Pennsylvania Authorizes ABLE Savings Accounts

Act 17 of 2016 - The Pennsylvania Achieving a Better Life Experience Act (PA ABLE) - became law on April 18^th. The new law authorizes the creation of special tax free savings accounts for individuals who became severely disabled before they reached age 26.  

In December 2014, the Federal government first authorized states to create ABLE tax free savings account programs. ABLE accounts allow certain individuals with disabilities to accumulate savings without losing their eligibility for means tested SSI, Medicaid and other government benefit programs. To be eligible for an ABLE account an individual’s blindness or disability must have occurred before the individual reached age 26.

An ABLE account is established by and owned by the disabled individual (or by a parent or fiduciary acting on behalf of an eligible individual who is a minor or who lacks capacity). Anyone can contribute to it.

The money in an ABLE account can be used to pay for a broad range of "qualified disability expenses." Funds can be used to pay for education, housing, health, transportation, personal support, employment training, legal and financial assistance, and more.

If the rules are followed, earnings on the ABLE account will not be subject to federal income tax, and perhaps more importantly, the funds in the account will not disqualify the owner from continued benefits under the Supplemental Security Income (SSI) and Medicaid programs. (If the account balance exceeds $100,000, SSI is suspended but Medicaid eligibility can continue.)

Act 17 provides the PA Treasury Department with the authority to enact regulations to establish and administer an ABLE account program for the Commonwealth. Treasury may coordinate the required administrative or investment structures with the already existing Tuition Account Investment (PA 529 College Saving Plan) Program.

It is anticipated that the PA ABLE program will open for accounts in the fourth quarter of 2016. Treasury has already created a website with information on the PA ABLE program. On that website you can sign up now for updates and open an ABLE account when the program becomes available.

In addition to the public benefits and federal income tax advantages, an ABLE account will not be subject to attachment, levy or execution by any creditor of a contributor, account owner or designated beneficiary. It shall not be used as security for a loan. Under Section 702 of the Act ABLE accounts are exempt from Pennsylvania income and inheritance tax. A related bill (HB1319) that will allow ABLE contributions (up to $14,000 annually) to be deducted from Pennsylvania state income tax appears to be on track to become law.

The PA ABLE program may become available to qualified individuals residing in other states. Act 17 directs Treasury to engage in joint efforts with other states to establish and maintain ABLE savings programs. And it authorizes Treasury to provide all or part of the program to beneficiaries residing in another state. Likewise, ABLE programs established by other states may become available to qualified residents of Pennsylvania.

One interesting aspect of Act 17 is its prohibition of medical assistance (Medicaid) recovery upon the death of a designated beneficiary. Section 503(d) of the Act says:  

(d)  Death of beneficiary.--Unless prohibited by Federal law, upon the death of a designated beneficiary, proceeds from an account may be transferred to the estate of a designated beneficiary, or to an account for another eligible individual specified by the designated beneficiary or the estate of the designated beneficiary. An agency or instrumentality of the Commonwealth may not seek payment under section 529A(f) of the Internal Revenue Code from the account or its proceeds for benefits provided to a designated beneficiary.

However, Federal law provides that after the death of the beneficiary funds remaining in an ABLE account must be used to repay any state Medicaid plan that was used by the beneficiary after the account was established. Under section 529A(f) of the Federal law, a qualified ABLE program must provide that, upon the designated beneficiary's death, any State may file a claim for the amount of the total medical assistance paid for the designated beneficiary under the State's Medicaid plan after the establishment of the ABLE account.

It will be interesting to see how the regulations developed by the PA Department of Treasury deal with this Medicaid repayment issue. The lack of a repayment component could make the PA ABLE program particularly attractive to qualified individuals across the entire country.

For national information on ABLE accounts you can visit the ABLE National Resource Center.  

I’ve written a number of other articles on ABLE Accounts:

ABLE Accounts - a New but Limited Financial Option for the Disabled (December 22, 2014)

IRS Issues ABLE Act Clarifications (March 17, 2015)

IRS Publishes Rules for ABLE Disability Accounts (June 29, 2015)

ABLE Account Residency Requirement Eliminated (December 19, 2015)

CARE Act – New Law to Help Family Caregivers

Our health and long term care support systems rely heavily on family caregivers who provide unpaid home care to their loved ones. According to a June 2015 report, 44 million adults in the US provide personal care assistance for family members. 34 million of them care for frail elders.

Being a caregiver can be really tough. It can involve enormous physical, emotional and financial burdens. Family caregivers are often called on to provide complex support services for which they have received little or no instruction. The lack of training and support adds to the burden on caregivers and makes it more likely that the care recipient will be admitted (or readmitted) to a hospital.

This lack of caregiver training is a critical failure in a health system that depends so much on family caregiving.

Recently, hospitals have become more focused on preventing re-admissions (in part due to financial incentives/penalties contained in the Affordable Care Act). They have come to recognize that family caregivers can be their key allies in this effort. Good care at home can limit hospital re-admissions. It is obvious that discharge planning is likely to be much more effective if the people providing the home care understand what they are doing and how to do it.  

This is one reason why the Pennsylvania Hospital Association was a key supporter of a new law that is intended to assist family members and other lay caregivers who are involved with post-hospital care. That law is Pennsylvania's version of the Caregiver Advise, Record, Enable (CARE) Act which was has passed the Legislature and should be signed soon by Governor Wolf. It will take effect in twelve months – which gives hospitals time to prepare to implement its provisions. But some hospitals may move more quickly to embrace it.

The Care Act uses the term “lay caregiver” to describe an individual who is chosen by a hospital in-patient and who accepts the role of providing post-discharge after-care assistance in the patient’s home. The new law requires hospitals to take the following actions:  

• Provide each patient with the opportunity to designate at least one lay caregiver [Section 2(a)];

• If the patient does designate a lay caregiver, the hospital must record the designation and related information in the patient’s medical record  [Section 3];

• With the patient’s consent, the hospital may release medical information to the designated lay caregiver (Section 3(d)(1)];

• Notify the designated lay caregiver of the patients pending discharge to a residence or transfer to another facility [Section 4 (a)];

• Consult with the lay caregiver prior to the patient’s discharge to a residence and issue a discharge plan that describes the patient’s after-care assistance needs at the residence. [Section 5(a)]. The discharge plan shall include (i) the name and contact information of the lay caregiver, (ii) a description of all after-care assistance tasks necessary to maintain the patient’s ability to reside at home, (iii) contact information for any health care, community resources, long-term care services and support services necessary to successfully carry out the patient’s discharge plan and contact information for a hospital employee who can respond to questions about the discharge plan.

• Provide lay caregivers with instructions in all after-care tasks described in the discharge plan [Section 5(b)]. Training and instructions may be conducted in person or through video technology at the discretion of the lay caregiver. The instruction must include (i) a live or recorded demonstration of the tasks, (ii) an opportunity for the lay caregiver and patient to ask questions, and (iii) answers to those questions.    

CARE Act Limitations

The CARE Act is focused on hospitals and the discharge of hospital patients. So it may miss many care-recipients who were not hospitalized or who are being discharged from non-hospital facilities. Nor does it apply where a patient receives hospital services that were provided on an outpatient basis. The Act only applies where there has been “an inpatient admission.” [See the definition of “Discharge” in Section 2].   

“After-care assistance” is defined as assistance relating to the patient’s condition at the time of hospital discharge. So the Act does not address situations where a once hospitalized care-recipient’s needs have changed but there has been no new inpatient hospitalization. And even if a patient is hospitalized, the law does not include any enforcement provisions or penalties in the event that a hospital fails to comply.  

A Good Start

Despite these big gaps, the CARE Act is a good start. But it is just a start. The Commonwealth needs to continue to look for and implement strategies to educate and support unpaid family caregivers. The success of the state’s policy of meeting consumer preferences and saving tax dollars by encouraging older adults to age at home depends on the development of more comprehensive caregiver support.

An April 2016 study from the University of Pittsburgh’s Stern Center for Evidence-Based Policy: “Addressing the Needs of Caregivers at Risk: A New Policy Strategy” describes “the situation for caregivers and their loved ones [a]s unsustainable.” 

Our analysis revealed that the existing landscape of caregiver policy is a patchwork of small, uncoordinated programs that do not yet meet the current and future needs of this population. Whereas caregivers provided over 90 percent of the long-term care received by 12 million Americans, their access to financial support, flexible employment and social supports that would facilitate and enhance the care they provide is highly limited. [Addressing the Needs of Caregivers at Risk: A New Policy Strategy, Executive Summary.]   

Other Interesting Aspects of the CARE Act

The CARE Act applies to all in-patients of any age being discharged from hospitals. The custodial parent(s) of a child have authority to designate a lay caregiver for the child. Being designated as a lay caregiver does not obligate the designated individual to perform any after-care assistance for the patient.

A patient may designate a caregiver in an advance directive [Section 6]. The term “advance directive” is not defined in the CARE Act, but the term “advance health care directive" is defined by Act 169 of 2006  (20 Pa.C.S. Chapter 54 Section 5422) as “A health care power of attorney, living will or a written combination of a health care power of attorney and living will.” Consumers should consider including a lay caregiver designation the next time they update their advance directive.

A lay caregiver may be designated by the patient or the patient’s legal guardian [Section 3(b)]. But the CARE Act does not specifically authorize the designation of a lay caregiver by a patient’s health care agent. So it is not clear whether a health care power of attorney can authorize a health care agent to make this designation.

The CARE Act specifically states that its provisions are not to interfere with the rights of an agent serving under a valid advance directive. But the Act does not address any potential interference with a person acting in the role of a health care representative under Chapter 54.

Thanks should go to State Representative (and elder law attorney) Hal English for sponsoring the new law. The Pennsylvania CARE Act is based on model legislation developed by AARP. The legislation was approved unanimously in both the State Senate and House. Pennsylvania becomes the 25th state to enact a version of the Act.  

Guide explains rules for paying Home Care Workers

Do you employ someone to provide in-home care to you or another family member? If so, you need to take heed of the complicated wage and hour requirements of the federal Fair Labor Standards Act (FSLA). 

The FLSA is a federal law that gives most workers minimum wage and overtime pay protections. The U.S. Department of Labor recently updated the FLSA rules about home care workers. Under the new rules, most home care workers must now be paid at least the federal minimum wage, and overtime pay.

The Department of Labor has published a guide for consumers and families who are struggling to understand comply with their legal obligations regarding home care workers. These rules can be a nasty combination of complicated, confusing and obscure. This new guide should help a lot. It includes simple explanations and examples, advice and checklists to help consumers understand and keep track of their obligations.

For example:

If you are a senior or person with a disability, or family member, who directly hires a worker to provide in-home services and support: see the “Direct Hire Checklist” on page 42.

If you are an individual who has a home care worker living with you or who arranged for a home care worker to live with a family or household member who needs services: see the “Live-in Direct Hire Checklist” on page 42.

If you go to an agency to find a worker to provide in-home support for yourself or a member of your family or household, see the “Agency Checklist” on page 43.

If you are an individual who receives (or helps a member of your family or household arrange) in-home personal care or other services through a Medicaid-funded self-directed program: see the “Self-Directed Checklist” on page 43.

The booklet notes that home care workers are sometimes incorrectly classified as “independent contractors." But most “home care workers are employees, NOT independent contractors.” It depends on the relationship between you and the worker, not the worker’s title (including if the worker is called an “independent provider”) or their status under other laws. [For more information on determining if someone is an independent contractor, see Department of Labor Fact Sheet #13: Am I an Employee?: Employment Relationship Under the Fair Labor Standards Act (FLSA). www.dol.gov/whd/regs/compliance/whdfs13.pdf.] 

The booklet also explains the companionship services exemption.

In some limited circumstances, consumers and their families or households are not required to pay a home care worker federal minimum wage and overtime pay. If a home care worker provides mostly fellowship and protection, which means she spends most of her work time watching over the consumer and keeping the consumer company, then an exemption from the wage requirements might apply. We call this the “companionship services exemption.”

Any employer other than you (like an agency) must always pay federal minimum wage and overtime. If a home care worker is employed by an outside employer, such as a home care agency, then that employer is responsible for paying the worker at least the federal minimum wage and overtime pay even if you are not.

The companionship services exemption is narrow. You may use it only if:

Your home care worker spends no more than 20% of his or her total working time in a workweek assisting with personal care, such as bathing, dressing, toileting, grooming, cooking, cleaning, etc.;

The worker does not perform any medically related tasks, which are tasks that are usually done by a nurse or certified nursing assistant, such as tube feeding or catheter care; or

The worker does not perform any general household work that is mostly for members of the household other than the consumer, such as doing laundry or cooking meals for the entire household. [Booklet at page 19]

The booklet also explores other murky areas such as: joint employment situations, the employment of family members as home care workers, live-in home care workers, overtime pay and record-keeping requirements.

This well-written guide should be a great help to any family that is utilizing home care services. Download it at http://www.dol.gov/whd/homecare/homecare_guide.pdf. And visit the Department of Labor’s website at www.dol.gov/homecare for even more information about how the FLSA applies to home care. 

 [Note that minimum wage and overtime coverage for home care workers may also be subject to state laws that may differ from the federal rules.]

Related Reading:

Paying Minimum Wage and Overtime to Home Care Workers:  A Guide for Consumers and their Families to the Fair Labor Standards Act, by U.S. Department of Labor.

How Well Do Families Understand Updated Wage & Hour Rules for "Home Care"?  By Katherine C. Pearson, Dickinson Law, Penn State.

Fair Compensation for Home Health Care Workers in Pennsylvania, by AARP.

Home Care Worker Rights in the States after the Federal Companionship Rules Change-2013, by National Employment Law Project