Deborah
Berrigan Joins Marshall, Parker & Associates
Written
By: Melissa Bottorf, Director of Marketing & Public Education
Marshall
, Parker & Associates is pleased to announce the addition of
Deborah L. Berrigan, RG as a Planning Specialist in the firm’s
Long Term Care Services Department.
Deb Berrigan is a Registered Guardian by the
National Guardianship Foundation and is the President of ElderCare Solutions, Inc,
a non-profit organization which serves as a court-appointed guardian
for incapacitated individuals. Deb has extensive knowledge about the
legal, social and financial issues affecting
Pennsylvania
seniors. She has over sixteen years of experience working as a Long
Term Care Planning Specialist.
In 2000, Deb received her certificate in
Gerontology from King’s College in
Wilkes-Barre
,
PA.
She also became a
Registered Financial Gerontologist from the American Institute of
Financial Gerontology at the Widener University School of Business
in 2004. She is a member of the Northcentral Geriatric Interest
Network and the
Northcentral
Inter-Agency
for Non-profits.
In her new position at
Marshall
, Parker & Associates, Deb will assist seniors and their
families with long term care planning issues, including Medicaid
eligibility and home care options.
She can be contacted at webmail@paelderlaw.com
and by telephone at 570-321-9008.
Melissa
can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
The
DRA Era Begins: Annuities Offer Planning Opportunities
Written By:
Matthew J. Parker
, CELA*
The
era of the Deficit Reduction Act (DRA) finally arrived in
Pennsylvania
on
March 3, 2007
. On that date, the Department of Public Welfare (DPW) published its
“Statements of Policy” implementing the DRA provisions for
payment of long-term care services in the Pennsylvania Bulletin (http://www.pabulletin.com/secure/data/vol37/37-9/353.html).
The DRA law is so confusing that it has taken
Pennsylvania
more than a full year to set out its guidance as to how it intends
to comply with the new requirements. DPW’s rules are extremely
complicated and many are unique to
Pennsylvania
. Seniors, their family members, advisors, and health
care providers, all should seek expert help to avoid the traps in
the new law. Elder
network professionals should try to attend this year’s Marshall,
Parker & Associates Professional Update to get more
information on the DRA and other recent changes in the law.
Under the new law, annuities have become a
fundamental planning tool for individuals and couples who want to
qualify for Medicaid long-term care benefits. An
article by Jeff Marshall on the use of annuities under the DRA is
reproduced below.
Attorney
Parker can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
DRA
Annuities: Understanding the Federal and
Pennsylvania
Rules
Written By:
Jeffrey A. Marshall
, CELA*
As
a result of the Deficit Reduction Act of 2005 (DRA), immediate
annuities have become an increasingly useful planning tool for
clients seeking to protect their resources from the costs of
long-term care. The new law effectively authorizes the use of
annuities to gain immediate eligibility for Medicaid if
the transfer and remainder interest provisions of the law are met.
The Department of Public Welfare’s (DPW’s)
Operations Memorandum on Annuities authorizes the use of annuities
to accelerate Medicaid/LTC eligibility. The Memorandum is available
online at http://www.paelderlaw.com/Draft_memos.html.
Federal and state approval of annuity-based
planning means lawyers and planners need to understand how annuities
can be used to benefit clients who are in need of long-term care.
This article is intended to provide the reader with a basic overview
of the federal and state treatment of DRA compliant annuities.
Prior to the DRA, annuities were frequently
employed to protect the assets of married couples. Annuities would
convert the excess resources of a community spouse to exempt income.
On the other hand, annuities were rarely used in planning for
unmarried individuals. For unmarried persons, assets could
usually be better protected through the use of “half a loaf”
transfer planning or other techniques.
Under the DRA, annuities continue to be a vital
planning option for married couples. And, due to the DRA’s
strict new restrictions on asset transfers, annuity-based planning
has now become more significant for unmarried individuals.
1
Federal Law
Congress and Federal regulators have
historically given preferential treatment to annuities. In OBRA 93,
Congress delegated the Medicaid treatment of annuities to the
Secretary of HHS. Transmittal
64 to the State Medicaid Manual contained the Secretary’s
determination as to when an annuity purchase involves a transfer of
assets.
Annuities, although usually purchased in
order to provide a source of income for retirement, are occasionally
used to shelter assets so that individuals purchasing them can
become eligible for Medicaid. In order to avoid penalizing annuities
validly purchased as part of a retirement plan but to capture those
annuities which abusively shelter assets, a determination must be
made with regard to the ultimate purpose of the annuity (i.e.,
whether the purchase of the annuity constitutes a transfer of assets
for less than fair market value). If the expected return on the
annuity is commensurate with a reasonable estimate of life
expectancy of the beneficiary, the annuity can be
deemed actuarially sound.
Transmittal 64 established that an actuarially
sound immediate annuity could be purchased without a transfer
penalty. The DRA continues this rule subject to several
modifications:
It requires that applicants for Medicaid funded long-term care disclose
their interest in annuities.
(2)
It requires that the state be named as remainder
beneficiary (subject to the preferred interest of the community
spouse and minor and disabled children) to the extent of benefits
paid.
(3) It
clarifies and codifies the rules regarding when an annuity
transaction is to be treated as a transfer for less than fair
value.
The DRA also gives special treatment to
annuities purchased with the proceeds of retirement plan accounts.
The new law’s asset transfer provisions do not apply to such
“qualified annuities.” However, retirement plan qualified
annuities are still subject to the DRA’s disclosure and remainder
beneficiary provisions.
The new annuity rules apply to any annuity
purchased after
February 7, 2006
or involved in a transaction after that date.
2
State Guidance
DPW’s Operations Memorandum (“Ops Memo”)
establishes the Department’s interpretation of the rules regarding
when the purchase of an annuity will be penalized as a transfer.
The Ops Memo also addresses the issue of when an annuity is to be
treated as a resource rather than as income. (Marshall, Parker
& Associates has been involved in litigation with DPW over the
“resource” issue, and recently obtained a permanent injunction
against the Department in this regard.
See, “Federal Court Orders Medicaid Benefits in Spousal
Annuity Case,” http://www.paelderlaw.com/Federal_Court.html.)
A denial of Medicaid long-term care
(“Medicaid/LTC”) benefits may result if an annuity is treated as
either a transfer or as an available resource. Thus, for Medicaid
planning purposes, the ideal annuity is one which will not be an
available asset and whose purchase will not involve a penalized
transfer of assets. The Ops Memo sets out the path to be
followed to meet these objectives.
The DPW annuity policy applies to applicants,
recipients and spouses of applicants and recipients who purchase an
annuity or make a transaction involving an annuity on or after
February 8, 2006
.
Acting in compliance with
the Ops Memo, a Medicaid/LTC applicant (and spouse, if applicable)
should now be able to purchase one or more annuities that will allow
immediate eligibility for benefits. Other techniques, such as
combining annuities with divestments, may be more aggressive. The
client, with expert advice from legal counsel, can decide on the
approach that is most appropriate to that client’s particular
goals and circumstances.
Attorney Marshall can be contacted
at webmail@paelderlaw.com
or at 1-800-401-4552
Report
Describes National and
Pennsylvania
Long-Term Care Costs
and Trends
Written By:
Jeffrey A. Marshall
, CELA*
Each
year, Genworth Financial commissions a study of long-term care costs
in
America
.
The study describes average costs for nursing facility,
assisted living, and home care in all regions of the
United States
.
This
year’s report was released on March 31st. It shows both
current costs and trends over the past four years. The statistics
reflect steadily increasing prices for institutional care but
relatively modest home care cost increases.
The
survey found the national average annual cost of nursing home care,
in a private room, has risen to $74,806, while the average yearly
cost of assisted living has risen to $32,573 for a one bedroom unit.
The average cost of a 40-hour-a-week in-home health care aide
was found to be $52,977 a year.
Regional
variations in the cost of long-term care are significant. In
Pennsylvania
, outside of the
Philadelphia
region, some average cost
figures are as follows:
$77,646
Annual cost of a private nursing home room ($91,954 in
Philadelphia
area).
$71,503
Annual cost of a semi-private nursing home room ($82,289 in
Philadelphia
area).
$26,463
Annual cost for private assisted living facility room ($37,597 in
Philadelphia
area).
$
17.75 Hourly rate for non-certified home health aide ($19.14 in
Philadelphia
area).
$
16.71 Hourly rate for non-certified homemaker services ($18.62 in
Philadelphia
area).
The
Genworth,"2007 Cost of Care Survey" is available at http://www.genworth.com.
Register
for Marshall, Parker & Associates’ Professional Update on May
10 and May 11
Marshall, Parker & Associates’ 11th Annual Elder Law
Update has been slated for Thursday, May 10th at the
Williamsport Country Club and Friday, May 11th at the Woodlands in
Wilkes-Barre
.
Each session begins with breakfast & registration at
7:30 AM
.
This
will be your opportunity to get the latest information on changes
that are of critical importance to seniors and to those of us who
provide services to them. A brochure and agenda are
available at www.paelderlaw.com/registration.asp.
You can register online or by calling 1-800-401-4552.
The
Update is FREE and intended for professionals in the elder care and
elder services network such as individuals working in nursing homes,
hospitals, assisted living and personal care facilities, area
agencies on aging, and county assistance offices.
It will also be of great interest to social workers,
insurance and financial planners, accountants, lawyers, trust
officers, and other professionals who work with seniors.
Credits
Provided:
Personal Care Home Administrators: 3.5 Credits
(Free)
Social Workers: 3.5 Credits ($20.00 made
payable to “College Misericordia”)
Accountants: 3 Credits offered through Parente
Randolph (Free)
Attorneys: 3 Credits pending
approval from PA CLE ($4.50 made payable to “Marshall
& Associates)
Marshall
, Parker &
Associates would like to thank this year’s sponsors:
•
Hospice of the Sacred Heart
•
Bayada Nurses
•
Outlook Pointe
•
Endless Mountains In-Home
Solutions
•
Valley Crest
•
Susquehanna Wealth Management
•
College Misericordia
•
C&N Trust & Financial
Management Group
•
NorthCentral Geriatric
Interest Network
•
NorthCentral Pennsylvania
Estate Planner’s Council
Back
issues of The
Elder Care Law Alert 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.
