Pennsylvania
Revises Penalty Divisor for Gifts
Written
By: Attorney
Jeffrey A. Marshall
, CELA*
Medicaid
("Medical Assistance") is the primary source of payment for nursing
home costs in
Pennsylvania
. But, before a nursing home
resident can receive government Medicaid benefits, the resident must
meet the financial need criteria
of the program. For many
residents, this means they first have to "spend down" their personal
financial resources so that they can qualify for this form of government
assistance.
If
the resident has given away assets in order to spend down to the
required financial qualification level, the gift may create a waiting
period during which the resident will be ineligible for Medicaid.
This waiting period, often referred to as 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.
Because
the penalty divisor is based on the cost of nursing home care, the
Department of Public Welfare must revise it from time to time.
The Department has announced that the penalty divisor will
increase, effective
July 1, 2005
, to $6,062.35. This new
divisor applies to applications for Medicaid benefits which are filed on
or after July 1st for nursing home care.
It also applies to applications for home care benefits under the
PDA 60+ Waiver program.
Under
the current rules, this new divisor means that a gift of $50,000 will
create a waiting period of 8 months.
This method of calculating ineligibility, however, may soon
change. Legislation is being considered which would impose fractional
month penalty periods for asset transfers.
Under the current rules, no penalty period is imposed on partial
months and the penalty period is "rounded down." Under the
legislative proposal, using the above example, the penalty period would
become 8.2476 months. By using the fractional month penalty periods, the
already-confusing and complex Medical Assistance process will only
become more complicated. The
change would produce only marginal savings to the Medicaid program.
In
most cases, if a gift was made more than three years before the Medicaid
application is filed, it need not be reported.
However, the reporting period can be extended to five years if a
gift is made to or from a trust. Persons
who may need to apply for Medicaid and who want to make gifts should
consult with an experienced elder law attorney.
Some gifts may be exempt from the transfer penalty rules.
Incorrect
understanding of the rules regarding gifts can create significant p
rob
lems not only for the nursing home resident and his or her family, but
also for the nursing facility. Nursing
facilities can end up with a resident who cannot pay for care but who is
now ineligible for Medical Assistance due to gifts that were made.
Everyone benefits if expert guidance is obtained.
Attorney Marshall can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Medicare
Part D Update
Written
By: Lisa Barner, Marshall
& Associates Planning Specialist
Beginning
January 1, 2006
, new Medicare prescription drug plans will be available to people with
Medicare. Insurance and
other private companies will work with Medicare to offer these drug
plans. Medicare PDPs
(prescription drug plans) will provide insurance coverage for
prescription medications. Like
other insurance plans, if you join, you will pay a monthly premium and
pay a share of the cost of your prescription drugs.
This new program will give Medicare beneficiaries a choice of
prescription drug plans that offer various types of coverage.
Those Medicare beneficiaries who have limited
income and resources may qualify for additional help in paying for
prescription drug costs. The
Social Security Administration has begun to send applications to
Medicare beneficiaries who may qualify for this extra help.
It is important to complete and return this application.
(Or, you can complete an online application beginning
July 1, 2005
.) The Social Security
Administration will be reviewing these applications and sending letters
informing beneficiaries if they qualify for this extra assistance.
The SSA will also be sending literature about the Medicare
Prescription Drug Program and will be telling beneficiaries what to do
next.
If you
need assistance in completing the application, you can call the SSA at
1-800-772-1213 or online at www.socialsecurity.gov.
Additional information about the Medicare Prescription Drug
Program
can be found online at www.medicare.gov
or by calling Medicare at 1-800-MEDICARE.
Lisa Barner can be contacted at lbarner@paelderlaw.com
or at 1-800-401-4552
Alzheimer's
Association Safe Return Program
Written By:
Suzanne K. Starr
, Marshall & Associates
Planning Specialist
One of the most stressful
behaviors facing Alzheimer's care givers is wandering.
Six out of ten people who have Alzheimer's disease will wander.
They may be seeking a prior residence, a loved one, or may become
disoriented in their own neighborhood and be unable to find their way
home.
There is no way to
predict when wandering may occur. Even
with the use of safety precautions and the most diligent of care givers,
dangerous wandering happens. Time is the enemy when someone is lost. The
longer that someone is exposed to the weather and missed medications and
meals, the higher the risk of serious injury.
The Alzheimer's
Association Safe Return Program is a national registry that assists in
locating the lost individual. The
program provides identification bracelets or necklaces for the
individual with Alzheimer's disease.
The identification jewelry, name of the individual, photo, and
contact information is registered in a national data base.
When a person who is registered in the program is lost, the
Alzheimer's Association faxes the information about the lost
individual to local police. When a person is found, an individual or the
police can contact the Alzheimer's Association using the phone number
on the identification bracelet to get the contact information that is on
file.
Pennsylvania
has received a grant to provide this program, so there is no fee for
participation. Registration is easy.
For those who would like to participate, there is an information
form that is completed and includes information such as the name of the
individual, physical description, and current medications. Names,
addresses, and phone numbers of several emergency contacts are also
listed. Remember to send a recent close-up photo of your loved one.
There are several options to choose from in identification
jewelry. Bracelets and
necklaces are available in several styles.
To register for this
free program, please contact The Alzheimer's Association at
1-888-572-8566. To register online, go to www.alz.org/safereturn.
This is a program that everyone hopes that they
will never need to use, but the few minutes that it takes to register
are well worth the time considering the advantages and assistance the
program provides if a loved one does wander and becomes lost.
Suzanne can be contacted at sstarr@paelderlaw.com
or at 1-800-401-4552
Governors
Issue Preliminary Report on Medicaid
Written By:
Jeffrey A. Marshall
, Certified Elder Law Attorney*
The
National Governor's Association has issued a preliminary report of
changes that Governors would like to see Congress make to Medicaid.
The recommendations are wide-ranging and include prescription
drugs discounts and the use of generics, limitations on judicial review,
added restrictions on transfers of assets, co-payments, benefit
packages, insurance pools, and tax credits for the purchase of health
insurance by individuals and small businesses. The report includes an
endorsement of the President's proposal to change the penalty start
date for transfers of assets, and also a $50,000 threshold below which
asset transfers would be permitted.
The
report is labeled "preliminary" and notes that it does not represent
a comprehensive health care reform package.
The entire report is available at http://www.nga.org/cda/files/0506medicaid.pdf
Attorney Marshall can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Attorney Marshall
Kicks-Off Pennsylvania Bar Institute's 8th Annual Elder Law
Institute in Harrisburg
Written
By: Melissa Bottorf, Director of Public
Ed
ucation
A
ttorneys, paralegals, and elder care service professionals will gather
in
Harrisburg
on July 21st and July 22nd for the Pennsylvania Bar Institute's 8th
Annual Elder Law Institute. The
Institute "has developed a reputation as the best elder law program
offered anywhere in the country."
For the 5th consecutive year, Certified
Elder Law Attorney Jeffrey Marshall will co-present the Opening General
Session -"Year In Review," with his colleague Robert
Clofine of
York
. The session will bring
attendees up to date on significant developments affecting the elderly
in the last year. Attorney Marshall will also serve as the moderator for
the final session at the Institute entitled, "The Gray(ing) Areas of
Medicaid." Attendees will have the opportunity to ask the panel of
experienced practitioners their questions about the "murky" areas of
Medicaid.
This year the event will also feature Dr. Joshua
Weiner, one of the pre-eminent national experts on long-term care,
Medicaid, and health care for the elderly, along with 39 separate
sessions on topics of concern to elder network professionals.
For more information or to register, call 1-800-247-4724 or visit
PBI online at www.pbi.org.
Melissa can be contacted at mbottorf@paelderlaw.com
or at 1-800-401-4552
Paying
for Long Term Care Workshops
Planned
Marshall
& Associates is now offering free workshops for seniors, their
families and professionals who want to know more about paying and
planning for long term care. The
workshops last about an hour. These
informal discussions with our planning experts are a great opportunity
to learn about the options available to pay for home care and nursing
home care.
June
30, 2005
The Lycoming Mall Community Room
6:30
PM
July
6, 2005
Marshall & Associates'
Williamsport
Office
49
East Fourth Street
4:00
PM
July
8, 2005
Marshall & Associates'
Wilkes-Barre
Office
1065 Highway 315,
Suite
402
11:00
AM
Reservations
are suggested, but not required. SIGN
UP ONLINE or call 1-800-401-4552
for more information or to reserve your spot.
Governor
Proposes Legislation Implementing Medicaid Cuts -
Part
4: Annuities
Written By:
Jeffrey A. Marshall
, Certified Elder Law Attorney*
This
is Part 4 in a series of articles which summarize some of the changes
proposed by Governor Rendell to the rules governing qualification for
Medicaid-financed long-term care services for seniors. The Governor's
proposals were originally introduced as part of House Bill 1500, and are
now being considered as part of the budget process.
A copy of the initial legislative proposal is available on the
Elder Law Firm of Marshall & Associates' website at http://www.paelderlaw.com/images/medicaid.pdf.
This issue of the Elder
Care Law Alert discusses the proposed changes to the treatment of
annuities in determining eligibility for Medical Assistance. The
proposed changes in the general treatment of annuities in determining
eligibility for Medical Assistance are found in Sections 441.7(b)-(e) of
the legislation.
Background.
Many financial planning strategies are used to hasten eligibility
for Medicaid benefits. The
techniques employed may include the conversion of otherwise available
assets into other forms that will not be counted in determining Medicaid
eligibility. For example,
cash or other available resources may be converted into income through
the purchase of an immediate annuity.
An immediate annuity is a contractual arrangement
that involves the payment of a lump-sum in return for the right to
receive a future stream of payments.
The annuity payments are treated as income for Medicaid purposes.
As a result, investments that might otherwise have to be spent on
care can be converted into income that may be retained by a community
spouse. Eventually the
community spouse should recoup the entire lump-sum that was paid for the
annuity, plus whatever earnings the annuity generates. (Annuities can
also be purchased by unmarried Medicaid applicants to extend the period
of spend-down of their assets, although the strategy is less attractive
than it is for married couples).
To avoid asset transfer penalties, annuities must
be based on an actuarially sound estimate of the life expectancy of the
purchaser/beneficiary. Annuities
with payments that extend beyond actuarial life expectancy may be deemed
to involve a transfer of assets. Annuities are reviewed by the
Department of Public Welfare (DPW) Office of Legal Counsel to determine
whether an uncompensated transfer of assets is involved. For Medicaid
qualification, it is also important that the annuity cannot be sold or
otherwise converted into an available asset.
Some view the use of immediate annuities to
accelerate Medicaid eligibility as another "loophole" built
into federal Medicaid rules. The
apparent goal of Sections 441.7(b)-(e) of the legislation is to restrict
the use of this loophole without violating mandatory federal Medicaid
requirements.
Provisions to Make Immediate Annuities Available.
Section 441.7(b) is an attempt to void restrictions on the
marketability of immediate annuities and similar contracts so that the
stream of payments can be sold by the owner.
This would allow the annuity to be re-converted from income into
a lump sum resource (albeit at a discount) that would be available to
pay for care. Section
441.7(c) establishes a legal presumption that, for purposes of Medicaid,
any annuity or contract to receive money is marketable (and thus,
available) without undue hardship (e.g. as a result of the discount).
"Fair Use" Provisions.
Section 441.7(d) then establishes requirements for what might be
referred to as the "fair use" of annuities in Medicaid
planning. The marketability
rules of sub-sections (b) and (c) will not apply to a commercial annuity
purchased "by or for an individual using that individual's
assets" if it meets the safe harbor provisions of Section 441(d).
To be exempt from the marketability/availability rules, a
"fair use" annuity must meet the following requirements: (1)
be an irrevocable guaranteed annuity, (2) make equal monthly installment
payments over the actuarial life expectancy of the annuitant, (3) name
DPW as the residual beneficiary of any funds remaining due from the
annuity at the time of death of the annuitant, to the extent of Medicaid
payments that were expended "on the individual during his or her
lifetime," and (4) be issued by a Pennsylvania licensed insurance
company.
The new rules regarding the availability and the
fair use of annuities will only apply to contracts entered into on or
after the effective date of the section.
It is unclear whether a deferred annuity purchased prior to, but
annuitized after the effective date of the new sections would be subject
to these rules.
Conclusion
The legislation's new rules governing annuities
would permit their continued use in Medicaid planning but in a manner
that would limit the savings available to community spouses and to
unmarried Medicaid recipients. Moreover, it would allow DPW to recoup
some Medicaid payments after the death of the annuitant.
Attorney Marshall 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.
