Converting Resources to Income Using DRA Annuities

Written By: Jeffrey A. Marshall, CELA*

  Annuities have become an increasingly powerful planning tool for clients seeking to protect excess resources from the costs of long-term care. The DRA permits the use of annuities to gain immediate eligibility for Medicaid if the transfer and remainder interest provisions of the law are met.  State policy raises the income/resource treatment of a DRA compliant annuity as an additional issue.    

Immediate annuities have long been utilized to protect the financial security of retirees.  A commercial immediate annuity is purchased from an insurance company. The investor pays a sum of money to the insurance company.  In return, the insurance company agrees to provide payments to the investor over a stated period of time.

There are many variations of annuity investments. With an immediate annuity the insurance company begins to make the contracted payments immediately.  An immediate annuity can provide a retiree with the security of a guaranteed income for a term of years or for life.

Immediate annuities can have an extra benefit for the community spouse of an individual who needs long-term care.  In determining eligibility for Medicaid/LTC, a married couple's countable resources are pooled and excess resources are at risk.  However, a community spouse can retain his or her income without affecting the Medicaid eligibility of the institutionalized spouse.

An immediate annuity converts a cash sum into a guaranteed stream of payments.  Such payments have traditionally been treated as income under Medicaid law.  As a result, the purchase of an immediate annuity can convert an otherwise countable excess resource (cash) into a non-countable stream of payments for a community spouse.

In order to expedite Medicaid eligibility for the institutionalized spouse, the purchase of the annuity must avoid treatment as a penalized transfer of assets.  This means that the community spouse must receive something of equal value in exchange for the purchase, and the annuity must meet the special requirements of the DRA.  In addition, the annuity must be structured so that it will be treated solely as a source of income rather than as a resource.  Annuities that meet these requirements are referred to as DRA compliant annuities.

For married couples, DRA compliant annuities will convert excess resources into income that will enhance the long-term financial security of the community spouse.  The purchase of the annuity spends down a couple's excess resources to the level required for the institutional spouse to become financially eligible for Medicaid/LTC benefits. The cash that is converted to income is recouped over time as annuity payments are made to the community spouse.

If you are married and your husband or wife is in need of long-term care, contact Marshall, Parker & Associates for more information about how an annuity can increase your income and protect your family's resources.

Attorney Marshall can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

Promoting Conversation About End-of-Life Philosophy

Written By: Attorney Brenda D. Colbert, Marshall, Parker & Associates

  OK - so you have finally signed that Health Care Power of Attorney with end-of-life directives that you have been meaning to have for so long.  Congratulations, you now have one of the most important estate planning documents and you probably deposited it right into your safe deposit box at your bank or your fire proof strong box at home with all of your other important documents for safe-keeping.  Well, signing the document and putting it away somewhere is not enough to ensure that your wishes will be honored - you must have a conversation about your philosophies concerning end-of-life medical treatment with your Health Care Agent and family and loved ones.  I know that end-of-life medical treatment is not exactly the easiest topic to bring up over Family Dinner.  You may have tried to communicate your feelings in the past only to be told that you are being morbid or that your loved one does not want to think about such thoughts.  As hard as that conversation may be, your end-of-life directive really may not mean anything until you have discussed your feelings with your family.

So, how can you make that conversation happen?  Marshall, Parker & Associates has made available on its website the "Health Care Decision IQ Test for Family or Physician" to promote better conversation and understanding regarding end-of-life medical treatments.  Does that sound a little overwhelming?  Think of it this way - everyone enjoys those couple's tests that are printed in magazines with titles like "How Well Do You Know Your Man" or "How to Tell if She's Paying Attention to You".  They are fun ways to spend a few minutes together and may be even learn a little something unexpected about each other.  The Health Care Decision IQ Test works in much the same way.

Step 1 of the Test requires you to complete the Personal Medical Preferences section, which consists of 10 questions designed to elicit your personal preferences concerning end-of-life medical treatment.  Step 2 requires your Health Care Agent, or family member, friend, or physician, anyone that you want to talk to about your philosophies, to complete the Agent's Understanding of Your Personal Medical Preferences" section, which mirrors the section that was completed by you.  In Step 3, you and your Agent compare your respective answers and score the results.  If you answer 10 out of 10 questions the same, then you are communicating well, 8-9 questions correct means that you have good communication, but still need to talk, 5-7 means that you definitely need to talk more, and 5 or less questions answered the same indicates that you and your Agent have a lot of talking to do.  Actually, the score is not the important factor.  The important aspect of this Test is that it will open up a dialogue between you and your Agent allowing you to discuss these difficult topics.

My husband, Mark, and I provide an excellent example of how useful this tool can be for promoting end-of-life discussions.  I am always talking to Mark about what I would and would not want in the way of medical intervention if I were terminally ill or permanently unconscious.  Mark, on the other hand, hates to talk about such issues.  He did, however, agree to take the Health Care Decision IQ Test with me one morning over breakfast.  We scored only a 5 when we took the test with Mark as my Agent and an 8 when I was Mark's Agent.  The scores were certainly eye-opening, but most importantly, we actually sat for over an hour talking about our philosophies concerning end-of-life medical treatments.  This was truly amazing, because prior to this, I could not get my husband to listen to me about my feelings concerning end-of-life issues for more than 5 minutes and he never expressed his feelings about the issue.  I feel confident now that I fully understand Mark's desires and that, if I am ever in the situation where I have to make end-of-life decisions on Mark's behalf, that I will be able to truly honor his wishes.  I feel that Mark will now be able to do the same for me.  The Health Care Decision IQ Test made the conversation that we know we had to have, but always avoided, much easier.  My husband even suggested that we take the Test again in the future to make sure that our feelings have not changed. 

I encourage all of you to sign a Health Care Directive that contains your end-of-life philosophy and to talk to your Agent and loved ones about your wishes.  The Health Care Decision IQ Test can help you to get that conversation started.  In the end, your Agent will be relieved that he/she fully understands your desires concerning end-of-life medical intervention, especially if called upon to make end-of-life decisions on your behalf.  Instead of the guilt and indecision often associated with end-of-life decision making on behalf of another person, the conversation that you have will provide your Agent with the peace of mind that comes from knowing that he/she was able to truly be your voice and ensure that your wishes were upheld.

Click here to download your copy of the IQ Test

Attorney Colbert can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

Estate Planning in Pennsylvania, Revised Edition Now Available

Written By: Melissa Bottorf, Director of Marketing & Public Education

  PBI Press has published a revised edition of Estate Planning in Pennsylvania. The book is an 858 page compendium of practical, proven-effective solutions to the estate planning problems presented by a broad range of typical clients. This book takes the estate planning professional from the initial stage of interviewing the client through terminating representation and offers expert discussion of a myriad of estate planning issues.

For the book, 15 recognized authorities on Pennsylvania estate planning law were each asked to write or update a chapter.  The result is a work of wide-ranging applicability which is intended primarily for lawyers, but should also be of interest to trust officers, financial planners and others involved with providing estate planning services to consumers.

Marshall, Parker & Associates' Managing Attorney Jeffrey Marshall wrote the book's chapter on "Medicaid Payment for Long-Term Care."

Chapters include: Interviewing the Client | Ethical Issues | Mapping the Plan | Drafting the Will | Drafting the Trust | Tax Planning | Estate Planning for Closely Held Businesses | Estate Planning for Nontraditional Couples | Estate Planning Using Charitable Gifts | Powers of Attorney and Advance Directives for Health Care Declarations (Living Wills) | Medicaid Payment for Long-term Care | Choosing Fiduciaries | Transferring Assets Outside of Probate | Execution and Safekeeping of Documents | Terminating the Representation | Index of Cases |. 

For more information or to purchase the book, contact PBI Press at info@pbi.org or 1-800-247-4724.  The cost is $199.00.   

Melissa can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

Attorney Marshall Named a Pennsylvania Super Lawyer

Written By: Melissa Bottorf, Director of Marketing & Public Education

  We are pleased to announce that our managing attorney, Jeff Marshall, has been named a 2007 Pennsylvania Super Lawyer by Super Lawyers.  Publication of the award was made in this month's issue of Philadelphia Magazine. Super Lawyers names Pennsylvania's top lawyers as chosen by their peers through independent research conducted by Law & Politics. The 2007 Pennsylvania Super Lawyers awards are based on a survey of approximately 35,000 lawyers across the state. Pennsylvania attorneys were asked to vote for the best lawyers they had personally observed in action. No more than the top 5 percent of the total lawyers in the state are selected for inclusion in Super Lawyers.

This marks the 4^th consecutive year that Attorney Marshall has received the Super Lawyer honor.

Melissa can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

What is POLST?

Written By: Jeffrey A. Marshall, CELA*

  Pennsylvania's new law on advance health care directives took effect on January 29, 2007.  Act 169 of 2006 sets out a comprehensive set of laws governing health care decision making for incompetent persons.

Among the provisions of the new law is a requirement that the Department of Health determine the advisability of using a standardized form containing physician orders detailing the scope of life-sustaining medical treatment to be provided to patients. These orders are commonly referred to as POLST - Physician-Order-For-Life-Sustaining Treatment. 

The POLST represents an attempt to more effectively implement patient decisions regarding  end-of-life care.  Numerous medical and social science studies suggest that even when living wills and other forms of advance directives are in place, they often fail to appropriately direct care because: (1) the directives don't provide much guidance; (2) the principal didn't understand the form he/she signed; (3) the agent doesn't understand the principal's wishes; (4) health care providers don't know about or fail to consult or misinterpret the document. 

"[T]he wishes expressed by an advance directive may in some cases not be honored due to the unavailability of completed forms or a health care professional's inability to quickly translate the language of the document into orders for treatment of specific medical conditions. Health care professionals caring for persons in various settings may in good faith initiate or withhold treatments that are medically not indicated or contrary to the desires of the person. The Physician Orders for Life-Sustaining Treatment (POLST) and similar forms are designed to help health care professionals honor the treatment wishes of their patients."¹

"POLST orders provide for continuity of DNR and other life-sustaining treatment orders from one setting to another, such as when a patient is transferred from a nursing facility to a hospital or vice versa."² The physician's POLST order is transferred with the patient when the patient moves to a new health care delivery setting which helps assure that the patient's end-of-life decisions are honored in the new setting. Because the POLST is in a standardized and unique format and is already signed by a physician, it is capable of being implemented at once by any clinician who encounters it.  As a result, the POLST form of instruction directive has shown high rates of compliance and effectiveness.³

"The POLST is a concise form containing specific medical instructions that can be acted on immediately by nurses, doctors, or emergency personnel; it may include "do not resuscitate" and "comfort measures only" orders, and it may indicate whether to administer CPR (cardio-pulmonary resuscitation), antibiotics, intravenous fluids, feeding tubes, artificial respiration, and other medical interventions. Unlike the living will, the POLST governs medical issues that are considered very likely to arise in the near term. According to its developers, it is really only suitable for those expecting to die within the year."⁴

Even without the encouragement of Act 169, the POLST movement has been spreading in Pennsylvania and throughout the nation.⁵ Health care providers, patients near the end of life, and family decision makers should be receptive to this effective form of combined physician order and advance directive.  For more information about POLST see http://www.polst.org.

Attorney Marshall can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

¹ www.polst.org.

² The Pennsylvania Medical Society Advance Health Care Directives and Health Care Decision-making for incompetent patients, a guide to Act 169 of 2006 for physicians and other health care providers, (2006), page 1. http://www.pamedsoc.org/.

³ Taking Care: Ethical Caregiving in Our Aging Society, The President's Council on Bioethics, (2005), Chapter 2 - The Limited Wisdom of Advance Directives.

⁴ Taking Care: Ethical Caregiving in Our Aging Society, The President's Council on Bioethics, (2005), Chapter 2 - The Limited Wisdom of Advance Directives.

⁵ "Advocates Praise PA. End-of-Life Law, But Want More Protections", Pittsburgh Post-Gazette (12/04/06). "First developed a decade ago in Oregon and now in use in fifteen other states as well, a POLST document (unlike a standard living will) takes the form of a signed doctor's order; it is not completed by the patient, but by a doctor or nurse-practitioner after consulting with the patient or his surrogate. The POLST is a concise form containing specific medical instructions that can be acted on immediately by nurses, doctors, or emergency personnel; it may include "do not resuscitate" and "comfort measures only" orders, and it may indicate whether to administer CPR (cardio-pulmonary resuscitation), antibiotics, intravenous fluids, feeding tubes, artificial respiration, and other medical interventions. Unlike the living will, the POLST governs medical issues that are considered very likely to arise in the near term. According to its developers, it is really only suitable for those expecting to die within the year." Taking Care: Ethical Caregiving in Our Aging Society, The President's Council on Bioethics, (2005), Chapter 2 - The Limited Wisdom of Advance Directives.