Sunday, January 29, 2012

Are we Abandoning our Nursing Home Residents?

No one wants to end up in a nursing home.  But, most of us recognize that someday we may need the level of medical and nursing care and rehabilitation services that can be best provided in a skilled nursing facility.  Placement into this high level of care may be temporary or permanent. Either way, it will most likely unpleasant and expensive but necessary. 

For many years federal and state governments have been emphasizing the benefits of keeping people out of nursing homes and at home or in more home-like settings liked assisted living facilities.  This movement was spurred on by the 1999 U.S. Supreme Court decision in Olmstead v. L.C., 527 U.S. 581 (1999). 

In Olmstead, the Court held that the unnecessary placement of individuals in nursing homes constitutes discrimination under the Americans with Disabilities Act (ADA). This means that states are required to serve individuals with disabilities in community settings rather than in institutions if it is appropriate and reasonable to do so.

In addition to this legal requirement, states have a strong financial incentive to keep people at home. Home care is generally accepted as costing much less than nursing facility care.  Supposedly, Medicaid dollars can support nearly three older people and adults with physical disabilities in home and community-based settings for every person in a nursing facility.  States that invest in keeping people at home may thus be able to reduce their rate of Medicaid spending on long-term care.  

Politics also dictates that states favor home care. Voting consumers prefer the idea of staying home. Who doesn’t want to remain independent and live at home as long as possible? Politicians universally express support for this strong voter sentiment. 

The confluence of these powerful factors is pushing our long term care delivery system towards care provided at home rather than in a nursing home. Home health agency franchises are growing rapidly, while skilled nursing homes are closing or transitioning to a lower assisted living level. This sounds like a good trend, doesn’t it?  The answer is - maybe not for everyone.   

The truth is, much as we all want to stay out of a nursing home, some of us may someday require a level of nursing care that cannot be provided at home.  The placement of a parent, or spouse, or yourself in a skilled nursing facility might be the best choice – and the only reasonable choice. We are not going to be able to do away completely with the need for nursing home care. 

Because of the growth in home and community based alternatives, the people residing in nursing homes are older and sicker than ever.  They usually need to be where they are. For many of them, there are no other appropriate options. 

In most of our nation’s nursing homes a majority of the residents have exhausted their ability to pay in full and are on Medicaid. Now, Medicaid reimbursement rates to nursing facilities are being cut back.  This is perhaps consistent with our attitude of general disfavor for this care setting. But, Medicaid residents were already not profitable for many facilities, and the reimbursement reductions will make the situation even worse.  Medicare payments are being cut as well.  So it is no wonder that few new skilled nursing facilities are being built. And existing nursing homes are cutting staff and services and other costs wherever possible.

I fear that an undesirable result of the growing focus on home care may be a continuation of the trend toward ever more inadequate care being delivered to ever sicker residents in outdated nursing homes by overworked and underpaid staff.  This downward spiral will likely accelerate if proposals to “block grant” Medicaid in order to “free” states from federal regulations (e.g. regarding nursing home staffing levels) are enacted by Congress.   

Another undesirable result may be that many of our sickest and most disabled, those who really need the care provided in a skilled nursing home, may be forced to receive inadequate services in an unregulated and inappropriate home environment.  

Are we moving toward abandoning the sickest of our elderly under the guise of providing them with the “option” to stay home?  Don’t we need to provide care to those who can no longer remain home?  Don’t we need to build some new nursing facilities and pay their operators enough to have enough trained staff to provide adequate care?   
In Olmstead the Supreme Court held that states should serve disabled individuals in community settings if it is appropriate and reasonable to do so. But we must not let the trend towards often desirable and cost effective home and community based care blind us to the needs of those for whom the only appropriate and reasonable care setting is a skilled nursing facility. 

Nursing home residents are not the detritus of our society. They are our parents and grandparents, brothers and sisters and, perhaps someday, ourselves. There are currently between 1.5 million to 1.8 million nursing home residents in the United States. They are among our society’s most dependent and defenseless individuals. How can a moral society abandon them? 

Further reading

Uncertain Futures, McKnight’s Long Term Care News.

Making Sense of Medicaid Block Grant Proposals, Marshall Elder and Estate Planning Blog.

States Seeking Major Changes in Medicaid Programs, Marshall Elder and Estate Planning Blog.

Bringing Long Term Care Home, Pennsylvania Home Care Association

Sunday, January 22, 2012

Estate Planning: A Gift to your Loved Ones

Some people think that "estate planning" is only of concern to the very wealthy.  Mostly ploys, they assume, to skirt tax while passing on huge piles of wealth from one generation to another.

But even if limiting death taxes is not a critical issue for you, the careful use of wills, trusts, powers of attorney and other legal planning tools can ensure that the things that you do own, whatever their value, are protected and will be distributed not haphazardly, but in the way that best cares for your family.  

Money left to children or grandchildren, for instance, can be passed on with strings attached, so that it is protected against being frittered away.  Investments, property and possessions earned by you and your spouse can be earmarked to eventually pass to your children so that they stay in the family rather than going to husband or wife number two. You can make sure your children are treated fairly and rectify lifetime inequalities. Family conflicts and jealousies can be avoided.

In the over 30 years I’ve been helping families plan, I have seen how poor planning can devastate the people who dad or mom only wanted to help. I’ve seen inheritances that have been lost to bad sons-in-law, been given away to “cults,” and been confiscated by children’s creditors.  I've seen family relationships destroyed more times than you can imagine. 

And the most effective estate planning is about much more than just planning for your heirs. It also involves lifetime planning through use of legal tools like powers of attorney, trusts, family agreements, and health care directives.  These tools help you retain control over your affairs and financial security during your lifetime. If you ever become incapacitated, they help ensure that the decisions that are made for you will be the ones you would have made yourself, and the person making the decisions will be the person you chose.  Lifetime planning can greatly ease the burdens placed on your family in the event of your incapacity by giving the right people the power to do what needs to be done consistent with your wishes.

Okay, I'll admit that thinking about what will happen in the event of your death or incapacity isn't much fun. It may force you to address family issues and conflicts that you have been avoiding for years. It may force you to come up with a plan instead of waiting for answers that may never come - like will a child finally “grow up” or will a marriage “work out.”

But we all need to recognize that life is uncertain and putting off planning is dangerous.  Just this past week a friend of mine collapsed on a basketball court of a massive heart attack. Young, vigorous, in great shape, he hadn’t gotten around to planning.  Although he survived, he is not competent.  And since he created no powers of attorney or health directives, his family is already lost and struggling with handling his affairs.   

The time to get started is now, while you are healthy and competent.  This is the best time to create a thoughtful and loving, estate plan.  As changes occur in your life and that of your family, you can update your plan accordingly. But you need to get a basic plan in place now. Or, if you created a plan years ago which is no longer appropriate, you need to get it updated.

The price for your procrastination may have be be paid by your loved ones and survivors.  The price may be paid in frustration, in money, in delay, and in hurt feelings.  If you don't put your affairs in order you leave your family's financial security to the ungentle mercy of inflexible laws and slow moving courts. 

And yes, if you have acquired anything of value, failure to plan may result in an unnecessary bequest to the Government.  Pennsylvania inheritance taxes range up to the 15% level, and taxation begins at dollar one.  An estate that is only worth $100,000 can incur an inheritance tax of $15,000. For people of greater wealth, there are also federal estate taxes to consider, with rates that are scheduled to go up to a maximum of 55% in 2013.

A carefully drawn estate plan will guard your family's finances, provide for the special needs of your heirs, and ease the administrative burden on your survivors.  And you know what? You will likely feel much better when you have taken care of this unpleasant though necessary task.  When my clients complete their estate planning, they often tell me that they feel like an enormous burden has been lifted off their shoulders.

Make a loving gift to your family. Set up an appointment with an estate planning attorney now.  If you live in Northcentral and Northeastern Pennsylvania, you can call Marshall, Parker and Associates at 800-401-4552 to get started

Sunday, January 15, 2012

DPW backs off policy on home sales by Community Spouses

When a married individual needs long-term nursing home care, the cost of care can jeopardize the financial security of the spouse at home. With average nursing home costs in Pennsylvania exceeding $8,000 a month, the spouse at home can easily become impoverished. 

In 1988 President Reagan signed measures into law that were been designed to protect the at-home spouse from impoverishment. States are required to comply with these federal rules in determining whether the resources of the spouse at home (called the “Community Spouse”) must be used to pay for the institutionalized spouse’s care. States must follow these federal rules.  

One of the spousal impoverishment rules is that the value of the home of the Community Spouse (“CS”) is not to be counted in determining the financial eligibility of the institutionalized spouse for Medicaid. The home of the CS is a protected asset if it has a value of $525,000 or less. But what if the CS sells the home after the Institutionalized Spouse (IS) qualifies for Medicaid nursing home benefits?  Can the CS keep the proceeds of the sale?  

The Department of Public Welfare (“DPW”) is the Pennsylvania state agency that decides who qualifies for Medicaid. When the CS sells the home “post eligibility,” DPW’s written policy has been to count any sale proceeds that are not immediately used to purchase a new home as resources that are available to pay for the IS’s care. This means that the IS will typically lose their Medicaid if the CS sells the home. 

In June 2011 DPW issued a policy clarification to its local County Assistance Offices to advise them to follow this policy.  Policy Clarification  PMN15842440 states, in part: 

If the CS sells the property, the entire value of the property will be counted as a resource for the IS. It does not matter that the property was titled only in the name of the CS. When the property is sold, all of the proceeds are considered available to the IS except for the amount used to purchase a new residence. The purchase of the new residence should be within three months. Proceeds remaining after the purchase of the new residence may be transferred to the CS, but only up to the Community Spouse Resource Allowance figure.

Now, DPW has apparently been forced to back off its position that the proceeds of a post-eligibility sale of a residence owned solely by a community spouse can be treated as an available resource of the institutionalized spouse. 

In a case brought in federal court for the Eastern District of Pennsylvania [DeMarco v. Alexander (Docket No 11-6444-RBS] Wife had been in a Skilled Nursing Facility and receiving Medicaid long term care (MA-LTC) benefits since 2003.  In 2003 the home was transferred from joint names to the sole name of her Husband. 

In 2008 Husband sold the home for $245,732 and placed the proceeds into an account in his sole name. DPW thereupon discontinued Wife’s MA-LTC due to excess resources.  Wife appealed and lost at fair hearing. She and her husband then filed an action in federal court.  In the federal court case, DPW backed down and agreed to reinstate wife’s eligibility.  The government lawyers signed a settlement stipulation that conceded that the proceeds from the sale of the home belong entirely to the CS and have no effect on the continued eligibility of the IS for Medicaid benefits.  

DPW likely backed off because its written policy as set out in PMN15842440 is in pretty clear violation of the spousal impoverishment protections mandated by federal law. The federal Medicaid rules prohibit states from attributing resources of the CS to the IS after the IS has established eligibility. Here is what the federal law says:

During the continuous period in which an institutionalized spouse is in an institution and after the month in which an institutionalized spouse is determined to be eligible for benefits under this [subchapter], no resources of the community spouse shall be deemed available to the institutionalized spouse.  42 U.S.C. 1396r-5(c)(4).

As one federal court put it, “Congress appears to have meant what it said: once the institutionalized spouse’s eligibility is determined, the state is not authorized to take any resources belonging to the community spouse and deem them available to the institutionalized spouse. Houghton v. Reinertson, 382 F.3d 1162 (10th Cir. 2004). 

Although DPW backed off when pressed by the knowledgeable and ardent advocates for the DeMarco family, lawyers should not assume that it will withdraw the policy set out in PMN15842440. For example, DPW has never rescinded its policy on DRA compliant annuities (see OPS0702208) despite a number of state and federal court decisions holding that policy to be in violation of federal law and enjoining its enforcement. (See, James v. Richman, 547 F.3d 214 (3 Cir. 2008); Weatherbee v. Richman, 595 F. Supp. 2d 607 (W.D.Pa.2009), aff’d 2009 U.S. App. LEXIS 24939, 2009 WL 3792406 (3d Cir. 2009). 

This means that lawyers representing couples where one is in a nursing home will need to be aware of the law and be ready, willing, and able to fight DPW at fair hearing and even in federal court. And consumers facing devastating long term care costs need to seek that kind of lawyer/advocate to represent them and protect their rights under the law.