Saturday, August 27, 2011

Federal Court voids Restrictions on Pooled Trusts

UPDATE: After I posted the article below, the Pennsylvania Department of Public Welfare appealed the decision in Lewis v. Alexander to the United States Third Circuit Court of Appeals. That appellate court entered its decision on June 20, 2012. Here is a link to its opinion.

The Third Circuit Court affirmed the lower court in part and reversed in part. Essentially the Third Circuit agreed that Pennsylvania could not impose its desired limitations on special needs trusts. It upheld the lower court's determination that Section 1414's 50% repayment provision, "special needs" provision, expenditure provision, and age restriction were all preempted by federal law. However, the Third Circuit did conclude that the enforcement provisions of Section 1414 could be used to enforce provisions not otherwise preempted by federal law. 

Pennsylvania then appealed the Third Circuit's decision to the United States Supreme Court which denied certiorari on January 14, 2013, thus leaving the Third Circuit's decision intact.  

Special needs trusts” allow money to be set aside to provide for the special needs of a person who requires or may someday require Medicaid without affecting the beneficiary’s entitlement to government benefits. A pooled trust is a type of special needs trust that has the purpose of providing disabled persons with a financial resource that can be used for a variety of their needs and managed inexpensively by pooling large numbers of accounts.
In 1993 Congress enacted rules governing the effect of trusts on eligibility for Medicaid (Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66). As a general rule, the assets transferred by an individual to a trust are still considered to be available to them if any portion of the trust principal can be paid out to them.  The trust rules were updated in 1999 to clarify and conform SSI and Medicaid trust rules (Foster Care Independence Act (Pub. L. 106-169)).
Congress created several exceptions from normal trust treatment for certain trusts established by disabled individuals.  It exempted these disability trusts from Medicaid's available resource provisions, and from the transfer penalty provisions that apply to Medicaid long term care services (provided that funds placed in a pooled trust established for someone age 65 or older may be subject to a transfer penalty). These exceptions established the statutory basis for what government regulations refer to as “exception trusts.” The law regarding exception trusts is set out in 42 U.S.C. §1396p(d)(4)
The two notable types of exception trust in use in Pennsylvania are:
(1) §1396p(d)(4)(A) Trust. This is often referred to as a (d)(4)(A) trust. It is a trust containing the assets of an individual under age 65 who is disabled and which is established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court.  The State must be paid back all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual.
(2) §1396p(d)(4)(C) Trust  - which is commonly referred to as a pooled trust. It contains the assets of a number of individuals who are disabled. The pooled trust must be established and managed by a non-profit association which must maintain a separate account for each beneficiary of the trust (but, for purposes of investment and management of funds, the trust pools these accounts). To the extent that amounts are remaining in a trust beneficiary’s account at death the balance of the account may be retained by the trust and used to benefit its other beneficiaries. Any remaining amounts that are not retained by the trust must be paid to reimburse the State up to the total amount of medical assistance it paid on behalf of the beneficiary. 
In Act 42 of 2005, Pennsylvania enacted some questionable limitations on the use of pooled trusts. Section 1414 of Act (62 Pa. Stat. Ann. §1414) imposes restrictions based on (1) the disabled individual’s age; (2) the characteristics of the individual’s needs in relation to disability; (3) what expenditures trusts can make to improve the disabled individual’s quality of life under the trust instruments; and (4) what percentage of any funds remaining in their trust accounts after their deaths can be retained by the trust to assist other disabled individuals. The Act also included a “death penalty” provision that allowed for the termination of an entire pooled trust for all beneficiaries if the trustee violated the Act as to any one beneficiary.

Section 1414 (b) of Act 42 reads as follows:
(b)        A special needs trust shall comply with all of the following:
(1)        The beneficiary shall be an individual under the age of sixty-five who is disabled, as that term is defined in Title XVI of the Social Security Act (49 Stat. 620, 42 U.S.C. § 1381 et seq).
(2)        The beneficiary shall have special needs that will not be met without the trust.
(3)        The trust shall provide:
(i)         That all distributions from the trust must be for the sole benefit of the beneficiary.
(ii)        That any expenditure from the trust must have a reasonable relationship to the needs of the beneficiary.
(iii)      That upon the death of the beneficiary, or upon the earlier termination of the trust, the department [the Department of Public Welfare, commonly referred to as DPW] and any other state that provided medical assistance to the beneficiary must be reimbursed from the funds remaining in the trust up to an amount equal to the total medical assistance paid on behalf of the beneficiary before any other claimant is paid: Provided, however, That in the case of an account in a pooled trust, the trust shall provide that no more than fifty percent of the amount remaining in the beneficiary’s pooled trust account may be retained by the trust without any obligation to reimburse the department.
(4)        The department, upon review of the trust, must determine that the trust conforms to the requirements of Title XIX of the Social Security Act (42 U.S.C. § 1396 et seq.), this section, any other State law and any regulations or statements of policy adopted by the department to implement this section.
Two Pennsylvania pooled trusts and related plaintiffs filed suit seeking to enjoin DPW from enforcing the provisions of Section 1414 that restrict Medicaid eligibility and require a minimum 50% state reimbursement from pooled trusts.  After many years of litigation, a federal district court has agreed with the plaintiffs that much of Section 1414 is unenforceable because it is more restrictive than what is permitted under federal Medicaid law.  (Lewis v. Alexander, 2011 U.S. Dist. LEXIS 95109, U.S. District Court Eastern District of PA, Case 2:06-cv-03963-JD Document 73 Filed 08/23/11).
The Lewis Court held that the following provisions of Section 1414 are unenforceable because they are in conflict with and more restrictive than controlling federal law:
·       The Special Needs requirement of Section 1414(b)(2) - which requires that the beneficiary shall have special needs that will not be met without the trust;
·       The Age requirement of Section 1414(b)(1). The Court concluded that disabled persons age 65 and older are permitted to form pooled special needs trust accounts;
·       The Expenditure restrictions in Section 1414(b)(3) which require that all distributions from the trust “must have a reasonable relationship to the needs of the beneficiary.” This means that funds in special needs pooled trusts can be used broadly for purposes beyond the treatment of specific disabilities. (However, the Court did okay the restriction in subsection (b)(3) that requires that expenditures “must be for the sole benefit of the beneficiary” as being consistent with federal law;
·       The Fifty-Percent Pay-Back provision of Section 1414(b)(3)(iii) which provides that a pooled trust can keep only fifty percent of the remainder left in a pooled trust account after the death of a beneficiary without an obligation to reimburse the state for that beneficiary’s Medicaid expenses. The Court held that pooled trusts are permitted to elect to keep the entire amount remaining in a beneficiary’s account at death;
·       In addition, the Court negated Section 1414(c) of Act 42. Section 1414(c) is the “death penalty section” that authorizes the cancellation of an entire pooled trust on the basis of one violation of the provisions of 1414(b).

The Court enjoined DPW from applying or enforcing subsections (b)(1), (b)(2), (b)(3)(ii), (b)(3)(iii), or (c) of 62 Pa. Stat. Ann. § 1414.

It should be noted that only the above cited provisions of Act 42 were held to be preempted by federal law and thus unenforceable.  Other provisions of Section 1414 remain valid. The following provisions of the Act are still enforceable:

  • ·       Subsection (a) which provides that “[a] special needs trust must be approved by a court of competent jurisdiction;”

  • ·       Subsection (b)(3)(i)’s sole benefit requirement;

  • ·       Subsection (b)(4) which empowers DPW to review trusts to ensure that they conform with state and federal law;

  • ·       Subsection (d) requires that liens and claims in favor of the DPW be satisfied before a pooled trust can be funded;

  • ·       Subsection (e) which provides that “[u]pon the death of the beneficiary or upon earlier termination of the trust, the trustee shall notify and request a statement of claim from the [DPW], addressed to the secretary;” and,

  • ·       Subsection (f), which contains definitions of the terms “pooled trust,” “special needs,” and “special needs trust.”

The Court’s decision in Lewis is a significant victory for the concept of Pooled Trusts and for individuals with special needs. Its clarification that disabled persons age 65 and older are permitted to form pooled special needs trust accounts provides elder law attorneys and their clients with a potential additional planning tool.
Planners should be careful to note, however, that dicta in the Lewis case seems to confirm that transfers to a pooled trust established for an individual over age 65 can incur a transfer penalty. This is in accord with CMS policy that funds placed in a pooled trust established for an individual age 65 or older may be subject to a transfer of assets penalty. See CMS State Agency Regional Bulletin No 2008-05 (May 12, 2008).

Here is a link to the Court's opinion: 
Pooled Trusts operating in Pennsylvania include: 
The Achieva Family Trust, 412-995-5000, 
The ARC Community Trust of Pennsylvania, 1004 West 9th Ave., King of Prussia, PA 19406, Phone: 610-265-4788,;

Friday, August 26, 2011

The National Alzheimer’s Project Act

The recent news reports that Alzheimer's has stricken Tennessee woman's basketball coach and legend Pat Summit and singer Glen Campbell brings tears to many hearts.  Bless them both for making their illnesses public.  Maybe this will help Alzheimer's gain the national attention and funding it deserves.

Washington at least nodded its head at Alzheimer's earlier this year. The National Alzheimer’s Project Act was signed into law on January 4, 2011. The Act establishes a National Alzheimer’s Project within the Department of Health and Human Services, to coordinate the country’s approach to research, treatment and caregiving. Its goal is to “accelerate the development of treatments that would prevent, halt or reverse the course of Alzheimer’s” and “improve the early diagnosis of Alzheimer’s disease and coordination of the care and treatment of citizens with Alzheimer’s.” 

While the Act itself does not authorize more money, one of the recommendations of the national plan may be for an increase in research money for Alzheimer’s. The legislation was driven by the rapidly rising number of people with Alzheimer’s — currently about 5.3 million and expected to triple by 2050.  

An advisory council is to draft an annual report on federally financed programs involving research, treatment, nursing homes, and home care, and recommend which to expand or eliminate. A fact sheet about the Act prepared by the Alzheimer’s Association is available at

HHS has named the first 12 members of the advisory council according to The Hill. See the list here. The impressive panel will be joined by 10 members from federal agencies.  

Let's hope Congress follows up with some additional financial support for Alzheimer's research. It would be a wise investment. The cost of care for Alzheimer's victims to Medicare and Medicaid was about $170 billion in 2010.  By 2050, according to Republican Senator Collins of Maine, it will grow to $800 billion a year, more than the current military budget. 

Sunday, August 21, 2011

Pennsylvania Clarifies its Medicaid Policy on Transfers to a Disabled Child

Medicaid law limits the ability of an individual to give away their assets in order to meet the resource level required for Medicaid help in paying for nursing home care or Medicaid funded Home and Community-Based Services. It imposes a period of ineligibilty for benefits if assets have been given away during the preceding five years. 

However, the law that penalizes transfers of assets includes a number of exceptions. One important exception applies to transfers that are made by a parent to his or her disabled child. 42 U.S.C. § 1396p(c)(2)(B)(iii) provides that “An individual shall not be ineligible for medical assistance by reason of [the transfer penalty rules] to the extent that . . . the assets were transferred to, or to a trust . . . established solely for the benefit of, the individual’s child described in subparagraph (A)(ii)(II) [which describes blind and disabled children].” 

Recently, the Pennsylvania Department of Public Welfare (DPW) issued a policy clarification to help clear up any confusion about this exemption among caseworkers at County Assistance Offices.  The DPW Policy Clarification (PMN15789440) was dated May 18, 2011.  It answers four key questions:

1.     Can assets be transferred to an individual's disabled child? 
2.     Is there an age limit for the individual’s disabled child?
3.     If assets are transferred will a penalty period be imposed?
4.     Could the asset transfer affect the eligibility begin date? 

The answers given by DPW’s Division of Health Services are as follows:
1.     Yes, assets (income and resources) may be transferred to an individual’s child, who is disabled per Social Security (SS) standards for the sole benefit of the child.  The disability must be documented.
2.     No, there is no age limit for the individual’s disabled child, including an adult child.
3.     No, a penalty period will not be imposed if the asset is transferred to an individual’s child who is documented as disabled per SS standards. 
4.     Yes, if an individual applying for Medical Assistance (MA) and payment of Long Term Care (LTC) services must reduce resources to be eligible, it could affect the begin date of eligibility, if the assets are transferred to an individual’s disabled child.  I.E. Mr. B is requesting MA LTC effective 2/15/11 and has resources totaling $15,000.  He has a child, who is documented as disabled per SS standards.  On 2/28/11, he transfers $8,000 to his child for the child’s benefit.  Mr. B would be eligible for MA LTC on 3/01/11 if all other conditions of eligibility are met. 

Thursday, August 18, 2011

How to Find the Right Nursing Home

As an elder law attorney for more than 25 years, I have counseled many families whose loved ones were in a nursing home.  Many of these families had devoted a lot of effort to finding the "right" nursing home, but others had made the choice without much if any forethought.   

Finding the right nursing home is a difficult task. How do you choose? After you do choose, how do you evaluate your choice? If you've never done this before, you might want to talk with a medical social worker, a geriatric care planner, an elder law attorney, or other professional who is more experienced with the facilities in the area, and the types of services each offers.

Here are some general tips:

    1. It is unwise to think that the appearance of the facility alone is an indicator of the quality of the care. A facility may spend thousands of dollars to "pretty" up the physical environment, but spend no more on, or even cut back on, staffing in the facility. The quality of the care that a nursing facility provides comes from the people who work there!

    2. Let your senses be your guide! For instance, overall, the smell of the facility should not be unpleasant. The noise level should be comfortable. The hallways, rooms and nurses stations should be organized and relatively clear of clutter. Is it too warm or too cold? Does the staff greet you with a smile? Is there cheerful, respectful, pleasant interaction between the staff, the residents, and administration. Does the nursing home have a "homey" atmosphere or is it cold and business like? Does the food look and taste appetizing? Are the residents wearing appropriate clothing, jewelry, makeup, and are the men clean shaven? Are residents involved in activities and using the common rooms such as the lounge? Observe the facial expressions and body language of the residents. Do they appear relaxed and how do they respond when approached? Visit during different times of day and visit unannounced; however, for your safety as well as the safety of the residents, you should not tour the facility unattended.

    3. Inspection Reports. Although inspection reports are not necessarily the best reflection of the quality of care that a facility provides, you should ask to see the most recent one. The administrator should be more than willing to share it with you or show you where it is posted within the facility. If it is not made available to you, the most recent inspection report is available on the Internet. In Pennsylvania, go to the Department of Health's Nursing care facility locator. Go to and click on the county in which you wish to search.  Then click on "view patient care surveys" for the particular facility.  

    4. Talk with residents and their families. If you know someone in the facility, or a family member, ask them to share with you how they feel about the overall care and about the facility administration. If possible, talk with a few of the residents to get an average view of how they feel about the important things like the hands on care, the food, and the overall atmosphere. If time allows, attend a family counsel meeting where you can talk with a number of family members who meet to support each other. Don't forget to ask your physician frank questions about nursing homes in the area, and which facilities she/he might favor. Note, however, that few private physicians will actually visit their patients if they reside in a nursing facility. 

    5. The staff!! The importance of quality staff can't be overestimated. Spend time talking with some of the nurses and nursing assistants throughout the facility. Do they speak warmly of the residents and their co-workers? Do they smile when approached by a resident? When a call bell rings, do they try to respond quickly? Do the nursing assistants and nurses seem to work well together? Ask how long they have worked there. It's not a good sign if a large percentage of the assistants are new employees. Does the facility have an active volunteer contingent? A strong volunteer program can add much to the overall feeling of community.

    6. The facility tour! Take your time and consider touring the facility at different times. Does the admissions coordinator take time to answer your questions and address your worries and concerns? The following is a list of questions you may want to ask the admissions director or other staff members while touring the facility:

  •         Resident rooms should reflect the individuality of their occupants. What types of things are the residents permitted to bring from home? How much storage is available for the resident's personal belongings?
  •         How quickly are call lights answered? Does the facility have a policy on answering call lights? Are all staff members, including management, required to answer call lights?
  •         Are there rooms that residents and their families can use for private visits?
  •         What is the policy on physical restraints? What alternatives to physical restraints are used to ensure a resident's safety?
  •         What kinds of activities are residents involved in? What kinds of activities are there for residents with dementia? Does the facility have a wheelchair accessible van for community activities?
  •         How many residents are assigned to each nursing assistant? Is there permanent assignment of staff to residents? Does the nursing facility try to accommodate individual schedules and preferences? Is the patient's privacy protected when dressing and bathing?
  •         Are the nursing assistants involved in the care plan meeting? They should attend and contribute ideas as they have the most contact with your family member.
  •         What is the facility policy for missing clothing and other possessions?
  •         What kinds of therapies are provided and who pays for these services?
  •         Who should you talk to when you have a concern or complaint? How are my concerns resolved? Are there family council and resident's council meetings?
  •         What is your daily rate and what is included in that fee? How often do your private pay rates increase? Are there charges for extra care, special diets, and ancillary supplies?
  •         Does the nursing home accept Medicare and Medicaid?
  •         What is the policy on roommates and room changes? What happens if your family member does not get along with his or her roommate?
  •         Does the facility have a policy regarding smoking? Are there designated areas for smokers?
  •         How is the outside environment? Are there places to walk or sit outside? Is there a secured place outside for residents with dementia to enjoy?
  •         Do residents participate in patient care conferences? If the resident is not able to participate, are conferences held at a time that family members can attend. Is adequate time allotted to allow all of your concerns to be addressed?
  •         Does the dietician work with the resident and/or family members regarding food likes and dislikes? Is there a second choice available at meals? Can you have meals with your family member? Are snacks provided? Is there a place to store snacks and food brought from home?
  •         How are outside doctor's appointments handled? Does the facility provided transportation to these appointments?
Choosing a nursing home for a loved one is not an easy process. Spend some time touring different facilities, talking to the staff, and becoming informed. It is extremely important to gather as much information about a nursing home as possible before making a decision.

Here are some links to further information:
Marshall, Parker and Associates Nursing Home Guide
Medicare Nursing Home Compare (detailed information on every Medicare and Medicaid facility in the country)

Sunday, August 14, 2011

How to save Billions in Medicare each year – Ideas for the Congressional Super Committee

Under the terms of the recent deficit agreement, a “super committee” of 12 lawmakers will be meeting between now and Thanksgiving to come up with recommendations to trim the deficit by at least $1.2 trillion over the next decade. The super panel can recommend changes to any part of the budget and may suggest cuts in Medicare. Congress will then need to either agree on a debt reduction plan or allow automatic reductions to take effect, including large cuts in defense and a 2 percent reduction in Medicare payments to hospitals and other providers.

I’m an advocate for seniors.  My proclivity is to oppose cuts that will reduce Medicare services that my clients need.  But there may be a number of steps that the super committee could recommend that would save many billions in Medicare payments each year while actually improving the program. 

In a recent newsletter, The Center for Medicare Advocacy suggest a number of changes that Congress could make in Medicare that would both protect Medicare coverage and reduce costs to taxpayers.  Here are a couple of their ideas that seem particularly worthy of close consideration by the super committee and Congress:  

1. Negotiate Drug Prices with Pharmaceutical Companies
The Medicare prescription drug law, passed in 2003, prohibits the Secretary of Health and Human Services from negotiating prices with pharmaceutical companies. These companies gained 47 million customers when Medicare began covering prescription drugs, but they did not have to adjust their prices in return. Requiring the Secretary to negotiate drug prices for Medicare would save taxpayers billions of dollars – potentially about $200 billion over ten years. Taxpayers currently pay nearly 70% more for drugs in the Medicare program than through the Veteran’s Administration, which does have direct negotiating power. Savings realized from reducing Medicare drug costs could be used to improve benefits for beneficiaries and reduce the deficit.

2. Stop Paying Private Medicare Plans Anything More Than Traditional Medicare
According to the Medicare Payment Advisory Commission (MedPAC), Medicare pays, on average, 10% more for beneficiaries enrolled in private Medicare (Medicare Advantage, also known as MA) than for comparable beneficiaries enrolled in traditional Medicare. Despite these extra payments, beneficiaries in private plans who are in poor health, or who have chronic conditions, often have more limitations on coverage than they would under traditional Medicare. A large portion of the overpayments made to private plans actually goes to insurers rather than to benefit Medicare beneficiaries. Although the Affordable Care Act (ACA) changed the payment formula for Medicare Advantage plans, some plans will continue to be paid as much as 115% of the average traditional Medicare payment rate for their county when the new rates are fully implemented. MedPAC estimates that by 2017 Medicare Advantage payment benchmarks will average 101% of traditional Medicare. ACA also provides additional payments for plans that receive high quality ratings, increasing the likelihood that some MA plans will continue to be paid more than under Traditional Medicare. Reducing private MA payments to 100% of traditional Medicare, as MedPAC proposed before the enactment of ACA, will increase the solvency of the Medicare program and curb costs for taxpayers. Private plans simply should not receive higher pay than traditional Medicare.

3. Include a Drug Benefit in Traditional Medicare
Offering a drug benefit in traditional Medicare would give beneficiaries a choice they do not now have, encourage people to stay in traditional Medicare, and save money for taxpayers It would also provide an alternative to unchecked private plans that leave many with unexpected high out-of-pocket costs. A drug benefit in traditional Medicare would also insulate beneficiaries from expensive and sometimes abusive marketing practices. Further, traditional Medicare’s lower administrative costs could free up money for quality care, would result in lower drug prices for beneficiaries, and save taxpayers over $20 billion a year.

4. Extend Medicaid Drug Rebates to Medicare Dual Eligibles
Dual eligibles (people eligible for both Medicare and Medicaid) comprise one-fourth of all Medicare drug users, and are among the most costly beneficiaries. Because Medicare, rather than Medicaid, covers most of their drugs and because Medicare cannot negotiate drug prices, their drugs are not eligible for the same rebates as they would be under the traditional Medicaid program. Extending these rebates for dual eligibles would save at least $30 billion over ten years.

5. Lower the Age of Medicare Eligibility
People between 55 and 65 who are not disabled are currently unable to enroll in Medicare. Lowering the age of Medicare eligibility to allow this healthier population to enroll would add revenue for people who will likely need less care and fewer services than older and disabled enrollees.

6. Let the Affordable Care Act (Health Care Reform) Do Its Job
The Affordable Care Act includes many measures to control costs as well as models for reform that will increase the solvency of the Medicare program and lower the deficit while protecting Medicare’s guaranteed benefits. The Congressional Budget Office estimates that repealing or defunding ACA would add $230 billion to the deficit while ignoring the real issue of rising overall health care costs, which contribute heavily to the growing national debt. ACA includes strong measures to allow CMS to combat fraud, waste, and abuse that will bring down costs, as well as a variety of pilot and demonstration projects that aim to bring better care and quality to beneficiaries. The bipartisan Bowles-Simpson Deficit Commission recommended that these projects be implemented as quickly as possible. Allowing ACA to do its job will create a foundation on which to build by improving care and holding down costs for taxpayers.

For help in telling Congress to reform Medicare instead of cutting it, visit

Thursday, August 11, 2011

Planning for Alzheimer's - 4 Important Questions

I’ve worked with hundreds of clients with Alzheimer’s and their families over the past 30 years.  Here are 4 questions and answers that families ask and some generalized answers.  Of course these answers just touch  the surface and every individual situation is unique. Please feel free to share your additional answers to these questions in the comments area below.   

How important is maintaining autonomy even after the disease begins to progress?
 Don’t try to maintain your autonomy to such an extent that it gets in the way of your need to set up and test your plan for incapacity. It’s important to work with your chosen agent while you still have adequate capacity to judge their actions and discuss your goals and objectives with them. 

This period of time can be seen as your agent’s training camp. For this reason, the sooner you appoint your agent and begin to work with him or her, the better. Be willing to turn over working control and autonomy on financial affairs before you run into serious trouble.  Get your support systems in place as soon as you can.  And have a backup plan.  If your first choice of caregiver or agent doesn’t work out, make sure you have a backup.    

What are some warning signs that it’s time to get your assets in order?
Don’t wait for symptoms to appear. The earlier you plan the better. In most people with Alzheimer’s, symptoms don't appear until after age 60 and are especially prevalent for people who are in the 80s and older. Certainly if symptoms appear, or if you have a family history of Alzheimer’s, get help as soon as possible. But don’t wait for a diagnosis or crisis.  Even if there are no symptoms you should try to plan for the needs and costs of your aging as you approach age 70. 

It is important to understand why planning in advance is critically important to your family’s financial security. For most people with Alzheimer’s, needs based benefit programs like Medicaid and Veterans Pension will eventually be needed to help pay for care costs. About 2/3rds of nursing home residents receive Medicaid benefits. But to qualify for Medicaid you must have limited countable assets and income. And Medicaid program rules create problems if you try to protect your assets by making transfers within 5 years of applying for benefits. So, it is ideal if you can plan 5 years in advance of the need to apply for Medicaid benefits.  

Some people create special trusts that can protect their assets without ownership being turned over to their children or others. This is a good planning option for many families. But, the 5 year look back period applies to the assets you transfer to these trusts. So you need to set up your legal/financial plan early.     
How can caregivers best prepare?
Seek professional help for your spouse/parent as soon as possible – for legal help consult a certified elder law attorney. You can find a list of attorneys throughout the country who are certified in this area of law at Long term care is expensive.  An experienced elder law attorney can show you how you can pay for the care you need without destroying your family’s financial security. 

To locate other professional help, you can attend meetings of one of your local Alzheimer’s support groups – find out who the members of the group recommend – what has been their experience in dealing with lawyers, and doctors and financial planners and home health care agencies.  The Alzheimer’s Association and many hospitals run these support groups.  Call them to find a group in your area.  

Make sure your loved one has a power of attorney that includes asset protection provisions if eligibility for Medicaid or Veterans Pension may become relevant in the future. A certified elder law attorney who is licensed to practice in your state can help ensure that your power of attorney has the correct terms.  If you already have a power of attorney document prepared by another lawyer, have it checked over by a certified elder law attorney.  

If you are the caregiver spouse of someone who has Alzheimer’s, you need to update your will, trust, beneficiary designations, and other estate planning documents.  

Consider setting up an asset protection trust.  Because of the five year look back period, this is an advance planning tool and ideally should be created well in advance of the need for long term care.

Talk with your certified elder law attorney about whether Medicaid annuities work in your state. In Pennsylvania, and some other states, a Medicaid annuity can protect all of the financial resources of a married couple, when one of them needs nursing home care.  But, be careful.  Many inappropriate annuities are being sold. If you buy the wrong annuity it can cost you a lot.  Check with your certified elder law attorney before buying an annuity that is intended to protect your finances from nursing home costs.  

If you are a child caregiver, work out a long term support plan with your parent(s) and siblings.  Try to get everyone involved. Some family members will be able to help more than others, but everyone can usually contribute to some extent. The issues and concerns of aging and incapacity are difficult to discuss but you need to communicate with your family members.  
Caregiving for a person with Alzheimer’s disease often has high financial costs for the caregiver. If you are a child of  person who needs care, talk with your certified elder law attorney about whether a care contract that pays you for caregiving services makes sense for your family.  

If you are a child of a care dependent parent, learn as much as you can about your parent’s financial resources and goals. Get to know their financial professionals. Your parent’s financial adviser and a certified elder law attorney can work together to help come up with the best plan to meet your parent's needs and pay for their care. 

Learn as much about the disease and about caregiving as you can. Don’t hesitate to ask for help when you need it.  Don’t try to do to be the "hero" who does it all on your own. 

Contact your local area agency on aging to find out what resources exist in your area.  

Where does the elder law attorney's responsibilities end and the financial adviser's begin?
The elder law attorney’s job is to understand the laws that apply to care dependent people and their families. The lawyer explains the options to the client and caregivers and helps them come up with a plan that deals with legal issues like the effective transfer of decision making authority, and legal/financial issues regarding qualification for benefit programs like Medicaid and Veterans pension. The lawyer needs to be an expert in the arcane rules of these programs and stay current on the changes that frequently occur. Basically the lawyer helps create the protective box (for example a trust) that will protect the client’s financial security and goals. 

The financial planner then helps the client choose the best investments to go into that protective container. The financial adviser can help determine how do to maximize income if that is required, or how to minimize income and favor capital growth if that is what is best for benefit program qualification.  

The elder law attorney’s role is typically more immediate (especially in a crisis situation) and involves analyzing the situation, advising the client of planning options, coming up with a plan, and implementing the legal plan structure through legal documents like trusts and asset protection powers of attorney. The elder law attorney will file the application for Medicaid benefits when that becomes appropriate and can help ensure that the process goes smoothly. Once the plan is in place, and after qualification for benefits, the lawyer may thereafter only be intermittently involved on an "as needed" basis.  

The financial planner often gets involved as assets are transferred and assists with the investment of the protected assets. The financial planner’s role is going to be long term - working with the client and family caregivers over a long period of time.