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The Team Approach: Be the Super Hero

My son likes action movies.  Especially ones that depict comic book super heroes.  It seems lately that there’s no shortage of movies adapting comic book icons to the big screen.  This year, one of the biggest such films is the Avengers.  The other night, at his insistence, I bought the DVD and sat down to watch the movie.

I remember the Avengers comic book series well from my own youth and the movie lived up to my fond nostalgic memories.  But this is no movie review.

Like most advisors, as I watched the movie, my thoughts kept running to the case I was consulting on earlier in the day.  Conscientious advisors never stop thinking of the cases they’re working on.  If you’re like me, you’re constantly thinking about the case different angles, wondering if you’ve covered all the bases, and dotted all the i’s and crossed all the t’s.

One of the reasons the people I work with can sleep easier at night is because I’m a firm believer in the team approach to Medicaid Planning.  It’s often the case that we assemble a team with a variety of necessary professionals to achieve a successful Medicaid eligibility plan.  There are often documents such as powers of attorney or trusts that need to be drafted by local counsel.  Most strategies involve the use of Medicaid-compliant annuities (either as part of a Modern Half-a-Loaf strategy or to protect qualified assets) or funeral trusts which are provided by the financial advisor.  A CPA may need to be called in when the case involves taxable accounts or helping with cost-basis information or business valuations.  The care manager is often critical to working with the nursing home while a Medicaid plan is being developed and in shepherding a case through the Medicaid agency.  Everyone on the planning team has a role.

The team approach is a lot like the Avengers.  Everyone comes together with their own area of expertise and together they use their unique talents to get the job done for the client.  Sure, they might not have super powers, but when a team works well to achieve Medicaid Planning objectives for a client amazing things happen.  When a family faces a catastrophic health crisis, they are often caught off guard and look to the Medicaid Planning team to guide them through one of the most difficult times of life and protect their life’s savings.  The end result can save them tens of thousands even hundreds of thousands of dollars and make sure a healthy community spouse doesn’t go broke while caring for the spouse in the nursing home.

To that family, you’re a real life super hero – and with the right team, you can rest assured that every base is covered.

To continue with the Avengers analogy, we’re a lot like S.H.I.E.L.D.:  our team is here to help you build and support your team.  Often we fill in the missing gaps by providing case design support or by connecting Medicaid Planning attorneys with financial advisors and vice-versa and connecting people with critical-need cases to a Medicaid Planning team in their area.  We provide training, education, marketing, and support services to help your team reach its fullest potential. 

A lot of people out there need real help from Medicaid Planners during these critical times.  They need help protecting what they have.  If you’re in a role to help them, it’s time for you to suit up and join the team. 

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Medicare Class Action to Provide Help

                On October 22, 2012, the New York Times reported that the federal government had reached a settlement in a Maine class action case that should have a positive impact for nursing home patients.              

                The lawsuit challenged the practice of a nursing home patient needing to show ongoing proof of the “likelihood of medical or functional improvement” to receive continued Medicare coverage in the nursing home.

                As many Medicaid Planners are keenly aware, Medicare provides coverage for a portion of the bill at the nursing home when for the first 100 days after a hospital stay that lasts three days or longer.  But in many cases, patients with degenerative conditions are deemed ineligible for Medicare coverage during that period if they have been determined to not be likely to have any improvement in their health condition.  Once that determination is made, Medicare stops paying and the patient must privately pay if Medicaid eligibility has not been achieved.

                I will never forget the first time I saw this happen.  I was working with a patient and her family on a Medicaid plan.  Her private insurance covered the difference between the Medicare reimbursement rate, so we estimated we’d have about 3 months to develop and implement the plan.   About 40 days into her first 100 days of care, the physical therapist came by to ask her if she wanted to go to do her daily physical therapy.  She wasn’t quite feeling up to it that day and declined to go.  The next day, the nursing home gave her notice that Medicare was no longer going to pay for the cost of her care.  Private pay would begin immediately; and would you please pay us a $5,500 deposit immediately.

                That notice was almost enough to give the patient a heart attack.              

                The justification for that notice was the longstanding policy that has been used to deny coverage if there’s no likelihood of improvement.  However, neither the Medicare law nor any official Medicare regulations make a Medicare recipient show a likelihood of improvement to qualify for coverage. Some provisions of the Medicare manual and guidelines given to Medicare contractors established more restrictive standard that suggests coverage should be denied or terminated if a patient’s care “reaches a plateau or is not improving or is stable.”

                The lawsuit settlement will put a stop to this.  In the settlement, the Medicare department agrees to rewrite the Medicare manual in order to clarify that Medicare coverage of nursing home patient “does not turn on the presence or absence of an individual’s potential for improvement,” but is solely based on the patient’s ongoing need for skilled care.

                The settlement is also good news for Medicaid Planners.  If the new rules are properly applied, it should guarantee that Medicare will provide coverage for the full 100 days. This 100-day coverage period is often critical to providing a Medicaid Planner with the time needed to thoughtfully lay out an asset protection plan and implement the plan.              

                While the health crisis often happens instantaneously, the process needed to rearrange a patient’s finances in order to achieve eligibility will often take weeks or even months depending on how complex the case is.  That timetable can often be unsettled by an early determination that Medicare will not provide its full 100 days of coverage – sometimes causing the patient to have to take drastic steps in order to avoid full payment for the remainder of the month when Medicare coverage is prematurely terminated.              

                Now with the new clarification that will come about as a result of the class action suit, most of the typical Medicaid Planning clients will now be able to rest assured that Medicare will provide its coverage for 100 days and the Medicaid Planner will be able to more ably rely on that coverage to gauge how long it will take to implement a Medicaid Plan. 

                Anytime the government does something proactive that helps keep the rug from being pulled out from underneath your client, that’s considered a success.

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Medicare v. Medicaid: Why the Confusion?

Because the terms “Medicaid” and “Medicare” sound similar to the uninitiated, the two programs are often confused or are considered to be different names for the same program. Even when the programs are differentiated by the scope of their coverage and purposes, the overlap often causes confusion ─ especially concerning nursing homes ─ causing some to mistakenly believe Medicare will pay for the cost of any impending nursing home stay. The fact that Medicare does, sometimes, pick up some of the costs early in a nursing home stay only serves to perpetuate the myth and add to the confusion.

Medicare is a primary health insurance program for people age 65 and older. There is also automatic Medicare eligibility for certain classes of disabled persons who are deemed eligible for Social Security Disability (SSD).

Medicare is not designed to cover the full cost of all necessary medical expenses but is considered to be the primary insurer determining the scope of its coverage and payment before any secondary insurer is required to pay.

The difference between what Medicare pays and the full cost is known unofficially as “Medigap.” If the retiree retains an employer-sponsored retirement plan, it will become a secondary insurer to fill the gap, less any plan copays; however, if a retiree does not have a secondary insurer, the retiree can pursue a specific Medigap policy to cover the difference. The poorest, unable to afford such policies, often apply for Medicaid to serve as their backstop. Medicare recipients who also qualify for Medicaid are referred to as “dual eligibles.”

In 2003, Congress enacted the Medicare Prescription Drug program[1] to provide an automatic private insurance program heavily subsidized by the government to provide help for seniors with the high cost of prescription drugs, which up to that point had not been previously covered by Medicare. For dual eligibles, Medicaid has served as a funding source for prescription drugs not covered by Medicare. After the implementation of Medicare Part D, Medicare shifted the responsibility of payment for drugs prescribed to dual eligibles from Medicaid to Medicare; but it did not have any impact on the Medicaid copayment nor did it require the dual eligible patients to pay the Part D insurance premium for coverage.

Aside from Medicare’s coverage of prescription drugs of nursing home patients outlined above, Medicare also pays for a portion of some stays in a nursing home that are essentially considered rehabilitative extensions of previous hospital visits. Despite the high cost of nursing home stays, they are a relative bargain compared to the even higher cost of a hospital stay. Through a strict set of guidelines, Medicare acknowledges that recovery in a nursing home is more cost effective than in a hospital. Medicare requires that, before coverage can commence for nursing home stay, a patient must have been hospitalized for three consecutive days (excluding date of discharge) and be subsequently admitted to the nursing home within 30 days from the discharge date.

Custodial care is not a sufficient need for Medicare coverage. The patient must require “skilled care”[2] which must be administered by a doctor or nurse that is considered medically necessary in order to avoid deterioration of a patient’s health.

Merely being unable to perform activities of daily living, the usual threshold for the payment of nursing home expenses by a long-term care insurance policy, is not enough to qualify for Medicare coverage. Under the theory that Medicare is only to be funding a likelihood of improvement in the recovery process from the illness that precipitated hospitalization, it will only pay for the nursing home stay when skilled care services such as physical therapy, wound dressing, or catheter insertion is required.[3]

Custodial care, even though provided by a skilled professional, is not sufficient unless they are also providing the skilled care services necessary before coverage is authorized. There must be a doctor’s order for these services. Doctors, for the most part, know and understand these rules and are usually the patient’s strongest ally in making sure the regulations are followed (i.e., keeping the patient the requisite three consecutive days in the hospital before discharge, writing an order for rehabilitative skilled care, and referring a patient to a skilled nursing facility) so Medicare will pick up the tab for early expenses of a nursing home stay. But even then, Medicare has its limits.

Medicare only covers up to 100 days of skilled care in a nursing home stemming from a particular spell of illness ─ a term defined by statute.[4]

Even then, Medicare is not a full ride for the whole 100 days. Medicare picks up the full cost for the first 20 days, and the patient is responsible for the first $144.50 per day (in 2012) as co-insurance during the remaining 80 days.

 “Adapted from the “Medicaid Planning Guidebook”  To order a copy click here.

[1] Medicare Prescription Drug, Improvement, and Modernization Act, Pub. L. 108-173, 117 Stat. 2071, Dec. 8, 2003, as codified in 42 U.S.C. §1395w-107, et. seq.

[2] 42 C.F.R. §409.31(b) and §409.33(a).

[3] 42 C.F.R. §409.33(b).

[4] 42 U.S.C. §1395d(a)(2)(A).

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How Not To Lose Clients to a Health Crisis


                  Let me know if this sounds familiar. You have a long-time client who you’ve worked with for several years.  Maybe you’ve help them invest their money for retirement or you were instrumental in rolling over their 401K. Sure, they should have bought long-term care insurance … but they’re like most people and just didn’t.


                  Then you get the call one day.  The husband’s had a stroke and is in a nursing home. The family knows that Medicare’s 100 days of coverage will run out soon and they have way too many assets to qualify for Medicaid.  In fact, that’s why you get the call.  The family is trying to figure out how much money they have available to “spend down” on nursing home costs.


                  Do you understand the difference between Medicare and Medicaid? If not, click here to learn more.


                  Do you know how the Medicaid spend down works?


                  Do you know that in many cases, assets can be shifted to the healthy spouse or converted into an income to the healthy spouse and allow the married spouse to re-accumulate the income while still allowing the spouse in the nursing home to remain fully eligible for Medicaid coverage.


                  Most of the time, the only call the financial advisor receives is when the client needs to move all their money into a Medicaid-compliant annuity to avoid the spend down. You watch your client and their money you have under management fly straight out the window through no apparent fault of your own.


                  In the process you’ve missed an amazing opportunity to be a more thorough advisor to the clients and help guide them through the Medicaid eligibility process. In a majority of Medicaid planning cases, even when an attorney is involved in the planning process, there is a need for a financial advisor to help with eligibility by providing protected funeral trusts (click here to learn more) and Medicaid-compliant annuities (click here to learn more).  Many times, assets under management can also retain their original form by being transferred into a spousal annuity trust that works similar to a Medicaid-compliant annuity.


                  Medicaid Planning is Growing Every Year


                  If this scenario doesn’t already sound familiar, it soon will be. The frequency of Medicaid Planning cases continues to grow. Eighty million Americans will be over 65 by 2040 and over half of them are expected to require some kind of long-term care.[1] That’s not just going to affect your clients; it will affect your future clients, the people who you want to be your clients, and your own extended friends and family members. With the cost of an average nursing home bed being over $6,000 per month – just slightly less expensive than booking a suite at the Ritz – you can’t afford to miss the opportunities to help the people you come in contact with.


                  For many advisors that want to learn the subject matter intimately, we offer the Medicaid Planning Course. This in-depth course is the only one of its kind and teaches insurance agents, financial advisors, attorneys, care managers, nursing home administrators, funeral home directors, and certified public accountants the nitty-gritty of Medicaid eligibility, how to pre-plan to better position a client for eventual crisis, how to manage the crisis situation for the client from the perspective of their discipline, how a Medicaid plan is put together and implemented and how to file and shepherd an application. 


                  Federal regulations allow the patient to choose anyone – even a non-lawyer – to help with filing the Medicaid application.[2]  Heaven forbid you don’t understand the impact of your advice on your client’s eventual Medicaid eligibility; many advisors are being sued because their advice was inconsistent with solid Medicaid Planning principles and we want to help you avoid that.


                  Some advisors don’t want to get that involved, but at the same time they don’t want to hand the client over to complete strangers to solve their Medicaid Planning needs.  For many advisors in that circumstance, we provide numerous resources to advisors to help you help your clients.


                  This includes Medicaid Planning support services, assistance with designing a workable Medicaid Plan – including the latest tools available to help protect assets, consulting on complex cases, Medicaid-compliant financial services, annuity design support, and mentoring assistance.  To learn more about these services, click on the following link:


                  For those looking to expand their practices to include more Medicaid Planning opportunities, we provide assistance with marketing ( We encourage planning on a team-based approach and work to supplement an advisor’s planning team with our in-house team and our network of local planners with a variety of disciplines to make sure that your clients get all the bases covered. Our goal is to provide value to you by helping you make sure that both opportunity and your clients don’t slip through your fingers when a health crisis occurs.



[1] Centers for Disease Control and Prevention, National Center for Health Statistics. Health, United States, 2005: With chartbook on trends in the health of Americans. Hyattsville, MD: Centers for Disease Control and Preventio 2005.

[2] 42 C.F.R. sec. 435.907 and 435.908.  Note, however, that Texas state law – contrary to Federal law – prohibits a person who is not licensed to practice law in Texas from charging a fee for representing or aiding an applicant or recipient in procuring assistance from their state Medicaid department. TEX HR. CODE ANN. § 12.001