Friday, July 27, 2012

Medical Assistance Numbers for Long Term Care Eligibility published


The Pennsylvania Department of Public Welfare has updated its Medical Assistance (Medicaid) Fact Sheet for MA LTC/HCBS Eligibility. The Fact Sheet provides the current figures used in determining an applicants eligibility for Medicaid benefits for long term care services and home and community based services in Pennsylvania as of July 1, 2012. 

The qualification rules for these Medicaid programs are extremely complicated. Persons who are interested in applying for Medicaid LTC or HCBS should consider consulting with an experienced elder law attorney to assist in the planning and process. 

Here are the figures from the current Fact Sheet:

MA LTC/HCBS Eligibility
Fact Sheet (eff 7/1/2012)
Step 1: Determining LTC/HCBS MA Eligibility

NMP
MNO (LTC only)
INCOME
$2094 mnt. (Gross)
$2,550 6 mnths (Net)
 Less:   - $20/mnth disregard
-        Medical expenses
-        Health Ins Premiums
-        6 mnth anticipated cost of LTC Facility (avg mnthly Private Pay Rate)



RESOURCES
$2000*
*Effective 10/31/03 there is an additional $6000 resource disregard for NMP (300% FBR) categories of LTC NMP
$2400



SPOUSAL IMPOVERISHMENT - COMMUNITY SPOUSE SHARE
Min: $22,728
Max: $113,640

EXCESS HOME EQUITY LIMIT
$525,000




AVG MONTHLY PRIVATE PAY RATE
$8,112.13

AVG DAILY PRIVATE PAY RATE
$266.70









STEP 2: DETERMINING Payment Towards Cost of Care (Patient Pay Liability)
PERSONAL NEEDS ALLOWANCE
$45/mnth
MAINTENANCE NEEDS ALLOWANCE
Min: $1892/mnth
Max: $2841/mnth
DEPENDENT LIVING WITH CS ALLOWANCE
$1892


EXCESS SHELTER STANDARD
$568
SHELTER COSTS
·        Heating Standard
·        Non-Heating Standard
·        Homeless Standard
·        Limited SUA
·        Phone Only

$536
$278
$143
$53
$33
HOME MAINTENANCE DEDUCTION
$720.10/mnth (6 mnth limit)
MEDICARE PART B PREMIUM
$99.90/ or various



SSI/ STATE SUPPLAMENTS

Personal Needs Allowance
Elig Person
Elig Couple
LTC Facility
$45/mnth
SSI
SSP
SSI
SSP
Indep Living

$698.00
$22.10
$1048.00
$33.30
Someone’s HH

$449.34

$674.30

Pers Care Home
$85/mnth
$698.00
$439.30
$1048.00
$957.40
Dom Care Home
$178.30/mnth
$698.00
$434.30
$1048.00
$947.40

Tuesday, July 24, 2012

Another Appeals Court Upholds Medicaid Annuity Protections


Another federal appeals court has upheld the use of immediate annuities to allow married couples to more quickly qualify for Medicaid long term care benefits. 

When a wife or husband needs long term care, a couple may face financial ruin. The cost of a month in a nursing home in Pennsylvania is over $7,500. Care at home is expensive as well. The cost for licensed homemaker or home health aide services averages $20.00 an hour.  

Few people have insurance that covers any portion of these costs. Medicare is usually available only temporarily or not at all.  The best potential source of financial assistance for most people is the Medicaid program, but it has strict financial qualification rules that can prevent people from qualifying until most of their savings are gone. This can be particularly devastating for the spouse who is still healthy and living in the community (the “community spouse.”) A community spouse who must use up all of the couple’s savings caring for a sick husband can be forced to live in poverty for the rest of her life.   

In 1988, during the Reagan Administration, the federal government did something about this “spousal impoverishment” problem. It passed a law that allows a married person to qualify more easily for Medicaid help with the cost of long term care if there is a community spouse. The 1988 law built in financial protections for community spouses so that they can retain all of their income and a limited level of resources to held prevent present and future impoverishment. The basic level of protected resources is called the community spouse resource allowance (CSRA).  

If the CSRA is insufficient to protect all of the resources for the community spouse, additional options may be available. One of these is the purchase of a financial product called a single premium immediate annuity that complies with the requirements of the Medicaid laws. Annuities have long been used by elder law attorneys to protect the financial security of their community spouse clients. This planning option allows a community spouse a separate way to protect resources in addition to the CSRA.  

The Deficit Reduction Act (DRA) of 2005 which was passed during the Administration of George W. Bush confirmed that a community spouse could protect additional resources in excess of the CSRA by purchasing an annuity if the annuity meets certain requirements. This special kind of “DRA annuity” converts otherwise excess resources into an income stream that can provide for and be retained by the community spouse. 

Note that the DRA annuity product is unlike the typical immediate annuity sold by many insurance companies – because it must meet the strict requirements of the DRA law. Expert assistance should always be sought from a qualified elder law attorney before purchasing any annuity for Medicaid purposes.   

The DRA annuity provisions are very beneficial to community spouses (and to the insurance companies who sell these products and had a hand in writing the law.) On the other hand, state Medicaid agencies (like the Department of Public Welfare in Pennsylvania) don’t like annuities because they allow individuals to qualify for Medicaid sooner, which means state funds will be expended sooner. But, the federal law requires states to follow the federal rules on annuities. In a series of annuity cases in federal courts in Pennsylvania, elder law attorneys (including Matthew Parker of my firm, Marshall, Parker and Associates, Stanley Vasiliadis of Vasiliadis and Associates and Kemp Scales, of Scales Law Offices) have forced the Welfare Department to follow the federal law.  

Although Pennsylvania has led the way, the battle over DRA annuities is being fought in other states as well. Some of these cases are now reaching decision by federal appeals courts (one level below the Supreme Court) in other jurisdictions.  This month (July 2012) in a case from Oklahoma the U.S. Court of Appeals for the Tenth Circuit has joined the ranks of the many courts that have upheld the use of annuities to protect the community spouse. The case is Morris v. Oklahoma Department of Human Services

When Glenda Morris needed long term care she and her husband Leroy had countable resources of $107,812 which meant that Gloria had a CSRA of $53,906. If the couple had done nothing, Glenda would not have qualified for the Oklahoma Medicaid Advantage Waiver program that could help pay the costs to keep her at home. 

Acting on the advice of his elder law attorney, Leroy “spent down” the couple’s excess resources by purchasing a DRA annuity. But the Oklahoma state Medicaid agency denied Gloria’s application anyway, and its decision was upheld by a lower “district” court.  However, the Tenth Circuit Court of Appeals said that the agency and lower court were wrong in rejecting Gloria’s application.  In reversing the lower court, the Court of Appeals wrote:

We understand the district court’s concerns about the annuity provisions in the Medicaid statutes, and we acknowledge the fiscal strain Medicaid can exert on state budgets. Nevertheless, we hold that the purchase of a qualifying annuity renders resources unavailable to the institutionalized spouse even if the annuity is purchased in addition to the community spouse’s CSRA. Qualifying annuities are not considered available to the institutionalized spouse pursuant to § 1396p(c)(1)(G) and 20 C.F.R.§ 416.1201. The CSRA is rendered unavailable to the institutionalized spouse under § 1396r-5(c)(2). These separate provisions create two different mechanisms by which a Medicaid applicant can render resources unavailable. The statute does not require an applicant to pick one or the other. Nor does any transfer penalty apply to qualifying annuities purchased prior to a determination that the institutionalized spouse is eligible for benefits.

As court after court has noted – the law on the use of annuities to qualify for Medicaid benefits was created by Congress and can only be changed by Congress. 

In my opinion, states that disagree with the law should seek to have Congress revisit this issue rather than deny benefits to people who are following the law. 

Married couples who reside in Pennsylvania can get additional information how to use a DRA annuity and other options to protect their assets from the law firm of Marshall, Parker and Associates which can be reached at 1-800-401-4552.  Residents of other states may wish to seek the advice of a Certified Elder Law Attorney – a national list is available at www.nelf.org.

Sunday, July 22, 2012

Don’t Confuse Medicaid Rules with Tax Rules


Many seniors worry that if they ever need nursing home care, they will lose everything they own. With nursing home costs averaging well over $90,000 a year in Pennsylvania, the prospect of losing everything is very real. As a result, many seniors think about gifting their cash or property away to their children before everything is gone.  

Making gifts to your children can make sense, but it has many complicated tax and Medicaid implications.  Over the years I have found that one common area of misunderstanding is that my clients often confuse Medicaid rules with the IRS rules regarding gifting.

Medicaid rules are important because the Medicaid program is the largest source of payment of nursing home costs. Approximately two-thirds of Pennsylvania nursing home residents have most of their care costs paid for by Medicaid.  

If you need nursing home care but can’t pay for it, Medicaid will usually step in and pay for that care. But, if you have given money or property away you may be ineligible for Medicaid assistance. In Pennsylvania, that means the nursing home can sue your children to force them to help pay for your care. (See: PA Ruling: Son must pay mother’s nursing home bill).  So, if you are going to give things away, you need to understand the impact of those gifts on your ability to qualify for Medicaid.

Many people have heard that you can give away a certain amount each year tax free. They may have heard that the exempt amount is $10,000 or $13,000.  (It is $13,000 this year). But this is a tax rule, not a Medicaid rule. And it is the Medicaid rules not tax rules that determine what nursing home residents (or their family members) will have to pay towards the cost of care.  

Pennsylvania Medicaid does not permit you to give away more than $500 in any month without the gift potentially affecting your eligibility for Medicaid benefits.  On the other hand, the Medicaid rules contain a multitude of exemptions and planning opportunities.

For example, there are situations where you can give your home to your child without any negative effect on your eligibility for Medicaid. Other rules may allow you to give investments away without penalty or pay your children for caregiving services. This means that a well-informed senior will usually be able to transfer away far more than would be permitted under IRS tax rules.  Because the rules are so complicated, this type of planning should only be done with the guidance of an experienced elder law attorney.

Another concept that confuses people is the Medicaid “look-back” rule for gifts. Many people think that gifts have to be made 5 years before seeking eligibility for Medicaid.  But this is usually incorrect. 

Gifts made more than 5 years before applying for Medicaid are ignored. So are exempt gifts. Non-exempt gifts made within 5 years of applying for Medicaid long term care benefits are penalized. The penalty period depends on the value of the gift. It may be anywhere from a few days to months or even years depending on the value of the gift. The rules are complicated and it is critical for families to get the best possible advice from an experienced lawyer who is working for you (and not from someone working for a nursing home). Mistakes can be very costly.

Although procrastination is your enemy and early planning is almost always best, most people can be assisted with preserving a significant amount of assets even if a family member is already in the nursing home.  For example, here is a common situation the lawyers at my law office see frequently:

A new client comes in. Her husband has been in the nursing home for two years.  When he entered the facility they had $300,000 in investments. Now, two years later, and with only $160,000 left, the wife wants to know if anything can be done to get her husband on Medicaid. After reviewing her situation, there is good news as well as bad news to deliver. The good – we can make her husband eligible for Medicaid immediately, subject only to the time it takes to purchase a DRA compliant annuity and go through the application process, and the remaining $160,000 will all be preserved for her. The bad news - the entire $300,000 could have been preserved under Medicaid laws and her husband could have received Medicaid two years ago if she had just sought out our help at that time.

If you are worried about nursing home costs, or thinking about making gifts to your children, the best time to start the conversation is today. Be sure to include an elder law and Medicaid expert in that conversation. If you live in Pennsylvania, you can learn about the Medicaid rules and your options from my law firm: Marshall, Parker and Associates. Your initial consultation is free. If you reside in another state, you can find a national list of certified elder law attorneys at www.nelf.org

Friday, July 20, 2012

Pennsylvania Welfare Secretary gives his views on what states should do about Medicaid Reform


Pennsylvania Department of Public Welfare Secretary Gary Alexander recently spoke on the topic “The Medicaid reform dilemma: What should states do next?” before the American Enterprise Institute (a conservative think tank). The video is available online. If you want to listen to Secretary Alexander's  remarks they start at about 29 minutes in. Here is the link:

Some highlights from the Secretary's remarks (his views, my paraphrasing):
  • DPW currently struggles with millionaire lottery winners who are on Medicaid but it can’t do anything about it because of the maintenance of effort provisions of the Affordable Care Act.
  • The intent and fundamental purpose of Medicaid and Welfare is to move poorer people out of poverty.
  • DPW is the largest state health and human services in the country: 17,000 employees and a budget of almost $30 billion. 
  • In PA we could save over a billion dollars a year by directing patients to lower cost but high quality care settings. 
  • Recipients on welfare need to move out of poverty to achieve the American dream. But welfare is failing – it is a trap instead of a safety net. 
  • The Pennsylvania Welfare Department’s spending is growing much more quickly than its revenues. Medicaid enrollment in PA is up over 100% over the last 33 years while the population has only grown at 7.2%.
  • PA recently imposed an asset test on the SNAP (food stamp program) because it found that there were many people with an abundance of assets coming onto public programs. These programs were designed to kick in only when people exhaust their assets, so PA imposed an asset test.
  • Today we have only 2.5 workers for every person on welfare. It’s the takers vs. the makers out there. We need to change the dynamic if we are going to have a safety net for those who are truly vulnerable and disabled.    
  • Medicaid is a safety net for those seniors who are truly destitute – it’s not for those seniors who are middle income or upper income and transfer their assets.
  • The Rhode Island (RI) solution – a global Medicaid waiver – RI got a capped allotment of funds over 5 years. This is the closest we have gotten to a Medicaid block grant. What was most amazing in RI was the culture change that took place when the waiver was in place. It changed the incentives.  Unfortunately, some of the flexibility – the ability to do health savings accounts - was revoked by the next administration. Medicaid and cash assistance programs in RI are expected to run a $30 million surplus this year – that would be equivalent to $400 million in surplus if it were PA.
  • Solutions moving forward:
    • Give states maximum flexibility. Freedom from federal rules will save 10%. PA has run financial models and estimates a savings of 7% to 16%. If we capped Medicaid growth at a generous 4% per year the federal government would save $771 billion over 10 years and total program savings including the states would be $1.3 trillion.
  • Some things we can do right now:
o   We can do things with waivers – the RI global waiver is an example. Using block grant waivers it is possible to save $1.8 trillion in federal and state funds over 10 years. Waivers don’t have to go through Congress – so you can avoid the gridlock.
o   Give states a mega-block grant of all means tested programs including housing – Secretary Alexander estimates that in PA this would save $129 billion over 10 years. This can be done without hurting anyone – and still serving the neediest populations. We can solve our fiscal dilemma and meet our real goal – which is helping people out of poverty.  
  •  In terms of Secretary Alexander's take on Republican states' reactions to the Affordable Care Act post the Supreme Court decision:
    • Pennsylvania is looking at its data currently to see where we want to go.
    • If a state is to say yes to Medicaid expansion they are going to be looking for concessions: for example - impose real work requirements around those who can go to work, impose greater cost sharing, utilize premium assistance, impose more personal responsibility. We need a maintenance of effort provision placed on individuals rather than states.