The Myths and Truths of Medicaid Paying for Long-Term Care with Morris Klein, Esq.

Philip Fish, CFP<sup>®</sup> and Estate Planning Specialist with Sandy Spring Trust

A Real Life Matters Discussion Series.
In this Professional Discussion Philip Fish, CFP® and Estate Planning Specialist with Sandy Spring Trust interviews Morris Klein, a local attorney with over twenty years of experience assisting clients with their Medicaid planning.  Morris and Phil discuss a number of Medicaid’s myths and truths including Medicare’s inability to cover long term expenses, gifting strategies to help protect a family’s wealth, how different states handle Medicaid qualification, the challenges individuals face as they attempt to meet Medicaid’s qualification standards and the importance of seeking qualified guidance as early as possible.

Guest Speaker:  Morris Klein’s practice focuses on legal issues faced by persons who are aging or incapacitated. This includes Medicaid eligibility, special needs planning for the disabled, guardianships, and drafting planning documents such as powers of attorney, health care advance directives, trusts and wills. Mr. Klein is a member of the national Board of Directors of the National Academy of Elder Law Attorneys, the preeminent national organization for elder law attorneys. He is also a member of the Board of Directors of the Special Needs Alliance, a select group of attorneys engaged in special needs planning. 

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    Myths and Truths of Medicaid Paying for Long-Term Care



    A Real Life Matters Discussion Series
    Hosted by Phil Fish, CFP® and Estate Planning Specialist 

    This Week’s Discussion:
    The Myths and Truths of Medicaid paying for long-term care.
    Presented by Morris Klein, Esq. 

    Sandy Spring Trust does not endorse or recommend the services of any person or entity not affiliated with Sandy Spring Bank.  

    The opinions and statements expressed by Morris Klein, Esq. reflect his views and do not necessarily represent the views of Sandy Spring Trust. 

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    - Hello everyone and welcome to Sandy Spring Banks' real life matters discussion series, my name is Phil Fish, I'm a certified financial planner and an estate planning specialist with Sandy Spring Trust and I've worked for the bank for over 20 years and through this series, I interview local professionals in the areas of law, tax, finance and healthcare on various topics, very honored today to have Morris Klein joining us. He's an estate planning attorney who specializes in among other areas, Medicaid planning, we're gonna be talking today about the myths and truths of Medicaid in regards to helping pay for long-term care costs, so Morris thank you so much for taking time out of your busy schedule to join us today. Can you take a few minutes and just before we get started in our conversation introduce the audience to yourself and the practice that you've been involved with for many years in the greater Washington region.

    - Well, first of all Phil, thank you so much for inviting me, I'm happy to participate in your series. So, I have been practicing in this area for almost 25 years, I practice in the Metro DC area, the Maryland suburbs as well as the District of Columbia, I concentrate in elder law, special needs law and estates planning, I am one of only a handful of attorneys in the state of Maryland that is a certified elder law attorney by the National Elder Law foundation. I am the immediate past chair of the Maryland State Bar Association elder law and disability section, I've also served as the co-chair of the DC bar estates trust and probate section, I am a past member of the Board of Directors of the National Academy of Elder Law Attorneys, I am a NAELA fellow, a member of its council of advanced practitioners and I'm a founding member and past president of the Maryland DC chapter of NAELA. I'm also a former board member of the Special Needs Alliance, a select group of attorneys who advise on special needs issues and I was also a member of the board of directors of the Maryland first, excuse me, the Maryland First Disability Trust, a not-for-profit pool trust for persons with special needs. In the past, I was a member of the board of directors of what was then the Alzheimer's Association for the national capital area, I have been practicing in Bethesda, Maryland for just about this entire time since I got involved in the area of elder law, so that is my background, Phil.

    - And it's why I was so pleased to have you on board of the discussion series, you and I have known each other probably close to 20 years if not longer and we've interacted in a lot of different ways, helping individuals with special needs and on behalf of the community, thank you for that work, it is such important work but also helping seniors which is our topic today as they face the difficult choices that come with having health care expenses and there's a lot of misunderstanding and miscommunication about Medicaid so I'm really excited about us taking 40 to 45 minutes to try and deal with some of the myths and truths that come along that way and so we're gonna have a nice conversation today and hopefully raise some awareness but also clarify some misunderstandings and you and I had chatted before and gone through a couple of items that we thought were important. I think number one on the list was as a lot of confusion between Medicare and Medicaid, so maybe could we start out with just kind of helping people understand the differences between those two and what one covers and what is not covered by those two options?

    - Yes certainly, this is very important and most people as you indicated have a misconception about this. So first of all, long-term care is terribly expensive, a nursing home now costs, could easily cost 15,000 dollars a month, an assisted living facility, may be six to 8,000 dollars a month, home care, the going rate for a home care provider is 25 dollars an hour and so you can almost hear the vacuum cleaner sucking your savings out of your investments and bank accounts to pay for this care. Most people think that because they have Medicare, at least those who are over 65, that because the need for long-term care, which is generally an issue about needing someone to help you with your activities of daily living because it's a health-related issue, that Medicare will pay for this care. Unfortunately, that is not the truth. Medicare pays for things that hospitals can fix and doctors can fix, so if you had a heart ailment or a heart attack and you go into the hospital, it may well cost hundreds of thousands of dollars for the hospital to make you whole again and those types of expenses are covered by Medicare but when it comes to dealing with help with activities of daily living, where you need help going to the bathroom, you need help getting dressed, you need help moving about, those are things that hospitals and doctors really can't fix, it's sort of what we call custodial care and therefore it is not covered by Medicare or most health insurance, the only exception is where someone who is admitted to a hospital, upon their discharge they could get Medicare to pay for what's called skilled nursing care for a relatively short duration and you have to jump through a number of hoops to even qualify for that. You have to have been in a hospital for at least three days or actually three midnights, you had to have been admitted to the hospital, many hospitals will only take somebody for observation status and although the patient may not know the difference that they're still getting attended to by doctors, they may even be in a room in the hospital, if they are technically considered to be getting observation status, those three days don't count and so you don't qualify. Now, under COVID that has been relaxed and you may not need to stay the full three days, however, you still have to be admitted to the hospital, so that's the first thing. The second thing is that you have to go into what's called a skilled nursing facility within 30 days of the hospital stay and so if you are discharged home and then need skilled care beyond that period, you are ineligible and then the third thing is the limited duration for Medicare under this circumstance. Medicare will pay for 20 full days for free, beginning on the 21st day and for up to an additional 80 days, there is a co-pay and the co-pay is this year, I believe 184 dollars and 40 cents and so you are responsible for that. If you have a MediGap plan such as Blue Cross or United healthcare, the Medigap may help pay for those additional days but here's the rub, most people don't get the full hundred day benefit most people get kicked off of Medicare well short of the a hundred days. You have to have a absolute need for skilled care as opposed to custodial care and usually most people don't have that need for that period of time. There's been some litigation in the recent past about what is the proper standard to have somebody discharged from Medicare, from a skilled care facility and it used to be that hospitals would say that you are not improving but failure to improve is not the correct standard, the standard is whether you're getting any benefit from the skilled care, so that is something to keep in mind for people in that situation. But anyway, Phil, the bottom line is that Medicare has only limited resources to help people who need a long-term care. I should add that people who have Medicare advantage plans are what we called Medicare Part C. Medicare Part C plans have been permitted to allow a little bit of skilled care of services, they may pay for some people to come into the home for a short period of time to provide some care but again, this is very limited and even that is only for people who are getting Medicare advantage or Part C plans.

    - Okay, so we have, what we've stated clearly that people need to understand is Medicare is not going to be a solution long-term for individuals long-term nursing home or assisted living style support, so then people start talking about Medicaid which is a difference program completely. Can you give people kind of a 30,000 foot idea of what Medicaid is and how it works? I know that's difficult to do 'cause it's a very complex issue but just as an introduction for somebody who might have heard of Medicaid but they don't really understand what it is or how it operates.

    - Yeah, sure. So Medicaid is a federal state program, Medicaid is sort of like the healthcare of last resort for individuals. It does cover long-term care expenses and in Maryland in particular, there is a bias towards, when I say long-term care I mean nursing home, although in other jurisdictions Medicaid could help out to pay for not only nursing home care but assisted living and even home care, in Maryland, there is sort of a bias towards paying just for nursing home care, it's still possible to get care in other venues but it's, they sort of push you towards getting nursing home care. So to qualify for Medicaid, you basically have to have very few assets. The general rule for a single person is you can't have more than 2,500 dollars in countable assets in Maryland and countable assets include in Maryland IRAs cash value of life insurance, savings, investments, all of that, the residence is excluded, automobiles are excluded, tangible personal property such as clothing and the like, generally they're not counted either, so a single person has to spend down to those amounts before they would qualify for Medicaid.

    - Did you say 2,500 dollars total?

    - Yes, that was not a mistake, 2500.

    - That's a very small number.

    - It's a very small amount of money. Now, for married couples however, Medicaid is somewhat more generous and the reason Medicaid is more generous is to prevent what is called spousal impoverishment. Medicaid is not intended to force a spouse to impoverish him or herself because their better half is in need of long-term care. So under the rules for spousal impoverishment, a snapshot is taken as to what both the husband and wife have as of when the nursing home spouse enters the nursing home and that amount has to be reduced by either one half of what they have at the time of that snapshot or in this year approximately 130,000 dollars, whichever of those numbers is lower with a ceiling of about 26,000 dollars. So in other words, if the couple have 26,000 dollars or less, the Medicaid applicant is in, if they have more than that, it's the lesser of half of what they had when the person enters the nursing home or 130,000 approximately, whichever is the lesser of those two numbers.

    - But the key thing there is if it being the lesser, if an individual had say 800,000 dollars in savings, that lesser amount is they have to spend down all the way to 130,000, correct?

    - That is correct. Now, remember that house is excluded.

    - House is excluded but with.

    - And so again with the purpose.

    - Retirement accounts are included in that calculation.

    - That is correct, now in the District of Colombia in contrast, retirement counts are excluded, so if one is in a nursing home in the District of Columbia, one doesn't have to worry about their retirement accounts but in Maryland and in most states you do so.

    - And I think that's gonna be at the end of today's conversation, one of a general theme is gonna be to get good advice early, so actually where you end up choosing to live I think could be, if you had a client who had a very large retirement account, that could be a huge difference in their plans as far as where they reside, would that be a fair statement?

    - That would be a fair statement, however I always tell my clients that the number one priority is making sure that the individual in need of care is well cared for and there's no point in trying to shoehorn somebody into a place where they are not gonna get good care or it's just inconvenient to get to and the like, so that is of priority concern. However, just looking strictly from a financial basis, you are correct what you just said that at least with regard to assets, DC is is somewhat more generous than Maryland is but so as far as the assets go, you could spend down, there are some ways particularly for a married couple to spend down, you can also buy a pre-need funeral arrangement that is permissible and make those arrangements. The non-nursing home spouse which frankly is usually the wife, usually the husband is older and gets sicker first and is more likely to be the one in the nursing home first and the wife is the one who is not in the nursing home and as an aside, sometimes the spouse will say, well he can stay with me at home, I'll care for him, there comes a point in time where that, it doesn't make sense in the sense that the well spouse is risking her own health in caring for the sick spouse and then all the windup happening, or two, sick spouses and that's not very good, it's sort of like on the airplane when they say put the mask, the oxygen mask on the child first and then put it on yourself, it sort of applies, you wanna, you want, you have to care for yourself as well as the other person but anyway, so there are some ways for the community spouse to spend down, the non-nursing home spouse. One option they could consider doing is buying what's called in Medicaid qualified annuity, which would allow them to get a stream of income which under federal law is excluded from being counted as an asset. I should back up and say that basically, to qualify for Medicaid there are actually three tests you have to pass or fail depending on how you look at it. One is you have to be a US citizen and virtually all people that I see don't have a concern about that, if they have not been in this, if they have only been in this country recently, they have to jump through a number of other hoops to get qualified for Medicaid and I'm not gonna get into that. The second is that you have to be sick enough for nursing home care which is a separate standard from the financial issue. You have to have deficiencies in what's called activities of daily living and or have some significant cognitive issues and whether you are rich or poor, it doesn't matter if you don't meet the medical test. So the third test and the one that we're focusing on is the financial tests and as I said, for a married couple the rules are somewhat more generous and would allow somebody to qualify. Now I talked about assets, separately there's income and for a single person, income, whatever they have as income has to go to pay for their cost of care, they are allowed to keep enough money to pay for their health insurance and they're given in Maryland 83 dollars a day for spending, 83 dollars a month, excuse me, for spending money but other, everything else has to go to pay for cost of care. For the married couple, the non nursing home spouse's income doesn't count, the married, the non-nursing home spouse can keep their income and only the nursing home spouse's income has to go to pay for cost of care. So, as I said, the rules are tough but they're somewhat more generous when you have a married couple involved, they're more easier to spend down. Now, some people say, well, okay, Medicaid will allow me to keep 2,500 dollars and I have 25,000 dollars or 250,000 dollars, I'm just gonna give it away to the kids and I'm gonna give it away on Monday and Tuesday, I'm gonna go into Medicaid, I'm gonna pull my pockets inside out and say, see, I don't have any money. Well, that won't work. Medicaid has what's called a five-year lookback rule and so what that means is any assets that you've given away for the past five years are taken into account and considered in the Medicaid application process and if you have given away assets for a period of time in the last five years, they penalize you for those gifts and the penalty is one of time. In Maryland right now, for approximately every 10,000 dollars and these numbers are revised annually to account for the increased cost of care but in any event, in Maryland for approximately every 10,000 dollars given away in the past five years, you lose one month of care. So if dad gave a hundred thousand dollars to his daughter, then dad would have to wait for Medicaid to pay for his care for 10 months after dad ran out of money, that's how that rule works. In DC, the divisor is a little higher, it's 12,800 dollars approximately but it's the same rule. Now, Maryland actually has some relatively generous exceptions to that, some of the exceptions are, if you have a family member who has had financial duress, if they got laid off, say because of COVID, if they're bankrupt, if they're in financial duress, a parents gift to that child or other relative who was in financial duress would not count as a penalty. A gift for to help somebody's education would not count as a penalty, so there are some exceptions in Maryland that allows some gifting without having to run into this penalty and the fact is that you could also, if you have enough time, gift assets away and put them in a trust, a special type of trust and wait out five years and that would be another way to get around the gifting penalty but even in time of crisis, if you could look back within the five years and have made those types of gifts, that might be acceptable but you can't do it at the last minute, you can't say, oh, I need to go in a nursing home so I better give my granddaughter 10,000 dollars for college tuition, it's too late to do that but if you have made those gifts in the past without anticipating the need for nursing home care, even if they were within the five years, Medicaid is not going, in Maryland it least, it's not going to penalize you for that.

    - And I think something that we discussed earlier when we were preparing for our conversation today is the importance of timing, the importance that the earlier a individual or a couple come to a professional like you, who specialize in Medicaid and starts thinking out strategies, there's a lot more flexibility and strategies available if you have more time to determine how to structure assets, gifting strategies, the establishment of trusts, et cetera, et cetera, so whenever I cross paths with a client in my role at Sandy Springs Trust, even though I'm a certified financial planner, I'm not an attorney, I'm certainly not an attorney who specializes in Medicaid and that's another issue, I always tell clients, this is a very specialized area so you really should be talking to somebody like Morris Klein and others like you who have spent so much time and energy learning and becoming knowledgeable in this very complicated field but I know you and I've already have had conversations where the timing those conversations is very important because the more time you have, the earlier you are engaged by the client, whether it be an individual or a couple, you have a lot more options available to you to discuss with the client of ways to help them. Is that a fair statement?

    - Phil, that's absolutely right, the more time you have to plan, the more options there might be to consider, if you're at a time of crisis, you have fewer options that would be available to you, certainly if you have a five-year time range, that would be beyond the lookback period, that would give you the most opportunities but even within that time, if there's not yet a crisis developing, if there's still issues that that can be talked about. I should also point out that another exception to the gifting rules relates to having someone in the family with a disability. There is no penalty imposed if a parent makes a gift to a disabled child or to a disabled person who is under 65, there's no age limit to the child but there is an age limit to a disabled person. So someone who has a disability and for this purposes disability is defined as someone who is getting benefits from social security, such as social security surety disability income or Supplemental Security Income or SSI, gifts to those individuals do not count as far as the penalty goes and in fact, there are some methods that would permit not only the disabled in a grand tour, the person who makes, I'm sorry, there are some rules that would allow the person who is making the gift who needs Medicaid, as well as the disabled recipient of the gift to both qualify or continue to qualify for their public benefits. There are special needs trusts that can be established that deal in that situation and so that's just a silver lining in having someone with a disability in the family.

    - Yeah and you had mentioned earlier a trust that is sometimes used in the planning process but it's very important that clients realize we're not talking about a revocable living trust in that situation, 'cause a lot of the clients believe a revocable living trust, which is a type of trust, might provide some protections against or help in qualifying for Medicaid but a revocable living trust I believe, is fully included in an individual's assets because they control those assets, so they are viewed as, they're assets under full controls so they're, just like a retirement account, in Maryland that's viewed as part of the assets, no different than an individual account, is that correct?

    - Yes Phil, you're absolutely right, a revocable trust which is what many people have for their own estate planning is not helpful in the Medicaid context. In fact, as I mentioned earlier a house is not counted as part of what you have to have or is not counted as part of the maximum as to what you should have for Medicaid. However, a house that's in a revocable trust would have to get pulled out of the revocable trust in order to qualify and any other assets in the revocable trust will be considered to be available. So the type of trust we're talking about is an irrevocable trustworthy persons creating the trust who may need long-term care and Medicaid do not have any ability to access the funds, to the extent they have an ability to access the funds, It's there, it's theirs and it's it's counted for qualifying for Medicaid so we're not talking about that. Now, the reason that you have to take the house out of the trust is because the, although the house is excluded it's not totally scot-free from Medicaid. When the Medicaid beneficiary dies, Medicaid can come back and claim what it pay for cost of care during the person's lifetime against the value of the house and recover what it paid when the house is sold. So in order for Medicaid to get at the house, it has to be subject to probate in most cases and a revocable trust bypasses probate so therefore they don't want, they don't allow the house to be in the trust.

    - Are you finding

    - And I should also.

    - Are you?

    - I'm sorry.

    - Okay.

    - Are they, are you finding that Maryland is aggressively going after real estate holdings after the patient has passed away?

    - I don't know how we define aggressive but yes, they do go after it. One cannot hope that they're going to ignore the fact that someone died owning a house. I should also point out that under federal law in Maryland there's a limit as to how much equity a single person can have in a house to qualify for Medicaid, that new limit in 2021 is 603,000 dollars of equity, which for most people is not that troublesome motive and amount, most people have homes that are worth less than that, unless you're living in certain parts of Montgomery county where people do have that much equity. For a married couple, there is no limit on the amount of equity one can have in a home. Furthermore, the home can be protected if there is a married couple by the non-nursing home spouse owning the home so that when the nursing home spouse dies, it's not in the nursing home spouses name. There are some other state recovery issues that have to be dealt with when you're dealing with a couple but the bottom line is that because of the relatively favorable Medicaid rules dealing with married couples as opposed to single people, a non-nursing home married spouse can pretty much wind up with much of the assets that they both had before the other spouse needed to qualify for Medicaid and again, that is to protect the non-nursing home spouse from spousal impoverishment and possibly their own need for long-term care down the road.

    - Got it and again, I guess it goes back to timing, it is that if you had a client with a fairly valuable piece of primary residence, if you could if you got to meet with that couple early enough and they were very concerned about future medical expenses or a long-term health issue, getting that house titled properly, whether it be in some form of trust or to the healthy spouse could be very important in that planning process.

    - Yes, that is correct, again, it goes back to the theme, the sooner you can start planning for these things the more options are and the more someone will have peace of mind knowing that if this happens, that their assets would be protected in some manner.

    - Something that we talked about which I'm very interested in is, you talked about the missing truths of the type of care and the facilities that are available for Medicaid eligible patients. Could you touch on that a little bit 'cause I think there is a lot of confusion as far as if you become eligible for Medicaid, where can, where are you going to be located? Does the state control where you go? Are there beds available? That type of thing.

    - Yes, so again, we have to distinguish between nursing home care and other types of care environments such as assisted living or adult daycare or getting care at home, so I'm gonna be talking about nursing homes in particular. So the state does not dictate where you can live, you would find a place and all but one nursing home in Montgomery county, for example, participates in the Medicaid program, so there are many options available assuming the nursing home has room to take you and so you would find the nursing home of your choice and once the funds have been spent down then you would apply for Medicaid at that facility. Now, it gets more complicated when you're dealing with facilities that are not licensed as a nursing home and I've had people tell me, well, my mom's in memory care, isn't that a nursing home? I say, no, it is not, it's the licensing that is so important. So, many assisted living facilities hold themselves out as providing care for somebody regardless of how much needs they have and particularly if there's an Alzheimer's or some other cognitive issue that they can care for them and I don't dispute their ability to care for them, they may very well do an excellent job, however as far as the state is concerned, the fact that the facility is not licensed as a nursing home makes a world of difference as far as Medicaid is concerned. If they're licensed as a facility, they can, the person can apply for Medicaid under the rules that I just, you and I have discussed, if the person is in assisted living or if they wanna get home care there is an additional set of hoops you have to jump through, you still have to meet the medical need for nursing home care so even though you're not in a nursing home, you have to be considered to be sick enough for a nursing home. You still have to meet the financial spend down, 2,500 dollars for a single person and the formula I mentioned if you are a married couple. What gets tricky is the income. So for a nursing home, as long as your income is less than the cost of care, you would qualify for Medicaid and since the nursing home is charging up to 15,000 dollars a month, virtually everyone would qualify because very few people have an income of 15,000 dollars a month. However, for assisted living, there is an income cap and the income cap is pretty low, it's, right now in this year, 2021, 2,382 dollars a month. If your income is more than that and many people, particularly federal retirees who may have money from OPM as well as a little from social security, they may have an income that is a little above that, maybe not a lot above that but enough that you get, get you over that cap and so because you're over the cap, you are out of luck, you will not qualify now. There are a few exceptions to that but the general rule is, if your income is above that number you are not going to get help in assisted living or home care in Maryland period. Now, even for individuals whose income are below the cap it's still not a cruise down the highway, there is a waiting list and the waiting list right now stretches out for about eight years. Now for, it used to be, it was a first come first serve and then you were almost certain that you'd have to wait the full eight years. The Medicaid people in Maryland have changed that now to that there is some consideration given to the need, if one is to get Medicaid and assisted living they will do an assessment and based on how significant your care needs are, you may be given a priority standing and you make it qualified sooner than waiting for everyone else who signed up before you to get through the waiting list but there's still that hurdle. Then the third complication aside from income and the waiting list is the fact that unlike you asked me, Phil, how many, we talked about how many nursing homes participate in Medicaid and I said almost all of them, that's not true for assisted living. Not all facilities participate in the Medicaid program, so usually if you're in one of the larger chains they don't participate, usually it's the smaller mom and pops that do so if you go through all these steps and clear the waiting list, if you're in one of the larger places and they don't participate in the program, you may have to move anyway.

    - Now all of these restrictions relate to you wanting to get Medicaid to help you be in a place that is not a Medicaid or is not a nursing home, correct?

    - Right, there is one other way to get around the waiting list, which is that if you qualify for Medicaid in a nursing home and then wanna move out of the nursing home into assisted living, you don't have a waiting list, you still have to meet the income test and all and still be sick enough for nursing home care but you don't have to be on the waiting list if you go through that step. Now, as a practical matter, people in that situation, it is not easy to be moving around, the move itself can have, could possibly have an adverse impact on their cognitive care situation and so it's not an ideal option but it's there.

    - And so we come full circle around 'cause the last item I had on our list to discuss is timing, I mean and we've been discussing this throughout the discussion today, is getting good advice from somebody knowledgeable as early as you can is I guess the one recurring message that we're trying to pass along through this discussion that we're having is, clearly from our brief discussion today there are a lot of rules, a lot of nuance depending on which state you're in and whether you're single or married and what type of assets do you have and do you own real estate and your income levels and all of these different factors so your role, I presume along with other professionals like you who deal with Medicaid planning, is to kind of be the problem solver, to figure out the client situation, where they are, what's their situation, here are your options, option A, B, C and D, each one's gonna have pros and cons and then to try and help clients navigate through that but I imagine doing, setting things up properly is gonna be critical, the titling of the assets, gifting in the right way, handling the real estate in the right way, setting up the trusts, if you're setting up these special kinds of trust in the right way, because I imagine whatever is done is gonna be viewed very carefully by the author, by the individuals who are watching over the Medicaid plans and if it's not done the right way, then you're running the risk of them saying, no, this was not set up properly so you're not gonna qualify, it's gonna be a delay or a problem. Is that a?

    - Yes, that is true and probably fill the foundation for proper preparation and we haven't mentioned this up to now, is a power of attorney. A power of attorney is sort of the setup document if you will, it's a document that allows somebody to designate somebody else to engage in these financial actions if and when they become necessary. If you wait and don't have a power of attorney until you need to go into a nursing home and you may be cognitively unable to sign a power of attorney at that point, that's when things get really dicey, that's when the options become really limited but by having a power of attorney that designates somebody to make financial decisions, if and when those decisions need to be made, is probably the foundation to all of this. That is sort of like step one in this whole process, to make sure that there is somebody positioned to move assets around if needed, if the person needs nursing home care and if they don't need it, then you may not be, it may not have to go through these steps but at least one has been prepared in case that were to happen.

    - I would imagine though that that power of attorney would need to be written in a certain way to grant these powers, 'cause a lot of cookie cutter powers of attorney may not give the specific powers to the agent that you would need, things like gifting powers, especially gifting in certain styles or ways, so I would imagine that the power of attorney would need to be very well-written and designed around the plan of potentially needing that document later on. Does that make sense?

    - Yes, that is absolutely correct, that the cookie cutter, ones you described and even the Maryland statutory power of attorney in its sort of basic form, do not contain all the things that would be needed to engage in the type of actions that may need to take place. For example, you mentioned gifting, it's generally untypical for an agent to be allowed to give away their principal's funds and that's common sense but in the circumstance in Medicaid, where basically you're medicated sort of, like everything is topsy-turvy as far as logic goes, there is a need to have somebody to engage in gifting and so it's important to have that clause in there. Furthermore, many estate planning type documents, the focus is concerned about taxes and there might be some phrases in there that limit gifting to minimize federal gift taxes and federal estate taxes, which is all well and good but when you're dealing with Medicaid, it's not the tax law that is of issue because you're spending down and you're not in a position really too much to worry about having millions of dollars theoretically, to give away which is what a estate taxes are concerned about but the clauses are still in there, if you have far much less than that, that the documents just have to be worded specifically to deal with the Medicaid type of situation.

    - We've covered a lot, so Morris, thank you so much, again, this was a broad introduction, before I make closing statements, are there any closing statements you would like to make before we wrap up for today's discussion?

    - Sure, so just to summarize, Medicaid is a very technical area as far as how to qualify for the program, it is the program of last resort and so therefore one has to go through a number of processes to become eligible but Medicaid is one of the only games in town as far as paying for long-term care. Now, I'm assuming that individuals in this situation don't have long-term care insurance or have had long-term care insurance that is insufficient to pay for the entire cost of care and that's one reason why you would turn to Medicaid to help you out, most people are in that situation, so with sufficient advanced planning and with the guidance of somebody who has experience in this area, one can navigate the Medicaid system safely.

    - Well Morris, I know how busy you are and so I wanted to thank you for taking time out of your day to share this valuable information and we will be sharing Morris's contact information, his website, email address, phone number at the end of today's program. So on behalf of the bank, Morris thank you so much and for those of you watching today, thank you for joining our discussion series. My name's Phil Fish, I've worked with Sandy Spring Bank's trust division for the past 20 years and my role is really, as a problem solver, helping clients navigate. Sandy Spring Trust manages assets professionally under federal fiduciary standards, we serve in documents as trustee and postal representative and we also provide support to family members who are named. So if you notice, when you logged on to today's discussion, we did not ask you your name, your telephone number, your email, nothing, this is a community program, it's designed to provide information through my interviews with professionals in the areas of law, tax, finance and healthcare and it is available to all members of the community, whether you bank with us or not. So please share information about the discussion series, I also host a seminar series on Sandy Spring Bank's website under the seminar library, we do ask for your name and how you heard about the event if you watch one of the seminars but we will not contact you unless you ask. My contact information is provided at the end, if I can answer any of your questions please let us know, if you bank with Sandy Spring Bank, thank you, we're one of the largest local community-based banks within the greater Washington region and we are independent because of your choice to bank with us and if you don't bank with us, we hope you might consider Sandy Spring Bank as your partner to help you with any of your banking needs. I hope you're safe and on behalf of Sandy Spring Bank, thank you for joining us today.

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