Unfortunately,
under Act 42, Ralph will no longer be able to qualify for the Medicaid
funded Waiver program. He will be thrown off the program in a few
months, as soon as the Department of Public Welfare gets around to
re-assessing the couple's financial situation.
Under
Section 441.8 of the new law, the savings held in Donna's name will be
treated as available to pay for Ralph's care.
Donna will be allowed to retain only $35,000 of the couple's
$70,000 as her spousal protected share and Ralph will be able to retain
$8,000. But the couple will
still have $27,000 too much to qualify for the Waiver program under the
new Act 42 rules. Ralph will
be thrown off the Waiver program and the four hours of daily assistance
will cease.
When
Donna gets this news, she will no doubt call her lawyer in a panic.
The lawyer can outline her choices under Act 42:
Choice 1.
Place
Ralph in a nursing home and go back to work.
This will probably be the best choice for Donna's long-term
financial (and probably physical and mental) well-being.
Donna and Ralph will still have to spend down $27,000 but Donna
will be able to keep all of her earnings from work. The nursing home
staff will relieve Donna of her care-giving burdens and she will be able
to get back to a relatively normal life.
(Note that this option will cost the state more each month than
it would have cost had Ralph remained at home under Waiver.
Waiver cost less than nursing home care because Waiver services
simply supplement the services being provided by family care-givers like
Donna.)
Choice 2. Apply
for home care services under the totally state-funded "Options"
program.
There is usually a cap on the cost of services the state will
provide under Options, and Ralph needs more assistance than could be
provided within that cap.
But, the local office of aging can choose to waive the cap in
certain cases.
If the cap is ignored, Donna and Ralph may be able to get the
same level of services that they were getting under the Medicaid funded
Waiver program.
(Note that this option will cost the state a lot more each month
than it would have cost to have kept Ralph at home on the mostly
federally funded Waiver program)
Choice 3.
Stay home and continue to care for Ralph, but without any assistance or
respite.
Or private pay for help with Ralph's care until the $27,000 has
been used up. This will negatively affect Donna's long-term financial
security and effectively punish her to choosing to provide care for her
husband at home.
Choice 4. Seek
to retain Ralph's Waiver eligibility by filing an appeal under Section
441.7 of Act 42. Because she is a low-income spouse, the appeal, if
successful, may allow Donna to purchase an annuity rather than having to
spend the $27,000 on Ralph's care. Unfortunately, to pursue this
appeal, Donna and Ralph will have to run a gauntlet of obstacles.
Under Act 42, they will have to do all of the following:
A.
Fill out a resource assessment form.
B.
Provide
the County Assistance Office (CAO) with documentation of their gross
monthly incomes.
C.
Calculate
the interest income generated by Donna's protected share.
D.
Project the amount
of Ralph's income that Donna would receive in the future in the event
that Ralph predeceases Donna. This means Donna and Ralph will have to
contact Social Security and Ralph's pension plan and ask them to
calculate this information and provide verification of it. (Whether they
can actually obtain this kind of verification, and how long that will
take, is open to question). They must provide the verification to the
CAO before they can pursue the appeal.
E.
Wait for
notification from the CAO as to whether Donna can keep any additional
savings.
F.
If
the CAO
says Donna can keep all or any part of the excess $27,000, Donna must
then contact at least 3
insurance companies and get quotes on immediate annuities that meet all
the following special requirements:
(1)
The annuity must generate income for as long as Donna will live with a
guaranteed period that is equal to Donna's actuarial life expectancy.
(This type of annuity is generally referred to as a
"Lifetime Guaranteed Period Annuity"). At age 56, Donna's
actuarial life-expectancy is approximately 26 years.
An immediate annuity with a purchase price of $27,000 and the
provisions required by Department of Public Welfare (DPW) will probably
generate about $130-$140 a month for Donna.
(2)
The annuity must pay out principal and interest in equal monthly
payments;
(3)
DPW must be named as the designated beneficiary of the annuity upon the
death of Donna;
(4)
DPW must receive the remaining annuity payments if Donna dies before the
expiration of the guaranteed payment period of the annuity; and
(5)
DPW can receive a lump sum payment from the annuity if Ralph predeceases
Donna.
G.
Donna must
provide the CAO with the three annuity quotes. The CAO will select the
cheapest annuity quoted in its calculations and advise the couple of
this decision.
H.
The CAO
will prepare a Stipulated Agreement to be signed by all parties that
specifies how much of the $27,000 Donna will be able to retain.
I.
After the
Stipulated Agreement is reviewed and signed, the CAO will forward it to
the Bureau of Hearings and Appeals.
J.
Upon
receipt of an Order from the Bureau of Hearings and Appeals, the CAO
will notify Donna and Ralph that they must actually purchase the annuity
and provide a copy of the annuity to the CAO.
K.
Upon receipt of the annuity document from the couple, the CAO will
review the annuity to ensure that it meets the DPW requirements and, if
it qualifies, forward a copy of the annuity to the Third Party Liability
(TPL) Unit in Harrisburg.
L.
Ralph will not be eligible for waiver services until after all of the
above is accomplished. The CAO will then authorize Medicaid/LTC benefits
effective the date set forth in the Stipulated Agreement.
Donna
and Ralph are fortunate. Donna
is relatively young and in good general health.
She may actually be able to eventually find her path through this
regulatory maze. Most
community spouses are much older. They
will be unlikely to be able to obtain the full financial protections
allowed by law.
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