Long-Term Health Care Costs Threaten Family Farms & Small Business

 

Written By: Attorney Jeffrey A. Marshall , CELA*

  The Heartland of America was built on the blood, sweat and tears of family-owned farms and family-owned businesses. Generation after generation passed down the love of the land and the value of working for oneself and providing for one's family. Keeping these businesses in the family is a source of pride and the foundation of the All-American Dream. Now, having survived tornadoes, droughts, price cuts, and import and export fluctuations, those who work the earth or run small businesses are having their livelihoods threatened by longer lives and rising health care costs.

Nearly every President in the last 40 years, both Democrat and Republican, has vowed to protect family farms and family businesses, yet this nation's health care policy is perhaps the greatest threat to those family farms and family businesses. Most family farms and family businesses have values less than $2 million and have never been affected by the Federal Estate Tax. They are, however, affected by health care issues. If the owner of the business or family farm requires nursing home care, that business or farm is threatened. With one third of farmers at 65 or more years of age, the potential for farms being lost due to the costs of nursing home care is significant.

In the past, through careful planning, most family farms and family businesses have been protected from health care costs through a combination of planning options utilized by elder law attorneys and traditional estate planning tools. There are three recent changes in the law which either erode or eliminate many of these options.

More aggressive estate recovery plans, which are being adopted in many states, are threatening these family farms and family businesses. A small family farm near Athens , Ohio , which has been in the family for several generations, totaling 30 acres, has been the subject of such a battle. The husband had died many years ago and the wife continued to live in the home. Her daughter decided to quit her job, move in with her mother and care for her full-time. If the daughter hadn't taken these drastic steps, her mother would have required nursing home care for several years. The farm and home, which were recently sold for $55,000, became the subject of a claim by the Ohio Estate Recovery Section for over $90,000. The case recently settled and the state will ultimately receive one-half of the net estate. The daughter and the balance of the family will receive the other one-half of the proceeds, but the family farm has been lost and no child, or grandchild, will be given the opportunity to maintain that family farm.

Similar circumstances occurred in Tennessee where a family farm was the subject of an estate recovery by the Tennessee Medicaid Agency. The Agency in Tennessee forced the property to an auction. Family heirlooms, including furniture, were also forced to sale. Some family members were able to purchase some of the family heirlooms, but again, the family farm was lost and the proceeds were utilized to pay the state of Tennessee . Families could have avoided this outcome if they had worked with an elder law attorney prior to the crisis developing, or if the states of Ohio and Tennessee had not started to more aggressively pursue their estate recovery efforts.

In most family businesses, business owners between ages 55 and 65 typically engage their children in a discussion regarding a transition of the business or family farm to the next generation. In most circumstances, one or more of the children will participate in the family business or family farm, and have been paid on some sort of discounted wage with the promise that they will eventually receive the family asset.

The Deficit Reduction Act of 2005, recently passed by Congress and signed into law by the President will make it increasingly unlikely that these family businesses and family farms will be preserved. This new legislation, for purposes of Medicaid eligibility, decrees that any transfer that has occurred within the prior five years can prevent Medicaid eligibility.  

For example, take the hypothetical case of Bob, a widower age 70, who owns a small family farm in Lycoming County . His son, Sam, has helped his father run the farm for the past 30 years.  Bob has repeatedly promised Sam that the farm will some day be his. In fulfillment of this promise, In Marc h of 2006, Bob deeds the farm to Sam. 

In 2008, Bob suffers a massive stroke and is confined to a nursing home.  Over the two years, Bob pays all of his savings to the nursing home.  Then he is out of money and needs to apply for Medicaid, the government program that assists nursing home residents who can no longer pay for their care.  As a result of the Deficit Reduction Act, which was signed into law on February 8^th, Bob will be ineligible for Medicaid because he gave the farm to his son four years before.  As a result, it is likely the government will force the farm to be sold either during Bob's life or after his death. Sam will lose the fruits of his thirty years of hard work. 

The Deficit Reduction Act of 2005 also places a $500,000 cap on the equity that an applicant for Medicaid long term care benefits is allowed to retain in their home and related land (including a farm). The new $500,000 cap on equity may force farms to be sold if the owner falls subject to a long term illness.   

The current Congress has vowed to protect family farms and family businesses from the "death tax," but perhaps unwittingly has condemned small family farms and family businesses (by virtue of what amounts to a health care tax) should long-term nursing care be required. The same politicians who seek to repeal the estate tax on larger estates ($2 million and up) purportedly to protect the small farmer and business owner, are the same politicians who passed the Deficit Reduction Act which limits a parent's ability to pass a farm on to a child.   

While the maximum Federal Estate Tax top bracket is only 46% for the wealthiest billionaire, the loss from the health care tax can be 100% for the small farmer.  Is Congress only interested in protecting the wealthy farmers? 

Small family-run businesses and farms are the backbone of our culture and our economy. Owners of family businesses and farms should be encouraged to continue their traditions, to provide much needed products and services to our country, and to cultivate generations for the future. If we continue to allow this injustice to the very Heartland that built our country, we can count on it coming to every citizen in the future.

[The above article was adapted by Attorney Marshall from "Eye on Elder Issues" published in June 2005 by the National Academy of Elder Law Attorneys , www.naela.org which is used by permission.] 

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

Related Elder Care Law Alert Articles:

"New Law Complicates Planning for Nursing Home Residents"

http://www.paelderlaw.com/nursing_home_residents.html

"Bill Puts Seniors At Risk"

http://www.paelderlaw.com/DRA_2005.html

 "Punitive Medicaid Cuts Near Enactment"

http://www.paelderlaw.com/punitive.html

"Medicaid: What Steps Should Seniors Take Now?"

http://www.paelderlaw.com/punitive.html

"Legislation Could Slash Medicaid, Child Support, Food Stamps and other Social Welfare Programs"

http://www.paelderlaw.com/slash.html

Selected provisions of the Deficit Reduction Act are available at: http://www.paelderlaw.com/pdf/DRA_Provisions.pdf

Preliminary Injunction Granted in Medicaid Annuity Case

 

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

 

  The Elder Law Firm of Marshall, Parker & Associates has won a preliminary injunction in James v. Richman, a federal court case involving Medicaid annuities in Pennsylvania .  In this case, the Department of Public Welfare had denied Medicaid benefits to Mr. James, a nursing home resident whose wife had purchased an actuarially sound immediate annuity.  The U.S. District Court for the Middle District of Pennsylvania issued a preliminary injunction which ordered the Department to grant eligibility to Mr. James.    

 

Mr. James was represented by Attorney Matthew Parker of The Elder Law Firm of Marshall, Parker & Associates. 

 

For more information about the case, please review the article on the Elder Law Answers website at: http://www.elderlawanswers.com/resources/article.asp?id=5300&section=3 .

 

A copy of the court order and memorandum are available at: http://www.paelderlaw.com/spousal_annuity.html .

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

April is Alcohol Awareness Month

Written By: Josephine Reviello , BSW, LPN, Planning Specialist, Wilkes-Barre Office

Alcohol Awareness Month is sponsored by the National Council on Alcoholism and Drug Dependence (NCADD).  It is an annual national observance that encourages local communities to focus on alcoholism and alcohol-related issues and it is also a way to inform the public that alcoholism is a treatable disease, not a moral weakness.  An integral part of Alcohol Awareness Month has been Alcohol-Free Weekend, which is an organized event, celebrated nationwide, and takes place the first weekend of April ( April 7-9, 2006 ).  The weekend was designed to raise public awareness about the use of alcohol and how it may be affecting individuals, families, and businesses. Throughout the weekend, Americans are invited to remain alcohol-free.  During Alcohol-Free Weekend, NCADD extends an open invitation to all Americans to engage in three alcohol-free days. Those who experience difficulty or discomfort in this 72-hour experiment are urged to contact local NCADD affiliates, Alcoholics Anonymous and Al-Anon to learn more about alcoholism and its early symptoms.

When many people think of alcohol abusers, they may think of street people, homeless, teenagers or college students.  However, alcohol abuse is prevalent within many demographic groups, including senior citizens. There could be many reasons why an older adult would become an alcoholic - loss of independence, loss of family/loved ones, loneliness, physiological changes, mental disorders, and many other negative life transitions. 

Alcohol and medication misuse and mental disorders can be a significant issue for older adults.  Due to increased age and declining health, some seniors may be taking medications that negatively interact with alcohol.  The individual's doctor should be consulted for recommendations regarding alcohol use and risks and benefits should be carefully weighed. Older Adults have an increased sensitivity to alcohol and medications and physiological changes can render alcohol and medications harmful at doses lower than those used by younger adults. Many of the types of prescriptions for older adults are for depression and/or anxiety and an estimated 1 in 4 older adults has symptoms of mental disorders.  Many hospitalizations of older adults result from adverse drug reactions.  Based on the Physicians Guide to Helping Patients with Alcohol Problems, an individual should avoid alcohol if he/she is taking CNS depressants, psychiatric medications, analgesics, anticoagulants, anti-diabetic medications, or cardiovascular medications. 

Signs of alcohol abuse among older adults may be mistaken for other disease problems or simply overlooked as a symptom of "aging." Many older adults "self-medicate" with alcohol to help relieve sleep problems, depression, and other problems. Alcohol abuse is more common than drug abuse in older adults. Alcohol contributes to automobile accidents and other types of severe injury in this age group.

If you think you or a loved one have an alcohol problem, contact a health care provider right away. Most people who depend on alcohol need help to stop drinking. Treatment programs for alcoholism use both counseling and medications. With the right support and treatment, many people can recover from the disease and rebuild their lives.

Attorney Marshall Quoted by Chicago Tribune

  Attorney Marshall was quoted in the article "Medicaid Changes Impact Some Homeowners" which appeared on Marc h 12, 2006 in the Chicago Tribune. 

A copy of the article is available on the Chicago Tribune's Website (membership is free, but is required to view the article).

Mark Your Calendars: 10^th Annual Professional Update Planned

Written By: Melissa Bottorf, Director of Marketing & Public Ed ucation

  Marshall, Parker & Associates' 10^th Annual Elder Law Update has been slated for Wednesday, May 10^th at the Holiday Inn Downtown in Williamsport and Thursday, May 11^th at the Woodlands in Wilkes-Barre .  Each session begins with breakfast & registration at 7:30 AM .

This will be your opportunity to get the latest information on changes that are of critical importance to seniors and to those of us who provide services to them. 

The Deficit Reduction Act of 2005 has complicated and limited the transfer of assets by seniors. It is the most significant new development in elder law in over a decade.  Attorney Matt Parker from Marshall, Parker & Associates, LLC will give you an expert overview of the new Act and describe how it will affect Medicaid and estate planning.  Tom Lilly, from Futurecare Associates in Pittsburgh will discuss how the Deficit Reduction Act will increase the focus on the importance of long term care insurance.

Pennsylvania is also undergoing some new initiatives to provide enhanced services to our seniors.  Darlene Shughart, Applications and Enrollment Manager from PACE/PACENET will talk about the state's drug coverage program and the Governor's proposal for PACE Plus Medicare, a program that will work with the Federal prescription drug program to provide even more seniors coverage at about half the price of the current program.

Jim Pezzuti, Director of the Division of Long Term Care Services at the Department of Public Welfare will talk about the Living Independently for Elders Program (LIFE) and how it works at the state level.  The LIFE program will offer seniors age 60 years of age and over who are Medicare & Medicaid eligible comprehensive medical, health & social services. Local representatives of the LIFE program, Shaun Smith from Albright Care Services and Amy Minnich and Maria Hastie from LIFE Geisinger will also be on hand to talk about how the program will be implemented at new local centers in Lycoming and Lackawanna Counties .

The Update is FREE and intended for professionals in the elder care and elder services network such as individuals working in nursing homes, hospitals, assisted living and personal care facilities, area agencies on aging, and county assistance offices.  It will also be of great interest to social workers, insurance and financial planners, accountants, lawyers, and trust officers who work with seniors.

The Northcentral Pennsylvania Estate Planners Council has applied and is pending approval for 3 continuing education credits for attorneys and accountants for the Williamsport program.

Marshall , Parker & Associates has also applied to become a DPW-approved training institution for Personal Care Home Administrators.  Please check DPW's website regarding approval.

The Williamsport session's breakfast is being sponsored by Citizens & Northern Trust & Financial Management Group.  Other sponsors include Outlook Pointe at Loyalsock, LIFE Geisinger, and ManorCare in Williamsport , Sunbury and Jersey Shore .

Registration online will be available in April.  If you would like to reserve your seat now, please call 1-800-401-4552 or e-mail Melissa at mbottorf@paelderlaw.com

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.

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