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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