Changes Coming to Medicare Advantage Plans Written By: Attorney Jeffrey A. Marshall, CELA*   Most Medicare beneficiaries can choose between two distinct paths for coverage: traditional fee-for-service Medicare, or a federally subsidized private Medicare Advantage (MA) plan. MA plans typically place some limitations on the beneficiary’s access to health care providers but they may also expand coverage to some services not covered by traditional Medicare. When the Medicare Modernization Act was enacted in 2003 the political decision was made to try to shift Medicare enrollees from traditional government run Medicare to private MA Plans. To accomplish this, the government began paying MA plans a premium over what it cost for beneficiaries who remained in traditional Medicare. The premium is currently around 14% or over $1,100 per plan enrollee. The extra money allows Advantage Plans to cover their higher administrative costs and still be able to attract enrollees with extra benefits. For an average of $40 to $74 more a month over their regular Medicare premium, an enrollee can get a host of extra benefits not included in traditional Medicare. Medicare Advantage Plans are aggressively marketed and have been particularly popular in Pennsylvania where a growing number of seniors have opted to enroll in them rather than the traditional government program. In Pittsburgh, 56% of Medicare beneficiaries are enrolled in an Advantage plan, the highest percentage of any metropolitan area in the country. Over the next several years the Affordable Care Act will take some of the Advantage out of Medicare Advantage Plans. The new law will return the competition between Advantage plans and traditional Medicare to a more level field by reducing the extra payments to MA plans to an average of only 1%. Actual payments to individual MA plans will vary depending on Medicare costs in the geographic location and the plan’s performance ratings. Like many of the health reform provisions, these MA plan cuts will be phased in over time. In 2010, no cuts will be made. In 2011, payments will be frozen at current levels. Starting in 2012, the remainder of the cuts will phase in over two to six years. MA plans that rate well on certain quality measures will receive bonuses. (MA plan ratings are available on the Medicare.gov website under "Find & Compare Health Plans.") Plans receiving 4 to 5 stars will be rewarded with bonus payments of 1.5 percent in 2012, 3.0 percent in 2013, and 5.0 percent in 2014 and later years. The Affordable Care Act also requires the suspension of MA plan enrollment for 3 years if a plan’s medical loss ratio is less than 85% for 2 consecutive years and the termination of the plan contract if the medical loss ratio is less than 85% for 5 consecutive years. The reduced payments will likely mean that MA plans will begin reducing benefits and/or raising premiums. If your clients are comfortable with getting their Medicare from an Advantage plan, they are probably going to want to stick with a plan that's been around for at least five years and, if available, earns four or five stars from the government. This article is adapted from Jeff Marshall’s opening presentation at the state Elder Law Institute in Hershey, Pennsylvania. For more of Jeff’s presentation, view his materials on our website at http://www.paelderlaw.com/pdf/ELI_2010_Year_in_Review_Coursebook_materials.pdf   ___________________________________________   Federal Third Circuit Issues Decision on Medicaid Planning with Loans Written By: Attorney Matthew J. Parker, CELA*   The Federal Third Circuit Court of Appeals in Philadelphia recently issued a decision regarding the use of loan agreements in Medicaid planning cases. The case of Mary Sable v. Jennifer Velez, 10-1148 (3rd Cir.), is the first Federal appellate case to give elder law attorneys and Medicaid agencies direction on the permissible use of loan agreements in applications for long term care Medicaid benefits. The Federal Third Circuit hears appeals from both New Jersey and Pennsylvania District courts. When addressing matters of Federal law, the Third Circuit’s decisions can impact Medicaid practice in both states. In rather complex Medicaid planning, loans can be used to help qualify applicants for Medicaid long term care benefits. If a gift of resources is made during the Medicaid look-back period, an ineligibility period will likely be imposed. To pay through this ineligibility period, an experienced elder law attorney can draft a loan agreement for the Medicaid applicant. The funds loaned by the applicant will be used to pay for nursing home care during an ineligibility period caused by the gift. Provided loan agreements are drafted in accordance with Federal law, the loan should not disqualify the applicant for benefits, nor should the balance due on the loan be considered a resource. A Federal District Court decision (Sable v. Velez , 2009 U.S. Dist. LEXIS 118063) out of New Jersey concluded that a loan agreement should be analyzed as a trust-like arrangement and not a loan. Therefore, the District Court ruled that the loaned funds were still available to the Medicaid applicant, frustrating the goal of using the loan payments to pay through the ineligibility period. The District Court’s decision was appealed. The Third Circuit Court of Appeals reversed the District Court’s decision and remanded the case back to the District Court with instructions to analyze the loan in accordance with regular Supplemental Security Income (SSI) resource counting rules. The case is important to practitioners and caseworkers as the final decision may influence the policy of the Department of Public Welfare regarding the use of loan agreements in Pennsylvania. Attorney Parker is a partner and Certified Elder Law Attorney at Marshall, Parker & Associates. More information about Attorney Parker is available on our website. You can also follow Attorney Parker on Twitter at: http://twitter.com/AttyMJParker   _______________________________________________    Does Your Eighteen-Year-Old Have a Power of Attorney?   Don't Let Them Leave Home Without it   Written By: Attorney Tammy A. Weber, CELA*   It’s that time of year . . . high school graduations are over and many 18-year-olds are planning excitedly for the move out of your house, their start in the work force, or their trip to college. What do they usually forget? A Power of Attorney. Why does that matter? You won’t have access to their grades or their billing statements (unless they consent), and getting information regarding their health or making health care decisions if they are unable to do so will be more difficult. As a parent, I can tell you this happened to me. I got the call at 12:30 AM on a blustery March morning. I groggily answered my phone and heard my 18-year-old daughter tell me that she was on the way to the Emergency Room. The good news was that she was the one calling me and not the police. We spoke for less than a minute. She was over 200 miles away. Snow was falling, and the roads were icy. Travel was not a safe option. I waited helplessly for some kind of news. Even if I used my persuasive attorney skills to call the hospital, they would not have been able to give me any information since my daughter did not have a Health Care Power of Attorney or a HIPAA release [Health Insurance Portability and Accountability Act of 1996, (Pub. L. 104-191), 45 CFR Section 160 through 164] that allowed me access to her health information. She was awake and competent so I had to wait. Fortunately, everything ended up working out, and she is prepared now. But what if we weren't so lucky? Pennsylvania’s Act 169 governs health care decisions for incompetent adults who have no Health Care Power of Attorney or Advance Directive and provides a default list of decision makers. However, no similar law exists to address when an incompetent adult has no Financial Power of Attorney. The alternative is for the family to seek a guardianship order from the court, an often expensive and lengthy process. Attorney Weber is a partner and Certified Elder Law Attorney at Marshall, Parker & Associates. When she isn't helping parents of college-age kids with their estate plans, she enjoys visiting her daughter, Sarah, at the University of Pittsburgh. More information about Attorney Weber is available on our website. You can also request a free copy of our Power of Attorney Booklet at webmail@paelderlaw.com   _____________________________________________________________   Gas Law Lingo Defined & Explained What is a "Pugh Clause"? Written by: Attorney Dale A. Tice     This is the third installment in a series written by Marshall, Parker lawyer Dale A. Tice. Dale is a nationally recognized expert on planning for landowners in the Marcellus Shale regions of Pennsylvania. He has been quoted in the New York Times and Investor’s Business Daily. Over the next several issues of this newsletter, Dale will define a common term used in the Marcellus shale industry and then explain why it’s important to you as a landowner, professional or consumer living in our region. If you would like regularly updated information about gas developments in the Marcellus shale, you can also follow Dale Tice on Twitter at http://twitter.com/PAGasLawGuy For most Pennsylvania landowners who have signed an oil and gas lease, the possibility of receiving royalties sounds exciting. As landowners see drilling development approaching their property, the potential royalties seem ever more real. When a landowner receives notification that her land has been included in a pooled production unit, these life-changing royalties seem just around the corner. Imagine the landowner’s dismay when she reads the Declaration of Pooling and Unitization and realizes that her property has been “clipped” and that and only a small portion of her land has been included in the production unit. Unfortunately, this is the reality for many Pennsylvania property owners. The gas leases used by the companies drilling in Pennsylvania allow the gas company to combine multiple properties into a pooled production unit. The landowners in the unit will share in the royalties from wells drilled based on their proportional ownership of the unit. While some production units may follow property boundaries, in most cases the unit is in the form of a rectangle with the boundaries of the unit not following property lines. Although the landowner will only receive royalties for the portion of the land included in the unit, the entire property is extended into the secondary term of the lease and held by production. For a landowner with only a small portion of her land in a production unit this is not a good outcome. The solution to this problem is a Pugh Clause. Usually added to the lease as an addendum, the pugh clause provides that at the end of the primary term (typically five years) the lease will terminate as to any acreage outside of a production unit. This allows the landowner to sign a new lease for the property not included in the unit at the end of the five year primary term. The cash bonus received for signing the new lease provides compensation to the landowner for the property not included in the unit. Naturally, the gas companies don’t want to lose leased acreage and won’t offer a pugh clause to landowners signing a gas lease. However, this is an important provision that should always be requested in gas lease negotiations. Landowners who have signed a lease without a pugh clause and find that their property has been “clipped” can take comfort from the accelerating pace of development in the Marcellus shale. Over time it is likely that additional production units will be formed including the acreage left out initially. However, landowners who have not signed a lease should understand the importance of working with an experienced oil and gas attorney who can draft an effective pugh clause and assist in negotiating with the gas company to include this important provision in their gas lease. To view our past installments of “Gas Law Lingo: Defined & Explained” visit our articles page at http://www.pagaslaw.net/Articles.html Do you or someone you know need an experienced lawyer for gas royalty planning? Contact Attorney Tice at webmail@pagaslaw.net   ________________________________________________________   Marshall, Parker & Associates Staff Attend & Present at 14th Annual Elder Law Institute in Hershey Written by: Melissa Bottorf, Director of Marketing and Business Development Things slowed down a few days here at Marshall, Parker & Associates last month. As we do each July, many of the staff (twelve to be exact) packed their bags and headed to Hershey for the Annual Elder Law Institute organized by the Pennsylvania Bar Institute. Five staff members from the Firm also presented at this year’s event. You can view pictures from the event by becoming our fan on facebook. Known as one of the premier elder law conferences in the country, nearly 450 attorneys attended the two-day institute. Attorney Jeff Marshall kicked off the event by co-presenting the plenary session with York elder law attorney, Rob Clofine. Known as “The Year in Review,” it is designed to hit the highlights of the most significant legislative and regulatory changes impacting seniors at both the state and national level. Attorney Matthew Parker presented an advanced session on “Practical Calculations for Using Annuities and Notes in Medicaid Planning.” Matt is a nationally known expert on how to protect married couples from financial devastation when one of the spouses needs long term care. He was the attorney in the leading federal case, James v. Richman, which upheld annuity based Medicaid planning. Attorney Tammy Weber presented two programs: one on Essential Elder Law Documents with Leslie Wizelman, CELA* and a 2nd on Medicaid and Hardship Waivers, with Linda Anderson, CELA* and Mark Newell, legal counsel for the Department of Public Welfare. A new addition to this year’s Institute was the Completing the PA 600L session. Attorney Brenda Colbert and Planning Specialist Karen Fry walked the attorneys through the process of completing the complicated and confusing Medicaid Application. They explained common pitfalls and offered attorneys a variety of practice tips from their experience as a former social worker and county assistance office caseworker. _____________________________________________ Don’t forget to log-on to facebook and view all of our “behind the scenes” photos from this year’s Elder Law Institute! _____________________________________________ *Attorneys Marshall, Parker, Weber, Grebas and Colbert are Certified Elder Law Attorneys by the National Elder Law Foundation under Authorization of the Pennsylvania Supreme Court. LEARN MORE ABOUT THE CELA STATUS   **In addition to her law degree and CELA status, Attorney Colbert holds an advanced legal degree (LLM) in Estate Planning from the University of Miami School of Law. FIND OUT MORE     If you or someone you know needs assistance with estate or gas royalty planning or with qualification for Medicaid benefits for nursing home or home care, you can trust the lawyers at Marshall, Parker & Associates. Please call us toll free at 1-800-401-4552 or e-mail our Scheduling Coordinator, Lynn Wesley at webmail@paelderlaw.com

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