ELDER & PROBATE LAW

EXPLANATION OF MEDICARE INSURANCE

1. Medicare Part A
   1. Generally
      Medicare Part A pays for inpatient hospital services and skilled nursing facility services under certain conditions. The inpatient hospital deductible and coinsurance amount are portions of the costs of covered inpatient hospital or skilled nursing facility services that Medicare Part A does not pay, and for which the hospital may charge the beneficiary or someone else on the beneficiary's behalf.
   2. Deductible
      Medicare Part A pays for inpatient hospital services for the first 60 days (full benefit days) in a spell of illness, except for a deductible, which is the beneficiary's responsibility. Although the beneficiary may be hospitalized several times during a benefit period, the deductible is charged only once during the benefit period. If the total hospital charge is less than the deductible amount applicable for the calendar year in which the services were furnished, the amount of the charge is the deductible for the year. The specific deductible amounts for each calendar year are published in the Federal Register no later than October 1 of the preceding year.
   3. Coinsurance
      Inpatient hospital coinsurance is the amount chargeable to a Medicare Part A beneficiary for each day after the first 60 days of inpatient hospital care in a benefit period. From the 61 st to the 90 th day of inpatient hospital services in a benefit period, referred to as coinsurance days, Medicare Part A pays for all covered inpatient hospital services, except for a daily coinsurance amount which is the beneficiary's responsibility. The coinsurance amount for the coinsurance days is one-quarter of the applicable deductible. For inpatient hospital services rendered during the 60 lifetime reserve days, that is, the 91 st to 150 th days of hospital care in a benefit period, there is also a daily coinsurance amount, which is equal to one-half of the applicable deductible, that is the beneficiary's responsibility.
      The specific coinsurance amounts for each calendar year are published in the Federal Register no later than October 1 of the preceding year.
   4. If the actual charge to the beneficiary for the 61 st through the 90 th day of inpatient hospital services is less than the coinsurance amount applicable for the calendar year in which the services are furnished, the actual charge per day constitutes the daily coinsurance amount.
2. SKILLED NURSING CARE
   1. Introduction
      In recognition of the need for continued treatment after hospitalization and the need to encourage the appropriate use of more economical alternatives to inpatient hospital care, Medicare Part A provides for entitlement of Medicare beneficiaries to have payment made on their behalf for coverage of extended care services furnished by a skilled nursing facility. According to the policy, payment may be made on behalf of a beneficiary under Part B for medical and other health services in an amount which is 80 percent of the reasonable cost of the services, subject to the Part B deductible.
   2. Coinsurance and deductibles
      The amount payable by Medicare Part A on behalf of a Medicare beneficiary for post-hospital extended care services furnished to the beneficiary during any spell of illness, is reduced by a coinsurance amount equal to one-eighth of the inpatient hospital deductible. However, according to HCFA policy, if the actual charge by a skilled nursing facility to the beneficiary is less than the applicable coinsurance payment, the coinsurance is the actual charge per day. The coinsurance amount is chargeable for each day from the 21 st day through the 100 th day in which extended care services were received in a benefit period. The inpatient hospital deductible for a year is applicable to the coinsurance amounts for post-hospital extended care services furnished in that year.
   3. Limits on beneficiary liability
      As a condition of participation in Medicare, a skilled nursing facility must agree, in accordance with 42 USCS § 1395cc, not to charge a Medicare beneficiary for any item or service covered by Medicare, other than allowable charges, deductibles, and coinsurance amounts, and to return any money, which is incorrectly collected.
3. Medicare Part B
   1. Generally
      Medicare Part B pays for medical provider services other than hospitals, such as doctors.
   2. Amount of benefits
      The amount of benefits payable under the Medicare Part B supplementary medical insurance program for covered items and services varies with the type of item or service furnished to the enrollee and the type of person or entity which furnished the item or service.
      Generally, Medicare Part B pays the lesser of: (1) 80 percent of the reasonable cost of the services; (2) the reasonable cost of the services, minus 20 percent of the customary charges for the services; or (3) the customary charges for the services, minus 20 percent of the customary, insofar as reasonable, charges for the services.
      Special rules govern the amount of benefits payable by Medicare Part B for emergency outpatient hospital services, home health services, durable medical equipment, and ambulatory surgical center facility services.
   3. Deductible and Coinsurance (generally)
      The Medicare Part B supplementary medical insurance program does not pay the full reasonable costs or charges for all services, which are covered under the program. Rather, the Medicare Part B beneficiary is responsible for an annual deductible, and after the annual deductible has been satisfied, for coinsurance amounts for most covered services.
   4. Annual deductible
      Before payment by the Medicare Part B supplementary medical insurance program is made for expenses incurred by the beneficiary for covered services, the beneficiary's incurred expenses for the calendar year are reduced by a Part B annual deductible. The annual deductible is applied to the beneficiary's incurred expenses in the order in which claims for those expenses are processed by the Medicare program.
      Generally, the beneficiary's expenses for covered services are subject to, and count toward meeting, the annual deductible.
   5. To whom Part B benefits paid
      Payment for medical and other health services covered under Part B of Medicare may be made to, or on behalf of, the beneficiary. Medicare Part B benefits owed to a beneficiary may be paid to the beneficiary's legal representative or representative payee. Medicare Part B payments for medical and other health services that are furnished by an eligible provider must be made on behalf of the beneficiary to the respective entity.
   6. Beneficiary's right to assign Part B claim
      A beneficiary who is entitled to direct payment of Medicare Part B benefits may assign the right to receive payment to the physician or supplier that furnished the item or services.
   7. Effect of assignment acceptance on beneficiary's liability
      The acceptance of an assignment of Medicare Part B benefits by a physician or other supplier limits the beneficiary's liability for the services furnished by the physician or supplier, since before payment may be made under the assignment, the assignee must agree to accept Medicare's approved "reasonable charge" for the service as the full charge. A supplier's acceptance of an assignment constitutes an agreement to limit further charges to the beneficiary or other sources to the unmet deductible, plus the 20 percent of the difference between the reasonable charges and the unmet deductible, for which Medicare pays 80 percent.
      An acceptance of an assignment constitutes an agreement not to charge or collect amounts from a beneficiary or other source when Medicare pays 100 percent of the reasonable charge. It also constitutes an agreement not to charge or collect from the beneficiary an overpayment for a service determined to be "not reasonable and necessary," provided the beneficiary was without fault for the overpayment and a carrier determination that the payment was incorrect was made after the third year following the year in which the carrier sent notice to the beneficiary that payment had been approved.
4. LIMITATION OF BENEFICIARY'S LIABILITY WHEN COVERAGE NOT AVAILABLE
   (Overview of Medigap Insurance)
   Medigap insurance is private health insurance designed to supplement Medicare's coverage by filling some of the program's coverage and cost gaps. All Medigap policies together paid only about five or six percent of seniors' health costs. This limited scope occurs because the private coverage tracks Medicare and therefore includes and excludes most of the same services. It supplements Medicare's coverage rather than covering services Medicare does not cover.

KENTUCKY MEDICAID ELIGIBILITY GUIDE FOR NURSING HOME CARE

Eligibility Requirements

1. Income Requirements
   1. If the individual's income is less than the maximum SSI payment they would meet the eligibility requirements. The maximum SSI payment per month in Kentucky for the year 2008 has been calculated as $2,185.00 per month. You are allowed to keep $40.00 per month. In addition, certain items such as medicare health insurance premium and other health insurance premiums are deducted. If the medicaid applicant has no surviving spouse, then the deduction is only $20.00 per month for personal items. If the individual's income still exceeds $2,185.00 per month, a second calculation is needed. The agency case worker contacts the nursing home and determines their normal monthly private pay rate. Let's assume it is $4,000.00 per month. If their income is less than $4,000.00 per month (private pay rate) then the applicant is still medicaid eligible. All income is included in this calculation, including interest income, dividends, etc.
   2. There is also what is called community spouse income allowance. This allowance comes into effect when you have one individual in the nursing home or applying for medicaid and one living in the community (at home). For the year 2008, the at home spouse is allowed to keep $2,610.00 per month in income. The same calculations are used as above but when you get to the bottom line you then, in addition, deduct $2,610.00 for the at home spouse. You are allowed the $40.00 personal needs allowance deduction, in addition to the health insurance (medicare premium deduction and other health insurance premium deduction).

1. Resource Requirements
   1. Maximum resources. A single individual cannot have more than $2,000.00 in assets. If an individual is married and one spouse is either in or going into the nursing home and the other spouse is outside the nursing home, then the spouse outside the nursing can have $104,400.00 in assets in 2008.
   2. Excluded resources
      1. Prepaid funeral expenses up to $10,000.00.
      2. All tangible personal property of any value.
      3. An automobile of any value.
      4. Pension plans (counted as income when received) regardless of value.
      5. Homestead of any value.
2. Look Back
   1. To be eligible for medicaid you should not have any transfers for less than fair market value within the sixty (60) months period from the day you apply for medicaid. In the year 2008, an amount of $4,584.00 per month represents the amount of money that will be deducted per month until the ineligible transfer is reached in value transferred. In other words, if $45,840.00 was gifted one month before you applied for medicaid, then you would have to wait ten (10) more months to be eligible. In addition, trust agreements that are created have a sixty (60) month look back. When an individual commits multiple prohibits transfers during the look back period, the ineligibility period accrues and runs consecutively beginning with the month of the initial transfer. Never apply for medicaid if you have a prohibited transfer during the look back period, unless the amount of transfer has been fully exhausted by the monthly draw down.
3. Permissible Transfers
   1. Certain transfers are permissible and are not considered prohibited transfers. The following transfers of resources are permissible at any time:
      1. Transfers to a spouse
      2. Transfers to a child under twenty-one (21)
      3. Transfers to a blind or disabled child of any age
      4. Transfers to pay for reasonable schooling costs or health care of a family member
4. Medicaid Estate Recovery
   1. The estate recovery claims are against all of the decedent's assets
   2. Estate recovery is automatically waived if the total value of the estate subject to recovery is valued at $10,000.00 or less
   3. Estate recovery is automatically waived if the deceased individual has a surviving spouse. The recovery claim is held in abeyance until the death of the second spouse
   4. Estate recovery is waived if the deceased individual has a surviving child under the age of twenty-one (21) or a disable child of any age

REVERSE MORTGAGES

In recent years the popularity of reverse mortgages has increased. That is due to the aging of the American population.

A reverse mortgage is a special type of loan that enables individuals 62 or older to take advantage of their home’s equity and receive money for the equity. The home must be owned free and clear or have a small balance on the present mortgage which can be paid off with the reverse mortgage.

The owner of the home retains ownership of the home and continues to live in the home. You can take all of the money that you borrow out at one time or you can take proceeds out as you need them. The loan proceeds are not considered income by the IRS and does not affect Social Security and Medicare benefits. In certain cases the monthly advances may affect other eligibility for other programs based on financial need.

Reverse mortgages are usually variable rate loans that are tied to some index such as U.S. Treasuries. The closing costs are similar to any other mortgage loan. The loan never has to be repaid as long as the borrowers are still living in the home. At the death of the last borrower, any remaining equity in the home belongs to the borrower’s estate. The borrower’s estate will never owe more than the value of the home. The estate and heirs have no personal liability for the repayment of the loan since it is secured by the house. The mortgage company can sell the house upon the death of the last borrower to pay for what is owed on the reverse mortgage. The interest payments are taken from the amount that is borrowed and therefore no monthly payments are ever made.

The downside of reverse mortgages is that in all likelihood there may be little or no equity left in the home for the heirs of an estate to inherit. The positives for senior citizens concerning reverse mortgages is that the proceeds from the equity loan can be used for any type of expenses that senior citizens may have in their later years when they have lower income and therefore cannot afford to make certain payments. It is a way to use the equity in your home without having to make monthly payments that must be made on first mortgages, second mortgages, or home equity lines of credit.

Since most people’s homes are their largest investment, the decision to take out a reverse mortgage is a critical and important decision that should be thought through by senior citizens and the consequences of a reverse mortgage must be totally understood before a reverse mortgage is taken out on a senior citizens home.