On January 25, 2015, the New York Times published an article, To Collect Debts, Nursing Homes are Seizing Control Over Patients. The article focused on the trend of some nursing homes to use the guardianship process (also known as a conservatorship in some states) as a means of debt collection for seniors who owe money to the nursing homes.
A guardianship or conservatorship is a legal process whereby a person is found by the court to be incapable of managing his or her affairs and a person or entity is appointed by the court to manage their finances and to make personal decisions such as where to reside and the type of medical treatment to receive.
The article told the story of Dino Palermo, age 82, having his 90-year-old wife, Lillian, served with a guardianship petition in New York after he complained about the care being provided to his wife and disputed the nursing home bill. Prior to Lillian being diagnosed with dementia in 2010, she executed a power of attorney and health care proxy (also known as an advance health care directive) naming Dino as her agent to handle her financial and medical affairs. When Dino complained, the nursing home filed for a guardianship (which would have given them access to Lillian’s finances and gotten their bill paid). Fortunately for Mr. Palermo, he has been able to resolve the problems and the guardianship petition has been dismissed. But according to the New York Times article, hundreds of other seniors in New York have been the subject of guardianship petitions brought by nursing homes and hospitals. Not all of these petitions were brought because the health care institution was owed money, but Brett D. Nussbaum, an attorney who represents nursing homes and who was quoted in the New York Times article, estimates he has filed over 5,000 petitions for guardianship in his many years of practice. He stated, “[w]hen you have families that do not cooperate and an incapacitated person, guardianship is a legitimate means to get the nursing home paid.”
Many seniors believe that the cost of a skilled nursing home will be paid for by Medicare. Unfortunately, the sad truth is that in most cases it is not. When Medicare does pay, the maximum coverage period is one hundred days and there is a substantial daily co-pay after the first twenty days in the nursing home. The cost of an independent living center or an assisted living facility is not covered at all by Medicare.
The cost of skilled nursing care can be paid for by Long-Term Care Medicaid. Some states have various waiver programs that may also cover assisted living or in-home care if certain health criteria are met. Veterans who served during a time of war who are receiving caregiving services at home, in an assisted living facility, or in a nursing home may be eligible for a benefit known as “Aid and Attendance” or “Enhanced Pension.” However, all these programs are needs-based, which means the senior’s assets and income (and sometimes that of their spouse) are considered in determining whether or not the senior is eligible to receive the benefits.
Many seniors are concerned about protecting themselves and their spouse from the high cost of long-term care. Many also have a desire to leave as much as possible to their children or grandchildren, a friend or other relative, or to a worthy charity. There are many alternatives to planning for long-term care, including self-funding (saving substantial assets) and the purchase of a long-term care insurance policy. Another alternative is for the senior to meet with a knowledgeable elder law attorney and learn how they can reposition their assets and/or income in order to qualify for Long-Term Care Medicaid or Veterans Aid and Attendance benefits. However, this type of planning MUST be done in advance. The seniors are much more limited if they already have had a stroke or fallen and broken a hip than if they had planned in advance. It is not much different than trying to buy flood or earthquake insurance after the natural catastrophe already has struck.
In addition, the planning needs to be done before the senior loses capacity due to dementia or Alzheimer’s disease. After the senior has lost capacity he or she is incapable of executing the documents necessary to put the planning in place and again, the planning options are much more limited as a result. If a guardianship or conservatorship needs to be instituted because no estate planning documents are in place, planning options for long-term care will be even further reduced. For those limited options still available, many judges are reluctant to approve such planning, as evidenced by the story below.
An Attorney was attempting to assist a wife whose husband was in a nursing home. The husband had many ailments and was on a breathing machine at a cost of about $15,000 per month. The husband did not have the mental capacity to engage in any planning and he and his wife did not have any estate planning documents in place. The attorney was able to get the husband approved for Long-Term Care Medicaid coverage, but the share of cost for the nursing home was still thousands of dollars per month. The attorney established a conservatorship for the husband and petitioned the judge to engage in planning for the husband that would allow his wife to keep the couple’s monthly income. After many hearings before the judge, the attorney convinced the judge to approve the planning and an order was prepared for the judge to sign. Unfortunately, the client died before the judge signed the order and the judge refused to sign it after the client’s death. This cost the family over $25,000 in nursing home share of cost that otherwise could have been preserved.
Traditional estate planning involving a Will, power of attorney, advance health care directive and perhaps a revocable trust is vitally important to assure management of assets during life, avoid probate, potentially provide some degree of asset protection for heirs and assure that the estate is distributed as desired. Of equal importance, if not greater importance, is planning for long-term care. Statistics show that fifty percent of seniors will spend some time in a nursing home during their lifetimes. Long-term care planning is in many ways more complicated than traditional estate planning and it generally requires that the plan be put in place long before the need arises. For that reason, competent advice should be sought, sooner rather than later.
Our office is familiar with the various planning options available for planning for long-term care needs. This type of planning is always in flux, so you must deal with an attorney who keeps up with all the changes. For example, The Veterans Administration has just introduced proposed regulations that will make planning to qualify for Veterans Aid and Attendance benefits much more difficult. The fact that the laws are changing and that advance planning is needed requires your clients to act as soon as possible. As a member of the American Academy of Estate Planning Attorneys, our firm is kept up-to-date with information about recent developments and new planning strategies for long-term care. You can get more information about scheduling a complimentary estate planning or elder law appointment and the services offered by our firm by calling our office.