Question: When our father remarried 16 years ago, we were suspect; however, as things turned out, my sister and I grew very fond of our stepmother. Her children by her prior marriage did not contact her in any way since she and Dad were married. Shortly after she was admitted to the nursing home after a stroke, our father died of a heart attack. When we began sorting through their papers, we found a real mess: Our stepmother had not signed a power of attorney. Since she had no assets to speak of, her will left everything to Dad. Dad’s will left everything to my sister and me, and nothing to her.
Since she had did not have any assets and very little income, my sister and I made a Medicaid application on her behalf to cover the nursing home costs which otherwise would have cost more than $4,000 per month; however, the Medicaid people denied the application saying that she was entitled to one-third of Dad’s estate – about $250,000 -- even though he left everything to us.
Smelling money, two of her three "children" (which I use loosely) went to the probate court and became her representatives to manage her new-found money. We went to a lawyer who told us that there was nothing we could do but pay over the money. We tried to negotiate with her children, but they would hear none of it. Our father’s plan has been frustrated, and we are not even allowed to visit her. While this is a terrible travesty, could the result have been avoided?
Answer: With proper planning, the answer is yes. In non-community property states, surviving spouses are protected from disinheritance by "elective share" laws which allow surviving spouses to elect to take against the will that disinherits them.
Eligibility for Medicaid benefits depends on both your stepmother’s health and her "available resources" which include those resources in which she has a legal interest or the legal ability to use or dispose of. Since the law of your state gives her – or her appointed representative -- the legal right to claim and use one-third of your father’s estate, her countable assets for Medicaid purposes exceed $250,000. If she attempted to waive this right, she would have been disqualified for at least 36 months – and it is unlikely that her children would have waived anything because, at her death, they will receive what may be left at her death. And with appropriate Medicaid planning by her children, she should be able to qualify for Medicaid.
This situation could have been avoided if: (1) Your stepmother had signed a durable power of attorney for finances and health care which provided for you and your sister to not only take care of her physically, but also her finances. This would have kept her children our of the picture and would have allowed you and your sister to visit her. (2) Your stepmother had signed a will leaving everything to you and your sister if your father died before she did. (3) Your father had signed a will that included a special needs trust or income-only trust that would have provided for your stepmother in a way that would have met the elective share value requirements. (4) Your stepmother had waived her rights in your father’s estate by way of a premarital agreement or a separate waiver signed at least 36 months before your father’s death under these circumstances.
Question: My parents both receive Social Security, have Medicare Parts A and B, and purchased a "Medicare Supplement" policy from a large national association which my parents thought covered everything Medicare did not cover. Big mistake. After her hospitalization for a stroke and at the time of her admission to a skilled nursing facility, Dad was told that since she had been in the hospital for three days prior to her admission and since she had a Medicare Supplement insurance policy, all of her expenses would be covered by Medicare. Well, 45 days later when she was discharged, it was quite a shock when my parents received a nursing home bill for nearly $15,000 – which she and Dad can not afford. The nursing home now says that their supplement insurance (Plan "A") does not provide nursing home coverage. Why is it that my parents had no clue about what is and what is not covered? Can we upgrade these policies even though my folks have health problems?
Answer: Like most folks over age 65, your parents folks purchased "Medicare Supplement" insurance, also called "Medigap" without understanding what coverage they were purchasing. Under Medicare, hospital stays are only partially covered, and 20 percent of doctor's approved charges or excess charges are not covered; however, the biggest gap in Medicare benefits is long-term care – which includes nursing home care and a number of home health services. Without this gap coverage, seniors may be subject to potentially catastrophic costs of long-term care.
Because of the confusion, Congress passed a law that, among other things, required that Medigap be simplified and standardized; that certain basic benefits be included in all policies; and that there not be more than ten different policies – now designated by letters "A" through "J". Plan A is the core policy and does not include the co-insurance benefits for skilled nursing care for days 21 to 100 – which will be $96 per day in 1999. Plan C is the first plan that covers this care.
It is doubtful that your parents will be able to "upgrade". So long as people with existing medical problems purchase Medigap insurance within six months after enrolling in Medicare Part B – which generally occurs at age 65, they can not be denied Medigap coverage because of preexisting conditions; however, if they make a poor choice in choosing the type of Medigap policy – as did your parents, it will be difficult to upgrade or secure a replacement policy because the insurer may then refuse to accept them because of the preexisting condition.
Taking the NextStep: It is essential that those who purchase Medigap coverage understand what is and what is not covered before they purchase.
Jan Collins is an award-winning writer and editor. Jan Warner is a matrimonial, elder, and tax attorney. Both are based in Columbia, South Carolina. NextSteps is seen in newspapers throughout the United States and can be found on the Internet at http://www.nextsteps.net.
Please send your questions by email to janwarner@nextsteps.net or by mail to P.O.Box 11704, Columbia, SC 29211.
