Federal Court Orders Medicaid Benefits in
Spousal Annuity Case
Written
By: Attorney Jeffrey A. Marshall, CELA*
A Federal District Court
has permanently enjoined
Pennsylvania
from treating an actuarially sound, irrevocable, non-assignable
immediate annuity as a resource of the community spouse.
Immediate annuities have long been utilized to protect the financial
security of retirees. A
commercial immediate annuity is purchased from an insurance company. The
investor pays a sum of money to the insurance company. In return, the
insurance company agrees to provide payments to the investor over a
stated period of time.
There are many variations of annuity investments. With an immediate
annuity the insurance company begins to make the contracted payments
immediately. An immediate
annuity can provide a retiree with the security of a guaranteed income
for a term of years or for life. Lifetime
guaranteed income is an attractive option not available with most
non-annuity investments.
Immediate annuities can have an extra benefit for the community spouse
of an individual who needs long-term care.
For purposes of Medicaid eligibility, a married couple’s
countable resources are pooled and excess resources are at risk.
However, the income of the community spouse is protected. A community spouse
can retain his or her income without affecting the Medicaid eligibility
of the institutionalized spouse.
An immediate annuity converts a cash sum into a
guaranteed stream of payments. Such
payments have traditionally been treated as income under Medicaid law.
As a result, the purchase of an immediate annuity can convert an
otherwise countable resource (cash) into a non-countable stream of
payments for a community spouse.
But what if there were a potential buyer for the stream of payments
being received by the community spouse?
Can a state Medicaid agency force a community spouse to turn the
promise of future income payments into a countable resource?
When Robert James entered the nursing home, his
wife, Josephine, had more than her allowed community spouse resource
allowance. To spend down to
the eligibility point, Mrs. James purchased an actuarially sound
immediate annuity. The annuity was irrevocable, non-assignable and had
no cash value.
When Mr. James thereafter applied for Medicaid benefits, his application
was denied on the basis that the annuity was countable and the couple
still had excess resources. Mr.
James, represented by attorneys Matthew
Parker and Kevin
Grebas, of Marshall, Parker & Associates, filed an action in
Federal Court which alleged that the denial issued by the Pennsylvania
Department of Public Welfare (DPW) was in violation of federal Medicaid
law.
In support of its denial of benefits, DPW took the
position that the annuity was a countable resource because Mrs. James
could sell the future payment stream of the annuity. It offered an
affidavit from an officer of J.G. Wentworth Company stating that
Wentworth would buy the community spouse’s rights to the annuity’s
income payments. Thus,
argued DPW, the annuity payments constituted a countable resource.
On November 20th, the
Federal District Court
for the Middle District of Pennsylvania rejected DPW’s arguments and
permanently enjoined it from denying Medicaid benefits to Mr. James.
Judge Caputo explained the Court’s ruling as follows:
Defendant [DPW] essentially argues that,
even if the income stream itself cannot be considered for purposes of
determining Medicaid eligibility, the market value of that income stream
should be a countable resource to preclude eligibility. Such a rule
would completely undermine federal law, which excludes income of the
community spouse from factoring into the institutionalized spouse’s
Medicaid eligibility. Indeed, a holding that the market value of an
income stream derived from an irrevocable actuarially sound annuity is a
countable resource would effectively contravene the MCCA, which provides
that “no income of the community spouse shall be deemed available to
the institutionalized spouse.” 42 U.S.C. § 1396r-5(b)(1). To be sure,
Defendant’s argument blurs the distinction drawn by the MCCA between
assets and income.
Rather, so long as the principal or
corpus of an irrevocable annuity or trust cannot be reached by the
applicant or spouse, the income derived from such an asset cannot be
counted as a resource for Medicaid purposes, notwithstanding that income
stream’s market value in the eyes of a third party.
Pennsylvania
and other State Medicaid authorities tend to see the ability of a
community spouse to protect his or her financial security through the
purchase of a Medicaid annuity as a loophole in federal Medicaid law. If
so, it is a loophole that Congress has continually refused to close.
A cynic might suggest that the Congressional
attitude towards Medicaid annuities is rooted more in the power of the
insurance lobby in
Washington
, than in concern for the financial plight of middle class married
seniors. Whatever its
motivation, Congress has continued the special treatment of annuities in
the recently enacted Deficit Reduction Act.
It appears that individuals and couples facing devastating
nursing home costs can continue to plan through the use of properly
structured immediate annuities.
The ruling in the James case is significant for
couples with a desire to protect a community spouse from financial
impoverishment due to nursing home costs.
Robert A.
James v. Estelle B. Richman, United States District Court for the
Middle District of Pennsylvania, Civil Action No. 3 :05-CV-2647
(November 21, 2006). A copy
of the Court’s memorandum and order is available online at www.paannuity.com.
Attorney
Marshall can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Pennsylvania
Updates Advance Health Care Directive Laws
Written
By: Attorney
Jeffrey A. Marshall
, CELA*
For
many years,
Pennsylvania
has been criticized for having out-of-date laws regarding health care
powers of attorney and other advance directives.
Now,
Pennsylvania
has enacted sweeping legislation designed to enhance the right and
ability of individuals to control the fate of their health care.
On
November 29, 2006
, Governor Rendell signed Act 169-2006 (SB 628) into law.
Act 169 sets forth a comprehensive set of laws governing health
care decision making for incompetent persons.
The new law permits an individual to appoint a
surrogate decision maker(s) who can be authorized to make any
health-care decision, including those concerning end-of-life treatment.
It updates
Pennsylvania
’s laws regarding living wills and out-of hospital do-not-resuscitate
orders. And, it authorizes
family members and close friends to make health decisions for
individuals lacking a designated surrogate.
The legislation was the result of years of
discussion, lobbying, and negotiation by many interest groups.
(An earlier version was vetoed in 2004). The new law shows the
effects of this collective parentage - the Act is lengthy and intricate.
Unfortunately, this complexity increases the risk that its provisions
will be either misunderstood or disregarded by health care providers.
Act 169 amends and restructures the prior Chapter
54 of Title 20 of the Pennsylvania Consolidated Statutes and
incorporates laws regarding living wills, out of hospital do not
resuscitate orders, and decision-making by health care agents and
representatives into a revised Chapter 54.
The new Chapter 54 is organized in five sub-chapters:
Subchapter A (General Provisions)
This subchapter provides general provisions and definitions of
some of the terms that are used in the Act.
However, some notable terms such as “sound mind” are not
defined.
Subchapter B (Living Wills) This
updates
Pennsylvania
’s 1992 law regarding health care “declarations” (which are more
commonly known as living wills). A living will applies when a patient is
determined to be incompetent and has an end stage medical condition or
is permanently unconscious.
Subchapter C (Health Care Agents and
Representatives) Subchapter C covers the authority and
responsibilities of health care agents and representatives. A health
care agent is named in advance to make health care decisions by an
individual who later becomes incompetent. The Act sets forth a set of
standards for the agent to follow in making decisions.
Where another surrogate decision maker is not
otherwise available for an individual who lacks decision making
capacity, the Act provides for decision making authority by a
"health care representative."
An individual “of sound mind” may designate this
representative. Otherwise,
the statute creates the following order of priority:
(1) The
spouse, unless an action for divorce is pending, and the adult children
of the principal who are not the children of the spouse.
(2) An
adult child.
(3) A
parent.
(4) An
adult brother or sister.
(5) An
adult grandchild.
(6) An
adult who has knowledge of the principal's preferences and values,
including, but not limited to, religious and moral beliefs, to assess
how the principal would make health care decisions.
Subchapter D (Combined Form). This
subchapter contains a form that combines a health care power of attorney
with “living will” end of life treatment instructions.
The use of this form is optional, but its use will likely become
widespread.
Subchapter E (Out-of-Hospital
Nonresuscitation). A
do-not-resuscitate (DNR) order is a medical order written by a
patient’s attending physician that directs medical personnel to forgo
cardiopulmonary resuscitation (CPR) if the patient’s heart or
breathing stops. There are two varieties of DNR orders. The traditional
DNR order is given by the doctor of a hospital patient directing that
resuscitation not be performed in the event that the patient’s heart
or breathing stops. The order, often referred to as a “no code,” is
usually placed on the patient’s chart. The second variety of DNR gives
similar instructions for non-hospitalized individuals.
A patient’s desire to forgo CPR can be more
difficult to enforce when the patient does not reside in a hospital.
Well-meaning family members and other caregivers tend to call 911,
drawing the response of an emergency medical services (
EMS
) team, which is trained to provide CPR and has no time to investigate
the patient’s circumstances. In 2002,
Pennsylvania
enacted a law to deal with such out-of-hospital situations and to
provide a means for non-hospitalized and terminally ill patients to
ensure that their choices regarding end-of-life care are honored by
EMS
personnel. The new Act
essentially incorporates the 2002 law into Chapter 54.
The Act also requires the Department of Health to
consider, in consultation with an advisory committee, adoption of a
standardized form for a physicians-order-for-life-sustaining-treatment (POLST),
which would provide for continuity of DNR and other life-sustaining
treatment orders from one setting to another.
Updating
Pennsylvania
's health care decision making laws was significantly overdue.
Prior statutory provisions were in conflict with the realities of
medical practice and the conventions followed by health care providers.
Applicable standards and procedures for health care agents were
not clearly defined and there was no statutory authorization for
decision making by family members.
The new law will hopefully enhance patient
decision-making autonomy and provide protection for both patients and
health care providers. It is
scheduled to take effect 60 days after the date the Governor signed it
into law.
A copy of the new Chapter 54 is available on
Marshall
, Parker & Associates website at the following link http://www.paelderlaw.com/pdf/SB_628.pdf
.
Attorney Marshall can be contacted
at webmail@paelderlaw.com or
at 1-800-401-4552
Quality Insights of
Pennsylvania
Written By: Lisa Barner,
Marshall, Parker & Associates Planning Specialist
Medicare
beneficiaries and their families often wonder how long a hospital stay
should be for a particular illness.
The answer is always the same (regardless of the reason for the
hospital stay). You should
stay in the hospital as long as it is medically necessary.
Medical necessity is based upon your needs (as determined by your
physician). What should you do if you feel you are being discharged too
soon?
Medicare has developed an appeals process. Medicare
beneficiaries should receive information upon admission to the hospital.
This information should inform you of what you can do if you feel you
are being discharged from the hospital too soon.
First, you must request and obtain a hospital issued notice
of non-coverage. This notice will explain why the hospital believes you
no longer need hospital care. After
you receive this notice, contact Quality Insights at 1-800-322-1914
immediately. (Inform the hospital that you have called Quality
Insights.) A family member or friend may call for you. If you call
during the evening, weekend, or holidays, leave a message.
Quality Insights will return your call the next business day.
Once you have called Quality Insights, you can not be forced to
leave the hospital while they are conducting a review.
You will not be charged for the review or for the days you stay
in the hospital while the review is being conducted.
When you place a call to Quality Insights, they will ask
you for some information and then contact the hospital to obtain a copy
of your medical record. Once they receive your information, one of their
physicians will review your case and decide whether you need to remain
in the hospital. If this
physician decides you need additional hospital care, you can stay in the
hospital and Medicare will pay for your stay as long as that care is
medically necessary.
If Quality Insights decides you do not need any
additional hospital care, Medicare will no longer pay for your hospital
stay after Quality Insights has made its decision.
For more information contact www.qipa.org
.
Lisa can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Study Finds: Support of
Caregivers Delays Nursing Home Admissions
Written By: Attorney Jeffrey A.
Marshall, CELA*
A
new study reports that people with Alzheimer’s can remain at home much
longer if their caregivers are provided with formal counseling and
support. The study, which appears in the November issue of the journal, Neurology, found that nursing home placement can be delayed for an
average of 1.5 years if the caregiver spouse is provided with enhanced
counseling and support.
Researchers
recruited caregivers of patients who had been diagnosed with
Alzheimer’s disease and who were living with their spouse and had one
other relative living in the area. The caregivers received two
individual and four family counseling sessions, each tailored to the
caregiver's needs. Caregivers were also able to receive later telephone
counseling and encouraged to go to support group meetings. The
researchers followed the caregivers for up to 17 years to assess the
long-term impact of the intervention.
"The
caregivers were given instruction on managing troublesome behaviors and
promoting better communication between family members," explains
study co-author, William Haley, director of the University of South
Florida School of Aging Studies. "Caregivers assigned to the
control group received services normally provided, but did not
participate in formal counseling sessions."
"Family
caregivers often want to avoid or delay placement, but they can wear out
under the long-term strain of caregiving. Appropriate counseling and
support can help empower the caregiver, reduce their distress, and give
them the strength to continue providing care at home" said Dr.
Haley.
Legislators
and government officials should take note. Providing nursing home
care to persons with Alzheimer’s imposes enormous costs on the
government’s Medicare and Medicaid programs.
Today,
4.5 million people in the
U.S.
have Alzheimer’s. By the middle of the century, that number is
expected to increase to between 11.3 and 16 million. The Study
suggests that Medicare and Medicaid costs could be significantly reduced
and the quality of life of caregivers enhanced, by improving caregiver
counseling and support.
“Interventions
that help reduce nursing home placement without overburdening family
members will be essential for our society, which is faced with a
projected tripling of cases of Alzheimer's disease in the decades
ahead," said the study’s lead author, Mary Mittelman of the New
York University School of Medicine.
Nearly
60% of all nursing home residents have Alzheimer’s disease or a
related disorder. "Given the average cost of $60,000 per year for
nursing home care in the
United States
in 2004, a delay in placement of one and half years represents about a
$90,000 savings per patient," noted Dr. Mittleman.
The
study report, “Improving caregiver well-being delays nursing home
placement of patients with Alzheimer disease.” by Mary S. Mittelman,
DrPH, William E. Haley, PhD, Olivio J. Clay, MA and David L. Roth, PhD
is available online http://www.neurology.org/cgi/content/abstract/67/9/1592
Attorney Marshall can be contacted
at webmail@paelderlaw.com or
at 1-800-401-4552
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*Attorneys
Marshall and Parker are certified
as Elder Law Attorneys by the National Elder Law Foundation under
authorization from the Pennsylvania Supreme Court.
