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New Year’s Resolution: Grow Your Business in 2014 with Medicaid Planning

Advisors find it very helpful to use the first part of the year to envision where they want to grow with their practice in the year to come.  We set goals; we strive for a bigger next year than we had last year.  I have personally always found it helpful to do this.

Anthony Robins once said that “setting goals is the first step in turning the invisible into the visible.”

Some even call it making “New Year’s Resolutions” like people do when they vow to go to the gym more.  Sure some will hit the treadmill for a while, but we already know what happens to most of those people!

It is my firm belief that every advisor who claims to be a legal, financial or tax advisor that gives advice to seniors needs to have at least a working knowledge of long-term care Medicaid.  Ignorance of the long-term care Medicaid rues is not a defense to a malpractice claim.

MAKE A RESOLUTION: For 2014, I challenge you to add long-term care Medicaid Planning to your advisor toolkit.  You will find it beneficial in a number of ways and here’s just a few:

  1. Nearly ten thousand people turn 65every day in America and a growing number will need long-term care.
  2. The Medicaid spend-down has outpaced taxes, market risk and probate as the single #1 largest risk to a senior’s retirement assets.
  3. Most advisors give the wrong advice about the Medicaid spend down and the asset transfer penalties because they just don’t understand.
  4. The earlier a senior can plan for long-term care the more options they have to preserve assets.
  5. If you’re not ready to help your clients with crisis Medicaid planning, someone else will gladly take them from you!
  6. Medicaid Planning does not mean guaranteeing a person has to go into a nursing home.  Home care and assisted living have become a greater option and integrating Medicaid planning with the VA Aid & Attendance benefit can be a double bonus to your frail clients.

When we set a New Year’s Resolution, we don’t always get a lot help keeping it.  A lot of people can tell you that you need to lose weight, but few will meet you at the gym in the morning and help you work off the pounds.

So my challenge doesn’t go without help and assistance.  We provide the most compressive Medicaid Planning support in the country.

In 2014 I encourage you to take advantage of the following Medicaid Planning tools to help you get ahead in the New Year:

Practice Mentoring: Are you looking to add Medicaid Planning but you don’t know where to begin?  Do you have a Medicaid Planning case but you’re not 100% sure what to do with it?  We have the solution.  Through my mentoring program, I work with local advisors of all types to help them develop their Medicaid Planning business, including help with case development and marketing

Case Design and Support: Do you have a Medicaid Planning case that needs the help of an experienced advisor to design the overall strategy?  We can put together comprehensive strategies and help you walk your clients through what needs to be done.  We provide critical support for new attorneys and financial advisors as they grow into this area of practice as well as provide expert help to seasoned Medicaid Planners.

Learn Medicaid Planning: People have different learning styles.  If you’re the type that likes to hear something explained, then my Medicaid Planning course is right for you.  If you’re the type who likes to read and digest a topic, then my Medicaid Planning Guidebook will give you page after page of explanation of the inner working of Medicaid and solid practice techniques.

Medicaid Compliant Annuity Planning:Medicaid Compliant Annuity planning is alive and well in2014. But unlike typical annuities, Medicaid Compliant Annuities are a precision instrument that needs to be used delicately. One mistake and the annuity could cause your client a transfer penalty.  You can’t afford to make mistakes on your Medicaid Compliant Annuities. We can help support all of your Medicaid Compliant Annuity needs.

Funeral Trust Planning: Did you know that most life insurance has to be cashed in when a person goes into a nursing home?  Did you know that in most states you can put up to $15,000 in a funeral trust funded by a life insurance policy and it’s exempt from the Medicaid Spend Down? Did you know that there’s a company that sells the trust and the policy as a package deal? These are things our successful advisors know and use on a regular basis … and you can, too.

Becoming a Certified Medicaid Planner™:  One of my single proudest achievements has been the work that I’ve done over the past couple of years to help develop and elevate the CMP™ designation as a world class certification program. A CMP™ stands out in the field as someone committed to knowing the subject matter and committed to the highest professional ethics.

So in 2014 make your New Year’s resolution to add Medicaid Planning as part of your practice and let us help you stick to it!

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2014 Spousal Impoverishment Figures Released

The Centers for Medicare and Medicaid Services (CMS) has released the new annual spousal impoverishment figures for 2014. The full numbers are contained in the 2014 Medicaid Spousal Impoverishment Desk Reference, which you can download for FREE by clicking on the following link: https://medicaidplanning.org/2014-medicaid-numbers/

Here is a quick recap of the new figures and what they mean:

            2014 ASSET LIMITS

The New minimum Community Spousal Resource Allowance (CSRA) is $23,448. The new maximum CSRA is $117,240.

Reminder, in the straight deduction states the Max CSRA is the asset cap. Any asset amount below that is sufficient to qualify for long-term care Medicaid. For example, if a couple has $100,000 in countable assets, then in the straight deduction states they do not need to spend down any further. Also, in straight deduction states the minimum CSRA never comes into play.

In the one-half deduction states, the minimum and maximums are both used. Take the couple with the $100,000. In a one-half deduction state, the CSRA calculation would take the total countable resources and divide by 2 to yield the CSRA of $50,000.

Where the maximum is used in a one-half deduction state is when the countable resources exceed twice the maximum. For instance, a couple with $300,000 would only be able to set aside $117,240 for the CSRA. The remaining assets would be exposed to a spend down.

The minimum CSRA is a floor and only factors in when the total amount of assets divided by 2 fall below the minimum. For example, if a couple has $40,000, then the CSRA would not be $20,000 because that’s below the minimum. The CSRA in that case would become the minimum $23,448.

            2014 INCOME LIMITS

The Minimum Monthly Maintenance Needs Allowance (MMMNA) is $1,938.75 (for all states except Alaska and Hawaii). The new maximum amount is $2,931. The Maintenance Needs Allowances are set mid-year and these numbers remain in effect until July 1, 2014. This figure is used to determine how much of the patient’s income a community spouse can keep.

The new Community Spouse Monthly Housing Allowance is $581.63 (for all states except Alaska and Hawaii). This number also changes mid-year and remains in effect until July 1, 2014.

            2014 HOME EQUITY LIMITS

The new minimum Home Equity Limit is $543,000. In the handful of states that have adopted an upper limit, that amount is $814,000 for 2014. This limit was set before the collapse of the housing market. As we start to see the housing market recover, this equity limit will start to become a serious factor for long-term care patients. NOTE: This limit does not apply if the patient is married.

            ADDITIONAL INFORMATION

If you want more information on how to calculate the CSRA or how to maximize the conversion of excess assets to income you should consider purchasing the Medicaid Planning Guidebook or taking the Medicaid Planning course. We provide a full range of support for advisors of all varieties to assist with their Medicaid Planning cases, including advisor mentoring and case design services. We also offer a full range of Medicaid Compliant Annuities and other valuable planning tools to assist with solving the most difficult of Medicaid Planning issues. You can make 2014 a more profitable year by learning how to help people navigate long-term care Medicaid eligibility and asset protection!

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Understanding the Differences Between Medicare and Medicaid

            It’s amazing how many advisors don’t clearly understand the difference between Medicare and Medicaid.  Maybe you’re one of them or maybe you just think you know the difference. If you get confused sometimes, imagine how your clients must feel.          

            Every advisor dealing with retirees should have a good understanding of the difference between the two if for no other reason than to be able to properly guide your clients.

            For more information on Medicaid planning, our mentoring support center, and why this area of consulting is our industry’s biggest area of growth, go to www.medicaidplanning.org.

            Medicare and Medicaid both sound alike and both are government programs that provide health services to the elderly. Both programs also pay for some portion of a nursing home stay, but most people can’t tell you which one pays for what portion. 

            Here are the basics every advisor should know about Medicare:

  • Medicare is an automatic primary health insurance for seniors age 65 and over.
  • Medicare also provides primary health insurance for some people under age 65 who become automatically eligible because of their disability.
  • Medicare does NOT pay all of a covered person’s medical expenses. The gap between the cost of services and the coverage is known as the Medigap and, as many of you already know, a private Medigap insurance plan helps cover the difference.
  • Medicare now has a prescription drug coverage plan which is known as Part D with a separate premium, supported by the government and separate co-pays.

            When it comes to a nursing home, most people think Medicare covers long-term care. They get a rude awakening when they learn that the most Medicare covers is 100 days in a skilled nursing facility.  And even then, it’s not a full 100 days.

            Medicare pays full price for the first 20 days. For the remaining 80 days, the patient has to pay the first $144.50 (2012 amount; figure adjusted annually). To even qualify for that, the patient had to have spent at least three days in the hospital first and transfer to the nursing home within a limited period of time after discharge from the hospital.

            In short, Medicare is not a solution to nursing home expenses like most seniors think it will be.

            Medicaid, on the other hand, is the biggest payer of nursing home expenses.  But unlike Medicare, you don’t automatically qualify for coverage.

            Why no automatic coverage? Because the laws state that in order to qualify, patients must

dramatically spend down assets in order to qualify for coverage. For individuals the amount of “countable” assets they can own and still qualify is approximately $2,000 (which sounds crazy to most people).           

            Countable assets include IRAs, stocks, mutual funds, bonds, CDs, etc.  These assets must be repositioned using proper Medicaid planning techniques (click here to learn more) or spent on nursing home care before Medicaid will pay for expenses. And if you think clients can just give their assets away and immediately quality for aid, that’s not going to happen. Improper gifting coupled with an ill-timed Medicaid application can cause a waiting period of in excess of five years before being able to qualify for aid.          

            And any assets they let the patient keep, the state can put a lien on them and take them when the patient (or the patient’s spouse) dies through estate recovery.          

            Learn Medicaid planning and have a support team

             There are 7,000 people turning 65 every day and with people living longer than ever, the amount of people who will need Medicaid planning to preserve assets is greater than ever.           

            Because few advisors know this important subject matter and because of the client need, we created www.medicaidplanning.org. It is the only place of its kind where advisors can both learn Medicaid planning and have a support team that is second to none when it comes to making sure their clients receive the best advice.  

            If you are looking for an area to grow your business and earn significant money in the process, you need to learn Medicaid planning.

            For hard core education on Medicaid planning, you can read my book The Medicaid Planning Guidebook (click here to learn more) or take the Medicaid Planner Course.

            I will be starting a webinar series where I will be teaching the Medicaid Planning course in one-hour modules over the next few months. If you are interested in signing up for this webinar series, please e-mail [email protected].  

            If you are interested in mentoring and case design support, please click here to learn more about our unique platforms.

            Finally, if your primary goal is simply to sell Medicaid-compliant annuities and life insurance in Funeral Trusts, we can also help you do that in a compliant manner.

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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: www.medicaidplanning.org/mentoring-program

 

                  For those looking to expand their practices to include more Medicaid Planning opportunities, we provide assistance with marketing (www.medicaidplanning.org/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