Act 42
Targets Low Income Seniors
Written
By: Attorney
Jeffrey A. Marshall
, CELA*
On July 7th Governor Rendell signed Act 42 amending the
Public Welfare Code. Among
the Act's many provisions are several that will reduce the savings
that a low-income married couple can retain when one of them needs
Medicaid funded long-term care. The Act also adds more complexity to
the process of applying for Medicaid benefits and will make it much
more difficult for married couples to keep an ill spouse at home.
The new law is effective immediately even though
desperately needed implementation guidance is unavailable.
Over the past several issues of the Elder
Care Law Alert, I have discussed various sections of the
legislation that has now become Act 42.
In this issue I will discuss two additional sections:
441.7 - Income for the Community Spouse; and
441.8 Home and Community Services.
Selected Provisions of Act 42 that most directly
affect seniors are available on this website at the following link: http://www.paelderlaw.com/images/selected_provsions.pdf
Section 441.7:
Income for the Community Spouse
Section 441.7 changes the methodology used to
determine how the community spouse's minimum income allowance is
funded. The change targets
community spouses who have incomes below federal minimum
impoverishment standards.
Before 1988, Medicaid rules often resulted in
almost all of a married couple's income and savings being paid to
the nursing home when one of them needed such care. This could leave
the healthy "community" spouse with inadequate financial resources
to pay for her necessities of life.
As a result, Congress passed a law that required
States to allow the healthy spouse to retain at least minimum amounts
of income and savings. These
Medicaid provisions help ensure that community spouses are able to
retain sufficient resources to live out their lives with a modicum of
independence and dignity.
Act 42 changes the method by which the community
spouse's protected income and resources are calculated so that the
amount of savings that a low income community spouse can retain is
greatly reduced. It limits
the amount of assets that a community spouse can own under the
"resource-first" (Hurly) procedures.
In addition, the new law forces the community
spouse to overcome substantial administrative burdens to get this new,
more limited, Hurly entitlement. The
community spouse must (1) apply for Medicaid at the right time, (2)
receive a denial, (3) file an appeal from the denial, (4) enter into a
stipulated agreement with the Department of Public Welfare (DPW), and
(5) then purchase a special restricted annuity with part of the
Spousal Share. The annuity
must name DPW as contingent beneficiary.
These requirements are going to be an enormous
challenge for seniors, especially those who have physical or cognitive
impairments.
Section 441.8:
Eligibility for Home and Community-Based Services
Until now, the assets of the non-applicant spouse
were disregarded in determining an individual's financial
qualification for the Medicaid funded PDA 60+ Home Waiver program.
Section 441.8 requires that the resources of the non-applicant
community spouse be counted in the future.
Thus the financial qualification rules for home care are now
similar to the rules for nursing facility care.
The new law will make it much more difficult for
married individuals to qualify for Waiver services.
It is likely that the time between application and eligibility
determination will also be extended even for those who do qualify.
The enactment of Section 441.8 will greatly
reduce the number of nursing facility clinically eligible married
individuals who will be able to qualify for Medicaid financed home
care. This may result in several potentially negative fiscal
consequences for state funding of long term care services:
1. State
expenditures on home care services under the completely state-funded
OPTIONS program will increase because that is a primary public
financing alternative for individuals who fail to qualify for the
mostly federally funded Medicaid Waiver programs.
2. Some
individuals who could appropriately have received home care under
Waiver will be forced into more costly nursing facilities.
Section 441.8 represents a curious policy
decision by the state.
By reducing the incentives for home based care,
and increasing the use of state-funded OPTIONS services, this change
is, at best, a two-edged financial sword.
The change could end up costing
Pennsylvania
more than it saves, especially since most of the Medicaid program
savings are passed through to the federal government.
In addition, making it more difficult for people
to stay at home is contrary to the
Pennsylvania
policy of favoring home services over institutional.
Repeal?
Act 42 will place significant new costs and
burdens on
Pennsylvania
's neediest low income seniors. Unfortunately, most of the additional
dollars generated by these changes will not remain in
Pennsylvania
but will be passed along to the federal government.
Act
42 was enacted as part of the recent rushed budget process, with
little forethought by the State Legislature. Hopefully, given the
policy considerations involved, the Legislature and Governor will take
the time to review and then repeal the most ill-considered provisions
of the new law.
Attorney Marshall can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Veteran's
Administration Improved Pension Disability
Written
By: Perry Landon, Marshall
& Associates Planning Specialist
If
you are a war time veteran with limited income and are no
longer able to work or are over 65 years of age, you may
qualify for an Improved Disability Pension. The maximum annual pension
rate (MAPR - this is an income ceiling) for a single veteran with no
dependents is currently $10,162. If
the veteran qualifies as housebound, or for 24 hour aid and
attendance, this MAPR is higher. There
is also a supplemental increase in the MAPR if the veteran has a
spouse or a dependent(s).
If the disabled veteran has annual income less
than this MAPR, he/she can apply to determine his/her eligibility to
receive improved pension funds to bring his/her income up to this MAPR.
If the applicant's medical expenses for the year exceed 5% of this
MAPR, the applicant can deduct those medical expenses from his income,
increasing the amount of his/her pension.
For example, if a single disabled veteran has
gross annual income of $9,000, he would be eligible to receive $1,162
in annual improved pension benefits, or $96.83 per month. If that same
veteran has $5,000 in qualifying medical expenses, then his qualifying
income would be $4,000. He would then receive $6,162 in annual
improved pension benefits, or $513.50 per month.
Qualifying medical expenses include prescription
and non-prescription medications, medical and personal care supplies,
physician and other health care profession charges, and personal care
home and nursing home charges.
To learn more about the improved pension benefit,
you can contact your
county
Veteran
's Affairs Officer. In
Lycoming
County
, that is Don Cohick. He can be reached at (570) 327-2365, or at dcohick@lyco.org.
If you reside in
Luzerne
County
, please contact Samuel J. Marranca, Jr. at (570) 826-8706. Or logon to the Veterans Administration
website at www.va.gov.
Perry can
be contacted at plandon@paelderlaw.com
or at 1-800-401-4552
Medicaid
for Seniors: Punishing Virtue
Written
By: Attorney
Jeffrey A. Marshall
, CELA*
Sylvia
is sitting beside me, near enough for me to reach out and touch her
arm. She is 86 and knows
she has Alzheimer's. She
has come in with her daughter, Ann, to discuss her legal and financial
situation and find out about her options.
I don't have good news for her.
As her body and mind slowly slip away, Sylvia's financial
security will also be destroyed by the disease. Still,
she is fortunate to have Ann - her "rock" as Sylvia calls her.
Ann has been the primary care giver for her mother ever since
her husband Bob's death 3 years ago.
The other children help out too.
Sylvia tells me about the War years, before Ann
was even born. She worked
at a Westinghouse plant making motors while Bob was away in the Navy.
She shows me a picture of Bob in his uniform, so young and
handsome. I hate to have to turn the conversation back to the reality
of Sylvia's present circumstances.
Already, Ann can barely meet her mother's
growing needs. Sylvia's combination of Alzheimer's and arthritis
translate into a need for 24 hour assistance.
Nursing home care may soon be required.
With an average monthly cost of nearly $6,000, a nursing home
will soon exhaust all of Sylvia's modest resources and she will wind
up on government Medicaid.
Seniors, like Sylvia, who have the misfortune of
getting a long-term illness, face financial devastation. Our
government's policy is that people who suffer from Alzheimer's and
similar long-term illnesses have to become virtually penniless before
they get any financial help. Under
current Medicaid rules, most nursing home residents are allowed no
more than $2,400 of savings. They
can keep only $40 a month from their Social Security to pay for
their personal needs.
Faced with government policies that require such
total impoverishment, it is understandable that seniors, like Sylvia,
want to put something aside. By
making small gifts, Sylvia should be able to protect a portion of her
savings. Although Medicaid
imposes severe limits on gifts, under current rules assets can be
given away if the senior retains enough funds to pay privately for
care until mandatory penalty periods have expired.
Now both the federal and state governments are
proposing new rules to prevent seniors from giving away even small
amounts of their assets. These proposals have been spurred on by
lobbyists and ill-informed commentators who paint a picture of wealthy
and greedy seniors gaming the Medicaid system.
A
February 24, 2005
editorial in the Wall Street Journal decried the prevalence of
"Medicaid for Millionaires."
The reality is far different.
People of wealth don't want to go on Medicaid.
Millionaires don't want to share a tiny room in a nursing
home. They don't want to
be left with $2,400 in savings and $40 a month.
They can afford to pay for 24-hour home care or a nice, if
expensive, assisted living facility that isn't covered by Medicaid.
A recent study by MetLife shows that the average
senior over age 75 has a total net worth of $100,100, including their
home. Excluding home
equity, their average net worth is only $19,025.
That presents a more accurate portrait of the seniors, like
Sylvia, who are engaging in "Medicaid Estate Planning."
They make gifts as a last resort. Their goals are
similar: stay home as long as possible; protect a spouse if married;
avoid total impoverishment; set aside some funds to pay for the
services that are not covered by Medicaid, like dental care, glasses,
clothing, and hearing aides; preserve a modest legacy to pass on to
their children from their years of hard work.
Proponents of the federal and state proposals to
further restrict transfers of assets have bought into the Millionaire
myth and are missing a vital principle - we need to reward the virtue
of seniors, like Sylvia, who have worked hard all of their lives and
have contributed to our society.
As a matter of principle, isn't it wrong for us
to say to people "work hard, save your money, do all the things that
represent an A+ on the American Dream scorecard, so that when you are
old and get sick we can take everything away from you. We will take
your income and all your savings, and your pride and dignity too. You
followed the rules and worked and saved - but you got Alzheimer's.
Tough break. Your reward is to lose everything."
This policy is immoral, un-American, and is an
attack on economic virtue and the American family. My clients say to
me - "Jeff, why did we work so hard and scrimp and save for our
later years? The people who didn't work and didn't contribute get
their care paid for. Why are they rewarded for their laziness, while
we are being punished for working and saving? It's not fair."
My clients are right. It is not fair.
People who work hard all of their lives ought to
be able to retire with dignity and access to needed care without
totally impoverishing themselves. We shouldn't punish their virtue.
They did what society wanted them to do. They paid their taxes, raised
their children, served their country during war, and worked hard their
whole lives. Now that they
are old, and frail, and sick, and dependent on others for even their
most basic needs, we shouldn't take everything away.
Only the
United States
, among all of the world's developed countries, forces people into
destitution before helping them meet their care needs.
Is this the message we want to send to today's workers?
Is this the type of society we want to face when we retire? If
we live long enough, this time will come for all of us.
Attorney
Marshall
's article was originally published in the Insights &
Opportunities Column of the
Williamsport
Sun-Gazette
on Sunday, June 26, 2005. Attorney
Marshall can be contacted
at webmail@paelderlaw.com
or at 1-800-401-4552
USDA
Rural Home Repair Loans & Grants
Written By: Perry Landon, Marshall & Associates Planning Specialist
Ve
ry low income owners of modest single family homes in rural areas can
seek financial assistance from the United States Department of
Agriculture to remove health and safety hazards from the home, or to
make the home more accessible for household members with disabilities.
This assistance is available in the form of a Section 504 loan that is
payable for up to a maximum of 20 years. If the applicant does not
have the financial ability to re-pay a loan, the funds may be
available in the form of a "Section 504 grant."
Loans
are also available to individuals who are unable to obtain decent,
safe and sanitary housing through other sources of credit. These are
called "Section 502 direct loans." These loans can be used in a
number of ways, including:
-To buy, build, rehabilitate,
improve or relocate a home
-Refinance
debts pertaining to the purchase or construction of a home
-Purchase
the site for a home
-Purchase
essential equipment and appliances for the home
Successful
applicants for both the "504 loan and grant" and "502 direct
loan" programs must qualify financially.
To learn more about these programs, contact the USDA rural
development office that serves your county, or logon to the USDA web
site at http://eligibility.sc.egov.usda.gov
.
Perry can be contacted at plandon@paelderlaw.com
or at 1-800-401-4552
Alzheimer's
Association Memory Walk Kick-Off Breakfast Planned for Friday
Written
By:
Melissa Mancini Bottorf
, Director of Public
Ed
ucation
The 2005 Alzheimer's Association Memory Walk
will be held on
Saturday, October 8, 2005
at
Indian
Park
in Montoursville. Teams
are beginning to form and we will be holding a kick-off breakfast this
Friday, July 22nd at
9:00 AM
at Outlook Pointe,
2985 Four Mile Drive
in Montoursville. Join us
to get your team captain kits and get a sneak peak at the new and
expanded incentive prices this year.
Other walks will be held throughout Northeast & Central
Pennsylvania. For more
information, call 321-9008 or check out the Association's website at
www.alzpa.org.
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 Kevin Grebas will be speaking about Advanced
Directives at The
Laurels in Peckville on July
26th at
2:30 PM
.
-Attorney
Marshall
will present a seminar for Muncy
Bank & Trust on
Wednesday, July 27, 2005
at
3:00 PM
. It will be held at Orly's Restaurant in Muncy. The
topic will be Legal
& Financial Considerations in Retirement. For more
information, please contact Maggie Aderhold at 570-546-2211.
-Planning Specialist Lisa Barner will be talking
about Medicaid
Updates & Medicare Part D for the American Express Financial
Advisors Branch Meeting on August
5th at
9:00 AM
-Attorney Matthew Parker will be making a
presentation about the legal and ethical dilemmas with end of life
decision making for the Geriatric
Interest Network (GIN) on
Tuesday, August 9, 2005
at
8:00 AM
at Outlook Pointe at Loyalsock. The topic of the presentation will be "Dying
With Dignity - Let Your Voice Be Heard."
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.
