Questions about legal issues and how they effect people with disabilities, their families and seniors come to us often. The firm is pleased to provide answers to general interest questions here. Our staff attorneys also publish more in-depth articles and full publications on topics of common concern and interest.
Readers are encouraged to submit additional questions by email. If answering them here might help others, we’ll do our best to publish a response. Your individual circumstances may also warrant contacting our office for legal advice.
Estate Planning For People With Disabilities
- How do I know if the trust I established for my disabled child is adequate?
- Why should I establish a trust for my child with a disability when I can give my estate to my other children?
- If I set up a trust for my child with a disability, must I fund it now?
- How often should I review my estate plan?
- I receive social security benefits for someone as a representative payee. What are my duties?
Estate Planning (Generally)
- How do federal gift and estate taxes work?
- How can I determine the value of my estate?
- What is excluded from federal gift and estate tax?
- Is a durable power of attorney a substitute for guardianship?
- If I become my sister’s guardian, does that mean I have to pay her bills or that she has to live with me?
- Why would I use a private attorney for a guardianship if DDD will do it for free?
- What is Medicaid EPSDT?
- What is the Medicaid Managed Care HMO system?
- Who administers Medicaid Waiver services?
- What about private insurance issues?
- What if I need help with Medicare?
- If I anticipate a problem with my school district or some other agency providing services, should I see a lawyer before or after the problem materializes?
- My school district told me that it does not have to provide any services if I do not sign the IEP. Is this true?
- Are school districts responsible for providing social skills training?
- Is it appropriate for the school district to come to an IEP meeting with the IEP already written?
- My school district told me that it does not have to pay for anything except the "educational" costs of a residential placement for my son and that DDD or another agency would have to pay for the residential costs. Is this true?
- My school district is trying to expel my son. Can I prevent this if I agree to have him classified for special education?
Adult Services For People With Disabilities
- It is necessary to be diagnosed with specific disabilities to receive services?
- Do I have to wait until my child graduates from his special education program to apply for or begin receiving services?
- I have heard that long waiting lists exist for group homes. Is this true?
- How much will it cost the parents if their son is placed into a group home in New Jersey?
- How can I obtain authority to make decisions for an elderly parent?
- What is the difference between guardianship and a durable power of attorney?
- What services are available to pay for long-term care ("LTC") in a nursing home?
- How does Medicaid work?
- Can I give away assets in order to qualify for Medicaid?
- I am considering long-term care insurance. Should I pay extra to obtain a rider for home care?
- How do I pay for a nursing home?
Estate Planning For People With Disabilities
How do I know if the trust I established for my disabled child is adequate?
There is no easy answer. Several thoughts come to mind. First, if the trust is written as part of the will, I would change it. Second, simply because the document is called a "special needs trust," it does not mean that it is adequate. Consider who drafted the document. Does the lawyer have experience with litigation concerning special education and adult services. Does the law office have an attorney available with a law degree in taxation or a certificate in estate planning? Mr. Hinkle’s estate planning views are rooted in long experience, and have been widely reported, including by the The Wall Street Journal, in its feature "Home Alone."
Why should I establish a trust for my child with a disability when I can give my estate to my other children?
You can do this, but what will happen to these assets if the non-disabled children die first? Also, if there are several children, will they all come up with money when needed, or will they bicker among themselves? Will spouses interfere? Establishing a trust helps eliminate these problems.
How often should I review my estate plan?
At a minimum, an estate plan should include a will, a power of attorney, a living will and a trust for the child with a disability (assuming there is a child with a disability). For estates in excess of $675,000 (in the year 2000), the estate plan should include one or more tax-related trusts. We recommend that you review your estate plan yourself at least every 5 years, and with an attorney no less than every 10 years, and whenever a significant event occurs, or as the estate grows.
Estate Planning (Generally)
How do federal gift and estate taxes work?
The federal government taxes transfers during life (gift tax) and at death (estate tax). The tax rates in 2000 are 37.5% to 55% for aggregate transfers in excess of $675,000. Thus, a person who transfers $250,000 during life and $500,000 at death will pay a tax.
How can I determine the value of my estate?
This can be counter-intuitive. The taxable estate includes everything of value that you own, and in some cases, control. It includes life insurance, IRAs, regular savings and real estate minus debts.
What is excluded from federal gift and estate tax?
Normally, transfers between spouses are excluded regardless of the amount. A person can give away up to $10,000 to as many people as he or she wishes each year, and can pay for medical and education expenses. Transfers to charity are also excluded.
Is a durable power of attorney a substitute for guardianship?
Generally not, because if the person with a disability lacks the legal capacity to give informed consent to a power of attorney, the document is invalid. Also, the person with a disability can repudiate a power of attorney making it invalid. A power of attorney is helpful when the person’s disability does not make him/her incapacitated, or for other family members to execute for themselves in case of their own future disabilities.
If I become my sister’s guardian, does that mean I have to pay her bills or that she has to live with me?
No. As your sister’s guardian, you would only be a decision-maker. You would not be legally responsible for her debts. Even if your sister does not have the money to pay all of her bills, her creditors will not make you pay them with your own assets. Likewise, it is not necessary that your sister live with you. Your sister can continue to live wherever she currently lives or anywhere else that is appropriate for her.
Why would I use a private attorney for a guardianship if DDD will do it for free?
In some counties, DDD will only seek a guardianship of the person rather than guardianship of the person and property. In addition, DDD has a backlog of guardianship cases. It usually takes several years to complete the matter.
What is Medicaid EPSDT?
The Medicaid EPSDT program is a fee-for-service system that provides a full array of health care services to children 21 and under. Medicaid is required to provide services that a physician has declared “medically necessary” to correct or ameliorate the child’s condition. Medicaid/DMAHS (Division of Medical Assistance & Health Services) often denies eligibility and reduces the amount of hours or days of a service) or terminates services, determinations that may lead to an appeal to OAL for the beneficiary. Attorneys at Hinkle, Fingles & Prior have successfully litigated these cases, securing such services as personal care assistance, home health aides, and therapy services appeals.
In an effort to control costs, the state decided to make mandatory the enrollment of individuals into HMOs with whom the state contracted to provide the state’s Medicaid services to some clients. This process has now stalled and only a few counties have begun using the program. Beneficiaries are entitled to the same services under the managed care system that they had been under the Medicaid fee-for service system. Attorneys at the firm have extensive experience litigating these issues, including exemption appeals for denial of coverage or termination of services, and the maintenance of health services during transition to the HMO system.
There are several state agencies that administer Medicaid-funded waiver services. DDD administers the CCW (community care waiver); DOHSS administers the CCPED (community care program for the elderly and disabled); DDS administers the CRPD (community resources for people with disabilities) and the TBI (traumatic brain injury) programs, among others. Attorneys at Hinkle, Fingles & Prior have assisted clients in getting eligibility for these waiver programs, appealing reduction or termination of waiver services, appealing due process rights violations, appealing termination or change in services without notice, failing to continue services pending the appeal, or failing to restore services that have been wrongfully terminated following an appeal.
With private insurance, most appeals involve denial of coverage and termination or reduction of services. Depending on the type of plan (managed care, fee-for-service, self-funded/self-insured, or individual health benefit plans), the appeals rights and process are slightly different. Attorneys at the firm have assisted many clients in private insurance matters.
Similar denial of coverage and appeal issues may obtain with Medicare. Appeals to Medicare may involve coverage issues, reimbursement/billing, and coordination of coverage with other payers.
If the client thinks the risk of a problem is significant and the problem will be serious, it’s a good idea to meet with an attorney first. We find it helpful to review the case early and advise the client about the law and possibly develop a strategy. This is preferable to having to change a position taken which was not legally advisable.
My school district told me that it does not have to provide any services if I do not sign the IEP. Is this true?
It depends. Parental consent is required only for the initial IEP. Even then the district cannot refuse to provide services indefinitely. The district must seek administrative approval of the IEP. After the first IEP, the school district must continue to provide services whether or not the IEP is signed. If you do not sign the IEP, the school district must wait fifteen days before providing the services described in the IEP. If the fifteen days go by and you have not requested mediation or a due process hearing, the school district can begin providing the services described in the new IEP.
Are school districts responsible for providing social skills training?
Yes, if the student requires this due to a disability. Many disabilities, such as Asperger’s Syndrome and Attention Deficit Disorder, impair students’ abilities to act appropriately in social situations. For these students, the school district might have to provide more intensive services to teach social skills. For example, the school may have to provide a social skills group or counseling with a psychologist or social worker.
Is it appropriate for the school district to come to an IEP meeting with the IEP already written?
Generally, no. All decisions regarding a student with a disability, such as what services the student requires and what placement the student will attend, must be made by the IEP team including the parents at an IEP meeting. It may be permissible for the District to prepare a "draft" IEP prior to the meeting to facilitate discussion, but only if all of the decisions regarding the final IEP are actually made by the full IEP team, including the parents, at the IEP meeting.
My school district told me that it does not have to pay for anything except the "educational" costs of a residential placement for my son and that DDD or another agency would have to pay for the residential costs. Is this true?
Not necessarily. If your son needs a residential placement in order to make satisfactory educational progress, the school district must pay the full cost of the placement including the residential costs. It is permissible for the school district to seek funding from other government agencies for the residential costs of the placement, but the school district cannot delay the placement while it does so. Also, be careful because if an agency other than the school district provides services – - parents may be legally responsible to reimburse the agency for the cost of services.
It depends. All students, whether or not they are classified for special education, have rights against being disciplined unfairly. However, students with disabilities have far more protection against unfair discipline than non-disabled students. Consenting to classification may give you a better chance of preventing expulsion. Keep in mind that as a general rule, the fact that a student has been classified for special education is confidential information that the school district cannot disclose to other students or colleges.
Adult Services For People With Disabilities
No. The agencies serving people with developmental disabilities in both Pennsylvania (the county Mental Health/Mental Retardation agency) and New Jersey (the Division of Developmental Disabilities or "DDD") use a functional approach in determining eligibility. What is important is what a person can or cannot do, not the disability label or medical diagnosis he or she has been given.
Do I have to wait until my child graduates from his special education program to apply for or begin receiving services?
No. Even if you do not need services right now, waiting to apply is a bad idea. The eligibility process can take several months to complete. Moreover, waiting lists exist for some services such as residential placement or day programs. Applying early can help ensure that there is no interruption in services upon graduation. In addition, some services, such as respite care or family support stipends, can be useful even while your child is still in school.
I have heard that long waiting lists exist for group homes. Is this true?
Yes, but that does not mean that immediate help is not available. Even if you are placed on a waiting list, you must be provided with appropriate alternative or interim services. In addition, it may be possible to be placed immediately if your situation is exceptional or qualifies as an emergency.
How much will it cost the parents if their son is placed into a group home in New Jersey?
Assuming your son is over eighteen years old, you will not have to pay anything. However, DDD will seek to charge your son for the costs of his placement using a formula in which the agency deducts a $40 personal needs allowance from the individual’s net monthly income, and then automatically seeks 50% of the remaining unearned income plus any additional amount that cannot be budgeted into these categories: clothing, recreation, travel, medical/dental and funeral. The amount that the agency will seek is determined each year as part of the IHP process, and you can appeal if you disagree with the agency’s assessment. We have filed a number of appeals based in part on a case law holding that a state agency such as DDD cannot require contributions from federal Social Security benefits.
How can I obtain authority to make decisions for an elderly parent?
There are at least 6 ways: (1) guardianship; (2) durable power of attorney; (3) living will; (4) living (inter vivos) trust; (5) joint account; and (6) representative payee status.
Guardianship is the result of a court proceeding. A durable power of attorney is a document signed by one person granting decision-making authority to another. Generally, guardianship is necessary only when the elder has failed to sign a durable power of attorney and now lacks the capacity to understand what he or she is signing or is unwilling to sign.
Individuals can provide payment for LTC themselves or have it paid for under a special insurance policy called "long-term care insurance." Generally, Medicare and private health insurance plans will not pay for placement in a nursing home, except for a brief stay following illness. When skilled nursing home care is required, Medicaid is the only government program that will pay for LTC.
How does Medicaid work?
The rules vary slightly from state to state. Generally speaking, an applicant can have no more than $2,000 in "countable resources" and income must be close to zero after substantial medical costs.
Yes, but the rules are tricky. Medicaid has a 36 or, in some cases, a 60 month look-back period.
Suppose X transfers her entire life savings of $40,000 to her daughter. Suppose also that the average monthly cost of nursing home care, as calculated by the local agency which administers Medicaid, is $4,000. X would be eligible for Medicaid for 10 months from the transfer. Suppose X has $400,000 instead. She then must wait 36 months before applying, otherwise she will be ineligible for 100 months ($400,000, at $4,000 per month).
I have very mixed feelings about these riders. The notion of staying home instead of going to a nursing home is very attractive. But, most policies say that the insurance company can elect to pay for nursing home care if it is cheaper than in-home care. Considering how expensive it is to provide in-home one-to-one care, there might be few instances in which the applicant qualifies for services, but only needs a small amount of home care.
Chances are that you or your spouse will spend a year or longer in a nursing home. There are four ways to pay for it: (1) use your own money; (2) use someone elseâs money; (3) use insurance or (4) let the government pay for it.
Here are some thoughts on each from a legal perspective:
1. Pay for it yourself. Care in a quality nursing facility can exceed $75,000 annually. This sounds enormous, but it is well within the means of some to meet this cost. Plus, in the case of an unmarried or widowed person with no dependents, there are virtually no other expenditures to consider. Private pay arrangements mean that the very best facility will be available when you need it.
However, it is important that you have a mechanism in place to ensure that funds will be available to spend as you wish, if you are not able to handle your affairs at the time. A power of attorney, or even better, a trust can accomplish this. Your agent or trustee must be someone (or an organization) who will follow your wishes. There is a risk that family might wish to transfer your assets for other purposes.
To digress for a moment, a durable power of attorney is a document that allows someone to act on your behalf, especially if you are incapacitated. A trust is an instrument to hold assets that are managed by a trustee. Sometimes trusts are used for tax purposes or to avoid probate. But, trusts can also serve to control your assets in the event of incapacity. Such trusts are called "stand-by trusts," and might remain unfunded until incapacity.
2. Have someone else pay for it. This is not as silly as this might seem. You could transfer assets to a trusted family member who will later pay for your care and obtain a medical deduction for income tax purposes. This approach can significantly reduce the actual cost of care, especially if the family member is in a higher tax bracket.
3. Long-term care insurance. In the 15-plus years that I have been involved with elder law, such insurance has become not only more popular but more necessary for many. Medicaid rules concerning the transfer of assets have become much tighter. The private cost of care in a nursing facility is beyond the reach of many, especially if a spouse or other dependent remains at home, and even if not, private insurance may make sense economically. Also, it will give you the freedom of choosing the facility you want. Some facilities do not accept Medicaid; others have long waiting lists for Medicaid beds.
4. Medicaid. Do not confuse Medicaid with Medicare. Medicare will pay for only very limited amounts of care in a nursing facility. Medicaid provides unlimited coverage, but an applicant must meet income and resource tests and there is a 36-month "look-back" period regarding the transfer of assets.
Here is how the transfer rule works: suppose Larry, a widower, has $350,000 in resources: a home, a life insurance policy with a cash value, savings and an IRA. On January 1, 1997, Larry transfers all of his assets to his daughter, Elaine. Larry enters a facility on February 1, 2000. Larry is Medicaid eligible because his resources are no more than $2,000 and more than 36 months has passed since he transferred his assets.
Suppose, instead, Larry transferred his assets to Elaine on January 1, 1998, and applies for Medicaid on February 1, 2000. This leads to 100 months of ineligibility from the date of transfer because the transfer occurred within 36 months. The number of months of ineligibility is computed by dividing the assets transferred by the average cost of nursing care as determined by Medicaid (approximately $3,500). Therefore, Larry should wait another year before applying so that he is outside the 36-month "look-back" period.
The downside for the transfer is that Larry must enter a facility that will accept Medicaid. Moreover, the transfer of the IRA and home will have negative income tax consequences. On the other hand, he has preserved Elaine’s inheritance.
Larry will also have to meet an income test, but the cost of care in a nursing facility can be deducted from his income; therefore, the income test should not be a problem.
A word of caution: if you contemplate a transfer of assets, be careful not to confuse Medicaid law with federal gift-tax law. You can transfer $10,000 annually to as many people as you wish. Such transfers are excluded from federal gift tax, but have nothing to do with Medicaid. Frequently, I see clients who mistakenly think there is a $10,000 annual limit on transfers.
Like everything else in life, it is not always clear what to do, and worse, when to do it. Much depends on family dynamics and weighing the comparable costs of action versus inaction.
One couple might have complete confidence in their children so that a transfer poses little risk in their view. Another couple might not have confidence in their children, or they might wish to ensure them personal independence. Also, any move might have significant tax consequences and these must be weighed carefully.