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 8th, 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
Ed
ucation
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§ion=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: 10th
Annual Professional Update Planned
Written By:
Melissa Bottorf, Director of Marketing & Public
Ed
ucation
Marshall, Parker & Associates’ 10th Annual Elder Law
Update has been slated for Wednesday, May 10th
at the Holiday Inn Downtown in
Williamsport
and Thursday, May 11th 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
Back
issues of The Elder
Care Law Alerts are available on our website.
You
can even search our site by a
keyword or phrase!
Do you have a friend or
colleague who would enjoy reading the
Elder Care Law Alert? If
so, please feel free to forward it to them. Simply use the “Forward” button on
your e-mail program.
To subscribe or unsubscribe to the Elder Care
Law Alert,
simply send your request to:
webmail@paelderlaw.com
*Attorneys
Marshall and Parker are certified
as Elder Law Attorneys by the National Elder Law Foundation under
authorization from the Pennsylvania Supreme Court.
