal inventory of the protected person´s assets. Each year the conservator must give the court an accounting of all income and expenses. The conservator must furnish copies of bank statements and all cancelled checks documenting the year´s transactions. The conservator must close the conservatorship if the protected person dies, or if the assets drop below $10,000.
6. Power of Attorney. The conservator needs to find out if the protected person has signed a Power of Attorney. Oregon law gives the conservator authority over any prior 'attorney-in-fact,' including the power to revoke all or part of a Power of Attorney.
7. Protected Person´s Estate Plan. Oregon law requires conservators and the court to 'take into account' the protected person´s estate plan when making decisions to invest, distribute, and/or utilize the protected person´s funds for his or her support. This means the conservator needs to pay attention to any Will or Revocable Trust, AND any 'contract, transfer or joint ownership arrangement' established by the protected person. However, any duty to preserve an existing estate plan remains secondary to the conservator´s duty to provide for the care and support of the protected person.The conservator should consult with an attorney regarding how to interpret and follow these requirements.
What Are The Costs Involved?
Expenses associated with a conservatorship include the court´s filing fee, fees for serving documents upon the proposed protected person, the fiduciary bond, and attorney fees. Other costs sometimes necessary to establish the conservatorship include the court visitor´s fee, medical evaluations, psychological testing, and/or functional assessments. Often these expenses will be reimbursed from the protected person´s funds after the court appoints a conservator.Once the conservatorship has been established, the court may approve payment for the conservator´s time and out-of-pocket expenses. Currently, the court is approving fees for a family member´s services as conservator in the range of $20-$35 per hour. Fees for professional conservators can range from $85 -$150 per hour. Banks and trust companies customarily charge fees based upon a percentage of the total estate under management.Attorney fees must be approved by the court before they can be paid. The range of attorney fees can vary greatly depending on the case. The attorney for the conservator submits a detailed description of all attorney and staff time to the court. The court reviews the attorney´s documents and gives the conservator permission to pay the attorney.
How can I qualify for Medicaid to pay for my care costs?
The Medicaid program is the largest source of payment for long-term care in Oregon. Medicaid is a joint Federal and State program. Medicaid covers the full range of long-term care services, including skilled, intermediate and custodial care, adult foster home, and in-home services.
Medicaid eligibility is based upon a 'service' (or health-related) need and upon a financial need. To be eligible for Medicaid, the applicant must meet three (3) criteria for eligibility: (a) a health need; (b) an income need; and (c) an asset or resource need. Generally, individuals with severe health issues, whose monthly incomes are at or below $2,349 and whose assets are below $2,000 for an individual and $27,728 for a couple will be eligible. Couples with assets above $27,728 may be required to split their assets and spend down before eligibility.
1. Service or Health Need of Medicaid. Medicaid benefits are available only to those persons who have severe health or disability needs and require assistance. These are referred to by Medicaid as “service needs.”
Medicaid evaluates applicants on a scale of 1-18 to determine their service need. This has also been referred to as their 'survivability' need (in other words, the applicant’s ability to 'survive' without assistance).
Level 1 is the highest level. A Level 1 patient needs full assistance with all of his or her 'activities of daily living' (ADLs). ADLs include mobility, eating, elimination, cognition, dressing, and bathing.
Level 18 is the lowest level on the scale. Level 18 patients are independent and need little or no assistance, although they do require a structured environment. Level 17 patients need assistance with dressing and bathing.
Medicaid is currently allowing eligibility for Level 1-13 applicants only. Applicants in service levels 14-18 may not receive assistance. No new applications for levels 14-18 are currently being accepted.
The Medicaid intake workers are trained to evaluate the level of assistance an applicant requires in various activities of daily living. This consists of the worker visiting the applicant and asking a number of very personal questions. It is critical that the applicant answer honestly, even if it is embarrassing. Eligibility for benefits may depend on the applicant’s answers.
The service levels are briefly defined as set forth in items 1-18 below. For a full description, see Oregon Administrative Rules at: http://www.dhs.state.or.us/policy/spd/rules/411_015.pdf
(1) Requires full assistance in mobility, eating, elimination, and cognition.
(2) Requires full assistance in mobility, eating, and cognition.
(3) Requires full assistance in mobility, or cognition, or eating.
(4) Requires full assistance in elimination.
(5) Requires substantial assistance with mobility, assistance with elimination, and assistance with eating.
(6) Requires substantial assistance with mobility and assistance with eating.
(7) Requires substantial assistance with mobility and assistance with elimination.
(8) Requires minimal assistance with mobility and assistance with eating and elimination.
(9) Requires assistance with eating and elimination.
(10) Requires substantial assistance with mobility.
(11) Requires minimal assistance with mobility and assistance with elimination.
(12) Requires minimal assistance with mobility and assistance with eating.
(13) Requires assistance with elimination.
(14) Requires assistance with eating.
(15) Requires minimal assistance with mobility.
(16) Requires full assistance in bathing or dressing.
(17) Requires assistance in bathing or dressing.
(18) Independent in the above levels but requires structured living for supervision for complex medical problems or a complex medication regimen.
Applicants who believe they are in the wrong service level need to request hearings immediately and request that they receive aid pending their hearing.
Planning Note: It is crucial that clients maintain as much flexibility as possible in their planning documents and also their financial investments. It is virtually impossible at this time to plan for long-term care with certainty. It does appear that the most impaired and vulnerable will still be able to access services. However, those individuals who need a great deal of care and have not met the service level will be refused services. An individual may return home, worsen, and reapply - at which time the individual’s declined health will qualify him or her for services.
2. Income Need for Medicaid.
a. Eligibility Level: In 1991 (as a result of Ballot Measure 5 cutbacks), Oregon changed Medicaid eligibility rules to require that an applicant´s monthly income be less than 300% of the SSI income standard, currently $2,349. Prior to July, 1991, Oregon´s 'Medically Needy' program covered nursing home residents whose incomes were over this limit but were not enough to pay for their nursing home expenses. Now, a Medicaid applicant whose monthly income is more than $2,349 cannot qualify for Medicaid assistance for long-term care, no matter how much the care costs are.
Income consists of such fixed items as Social Security, pensions, certain VA benefits, workers compensation, fixed annuities, and real property contracts. Only the income of the institutionalized spouse is considered. The community spouse´s income will not be counted when determining income eligibility.
b. Income Cap Trust: A special trust, known in Oregon as an 'Income Cap Trust,' is available to assist those individuals over the Medicaid Income Level to obtain Medicaid eligibility. The Income Cap Trust was created through a joint effort between elder law attorneys and the State. Be sure to contact Fitzwater Law, for help from an experienced elder law attorney if you are over the Medicaid income level.
3. Resources. An individual can have up to $2,000 in cash or other non-exempt resources. An additional $1,500 can be set aside in an interest-accumulating savings account dedicated as a 'burial fund.' Jointly held liquid assets, such as joint bank accounts, are considered available to the Medicaid applicant. However, the State cannot force a co-owner to sell a jointly held parcel of real property. A life estate interest in real property is an available asset. Value will be established by considering the fair market value for the property and life expectancy of the Medicaid applicant. The value of a resource is determined by its 'equity value.' Equity value is the fair market value of the resource minus encumbrances. 'Fair market value' is defined as 'the amount a resource can be expected to sell for on the open market.' The State accepts valuation methods such as county tax appraised value, professional appraisals and certified market analysis for real property.
4. Exempt Resources. Certain resources are exempt and not counted in determining eligibility for Medicaid benefits. These include the person´s home (see below), one motor vehicle, household items, personal effects, medical equipment, 'hardgoods' for burial (including burial space, casket, liner, headstone), and a funeral or burial fund up to $1,500.
5. Penalty for Transfer of Resources. The Medicaid recipient may desire to give away or transfer property or other assets to a (non-spouse) family member, friend, or charity as part of his or her estate planning goals. Unfortunately, a very complex set of rules governs a future Medicaid applicant’s ability to transfer property. Simply put, a transfer of resources may make the Medicaid recipient or his or her spouse ineligible for Medicaid benefits for a period of time.
a. Period of Ineligibility: The disposal of a resource for less than fair market value, by the applicant or applicant’s spouse, will result in a period of time in which both applicant and applicant’s spouse are ineligible for Medicaid benefits. This period equals the time during which the uncompensated value of the transferred asset could have been used to pay for care at the average private pay rate in the State of Oregon, currently $8,784 per month.
FOR EXAMPLE: A transfer of assets worth $87,840 would result in 10 months of ineligibility. In other words, that $87,840 could have been used to pay for care in a nursing facility for 10 months. The State is allowed to ask a Medicaid applicant about any transfer of assets made during a 60-month period before applying for Medicaid (called the 'look back period').
Beginning July, 2006, Medicaid rules regarding transfers have added a requirement that the period of ineligibility for a transferred asset can begin (a) on the date the asset was transferred or (b) on the date the person applies for Medicaid and is otherwise eligible, whichever date occurs later. Using the example above with a 10-month period of ineligibility, the Medicaid applicant may be ineligible as long as 10 months from the date the person actually applied for Medicaid. This is a substantial change from old Medicaid law. Be sure to contact an attorney at Fitzwater Law, before making transfers that could adversely affect your eligibility or a family member’s eligibility for Medicaid.
b. Exempt Transfers: There are transfers that are exempt from the above rules and will not result in a period of Medicaid ineligibility. These include transfers to a spouse, transfers to a blind or disabled child, and transfer of the primary residence to a care giving son or daughter, or a sibling with an equity interest (certain conditions must exist).
6. Protecting the Spouse who Remains at Home.
a. Spousal Impoverishment Rules. The Medicare Catastrophic Coverage Act of 1988 ('MCCA') significantly changed previous Medicaid laws, providing greater protection to the income and resources available for the maintenance of the spouse who remains at home ('community spouse'). Prior to MCCA, a spouse´s eligibility for Medicaid often resulted in the impoverishment of the community spouse.
b. Treatment of Resources. The non-exempt assets ('available resources') of both spouses are pooled together, regardless of how title is held. The equity value of pooled resources are 'deemed' available to the institutionalized spouse subject to the spousal impoverishment rules discussed below.
The community spouse is allowed to keep the exempt assets and some of the non-exempt assets. The amount of non-exempt assets which the community spouse is permitted to keep is subject to a limit referred to as the 'community spouse resource allowance' or 'CSRA.' The community spouse may retain one-half of the couple´s combined assets. The value of the assets is determined at the beginning of the 'Continuous Period of Care.' The amount allowed to the community spouse is subject to a minimum of $25,728 and a maximum of $128,640.
Once the community spouse´s resource allowance has been calculated, the excess resources must be spent down before the institutionalized spouse can be eligible for Medicaid benefits.
IMPORTANT NOTE: Much is currently being done by elder law attorneys to allow the community spouse to keep more than one-half of the couple´s assets. The process known as a 'Revision of the Community Spouse Resource Allowance' should be evaluated in every case, before the spouse begins spending down the assets.
Once the institutionalized spouse has been determined eligible for Medicaid benefits, there is no need for future assessment of the community spouse´s resources. The community spouse may accumulate additional resources without affecting eligibility.
c. Treatment of Income. The institutionalized spouse´s monthly income (with two small deductions) determines the maximum that he or she can be required to contribute to the cost of care. Therefore, the community spouse´s monthly income, regardless of the amount, will not increase the amount the couple will pay to the nursing home. Conversely, if the community spouse´s monthly income is low enough, it will reduce the amount the couple pays to the nursing home. In other words, the community spouse has no duty to contribute his or her monthly income, but has a statutorily defined right of support. The Medicare Catastrophic Act of 1988 allows the community spouse to receive a significantly larger share of the institutionalized spouse’s income than previously allowed. The community spouse is entitled to an amount sufficient to raise his or her monthly income to $2,113.75. In determining the allowance, all of the community spouse´s monthly income, from all sources, will be considered. If all available income is less than the allowance, the institutionalized spouse´s income will be used to make up the difference. (In addition, the community spouse is entitled to an additional allowance for his or her shelter expenses.)
IMPORTANT NOTE: Elder law attorneys are currently using court orders to increase the income allowance of the community spouse, above Medicaid levels. Again, any spouse in this situation should contact Fitzwater Law, to have an experienced elder law attorney review his or her income and assets.
7. Estate Recovery – Recovery by State of Oregon.
The State of Oregon may have a claim against the (expanded) estate of a deceased Medicaid recipient. The claim cannot be collected until the death of the surviving spouse. The claim is limited to those assets transferred to the surviving spouse upon the death of the Medicaid recipient.
a. Law Governing Estate Recovery. OBRA ´93 requires each State to establish estate recovery programs. 42 USC 1396p. Federal law defines 'estate' to include all real and personal property and other assets included within the individual´s estate as determined under State probate law. It also allows the States to expand the definition of estate recovery to non-probate assets. (The State of Oregon has had an aggressive estate recovery program in place for many years.) The estate recovery is for nursing facility services, home and community-based services, and related hospital and prescription drug services provided to individuals age 55 or older. If there is a surviving spouse, the estate claim is not collected at the death of the first spouse. If there is a minor or disabled child, the estate claim is not collected. In addition, the State’s ability to recover may soon expand to include the costs of institutionalized care received prior to the recipient reaching age 55.
b. Hardship Provisions. OBRA ´93 requires the States to incorporate hardship provisions in their estate recovery programs. Transmittal #64 issued by the Health Care Financing Administration (HCFA)[now the Center for Medicare & Medicaid Services] in September, 1994, provides for 'special consideration of cases in which the estate subject to recovery is (1) the sole income producing asset of survivors (where such income is limited), such as a family farm or other family business; (2) a homestead of modest value; (3) other compelling circumstances.'
c. Expanded Estate Recovery Rules. In 1995, Oregon expanded the laws governing estate recovery. The new law expands estate recovery to allow recovery against any real or personal property and other assets in which the individual had any legal title or interest at the time of death (to the extent of such interest), including but not limited to property passing by joint tenancy, survivorship, Revocable Living Trust, or other arrangement. The State of Oregon takes the position that the claim survives and can be made against the estate of the surviving spouse if it can be traced back to the estate of the recipient at the time of the recipient´s death. Therefore, if a recipient wishes to avoid a State claim, he/she should consider transferring assets, such as the home, to the name of the surviving spouse.
8. Planning Strategies.
Careful planning can go a long way toward preserving the couple´s resources and preventing the impoverishment of the community spouse.
a. Spend Down. Often referred to as 'split and spend down,' this planning approach combines the Community Spouse Resource Allowance (discussed above) with spend down strategies to both prevent the impoverishment of the community spouse and expedite Medicaid eligibility for the institutionalized spouse. The Resource Assessment is the beginning of the planning process. This 'snapshot' of the couple´s combined resources determines the amount the community spouse may have while the institutionalized spouse qualifies for benefits. Generally, the community spouse is best off with the highest possible allowance. The Resource Assessment takes a snapshot of the couple´s available assets at the time the Continuous Period of Care begins. Subsequent spend down or transfers will not change the figures produced by the Resource Assessment. Once the Resource Assessment is complete, the community spouse may transfer 'his share' or “her share” (the community spouse´s resource allowance) into his or her own name. The remaining amount, 'his share' or 'her share,' may be left in the name of the institutionalized spouse, or preferably, their joint names. This amount must then be spent down before the institutionalized spouse will be eligible for Medicaid benefits.
b. Exempt Resources. Spend down often begins by purchasing or maximizing exempt resources. Some examples are:
(i) Purchasing a residence;
(ii) Repairing the existing residence;
(iii) Purchasing car (with long-term warranty);
(iv) Purchasing personal property (appliances, clothing, home entertainment);
(v) Purchasing medical equipment;
(vi) Purchasing burial goods and merchandise; and
(vii) Travel expenses.
c. Converting Resources Into Income. Monthly income in the sole name of the community spouse is not considered available to the institutionalized spouse. Therefore, the community spouse may convert a nonexempt resource into an income source (i.e. real estate contract or loan) or he or she may use non-exempt assets to purchase an irrevocable income source (i.e. single premium, immediate annuity).
IMPORTANT NOTE: While an annuity can be a very attractive planning tool, be sure it fits your particular circumstances. Be sure to 'run the numbers.' The extra income provided by the annuity may reduce the amount of the community spouse´s income allowance or bring his or her monthly income over the income cap.
Also, beginning July, 2006, all annuities must be irrevocable, non-assignable, and must contain a provision making the State of Oregon the first remainder beneficiary of the annuity up to the full amount of medical assistance provided. Therefore, it is highly recommended that you or your family member contact an attorney from Fitzwater Law, before purchasing an annuity and applying for Medicaid.
d. Transfers by Gift. The gifting of assets should be considered a dramatic form of planning. While it may preserve assets, it also can be a significant risk. Gifts can be made to a community spouse with no period of ineligibility for Medicaid. Gifts to individuals other than a spouse will trigger the period of ineligibility discussed above. Again, there is a 60-month look back period.
IMPORTANT NOTE: Remember, gifts are irrevocable. If your client is relying upon the recipient to return the funds (or portion thereof) if needed, consider what would happen if the recipient were to die, divorce, or become indebted.
e. Transfers to Trust. In the past, transferring assets to a specialized form of trust could protect some of the assets. However, Congress changed the rules governing trusts when it passed OBRA 1993, effective August, 1993. These new rules have substantially restricted the use of trusts for long-term care planning purposes.
IMPORTANT NOTE: Special Needs Trusts. The trust rules changed by OBRA ´93 are trusts funded with assets owned or previously owned by the Medicaid applicant or spouse. The rules governing trusts that are funded by assets owned by third parties, with no legal duty of support (i.e. parents of adult children, children, grandparents) were not changed. Therefore, the commonly used 'Special Needs Trust' established by a parent for the benefit of an adult disabled child is still an available and effective estate planning tool.
f. Staying Off Medicaid. Finally, the best plan may be to not apply for Medicaid benefits. Some disadvantages to receiving Medicaid benefits include (a) discrimination against Medicaid patients; (b) some facilities do not accept Medicaid; and (c) the impacts of estate recovery upon the death of the surviving spouse. Long-term care insurance may be the best way to prevent the need for Medicaid in the future.
How Can I Qualify For Medicaid If My Income Is Too High? What Is An Income Cap Trust?
WHAT IS AN INCOME CAP TRUST?
An Income Cap Trust is a special type of trust designed to meet the income limit for Medicaid eligibility. If an applicant has more than 300% of the SSI standard in monthly income, he or she does not automatically qualify for Medicaid benefits for long-term care. The income limit is currently $2,349 per month (2020 figure). An applicant with gross monthly income above that amount needs an Income Cap Trust in order to receive
Medicaid for long-term care.
Once an applicant qualifies for Medicaid, thus becoming a Medicaid recipient, all of the recipient’s income is deposited monthly into a new account and disbursed according to a Medicaid approved budget. At the recipient’s death, the remaining money in the account is paid to the State of Oregon.
DO I NEED AN INCOME CAP TRUST?
An Income Cap Trust is needed if the applicant’s gross monthly income exceeds $2,349 per month. Because certain deductions, such as taxes and health insurance, are withheld from the recipient’s gross monthly income before the income check is written or directly deposited, the recipient may not actually receive $2,349 per month. Keep in mind, therefore, that it is the amount of gross monthly income, the income before deductions, that must be below $2,349 in order to avoid the need for an Income Cap Trust.
WHAT CAN BE PAID FROM THE INCOME CAP TRUST?
The trustee may make the following types of payments from the Income Cap Trust:
1. Personal Needs Allowance/Maintenance Standard:
a. For residents in nursing homes, the allowance is $64.11 per month.
b. For residents in an assisted living facility, foster home, or in their own home, the allowance is $175 per month. In addition, recipients in these types of living situations must pay a minimum room and board amount for their care, which is currently $608 per month. This amount is raised each year, in the summer.
2. Administrative Costs: The amount of $50 per month is available to pay for costs associated with administering the Income Cap Trust. These costs can include bank fees, check charges, postage, mileage, etc. The trustee may pay himself or herself the balance of the $50 as a fee for working on the trust. Therefore, a total of $50 per month is available for all of the monthly expenses of the Income Cap Trust, including the trustee fee.
3. Community Spouse Allowance:
a. A special formula is calculated to determine how much of the Medicaid recipient’s income may be paid as a monthly allowance to the spouse who is not on Medicaid (the “Community Spouse”).
b. In some limited circumstances, a court order may be obtained to increase the monthly allowance to the Community Spouse.
4. Health Insurance Premiums:
a. Deductions for health insurance for the Medicaid recipient and his or her spouse may be paid from the Income Cap Trust.
b. These premiums may be deducted from a pension, but they may also be paid by check – each situation is different, but all premiums are payable from the Income Cap Trust.
5. Burial Plan: The cost of a pre-paid burial plan may be paid from the Income Cap Trust, up to a maximum cost of $5,000.
6. Other Incurred Medical Expenses:
a. If the Medicaid recipient has medical bills that were incurred in the three months prior to the approval of the application, the portion of the bill not covered by insurance can be paid from the Income Cap Trust.
b. Also, any medical cost or medical equipment costs that become necessary and recommended by a doctor when the recipient is on Medicaid may be paid from the Income Cap Trust, provided the Medicaid caseworker approves the expense.
7. Other Reserves: There may be other appropriate deductions, depending on the case. A lawyer well trained in Income Cap Trusts will be able to identify those deductions.
8. Patient Liability: The money left after making the payments set forth in items 1 through 7 above is the amount to be paid to the care facility. Any remaining amounts owed to the care facility for charges relating to recipient’s care are paid by Medicaid.
HOW DOES AN INCOME CAP TRUST WORK?
The Income Cap Trust is created and managed by a trustee who deposits the Medicaid recipient’s income into a new bank account established in the name of the Income Cap Trust. The trustee also writes checks on the Income Cap Trust account each month, which checks are written according to a budget prepared by an attorney and approved by the Medicaid caseworker. The budget must meet the requirements listed in the
previous section. All distributions from the Income Cap Trust must be verified in writing in order to be allowed. Once the budget is approved, the trustee is given a copy, generally with instructions from the attorney.
WHAT HAPPENS WHEN THE MEDICAID RECIPIENT PASSES AWAY?
Usually, the trustee will pay the last bills owing from the Income Cap Trust. Soon after the recipient’s death, the State will contact the trustee and request repayment of the balance the Income Cap Trust account, if any. If there is any money left in the Income Cap Trust account at recipient’s death, that money is owed to the State. Once the Income Cap Trust account is empty, the trustee should close the account.
Will My Estate Have To Repay Medicaid After My Death? What Is Medicaid Estate Recovery?
Medicaid estate recovery is the process by which states recoup, from the estates of deceased Medicaid recipients, some of the costs of running their Medicaid programs. Ever since the inception of Medicaid in 1965, states have had the legal authority to implement estate recovery programs. Today, all states are required by federal law to have them. 42 USC 1396p(b)(1).
In Oregon, Medicaid is administered by the Oregon Department of Human Services (hereafter “Oregon DHS” or “DHS”), and is governed by both federal and state law. Oregon law also requires DHS to seek recovery from the estates of deceased recipients. ORS 414.105. The branch of DHS tasked with administering Oregon’s estate recovery program is the Estate Administration Unit.
When Medicaid recipients die, their estates are required to pay back some or all of the medical assistance received during life. The concept of estate recovery is sometimes confusing because, when people think of Medicaid, they (correctly) think of individuals with modest means, and the idea of an “estate” is at odds with that image. Medicaid does impose strict limits on the assets and income of recipients. In fact, individuals with
financial resources in excess of $2000 generally do not qualify for Medicaid assistance. However, some assets are considered to be “exempt” for purposes of Medicaid eligibility, and it is these exempt assets that are most commonly pursued in estate recovery. The largest and most important of these is the home. A Medicaid recipient can own a home and still qualify for Medicaid if the home is used as his or her primary residence (and/or the primary residence of his or her spouse). OAR 461-145-0220(2).
NOT A LIEN
One of the most common misconceptions about the estate recovery program is that DHS places liens on the homes of Medicaid recipients. This is not the case. Although the home is, more often than not, the primary asset in most Medicaid recipients’ estates, Oregon DHS does not use a lien mechanism to recover its costs. Instead, DHS makes “claims” against the estates of deceased recipients, just as any other creditor (such as a
hospital or credit card company) might do. The only difference is that DHS’s estate recovery claim is given priority over the claims of most other creditors, so that in insolvent estates, DHS gets paid before them. ORS 115.125.
SCOPE OF RECOVERY
Oregon estate recovery law defines “estate” very broadly, so as to facilitate recovery of Medicaid assistance paid regardless of how it passes upon a recipient’s death. OAR 461-135-0832. Federal Medicaid law allows (and Oregon has opted for) an “expanded” definition of “estate” that includes not only the assets in a person’s probate estate (as determined by state law) but also those assets that pass outside of probate, including
• Joint Tenancy/Tenancy by the Entirety
• Life Estates
• Living Trusts
• Certain Annuities
Any property that in which an individual has an interest on the date of death may be reached by Oregon’s estate recovery program, to the extent of that interest.
LIMITS OF RECOVERY
Not all Medicaid assistance provided by DHS is recoverable under the estate recovery laws. For example, DHS cannot recover the costs of basic medical care (i.e., Oregon Health Plan) provided to recipients who were under the age of 55 when the care was provided. (However, if the recipient was permanently institutionalized, DHS can recover benefits paid at any age.). In addition, if a Medicaid recipient is survived by a spouse, DHS must defer enforcement of its recovery claim until the surviving spouse’s death. Finally, if a recipient is survived by a child under age 21; a permanently disabled child; or a blind child; the estate recovery claim cannot be enforced. ORS 416.350. OAR 461-135-0835.
DHS is empowered to waive enforcement of any estate recovery claim if it finds that enforcing the claim would result in undue hardship to the family members, heirs, or beneficiaries of the deceased Medicaid recipient. ORS 416.340. OAR 461-135-0841. For example, if enforcement of a recovery claim would cause the waiver applicant to become homeless, or would result in the applicant becoming eligible for Medicaid himself, DHS may opt to waive recovery. In some cases, the claim is forgiven in its entirety. In other instances (such as where a deceased recipient’s family has compelling reasons to continue residing in the recipient’s home, but lacks the liquid resources to pay the Claim), the Department will negotiate with the interested parties, sometimes accepting a Note and Trust Deed on the property in lieu of a lump-sum payment.
NOTICE TO DHS: PROBATES; SMALL ESTATE AFFIDAVITS; AND WRONGFUL DEATH PROBATES
Although estate recovery in Oregon is not limited to assets that pass through probate estates, Oregon law does require that notice of all probates initiated in the state (including copies of Small Estate Affidavits) be provided to the DHS Estate Administration Unit. ORS 113.145(6); ORS 114.525(11); OAR 461-135-0834. DHS takes the position that this requirement applies even to probates opened for the sole purpose of pursuing a wrongful death claim.
In general, proceeds of wrongful death claims are not available to creditors of the decedent, as the claim is not property of the decedent. However, DHS contends that it may nonetheless have valid claims for reimbursement of Medicaid costs from wrongful death proceeds, and thus should be notified of wrongful death probates. Specifically, DHS points to the reporting requirement contained in ORS 416.530, which
requires recipients and/or their attorneys to notify DHS whenever an action for personal injuries is initiated. In these cases, DHS takes the position that notice of the probate should be given to the Estate Administration Unit (as required by ORS 113.145(6)) and notice of the wrongful death action for which the probate is opened should be given to the Personal Injury Liens Unit (as required by ORS 416.530).
As mentioned above, Oregon probate law prioritizes certain creditor claims over others in insolvent estates. One claim with a higher priority than DHS’s estate recovery claim is a “plain and decent funeral” for the decedent. ORS 115.125 (1)(c). In its administrative rules, DHS has determined that such a funeral can and must be arranged for no more than $3500.00. OAR 461-135-0833.
RELEVANCE OF ESTATE RECOVERY TO PERSONAL INJURY LAWYERS
Medicaid estate recovery is, obviously, not central to the practice of most personal injury attorneys. However, a basic understanding of estate recovery is useful for a number of reasons:
1. Personal injury lawyers need to be able to distinguish between Medicaid liens against personal injury actions and estate recovery claims against estates. Medicaid recipients frequently confuse and conflate the two concepts, and lawyers can reduce client anxiety by separating and clarifying them.
2. Medicaid recipients who receive personal injury settlements or awards (and whose Medicaid liens are negotiated and resolved) are sometimes unaware that settlement funds remaining at their death may be subject to estate recovery claims, notwithstanding the lien resolution. Whereas injury liens are limited to accident-related medical expenses, estate recovery is limited only as described in these materials.
3. As mentioned above, Medicaid estate recovery is, according to DHS, directly relevant to wrongful death actions, and personal injury lawyers may put themselves or their clients at risk by failing to properly notify DHS in such cases.
4. Medicaid recipients receiving settlements or awards may want to factor a future estate recovery claim into their settlement decisions. For example, in evaluating the attractiveness of a proposed settlement, a Medicaid recipient may want to determine the amount of money he or she will be able to pass on to family and friends at death, after satisfaction of the estate recovery claim. The Estate Administration Unit of DHS
will, on request, prepare an “Assistance Summary” detailing the type and amount of recoverable assistance provided up to the date of request. The Estate Administration Unit can be reached at 503-378-2884 or, toll -free in Oregon, at 800-826-5675.
DISCLAIMER: The information contained in this document is based on Oregon law and is subject to change. It should be used for general purposes only and should not be construed as specific legal advice by Fitzwater Meyer Hollis & Marmion, LLP or its attorneys. Neither this website nor use of its information creates an attorney client relationship. If you have specific legal questions, consult with your own attorney or call us for an appointment.