Military Veteran Attorney Blog

It is important to understand the interplay between the Veteran's Administration (VA) Aid and Attendance (A&A) Benefits and state Medicaid law.

Clients often come to our office in Sterling Heights after hearing about the A&A benefit through seminars organized by financial planners. Seminars in Southeast Michigan are becoming more and more common place as insurance agents and planners learn that eligibility for such benefits can be created through the use of careful financial planning.

Although seminars can provide valuable information to veterans, an attendee should exercise caution prior to working with a planner to apply for such benefits. Prior to working with a planner, a potential client should perform his or her own due diligence by asking the planner a few simple questions:

1. Do you also practice Medicaid financial planning?

2. Do you have a relationship with a Service Organization?

3. Do you have an existing relationship with an elder law attorney?

4. What is your commission in assisting with my planning?

These questions will shed light on the planner's intentions and whether or not he or she truly has the best interests of the client in mind. If the planner is unable to answer these questions, the potential client should consult with an elder law attorney that is skilled in the areas of VA benefits and Michigan Medicaid law.

Because federal law currently does not provide a "look-back" period for A&A eligibility there is an incentive for planners to earn commissions by funding financial products owned by people other than a veteran seeking A&A benefits. This strategy can be catastrophic if the planner is not well versed in state Medicaid law.

Conversely, current federal law provides that a Medicaid applicant is subject to a five (5) year "look-back" period. This audit period is designed to identify gifts, transfers, or "divestments" made within five (5) years of an individual's application for Medicaid benefits. Any such transfers will result in periods of ineligiblity to receive Medicaid benefits even if the applicant is otherwise qualified to receive nursing home benefits from Medicaid. As a result, transfers made for A&A eligiblity can disqualify an applicant from receiving Medicaid benefits for later nursing home care.

However, through prudent planning an individual can avoid this pitfall. Prudent planning can be accomplished by working with a team of advisors which should include an elder law attorney, CPA, and a financial planner well skilled in Medicaid and VA planning that also has an affiliation with a veteran's service organization.

As always, if you are a resident of Metro-Detroit and are looking for legal advice feel free to contact our office for a free consultation at (586) 264-3756 or via the internet through our website: www.smdalaw.com.

Remember, "Call first... Act second!"

After a relative dies, the last thing grieving family members may expect are calls from debt collectors asking them to pay their loved one’s outstanding debts. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, a surviving relative usually has no legal obligation to pay the debts of a family member who has died. In fact, the rights of surviving relatives are covered by the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Under the FDCPA, which is enforced by the FTC, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

Here’s what the law has to say about who has responsibility for a dead relative’s debts.

Who is responsible for paying the debts of a relative who has died?
Generally, someone’s estate is responsible for paying their debts. But if there isn’t enough in the estate to cover the debts, they typically go unpaid.
Am I am legally obligated to pay the debts of a deceased relative?
You usually don’t have a legal obligation to pay the debts of a deceased relative who was not your spouse. Even a spouse’s obligation to pay may be limited under state probate law. To determine whether you’re legally obligated to pay, talk to an attorney who is knowledgeable about this area of the law.

What should I do if a debt collector contacts me about a debt of a relative who has died?

Give the debt collector the contact information of the decedent’s personal representative. That’s the person responsible for settling their affairs, including paying any outstanding debts from the estate. If there is a will, the personal representative is known as the executor; if there is no will, the personal representative is known as the administrator.

Don’t give any of your personal information, like your Social Security number, birth date, or financial account numbers to anyone unless you know who you’re dealing with. Some con artists may check obituaries and other legal notices, and then contact relatives of a deceased posing as debt collectors. These scam artists can use your personal information to help them commit identity theft or other types of fraud.

Do I have to speak with a debt collector who contacts me about the debts of a deceased relative?

No. But if you’re a decedent’s personal representative, or otherwise legally obligated to pay the debt, you may want to talk with the debt collector to see if you can resolve the matter.

Can I stop a debt collector from contacting me about the debts of a deceased relative?

Yes. If you decide that you don’t want a debt collector to contact you again, write a letter to the collector saying so. Then, make a copy of your letter, send the original by certified mail, and pay for a “return receipt” so you will be able to document what the collector received and when. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact and to let you know that they or the creditor plan to take a specific action, like filing a lawsuit. Remember that even though the collector is prohibited from contacting you again, they still may sue the estate of your relative or the legally responsible person to collect the debt.

Can debt collectors tell anyone else about my dead relative’s debt?

Other than to get the personal representative’s location, a debt collector generally is not allowed to disclose your relative’s debt to anyone other than the deceased’s spouse, parent (if your relative is a minor child), or guardian.
For Complaints and More Information

Report any problems you have with a debt collector to your state Attorney General’s office (www.naag.org) and the Federal Trade Commission (www.ftc.gov). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law.

For more information about debt collection and the additional rights provided under the FDCPA, see Debt Collection FAQs: A Guide for Consumers at ftc.gov/credit.

For information on other credit-related issues, visit www.ftc.gov/credit and www.MyMoney.gov, the U.S. government’s portal to financial education.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

After a relative dies, the last thing grieving family members may expect are calls from debt collectors asking them to pay their loved one’s outstanding debts. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, a surviving relative usually has no legal obligation to pay the debts of a family member who has died. In fact, the rights of surviving relatives are covered by the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Under the FDCPA, which is enforced by the FTC, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

Here’s what the law has to say about who has responsibility for a dead relative’s debts.

Who is responsible for paying the debts of a relative who has died?
Generally, someone’s estate is responsible for paying their debts. But if there isn’t enough in the estate to cover the debts, they typically go unpaid.
Am I am legally obligated to pay the debts of a deceased relative?
You usually don’t have a legal obligation to pay the debts of a deceased relative who was not your spouse. Even a spouse’s obligation to pay may be limited under state probate law. To determine whether you’re legally obligated to pay, talk to an attorney who is knowledgeable about this area of the law.

What should I do if a debt collector contacts me about a debt of a relative who has died?

Give the debt collector the contact information of the decedent’s personal representative. That’s the person responsible for settling their affairs, including paying any outstanding debts from the estate. If there is a will, the personal representative is known as the executor; if there is no will, the personal representative is known as the administrator.

Don’t give any of your personal information, like your Social Security number, birth date, or financial account numbers to anyone unless you know who you’re dealing with. Some con artists may check obituaries and other legal notices, and then contact relatives of a deceased posing as debt collectors. These scam artists can use your personal information to help them commit identity theft or other types of fraud.

Do I have to speak with a debt collector who contacts me about the debts of a deceased relative?

No. But if you’re a decedent’s personal representative, or otherwise legally obligated to pay the debt, you may want to talk with the debt collector to see if you can resolve the matter.

Can I stop a debt collector from contacting me about the debts of a deceased relative?

Yes. If you decide that you don’t want a debt collector to contact you again, write a letter to the collector saying so. Then, make a copy of your letter, send the original by certified mail, and pay for a “return receipt” so you will be able to document what the collector received and when. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact and to let you know that they or the creditor plan to take a specific action, like filing a lawsuit. Remember that even though the collector is prohibited from contacting you again, they still may sue the estate of your relative or the legally responsible person to collect the debt.

Can debt collectors tell anyone else about my dead relative’s debt?

Other than to get the personal representative’s location, a debt collector generally is not allowed to disclose your relative’s debt to anyone other than the deceased’s spouse, parent (if your relative is a minor child), or guardian.
For Complaints and More Information

Report any problems you have with a debt collector to your state Attorney General’s office (www.naag.org) and the Federal Trade Commission (www.ftc.gov). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law.

For more information about debt collection and the additional rights provided under the FDCPA, see Debt Collection FAQs: A Guide for Consumers at ftc.gov/credit.

For information on other credit-related issues, visit www.ftc.gov/credit and www.MyMoney.gov, the U.S. government’s portal to financial education.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Often times, I will work with families that are crisis planning. What does this mean?

I define crisis planning as planning by a family that is in the process of assisting a loved one with an illness, injury, or disease. In Michigan, especially in Metro-Detroit, it is difficult to get the right information to assist these clients timely. All to often, clients receive misinformation or flat out wrong information from their neighbors, friends or nursing home personnel that do not understand Medicaid regulations or Michigan law.

As a result, clients will often lose assets or funds that could be better used supplementing their loved one's care or assisting with other financial burdens like the upkeep of a home or providing economic means for the other parent or spouse living at home. Therefore, the best advice that you can provide anyone in a nursing home situation, is to seek the advice of a qualified elder law attorney. Our office offers free consultations and can provide important information to assist a family in crisis.

The easiest way to avoid crisis planning is to plan ahead. Using Michigan's estate planning and probate laws to your advantage, you can enact certain strategies by simply updating your estate plan. Michigan law allows you to avoid living probate, guardianships and conservatorships, by executing power of attorney documents. Power of attorney documents, both a general durable power of attorney and medical power of attorney, can be effective disability planning tools that will allow your family to unlock your assets and engage in Medicaid or VA benefit planning, if these documents are drafted correctly. In order to determine if these documents are drafted correctly, you should have them regularly reviewed by an attorney specializing in elder law. As a rule of thumb, I suggest that you review your general durable power of attorney to make sure that:

* It is effective upon signing
* It appoints successor agents
* It has specific clauses related to benefit planning
* It is not "stale"

If you have specific questions regarding your power of attorney documents, or if you do not have these documents in place, call our office for help. Drafting these documents is a simple process and often can be done at a very reasonable price.

You can reach our office at (586) 264-3756.

The State of Michigan sponsored VA advocate and mediation will be defunct as of May 15, 2009.

Gov. Granholm disbanded these service centers as part of the budget reduction. This means that if you have a question about VA services, benefits, etc. you must go through the Federal system of the VA to get an answer.

There are "independent" organizations who will continue to help veterans, families of veterans, attorneys, etc navigate the VA system.

Unfortunately, individuals may get lost in the shuffle as the State looks at ways to balance its budget. The bottom line...helping disabled veterans has just gotten harder to achieve and more complicated, you may always contact our firm for assistance. As an accredited attorney, I can assist with your claims, appeals and provide you with information that you may need to help yourself or family with VA benefits.

Below is a copy of the link to the legislation cutting these services in Michigan.

EXECUTIVE ORDER No.2005 - 5
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS
ABOLISHING THE STATE MILITARY BOARD
EXECUTIVE REORGANIZATION

If you are interested in learning more about the topics that I have discussed on this site and live in the Howell area, I will be presenting a seminar at the Oakhaven Manor Senior facility in Howell, Michigan on Friday April 3, 2008. All are welcome to attend.

For more information please feel free to contact Amanda at: (517) 548-9870.

Oakhaven Manor is located at:1320 Ashebury Lane, Howell, MI 4884.

We will be discussing the use of the Aid and Attendance benefit to assist seniors with their housing choices. In addition, I plan on discussing Medicaid and estate planning concepts that are crucial to understand in order to plan for this great benefit.

Hope to see you there!

Michigan's Department of Human Services (DHS) is the administrative branch responsible for administering and managing the state's Medicaid program. This branch of government is responsible for setting the Medicaid eligibility criteria each year. Recently, the DHS released its financial eligibility criteria.

The new community spouse resource allowance is a minimum of $21,912.00 and a maximum of $109,560.00. This number is important for married persons with a spouse in the nursing home. It determines how much in cash and otherwise non-exempt assets the spouse living in the community will have to spend down before qualifying for Medicaid.

The community spouse income allowance, which is the income that the community spouse can keep each month and not have to pay to the nursing home has been increased from a minimum of $1,750.00 to $2,739.00. The new utility allowance (which provides additional income protection for the community spouse above the minimum protected amount) is $550.00 per month. However, it is important to note that these numbers do not adjust until April of this year.

An important change to note is the update to the divestment rules. If you recall, from my previous post, divestment is a gift by an individual prior to applying for Medicaid benefits. Any gift made is divided by the "penalty divisor" to calculate the length of time the individual will be ineligible to receive benefits. The new penalty divisor is $6,362.00. Accordingly, for every $6,362.00 gifted by a nursing home patient, within the look back period, the state will withhold nursing home care for 1 month. As a result, if an applicant gives away $63,620.00 during 2009 and needs nursing home care, the state will impose a penalty of 10 months.

For many seniors, these numbers may be discouraging: particularly those related to the community spouse. DHS will require an unadvised senior to spend down to ½ of the family’s total assets with a maximum of $109,560.00 before qualifying for Medicaid. Furthermore, the income allowance is very seldom any higher than $1,750.00 based on cost of living expenses alone.

Despite these limits, it is still possible to save more than the normal allowances. Only a well versed elder law attorney can assist you with preservation of your assets and provide you or your family with the care that you deserve.

If you need assistance with Medicaid or nursing home planning, please contact our office.

Frequently, veterans that are residents of Macomb County who need assistance will consider applying for Medicaid benefits in addiiton to VA benefits. If you or your family fall into this category, it is important to understand the interaction between the different care systems as well as the differences in application of federal and state regulations.

Michigan Medicaid benefits fall into two categories: community based; and, long term care benefits. For the purposes of this discussion, we will consider long term care benefits. In order to qualify for this benefit, you must be: (1) over 65 and confined to a long term care facility; (2) be asset eligible; (3) be medically eligible; and, (4) reside at a facility that is certified to receive Medicaid benefits. In addition to this criteria you must also be free of any divestment penalties. Most people know this rule as the five (5) year "look back" period--and few actually understand what it means.

Pursuant to Medicaid regulations a divestment penalty is incurred for any transfer of an asset by an applicant for less than fair market value. This includes any sale of an asset for less than it is worth, any gift of an asset, or any other transfer in title to an asset. The resulting affect of such events is a one month penalty of ineligibility for every $6,300.00 of value transferred. The resulting penalty would begin to "run" when the Medicaid applicant is otherwise eligible to receive Medicaid benefits. While Medicaid has a "look back" period, the VA system does not. In fact, federal regulations provide that gifted assets prior to application for benefits should not be considered as part of the approval assets. However, any gifts made prior to application for VA benefits will trigger Medicaid penalties, if nursing home care occurs within five (5) years of the transfer. Accordingly, if you engage in Medicaid or VA planning it is important to work with an accredited individual that understands both Medicaid law and VA benefit planning, in order to avoid costly errors.

Finally, it is also important to understand that once a veteran or his or her spouse becomes eligible to receive Medicaid benefits in a nursing home, his or her VA aid and attendance benefits will be reduced to the amount of ninety (90) dollars a month. This is because the Aid and Attendance benefit is intended to provide a benefit to essentially keep a veteran out of a nursing facility. The benefit is more or less designed to provide supplemental income for veterans that require help and assistance and not necessarily 24 hour care. However, despite its limitations, if the proper planning is performed, it is possible to use the benefit to provide care, similar to the care that is provided at nursing homes, in assisted living facilities and senior independent living facilities that offer health care and assistance. In metro Detroit, veterans can find such care in several different facilities. In Sterling Heights and Macomb county, veterans will frequently look at moving into Pine Ridge, American House, or Oak Haven facilities.

Often times when I work with clients in Metro-Detroit interested in long term care planning clients are often interested in engaging in planning for VA benefits, but are unaware of the consequences involved with regard to Medicaid benefits should their health decline necessitating a move to a nursing home.

In order to qualify for VA benefits, some clients often transfer their assets to their children or into a special type of trust, at the direction of a financial planner or other "adviser," to preserve their assets; and, yet qualify for benefits. Frequently, such "advisers" are so focused on qualifying for VA benefits that they often ignore the legal, tax or Medicaid consequences of performing such planning. This often results in added legal expenses to effectively "undo" the planning that was done to qualify for VA benefits and to qualify for Medicaid benefits for the nursing home care that the person now requires.

The solution is to engage in a plan that contemplates additional benefit planning in the future. This can be accomplished by working with an elder law attorney that has knowledge in both areas--VA planning and Medicaid planning. Often times documents and planning can be performed to quickly change gears from VA planning to Medicaid planning without missing a beat or incurring additional costs.

The holidays are often a good time to evaluate long term care options. Often, I receive phone calls from children who after visiting with their parents over the holidays realize that that they need more assistance at home or that mom and dad are not doing as well as they thought. Or after self evaluation and goal setting for the new year, some seniors want to move to senior residences to have more social activities and less responsibility with their homes. If you have a loved one or are someone facing these situations, VA benefits can offer a great planning opportunity.

In the metro-Detroit area, there are several assisted living and senior independent living facilities that are familiar with the VA aid and attendance program. In fact, many facilities will provide prospective residents with materials regarding VA benefits in order to help offset the monthly living expenses at their facilities or to prolong a resident's stay at the facility after his or her funds are exhausted.

The aid and attendance benefit will provide additional monthly income to supplement seniors that need assistance and live in such facilities. This benefit can be the bridge between a qualified veteran's regular monthly income and his or her monthly rent and medical expenses.

For example, if you are a qualified veteran and earn about $1,500 per month with monthly living expenses and medical expenses at a senior facility, you will more than likely receive assistance from the aid and attendance program. The benefit is designed to offer a dollar for dollar match for medical expenses. In most cases, a qualifying veteran will receive the maximum monthly benefit of about $1,600.00 per month. If you would like more information about VA benefit planning, please contact a qualified attorney or a qualified service organization like the American Legion or VFW.

In November of last year, the State of Michigan adopted a new estate recovery law. For those of you unfamiliar with the concept, "estate recovery" is a term that describes the State's ability to recover funds from people that have been approved to receive Medicaid benefits for nursing home care. For many Medicaid applicants this means that the State would have a right to file la lien against a Medicaid recipients estate. Primarily, the target of these recovery acts are the Medicaid recipients' homes.

Following the enactment of the Deficit Recovery Act of 2006, the federal government made it clear that all states seeking funds for Medicaid programs needed to adopt an estate recovery statute. Seemingly, this provision targets Michigan, as it remained as the only state without such a law.

Michigan's legislature slowly implemented such a law last year. The only remaining issue for it to be implemented was federal approval. At the end of October, we received word that the federal government rejected Michigan's proposed estate recovery law. As a result, Michigan remains as the only state without an estate recovery law. For the time being, Medicaid applicant's homes are safe.

What does this mean to those seeking Medicaid benefits for long term care? No one really knows for sure. Presently, the best advice is to consult with an elder law attorney in Michigan to discuss your options if you or a family member are facing long term care decisions.