HUD Announces Changes to the Federal Reverse Mortgage Program

September 11, 2017

Seniors sometimes secure and use a reverse mortgage to pay for “in-home” long-term care. Specifically, a reverse mortgage allows a homeowner who is at least 62 years old to use the equity in his or her home to obtain a loan that does not have to be repaid until the homeowner moves, sells, or dies. In a reverse mortgage, the homeowner receives a sum of money from the lender, usually a bank, based largely on the value of the house, the age of the borrower, and current interest rates. There are many factors to consider before deciding whether to proceed with a reverse mortgage.  Before proceeding with a reverse mortgage, federal law requires the homeowners to meet with a Home Equity Conversion Mortgage (HECM) counselor to help individuals make an independent and informed decision as to whether a reverse mortgage is right for them. While a reverse mortgage may NOT be a viable option for most people, in the right circumstance (after careful consideration of the financial and other factors), some will decide to move forward with a reverse mortgage.

Thus, for those considering, or already moving forward with, a reverse mortgage, understanding the Department of Housing and Urban Development’s (HUD) recently announced changes to the federal reverse mortgage program is critical. Citing the need to put the program on better financial footing, HUD will raise reverse mortgage fees for some borrowers and lower the amount homeowners can borrow.

To start, HUD is changing the mortgage insurance premium fees that homeowners pay in order to obtain a loan. Currently, homeowners pay 0.5 percent of the value of their home as an upfront mortgage insurance premium on smaller loans, but homeowners who take out a loan that is more than 60 percent of their home’s value pay a 2.5 percent premium. The new rule will require homeowners to pay a standard 2 percent upfront mortgage insurance premium. Homeowners considering a large reverse mortgage may want to wait until after the new rules go into effect. To offset the upfront costs, the annual mortgage insurance premium rate will be dropped from 1.25 percent to 0.5 percent.

In addition, HUD is lowering the amount that homeowners can borrow. The average borrower at current interest rates will be able to borrow only around 58 percent of the value of their home, down from 64 percent.

The changes are set to go into effect on October 2, 2017. The changes will only affect borrowers who take out new loans; they will not affect existing loans.  The August 29, 2017 Mortgagee Letter announcing these changes can be found at:  https://portal.hud.gov/hudportal/documents/huddoc?id=17-12ml.pdf

For additional information regarding reverse mortgages, visit:

https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmabou

 

The Elder Law Center, P.C. (subsidiary of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

 

 

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Why You Should Use a Lawyer for Medicaid Planning

September 1, 2017

Many seniors and their families don’t use a lawyer to plan for long-term care or Medicaid, often because they are afraid of the cost. But an attorney may be able to help you save money in the long run as well as make sure you are getting the best care for your loved one.

Instead of taking steps based on what you’ve heard from others, doing nothing, or enlisting a non-lawyer referred by a nursing home, you can hire an elder law attorney. Here are a few reasons why you should at least consider this option:

  • No conflict of interest. When nursing homes refer the families of residents to non-lawyers to assist in preparing the Medicaid application, the preparer has dual loyalties, both to the facility that provides the referrals and to the client applying for benefits. To the extent everyone wants the Medicaid application to be successful, there’s no conflict of interest. But it’s in the nursing home’s interest that the resident pay privately for as long as possible before going on Medicaid, while it’s in the nursing home resident’s interest to protect assets for the resident’s care or for the resident’s spouse or family. An attorney hired to assist with Medicaid planning and the application has a duty of loyalty only to the client and will do his or her best to achieve the client’s goals.
  • Saving money. Nursing homes can cost as much as $9,000 (or more) a month in some areas. So investing in legal advice in many cases will be worthwhile and cost-effective, and may result in savings equal to this much in long-term care and/or probate costs. Often attorneys will consult with new clients at a reduced cost to determine what might be achieved before the client pays a larger fee.
  • Deep knowledge and experience. Professionals who work in any field on a daily basis over many years develop both the depth and breadth of experience and expertise to advise clients on how they might achieve their goals, whether those are maintaining independence and dignity, preserving funds for children and grandchildren, or staying home rather than moving to assisted living or a nursing home. Less experienced advisers, however well-intentioned, can’t know what they don’t know.
  • Peace of mind. While it’s possible that when you consult with an elder law attorney, the attorney will advise you that in your situation there is not much you can do to preserve assets or achieve Medicaid eligibility more quickly, the consultation will provide peace of mind that you have not missed an important opportunity. In addition, if obstacles arise during the process, the attorney will be there to work with you to find the optimal solution.

Medicaid rules provide multiple opportunities for nursing home residents to preserve assets for themselves, their spouses and children and grandchildren, especially those with special needs. There are more opportunities for those who plan ahead, but even at the last minute there are almost always still steps available to preserve some assets. It’s always worth checking out whether these are steps you would like to take.

The Elder Law Center, P.C. (subsidiary of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.


Special Needs Trust Fairness Act Passage Presents New Opportunities in the New Year

January 30, 2017

On December 13, 2016, approximately two weeks prior to the start of the new year, the Special Needs Trust Fairness (SNTF) Act became law.  The SNTF Act corrected what appears to have been a long-standing error in the law regarding who is authorized, pursuant to the Social Security Act, to create first-party special needs trusts (commonly referred to as a (d) (4) (A) trust).  For many disabled persons, the ability to create a first-party special needs trusts is extremely important and critical to his/her continued access to important government benefits.  As such, the passage of the SNTF Act is a significant victory for competent disabled adults, who now have the same right that parents, grandparents, guardians, and courts have to create a first-party trust, for their own benefit with their own assets.

Prior to December 13, 2016, and for more than two decades, such individuals were prohibited from creating their own first-party special needs ((d)(4)(A)) trust.  Rather, the prior law stated that such trusts could only be created by the individual’s parent, grandparent, or guardian or by a court, even in a circumstance in which the individual was legally competent and able to handle his or her own affairs.  This error in the law left legally competent disabled adults in the unfortunate circumstance of having to either rely on the assistance of a qualified family member, or to expend significant funds petitioning a court to establish a first-party trust, when a qualified family member was either no longer alive, unwilling, or unable to assist.

Specifically, the SNTF Act, which was included in the 21st Century Cures Act, accomplished this change by amending the Social Security Act to add “the individual” as a person who is now allowed to create a first-party specials needs trust for the individual’s own benefit.  It should be noted that the SNTF Act did NOT make any other changes to the law regarding first-party special needs trusts, which still requires the inclusion of a payback provision to allow state Medicaid offices to recover expenditures made by the state for the individual’s benefit from the any remaining trust assets, after the individual’s death.

Quite simply:  The bottom line is that the addition of just two words (“the individual’) to the Social Security Act has made a world of difference for many legally competent adults.

Planning for special needs is complex.  As such, persons wishing to learn more about special needs planning for yourself or a loved one, are strongly encouraged to seek specific legal advice from an attorney, whose practice includes special needs planning.

The Elder Law Center, P.C. (subsidiary of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.


National Healthcare Decisions Day 2016

April 16, 2016

Today is “National Healthcare Decisions Day!”  What is National Healthcare Decisions Day (NHDD)?  According to the “National Healthcare Decisions Day” website (www.nhdd.org), “National Healthcare Decisions Day exists to inspire, educate, and empower the public and providers about the importance of advance care planning.”  In other words, it is a day dedicated to educating others as to the available options for creating the appropriate legal documents to ensure that their wishes regarding their healthcare will be carried out, should there come a time when they are no longer able to express their wishes.

The attorneys and staff at our office are, and have been, extremely passionate about the importance of advance planning for healthcare decision-making for anyone over age 18. It was out of this passion and strong belief that all competent persons over age 18 should have access to the information necessary to understand and create a Durable Powers of Attorney for Healthcare that we celebrated NHDD 2016 earlier this week.  We celebrated by hosting a community event to educate Illinois residents.  Not only was it an inspiring day for our office, it was truly our pleasure to host this event and to meet with attendees to “inspire, educate, and empower” all those who attended to be pro-active regarding their healthcare planning.  We are grateful to, and thank, all who attended the event.  In addition, we thank and salute our staff for going above and beyond to ensure that the event was a huge success.  If you missed the event, and would like to receive general information regarding the Illinois statutory Durable Power of Attorney for Healthcare, please do not hesitate to contact our office.

Thus, we wish each of you a very Happy National Healthcare Decisions Day 2016!  To those of you who already have your planning in place, we encourage you to inspire others to do the same.  To those of you who do not, we encourage you seek the information you need and delay no more in creating an advance healthcare plan for yourself.  Remember though, the available legal documents and the legal requirements for creating such documents will vary from state to state.  Thus, it is important to seek specific legal advice in your state to be sure that any documents that you create will, if ever needed, be effective.

The Elder Law Center, P.C. (subsidiary of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., http://www.mickeywilson.com) is located in Aurora, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.


Medicare Coverage for Skilled Care Services: Knowing the Correct Standard and Your Rights

February 21, 2016

Have you, or has someone you know, ever been told that your loved one’s Medicare coverage for skilled care services will be stopping because they are either not improving, or are not likely to improve, from additional services?  Within the last month, we have repeatedly heard this from our clients.  We continue to hear this so much that we felt compelled to write this post, as a follow-up to our June 1, 2014 post, to reiterate what the Medicare laws and regulations actually state on this matter.

On January 24, 2013, a settlement in the case of Jimmo v. Sebelius, which was pending before the U. S. District Court for the District of Vermont, was approved.  Although three years have now elapsed since the law on this matter was settled and clarified, confusion, misinformation, and misapplication by, and among, Medicare contractors seems to remain.  The settlement made it clear that the “improvement standard” routinely used by Medicare contractors to determine whether Medicare coverage was available for skilled care services is NOT the appropriate standard.  Per the Jimmo settlement, the determining issue as to whether a Medicare recipient is entitled to Medicare coverage for skilled care services received in a skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) in a long-term care facility (assuming all conditions of eligibility have been met) is dependent upon whether the services are necessary to maintain the individual’s condition or to prevent or slow their decline, and NOT whether the Medicare beneficiary will “improve.”  According to the federal government, this has always been the standard, and as such the Jimmo settlement was not a change in the Medicare laws and/or regulations.

The bottom line, quite simply, is that is important to know the correct standard and to know your rights.  Denials of coverage for skilled care services, when the “improvement standard” is used as opposed to the correct standard are appealable.  The Center for Medicare Advocacy       (www.medicareadvocacy.org)has extensive information regarding the correct standard, the Jimmo settlement, and “self-help” resources for the timely appeal of an “improvement standard” denial.

©Copyright 2016 by Constance Burnett Renzi. All rights reserved.

The Elder Law Center, P.C. (subsidiary of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., http://www.mickeywilson.com) is located in Aurora, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

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Illinois Again Revises Statutory Health Care Power of Attorney Form

February 5, 2016

If you are an Illinois resident, then you may already be aware that as of January 1, 2016 there is yet another new version of the Illinois Health Care Power of Attorney (HCPOA) statutory form now in effect.  Some of you may be wondering why Illinois keeps revising this form.  It seems that, as of late, revisions to Illinois’ statutory  HCPOA form have been frequent.   By way of background, the HCPOA statutory form has evolved and been tweaked over many years.  Then, in 2015, an unexpected and substantial revision to the form was rolled out, and less than a year later, legislation had already been passed (which took effect on January 1, 2016) to correct several major issues of concern with the 2015 form.  In our opinion, the new changes are a vast improvement over the 2015 version.  Although the 2016 changes significantly improve the 2015 version, one might argue that there still remains room for improvement.  That being said, here are a few of the key, positive changes to the 2016 version of the HCPOA statutory form:

  • The principal’s designation of the agent as guardian, should one later be required, has been added back into the form. For some unknown reason (perhaps simply an unintentional oversight), this provision was removed from the 2015 form.
  • The designation of successor agents has been relocated to a more logical place within the form. The location of this provision in the 2015 form was quite problematic, as it appeared after the signatures of both the principal and the witness.
  • Another significant change is that the 2016 version of the form now includes a third, and new, statutory option as to when the agent is permitted to act on behalf of the principal. The new, additional option reads as follows: “Make decisions for me only when I cannot make them for myself. The physician(s) taking care of me will determine when I lack this ability. Starting now, for the purpose of assisting me with my health care plans and decisions, my agent shall have complete access to my medical and mental health records, the authority to share them with others as needed, and the complete ability to communicate with my personal physician(s) and other health care providers, including the ability to require an opinion of my physician as to whether I lack the ability to make decisions for myself.” The 2015 version included two somewhat extreme options, which for many proved to be quite confusing. Both of these options remain in the new form.  The addition of the third option appears to be an attempt to bridge the gap between the extremes of the other two options, by offering a more a middle of the road option.  Thus, if using the statutory form, these three options should be carefully considered; and if need be prior to completing the form, advice should be obtained to ensure that the legal impact of each option is fully understood.
  • The 2016 version now includes language which allows an agent the authority to continue an application or appeal of government benefits post-death, if no probate representative is appointed. This, too,  is a significant and positive addition to the form, as this provision will allow an agent to continue to pursue government benefits (such as Medicaid for long-term care) when the principal has no funds remaining and the opening of a probate estate is not, otherwise, necessary and/or practical.

Many Illinois residents are, also, now wondering whether the Illinois statutory HCPOA which they previously created is still valid; or whether they should create a new one that complies with the most recent set of changes. The good news is the recent statutory changes include a “savings clause.”  As such, an existing, otherwise valid, statutory HCPOA executed prior to January 1, 2016 remains valid and in effect.  However, for those who created a HCPOA using an “unaltered” version of the 2015 Illinois statutory form, we encourage you to seek advice to determine whether updating to the revised 2016 Illinois statutory form is recommended for you.  For those, who created their HCPOA using a pre-2015 version of the statutory form, unless you wish to change your HCPOA for other reasons (such as to change your agents, change the effective date, etc.), your current HCPOA will more likely than not continue to meet your needs.  For those who have not yet created a HCPOA then we, of course, encourage you to do so, as there is no better time than the present to create a HCPOA.

Quite simply, the bottom line is that the 2016 revisions to the Illinois statutory HCPOA are a move in the right direction.  Although executing a new form is not required,  Illinois residents, who used an “unaltered” 2015 version of the form, are encouraged to seek legal advice as to whether updating to the new 2016 form is recommended for them.  For those who have any question at all about their current HCPOA, regardless of whether it was created using the 2015 form or a pre-2015 form,  we likewise encourage those persons to seek specific legal advice for their particular circumstance.

©Copyright 2016 by Constance Burnett Renzi. All rights reserved.

The Elder Law Center, P.C. (subsidiary of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., http://www.mickeywilson.com) is located in Aurora, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

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2016 Medicare Premiums, Deductible, and Co-Insurance Amounts At-a-Glance

January 14, 2016

Still sorting through the new Medicare premiums, deductible, and co-insurances for 2016?  Here is a link to a Medicare press release detailing the 2016 amounts.

Medicare press release:  https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2015-Press-releases-items/2015-11-10.html

As set forth in the press release, most Medicare Part B recipients did not experience a change in their 2016 Part B premiums, as their premiums remain at $104.90 per month.  Some (approximately 30%), however, have experienced an increase in their 2016 Part B premiums, and must now pay a premium of $121.80 per month.  The press release further explains the 2016 premium increase for the 30% of beneficiaries, who are those who are not “held harmless” from premium increases when Social Security benefits remain unchanged.  All other Medicare premiums, deductibles, and co-insurance amounts for 2016 are increasing.  The following is an at-a-glance review of the 2016 numbers:

  • Basic Part B premium: $104.90/month (unchanged for those “held harmless”)
  • Part B premium for those not “held harmless”: $121.80
  • Part B deductible: $166 (was $147)
  • Part A deductible: $1,288 (was $1,260)
  • Co-payment for hospital stay days 61-90: $322/day (was $315)
  • Co-payment for hospital stay days 91 and beyond: $644/day (was $630)
  • Skilled nursing facility co-payment, days 21-100: $161/day (was $157.50)

Additionally, higher-income beneficiaries will pay higher Part B premiums, as follows:

  • Individuals with annual incomes between $85,000 and $107,000 and married couples (filing a joint tax return) with annual incomes between $170,000 and $214,000 will pay a monthly premium of $170.50 (was $146.90).
  • Individuals with annual incomes between $107,000 and $160,000 and married couples (filing a joint tax return) with annual incomes between $214,000 and $320,000 will pay a monthly premium of $243.60 (was $209.80).
  • Individuals with annual incomes between $160,000 and $214,000 and married couples (filing a joint tax return) with annual incomes between $320,000 and $428,000 will pay a monthly premium of $316.70 (was $272.70).
  • Individuals with annual incomes of $214,000 or more and married couples (filing a joint tax return) with annual incomes of $428,000 or more will pay a monthly premium of $389.80 (was $335.70).

Note:  The premiums differ for beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return from their spouse. For additional information regarding those premium amounts, see the press release noted above.

Our legal team is available for consultations with Illinois residents regarding estate planning (Wills and Trusts), durable powers of attorney (life care planning), probate and/or trust administration, guardianships, special needs planning, Medicaid for long-term care, and/or other elder law issues. To schedule an appointment contact our office at 630-844-0065. The Elder Law Center is located in Aurora, IL, Kane County, in the Chicago Western Suburbs.

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