Janna Dutton & Associates, P.C.One N. LaSalle Street, Suite 1700

Chicago, IL 60602

(T) 312-899-0950(F) 312-899-0959

www.duttonelderlaw.com

The cost of long term care - meaning either in home care or nursing home care for individuals requiring assistance with activities of daily living- is largely an uninsured health care cost for most individuals. Planning for possible exposure to these costs is necessary for effective retirement planning.

Medicare Coverage of Long Term Care

1.Covers 100 days of skilled nursing care provided in a Medicare certified nursing facility following a hospitalization per spell of illness. Medicare pays the full cost of the first 20 days. There is a coinsurance payment of $133.50 per day for days 21 through 100 which most Medicare supplemental policies cover.

2.Medicare provides home care to those individuals needing intermittent skilled care, usually post hospitalization only, although long term part time skilled home care services are covered. Skilled care does not include custodial care, which is the type of long term care most individuals impaired by dementia require

Long Term Care InsuranceLong Term Care Insurance is the only insurance which pays for ongoing nursing home, assisted living, or custodial home care.

Illinois Medical Assistance The Medicaid program in Illinois is a needs based

program and covers custodial long term care expenses for the aged and disabled - covers nursing home, some assisted living (Supportive Living Facilities) and some home care – Community Care Program, In Home Services.

$2000 Asset Disregard Homestead Property Personal Effects and Household goods Automobile worth $4500 or less (unless needed for

Medical Transportation, modified, or for employment) Burial Plot and Tangible Burial Merchandise Exempt Prepaid Burial Arrangements

Revocable Burial Trust - $1500 Irrevocable Burial Trust - $5,210 Life Insurance Irrevocably Assigned to Funeral Home

Illinois is an income “spend down” State: if an applicant’s countable income is $1 less than the private pay cost of care, the applicant is income eligible.

Countable income is the income left after certain deductions:◦ Personal Needs Allowance - $30;◦Amounts need for Health Insurance premiums;◦Community Spouse Maintenance Needs Allowance;◦Amounts needs for medically necessary items and services not

covered by Medicaid.

Income of community spouse does not affect eligibility of nursing home spouse

If community spouse’s monthly income >$2,739:◦ Spousal contribution assessed by State◦ Paid directly to State (not nursing home)

The federal Deficit Reduction Act of 2005, Pub. L. No. 109-171 (DRA), signed into law by President Bush effective February 8, 2006, made substantial, and for the most part punitive, changes to the eligibility rules for long-term care coverage. Although the State of Illinois was required to implement the DRA in 2006, it has not done so. However, it is likely (unless DRA is amended by Congress) that Illinois will be implementing the DRA in the future.

Present Illinois Rule – look back period 36 months from month of application for Medicaid, except 60 months for transfers to irrevocable trusts or from revocable trusts

If nonallowable transfer occurs during the look back period, a penalty period of ineligibility is applied calculated by dividing the total transfers made in each month by the private pay cost of the nursing home, supportive living facility, CCP cost.

Total gift/private pay cost of nursing home◦Gift of $50,000 in 1/09◦ Private pay cost of $6000 ($200/day times 30);

$50,000/$6000 = 8.33 (8 months)

Penalty period beginning1/09 through 8/09

Medicaid applicants are allowed to transfer their homestead property to certain persons:◦Community Spouse◦ Live -in Caregiver child (2 years)◦ Sibling with an equity interest who has lived in home for at

least 1 year◦Disabled or minor child

There are certain allowable transfers that will not affect eligibility for Medicaid:◦ Transfer to or for the benefit of a adult disabled child (SSA

definitions of disabled)◦ Transfers to a trust for the benefit of a disabled person◦ Transfers made exclusively for reasons other than to become

eligible for Medicaid◦ Transfers for fair market value◦Where the imposition of a penalty period will cause a hardship

IL Community Spouse (CS) may refuse to disclose her assets◦Will not affect nursing home spouse’s (NS) eligibility◦BUT CS not eligible for Community Spouse Asset Allowance◦AND Transfers from NS to CS during look back period will

cause penalty period

The State of Illinois allows the Community Spouse of a Medicaid nursing home resident to receive a portion of the income of the nursing home resident, which is the Community Spouse Maintenance Needs Allowance (CSMNA). The CSMNA is calculated by subtracting the nursing home spouse’s income from the standard, which in 2009 is $2739. The State never directly subsidizes a CS.

OBRA Trusts allow Medicaid recipients to set aside their nonexempt funds in an irrevocable trust which can be used for their benefit and remain eligible for Medicaid◦Medicaid recipient must be disabled◦ Trust must be Irrevocable and for the exclusive benefit of

disabled Medicaid recipient◦ Trust must contain a “pay back” provision to the State at the

death of the beneficiary

Individual OBRA Trusts◦Available to disabled persons under the age of 65Pooled OBRA Trust Subaccounts Presently available to disabled persons of any age

Must be managed by a non for profit organizationIllinois Pooled Trusts

Illinois Disability Association Pooled Trust (contact Howard Berk at 312 332 4622)

Options For Living Pooled OBRA Pay Back Trust (contact Jeffrey Schmidt at 630-443-2011) Life Plan, Inc. Pooled Trust (630 620 2222).

Pooled OBRA Trust SubaccountsState may start penalizing transfers by persons

over the age of 65 to Pooled OBRA Subaccounts Spouse Refusal to Disclose Assets

State may discontinue practice of allowing community spouses to refuse to disclose assetsDeficit Reduction Act of 2005

State may implement the DRA: 60 month look back starting the month of eligibility for

Medicaid coverage of nursing home care.

Illinois Program Manual Detailed policy and procedure relating to the

Medicaid program is contained in the IDHS “Combined Policy Manual (PM) and Worker’s Action Guide(WAG)”. This manual is a necessity for anyone processing Medicaid applications and may be accessed online at http://163.191.134.21/pmwag/intranet.htmlhttp://www.dhs.state.il.us/ (Illinois Department of Human Services web site - search for Cash, Food Stamp and Medicaid Manual).

www.duttonelderlaw.com A detailed explanation of Medicaid coverage of long term

care in Illinois can be found on the website of Janna Dutton & Associates. It contains citations to the IDHS policy manual which will allow you to find the policy sections relevant to your issue which is otherwise a time-consuming search. You can find this material by clicking onto the “Speaking Engagements” Menu Option, then clicking onto the “Learn More…” hyperlink and finally downloading the “Medicaid Book Chapter” in the blue box. You can also use the following direct link:

www.duttonelderlaw.com/documents/2008_Medicaid_Chap_Draft.pdf