Attorney
Marshall Receives
Excellence in Elder Law Award
Written
By: Melissa Bottorf, Director of Marketing & Public
Education
Marshall, Parker &
Associates’ Managing Attorney Jeff Marshall was recognized for
his noteworthy service to seniors at the Pennsylvania Bar
Association’s meeting on November 29th in
Harrisburg. Attorney
Marshall was presented with the Excellence
in Elder Law Award “in recognition and appreciation
of his superior professional efforts in the field of elder law,
significant contributions to the legal profession and noteworthy
service to the elderly.”
The
award was presented by Elder Law Section Chair, Leslie Wizelman
who told the audience, “Jeff
is committed to the quality practice of elder law. He is a
consummate professional, who gives of his time and intellect to
develop the practice of elder law and to assist other attorneys
in their practice of this challenging area of the law.”
Attorney
Marshall received his B.A. from Wesleyan University in 1967 and
his J.D. from Stanford University in 1972, where he was an
editor of the Stanford Law Review.
He is the author of Elder Law in
Pennsylvania, published by PBI Press, and a
contributing author of PBI’s Estate Planning in Pennsylvania.
A recognized expert on elder law, estate planning, and
long term care planning, Mr. Marshall has been quoted by
national publications including The
Wall Street Journal, Time Magazine, The Chicago
Tribune, and The
Kiplinger Retirement Report.
Attorney
Marshall has been designated as a Certified Elder Law Attorney
by the National Elder Law Foundation.
He has been selected as a Pennsylvania Super Lawyer for
each of the past four years.
He is also listed in Best Lawyers in America.
Melissa
can be contacted at webmail@paelderlaw.com or at 1-800-401-4552
What Will Happen to the Family
House if you Enter a Nursing Home?
Written
By: Beth Shapiro, Esquire
People who are thinking about the possibility of nursing home care,
either for themselves or for a family member, often have
questions about what will happen to the family home if they or
their relative enter a nursing facility.
This article discusses some of these questions.
Is it true that I have to turn my house over to the nursing
home when I move there?
Absolutely
not. If the state is
going to help pay for your nursing care through a Medical
Assistance Nursing Home Grant, you may have to give some or most
of your income to the nursing home each month.
You do not have to sign over the deed of your
house to receive nursing home care.
Will the state try to take my house while I’m in the nursing
home? No.
The state will not do anything to your house while you
are living in the nursing home or anywhere else.
The state has a program called “Medical Assistance
Estate Recovery” through which it tries to recover the money
it paid for long-term care (nursing home-type services).
Medical Assistance Estate Recovery happens only
after the recipient of long-term care has died.
What is Medical Assistance Estate Recovery?
The law requires that Pennsylvania try to reimburse
itself for the long-term care services provided to people 55
years of age or older in certain situations.
Pennsylvania keeps track of the amount it pays for
long-term care through the Medical Assistance program and adds
up the “debt” after the death of the person who received
care. The state then
tries to collect money or assets from the deceased person’s
estate to repay the debt. Long-term
care may have been provided in a nursing home or through the
Aging Waiver or LIFE programs.
The Department of Public Welfare is responsible for
collecting the money.
What is an estate? An estate is the property
owned entirely or in part by a person after the person’s
death. For the
purpose of Medical Assistance Estate Recovery, only the probate
estate matters. The
probate estate is what would pass by will or by law (for
example, if the person does not have a will) to other people
after the owner dies.
I don’t own anything but my house and I want to leave that
to my children. Will
the state still take it?
The state has a legal right to recover money from your
house even if you have a will giving it to your children.
However, there are situations in which the state should
not try to collect the debt.
Who Can Keep the House After My Death?
What if my husband or wife is still living in the house?
The state should not try to take your house as long as you have a
spouse, a child less than 21 years old, or an adult child who
has a disability. It
doesn’t matter if the person is living in the house or not.
What if both my name and my spouse’s name are on the deed?
If the deed says “tenancy by the entireties” or
“joint tenancy with right of survivorship,” your spouse will
get the house free and clear when you die.
The state will not try to recover any money from the
house. If the deed
is in both your names but does not have these words written on
it, talk to a lawyer.
What if only my name is on the deed?
If the deed is in your name only, nothing will happen to
the house until your surviving wife or husband dies, your
disabled son or daughter dies (or is no longer disabled), and
all your children have turned 21 years of age.
When all of these things have happened, the state may try
to recover money from the house.
What if only my spouse’s name is on the deed?
Then you do not legally own the house.
However, if your spouse dies before you and leaves you
the house, the house will pass to you and you will legally own
it. If you receive
long-term care services through the Medical Assistance program
while you own the house, the state may try to recover from it
after you die. If
your spouse’s name is on the deed and you die first, the house
will not be part of your estate.
In that case, the state will not try to recover any money
from the house after your death.
We never really “got married” but we lived together as
husband and wife. Do
these rules still apply to us?
Yes, if you can show that you married under common law
before January 1, 2005. Talk
to a lawyer about how to do this.
Rules for Transferring Property
Can I give my house away before I enter the nursing home?
Yes, but the law limits to whom you can give your house.
You can transfer title (ownership) to your husband or
wife, your child who is under 21 years old, or your adult child
who is disabled. It
is also legal to transfer title to your brother or sister if
that person already owns part of the house and has lived in it
for at least a year before you get Medical Assistance for
long-term care. Finally,
it is legal to transfer title to your adult son or daughter who
has lived in the house with you for at least two years before
you move to a nursing home and has cared for you so that you
could stay at home longer.
How do I transfer title?
It is very important that you talk with a lawyer before
you try to transfer title. You
could have “tangled” title problems that make it difficult
for the house to be transferred legally.
Also, you want to make sure that you transfer title in a
way that protects your right to live in the house and manage it
until you move somewhere else.
I am not sure who owns the house because it was passed down by
family members. Can
I still give the house to my children who have been taking care
of me?
They will not legally own the house unless title to the
house has been transferred to them according to the law.
Talk to a lawyer about how to do this.
Unless the house is properly transferred or the state
forgives the debt through a hardship waiver (see below), the
state will try to collect the Medical Assistance debt after your
death.
Can I sell my house to my children or anyone else?
Yes. If you
sell it for fair market value (what it is worth), the state will
not try to take your house.
However, the money you receive from the sale, after
expenses are taken out, may affect your eligibility for Medical
Assistance. Talk to
a lawyer about how to plan for the sale and the effect on your
eligibility.
Other Important Information
Can I give my house to anyone else so the state will not take
it?
No. The law
does not allow you to avoid Medical Assistance Estate Recovery
by transferring title to a relative (except as described above)
or anyone else unless they pay fair market value for it.
Talk to a lawyer if you have questions about this.
What if I die without legally transferring title to my
daughter who cared for me until I moved to the nursing home?
Can she keep the house?
The state will forgive the debt and let her keep the
house if she meets three conditions: 1) She must have lived in
the house at least two years before you moved to a nursing home
or while you were receiving home care through the Aging Waiver
or LIFE programs; 2)
She must have provided you care or support while living with you
those two years so you could remain at home; and 3) She must
have no other permanent residence.
Anyone, not just family members, can get a “hardship
waiver” from the estate recovery rules if they meet these
conditions.
Can my son be reimbursed for the money he spent to
maintain my house while I was in the nursing home or receiving
care at home?
Yes, if the house is sold after your death to pay the
Medical Assistance debt. Anyone
who is taking care of your house by paying taxes, utility bills,
repair costs, and other maintenance expenses while you’re in a
nursing home or receiving care at home should be reimbursed from
the proceeds of the sale of the house before DPW gets repaid.
Keep records of the payments to show DPW.
There may be other important and compelling reasons that
Medical Assistance Estate Recovery would cause serious problems
for someone who needs to live in your house after your death.
Talk to a lawyer for more information about hardship
waivers.
How do you ask for a hardship waiver?
Write a letter explaining the situation and the
compelling reasons that the Department of Public Welfare should
not use the house to pay the Medical Assistance debt.
Give as many details as possible about how estate
recovery would cause problems and would not be fair for the
person living in the house.
Make a copy of the letter for yourself and mail the
original letter certified, return receipt requested, to: Estate
Recovery Program, Post Office Box 8486, Harrisburg, PA
17105-8486.
Legal Assistance in Philadelphia
If
you are 60 years old or older, you may qualify for free legal
assistance from our office.
Call or visit The Elderly Law Project, Community Legal
Services, Inc., 3638 North Broad Street, Philadelphia, Pa.
19140, (215) 227-2400 or SeniorLAW Center at 215-988-1244,
Mondays through Fridays, 9 a.m. – 1 p.m.
Beth Shapiro is an Attorney with the Elderly Law
Project, Community Legal Services, Inc. She can be reached at
(215) 227-2400.
Another
Annuity Case Win for
Community Spouses
Written
By: Attorney Jeffrey A. Marshall, CELA*
A properly
structured immediate annuity can be a particularly valuable
investment in financial planning for long term care.
An effectively timed and implemented annuity purchase may
be all that is required to protect the financial security of a
married couple from nursing home costs.
Under
Federal law (the Deficit Reduction Act of 2005 or “DRA”),
annuities are an approved method of protecting assets from
spend-down requirements. Annuities
are a particularly valuable planning option for married couples.
A DRA-compliant annuity can convert otherwise excess resources
into income that will enhance the long-term financial security
of the community spouse.
Annuity
planning is based on Medicaid’s distinction between resources
and income. In
determining eligibility for Medicaid benefits, a married couple’s
countable resources are pooled. Excess resources must be spent down. However, a
community spouse can retain all of his or her income
without affecting the Medicaid eligibility of the
institutionalized spouse. (The
community spouse is the spouse who is not institutionalized or
applying for Medicaid Waiver benefits).
The
community spouse’s income is protected.
The community spouse’s resources are not. This variance
in treatment creates the opportunity for the use of an immediate
annuity. The community spouse spends any excess resources on the
purchase a DRA compliant immediate annuity.
The purchase of the annuity spends down the couple's
excess resources to the level required for the institutionalized
spouse to become financially eligible for Medicaid funded
nursing home care. The cash that is converted to income is
recouped over time as annuity payments are made to the community
spouse.
Pennsylvania’s Attempts to Limit
the Use of Annuities
In
Pennsylvania, the Department of Public Welfare (DPW) has long
sought to limit the use of annuities to protect assets for the
community spouse. Current
state policy is to allow a community spouse to purchase an
annuity so long as the income it produces does not put the
community spouse over the minimum community spouse’s income
allowance. However,
there appears to be no authority for this limitation in the
Medicaid laws.
DPW has tried three
approaches to justify its annuity limitations:
(1)
Initially DPW argued that the purchase of an annuity by a
community spouse constituted a transfer of assets, (thus,
resulting in a period of ineligibility for Medicaid).
This argument was struck down by a Federal Court in 2001
in the case of Mertz v.
Houstoun, 155 F.Supp.2d 415 (E.D. Pa. 2001).
(2)
Trying another route, DPW unsuccessfully sought to claim that
the income payments received by a community spouse were an
available resource because they could be sold at a discount. In
2006, in a case brought by Marshall, Parker & Associates, a
Federal Court struck down that argument in James
v. Richman, 465 F.Supp.2d 395 (M.D. Pa. 2006). (DPW
has appealed the decision in the James
case to the Third Circuit Court of Appeals.
A decision is expected in 2008).
Now
a Pennsylvania State Court has joined the Federal Court in
rejecting DPW’s argument that payments from an annuity are an
available resource because they can be sold.
Ross v. DPW
When
Pauline Ross entered a nursing home, her husband David,
transferred $418,026.66 in marital assets into a “Medicaid
Qualified, Single Premium, Immediate Annuity.” The annuity
paid David $10,211.83 per month from May 15, 2005 to September
15, 2008. David
purchased the annuity in order to make Pauline eligible for
Medical Assistance-Nursing Home Care benefits.
On
May 27, 2005, David filed a Medicaid application on behalf of
Pauline. The county assistance office and an Administrative Law
Judge determined that the annuity was an available resource
because companies exist that would pay a lump sum to David in
exchange for his assigning to them the right to receive the
monthly income.
David
appealed to the Pennsylvania Commonwealth Court, which found in
his favor. Ross
v. DPW, No. 137 C.D. 2007, Slip Op. at 4 (Pa.
Cmwlth. Ct., November 15, 2007).
The
Ross court noted that federal law requires that income
and resources receive separate treatment. 42 U.S.C. §1396r-5.
Income received by a community spouse cannot be deemed to
be available to the institutionalized spouse. 42 U.S.C. §1396r-5(b)(1).
The community spouse’s income does not affect the
determination of whether the institutionalized spouse qualifies
for Medicaid. [As authority, the Ross Court cited James,
465 F. Supp. 2d at 398 (which quoted a United States Supreme
Court case, Wisconsin
Department of Health & Family Services v. Blumer,
534 U.S. 473, 480-81 (2002)].
The
court found that DPW’s attempt to treat David’s income from
the annuity as an available resource was contrary to the plain
language of the federal law.
It reversed the judgment of the county assistance office
and Administrative Law Judge. It ruled that DPW could not treat
income stream from David’s irrevocable and non-assignable
annuity as an available resource despite the potential existence
of a secondary market for the income stream.
DPW’s Post-DRA Argument
(3)
DPW is now pursuing a new argument in its attempt to place
limits on the purchase of annuities by the community spouse.
The annuities in both James and Ross
were purchased prior to the enactment of the DRA.
The DRA enacted complicated new rules concerning the
Medicaid effects of an annuity transaction.
These rules apply to annuity transactions on and after
February 8, 2006. The main thrust of the DRA provisions is that
all annuities must be disclosed and an annuity transaction is to
be treated as a transfer of assets unless the requirements of
the DRA are met.
The
first case to arise in the post-DRA era is Weatherbee
v. Richman, USDC Western District of PA Civil
Action No. 07-00134.
When
Theodore Weatherbee was admitted to a nursing home, his wife
converted the couple’s existing deferred annuity into an
immediate annuity. The
$387,756 annuity purchase took place on November 29, 2006, which
was after the effective date of the DRA. The new annuity
provided Weatherbee’s wife with a payment stream of $4,423.47
per month over 107 months.
On
February 28, 2007, Weatherbee applied for Medical Assistance
long term care benefits to cover the cost of his nursing home
care. DPW determined that the payment stream from the annuity
was an available resource to Weatherbee because the payment
stream could be sold on the secondary market for cash.
DPW’s
new argument in Weatherbee is that the DRA has modified
Medicaid law to permit DPW to count the payment stream from an
annuity as an available resource. This change, DPW suggests, can
be found in 42 U.S.C. §1396p(e)(4).
§1396p
of Medicaid law is entitled “Liens, adjustments and
recoveries, and transfers of assets” and subsection §1396p(e)
deals with disclosure of interests in annuities. DPW relies on
42 U.S.C. §1396p(e)(4) which reads as follows:
“Nothing
in this subsection shall be construed as preventing a State from
denying eligibility for medical assistance for an individual
based on the income or resources derived from an annuity
described in paragraph (1).”1
DPW
argues that this language in §1396p(e)(4) overturns
Medicaid’s long established distinction between income and
resources. According
to DPW, the above language allows it to count the income from an
annuity as a resource.
The
Weatherbee case is currently pending in Federal District
Court. To this
author, DPW’s new argument is strained. Section §1396r-5(a)(1),
upon which it relies, appears to be directly superseded by the
community spouse income and resource provisions that it seeks to
overturn. The income
and resource provisions are contained in a different section of
Medicaid law, 42 U.S.C. §1396r-5. And 42 U.S.C. §1396r-5
specifically states that it supersedes any other provision of
Title 42 that is inconsistent with its provisions. 42 U.S.C. §1396r-5(a)(1).
Ross v. DPW,
No. 137 C.D. 2007, Slip Op. at 4 (Pa. Cmwlth. Ct., November 15,
2007).
Although
§1396p(e)(4) expressly limits its effect to “this
subsection,” DPW is arguing that it overrides the long
established spousal protection income/resource provisions in a
completely different section of Medicaid law (42 U.S.C. §1396r-5).
On the other hand, 42 U.S.C. §1396r-5 specifically
states that it supercedes any inconsistent sections of §1396.
As a result, it seems likely that the community spouse
will prevail again in Ross, although DPW has appealed the case to the
Pennsylvania Supreme Court.
Of course, anything is possible. Logic
aside, DPW could conceivably prevail in its §1396p(e)(4)
argument in Weatherbee.
And DPW could get a reversal in the 3rd Circuit Court
of Appeals in James.
But, for the moment, it seems more likely that DPW’s
attempt to impose its own state policy limits on the purchase of
DRA compliant annuities by a community spouse are more likely to
fail. In the
meantime, counsel for married couples must decide whether to
abide by the limitations in DPW’s policy guidance, or ignore
them as unlawful.
Attorney Marshall can be contacted at webmail@paelderlaw.com or at 1-800-401-4552
Learn How to Protect Your Assets
from Long Term Care Costs at our FREE Community Workshops
-The
staff at Marshall, Parker & Associates will present several free
consumer workshops on Protecting
Your Assets from Long Term Care.
Reserve
your seat by calling 1-800-401-4552 or visit our registration
page online.
SCRANTON
Saturday,
January 26, 2008 from 10:00 AM until 12:00 PM
The
Hilton Hotel and Conference Center, 100 Adams Avenue in Scranton
Click
Here to Register
WILLIAMSPORT
Saturday,
February 2, 2008 from
10:00 AM until
12:00 PM
The
Holiday Inn Downtown, 100 Pine Street in
Williamsport
Click
Here to Register
PITTSTON
Saturday,
February 23, 2008 from
10:00 AM until
12:00 PM
Convention
Hall
1073 Oak Street
Click
Here to Register
LOCK HAVEN
Saturday, March
8, 2008 from 10:00
AM until
12:00 PM
Clinton
Country Club
Click
Here to Register
MATAMORAS
Saturday, March
15, 2008 from 10:00
AM until
12:00 PM
Best
Western at Hunt’s Landing in Matamoras
Click
Here to Register
If you would like someone from
Marshall, Parker & Associates to speak at your next meeting,
please contact Melissa Bottorf at 570-321-9008 or mbottorf@paelderlaw.com.
Contacting Marshall, Parker & Associates
for Assistance
Marshall, Parker &
Associates is a nationally recognized 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.
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
**In
addition to her law degree, Attorney Colbert holds an advanced
legal degree (LLM) in Estate Planning from the University of
Miami School of Law.
