34 THE QUEENS COURIER • HEALTH • JANUARY 5, 2017 FOR BREAKING NEWS VISIT WWW.QNS.COM health The Elder Law Minute TM Don’t Let Life Insurance Aff ect Your Medicaid Eligibility BY RONALD A. FATOULLAH, ESQ. AND JEFFREY P. GORAK, ESQ. A life insurance policy is a contract between an individual (the insured) and an insurance company (the insurer) where the insured pays a premium in exchange for the insurer’s promise to pay a certain sum of money (the death benefi t) to the designated benefi ciaries on the death of the insured. Th e two most common types of life insurance policies are 1) term life insurance and 2) whole life insurance. Under both policies, an insured pays a premium (can be annual or monthly) during a term of years (for example, 20 years) and if the insured dies during the term, the insurer pays the death benefi t to the insured’s designated benefi - ciaries. But a whole life insurance policy also has a cash surrender value, meaning that the insured can surrender the policy at any time and receive the cash value of the account, which is largely determined by the amount of premium payments made by the insured. Both types of policies are great estate planning tools. Th ey both pay the death benefi t directly to the designated benefi - ciaries, thereby avoiding probate. Further, such proceeds are not recoverable from the estate by Medicaid because Medicaid ELDER LAW can only recover against assets distributed through the probate process. Despite these benefi ts, whole life insurance in particular can be problematic when it comes to applying for Medicaid. In New York, an applicant may have up to $14,850 (or $21,750 for a couple) in resources in order to qualify for Medicaid. A life insurance policy with no cash surrender value (such as a term policy) poses no problem, as it is not counted as a resource for Medicaid purposes. But a life insurance policy with a cash surrender value will be counted as a resource if the death benefi t exceeds $1,500. Its value will be the cash surrender value. Medicaid views these policies as resources because they can be surrendered for cash. An applicant who owns a life insurance policy with a cash surrender value must therefore plan wisely to maintain the policy and still qualify for Medicaid. Th e planning options available to a Medicaid applicant with a whole life insurance policy largely depend on the cash value of the policy. If the cash value (not the death benefi t) is less than $1,500, a Medicaid applicant may purchase a separate burial fund in an amount equal to or less than the $1,500, thereby removing this amount as a countable resource. Planning, however, becomes more problematic when the cash value, in combination with the applicant’s other (non-exempt) resources, exceeds the applicant’s resource allowance ($14,850). When this happens, some applicants surrender the policy and spend down the cash. Th is is ill-advised in many circumstances because surrendering the policy results in the loss of the death benefi t. If an applicant is contemplating Medicaid home care, the applicant may transfer (or gift ) the ownership of the policy to a family member, because there are no transfer penalties for home care. If, however, an applicant is contemplating Medicaid nursing home care and he or she cannot transfer the policy to a spouse or disabled child, which are exempt transfers for nursing home care, a better alternative may be to have the applicant’s children purchase the policy from the applicant for the cash surrender value. Th e cash received can then be spent down or used to purchase an irrevocable funeral agreement, which is not considered a transfer. If the cash value (when combined with the applicant’s other non-exempt resources) is signifi cant, further Medicaid planning will be needed. Th is may include, for example, a gift /loan strategy where part of the cash value is used for the applicant’s care. Th e benefi t of these latter techniques is that the death benefi t of the policy remains in eff ect, which is oft en the very reason for purchasing the policy. A life insurance policy is a great estate planning tool. It off ers both the advantage of avoiding probate and the protections against a Medicaid recovery. But it can be problematic when planning for Medicaid. It is important to review the various planning techniques with an experienced elder law attorney when planning for Medicaid. Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law fi rm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Jeff rey P. Gorak, Esq. is an elder law attorney with the fi rm. Th e law fi rm can be reached at 718-261-1700, 516- 466-4422, or toll free at 1-877-ELDERLAW or 1-877-ESTATES. Mr. Fatoullah is also a partner with Advice Period, a wealth management fi rm, and he can be reached at 424-256-7273. Options for patients: Alleviation of hip and joint pain BY ROHIT HASIJA, MD In the hip and knee, there is a layer of smooth cartilage on each surface making up the joint. Th is cartilage serves as a cushion and allows for smooth motion of the joint. Osteoarthritis, the most common form of arthritis, is a wearing away of this smooth cartilage, eventually wearing down to bone. Rheumatoid arthritis is an autoimmune disease in which the body’s immune system attacks joint tissue, causing infl ammation of the joint lining. Both forms of arthritis cause joint pain, stiff ness, and sometimes even loss of normal movement. Arthritis is the most common cause of disability among U.S. adults. In fact, 49.7 percent of people older than 65 years, and 30.3 percent of people aged 45–64 years, have doctor diagnosed arthritis. In the early stages of arthritis, successful treatments may include pain medication, exercise, physical therapy, and steroid injections into the joint. It is usually recommended to try other measures before resorting to joint replacement surgery. When pain in the knee or hip severely limits the ability to walk, work, or perform even simple activities, joint replacement may be an excellent option. Joint replacement is really cartilage replacement with an artifi cial surface, made up of metal, plastic, and/or ceramic. Your orthopedic surgeon will discuss if you are a candidate for the surgery. Th e decision will then be yours. Joint replacement surgery has a high rate of success in eliminating pain and restoring range of motion; 90-95 percent of patients achieve good to excellent results. Dr. Hasija is an Orthopedic Surgeon at NYC Health + Hospitals/Elmhurst’s Hip and Knee Center, whose team of surgeons, consulting physicians, nurses, physical and occupational therapists, and social workers work together to treat and improve the quality of life for patients suff ering from hip and knee pain. To fi nd out if you qualify for joint replacement or receive further information, please call Dr. Hasija or Laura Skeeles, PA-C, at 718-396-4324. RONALD FATOULLAH ESQ, CELA*
QC01052017
To see the actual publication please follow the link above