Governor David Patterson, in the State of New York has recently signed into law the Family Health Care Decisions Act. This statute authorizes health care decisions to be made for a person who is incapacitated and has not prepared a healthcare proxy specifically indicating his or her wishes. This statute authorizes family members without a written advanced directive to make decisions to withhold or withdraw life support systems for their family members.

The best means for dealing with making of medical decisions, if you should become disabled or incapable of making your own medical decisions, is to execute a health care proxy appointing someone you trust to make these decisions for you. Unfortunately more than 75,000 incapacitated individuals die each year in the State of New York with out having a health care proxy. Court decisions have ruled that life sustaining treatment cannot be withheld or withdrawn without clear and convincing evidence that the person would decline if they could. This has resulted in people being subject to fruitless treatments that actually violates their personal wishes or religious beliefs.

The new statue sets up a hierarchy to determine those individuals who can make the choices. The list of individuals capable of making these choices range from a guardian, to spouse, to a domestic partner, an adult son or daughter, parent, adult brother or sister, and/or some other relative or close friend. The purpose of the statue is to prevent needless medical treatment for those who, if they were competent, would not want it.

Elliot Schlissel, Esq.

Image courtesy of Sun Sentinel

On Tuesday, this blog featured an article about what seniors can do to qualify for Medicaid if they forsee the need for nursing home services in the future, but do not yet need to go that route. But what if you or a loved one has already had to enter a nursing home? Now, you are faced with a situation where the senior’s life savings will soon be depleted by nursing home bills that can run as much as $10,000 to $12,000 per month. Is there any way to preserve the person’s assets, or at least a portion thereof?

Attorneys have used various strategies to allow seniors to preserve their savings for their children while still “spending down” their estate legally for the purpose of qualifying for Medicaid. One of those, which is not playing out as the most effective method, is the use of “personal service contracts” in conjunction with a lump-sum up-front payments to caregivers.

A better method is emerging for those who need “crisis planning,” i.e., trying to preserve assets after a senior has already entered a nursing home. This is the use of gifts along with promissory notes.

This method consists of retaining an attorney’s assistance to gift  half of his or her assets to another while simultaneously loaning the other half of the assets (minus the $13,900 [in 2009]) to another with a promissory note for repayment. The promissory note must not last longer than the life expectancy of the lender, it must require that  equal payments are made during the loan period without deferred or balloon payments, the note is not terminated by the death of the lender, and the note must be non-negotiable.

The attorney will assist the client in then applying for Medicaid, receiving a denial indicating that the person is “otherwise eligible” but for the uncompensated transfer of the gift. The applicant can then use the payments on the promissory note to pay the nursing home bills till the Medicaid “penalty amount” is paid, and then reapplying for Medicaid at which time the application should be accepted.

At that time, the person will have at least preserved half of her assets from the “spend down” requirement.

Maximum protection can be afforded to seniors’ assets by starting the Medicaid planning process several years before the expected need for nursing home services, as discussed earlier. But the promissory note/gift method, among others, is still available to seniors even if the time has already come to enter a nursing home.

For help with short term or long term Medicaid planning, e-mail or call us at 800-344-6431.

Picture courtesy of the Ombudsman Program.