Pennsylvania
Receives $98 Million Federal Award for Nursing Home Alternatives
Written By:
Jeffrey A. Marshall
, CELA*
Pennsylvania
will get more than $98 million in federal grant funds over five
years to build Medicaid long-term care programs that will help
keep people at home and out of institutions. The awards are
intended to help shift Medicaid's traditional emphasis on
institutional care to a system offering greater choices that
include home and community-based services.
The
funds are part of the "Money Follows the Person"
initiative that was included in the Federal Deficit Reduction Act
of 2005 (DRA). It is a component of a nationwide effort to remove
barriers to community living for people of all ages with
disabilities or chronic illnesses.
Pennsylvania
expects to be able to move 2,600 people into community settings
using these grant awards. The funds will increase the
state’s ability to provide home and community based long-term
care services to Medicaid-eligible individuals who choose to move
from an institutional to a community setting.
Pennsylvania
will seek to eliminate barriers that prevent Medicaid-eligible
individuals from receiving long-term services in the settings of
their choice. The funds will help the state develop procedures to
provide quality assurance for individuals receiving Medicaid home
and community-based long-term care services and to provide for
continuous quality improvement in such services.
In
addition, the grant means that
Pennsylvania
will qualify for a higher percentage of federal matching dollars
to help cover the costs of moving people out of nursing homes and
into community settings. The higher matching rate will be paid for
one year after an individual moves out of an institution and into
the community. The state must continue to provide community
services after that period as long as the person needs community
services and is Medicaid eligible.
The
grant awards are part of a continuing federal and state emphasis
on re-balancing public funded long-term care services away from
institutional care. The Medicaid program has traditionally
paid for care mainly for individuals living in institutions. The
Rendell Administration has announced its goal to shift funding to
50% home based care and 50% institutional care by fiscal year
2011-12.
To
help achieve this goal, the Rendell Administration proposes
expansion of home and community based services by opening up 2,200
slots for individuals in the Aging Waiver. The Governor would also
increase state investment in domiciliary care, other
community-based care options, the Nursing Home Transition program,
and invest in the conversion of nursing facility beds to other
uses.
Attorney
Marshall can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Health Care Advance Planning Tools Available
Written By:
Jeffrey A. Marshall
, CELA*
Effective
planning for your future health care requires that you carefully
choose an agent to make health decisions for you if you are ever
unable to decide for yourself. The
Marshall
, Parker & Associates website now includes a tool that you can
use to make a wise choice of agent and a guide your agent can use
to make appropriate decisions for you.
Feel free to download these tools for your personal use or
to assist others.
How To
Select Your Health Care Agent: http://www.paelderlaw.com/pdf/Choose_Agent.pdf
Guide
for
Pennsylvania
Health Care Agents: http://www.paelderlaw.com/pdf/HC_Agent_Guide.pdf
IRA Distribution to Special Needs Trust
Approved
Written
By:
Brenda
D. Colbert
,
Esquire
The IRS has approved the transfer
of an IRA to a Special Needs Trust without resulting in negative
income tax consequences. In
Private Letter Ruling 200620025, a father named his four (4)
children, one of whom was disabled, as beneficiaries of his IRA.
Upon the father’s death, which occurred prior to his
required beginning date, three-quarters of the IRA were
distributed to three (3) separate IRAs for three (3) of the
children. The
remaining one-quarter share remained in the original IRA for the
benefit of the disabled child and only the required minimum
distributions were made to the guardian of the disabled child.
If the IRA had been transferred to the disabled child, he would have
failed to qualify for Medicaid benefits because he would have been
over the permitted resource limit.
A State court granted a petition of the guardian to create
a Special Needs Trust for the purpose of owning the IRA for the
benefit of the disabled child.
The disabled child was the sole beneficiary of the Special
Needs Trust during his lifetime.
The terms of the Special Needs Trust provided for the
distribution of net income and principal in the sole discretion of
the Trustee and allowed the Trustee to accumulate income and add
the accumulated income to Trust principal.
Upon the death of the disabled child, the Trust assets
would be distributed to the State up to the amount expended on
behalf of the disabled child for Medicaid benefits and the
remainder would be distributed to the intestate heirs of the
disabled child.
The IRS stated that the transfer of the IRA to the Special Needs Trust
would be disregarded for Federal income tax purposes and would not
be considered Income in Respect of a Decedent because the Trust
was considered to be a grantor trust under Section 671 et seq of
the Internal Revenue Code. As
such, there was no transfer between the disabled child and the
Trust and therefore no income tax consequences.
Further, the IRS stated that the required minimum distributions from the
IRA to the Special Needs Trust could be based on the life
expectancy of the disabled child.
The IRS thus treated the Trust as a “look through”
trust as opposed to an “accumulation” trust, which is
significant because the required minimum distribution from an IRA
to an accumulation trust would be based on the life expectancy of
the oldest beneficiary, including contingent beneficiaries.
Two (2) factors were relevant to this decision: (1) the
separate account requirements under 26 CFR 1.401(a)(9)-5 were met
by the required date (i.e. the original IRA was properly and
timely separated for each individual beneficiary); and (2) the
Trust was a grantor trust created to preserve the disabled
child’s eligibility for government benefits.
While the Private Letter Ruling applies only to the particular situation
presented in the ruling, the conclusions of the IRS may lead to
new estate and long term care planning strategies with IRAs.
However, to my knowledge the IRS has not ruled on any of
the strategies presented below and therefore, it would be wise to
obtain a Private Letter Ruling before putting these new strategies
in place.
1.
Obviously, under a similar fact pattern as that presented
in the Private Letter Ruling, a disabled individual could convert
an outright inheritance of an IRA to a Special Needs Trust to
preserve entitlement for public benefits without incurring
negative income tax consequences.
This may also mean that any IRA beneficiary could assign
his/her rights in an IRA to a grantor trust for asset protection
and estate planning purposes after the death of the IRA owner.
2.
An IRA owner may be permitted to transfer ownership of
his/her IRA during his/her lifetime to a grantor trust for asset
protection planning purposes.
One example would be for long-term care planning purposes
where an individual transfers an IRA that would otherwise be a
countable resource to a grantor trust.
The transfer of the IRA will not cause the individual to be
ineligible for Medical Assistance benefits for long-term care
services once 60 months from the date of the transfer have
elapsed. The
individual would not own the IRA and therefore the IRA would not
be included in the individual’s resources under the Medical
Assistance Application. Moreover,
the individual could retain the right to receive income from the
grantor trust.
3. An IRA owner could
name a grantor trust as the beneficiary of his/her IRA upon the
death of the owner. The
IRA owner, through use of such a trust as a beneficiary of the
IRA, could provide spendthrift and creditor protection while
retaining the maximum income tax deferral benefit of the IRA.
Attorney
Colbert can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Medicaid/LTC
Assessment Criteria Revised
Written By:
Jeffrey A. Marshall
, CELA*
In order to qualify for Medicaid
payment of nursing facility expenses, a resident must be
determined to be “nursing facility clinically eligible.”
Nursing facility clinical eligibility (NFCE) is also required for
Medicaid payment of home care costs under the PDA 60+ Waiver
Program and the Long Term Care Capitated Assistance (also known as
LIFE) Program.
The NFCE determination is made though an OPTIONS assessment conducted by
the Area Agency on Aging or its representative. An NF Clinically
Eligible consumer is an individual who is assessed and determined
to be clinically eligible for nursing facility care.
Until recently, the Department of Aging’s Home and Community Based
Services Assessment Manual provided that the NFCE determination
was to be made based on the identification of a medical
diagnosis/illness or condition, which creates medical needs that
require care and service, which:
1.
are ordered by, or provided under the direction of a physician,
2.
are needed to be given on a regular basis and provided by or under
the supervision of a skilled medical professional, or
3.
because of a mental or physical disability, the individual
requires nursing and related health and medical services in the
context of a planned program of
health care and management. [Emphasis Added]
Starting in 2006, the state embarked on the process of providing for
state wide “consistency” in assessments.
This process effectively made it harder to qualify for
Medicaid/LTC benefits due to the increased oversight of NFCE level
of care assessments and the imposition of tougher qualifying
standards.
On
March 28, 2007
, the Department of Aging revised its Home and Community Based
Services Assessment Manual with the issuance of Aging Program
Directive APD #
07-01-01
issued
March 28, 2007
. (Available online at the Department of Aging website http://www.aging.state.pa.us/aging/ )
The revised Department of Aging Home and Community Based Services
Assessment Manual makes a small but significant change in the
definition of an NF Clinically Eligible consumer. The
determination is now made based on the diagnosis by a physician of
a medical illness or condition which creates medical needs that
require care and service, which:
-Are ordered by, and provided under the direction of a physician,
and;
-
Are needed to be given on a regular basis and provided by or under
the supervision of a skilled medical professional and
-
Because of a mental or physical disability, the individual
requires nursing and related health and medical services in the
context of a planned
program of health care and management.
These
services are usually only available in an institutional setting.
[Emphasis added]
The change of the word “or”
to “and”
represents a significant tightening of eligibility criteria. The
Manual now seems to suggest a requirement of a “skilled care”
level for NFCE eligibility. Such a strict medical/functional
eligibility requirement may be in violation of federal law.
In any event, at present, continuing NFCE status cannot be assumed
even for long-time Medicaid eligible nursing facility residents
and Waiver recipients.
Attorney
Marshall can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Materials from
Marshall, Parker & Associates’ Professional Update Available
Online
By: Melissa Bottorf, Director of Marketing &
Public Education
Over 450 elder care professionals
attended Marshall, Parker & Associates’ 11th
Annual Professional Update on May 10th in
Williamsport
and May 11th in
Wilkes-Barre
.
The presentation materials from Professor Katherine Pearson, Attorney
Matt Parker
and Attorney
Jeff Marshall
are available online at http://www.paelderlaw.com/professional_update.html.
The slides from a number of other recent
Marshall
, Parker & Associates presentations are available at http://www.paelderlaw.com/recent_presentations.html.
-
“Act 169- Changes in Advance Care
Planning in PA” presented at The Northeast Pennsylvania End of
Life Conference (Pittston,
May 10, 2007
);
-
“Latest Developments in Elder Law”
presented at The CPERI Nursing Home Administrator’s Conference (
State College
,
May 8, 2007
);
-
“New
Spousal Impoverishment Rules & Act 169" presented
at The P4A Waiver and Care Management Enrichment Conference (Camp
Hill,
March 27, 2007
).
Melissa
can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Contacting Marshall, Parker & Associates
for
Assistance
Marshall, Parker & Associates is a
nationally renowned law firm which provides long-term
care planning and estate planning services to Pennsylvania clients
from our offices in Jersey Shore, Williamsport, Wilkes-Barre and
Scranton/Clarks Summit.
If you or someone you know needs assistance with estate planning or with
qualification for Medicaid benefits for nursing home or home care,
please call us toll free 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
