New
Legislation Enacted, Regulations Issued
Written
By: Jeffrey A. Marshall, CELA*
Pennsylvania
has
enacted two new laws intended to help reduce state
expenditures on long-term care.
ACT NO.40 of
2007, which implements a long-term care insurance
partnership program in
Pennsylvania
, is
discussed below in this issue of the Elder
Care Law Alert.
ACT
NO. 56 OF 2007,
establishes a new category of care provider - Assisted Living
Residences - which will be able to accept residents who
would have previously required a nursing facility level of
care. Act 56 will
be discussed in the next issue of the Elder
Care Law Alert.
In
addition, The Department of Public Welfare has issued proposed
regulations to set minimum standards for the operation of home
care agencies and home care registries. The act of
July 7,
2006
(P. L.
334, No. 69) (Act 69) amended the Health Care Facilities Act
(act) (35 P. S. §§ 448.101--448.904) requires the Department
to license home care agencies and home care registries. Home
care agencies employ direct care workers to provide home care
services to individuals in their homes or other independent
living environments. Home care registries refer direct care
workers who are independent contractors to provide home care
services to individuals in their homes or other independent
living environments.
Act 40, Act 56, and
the proposed home care agency and registry regulations are all
available on the Marshall, Parker and Associates' website at
the following links:
▪
Act
40- Long-Term Care Insurance Partnership Program in
Pennsylvania
▪
Act
56-Assisted Living Residences
▪
Proposed
Home Care Agency and Registry Regulations
Attorney Marshall can be contacted
at webmail@paelderlaw.com
or at 1-800-401-4552
"Nursing
Homes, Medicaid and Your Assets" - Wall Street Journal
Article quotes our managing attorney, Jeff Marshall
Written
By: Melissa Bottorf, Director of Marketing & Public
Education
Jeff
Marshall, managing attorney of Marshall, Parker &
Associates, is quoted in a recent Wall Street Journal article entitled, "Nursing Homes, Medicaid and
Your Assets." The
article discusses strategies estate planning experts use to
protect assets from nursing home costs.
Planning for nursing home and other long term care
costs has been significantly affected by the passage of the Deficit
Reduction Act of 2005.
"Estate-planning experts say some
options remain open for those who want to pass on some assets,
such as a home, through a trust, or preserve some income for a
spouse in certain kinds of annuities," writes Tom Lauricella
of the Journal. The article
goes on to discuss the growing use of these highly specialized
trusts and annuities.
"Nursing
Homes, Medicaid and Your Assets" is featured in the
July 22, 2007
Sunday edition, and the July 24 regular edition of the Journal. It is
available online through the Wall
Street Journal website at the following link:
http://online.wsj.com/article_print/SB118498132532773712.html.
The column is also available online
through Yahoo. Paste
the following link into your browser.
http://biz.yahoo.com/wallstreet/070722/sb118498132532773712_id.html?.v=1.
Melissa Bottorf can be contacted
at webmail@paelderlaw.com
or at 1-800-401-4552
Attorney Marshall can be contacted
at webmail@paelderlaw.com
or at 1-800-401-4552
Pennsylvania
to Implement
Long-Term Care Insurance Partnership Program
Written
By: Jeffrey A. Marshall, CELA*
Getting
Alzheimer's, multi-infarct dementia, Parkinsons, COPD, or
any other long-term care related illness, is a catastrophic
event for the affected individual and family. Tremendous
physical and emotional burdens must be borne by the affected
individual and family caregivers.
Should they also bear the full financial burden of the
cost of the needed care?
Our political system has pretty much
answered that question yes - the affected individual should
only get public assistance for long-term care when their
privately available resources are gone. Medicare provides
substantial coverage for acute illness, but its coverage of
long term care is very limited.
The major public-funded source of financial assistance
for long term care is Medicaid, for which seniors can qualify
for only after they have exhausted their ability to privately
pay for needed care.
Despite these financial restrictions,
government is forced to expend significant public funds on
long term care. The problem is that extended long-term care
services are expensive. And
they are a cost for which few private individuals save.
An individual's private funds are soon exhausted.
All but the wealthiest elders will eventually run out
of private resources and then turn to public Medicaid funds to
pay for the care they need.
In order to reduce reliance on Medicaid,
federal and state governments would like to see people save
more to pay for the long term care they may someday need.
To the extent individuals save more for their long-term
care, government should have to pay less.
What
is a Partnership Program?
One way that individuals can save for the
cost of long term care is through the purchase of insurance
policies specifically designed to pay those costs. "Long
Term Care Insurance Partnership" programs are a way that the
government seeks to encourage people to buy these policies.
Originally developed by policy makers in
the mid-1980s, partnership programs combine private insurance
with special access to Medicaid.
Individuals who have exhausted the benefits of their
partnership policy are permitted to preserve more assets than
would otherwise be permitted by Medicaid rules.
(The income and functional eligibility rules are not
affected. The
applicant must still meet income co-payment and other Medicaid
requirements.) The ability to protect additional assets from
becoming lost to the cost of care is an incentive meant to
encourage middle class individuals to purchase long term care
insurance.
Does this additional incentive encourage
individuals who would not otherwise purchase long-term-care
insurance to do so? Policymakers
in the 1980s initially projected that adoption of partnership
programs in all 50 states could eventually reduce Medicaid
expenditures for long term care for the elderly by 5 to7
percent. However, it now appears that this projection was too
optimistic. Recent
studies question whether any tax savings are achieved.
Only four states (
California
,
Connecticut
,
Indiana
and
New York
) had partnership programs approved when Congress had second
thoughts about the programs.
The Omnibus Budget Reconciliation Act (OBRA) of 1993
grand-fathered the four existing program states, but it required
future state programs to recover assets from the estates of all
persons receiving services under Medicaid. These new estate
recovery provisions has the effect of limiting the partnership
asset protection to the time when the insured was alive. Since a
major attraction of partnership policies was the ability of
insureds to pass additional assets to their heirs, OBRA 93
effectively ended the implementation of new partnership
programs.
In February 2006, the Deficit Reduction Act
of 2005 (DRA) was enacted. The
DRA allows the long-term-care insurance partnerships to be
implemented in new states by relaxing the estate recovery
requirement for policyholders. In addition to promoting
partnership programs, the DRA also seeks to encourage the
purchase of insurance by making it harder for seniors to give
away assets before applying for Medicaid and reducing spousal
protections.
Policies issued in new DRA partnership
programs must meet specific criteria, including federal tax
qualification, consumer protection and inflation protection
requirements. Compound annual inflation protection is required
for purchasers below age 61.
(States get to determine the percentage rate).
An undefined level of inflation protection is also
required for purchasers between the ages of 61 and 75. (Of
course, the inclusion of inflation protection will increase the
cost of policies). States may also decide to allow purchasers to
use their benefits in other partnership states (reciprocity).
Pennsylvania's
Act 40
In
Pennsylvania
, the Legislature and Governor have now approved the creation of
a Long-Term Care Partnership Program for
Pennsylvania
(Act 40 of 2007). Act
40 was signed into law
July 18, 2007
. The Long-Term Care Partnership program provisions take effect
60 days after that date. However,
additional steps must be taken in order to implement a program
in our state.
Medicaid is a joint federal-state program
that is administered by the individual states according to their
Medicaid state plans. The
state plans are set up within broad federal guidelines and must
be approved by the federal government agency in charge of
Medicaid (CMS). State plans specify when an individual becomes
financially eligible to receive Medicaid benefits. When a state
wants to make changes in its Medicaid program that go beyond the
parameters previously approved by CMS, the state must submit a
plan amendment for approval.
Unlike so-called "waiver programs," CMS' role in
this case is not to waive compliance with the federal law, but
merely, to approve modifications within existing federal
statutory authority as set forth in the DRA.
Act 40 directs the Department of Public
Welfare (DPW) to file a state plan amendment with CMS within 60
days of the effective day of the Act.
In large part, the Legislature has left the details of
the program to DPW, and merely directed it to comply with the
DRA. However, Act 40 does mandate that all insurers offering a
qualified long term care partnership program policy must offer
to exchange any policy or certificate issued between
February 8, 2006
and the date the state plan amendment takes effect with a
qualified partnership policy.
Additional requirements for the exchange of policies are
located in Section 3(C) of the Act which is available on the
Marshall
, Parker and Associates website at the following link: http://www.paelderlaw.com/pdf/act_40.pdf.
Insurance
producers should note that the Act also requires all producers
(resident and non-resident) licensed in Pennsylvania who intend
to sell, solicit or negotiate long term care insurance MUST
complete the "Pennsylvania Medicaid Long Term Care Services"
course BEFORE they can market Long Term Care services.
Doubts
about Partnership Program Savings
Act
40 states its purpose as follows:
"The purpose of this program is to reduce future
Medicaid costs for long-term care by delaying or eliminating
dependence on Medicaid by providing incentives for individuals
to ensure against the potentially substantial costs that arise
upon the need for long-term care." (Act 40 of 2007, Section
3.)
Unfortunately,
studies suggest that
Pennsylvania
's partnership program may be an ineffective way to reduce
Medicaid costs. The
title of a Government Accounting Office Report issued in May of
this year summarizes the report's conclusions:
"Long Term Care Insurance Partnership Programs: Include
Benefits that Protect Policyholders and Are Unlikely to Result
in Medicaid Savings." A
copy of the report is available online at http://www.gao.gov/new.items/d07231.pdf
A copy of Act 40 is available on
Marshall
,
Parker & Associates' website at http://www.paelderlaw.com/pdf/act_40.pdf.
Attorney Marshall can be contacted
at webmail@paelderlaw.com
or at 1-800-401-4552
Attorneys
Marshall & Parker on Faculty of Elder Law Institute
Written By:
Melissa Bottorf, Director of Marketing & Public Education
Known
as one of the best elder law conferences in the country, PBI's
Elder Law Institute recently hosted over 400 attorneys in
Hershey
,
PA.
For the 7th
consecutive year, Jeff Marshall kicked off the Institute by
co-presenting with fellow elder law attorney, Robert
Clofine. Their session, entitled "The
Year in Review," updated attendees on the latest
developments and most relevant case law affecting elderly
clients in
Pennsylvania
.
Attorney
Matt Parker
co-presented a session on "What
to do When Medicaid Benefits are Denied: From Dealing Informally
with the
County
Assistance
Office to Handling Fair Hearings". Attorney Parker and Attorney
Stan Vasiliadis offered practical tips on when and how
to represent your client in such proceedings.
Attorney Marshall also
moderated the Institute's closing session entitled "The
Gray(ing) Areas of Medicaid."
The session enabled attendees to ask their most
perplexing questions about Medicaid Planning to the leading
elder law experts, including Andrew Coates, Legal Counsel for
the Department of Public Welfare.
Written Materials from
this year's Institute are available for purchase on PBI's
website at www.pbi.org.
Melissa can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Alzheimer's Association Memory Walk
Kick-Off Event Planned
Written By:
Melissa Bottorf, Director of Marketing & Public Education
Each
October, throughout Northeast and
Central Pennsylvania
, the Alzheimer's Association holds their annual Memory Walks
to help our communities raise money and awareness to support
programs dedicated to Alzheimer's.
This year, the Lycoming-Clinton County Memory Walk will
be held on
October 6, 2007
at
Indian
Park
. To kick-off this
year's event, Comfort Keeper's will host a cocktail
reception on
Thursday, August 23, 2007
from
4 PM -6 PM
at their office at
353 Pine Street, Suite 4
in
Williamsport
. If you would like
more information about the walk or if you are interested in
participating as a sponsor or volunteer, please feel free to
join us.
Melissa can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
