Tuesday, December 17, 2013

New Transfer Penalty Divisor Announced

The Medicaid program is the most significant source of potential financial assistance for families struggling to meet the cost of long term care. According to the Pennsylvania Health Care Association, 47% of our nation's $275 billion in annual spending on long-term care --excluding unpaid family caregiving—is paid for by Medicaid. See: PA Long-Term Care Statistics. 

In Pennsylvania, in 2012 over $7 billion was spent by Medicaid on long-term care services and supports. Nearly 50% went for nursing facility care while 41% was paid for home and personal care services. See: Distribution of Medicaid Spending on Long Term Care, Kaiser Family Foundation State Health Facts.  
Qualification for Medicaid long-term care benefits is critical to meeting the care needs of many of Pennsylvania’s most frail elderly. But, an applicant is ineligible for those benefits if he has disposed of assets for less than fair market value during a five year look-back period. 
Imposition of a transfer penalty denies benefits for individuals who otherwise need and qualify for Medicaid long term care benefit. A denial can also effectively make an individual’s children liable for the costs of the needed care. See: Children can be liable for a parent’s long term care costs in Pennsylvania.
The transfer penalty applies when a transfer was made by the individual applying for Medicaid long-term care benefits, or their spouse, or someone else acting on their behalf.
Unless the transfer is for some reason exempt, if an asset is transferred for less than fair consideration within the applicable look-back period, then a period of ineligibility is imposed based on the uncompensated value of that transfer.
New Penalty Divisor for 2014
The length of the penalty period is calculated by taking the uncompensated value of the transfer and dividing it by the average private patient cost of nursing facility care in Pennsylvania at the time of application for benefits. The average cost to a private patient of nursing facility care is often referred to as the “private pay rate” or the “penalty divisor.”
The penalty divisor is revised each year as nursing facility care costs increase. The Pennsylvania Department of Public Welfare has announced that as of January 1, 2014, the penalty divisor will be set at $288.21 per day. This means that the Department has calculated that the average monthly private pay rate in Pennsylvania is $8,766.39 a month (or $105,197 per year).
Uncompensated transfers made during the look-back period will be calculated at one day of ineligibility for every $288.21 transferred away. In Pennsylvania, transfers penalties will be imposed when the value of transfers made in a month exceeds $500.   
The rules are complicated. Seniors considering making gifts or other transfers of assets should consult with an experienced elder law attorney before completing the transaction.

Tuesday, December 3, 2013

Lawyer of the Year



Although it’s hard for me to believe, I’ve been a lawyer for over 40 years. When I graduated from Stanford Law School in 1972 and got my first job, in San Jose, California, I didn’t like it. I spent most of my time involved in disputes between big corporations. The work didn’t seem important. I felt like I was wasting my education and the days of my life. 
Then, in 1979 my mother passed away and I returned to Pennsylvania to be near my father. I opened an office in a small town and started doing whatever work came my way. Some of that work involved wills and trusts and estate planning. I found that I really liked that part of my law practice. 
I particularly enjoyed spending time with seniors, hearing their stories and helping meet their needs. I realized this was the work I wanted to do – these people were important to me and they needed me and I could help them. By 1983 I had decided to devote my legal practice to representing seniors. It was the best career decision I ever made.
Looking back now, I understand that if you can find something you are passionate about, and you are fortunate enough to be able to do it every day, your days will likely be happy and fulfilling. And you are probably going to get to be quite good at what you are doing.
I was fortunate to have found my passion in elder law. I have loved being an elder law attorney. It has been tremendously rewarding to spend my days working with seniors and their families.  As a bonus, the field of elder law is filled with people – lawyers and paralegals and health providers and social workers – who are caring and good.  So I have made great friends amongst my elder law colleagues.
One additional reward of being able to do work you love over a long period of time is that your colleagues may come to value your work. This can lead to awards and recognitions.
In this regard, I am pleased to note that I have been selected by US News Best Lawyers® as the Lawyer of the Year in Elder Law for 2014 for the Harrisburg, Pennsylvania metropolitan region. http://tinyurl.com/lfxwz4q. I am touched by this recognition of my work. 
In addition to my being chosen to be Lawyer of the Year in elder law for my geographical region my firm, Marshall, Parker and Weber has been selected as one of only eight tier one law firms in entire state of Pennsylvania in the field of elder law. http://tinyurl.com/kzjyeko. This is to the great credit of Matt Parker, Tammy Weber and the rest of the amazing professional staff at the firm.   
Here is how US News Best Lawyers® describes the Lawyer of the Year recognition.
Lawyer of the Year

Only a single lawyer in each practice area and designated metropolitan area is honored as the “Lawyer of the Year,” making this accolade particularly significant.
Lawyers being honored as “Lawyer of the Year” are selected based on particularly impressive voting averages received during the exhaustive peer-review assessments we conduct with thousands of leading lawyers each year. Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, their professionalism, and their integrity.
Best Lawyers® began designating “Lawyers of the Year” in the U.S. in high-profile legal practice areas in 2009. Since then, we have extended this honor to many other countries where the Best Lawyers peer-review process is conducted as well.
We continue to believe — as we have believed for over 30 years — that recognition by one’s peers is the most meaningful form of praise in the legal profession. The Editors of Best Lawyers would like to congratulate all of the lawyers who have been selected as “Lawyers of the Year” for 2014.
For purposes of selecting a Lawyer of the Year, US News Best Lawyers® divides Pennsylvania into 4 metropolitan regions: Allentown, Harrisburg, Philadelphia, and Pittsburgh. For 2014 a lawyer of the year in the field of elder law was selected for only two of the regions – Harrisburg and Pittsburgh. I was honored to receive award for the Central Pennsylvania (Harrisburg). My long-time friend and colleague, Julian Gray, was chosen for the Pittsburgh area.
Thank you, US News Best Lawyers® and thanks to all of the Pennsylvania lawyers who choose me for this honor. And thank you to all of the clients, staff, and colleagues who have supported me over my past 30 years of elder law practice. You have allowed me to live my passion.

Sunday, December 1, 2013

Substantial home equity can disqualify you for Medicaid



Medicaid long-term care benefits are a primary source of payment of the cost of care for many seniors who need services and supports in their homes or in nursing facilities.  According to the Pennsylvania Health Care Association, 47% of our nation's $275 billion in annual spending on long-term care --excluding unpaid family caregiving—is paid for by Medicaid. See: PA Long-Term Care Statistics.  
Medicaid long-term care benefits are available only to those who qualify both medically and financially. In Pennsylvania an applicant is allowed no more than $8,000 in countable assets. This means that most homeowners would be disqualified if their home equity were counted. But Medicaid has special rules that apply to your home. 
Prior to the enactment of the Deficit Reduction Act of 2005 (DRA) Medicaid disregarded the full value of an Medicaid long term care applicant’s primary home as long as the home owner was residing there or evidenced an intent to return to the home.
Section 6014 of the DRA [codified at 42 U.S.C. 1396p(f)] made a fundamental change in this treatment. Now some individuals with substantial home equity are disqualified for Medicaid long-term care assistance. The idea behind the change is to force individuals with substantial equity to use that resource to pay for their care before they can get financial help from Medicaid.
The law allowed states to choose an amount between $500,000 and $750,000 as its equity interest limitation. Pennsylvania chose $500,000 as the threshold for disqualification. The law also specified that beginning in 2011 the threshold would be adjusted for inflation based on the percentage increase in the consumer price index -Urban (CPIU). 

2014 Equity Limit is $543,000

As a result of this inflation adjustment, the home equity limitation will be increased to $543,000 in Pennsylvania during 2014.  In states like New York, New Jersey, and California which elected to use the higher level, the limit in 2014 will be $814,000. 

The Equity Limit may not apply to you

This limitation on the value of home equity does not apply if the applicant has a spouse, a child under age 21, or a child who is blind or disabled, any of whom lawfully reside in the home. The limitation is also to be waived in the case of a demonstrated hardship. [See 42 U.S.C. 1396p(f)(4). In Pennsylvania see also 55 Pa.Code § 178.62a].
The limitation applies only to Medicaid long-term care benefits provided to nursing facility residents and through home and community based services like Pennsylvania’s Aging Waiver program. It does not affect an individual’s eligibility for other medically necessary Medicaid covered services (soemtimes called "regular Medicaid"). 
Individuals who are disqualified for benefits due to the equity limit may be able to reduce their equity interest through the use of a home equity line of credit or reverse mortgage.  
For more information on the home equity limitation, see my December 2011 blog post here