New Spousal Impoverishment & Waiver
Amounts Announced for 2007
Written
By: Attorney
Jeffrey
A. Marshall
,
CELA*
The
Centers for Medicare and Medicaid Services (CMS) has announced a number
of new qualification and protected resource and income levels for
Medicaid programs beginning
January 1, 2007
.
Community
Spouse Allowances
In
general, when your spouse is in a nursing home or needs home care under
the PDA Waiver program, he or she will not qualify for Medical
Assistance (Medicaid) benefits until your combined savings are reduced
to a certain level. That
permitted level of so-called "available resources" varies with
each situation. For nursing
facility residents, the general rule is that the community spouse can
keep ½ of the amount of available resources that were owned by the
couple on the date of admission to the nursing facility.
However, this protected "Community Spouse Resource
Allowance" is subject to a ceiling and a floor.
In
addition to being allowed to keep the resource allowance, the community
spouse is also entitled to have a certain minimum level of income called
the Minimum Monthly Maintenance Needs Allowance. The income allowance is
also subject to a ceiling and a floor.
If the community spouse does not have the required level of
income, the spouse may be allowed to keep some of the institutional
spouse's income. If the
income diverted from the institutionalized spouse is still insufficient,
the community spouse may be able to keep additional resources.
These
community spouse resource and income allowances are adjusted annually.
Effective
January 1, 2007
, the new base standards will be
as follows:
ü
Minimum Community Spouse Resource
Allowance - $20,328.
ü
Maximum Community Spouse Resource
Allowance -$101,640.
ü
Maximum Community Spouse Monthly
Income Allowance - $2,541.
Note:
The Minimum Monthly Income Allowance remains $1,650 - it will be
adjusted on
July
1, 2007
.
Federal
Benefit Rate
The
Social Security Administration has announced the SSI Federal Benefit
Rate Standards for 2007 as follows:
ü
Individual - $623.00 per month
ü
Couple - $934.00 per month
PDA
60+ Home Waiver Program
The
Federal Benefit rate is used to determine qualification for many
Medicaid public benefit programs including the Department of Aging 60+
Home Waiver program. The income limit for the Waiver program is equal to
300% of the SSI Federal Benefit rate for an individual. This means that
effective
January 1, 2007
the new income ceiling should be:
ü
$1,869 per month - PDA 60+
Medicaid Waiver Program Income Limit
Individuals
with income above this limit cannot qualify for the PDA 60+ Home Waiver
program.
Attorney
Marshall can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
New Law Impacts Planning with
Long Term Care Insurance
Written
By: Attorney
Jeffrey A. Marshall
, CELA*
A
new federal law is intended to encourage middle class consumers to
purchase long-term care insurance.
The Deficit Reduction Act of 2005 (DRA) makes it
harder to qualify for Medicaid. Medicaid
is the primary source of public funding of nursing home costs. The DRA
limits the financial security of married seniors and makes it harder to
protect assets for children or other heirs.
Under the DRA, if you give assets away within 5
years of applying for Medicaid nursing home benefits, your eligibility
will be delayed. The law
requires
Pennsylvania
to reduce the amount of financial resources a low income community
spouse can keep. And, it may
force consumers with valuable homes to mortgage or sell their homes
before qualifying for Medicaid nursing home benefits.
The DRA places a premium on planning early for
long-term care. And it is specifically intended to encourage the
purchase of long-term care insurance.
The Act expands Partnership for Long-Term Care
Programs. Partnership programs allow states to disregard benefits paid
under a long-term care policy when calculating an individual’s income
and resources for purposes of Medicaid eligibility and estate recovery.
Prior to the DRA, partnership policies were sold in
only four states --
California
,
Connecticut
,
Indiana
, and
New York
.
The DRA gives all states the option to establish
long-term care insurance partnership programs and sets forth
requirements for partnership policies. Policies sold under the program
must meet strict consumer protection conditions set by the National
Association of Insurance Commissioners' (NAIC) long-term care model
regulations.
If Pennsylvania decides to authorize a partnership
program, policyholders who buy a designated private long-term care
insurance policy which is used to pay for long-term care services will
be allowed to protect additional resources from Medicaid spend-down
requirements.
For example, let’s say standard Medicaid rules
only allow you to have $8,000 in available resources.
Under the partnership program, if you had exhausted your $100,000
in benefits under a partnership long term care insurance policy, you
would be allowed to keep $108,000 in assets.
Unfortunately, there are some significant concerns
with the DRA’s approach to partnership long-term care insurance.
It appears that existing long-term care insurance policies are
not grand-fathered in. Moreover,
the DRA requires that partnership policies contain provisions, such as
inflation riders, that will make them expensive and inappropriate for
many middle class consumers. The
experience of other states is that partnership policies have not been
particularly successful. However,
as a result of the harsh new penalties set forth in other provisions of
the DRA, standard long-term care insurance policies are becoming more
attractive to some consumers.
A major goal of many seniors is to limit the
potential loss of their home and savings to the cost of long-term care
and to protect those assets for their spouse and family. Long-term care
insurance could help them attain that goal. But, they feel that the
insurance is too expensive. That
doesn’t necessarily have to be the case.
Consumers often over-insure when they buy long-term
care insurance. By creating
a comprehensive plan that includes both insurance and Medicaid,
consumers may be able to protect their assets at a much reduced cost.
Shifting some of the financial risk of the catastrophic cost of
long-term care onto the Government Medicaid program can lower the cost
of insurance to a level they feel they can afford.
Here is an example of how Medicaid planning and
long-term care insurance can be combined to create a more affordable
asset protection plan.
The DRA requires a 5 year look-back period for
asset transfers. Transfers
that occur more than 5 years prior to the Medicaid application are
ignored. Thus, an individual
whose major goal is asset protection and who is willing to transfer
assets today, needs insurance protection for the next five years.
They don't need permanent long-term care insurance - they need
temporary coverage to get them through the look back period.
A policy with a 3-5 year benefit period may be adequate.
And the consumer probably doesn’t need expensive inflation
riders. They only need to continue to pay the premiums for 5 years - the
insurance is temporary.
To expand protection at a reasonable cost, a
married couple may want to consider policies with shorter benefit
periods especially if the policies offer a shared care benefit rider.
Perhaps a 3 year shared care benefit, affording either spouse up
to 6 years of maximum benefits, would provide adequate protection.
It is much less expensive to cover the long-term
care risk for a consumer for the next five years than to cover it for
their lifetime. The cost of
the longer term risk is shifted from the insurance to Medicaid.
After the 5 year Medicaid look-back period has
expired, the long-term care insurance purchaser can re-evaluate the
policy. Does it still make
sense? Perhaps it will,
given changes in the consumer’s situation or government policies.
The concept of temporary insurance gives consumers
an opportunity to purchase long term care insurance as part of
appropriate and affordable planning. It can fully protect assets if
combined with expert Medicaid planning.
For some consumers, it might be a reasonable choice.
Attorney Marshall can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Attorney Marshall Contributes
to Guide for Americans Over 50
Written By: Melissa
Bottorf, Director of Marketing & Public Education
The
American Bar Association has published a new book of interest to
seniors, their family members, and anyone who is concerned about legal
issues encountered by older Americans.
The American Bar Association Legal
Guide for Americans Over 50 is an essential reference for baby
boomers and their parents. In 300+ pages it covers everything from
choosing the best pension plan to finding affordable housing and getting
appropriate eldercare. It features the most recent changes in healthcare
and Social Security laws. It explains the “ins and outs” of income
tax breaks, estate planning, government benefits, and an array of other
topics which are key to the legal protection and wellbeing of all
Americans over 50 years of age.
The book is authored by the staff of the American
Bar Association Commission on Law & Aging.
Lawyers from across the country who are recognized experts in
legal issues related to older persons were asked to contribute responses
to practical questions.
Attorney Marshall, the managing attorney of
Marshall, Parker and Associates, was asked to provide his expert
responses to a number of practical questions regarding financial
planning for incapacity. These
questions and Attorney Marshall’s responses are included in the book.
(We will also publish them in future issues for readers of the Elder
Care Law Alert.)
The American
Bar Association Legal Guide for Americans Over 50 is available at
booksellers everywhere and online at www.amazon.com
and at many other booksellers. The
cost is $16.
Melissa can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Attorney
Grebas Presents Annual Training Sessions for the
Pennsylvania
Association of Area Agencies on Aging (P4A)
Written By: Melissa
Bottorf, Director of Marketing & Public Education
Marshall, Parker &
Associates Attorney Kevin Grebas will provide a number of full day
educational sessions for the Pennsylvania Association of Area Agencies
on Aging (P4A) in November. Caseworkers
from Area Agencies on Aging around the commonwealth will attend the
sessions to learn about the most recent changes in elder law and discuss
how to apply often misunderstood concepts to real life scenarios.
Attorney Grebas will walk the caseworkers through an explanation
of the different legal documents and concepts encountered by caseworkers
on an almost daily basis.
The staff at
Marshall
, Parker & Associates has provided these trainings for several
years. This year’s
trainings are particularly timely, given the significant changes in
Medicaid rules which are to be implemented on
January 1, 2007
. The schedule for November will include sessions in Clarion on November
14, Camp Hill on November 15, and
Wilkes-Barre
on November 16.
Melissa 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.
