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Budget Proposal Targets Homes of Seniors

You Can Make a Difference—Help us BLOCK THE PROPOSAL  

Written By: Attorney Jeffrey A. Marshall, CELA*  

If you are old and need financial help to meet your care needs, the Governor wants your home or farm when you die.  

Pennsylvania House Bill 1351, introduced by Representative Dwight Evans of Philadelphia, proposes to expand the Medicaid Estate Recovery program. Estate recovery is a federal mandate that requires Pennsylvania to try to recoup the costs of long term care paid by Medicaid. Medicaid, not Medicare, is the biggest government source of payment for long term care.  Most people who reside in nursing homes have part of the cost of their care paid by Medicaid.  And many frail seniors who reside at home with help from their family also get some assistance from Medicaid.  

In a curious exercise of age discrimination, the recovery program only applies to people who are over age 55. Essentially, estate recovery turns government financial help to frail seniors of modest means into a loan program with collection taking place at death. If Medicaid helped pay for any of your care, your estate will be forced to repay the government after you die.   

Estate recovery is a Medicaid “death tax” imposed only on the elderly. The program has been referred to as “picking the bones of the poor,” and “sucking the last ounce of blood from the corpse.”  Because most assets must be spent before a senior becomes eligible for Medicaid, recovery efforts focus on real estate – mainly the home or family farm.  Although Pennsylvania and its citizens bear the costs and burdens of collection, most of the money collected goes to the federal government.  

Estate recovery was first implemented Pennsylvania in 1994.  For the past 15 years, Pennsylvania has wisely limited its scope to the minimum required by federal law – collection from the probate estate of the recipient of Medicaid.  This means that a home or other property owned jointly by a husband and wife can pass free of state lien to the survivor if he or she never personally received Medicaid.  

Now the Governor has now broken with the tradition followed by both Democratic and Republican Administrations and proposed expanding estate recovery to reach assets owned with a spouse or any other person.   

Here is an example of how this proposal will work.  

When John came back from Korea he took over working the family farm.  Eventually, John and his wife Mary inherited the farm from John’s parents.  John and Mary were always “dirt poor.”  But they worked hard their whole lives and raised two fine sons.  They were proud when both of the boys graduated from Penn State.  They were even more proud when both of the boys came home to help their father work the farm.   

In 2000 Mary’s health began to decline due to Parkinson’s disease and dementia.  Everyone in the family pitched in to care for Mary and keep her home.  In 2005, after 5 years of struggle, the family needed some outside help.  They applied for home care that was paid for in part by Medicaid.  This extra help, combined with the ongoing care by John and the boys and their wives, allowed Mary to stay at home for another full year. In 2006 the Office of Aging finally advised the family that it was no longer appropriate to care for Mary at home.  She moved to a local nursing facility.  John could not fully afford the nearly $8,000 a month cost and Medicaid benefits were needed.  

Mary died in January 2009.  She was 84.  Three weeks later John got a letter in the mail from the Government.   The letter said Pennsylvania was owed $171,386 for the Medicaid that was provided for Mary’s care, both at home and in the nursing facility.  When John consulted his lawyer, he was relieved to learn that under current law, the farm is not exposed to this debt to the state.  John can keep the farm and pass it on to his boys when he dies.   

This will all change under the Governor’s proposal. Under expanded estate recovery, the state will have a $171,386 lien against John’s farm.  This will create immediate problems for John and the boys if they need to borrow for the farm operation.  And when John dies, his family will need to find some way to pay off the state lien.  Most likely, the farm will have to be sold.  

Under Governor Rendell’s proposal estate recovery will be expanded to apply to any type of asset in which an older Medicaid recipient has any interest.  This will include joint accounts, trusts, life insurance, annuities “and other assets in which the deceased individual had any legal title or interest at the time of death.”  Lawyers and bankers and real estate title companies are opposed to this expansion because it will add confusion to the ownership of property, raise costs for consumers and business alike, and add complexity and additional expense to the settlement of estates.  But even worse, the fear of losing their home to estate recovery deters seniors from getting the care they may desperately need.  As a result, organizations like the Pennsylvania Alzheimer’s Association Public Policy Coalition and the Pennsylvania AARP oppose expansion of recovery.    Failing to provide needed care puts both the senior and caregiver at risk and is likely to ultimately increase the cost of care.   

Normally in Pennsylvania, controversies involving the debts of a decedent are decided in Orphans Court by our elected judges. In an excess of hubris, the Governor’s proposal, currently contained in Section 1412 of House Bill 1351, sets up the Department of Public Welfare as the sole arbiter of the amount and validity of the amount and validity of the state’s claim.  It is judge, jury, and executioner.  Orphan’s court review of the state agency’s decisions is foreclosed.     

The Governor’s office projects that expanded estate recovery will add $2.6 million annually in collections.  However, this figure fails to account for the costs of the additional burdens placed on business and the citizens of our Commonwealth.  It doesn’t factor in the loss of local tax revenues as homes fall into disrepair.  And it doesn’t account for the costs that will result when infirm seniors do not receive the care they need or are subjected to abuse by caregivers who are stressed beyond the breaking point. Those costs will be paid by the people and by the government.  

These are tough times for all of us, including the state government.  But helping people get the care they need at the end of their lives should not give the government the right to take our property.  Much more than money is at stake in the battle over estate recovery. Thousands of Pennsylvania families are struggling, often magnificently, to do the right thing for their loved ones.  We need to support our families and caregivers, not take their property.   

Expanded estate recovery is part of the Governor’s budget proposal and will likely be enacted this July unless citizens make their voices heard in Harrisburg.  Call or write or e-mail the Governor and tell him you oppose expanded estate recovery.

Here is his contact information:

Governor Edward Rendell

225 Main Capitol Building

Harrisburg, Pennsylvania 17120

Phone: (717) 787-2500

Fax: (717) 772-8284

E-mail http://sites.state.pa.us/PA_Exec/Governor/govmail.html  

Resources that can help you act to STOP THIS PROPOSAL are available on our website.

You can read more about expanded estate recovery, view sample letters that you can send to your legislators and read talking points prepared by the Pennsylvania Association of Elder Law Attorneys (PAELA) to fight against this proposal. http://www.paelderlaw.com/estate_recovery_expansion_PA.html

Be sure to contact your state legislators – ask them if they will be voting in favor of expanding the Medicaid death tax.  Tell them you don’t want to expand the government’s right to take your property after your death.  Let them know how you feel about the proposal to expand estate recovery.   You can find your legislators names and contact information at http://www.paelderlaw.com/estate_recovery_expansion_PA.html. 

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 Contacting Marshall, Parker & Associates for Assistance

Marshall, Parker & Associates is a nationally recognized law firm which provides long-term care planning, estate planning & estate administration services to Pennsylvania clients from our offices in Jersey Shore, Williamsport, Wilkes-Barre and Scranton.

If you or someone you know needs assistance with estate planning or with qualification for Medicaid benefits for nursing home or home care, please call us toll free at 1-800-401-4552.

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*Attorneys Marshall, Parker & Grebas are certified as Elder Law Attorneys by the National Elder Law Foundation under authorization from the Pennsylvania Supreme Court

**In addition to her law degree, Attorney Colbert holds an advanced legal degree (LLM) in Estate Planning from the University of Miami School of Law.

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