Saturday, January 25, 2014

Community Spouse Income Allowance to Increase on July 1, 2014

If a nursing home resident is receiving Medicaid long-term care benefits, most of their income must be paid to the nursing home each month and applied to the cost of their care. This is sometimes referred to as the resident's "patient pay liability."  

But, if the nursing home resident is married, this patient pay liability may be impacted by community spouse income protections found in federal and state law. 

The community spouse is entitled to retain a certain minimum level of income called the Monthly Maintenance Needs Allowance (MMNA). If the community spouse's own income is insufficient to provide this allowance, income can be diverted to the community spouse from the institutionalized spouse.

The MMNA is set at 150% of the federal poverty level for a family of two plus an excess shelter allowance, if applicable. The Pennsylvania MMNA is adjusted on July 1st of each year to keep up with inflation adjustments to the poverty level. For the period July 1, 2013 until June 30, 2014 the minimum allowance is $1,939 per month.

On January 22, 2014 the Department of Health and Human Services announced that the 2014 federal poverty guideline for a family of two is $15,730. This means that effective July 1, 2014 Pennsylvania should increase the community spouse minimum MMNA to $1,966.25 per month.

A standard monthly shelter allowance is built into the minimum MMNA. The actual MMNA allowance can be higher than the minimum if the community spouse has high housing cost and is entitled to an “excess shelter allowance.”

The MMNA can also be increased in situations where the community spouse can show “exceptional circumstances resulting in significant financial duress.” 42 U.S.C. § 1396r-5(d)(2)(B). Several Pennsylvania appellate court cases have dealt with the issue of whether a community spouse has such exceptional circumstances. See Davis v. DPW (776 A.2nd 1026 (Pa.Cmwlth. 2001) and Kuznick v. DPW (5A.3d 832) (Pa.Cmwlth. 2010).

The MMNA can also be increased by judicial court-ordered support under 42 U.S.C. § 1396r-5(d)(5). An increase in the MMNA via judicial order does not require a showing of “exceptional circumstances resulting in significant financial duress.”   

The minimum income allowance rules are part of the federally mandated “spousal impoverishment” protections that were enacted in 1988 to limit the potential for impoverishment of spouses of nursing home residents. 

Friday, January 24, 2014

Caregiving Goes to the Oscars

Caregiving is an inherent aspect of our human existence. Most of us will become caregivers at some point in our lives. And we have been and probably will again become care recipients.
No wonder then, that caregiving is so frequently a subject for high quality motion pictures. Last year’s Amour (now available on cable) is a recent example. And several of this year’s top movies are about caregiving and receiving.  
Sherri Snelling, former chairman of the National Alliance for Caregiving, has posted her take on three current Oscar nominated films that “showcase the reality of caregiving in our lives.” See, And the Oscar Goes to…Caregivers , by Sherri Shelling, January 22, 2014. The films are:
Sherri’s article suggests some of the caregiving insights that she thinks can be drawn from each of the films.
None of these movies have been available yet here in small town Williamsport, Pennsylvania. But I am so looking forward to seeing each of them soon.

Sunday, January 19, 2014

What you need to know if the Bank won’t accept your Power of Attorney

Even a perfectly prepared and executed power of attorney (POA) can be rejected or called into question by a third party. Banks, brokerage firms, insurance companies, and other institutions often raise objections when presented with a POA by the named agent. They may de­mand proof that the POA is still valid or complain that the power of attor­ney is stale” – i.e. was executed too long in the past.
Some third parties will not honor a POA without a Medallion guarantee through a participating bank. Others may try to demand that its own form be used or that certain internal require­ments of the third party be met.
In some situations it may be easier to meet the third party’s requirements rather than fight them. But in other cases those requirements may be onerous or impossible to meet. If you are in one of those difficult situations, be aware that the law provides you with tools you can use to get your existing POA accepted. Read on to find out more.   
Where Government Benefits are NOT involved:
Various provisions of Pennsylvania law provide the person seeking to act as agent with the means to limit the potential for rejection of a power of attorney by non-governmental entities.  Key provisions are located in Chapter 56 of Title 20 of Pennsylvania’s Consolidated Statutes (the Decedents, Estates and Fiduciaries Code), the Pennsylvania law governing POAs.
The issue of “staleness is effectively refuted by section 5604(b) of Title 20 which states that unless the power of attorney states a time of termination, it is valid notwithstanding the lapse of time since its execution. And section 5604 authorizes the agent to execute an affidavit that serves as conclusive proof of the non-revocation and non-termination of the power.
Section 5605 provides that even the death of the maker of the POA does not revoke or terminate the agency as to an agent or third parties who act in good faith without actual notice of the death.
To further facilitate the acceptance of powers of attorney, Section 5608(a) places an affirmative duty on third parties to comply with the instructions of the agent. Third parties who fail to com­ply with the instructions of the agent without reasonable cause are subject to civil liability for any damages resulting from the noncompliance. And Section 5608(b) provides third parties with immunity if they act in good faith reliance on the instructions of the agent.
Thus a third party is generally at a much greater risk of liability for failing to accept the agents authority than for accepting it. The law reads as follows:
5608. Liability.
(a)  Third party liability. Any person who is given instructions by an agent in accor­dance with the terms of a power of attorney shall comply with the instructions. Any person who without reasonable cause fails to comply with those instructions shall be subject to civil liability for any damages resulting from noncompliance. Reasonable cause under this subsection shall include, but not be limited to, a good faith report having been made by the third party to the local protective services agency regarding abuse, neglect, exploi­tation or abandonment pursuant to section 302 of the act of November 6, 1987 (P.L. 381, No. 79), known as the Older Adults Protective Services Act.
(b)  Third party immunity. Any person who acts in good faith reliance on a power of at­torney shall incur no liability as a result of acting in accordance with the instructions of the agent.
These statutory provisions work to effectively exonerate third parties from liability for following the instructions of the agent, but place them at risk if they disregard them. A letter from a lawyer pointing out these statutory sections, especially when combined with an affidavit, has typically been sufficient to convince third parties to follow the directions of the agent.
But recently a decision by the Pennsylvania Supreme Court has raised the level of risk encountered by banks and other third parties when they act on the instructions of an agent.  In Vine v. SERS Board, Pennsylvania’s highest court held that a third party is ONLY entitled to immunity if the POA turns out to be legally valid. 
For example, if the maker was not competent when he or she signed the POA, the document is not valid and the statute's immunity protection does not apply. Even though the POA appears to be valid on its face, the third party may bear liability for accepting it and acting in accordance with the instructions of the agent.
This ruling puts third parties in a “damned if you do, damned if you don’t” situation. As you might guess, banks in Pennsylvania have been lobbying to have the Legislature fix their Vine problem.   
It is likely that 2014 will see legislation enacted that will address the result in Vine and re-establish a clear path to immunity for third parties. Competing, but very similar, bills have been passed by the state House (House Bill 1429) and Senate (Senate Bill 620). One of these bills will probably become law later this year. Both bills would make significant additional changes to Pennsylvania law regarding POAs.
Occasionally an institution will demand a Medallion guarantee. The Securities and Exchange Commission describes a Medallion guarantee as a type of signature guarantee that most trans­fer agents will require before they process the transfer or sale of any securities you hold in your own name (i.e., in certificate form as opposed to your broker holding them for you in street name). You can get a Medallion guarantee from any commercial bank, savings bank, credit union, or broker-dealer that participates in one of the Medallion signature guarantee pro­grams. While it can be argued that requiring a Medallion is inconsistent with Pennsylvania law, the easiest solution when this situation is encountered is usually to obtain the Medallion guarantee.
Where Government Benefits ARE involved:
Most people who receive federal benefits are able to manage their own financial affairs. However, some beneficiaries are unable to manage their benefits because of physical and mental problems. When this happens, the federal agency issuing the benefit check may appoint a repre­sentative payee to manage the benefit amount.
The following government agencies administer programs that may refuse to recognize the authority of an agent acting pursuant to a power of attorney:
A.        Social Security Administration;
B.        Office of Personnel Management; and
C.        Railroad Retirement Board.
Instead, each of these agencies has its own rules for determining whether a payee is needed and who the appropri­ate person or program will be. They may also impose additional requirements and restrictions such as requiring the filing of an annual "Representative Payee Report" stating how the benefits have been used.
One practical work-around that some people use to circumvent these agency requirements is to have the government benefit check direct deposited into a bank account. The power of attorney is then used to access the funds after they are deposited.  

This work-around is not approved by the agencies. They specify that if you have POA for a beneficiary who is found incapable of managing their own benefits, you must still file an application to serve as representative payee.

Friday, January 10, 2014

Life Care Planning

Currently, about 12 million Americans require long-term-care services — a number the U.S. Commission on Long-Term Care says will nearly double by 2050. Today, most people receive care from family and friends, but an increasing number depend on costly in-home care, or end up in assisted living facilities or nursing homes, where median annual costs range from $40,000 to over $100,000. This is an expense most middle-class families can’t afford.

Some elder law firms offer life care planning services to help families find and finance the care they need. Life care planning can help relieve the physical, emotional and financial stress for families struggling to deal with the demands of caregiving. It can help locate available resources and employ the right caregivers and preserve the family’s financial resources. It can help keep a senior at home for as long as possible, and make the best residential transition if that ever becomes necessary.
Life care planning is an elder centered approach to meeting the needs of seniors who require assistance as those needs shift over time. The life care planning team helps identify a senior's present and future care needs and locate appropriate high-quality care providers. The goal is to promote and maintain the health, safety, well-being and quality of life of the elder client, whether the client is at home or in a residential facility.
My law firm, Marshall, Parker and Weber offers life care planning services. Initial planning and continuing assistance is available to seniors in Northcentral and Northeastern Pennsylvania and their families.  

Marshall, Parker and Weber is a good choice to be your life care planning law firm.  It is one of only eight law firms in Pennsylvania that have been selected for top tier Best Law Firm status in the area of elder law by US News Best Lawyers®. It is also one of only a few law firms in Pennsylvania that is a member of the Life Care Planning Law Firms Association.

While maintaining quality of life is the primary goal, life care planners understand that the high costs associated with long term care can devastate a family. The planners at Marshall, Parker and Weber are experts in helping the family locate public and private sources to help pay for the cost of long-term care while preserving family financial security.

If your family is caring for an aging family member, life care planning might be a good fit for you. If your care recipient resides in Pennsylvania, you can find out more about life care planning by calling Marshall, Parker and Weber's elder care coordinator Karen Griswold at 1-800-401-4552 or by contacting her at

Tuesday, January 7, 2014

How to Protect Your Assets by Purchasing a Life Estate in Your Child’s Home

A “life estate” is a way of splitting the ownership of a home or other property over time. The person owning the life estate has the right to use and occupy the property for life. That interest ends automatically upon death and full ownership of the property passes to the other owners who hold the “remainder interest.”

Life estates can be a valuable planning tool and are frequently used in elder law planning. A common use involves a parent who wants to “give the house to the kids” while retaining the ability to live in and control the property during the parent’s lifetime. The parent deeds the home to the children but reserves a life estate for him or herself. Upon the parent’s death the property will pass to the children outside of probate and (in Pennsylvania) free from government Medicaid estate recovery claims.

Purchasing a Life Estate

While the most common use of a life estate involves the children owning a remainder interest in the parent’s home, sometimes it makes sense for the parent to purchase a life estate interest in a child’s home. In the right circumstances, the purchase of a life estate can be an effective means to protect a parent’s assets and a child’s inheritance.

For example, a parent may sell his or her home and move in with a child. As part of the arrangement, the parent can purchase a life estate in the child’s home. This transfers cash to the child while giving the parent the legal right to reside in the home for the rest of the parent’s life. The care provided by the child may help the parent remain in a supportive home setting. If a few requirements are met, the cash paid to the child will be protected from the cost of long term care that may be needed by the parent in the future.

Medicaid Eligibility

The purchase of the life estate interest can help the parent spend down to the level needed to qualify for public benefits like Medicaid. Medicaid is the primary source of government payment of long-term care costs in the United States. It can provide the extra financial help needed to keep a parent at home, or pay for nursing home care if that is someday required.

An outright gift of funds from parent to child will usually make the parent ineligible for Medicaid long-term care benefits. Medicaid penalizes gifts made within 5 years of an application for long-term care assistance. But an appropriate purchase of a life estate in a child’s home will be treated as a purchase for value not a gift, with no Medicaid penalty involved.

Medicaid laws encourage this type of life estate - family caregiving arrangement. Federal law [42 U.S.C. § 1396p(c)(1)(J)] establishes the criteria under which the purchase of a life estate will avoid treatment as a penalized transfer of assets. A parent’s purchase of a life estate interest in a child’s home does not constitute a transfer of assets if the purchase price is fair and the parent resides in the home for at least one year af­ter the date of purchase.

This means that, in the right circumstances, a parent can use available funds to establish a caregiving arrangement, reward the caregiver, and protect a child’s inheritance from the parent’s nursing home costs. The child will be able to keep the funds the parent pays to the child to purchase the interest in the child’s home. Provided the purchase is for fair value and the purchaser moves into and lives in the home for at least a year, the purchase will not be deemed to involve a transfer of assets for less than fair consideration. This means it won’t affect the parent’s eligibility for Medicaid. The purchase price will be protected from the parent’s long term care costs.

At the death of the parent, the child will again become the sole owner of his or her home. The parent’s interest in the home will be extinguished without the need to go through probate or other legal proceeding. Estate recovery should also be avoided under current Pennsylvania rules. And Pennsylvania inheritance taxes may be reduced as well.

There are Traps for the Unwary 

Before you engage in this type of planning, be sure that it meets your family situation and needs. Also, be sure to carefully consider the tax and other non-Medicaid issues that may arise before you complete the transaction. The parent must legally reside in the child’s home and the change of residence should be fully documented in the parent’s driver's license, tax returns, and election records.

Albino v. Shah

It is important to remember that the parent must reside in the child’s home for at least one year to avoid Medicaid transfer of asset penalties. A recent New York case illustrates this point. The case is Albino v. Shah (N.Y. Sup. Ct., App. Div., 4th Dept., No. 1152 TP 13-00733).

Frances Albino resided on Diffin Road in Cicero, New York. In July 2007 her daughter and grandson purchased a home located on Lakeshore Road in Cicero. Three months later, in October 2007, Frances purchased a life estate in the Lakeshore Road home for $70,000, paying $35,000 each to her daughter and grandson. She still owned her interest in the Diffin Road property (which she did not sell until November 2009).

In November 2008, approximately 13 months after she had purchased the life estate in the Lakeshore Road home, Frances became a resident of an assisted living facility. In January 2010 Frances fell and broke her hip and ended up in a nursing home. Frances initially paid privately for her nursing home care, but she soon ran out of funds and applied for Medicaid payment of her costs of care.

The state of New York denied Frances request for Medicaid and declared that she was ineligible for 14.46 months due mainly to the purchase of the life estate in 2007. The state said that the purchase of the life estate must be treated as a gift. It could not be treated as a purchase since Frances could not prove that she had resided at the Lakeshore Road property for the required 12 months.

The state pointed out that Frances had listed the Diffin Road property as her address on her 2007 and 2008 income tax returns, and that her driver’s license and voting registration still listed her as residing on Diffin Road. Even though she had owned a life estate in Lakeshore Road for more than 12 months when she entered assisted living, she did not reside there for that period of time. Without adequate proof of residency, the purchase must be treated as a gift.

Based on these facts, the Appeals Court upheld the state’s determination, and found that Frances was ineligible for Medicaid help in paying her nursing home costs.

For more information on getting Medicaid benefits for nursing home care see Marshall, Parker and Weber’s Nursing Home Guide booklet. For information on Medicaid estate recovery see Marshall, Parker and Weber’s booklet The Medicaid Death Tax.

Sunday, January 5, 2014

Social Security’s Website for Smartphones

Anxious to check on your Social Security benefits while you are grocery shopping? You will be pleased to learn that the Social Security Administration has created a special mobile website especially for your smartphone.
While you may not be checking on your retirement benefits while you are out and about, your neighbors apparently are. Each year, more than 35 million Social Security web page views come via smartphones. So, the Social Security Administration has responded appropriately in creating a website particularly designed for smartphone visitors.
Smartphones users are now automatically redirected to a mobile-friendly site which is easier to navigate on a small screen. The mobile site uses different colored tiles to direct users to different information centers.
According to a Social Security Administration Press Release, people “visiting the agency’s website,, via smartphone (Android, Blackberry, iPhone, and Windows devices) will be redirected to the agency’s new mobile-friendly site. Once there, visitors can access a mobile version of Social Security’s Frequently Asked Questions, an interactive Social Security number (SSN) decision tree to help people identify documents needed for a new/replacement SSN card, and mobile publications which they can listen to in both English and Spanish right on their phone.”
“With significant budget cuts of nearly a billion dollars each year over the last few years, we must continue to leverage technology and find more innovative ways to meet the evolving needs of the American public without compromising service,” said Social Security Acting Commissioner Carolyn Colvin when she introduced the website last May.    
Of course you can also use your smartphone to contact Social Security the old fashioned way. By calling 1-800-772-1213, you reach Social Security’s automated telephone services where you get recorded information and can conduct some business 24 hours a day. You can also speak to a human Social Security representative between 7 a.m. and 7 p.m. Monday through Friday. If you are deaf or hard of hearing, you can call Social Security’s toll-free TTY number, 1-800-325-0778, between 7 a.m. and 7 p.m. Monday through Friday.
Special Note to Elder Law Attorneys and other advocates: The Social Security POMS are available to you on your smartphone. The POMS (Program Operations Manual System) is a primary source of information used by Social Security employees to process claims for Social Security benefits. Due to the ties between SSI and Medicaid the POMS can be relevant and helpful in Medicaid eligibility decisions as well. To locate the POMS on your phone just google “ POMS” or type in or click on the following link: