Connecticut Proposal Would Have Drastic Effects on Nursing Homes and Their Residents

  Written By: Jeffrey A. Marshall, CELA*

  Every state is looking for ways to lower its Medicaid costs.  This trend is likely to continue throughout the United States for the foreseeable future.  Connecticut provides a particularly stark example of how far state Medicaid Agencies may be willing to go to shift the cost of long term care onto families and nursing homes.   

Federal Medicaid law requires states to impose a penalty on certain transfers of assets.  The penalty is that the person who makes the transfer and his or her spouse are made ineligible for benefits for a period of time.  The penalty period starts to run on the date the asset is transferred. 

The Connecticut Department of Social Services is seeking Federal Government approval to increase transfer penalties and change the way they are calculated.  Despite the opposition of the Legislature, advocates for seniors, and nursing home trade groups, the Governor has submitted a waiver request to the Federal Government. 

Under Federal law, the Secretary of HHS has broad authority to waive provisions in federal Medicaid law so that states can experiment with innovative ways to provide Medicaid financed services.  Connecticut is seeking a waiver that will allow it to have the transfer penalty period begin on the first day the applicant would otherwise be eligible for Medicaid rather than on the date the asset was transferred.  This means that if you gave $1,000 away to each of your five grandchildren two years ago, and now you need to apply for Medicaid benefits, you won't qualify for a month or so because of the gifts you made two years prior.  

Under the Connecticut proposal, the benefit ineligibility period starts to run only when the nursing home resident is otherwise out of assets to use to pay for care.  This spells disaster for the nursing home.  The resident will have no way of paying for care, and Medicaid won't pay.  The nursing home will not be able to discharge the resident, due to federal laws requiring appropriate "discharge planning."  The result - the nursing home will have to provide care to the resident for the duration of the penalty period.  Connecticut will save money by shifting the cost of care onto the nursing home. 

Connecticut states that its waiver proposal is intended to encourage people to buy long term care insurance.  Whether or not some additional citizens purchase insurance, the most obvious consequence will be hard times for nursing homes in the state. 

In recent years, the federal government's policy has allowed states to do pretty much what they want in terms of waiver requests.  But, the Secretary may recognize the impracticality, injustice, and poor policy underlying the proposal and deny the waiver.

In its waiver proposal, Connecticut states that one of its goals is to test out this new way for states to save Medicaid dollars, so that other states can follow its example.   We can expect that other states, including Pennsylvania , will be watching closely.  

Health Care Spending Up Sharply

Written By: Attorney Jeffrey A. Marshall, CELA*

  The Centers for Medicare and Medicaid Services (CMS) has announced that health care spending is continuing its dramatic rise.  In 2001, expenditures on health care rose 8.7% to a total of $1.4 trillion.  This accounts for 14.1 percent of the total US economy, the highest share ever.  (Each year during the period 1992-2000, health care accounted for only 13.1 to 13.4 % of the overall economy). 

Despite the existence of 41 million uninsured Americans, health care spending is a much larger portion of the overall economy in the United States than in other Western nations.  By comparison, health care spending amounted to 10.7% of the economy in Switzerland , 9.5% in France , and 9.1% in Canada [in 2000].     

In 2001, US health care spending averaged $5,035 per person.  Medicare spending rose 7.8%, and Medicaid increased 10.8%.  Private health insurance premiums rose 10.5%. 

The steep increase in health spending puts particular pressure on state governments.  The states are struggling with financial problems due, in part, to the poor economy.  The increases in Medicaid spending are particularly troublesome for states since they pay a significant proportion of Medicaid costs (46% in PA).  The soft economy is leading to increased Medicaid enrollment as is the growth in the elderly population.   As a result, most states, including Pennsylvania , are seeking ways to limit the spiral in government health costs.  In Pennsylvania , health spending accounts for a third of our $21 billion annual budget.  Of this amount, $4.4 billion is spent on health care for seniors. 

Governor Rendell has introduced Rosemarie Greco as director of the Pennsylvania Office of Health Care Reform, a new government agency that will look for ways to streamline and improve the way the state delivers health-care services.  The new Office's goal will be to work with the departments of health, aging, insurance, and public welfare to find ways to streamline operations, improve access to services and ultimately save tax money.

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New Jersey Court Refuses to Permit Medicaid Planning By Guardian

Written By: Attorney Jeffrey A. Marshall, CELA*

  A  New Jersey Appeals Court has refused to permit a guardian to do Medicaid planning for his mother.  The guardian/son wanted to sell his mother's house, gift himself a portion of the proceeds, and use the rest to pay for his mother's care through the penalty period.  Since there was no power of attorney to authorize this action, he needed to seek authority from the Courts.  The Court refused to allow the planning even though all members of his mother's family approved, and her court-appointed lawyer did not object.  In the Matter of Keri (N.J. Super. Ct. App.Div., No. A-5949-01T5, Dec. 19, 2002 ).  The New Jersey Court noted that Courts in other states, notably New York , have permitted such planning by guardians.  It also noted that it might have made a different decision if the assets were to be transferred to a spouse rather than a child, or if the mother had indicated a preference for Medicaid Planning while competent.

The Keri case is indicative of how important it is to have a power of attorney document that authorizes your family to act in accordance with your wishes, in the event you ever become incapacitated.  Under Pennsylvania law, your power of attorney should grant your agent specific authority to gift assets if you want your agent to be able to protect them from the costs of long-term care.  Whether you should give this power to your agent, and how you can protect yourself from its abuse, are questions you should discuss with a lawyer who has experience dealing with these issues. 

Minimum Holding Period for both Series EE and I Bonds Extended to 12 Months

Written By: Karen A. Griswold, Planning Specialist

  The minimum holding period for both the Series EE and I bonds has been extended from six months to twelve months, effective with issue dates on or after February 1, 2003.  Series EE and I bonds with an issue date prior to February 1, 2003 , will keep the six month minimum holding period.  The minimum holding period is the length of time from the date of issue that a bond must be held before it is eligible for redemption. 

Additional information can be found on the web at www.savingsbonds.gov.

Medicaid Misconception #3.

Medicare Will Take Care of the Bills

  Here is the next installment in our discussion of some of the most prevalent misconceptions about Medicaid and the rules for payment of nursing home costs.

Misconception # 3:

 Medicare will take care of the bills     

The Truth:   Medicare is very different from Medicaid.  Medicare is the great government-run health care insurance system for the elderly.  Over 95% of Americans over 65 have health care coverage through Medicare.  Unfortunately, Medicare has rules that severely restrict its use in paying for nursing home care.

Traditional Medicare requires a three-day hospital stay within 30 days of your nursing home admission, and the receipt of daily skilled care in the nursing home.  Otherwise, you get no payment from Medicare or your Medicare Supplement policy.  Most people residing in nursing homes are not receiving what Medicare considers to be skilled care. ("skilled care" is care which involves skilled nursing or rehabilitative personnel such as registered nurses, LPNs, or physical therapists).  As a result of these restrictions, a majority of people who enter a nursing home don't get any Medicare coverage at all.

And even if you do qualify for Medicare, it will only pay for a limited period of time.  As long as you meet the prior hospitalization and skilled care requirements, Medicare will pay in full for the first twenty days.  After that, if you continue to meet the skilled care requirement, you must pay the first $105.00 [in 2003] a day and Medicare will pay the rest of the daily bill.  (Many people have Medicare Supplement or Managed Care coverage that will pay the initial $105.00 for them).

In practice, very few nursing home residents qualify for more than a few weeks of Medicare coverage for nursing home costs; even if they do, after 100 days, Medicare will stop paying for any nursing home costs.  As a result of all these limitations, Medicare just isn't as much help as most people expect when they need nursing home care.

Since Medicare isn't much help, most nursing home residents are forced to pay the costs themselves out of their income and savings, and the savings of their spouse, until they qualify for the Medicaid program.   Medicaid, not Medicare, is the government program that provides significant coverage for long term nursing home care.  Over 2/3rds of nursing home residents receive benefits under Medicaid. 

Other examples of Medicaid Misconceptions are posted on the Marshall, Parker & Associates' website at www.paelderlaw.com .

In future editions of the Elder Care Law Alert, we will discuss

additional Medicaid misconceptions.

Stay Tuned!

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  "Understanding the Rules: Medicaid  Payment for Long Term Care"

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