Q. My wife and I have a Reverse Mortgage on our home. We have already pulled out about $100K on our loan and have another $150K available. If one of us needs nursing home care, will our Reverse Mortgage prevent us from seeking a Medi-Cal subsidy to help with the cost of that care?

A.  Not necessarily, but it all depends upon how you handle the loan proceeds from your Reverse Mortgage (“RM”). If you only draw what you need and fully spend those funds during the same month of that draw, then the RM would not prevent Medi-Cal qualification. The key is to avoid rolling over unspent funds into the next month.

If you still have unspent draws from your RM as of the 1st day of the following month, then these unspent funds will be treated as property and added to your other non-exempt resources for purposes of determining eligibility.  If they put you over the Medi-Cal resource ceilings, then they could make you ineligible, at least until they are spent.  The best plan: draw down only what you need and fully spend it in the same month as received.  Note:  Your remaining unused line of credit would not count as an available resource, so you are OK there.

HECM For Purchase:  There is a newer RM product designed to help seniors sell their existing home and purchase a replacement home.  It is called a “HECM For Purchase” or “H4P”.  Typically, seniors purchase a replacement home by putting roughly 50% down and use an H4P to pay the balance of the purchase price.  As with the traditional RM, the homeowners under the H4P program own their new home without any obligation to make mortgage payments.  Likewise, the H4P loan would be due when the seniors sell their home, move out or die. Since the H4P loan would help finance the purchase of an exempt residence, it would not adversely affect Medi-Cal eligibility.

Problem: Loan Due When Home Vacated: When the homeowner vacates the home to move into a care facility, and has been absent from the home for at least 12 months, the RM is due and payable.  This can force a sale of the home.  If the sale proceeds are more than the amount needed to fully pay the RM loan, the excess is then counted as a resource and could render the homeowner ineligible for Medi-Cal, at least until they are spent down on care. Alternatively, he or she might seek guidance from an Elder Law attorney to implement a transfer or conversion strategy to preserve or restore Medi-Cal eligibility.

Another Problem: Putting Home Into Trust: Under recent legislation, placing a home into a “Living Trust” will usually protect it from Medi-Cal “payback” after the death of the borrower. However, RM lenders may impose special requirements as a condition to allowing the RM loan to remain in effect after the home is placed into trust. So, make sure that you satisfy your lender’s requirements when you originate the RM loan and/or create your trust, so your lawyer can draft the trust in accord and secure the lender’s consent.

In short, if the RM draws are either fully spent in the month of draw or are used to purchase an exempt personal residence, you should be OK.  But, plan ahead to deal with anticipated excess sales proceeds when the home is eventually sold to repay the loan.

References:  All County Welfare Directors’ Letter No: 08-17 (4/25/2008); Medi-Cal eligibility Procedures Manual § 9D;  20 CCR § 50483.

Q.  My 91year old father has a substantial brokerage account and likes to manage it himself. Yet I worry that he could easily fall victim to financial scams. Is there anything I can do to protect him?

A. Yes, there may be. The Financial Industry Regulatory Authority (“FINRA”), which regulates firms and professionals selling securities in the United States,  recently received permission from the SEC to activate two new rules to protect senior investors:  One rule now requires member brokers to make reasonable efforts to ask investor clients, age 65 years and older, to designate a Trusted Contact Person” (“TCP”) whom the broker may contact if the broker reasonably believes that financial exploitation has occurred or may be attempted, or where the investor shows signs of dementia or diminished capacity.  Where exploitation is suspected, a companion rule authorizes the broker to place a temporary hold on disbursements of funds or securities from the customer’s accounts, pending further investigation.

These two rules are the result of a growing realization that financial exploitation of seniors is a very real problem, not only for the senior investors, but also for the brokerage firms when financial abuse is suspected. Previously, there were issues of privacy which prevented the broker from contacting family members when suspicious activity was detected, and prior FINRA rules prevented brokerage firms from halting suspected transactions without risking liability.  The scope of the problem became apparent to FINRA after it placed into service its Securities Helpline for Seniors in April 2015: during its first two years of its operation, it fielded more than 8,600 calls seeking help and recovered more than $4.3 million for seniors. For Senior Helpline, call 1-844-574-3577.

For now, the new rules only apply to new accounts or to accounts that are updated, but not yet to existing accounts. That said, it is anticipated that the rule will soon apply, as well, to existing accounts even without an update.

The new rules protect not only seniors, but also younger persons aged 18 and older, whom the broker reasonably believes has a mental or physical impairment which renders such individual unable to protect his/her own interest.

I sense from your question that your father might take offense if you asked permission to monitor his accounts. The nice thing about the new FINRA rules is that the request will come from the broker, rather than from you, and to that extent may be more palatable to your father and other senior investors. Unfortunately, in your situation and until the new rules are extended to existing accounts, your father may need to submit some kind of update to his brokerage account in order to trigger application of the new rules. Alternatively, he might just ask his broker to add you as a ‘Trusted Contact Person’.

Where the brokerage firm suspects financial exploitation, and initiates a hold on disbursements, it must immediately begin an investigation to determine whether the hold may be extended. The initial hold is limited to 15 days, but may be extended an additional 10 days if there is sufficient cause. In the interim, a hold can be extended further by court order where the facts so warrant.

Another option is to consider elder protection monitoring through services such as EverSafe. Monitoring would send suspicious activity alerts where accounts show unusual withdrawals, deposits, changes in spending patterns, changes in passwords, and identity theft. EverSafe also enables subscribers to designate trusted advocates to receive these alerts, and can assist with creating a recovery plan. For more:  www.EverSafe.com or call 1-888-575-3837.  Monitoring is on a paid subscription basis, and customers of some brokerage firms can qualify for a discount, e.g. Fidelity customers.

References:  FINRA Rule: Regulatory Notice 17-11 announced on February 5, 2018 and effective that date; Text of Rule Change

“Frequently Asked Questions Regarding FINRA Rules Relating To Financial Exploitation of Seniors”

Q. My Medicare Part D drug plan just denied coverage for my medication. Can I appeal its decision?

A. Yes. If your Medicare drug plan denies coverage for a drug you need, you don’t have to simply accept it. There are steps you can take to appeal the decision.

Background:  The insurers offering Medicare drug plans choose the medicines — both brand-name and generic — that they will include in their plan’s “formulary,” the roster of drugs the plan covers. This can change from year-to-year. If a drug you need is not in the plan’s formulary or has been dropped from the formulary, the plan can deny coverage. Also, plans may charge more for a drug than you think is fair, or may deny coverage if it believes you do not need that particular drug. If any of these things happen, you can appeal the decision.

Before you can start the formal appeals process, you must file an Exception Request with your plan. This usually will involve a statement from your doctor explaining your need for the drug. The plan must then respond within 72 hours, or within 24 hours if your doctor explains that you need an expedited decision for health reasons. If your exception is denied, the plan will send you a written denial-of-coverage notice, and the five-step appeals process then begins.

  1. The first step is to ask the insurer for an internal Redetermination, following the instructions it provides you. Submit the statement from your doctor explaining why you need the drug, along with supporting medical records. If your doctor informs the plan that you need an expedited decision for health reasons, the plan must respond within 72 hours. Otherwise, it must reply within seven days.
  2. If the redetermination is not satisfactory, you then have 60 days to request Reconsideration by an independent board. Again, follow the instructions on the written redetermination notice you received from your plan. An Independent Review Entity (IRE)will review your case and issue a decision either an expedited decision within 72 hours, or a standard decision within seven days. If you receive an adverse decision, you can continue the appeal process.
  3. The third level of appeal is to make a timely request for hearing before an Administrative Law Judge (ALJ), which will allow you to present your case either over the phone or in person. To request a hearing the amount in controversy must be at least $160 (in 2018). Your request for a hearing must be sent in writing to the Office of Medicare Hearings and Appeals (OMHA).[Phone: 1- 844-419-3358]. Following hearing, the ALJ will issue an expedited decision within 10 days or a standard decision within 90 days.
  4. If the ALJ rules against you, the next step is to request review within 60 days by the Medicare Appeals Council. [Phone: 1-202-565-0100]. The appeals council will issue an expedited decision in 10 days, or a standard decision within 90 days.
  5. The final step is to seek judicial review in Federal District Court within 60 days of the adverse decision by the Appeals Council. To qualify for judicial review, the amount in controversy must be at least $1,600 (in 2018), and you may need to engage an attorney for help.

For more information, visit www.Medicare.Gov and go to “Claims and Appeals”,  and www.HHS.Gov and go to “Appeals Process”].







Q. My father suffers from advanced dementia and needs care in a nursing home. It costs about $9,500 per month, and we are rapidly spending down his savings.  I was told that he might qualify for a Medi-Cal subsidy to help with the cost once his savings are below $2,000.  Years ago he signed a power of attorney (“POA”) naming me as his agent.  Can I use that POA to gift his excess savings to myself and thereby accelerate his eligibility for a Medi-Cal subsidy?

A. The question may seem straight forward, but the answer is somewhat complicated. To get to a possible “yes”, there are a number of legal hurdles to overcome:

1) Is the POA “Durable”? The word “durable” means that the powers granted in the POA survive your father’s incapacity. If it is not durable, then it’s authorizations expired when your father lost capacity.  Fortunately, most of the POA’s that I see these days have been drafted as durable powers, and so it is likely that yours is also a durable POA.

2) If a “Springing” POA, Have The Triggers Been Satisfied?  Often POA’s are drafted to only spring into life when the signer loses capacity, usually then requiring one or two doctors’ letters so certifying. If this describes yours, make sure that you have secured the doctors’ letters in order to make the POA operative.

3) Is Gifting Expressly Authorized?  As your father’s agent (or, Attorney-In-Fact), you are a fiduciary and cannot give away your father’s assets, unless that power is expressly granted in the document; it cannot be implied.  If not expressly stated, the making of gifts might be considered a breach of your fiduciary duty and/or financial elder abuse.

4) Does the POA Set Gifting Limits? Very often, we see POA’s that do permit some gifting, but limit it by reference to an Internal Revenue Code (“IRC”) section, the import of which may not be immediately apparent.  Example: If the POA limits gifts to the maximum authorized under IRC§ 2503(b), then gifts would be limited to the amount of the Annual Exclusion Gift, currently $15,000 per year per recipient.

5) Can You Gift To Yourself?:    As your father’s Agent you are his fiduciary, and cannot make gifts to yourself unless the POA expressly so authorizes, usually by permitting what we call “self-dealing”. Sample Language to look for: “In exercising the power to make gifts of my assets, I hereby authorize my Agent to include himself/herself as a gift recipient, i.e. I authorize my Agent to self-deal.”

Also, sometimes, POA’s impose the aforesaid § 2503(b) gifting limit only upon gifts to the Agent, but not upon gifts to others. If so, know that there may yet be “work-a-rounds” to design a more generous gifting plan to all recipients, which is still compliant with the limits in the POA.

6) Gifting Prohibition By Medi-Cal: If you get over all of the above hurdles, remember the following over-arching caution: Medi-Cal does not like it when applicant’s give away their assets to qualify, and may disqualify an applicant for benefits based upon the value of the gifted assets. Nevertheless, there are lawful techniques that can still be used to give away assets without a loss of Medi-Cal benefits, but they should be designed and carefully supervised by an Elder Law attorney experienced in Medi-Cal planning.

Q.  My wife and I have a home equity loan. In the past, we have been able to deduct the interest we paid on our taxes. However, under the new tax law, I hear conflicting opinions as to whether those interest payments are still deductible. Do you have any word on that?

A.  Thanks to a recent IRS guidance on topic, I believe I do. Responding to many questions received from taxpayers and tax advisors, the IRS recently released a statement to help clarify the issue. The guidance statement advises that, despite the new restrictions on home mortgage interest contained in the Tax Cuts and Jobs Act, taxpayers can often still deduct interest on a home equity loan, provided that the loan proceeds were used to “buy, build or substantially improve the taxpayer’s home that secures the loan”. However, if the equity loan proceeds have been used to pay credit card debt or other personal expenses, the interest is no longer deductible.

Further, if the equity line was taken out after December 15, 2017, there is also a dollar limitation: the sum of the loans to purchase the home, plus the new home equity loan, may not exceed a total of $750,000 in order for all of the interest on both loans to be deductible.  If the combined loans exceed $750,000, only a percentage of the interest payments will be deductible.

A bit of further good news for taxpayers with two homes: the new dollar limit applies to the combined amount of loans used to buy, build or substantially improve the taxpayer’s main home and a second, vacation home.

Also, for the interest to be deductible, the home equity loan must be secured by the individual property which receives the benefit of the loan proceeds. Thus, if the home equity line is to be used to buy or improve the vacation home, it must be secured by that particular property.

All of these changes sunset at the end of year 2025.  What the rule will be thereafter is presently unclear.

The recent IRS Guidance [identified as IR-2018-32, Feb. 21, 2018] contains three examples which help illustrate the effect of the new law, and can be viewed on the IRS website, by an Internet search as follows: Start at www.IRS.gov, then go to “Tax Reform”, then go to “IRS News Releases & Statements”, and scroll down to this topic.

References:  IRS Guidance;  Tax Cuts & Jobs Act [Scroll to Section 11043 {“Limitation on Deduction for Qualified Residence Interest”], on pages 33–34; Internal Revenue Code Section 163 [“Interest”], and scroll to page 642; 

Q. I need to qualify my mother for a Medi-Cal subsidy to help pay for her nursing home care, due to her progressive dementia. However, she has about $20,000 in a bank account with just her name on it, and no power of attorney in place to allow me to draw upon it. I was told that these funds will place her over the Medi-Cal resource ceiling and prevent eligibility. What can I do?

A.  It is unfortunate that your mother had not previously arranged for you to have access to that account, and now with her dementia she likely does not have sufficient mental capacity to arrange for your access now. That said, recall the old expression: “If life deals you lemons, turn them into lemonade”! That adage may have particular application to your situation. Here’s why:

As you may know, Medi-Cal typically divides the world of resources into two (2) categories, i.e. those which are exempt [such as a home, furnishings and the like], and those which are countable [such as savings and a second home].  In order to qualify an unmarried individual for a Medi-Cal nursing home subsidy, the applicant’s “countable” resources must be less than $2,000. Note: In this analysis, countable resources determine eligibility, and monthly income is only considered afterwards in calculating applicant’s co-pay (“share of cost”).

But, in fact, there is a little known third category, which embraces resources which are considered “unavailable”. If an asset is unavailable, it is – during the period that it remains unavailable – treated the same as an asset that is exempt! Most social workers, and even many Medi-Cal eligibility workers, either are not aware of this third category or forget to apply it in appropriate situations, such as yours.

An asset is unavailable when it cannot be readily accessed to pay for the care of the proposed beneficiary.  This rule would apply to your mother’s situation, and here’s why: (1) she previously set up her bank account so that only she can access the funds and she does not have the capacity to do so now, on her own;  (2) there is no existing power of attorney in place to permit you to access it on her behalf; and (3) she does not now have sufficient mental capacity to either add your name to the account or to sign a Durable Power Of Attorney to allow you access. Under these circumstances, it would be deemed “unavailable” under relevant Medi-Cal regulations. Further, for so long as it remains unavailable, it would be treated the same as an exempt asset and not counted toward her $2,000 Medi-Cal resource allowance.

There are indeed other situations where ‘unavailability” may come into play. Examples: where an asset, such as a second home or a promissory note, cannot be readily redeemed for cash and must be first marketed for sale; and, where the applicant owns only a partial interest in a rental property and the other co-owners refuse to sell.

For cases like yours, it is best to engage a knowledgeable elder law attorney for assistance, as it may be necessary to first lay appropriate groundwork to justify the claim of “unavailability”, to then educate the Medi-Cal eligibility worker as to its application in the particular case, and to thereafter shepherd the Medi-Cal application through to approval.

Q. My late wife and I set up a trust about 10 years ago, and now I want to change the Successor Trustee and remove a beneficiary. Is that a simple thing to do?

A. Like so many things in life, it depends. Here are some of the considerations:

Is It Amendable?  Not all trusts can be amended, which often comes as a surprise to clients.  If your trust was set up years ago, it is likely that it included tax-saving provisions requiring that, upon your wife’s demise, her share be allocated to an irrevocable sub-trust (often called a “ByPass”, Exemption, Credit Shelter, or just plain “B” Sub-Trust).  By design, and in order to achieve tax-saving objectives under then existing tax law, those sub-trusts could not be amended by the survivor, and could usually be changed only by court order. However, your own share, typically called the “Survivor’s Trust”, could be amended.

Are There Other Provisions That Require Change? When we review older trusts, we often discover other provisions that should also be changed. Examples:  adding provisions to coordinate the trust with a Power of Attorney so as to permit further changes in the event of your later incapacity, as need requires and/or to facilitate Medi-Cal long term care planning; including HIPAA Privacy Waiver provisions to facilitate assumption of responsibility by the named Successor Trustee in the event that the prior trustee becomes incapacitated; adding Special Needs provisions to protect the inheritance of beneficiaries receiving public benefits, such as SSI or Medi-Cal; and, making “no contest” provisions compliant with changes in the law. To be sure, the same issue presents as to whether we can amend the trust without a court order.

Amendment vs. Restatement? If a change can be made, the next consideration is whether to do so by Amendment or by a complete Restatement.  A Restatement is often preferred:  upon your later demise, when it comes time to send out the statutory notices to beneficiaries and heirs in connection with formal trust administration, a Restatement often turns out to have been the better choice.  Reason:  Unlike an Amendment, a Restatement does not require that the prior version of the trust go out with the notices. You can imagine the benefit to family harmony to avoid having to reveal that an originally named trustee or beneficiary was later replaced. Another consideration:  a Restatement may also be preferred if the trust has had multiple amendments, making it now cumbersome to read.

Professional Responsibility: An analogy from the medical field may be helpful:  imagine calling a new physician seeking only a prescription for a persistent stomach ache. It is doubtful that any doctor would accommodate your request without a physical exam and appropriate lab work.  The situation is much the same for members of my profession. When an attorney reviews an existing trust with an eye toward making even the simplest change, he or she then becomes responsible for the entire trust.  Most attorneys take this responsibility very seriously.

That said, much good often comes from requests like yours: if the trust is amendable, we can often amend the trust to make it more suitable to the client’s present circumstances and current tax law. Alternatively, if it is only amendable by court order, we can evaluate the option of petitioning the court for authority to reform the trust. Indeed, these client requests for changes often end up rescuing what might otherwise be a trust badly in need of reform. They also often trigger review of companion documents, such as Powers of Attorney, with similar beneficial results.

Q.  My mother named my brother as her agent under her power of attorney to handle her financial affairs, but he seems to be abusing his authority and my mother wants to revoke it. Can she do so, and how would she go about it?

A. The simple answer is, yes, she can revoke her power of attorney, providing that she is mentally competent to do so. While the revocation can be handled either verbally, or in writing, the most effective way is as follows: she would prepare a formal Revocation of Power of Attorney, in writing, and arrange for its hand-delivery to your brother and to any other third parties who may have relied upon it, such as banks, brokerage houses, and the like.

The written revocation should make specific reference to the Power of Attorney (“POA”) in issue, by referring to your mother as the principal, the date it was signed and its designation of agent. It might also help if she can attach a photocopy of the original POA to her written Revocation, and reference that attachment in the text of the Revocation. Here is an example:

“I hereby revoke the Power of Attorney I signed, as Principal, on January 3, 2015, naming my son, John Brown, as my agent.  A true copy of said, now revoked, Power of Attorney is attached.”

If the Power of Attorney (“POA”) has been used for any real property transactions, the original most likely will have been recorded and, in that event, the revocation should likewise be recorded in each county wherein the original was recorded. If it is to be recorded, the Revocation must be notarized and should reference the Book, Page, Image and/or Instrument Number of the previously recorded POA.

Two cautions, however: (1) The Revocation is not effective until your brother receives actual notice of that Revocation. So I would urge that it be hand-delivered  by messenger, who then signs an affidavit as to the date and time of personal delivery.  (2) Third parties, such as banks, may continue to rely upon the validity of the POA until they receive notice of its Revocation, and they would usually be shielded from responsibility for continuing to honor it in good faith.   Therefore, it is important to immediately also deliver a copy of your mother’s revocation to her banks and other financial institutions.

Your mother should also visit her banks to determine whether she has signed their “short form” Limited POA’s authorizing access to her accounts and/or to her safety deposit boxes. If so, she may wish to revoke them, as well, or revise them to name other persons whom she now trusts as her new agent(s).

A revocation can also be effective if your mother were to sign a new Power of Attorney which expressly recites that all prior general POA’s are revoked. Again, if she chooses this manner of revocation, this new POA should be personally delivered to your brother and to her financial institutions, with an appropriate cover letter calling attention to the “revocation” provision of the new POA.

Note:  The Revocation provision in a new POA might exclude from revocation powers of attorney for health care, or any other limited powers that the principal does not intend to revoke.

To make sure all of this is handled properly, it might be wise for your mother to seek legal consultation and arrange for her attorney to prepare the appropriate documentation and handle its delivery in a timely manner to the proper persons.

References:  California Probate Code §’s 4151 — 4153

Q. I hear a lot about the new tax law that Congress passed and President Trump just signed, but I am unclear as to how it might affect me and my family. Can you give us a summary?

A.  Sure. While much of the new “Tax Cuts and Jobs Act” was designed to reduce the corporate tax rate from 35% to 21%, here are some of the principal features that affect families:

Standard Deduction and Personal Exemption: the standard deduction increases to $12,000 for Individuals, $18,000 for those filing as Head of Household, and $24,000 for Joint filers, all adjusted for inflation. As an apparent trade-off, miscellaneous itemized deductions are eliminated. The Personal Exemptions, which were $4,050 for each member of the household (subject to phase out at higher levels of income), are also eliminated.

Home Mortgage Interest Deduction: the limit on deducting interest on up to $1 million of a home acquisition loan stays in effect for existing mortgages in effect as of December 15, 2017, at least for the next 8 years. However, the interest deduction on mortgages placed thereafter will be subject to a $750,000 limit, which will also become the new cap on existing mortgages beginning January 1, 2026. So, if you have a mortgage above $750,000, it would be wise to try to pay it down over the next 8 years to an amount below the $750,000 cap, so all of your interest payments made thereafter will continue to be deductible. Interest deduction on Home Equity Loans will be eliminated.

Medical Expense Deduction: after much public concern, the medical expense deduction actually survived. In fact, it was temporarily enhanced: for 2017 and 2018, medical expenses above 7.5% of adjusted gross income (“AGI”) will qualify for the deduction. After 2018, only amounts above 10% of AGI will be deductible, as under existing law.

State and Local Tax Deduction: the combined deductibility of the payment of state income taxes and real property taxes will now be capped at $10,000 per person. This will likely have a big impact on residents of California, with its higher income and property taxes, as compared with residents of other states.

Estate and Gift Taxes: the new law more than doubles the existing exemptions, going from $5.49 million per person for those dying in 2017, up to $11.2 million per person for those dying thereafter, and up to $22.4 million for a married couple (where the survivor makes a timely election on her estate tax return). The new rates will be indexed to inflation, just like the current exemptions.

GST Exemption:  in 2017, an individual could protect up to $5.49 million from the Generation Skipping Transfer Tax (“GST”), which is a tax assessed when an asset bequest skips over a child and passes directly to a grandchild or the equivalent; the logic of the GST is to make up for the loss of a transfer tax which would otherwise be payable to the IRS when the asset transferred from the parent to the child. Beginning in 2018, that GST Exemption increases to $11.2 million per donor.

Tax Rates: individual tax rates will be reduced and the income brackets adjusted upward, with the top income tax bracket dropping from 39.6% to 37%. Example:  under former law, a married couple filing a joint return with taxable income of  $140,000 — $250,000 would be taxed at a marginal rate of 36%, while under the new law a married couple with taxable income of $165,000 — $315,000 will be taxed at a marginal rate of only 24%.

Step-Up In Basis: the new law keeps intact the current rule which permits the recipient of property transferred upon the donor’s death to be adjusted to its date of death value as the new ‘cost basis’. This favors property which has increased in value over the donor’s lifetime by reducing the tax on capital gain that would otherwise by payable when the gift recipient later sells the property.

Individual Mandate Eliminated: the new law eliminates the tax penalty for failure to maintain “minimum essential” health care coverage, which many believe will significantly weaken the Affordable Care Act signed into law by President Obama.

Spousal Support Payments No Longer Deductible.  For divorce decrees or support orders made after 12/31/2018, spousal support payments will no longer be deductible.

California State Income Tax:  Unless California adopts confirming legislation, it will retain existing law for state income tax, and many persons will therefore be obliged to calculate their state and federal taxes using two separate frameworks of deductions.

Special Concern:  Of special concern for seniors and the disabled, is that these tax cuts will add up to $1.5 trillion to the deficit over 10 years, and may then be cited as “justification” for reductions to Medicare, Medicaid, Social Security, or other programs, to pay for the resulting deficit.

Special Note:  Except for the corporate tax rate cut, almost all of the new features ‘sunset’ at the end of year 2025, with the changes reverting back to their current form in 2026 unless Congress acts to extend them. This reversion back creates uncertainty for tax planners, especially in regard to estate planning.  In this respect, Congress expressly deferred to the Secretary of the Treasury to issue “appropriate” regulations to address this concern. [See § 11061 of the Act by scrolling to page 38 using the link of the full text of the Act, below.] Our hope is that the Secretary will issue regulations which provide that the increased estate tax exemption amounts which were in effect when estate plans were signed will control the exemption amount at death, even if death occurs after the Act sunsets. However,  we must await regulations in this regard.

For more on the new law, see the companion article on this website, “How Will The New Tax Law Impact Seniors and Persons With Disabilities?”

References:  (1) Click this link for the full text of the Tax Cuts and Jobs Act (H.R.1) Signed into law by President Trump on 12/22/2017.  (2) See,  IRS News regarding effect of inflation on some tax benefits and deductions for the year 2017, an IRS release which preceded the signing of the new law.  (3) Article by Kathleen Pender in San Francisco Chronicle of January 7, 2018, “How the Federal Tax Overhaul Will (or Won’t) Affect Your State Income Taxes“.

Q.  Mom has been receiving care in a nursing home. She is currently covered by Medicare, but soon will switch to Medi-Cal. She would really like to come to our home for a short visit for family celebrations. However, I heard that she might lose her coverage if she does so. Is that true?

A. Not if her visit is handled correctly, including arranging for a “pass” from the nursing home for the visit and making sure that it is included in her Plan of Care. In this regard, the rules for Medicare are different from the rules for Medi-Cal. Here’s the way they work:

Medicare: While the Medicare Benefits Policy Manual recognizes that most beneficiaries needing nursing level care are unable to leave the facility, it recites that

“the fact that a patient is granted an outside pass or short leave of absence for the purpose of attending a special religious service, holiday meal, family occasion, going on a car ride, or for a trial visit home, is not, by itself evidence that the individual no longer needs to be in a [nursing home] for the receipt of required skill care.”

The Manual also states that is not appropriate for the facility to notify the patient that the visit home will result in a denial of coverage. However, it is best if your mom returns before midnight on the same day, as Medicare will only pay for that one day away. If her visit extends out more than the same day, the facility can charge her privately for the bed-hold for each day thereafter, so long as it has advised her, in advance, that it will do so and the cost for same.  So, short visits of one or two days to be with family is entirely appropriate, and will not result in a loss of Medicare coverage, but—after the first day away—the visit may require private payment to hold her bed.

Medi-Cal: The rules for persons on Medi-Cal are more lenient. If your mom’s stay is covered by Medi-Cal at the time of her visit, she could be granted a leave of absence (LOA) of up to 18 days per calendar year, provided that the physician approves the LOA and writes it into her Plan of Care. Further, she could be granted up to an additional 12 days of LOA per year under certain conditions. This is called a “therapeutic leave”. Medi-Cal will cover the first seven (7) days of “bed hold”.  So, again, if your mom were relying upon Medi-Cal for nursing home coverage, her visit home  should not be a problem, but be sure to request that the physician write the planned LOA into her Plan of Care.

Good wishes to your mom and family, and I hope that she enjoys her visit with those she loves.


References: Medicare Benefit Policy Manual, scroll to §30.7.3, Example. at page 43 ; 

Medi-Cal Rules at 22 CCR 51335 (i)

Center for Medicare Advocacy article “Home for the Holidays: Leaving the Nursing Home During a Medicare-Covered Stay”

California Advocates For Nursing Home Reform article: “Did You Know? Nursing Home Residents Can Go Home for the Holidays”

Medicaid Bed Hold Policies by State (September 2012), compiled by the National Long-Term Care Ombudsman Resource Center.