Wednesday, October 19, 2016

Medicaid's Spousal Impoverishment Allowances for 2017

The cost of care in a nursing home can devastate the lifetime savings of a married couple. In recognition of this problem Congress passed a law in 1988 which was intended to limit the "spousal impoverishment" that can result when one spouse becomes a nursing home resident.  
Under this Medicaid law, minimum amounts of financial resources and income are protected for a spouse who is still living in the community. These protected amounts are adjusted each year to account for inflation. The adjustments are based on a Labor Department measure of inflation.   
In October of each year the Labor Department publishes the consumer price index for all urban consumers, all items, U.S. city average (the CPI-U) for the month of September. Using that figure it is possible to calculate the Medicaid 2017 Community Spouse minimum and maximum resource allowances and maximum income allowance.

What are Community Spouse Resource and Income Allowances?

In general, when your spouse is in a nursing home or needs assistance with home care under a Medicaid Waiver program (like Pennsylvania’s Aging Waiver program) he or she will not qualify for Medicaid benefits until your combined financial resources are reduced to a certain level. That permitted level of so-called “available resources” varies depending on your financial circumstances.

Where one spouse is in a nursing facility the general rule is that the community spouse can keep ½ of the amount of available resources that were owned by the couple on the date of admission to the nursing facility. However, this standard protected “Community Spouse Resource Allowance” is subject to a ceiling and a floor. My projection of the  ceiling and floor amounts for 2017 are set out below.

In addition to being allowed to keep the resource allowance, the community spouse is also entitled to have a certain level of income called the Monthly Maintenance Needs Allowance. This income allowance is also subject to a ceiling and a floor. If the community spouse does not have the required level of income, that spouse may be allowed to keep some of the institutional spouse’s income. If the income diverted from the institutionalized spouse is still insufficient, the community spouse may be able to keep additional resources.

What are the Resource and Income Allowances for 2017?

Although the 2017 figures have not yet been formally announced by the Centers for Medicare and Medicaid Services (CMS), by law they are based on the consumer price index for all urban consumers published by the Bureau of Labor Statistics (the CPI-U) for September of the prior year. The CPI-U for September of 2016 has now been released. This allows me to provide readers with my unofficial calculation of the community spouse resource and maximum income allowance for next year.

In 1988, the Medicaid law established the initial community spouse resource allowance at levels of $12,000 minimum and $60,000 maximum for 1989 based on the CPI-U for September 1988. The initial maximum income allowance was set at $1,500. The law provides that these levels be increased by the same percentage as the percentage increase in the CPI-U between September 1988 and the September before the calendar year involved.
The 2017 Allowances

The CPI-U for September 1988 was 119.8. The CPI-U for this September (September 2016) was 241.428 or higher by a factor of 2.015 [241.428/119.8= 2.015] This allows me to project that the spousal protection allowance figures for 2017 will be as follows:   
Minimum Community Spouse Resource Allowance for 2017 = $24,180.
Maximum Community Spouse Resource Allowance for 2017 = $120,900.*
Maximum Community Spouse Monthly Income Allowance for 2017 = $3,022.50. (Note: The Minimum Monthly Income Allowance remains at $2,002.50 – it will be adjusted on July 1, 2017. The income allowances are higher for residents of Hawaii and Alaska.)
Readers should understand that the Community Spouse Resource Allowance is a starting point for planning. A community spouse can typically protect resources far in excess of his or her resource allowance through Medicaid planning techniques such as the purchase of a Medicaid qualified annuity. (Be sure to consult an experienced elder law attorney before purchasing an annuity for purposes of qualification for Medicaid benefits.)

The allowances discussed in this post can be calculated from the September CPI-U. But they have not yet been formally announced by the Centers for Medicare and Medicaid Services (CMS). It is possible that CMS could ultimately announce figures that are slightly different than those above. But my projections have been correct in the past and I have a reasonable degree of confidence in them.

Further Information:

Spousal Impoverishment (from Medicaid.Gov website).

The law governing these protected amounts is found at 42 U.S.C. §1396–5.
* To illustrate, here is how I did the calculation for the Maximum CSRA for 2017:

241.428/119.8= 2.0152587

Round to 3 decimal places = 2.015

2.015 X $60,000 = $120,900 (the maximum CSRA for 2017) 

Monday, October 17, 2016

The Family Farm and Long Term Care

The following article was written by Attorney Matthew Parker, of Marshall, Parker and Weber]
Many families have a farm that has been in the family for generations. Title to these farms is often transferred as an inheritance to one or more of the children in the next generation. 
In the past, the biggest threat to keeping the farm in the family was the inheritance tax.  Thankfully, the Federal Estate Tax system now has an exemption from tax of over $5.4 million and the Pennsylvania Inheritance Tax system has a family farm exemption from tax, provided certain conditions are met.   
Today, the biggest threat to family farms is the cost of long term care. In-home care as well as nursing home care can cost over $9000 per month. That cost can consume the savings of the average family very quickly. Many families turn to the Medicaid program to help pay for their loved one’s care. 
However, Medicaid has many complex financial qualification rules. In addition, the Medicaid Estate Recovery Program seeks to recover the amount of Medicaid paid to the person who received the benefit. The Medicaid Estate Recovery Program allows the government to place a lien on any real estate owned by the Medicaid recipient after death. Given the high cost of long term care, the lien could be over $100,000 and dramatically affect the ability of a family to pass on a family farm to the next generation.   In some cases, the farm may have to be sold to pay off the lien. 
To protect the farm, families need to change ownership of the farm from the current aging generation to the younger generation well before a long term care crisis occurs.  In the past, transferring the farm directly to children was the preferred plan.  Today, the risk of financial distress, divorce, death and dysfunction with children (and in-laws), has pushed parents to seek another option to an outright transfer of ownership. 
The irrevocable asset protection trust has become the preferred method of protecting the family farm. Title to the farm can be transferred to an irrevocable trust and sheltered from the Medicaid Estate Recovery Program. An irrevocable trust also provides protection from the risks associated with children’s lives, such as divorce. The children will take title to the farm only at the death of the parents. These trusts also permit the parents to live at the farm for the rest of their lives, allow for the sale of the property to a child or other person, and provide advantageous capital gains treatment of the farm.  

Of course, asset protection trusts should be created well before a long term care crisis.  There is a five (5) year look back for transfers of real estate under the Medicaid rules.  However, if the transfer to the trust is done five (5) years prior to applying for Medicaid, that transfer will not affect eligibility for Medicaid benefits. Skilled elder law attorneys can help you plan in advance with asset protection trusts and save the family farm for future generations.  

Wednesday, October 5, 2016

Pennsylvania Fine-Tunes Power of Attorney Law

Pennsylvania has revisited its law pertaining to the requirements for signing and notarization of powers of attorney.
HB 665 was signed by the Governor on October 4, 2016. It becomes Act 103 of 2016. The new law modifies Chapter 56 of Title 20 (the Decedent’s, Estate’s and Fiduciaries Code) and Title 57 (Notaries Public) of Pennsylvania Consolidated Statutes.  Here is a quick overview of the changes resulting from this new law.
Chapter 56 of Title 20 deals with powers of attorney other than advance health care directives.  (Chapter 56 was also modified earlier this year by Act 79 which was enacted in July).  
Chapter 56 Power of Attorney Execution Requirements
Section 5601 of Title 20 lays out formal rules that must be followed in signing powers of attorney in Pennsylvania. The new Act 103 specifies that:
  • A person who is signing a power of attorney for someone else cannot sign by mark;
  • A lawyer who takes the acknowledgement of the person signing the power of attorney cannot also be one of the required witnesses to the power of attorney. The notary law is clarified to do away with the implication that a lawyer who acknowledges a power of attorney must also be subscribing witnesses. [*Lawyers: see below for Jeff’s comment on this change].
  • Powers of attorney used in commercial transactions are exempt from many of the requirements of Chapter 56.    
Exemption of Some Powers of Attorney from Chapter 56 Requirements
Section 5601(e.1) of Act 103 exempts certain commercial and business oriented power of attorneys from some of the formalities required by Section 5601; and from various duties that are placed on an agent. This means that the power of attorney requirements of Chapter 56 regarding execution, notice, and acknowledgment, and the provisions specifying an agent’s duties do not apply to those types of power of attorney.
Section 5601(e.2) of HB 665 restates the exemption of powers of attorney that exclusively provide for health care decision making and mental health care decision making from many of the requirements of Chapter 56 (i.e. sections (b)(3)(i), (c) and (d) and section 5601.3).
The new law takes effect immediately. The exemptions set out in Section 5601(e) apply retroactively to January 1, 2015.  
Related Information
*Jeff’s comment.  The principal’s signature must be acknowledged before a notary public or other individual authorized by law to take acknowledgments. Section 5601(b)(3)(i). An acknowledgment may be taken by a lawyer who is a member of the bar of the Supreme Court of Pennsylvania if the document is thereafter certified to an officer authorized to administer oaths. (See 42 PA.C.S. § 327(a)). The statutory short form that is sufficient for this purpose is set out in 42 PA.C.S. § 316(2.1)) and is modified by Act 103.  
The principal’s signature must also be witnessed by two individuals. Section 5601(b)(3)(ii) provides that a witness shall not be the notary public or other person authorized by law to take acknowledgments before whom the power of attorney is acknowledged.
The lawyer may not serve in the dual role of taking the acknowledgment and serving as a required witness. If a notary is not available, the lawyer may take the acknowledgment (and then later certify), but may not also be one of the two required witnesses. Two other witnesses are required.
This prohibition may be inconvenient for lawyers. Prior to recent changes in the law, lawyers would sometimes both witness and acknowledge the principal’s signature (and have the document notarized at a later time). This was particularly helpful for lawyers in solo practice and where the power of attorney was signed as part of a home or nursing home visit. It reduced the number of people who needed to be involved. But the current Pennsylvania law opts for protection of the principal over convenience for the lawyer. If the notary is not present and the lawyer is taking the acknowledgment, there must be two other qualified witnesses.
To qualify a witness must be (1) 18 years of age or older, (2) not be the individual who signed the power of attorney on behalf of and at the direction of the principal, (3) not be the agent designated in the power of attorney; (4) not be the notary public or other person authorized by law to take acknowledgments before whom the power of attorney is acknowledged. Note that it appears that in many situations a spouse or child of the principal could be qualified to serve as a witness on the power of attorney so long as they meet the other requirements.

Thursday, September 29, 2016

Government Updates Nursing Home Regulations

The Federal Government has issued a final rule to update and reform its regulation of long-term care facilities. The final rule, issued by the Centers for Medicare and Medicaid Services (CMS), was formally published in the Federal Register on October 4, 2016.

Federal nursing home regulations have not had a comprehensive update since 1991. Acting CMS Administrator Andy Slavitt describes the updated regulations as “a major step forward to improve the care and safety of the nearly 1.5 million residents in the more than 15,000 long-term care facilities that participate in the Medicare and Medicaid programs.”
Use of Pre-Dispute Arbitration Agreements Restricted
Among its many pages, the new rule limits the use of arbitration provisions in nursing facility admission contracts. Effective November 28, 2016 any long-term care facility that receives federal funding is barred from requiring residents to agree to resolve disputes through private arbitration as a condition of admission to the facility. Here is Administrator Slavitt’s comment on this new limitation.  
The rule makes important changes to strengthen the rights of residents and families in the event that a dispute arises with a facility. Historically, many facilities require residents to agree to binding arbitration clauses when they are admitted to these facilities. These clauses require the resident to settle any dispute that may arise using arbitration rather than the court system. Effective November 28, 2016, our final rule will prohibit the use of pre-dispute binding arbitration agreements. This means that facilities may not require residents to sign pre-dispute arbitration agreements as a condition of admission to that long-term care facility.
Facilities and residents will still be able to use arbitration on a voluntary basis at the time a dispute arises. Even then, these agreements will need to be clearly explained to residents, including the understanding that these arbitration agreements are voluntary, and that these agreements should not prevent or discourage residents and families from talking to authorities about quality of care concerns.
Brief Overview of the New Rule
The new rule includes hundreds of new regulations that will keep lawyers busy for some time. Examples include new provisions requiring facilities to establish formal grievance procedures and provide more training for staff, limiting discharges of residents who are awaiting Medicaid payments, prohibiting "hospital dumping" by facilities, and giving residents and their families more say in care.  

Here is a related news release issued by CMS on September 29, 2016 which provides an overview of some of the changes finalized in the new Rule.
CMS finalizes improvements in care, safety, and consumer protections for long-term care facility residents
Revisions mark first major rewrite of the conditions of participation for long-term care facilities since 1991
Today, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to make major changes to improve the care and safety of the nearly 1.5 million residents in the more than 15,000 long-term care facilities that participate in the Medicare and Medicaid programs. The policies in this final rule are targeted at reducing unnecessary hospital readmissions and infections, improving the quality of care, and strengthening safety measures for residents in these facilities. These changes are an integral part of CMS’s commitment to transform our health system to deliver better quality care and spend our health care dollars in a smarter way, setting high standards for quality and safety in long-term care facilities.
The health and safety of residents of long-term care facilities are our top priorities,” said CMS Acting Administrator Slavitt. “The advances we are announcing today will give residents and families greater assurances of the care they receive.”
To learn more about these efforts to support person-centered care and improved safety for long-term care facility residents, please visit the CMS Blog at
As the first comprehensive update since 1991, this rule will bring best practices for resident care to all facilities that participate in Medicare or Medicaid, implement a number of important safeguards that have been identified by resident advocates and other stakeholders, and include additional protections required by the Affordable Care Act. CMS received nearly 10,000 public comments, which were considered in finalizing this rule.
Changes finalized in this rule include:
  • Strengthening the rights of long-term care facility residents, including prohibiting the use of pre-dispute binding arbitration agreements.
  • Ensuring that long-term care facility staff members are properly trained on caring for residents with dementia and in preventing elder abuse.
  • Ensuring that long-term care facilities take into consideration the health of residents when making decisions on the kinds and levels of staffing a facility needs to properly take care of its residents.
  • Ensuring that staff members have the right skill sets and competencies to provide person-centered care to residents. The care plans developed for residents will take into consideration their goals of care and preferences.
  • Improving care planning, including discharge planning for all residents with involvement of the facility’s interdisciplinary team and consideration of the caregiver’s capacity, giving residents information they need for follow-up after discharge, and ensuring that instructions are transmitted to any receiving facilities or services.
  • Allowing dietitians and therapy providers the authority to write orders in their areas of expertise when a physician delegates the responsibility and state licensing laws allow.
  • Updating the long-term care facility’s infection prevention and control program, including requiring an infection prevention and control officer and an antibiotic stewardship program that includes antibiotic use protocols and a system to monitor antibiotic use.
CMS set out to revise the long-term care facility standards and originally issued the proposal being finalized today, in conjunction with the White House Conference on Aging in 2015, which marked the 50th anniversary of Medicare and Medicaid.
The final rule is available on the Federal Register at

The new provisions which limit arbitration agreements are found at Section 483.70(n) of the final rule. They read as follows:
(n) Binding arbitration agreements.
(1) A facility must not enter into a pre-dispute agreement for binding arbitration with any resident or resident’s representative nor require that a resident sign an arbitration agreement as a condition of admission to the LTC facility.
(2) If, after a dispute between the facility and a resident arises, and a facility chooses to ask a resident or his or her representative to enter into an agreement for binding arbitration, the facility must comply with all of the requirements in this section.
(i) The facility must ensure that:
(A) The agreement is explained to the resident and their representative in a form and manner that he or she understands, including in a language the resident and their representative understands, and
(B) The resident acknowledges that he or she understands the agreement.
(ii) The agreement must:
(A) Be entered into by the resident voluntarily.
(B) Provide for the selection of a neutral arbitrator agreed upon by both parties.
(C) Provide for selection of a venue convenient to both parties.
(iii) A resident’s continuing right to remain in the facility must not be contingent upon the resident or the resident’s representative signing a binding arbitration agreement.
(iv) The agreement must not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials, including but not limited to, federal and state surveyors, other federal or state health department employees, and representatives of the Office of the State Long-Term Care Ombudsman, in accordance with §483.10(k).
(v) The agreement may be signed by another individual if:
(A) Allowed by state law;
(B) All of the requirements in this section are met; and
(C) That individual has no interest in the facility.
(vi) When the facility and a resident resolve a dispute with arbitration, a copy of the signed agreement for binding arbitration and the arbitrator’s final decision must be retained by the facility for 5 years and be available for inspection upon request by CMS or its designee.