Elder Law Firm of Marshall & Associates

Partial Month Transfer Penalties Begin

Written By: Attorney Jeffrey A. Marshall , CELA*

Medicaid (“Medical Assistance”) is a primary source of payment of long-term care costs in Pennsylvania . But, before an individual can receive government Medicaid benefits, he or she must meet the financial need criteria of the program. For many individuals, this means they first have to “spend down” their personal financial resources so that they can qualify for this form of government assistance.

If an individual or his or her spouse has given away assets in order to get down to the required financial qualification level, the gift may create a waiting period during which the couple will be ineligible for Medicaid. This waiting period, often called the “penalty period,” begins in the month the gift is made. The length of the waiting period is determined by dividing the value of the income or assets given away by a “penalty divisor” which is roughly equivalent to the average monthly cost of a private nursing home room.

Recently enacted Act 42 of 2005 makes a number of changes to the rules for qualification of Medicaid funded long-term care services. These changes apply to individuals receiving nursing facility care as well as home care under the PDA 60+ Waiver program.

One of the changes mandated by Act 42 is the imposition of partial month penalties for cumulative gift transfers in excess of $500 in any month. On August 15^th, DPW issued instructions (Operations Memorandum OPS050804) to County Assistance Offices advising them as to how to implement this new transfer penalty.

The new rule goes into effect on August 22, 2005 . Transfers in excess of $500 now create a penalty of 1 day for every $199.31 transferred (this figure will change on July 1, 2006 ). Here is an illustration of how the new partial month’s penalty rules work.

On August 22, 2005 Mr. Jones makes a non-exempt transfer of $20,000. He applies for Medicaid benefits on August 29^th. Under the new rule, the penalty period resulting from the transfer is calculated as follows:

- Divide the $20,000 by the average monthly private pay rate at the time of application ($20,000 /$6,062.35 = 3.29 months). There are three whole months of ineligibility.

- Determine the partial month penalty period by subtracting the value of the three whole months of ineligibility (3 x $6,062.35 = $18,187.05) from the total amount of the transfer ($20,000.00). Divide the result ($1,812.95) by the average daily private pay rate of $199.31.

Result: $1,812.95/$199.31 = 9.09 days (round down to 9 days).

- Mr. Jones is ineligible for Medicaid funded long-term care services for three whole months (August, September, October) and nine days (November 1, 2005 through November 9, 2005).

This is just one of a series of new directions that DPW should be issuing over the next few weeks to implement Act 42. A copy of DPW’s Operations Memorandum OPS050804 ( August 15, 2005 ) regarding partial month penalties is available on the Marshall & Associates website at the following link: http://www.paelderlaw.com/pdf/opsmemo.pdf .

The Section of Act 42 which requires DPW to impose this new partial month’s penalty is reproduced below:

Section 441.5. Penalty Period for Asset Transfer.--

(a) Pursuant to section 1917(c) of the Social Security Act (49 Stat. 620, 42 U.S.C. § 1396p(c)), the department shall impose a penalty of ineligibility for all ineligible days, whether for full months or for a partial month's period of ineligibility, or both, when an applicant, recipient or spouse of an applicant or a recipient of the services set forth in subsection (b)transfers assets for less than fair market value within or after the look-back period as defined in section 1917(c) of the Social Security Act. Transfers totaling five hundred dollars ($500) or less in a calendar month shall not be subject to the penalty.

(b) The ineligibility period set forth in subsection (a) shall apply to all of the following:

(1) Nursing facility services.

(2) Services equivalent to those provided in a nursing facility.

(3) Home and community-based services furnished under a waiver granted under section 1915(c) or (d) of the Social Security Act (42 U.S.C. § 1396n(c) or (d)).

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

Medicare Part D and Creditable Coverage

Written By: Lisa Barner, Marshall & Associates Planning Specialist

Medicare Part D prescription drug benefits will become available to Medicare beneficiaries on January 1, 2006 . Those eligible to sign up for a Part D plan can begin doing so on November 15, 2005 . The initial enrollment period runs for 6 months until May 15, 2006 . After that, the annual enrollment period will be from November 15 thru December 31 of each year for most continuing Medicare beneficiaries.

Most enrollees will have to pay a monthly premium for this coverage. The premium will vary depending on the plan chosen. Premiums for a standard plan are expected to run approximately $35 a month. (Some plans that offer additional benefits may charge a higher premium.)

Enrollment is voluntary. However, beneficiaries who choose not to join a Medicare Part D plan during their initial enrollment period ( November 15, 2005 - May 15, 2006 ), may be subject to a penalty if they later decide to enroll. The penalty will be approximately 1% for each month of delayed enrollment. Thus, someone who delays their enrollment for 4 years will have to pay 48% more in premiums each month.

There is an exception to this penalty. There will be no penalty for delayed enrollment if the beneficiary did not enroll because they had some type of “creditable coverage.” Creditable coverage is coverage provided by a private insurer that is considered to be at least “as good as” the Medicare Part D standard benefit.

Private insurers are required to notify beneficiaries if their coverage is going to be considered creditable. The Center for Medicare and Medicaid Services (CMS) suggests that beneficiaries receive this notice in writing. Beneficiaries should contact their benefits administrator to request this notice. If a beneficiary has creditable prescription coverage from another insurer, he or she would not be subject to the premium penalty if her or she loses this coverage and later decides to enroll in a prescription drug plan (PDP).

The Pennsylvania PACE and PACENET Programs will be considered “creditable coverage.” Therefore, the PACE program suggests that anyone eligible for PACE (or PACENET) benefits should apply now (even if you currently do not have prescription drug needs). If you are a PACE or PACENET recipient and then later choose to enroll in Medicare Part D, you should not be subject to the premium penalties.

Prescription drug coverage provided by Medicare supplement plans H, I, and J will not be considered to be creditable coverage. Medicare beneficiaries who have Medicare supplement plans H, I, or J will not be able to keep that coverage and also enroll in Medicare Part D.

Applying for PACE and PACENET benefits has never been easier. Applicants can apply via mail or online at http://www.aging.state.pa.us/ The current income limits for PACE are $14,500 for a single person and $17,700 for a married couple. For PACENET the limits are $23,500 for a single person and $31,500 for a married couple.

Lisa can be contacted at lbarner@paelderlaw.com or at 1-800-401-4552

Act 43 - Children Can Be Liable for their Parent’s Nursing Home Costs

Written By: Attorney Jeffrey A. Marshall , CELA*

Pennsylvania has re-enacted a law that makes children liable for their parent’s nursing home costs and other care-related expenses. Children can be sentenced to jail if they fail to comply with a court order to support their parent. The law, Act 43, also allows state agencies to become guardians of the person and the estate of indigents.

Under the law, any person, public body, or public agency having an interest in the care, maintenance or assistance of the indigent person may sue any child who has sufficient financial ability to support the parent (unless the child was abandoned by the parent). A child who fails to comply with a support order can be sentenced to up to 6 months imprisonment.

Act 43 also gives any public body or public agency caring for any indigent person the right to petition to become legal guardian of the PERSON and property of the indigent. The law does not specify that the indigent person must be incapacitated. The guardianship, if granted, is not terminated until the public body or agency has been fully reimbursed for the expense of that person’s care or assistance.

Here is what the Governor’s press release says about Act 43 (formerly know as SB. 86):

Senate Bill 86 – includes changes to the Support Law and is a companion bill to the changes that were made to the Welfare Code that enable the commonwealth to seek reimbursement for medical assistance costs already paid for by the commonwealth recipient if there is any action, claim or settlement associated with the recipient’s estate. It also updates provisions requiring that immediate family members contribute to the cost of care, thus decreasing the burden on the Medical Assistance program, when possible.

Here is a link to the Act 43 (SB 86).

http://www2.legis.state.pa.us/WU01/LI/BI/BT/2005/0/SB0086P1054.pdf

For more information, here is a link to an earlier Elder Care Law Alert article on the subject of children’s liability for their parent’s nursing home costs. http://www.paelderlaw.com/childresponsible.html.

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

Proposed Regulations on Preadmission Requirements & Civil Rights Compliance for Nursing Facilities

Written By: Melissa Bottorf, Marshall & Associates Director of Public Education

The Department of Public Welfare has proposed a regulation that will require nursing facilities to have applicants evaluated by the Department or its independent assessor as to the need for nursing facility services prior to admission to the facility. This is part of the state’s effort to re-balance the long term care system to have more individuals receive long-term care in home and community based settings.

The purpose of this proposed clinical evaluation is two-fold: It will help determine if the individual requires nursing facility care and it will help educate the family about other possible options in the community.

The regulation also calls for nursing facilities to keep civil rights compliance information on each applicant who has applied for admission. By maintaining these records, the Department hopes to ensure that facilities are complying with the laws set forth in the Civil Rights Act, prohibiting discrimination on the basis of race, color, national origin or disability.

The public has a 30 day period (from the date of publication – July 29, 2005 ) to comment on the proposed regulation. The full text of is available at http://www.pabulletin.com/secure/data/vol35/35-31/1435.html .

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

In the Community…

The professional staff of Marshall and Associates will be presenting to the following groups and organizations over the next couple of weeks. Many of these events are open to the public. If you would like more information or would like to schedule someone to speak at your group, please contact Melissa at 321-9008 or at mbottorf@paelderlaw.com

-Attorney Marshall will instruct a course on the Nuts & Bolts of Medicaid Planning for the Pennsylvania Bar Institute (PBI) on August 25^th in Mechanicsburg , PA.

-Attorney Grebas will talk about Using Wills in an Effective Estate Plan for the Lee Park Towers Senior Community in Pittston on August 29th at 2:30 PM .

-Planning Specialist Lisa Barner will make a presentation on Medicare Part D to the Williamsport Church of the Savior Senior Group on Wednesday, August 31 at 11:45 AM .

-Planning Specialist Lisa Barner will provide a lunch n' learn on Medicare Part D at Sycamore Manor in Williamsport. It will be held on Thursday, September 8th at 11:45 . For more information or to register, please contact Lesley Blair-Morrison at 326-2037.

-Attorney Kevin Grebas and Planning Specialist Josephine Balsamo will make a presentation about Protecting Your Assets from Long Term Care Costs. The event will be held at the Ed wardsville Senior Center on September 8th at 1:00 PM .

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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.

1-800-401-4552

www.paelderlaw.com

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