SMART Bill Update

Yesterday, May 24, Senate Bill 2840 passed both the Illinois House and Senate, and will shortly be signed into law by the governor.   The bill makes the following changes to the Medicaid eligibility rules:

• Individuals over the age of 65 will no longer be able to participate in OBRA pooled trusts, unless they are a ward of the State or County Public Guardian;
• Property held in trust (even a revocable living trust) will no longer be considered exempt homestead property, even if the spouse or other qualified individual resides there;
• DHFS may refuse to grant assistance to an applicant whose spouse refuses to disclose his or her assets;
• The Community Spouse Resource Allowance has been set at $109,560.00, and the monthly income allowance has been set at $2,739.00.  While these amounts are much higher than what was originally proposed in SB 2840, they are lower than the current Federal rate, and it is unclear whether or not these rates will be adjusted annually for inflation, as they previously have been;
• DHFS will be able to pursue support payments from the Community Spouse.

Our office will continue to monitor this legislation, and to advocate for trailer legislation in the near future.  We encourage you to contact your legislators to express your concerns about this legislation.  You can search for your representatives here: http://www.elections.il.gov/districtlocator/districtofficialsearchbyaddress.aspx

SMART Bill Will Make Harsh Changes to Illinois Medicaid Eligibility Rules

             In the next few days, Senate Bill 2840, also known as the “SMART” bill, will likely be signed into law by the governor.  It recently came to the attention of the Elder Law Center that certain language was added to the 400 plus page bill that would have a severely negative impact on our clients and the senior citizens of Illinois.  These changes were inserted into the bill despite the recent and protracted negotiations between the Joint Committee on Adminstrative Rule Making and HFS director Julie Hamos, and they effectively undo many aspects of the new Medicaid eligibility rules that took effect on January 1, 2012.  

            On May 22, Katie Malesky from our office was in Springfield with other members of the Illinois Chapter of the National Academy of Elder Law Attorneys (IL-NAELA), in an effort to inform our legislators of the potentially devastating impact of SB 2840 if passed in its current form.  In addition to spending the day in Springfield, the Elder Law Center has joined forces with the members of IL-NAELA and other advocacy groups on behalf of the senior citizens of Illinois by contacting legislators by phone and by fax to express concerns about the bill.  As a result of these efforts, language was removed from the bill that would have significantly reduced the Community Spouse Resource Allowance (the amount of assets the healthy spouse may keep while the unhealthy spouse is on Medicaid), and the monthly income for the community spouse.  Thus, the legislature was responsive to one of our biggest concerns regarding this legislation.  

            However, there are numerous provisions of the bill that remain of grave concern to us, including but not limited to the following:

• A provision that would not allow a home placed in a trust to be considered exempt homestead property, even if the community spouse or another qualified individual is living there.  Thus, individuals who have homes in revocable living trusts as an estate planning measure may have to transfer the home out of trust in the event one spouse needs to apply for Medicaid.
• A provision which would eliminate the ability of a person over the age of 65 to utilize a pooled trust, unless the person is a ward of the county public guardian or state guardian.  These trusts enable individuals to set some money aside in the trust, which contains a pay-back provision to the state, so that they have assets available to cover things that Medicaid will not.

            Since many harsh provisions of the bill have not been amended, and will likely become law, we will continue lobbying and working with our legislators in the hopes that there can be further legislation, sponsored by those legislators who agree that these changes are unwarranted and unfair to senior citizens.  We encourage all of our clients to contact their representatives and voice their concerns over this legislation, in the hope that it may be amended in the near future.  Together, we can make a difference to protect the senior citizens of Illinois.

To find out who your representatives in the Illinois Legislature are, click here: http://www.elections.il.gov/districtlocator/districtofficialsearchbyaddress.aspx

Reverse Mortgage Borrowers Are Getting Younger, Which May Not Be a Good Thing

The age of reverse mortgage borrowers is dropping, according to a new study by MetLife. Unfortunately, reverse mortgages come with risks, so younger borrowers need to be careful.

Reverse mortgages allow homeowners who are at least 62 years of age to borrow money on their house. The homeowner receives a sum of money from the lender, based largely on the value of the house, age of the borrower, and current interest rates. The loan does not need to be paid back until the last surviving homeowner dies, sells the house, or permanently moves out.

The MetLife study found that younger borrowers are taking out reverse mortgages. Today baby boomers aged 62 to 64 make up 21 percent of reverse mortgage applicants. In 1999, only 6 percent of applicants were in this age bracket.  Of homeowners who are considering a reverse mortgage, 46 percent are under age 70.

This new trend toward younger borrowers could spell trouble. While reverse mortgages seem like a great idea, there are major downsides. The closing costs for the loans are much higher than for conventional mortgages, and younger borrowers receive less money because their life expectancy is longer. In addition, the borrower is still responsible for property taxes, homeowner’s insurance, and maintenance. If the borrower runs out of money and can’t pay the property taxes or homeowner’s insurance, the loan will default, and the borrower could lose his or her house.

MetLife’s study also found that most reverse mortgage applicants (67 percent) wanted to use the reverse mortgage to lower household debt compared to 27 percent who wanted to enhance their lifestyle and 23 percent who wanted to plan for the future. Instead of using a reverse mortgage to pay for health care that would allow borrowers to remain in their homes during their final years, borrowers are using reverse mortgages to cover short-term financial shortfalls. The MetLife study finds that strong reverse mortgage counseling is needed, and it cautions that homeowners need to consider whether to use their home equity to shore up their retirement financing or preserve this asset for major unexpected expenses in the future, such as health-related expenses that inevitably increase as people age.  (Funds for reverse mortage counseling were eliminated in last year’s budget deal between Democrats and Republicans but have since been restored.)

To read the MetLife study, click here.

For more information on reverse mortgages, click here.

To discuss elder law issues with an attorney, please call the Elder Law Center at 630-844-0065 or contact us via email. The Elder Law Center is located in Aurora, IL, Kane County, in the Chicago Western Suburbs.

Who Gets Access to Your Online Accounts After You Die?

You may have a plan for what to do with your physical belongings after you die, but what about your online accounts? In today’s social media-dominated world, a person’s digital presence lives on online even after he or she is gone. But who has the right to access those accounts? States have begun addressing this issue with new digital access laws.

Under current Facebook policy, if an account member dies, Facebook will remove the account at the request of family or put it into “memorial status,” but it is very difficult for family members to get access to the account itself.  Family members may want access to a deceased loved one’s account to read messages left by friends or to have the ability to contact the deceased’s friends.  Under Facebook’s policy, the estate can have access to a download of account data as long as it has prior consent from the deceased or if it is mandated by law.

Such mandates are beginning to appear.  In 2010, Oklahoma became the first state to pass a law giving estate executors the power to access, administer, or terminate the online social media accounts of the deceased. Two other states — Nebraska and Oregon — are now considering similar laws. Under Oklahoma’s law, the executor automatically has the power to act on behalf of a deceased individual and access a Facebook, Twitter, or e-mail account. The executor does not have to go to court to get access to such accounts.

While states grapple with this issue, it may be a good idea to provide some instruction in your will on how to deal with your online accounts once you die.  To speak with an attorney to determine if this is something you should add to your will, please call the Elder Law Center at 630-844-0065 or contact us via email. The Elder Law Center is located in Aurora, IL, Kane County, in the Chicago Western Suburbs.