Monday, April 24, 2017

Concerns Raised about Aging Department Consolidation

Pennsylvania legislators are currently considering Governor Wolf’s proposal to merge four Pennsylvania human service agencies. The Governor would like to consolidate the current Departments of Aging (PDA), Drug and Alcohol Programs (DDAP), Health (DOH), and Human Services (DHS) into a unified Department of Health and Human Services (DHHS).  
In recent weeks legislators have heard testimony from Wolf Administration officials offering support for consolidation, and from groups and individuals who expressed various degrees of opposition. Many of the concerns relate to the impact of the merger on the Department of Aging.
The Pennsylvania Department of Aging (PDA) has a 40 year history in Pennsylvania. In 1973 an amendment to the federal Older American’s Act required states to establish Area Agencies on Aging (AAAs) to provide programs and services for older adults. In response Pennsylvania established a network of county or non-profit based local agencies. In 1978 the Legislature established the PDA as a cabinet level position.
The PDA currently has 117 employees. The agency coordinates and funds a broad range of programs and services that benefit older (age 60 and over) Pennsylvanians and their families and caregivers. Most of these services are made available through the 52 local AAAs. About 2/3rds of the PDA funding to local AAAs comes from the Pennsylvania lottery.  
The Wolf Administration states that consolidation of PDA with other human services agencies makes sense “in order to promote more effective collaboration and service delivery, enhance program effectiveness, and eliminate duplicative processes.” Seniors could benefit from having a single agency as their point of contact for state provided health and human services. The hope is that consolidation will reduce complexity and confusion for seniors and individuals with disabilities by providing one door to needed services instead of several. Consolidation has the potential to reduce red tape for providers. And it should result in modest, but ongoing cost savings. For more on the Administration’s rationales, see the Governor’s press release here.
Many organizations across the state have expressed reservations about the merger of the PDA into the new DHHS super-agency. Organizations testifying about concerns with this aspect of the proposal have included the PA Association of Area Agencies on Aging (P4A), the Center for the Advocacy for the Rights and Interests of the Elderly (CARIE), the Southwestern Pennsylvania Partnership for Aging (SWPPA). The Pennsylvania Association of Elder Law Attorneys, of which I am a past President, has come out against including the PDA in the consolidation. A number of legislators have also expressed reservations.
Here are some of the concerns being raised:
Loss of a cabinet level voice advocating for seniors. Since 1978 Pennsylvania seniors have had cabinet level representation. As expressed by House Aging and Older Adult Services Chairman Tim Hennessey at a House Appropriations Committee meeting: “What position do you think would be the most effective advocate for the elderly: a cabinet secretary sitting beside other cabinet secretaries with the governor; or a deputy secretary three levels down from the governor, as the consolidation plan proposes?”
Buried in Bureaucracy. Aging may get lost in the large DHS dominated super-agency bureaucracy. It could get “buried in bureaucracy” according to Representative Gene DiGirolamo, chair of the Human Services Committee. Aging has only 117 employees compared with the 17,000 total projected employees of DHHS.  
Potential reduction in lottery funding. As we often see noted in its advertising, proceeds from the Pennsylvania lottery go to support programs benefiting older residents. The PDA and AAAs use lottery funds for senior centers and meals, low cost prescription assistance (PACE and PACEnet), transportation, property tax and rent rebates, home and community based services and other care related services. They fund education and outreach activities, ombudsman services, protective services, family caregiver supports, the nursing home transition program and the OPTIONS program.
Approximately 78 percent of PDA funding comes from the Pennsylvania Lottery with the other 22 percent being derived from federal funds. The lottery funds are used by the PDA and AAAs to benefit older adults who are not on Medicaid. As described by Rebecca May-Cole, Executive Director of P4A, “the typical senior receiving services through an AAA is a 79-year-old widowed female living just above the poverty level; she is not eligible for Medicaid, but also has a very limited income.”
But lottery funds can also be distributed to the Department of Human Services and used to fund the state’s share of the cost of Medicaid long term care services. In other words, the lottery funds can be used to replace General Funds. The fear is that after consolidation lottery funding will be diverted from the PDA and AAAs to DHS and used reduce state General Fund outlays for Medicaid.
“If it ain’t broke, don’t fix it.” As noted by Chairman Hennessey there is no need to include the PDA in the DHHS merger because PDA already functions smoothly. DHS, on the other hand, has a recent record of failure with its assumption of handling enrollment in the Aging Waiver program. In 2016 the enrollment functions of the PDA Waiver program were removed from AAAs and outsourced by DHS to a private company. The transition was poorly implement and the failure has delayed critically needed services for untold numbers of seniors. This recent misadventure casts doubt on the ability of a DHS controlled super-agency to oversee PDA functions.  
Conflicts of Interest: There are potential conflicts of interest in having one super-agency (DHHS) handling federally funded programs which require separation of function. For example, is it appropriate to have the Long-Term Care Ombudsman Program (currently a PDA function) housed with the same agency charged with nursing home licensing and enforcement? Would this violate the federally mandated independence of the Ombudsman?  
Lack of Stakeholder Input: The consolidation proposal was developed without meaningful external stakeholder input.
Lack of adequate study: There has been no study to determine if the consolidation makes sense. More study should be required before moving forward with its implementation.
For all of these reasons legislative approval of the proposed consolidation seems to be in doubt. We may learn its fate in the next few months. If you want to provide your legislators with your opinion on the merger you can find their names and contact information here.  
A video of the April 17, 2017 Joint House Aging and Older Adult Services, Health, and Human Services Committees hearing on the consolidation is available here.

Saturday, April 15, 2017

What is the difference between a health-care power of attorney and a living will?

There is a lot of misunderstanding about living wills and health care powers of attorney. Even health care professionals can be confused. Here is my explanation of the major differences between these two forms of health care directive. 
If you are medically competent you get to make health decisions for yourself. But a problem arises if you are not competent to make your own decisions. In that case, who decides, and what can you do to make sure the decisions will be consistent with your intentions?That is where advance health care directives come in.
Two notable advance health care directives are the health care power of attorney and the living will. You can use these documents to help ensure that you always get the kind of health care treatment you want even if you are unable to speak up for yourself.
What are the differences between these two documents? Do you need to have both?
What is a health care power of attorney?
A health-care power of attorney authorizes another person to make health-care decisions for you when you cannot make them yourself. The person you choose is called your health care agent.
The document must be signed by you while you are competent. In it you can describe the types of treatment that you would and would not want to receive at the end of your life. But you do not have to do so. The document can give your agent the authority to make any and all health-care decisions you could make, if you were competent. It is important to note that the health care power of authority is only stand-by authority. You will continue to make decisions for yourself as long as you can do so.
What is a living will?
A living will is a written declaration that instructs your doctor regarding the use, withholding or withdrawal of life-sustaining treatment if you are terminally ill and lack the capacity to make decisions. A living will directs your doctor’s actions when the use of life-sustaining treatment would serve only to postpone the moment of death or maintain you in a permanent unconscious state, but would not provide a cure for the condition.
A living will applies only in the limited situation where you have an end-stage medical condition or are permanently unconscious. It is not relevant to other circumstances.   
Under Pennsylvania’s living will statute you may appoint someone to make decisions regarding life sustaining treatment for you if you are ever both incompetent and either terminally ill or permanently unconscious. This person is called a surrogate.
What is the difference between a health-care power of attorney and a living will?
One significant difference is that the health-care power of attorney is much more broadly applicable. A living will comes into effect only when the issue is whether to use a life-sustaining treatment to postpone the moment of death or maintain you in a permanent unconscious state. In that limited circumstance, a living will gives instructions regarding life-sustaining treatments. 
A health care power of attorney is not limited to terminal illness situations but can be used to address the broad range of health-care decisions that may arise whether you are terminally ill or not. 
Both documents allow you to select someone else to make decisions for you when you are unable to do so, but with a living will that person can only act if you are terminally ill. 
A living will forces you to anticipate the circumstances that will arise in the future and give your instructions before you have knowledge of your specific medical situation. A health care power of attorney can provide for better informed decisions because it allows your agent to evaluate the specific situation that has arisen and make a decision based on the actual circumstances.
Should I have both documents?
Ideally your advance directive will include guidance as to the medical treatments you would want to refuse in specific situations, and will name a person to make decisions for you in other situations or if your intentions are not clear. You can set forth your desires on these related but separate issues in separate documents if you wish, but it is also possible for you to combine your living will instructions and health care power of attorney appointment in one document.
It makes sense to use only one document so that health care professionals can find all of the relevant information in one place, and your health care agent will be fully aware of your specific instructions. I suggest that the best document for most people is a health care power of attorney that also provides some instructions regarding the use of life sustaining treatment in the event of your terminal illness.

I personally have just one document – a health care power of attorney. It gives my agent wide discretion in making decisions for me, including treatment at the end of my life. And I have talked to my agent and other family members about my philosophy towards end of life care. That communication is a key element in helping ensure that the appropriate decisions will be made for me. 

Monday, April 10, 2017

Going Home - How to Prepare for your Hospital Discharge - Part 2

This is part 2 of my series on how to prepare to go home after a hospital discharge. Click here for Part 1.
Being in the hospital is tough on the patient. If you are in the hospital for a few days, you should expect that your functional abilities will decline. When you return home there is a good chance you will need assistance and supportive care for a while. But, you will no longer have the professional care support that was available to you when you were in the hospital. You may qualify for some limited licensed home health services. But most or all of your care needs will have to be met by your non-professional family caregivers. Hopefully, your family will be prepared. 
Recently I wrote about the importance of advance preparation by caregivers when a loved one is being discharged from a hospital. See Preparing for your Hospital Discharge. As I noted, one way your family can prepare is by taking full advantage of the support that should be available from the hospital in conformity with the new Pennsylvania CARE Act.
This article provides some additional information on what you can do to prepare for a hospital discharge. Better preparation can improve the post-hospital quality of care, reduce the likelihood of re-admission, and limit the physical and emotional stress on caregivers.
Medicare Discharge Requirements
Medicare regulations require hospitals to follow rules to help you with your discharge and make your transition home safe. These discharge planning rules only apply if you are considered a hospital inpatient. (They do not apply if you are an outpatient or on observation status). 
The hospital must provide a discharge planning evaluation to all patients who are likely to suffer adverse health consequences upon discharge if there is no adequate discharge planning, and to other patients upon the patient's request, the request of a person acting on the patient's behalf, or the request of the physician. A nurse, social worker, or other appropriately qualified personnel normally will develop the evaluation.  A discharge plan must be developed if the evaluation indicates it is needed or if the patient’s physician requests it. (42 CFR 482.43(c)).
CARE Act Requirements
In addition to the Medicare rules, the Pennsylvania CARE Act requires hospitals to provide discharge planning assistance when a hospital inpatient is being discharged to home. When an inpatient is to be returning to their residence, the CARE Act requires the hospital to consult with the patient’s designated lay caregiver and issue a discharge plan that describes the patient's after-care assistance needs at the residence.
The CARE Act discharge plan also must include 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. Hospitals are also to provide lay caregivers with instructions in all after-care tasks described in the discharge plan.
Questions to Ask
When you learn that a discharge is planned, find out who the hospital has assigned as your “discharge planner.” Recognize that the patient and family home caregiver are critically important members of the discharge planning team. This should be an interactive process. Be prepared to ask lots of questions to get the guidance and assistance you need. Express your concerns. Take notes. Try to have another person (e.g. another family member or friend) involved in discharge planning discussions. They can help ask questions and listen to directions.   
Here are some questions to consider asking prior to the discharge: 
  • Who on the hospital staff will assist with the discharge planning?
  • When will the discharge take place?
  • How will the patient get home safely?
  • What equipment and supplies will be needed? How can they best be obtained?
  • What patient care procedures will the home caregivers need to perform?  Do the caregivers have the physical ability and knowledge needed to perform them?
  • How can the home caregivers get the training, practice and support they need to be able to perform required tasks and procedures?
  • What special foods and diet will the patient require?
  • What medications will be required? Will the caregiver require training in administering medications?
  • What changes in condition or other problems might occur at home? How should the patient and caregivers respond if problems arise?
  • What resources will be available to provide respite time for the home caregivers?
  • What follow up care will be needed? When is the first follow-up appointment?
  • Who can the patient and/or caregivers call with questions and concerns?
  • Will professional in-home assistance (such as physical therapy or occupational therapy) be needed? Who will arrange for those services?
  • What costs will be encountered and how will they be paid (e.g. Medicare, Medicaid. VA benefits, out of pocket)?   

Additional tips on preparing for a hospital discharge to home are available online. The Medicare website includes a planning checklist: Your Discharge Planning Checklist [opens as a .pdf file]. I suggest that the patient and/or primary caregiver print out this Medicare booklet and take it with you to the hospital.
Another helpful checklist is Going Home: What you need to know
The Next Step in Care website has wonderful resources for patients, caregivers and providers.Visit to learn about home health services.

Thursday, March 30, 2017

How to Become an Organ Donor in Pennsylvania

[The following article was written by Jody Lose, an Estate Planning Case Manager at my law firm, Marshall, Parker and Weber.]
Most people already have some knowledge of organ donations. When you apply for or renew your driver’s license or photo ID you are asked if you want to become an organ donor.
Anyone can decide to be a donor. If you are under age 18, however, you will need the signature of a parent or guardian to have the donor designation placed on your driver’s license or photo ID. If you are over age 18, you can request the Organ Donor designation be placed on your driver’s license or photo ID at the Photo Center at the time you have your photo taken.
You can also now apply online if you do not want to wait to renew your driver’s license or photo ID by going to This is an online database for Organ Donor Registrations, with a link through the PennDot website as well. Separate donor cards are not mailed out. You can call Gift of Life in Philadelphia toll-free at 1-877-DONORPA (366-6772) or you can go online to to obtain more information.
For people who are interested in contributing to scientific study or teaching to promote medical science, your entire body can be donated to the Humanity Gifts Registry in Philadelphia. The Humanity Gifts Registry is a non-profit agency in the Commonwealth of Pennsylvania that handles receipt and distribution of entire bodies donated to medical and dental schools in the state for teaching purposes.  For more information or to pre-register as a donor, you can contact the Registry at 1-215-922-4440 or go online to .
We are often asked about placing donor information in a person’s Last Will and Testament. This is not a good choice for designating your wishes for organ, tissue and/or body donations because your Will may not be reviewed until days or even weeks after you have passed away.
Organ, tissue and/or body donation directions can be placed in your Health Care Power of Attorney. If you do this be sure to talk about it with your family members and the person(s) designated as your health care agent(s). You want them to be aware of your wishes for donation and any designations or registrations you have done in advance.
With the advancement in technology for donations and the types of donations that are available today, many of our clients prefer to discuss their wishes with their health care agent(s) and family members and have them make the ultimate decision for donation based on the circumstances at the end of life.

People of all ages and medical histories should consider themselves potential donors.  Qualified medical personnel will review the donors’ medical and social history to determine what organs, tissues, or body parts may be able to be donated.  The Humanity Gifts Registry will make a determination at death for acceptance of remains.  It is only under the most unusual of circumstances that a donor’s body would be rejected.

Wednesday, March 29, 2017

Pennsylvania ABLE Accounts to Open for Enrollment

The Pennsylvania Department of Treasury has announced that the PA ABLE Savings Program will open on April 3, 2017. On that date the Department will officially begin accepting applications for enrollment.
In December 2014, the Federal government enacted a law which authorizes states to create “Achieving a Better Life Experience” [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.)
Ohio opened the first ABLE program in June 2016. Since then, many states have established ABLE account programs. Pennsylvania is now joining that group. For an updated listing of state programs click here.
ABLE accounts represent an important additional planning option for individuals who qualify. To understand the benefits and pitfalls and achieve optimal results ABLE accounts should be integrated and coordinated with other planning options like special need trusts. Check with a certified elder law attorney[1] or other experienced special needs planning lawyer in your state. Pennsylvania residents can contact Marshall, Parker and Weber for planning assistance.
Here are links to further information:
PA ABLE Program website:
The National ABLE Resource Center:
Marshall, Parker and Weber blog articles:
NewLaw Authorizes PA ABLE Savings Accounts (MPW blog, April 19, 2016)

[1] Certified Elder Law Attorneys are Certified by the National Elder Law Foundation. In Pennsylvania, this certification has been reviewed and authorized by the Pennsylvania Supreme Court. These attorneys are typically knowledgeable about special needs planning including ABLE.  

Friday, March 24, 2017

Going Home - How to Prepare for your Hospital Discharge

Are you or a loved one being discharged too home from a hospital? It’s important to be prepared before the discharge. Advance preparation will make life easier for both patient and family, help ensure that the proper home care is received, and prevent readmission to the hospital.
Research shows that about 34% of Medicare recipients are readmitted to the hospital within 90 days of their discharge and more than half (56.1%) within one year. Primary causes for readmissions include lack of preparation for discharge, poor hospital communications with patient and caregivers, and inadequate follow up care.
Medicare has long required hospitals to provide their patients with “discharge planning.” Medicare defines discharge planning as “a process used to decide what a patient needs for a smooth move from one level of care to another.” But the mere existence of a discharge plan does not mean it will be adequately implemented at home by the patient and his/her caregivers.
Home care can be difficult. Family caregivers are often called on to provide complex care that once was provided only by nursing professionals. This can include tasks like managing multiple medications, giving injections and providing wound care. Home caregivers need preparation, training, and ongoing support. 
On April 20, 2017 the Pennsylvania Caregiver Advise, Record and Enable Act (CARE Act) takes effect. The CARE Act recognizes the importance of preparing caregivers for home care and providing them with ongoing post-discharge support.
The CARE Act allows hospital in-patients to choose a “lay caregiver” to provide them with post-discharge assistance when the patient returns home. The hospital is required to consult with the lay caregiver regarding the care assistance tasks necessary to maintain the patient’s ability to reside at home. The hospital is also required to provide contact information for a hospital employee who can respond to questions about the discharge plan.
Lay caregivers should receive instructions in all after-care tasks described in the patient's discharge plan. Training and instructions may be conducted in person or through video technology at the discretion of the lay caregiver. The instructions 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.
Take full advantage of the Care Act.
If you are fully competent prior to your time of discharge, you can name your choice of lay caregiver. But what if you are not competent? 
If you have a health care power of attorney you should consider including a specific designation of your choice of lay caregiver in it. This could be the person designated as your health care agent, or it could be someone else who you expect to be involved with your hands-on post-discharge care. Your choice will apply in the event that you are not competent to name a "lay caregiver" at the time of a hospital discharge. 
If you don’t have a health care power of attorney, get one. It is a vitally important document. (See the recent article by my colleague Elizabeth White: “Health Care Decision Making and the CARE Act”).   
Click here to read the Pennsylvania CARE Act. 

 [This is Part 1 of a planned two part series on preparing for your hospital discharge. I’ll post Part 2 in the near future.]

Tuesday, March 14, 2017

What happens if you have no Executor when you die?

If you don’t have a Will, you don’t have an Executor.  Your Executor is the person you name to carry out the terms of your Will, meet your post-mortem legal obligations, and distribute your estate to your heirs.
So what happens if you don’t have a Will? Or you do have a Will but the Executor is unable to serve for some reason?
Well, someone still needs to be in charge or winding up your affairs, collecting your property, paying your bills and taxes, and distributing what is left to your heirs. If you don’t have an Executor to be in charge, the government is going to have to name someone. This person is typically referred to as the Administrator of your estate.
In naming an Administrator, your local court (usually acting through an Orphans or Probate division) will be guided by state law. Each state has laws which set out a hierarchy of who is authorized to administer your estate if you don’t have an Executor. Pennsylvania law is fairly typical. The Pennsylvania hierarchy is set out in Subchapter D of Chapter 31 of the "Probate, Estates and Fiduciaries Code."
If there is no Executor, Pennsylvania law gives top priority to (1) those persons who are entitled to your residuary estate under your will (if you have a will). Next in priority is (2) the surviving spouse, if any. Then things get a little murkier and discretion is given to the Register of Wills.
The Register of Wills is the county officer who processes the estate paperwork when someone dies. The Register of Wills issues documents (“Letters”) that authorize the executor or administrator to act on behalf of the estate. The Register is the office that accepts the filing of documents needed to complete the estate administration and serves many additional functions including collecting inheritance tax due to the Commonwealth of Pennsylvania.
In some cases, the law gives the Register of Wills discretion in determining who will be appointed as administrator of estate. The Register has quasi-judicial authority and can, if necessary, conduct hearings to determine who should be appointed. If no one is entitled to appointment under the (1) residuary estate or (2) surviving spouse provisions, Section 3155(b) of the Pennsylvania law directs the Register to issue Letters to:
(3)  Those entitled under the intestate law as the register, in his discretion, shall judge will best administer the estate, giving preference, however, according to the sizes of the shares of those in this class.
(4)  The principal creditors of the decedent at the time of his death.
(5)  Other fit persons.
(6)  If anyone of the foregoing shall renounce his right to letters of administration, the register, in his discretion, may appoint a nominee of the person so renouncing in preference to the persons set forth in any succeeding paragraph.
(7)  A guardianship support agency serving as guardian of an incapacitated person who dies during the guardianship administered pursuant to Subchapter F of Chapter 55 (relating to guardianship support).
(8)  A redevelopment authority formed pursuant to the act of May 24, 1945 (P.L.991, No.385), known as the Urban Redevelopment Law.
Section 6 above is used frequently. It allows someone with priority (.e.g. a surviving spouse) who doesn’t want to take on the responsibilities of being the Executor to nominate someone else to serve. The law also sets out categories of persons who are not entitled to serve as the administrator of an estate:
Persons not qualified.
No person shall be qualified to serve as a personal representative who is:
(1)  Under 18 years of age.
(2)  A corporation not authorized to act as fiduciary in the Commonwealth.
(3)  A person, other than an executor designated by name or description in the will, found by the register to be unfit to be entrusted with the administration of the estate.
(4)  The nominee of any beneficiary, legatee or person having any interest whatsoever, when such beneficiary, legatee or person is a citizen or resident of any country outside the territorial limits or possessions of the United States, when it shall appear doubtful to the register that in the distribution of the estate any such person will have the actual benefit, use, enjoyment or control of the money or other property representing his share or interest therein.
(5)  Charged, whether by indictment, information or otherwise, by the United States, the Commonwealth or any of the several states, with voluntary manslaughter or homicide, except homicide by vehicle, in connection with a decedent's death unless and until the charge is withdrawn, dismissed or a verdict of not guilty is returned.
In most cases it is going to be much easier and better for your survivors if you have a Will that names an Executor who is able and willing to serve. So make a Will and update it every five years or so, or sooner if circumstances change. Here are a couple of additional tips for you to consider when you do create or update your Will:
- If you have a Will, consider whether the person you named as Executor is still the best choice. Are they able and willing to serve?
- In your Will be sure to name a backup for your primary choice as Executor. Don’t force the Register of Wills to name an administrator for your estate.
- Recognize that you probably also own assets that will pass automatically to a beneficiary without the involvement of an executor or administrator. Examples include (A) assets owned jointly with right of survivorship, (B) Retirement accounts, life insurance policies and annuities; (C) Investments held in transfer on death (“TOD”) accounts; (D) Assets held by a trustee.  Talk with your lawyer to make sure that the disposition of these beneficiary designated assets are properly coordinated with the dispositions created under your Will.
Further Reading

Sunday, March 5, 2017

Sad End for Penn Treaty Insurance

Long-term care insurance policies were initially developed in the late 1960s to supplement Medicare skilled care payments for nursing home care. By 1990 policies had evolved to cover a wide range of non-skilled long term care services including home care and assisted living as well as non-skilled nursing facility care.   
The market was there. A majority of elderly Americans require long term services and supports at some point during their lives. Unfortunately traditional private long-term care insurance (LTCI) has failed to live up to early expectations as an effective means to meet that risk.  
Twenty years ago the market for LTCI was busy with over 100 companies selling policies. One company active in central and northeastern Pennsylvania was Penn Treaty Insurance. Penn Treaty distinguished itself by its lax underwriting standards. It was very easy to qualify for a Penn Treaty policy. The underwriting and benefits appeared to be “too good to be true” and made Penn Treaty policies very risky.    
And, as all the companies learned, the traditional LTCI model was flawed. As described in a National Association of Insurance Commissioner Report:
As required by state insurance laws, private LTCI policies were always sold as guaranteed renewable—they could only be cancelled for non-payment of premium—and as level-funded. While the premium charged varied by age at purchase, once an individual purchased a policy, the premium was designed (although never guaranteed) to be level for life. Finally, almost all policies reimbursed the actual costs of care up to a daily benefit maximum.
The level-funded nature of the product persists to this day and poses unique challenges to insurers. Insurers can only adjust premiums subject to regulatory approval if experience is countering their pricing assumptions. Most insurers’ LTCI policies issued before the mid-2000s have seen adverse experience when compared to their original pricing assumptions. Rising claims, low mortality and lower than expected lapses have led to higher prices often unaffordable to a large segment of the affected population. A number of insurers have also opted out of the market, leaving only a relatively few insurers to provide much needed LTCI products. The State of Long-Term Care Insurance: The Market, Challenges and Future Innovations, National Association of Insurance Commissioners, May 2016
Even companies with stronger underwriting standards and deeper pockets than Penn Treaty have failed to weather the devastating conditions for LTCI. Most companies selling individual stand-alone LTCI policies exited the unprofitable market. Sales of traditional individual policies declined from 754,000 policies in 2002 to only 129,000 policies by 2014. New models of long term care coverage have now appeared that are hybrid products based on annuities or universal life or whole life insurance.
In this environment Penn Treaty’s aggressive LTCI underwriting made it particularly vulnerable to disastrous failure. It was forced into receivership and eventual liquidation by the Commonwealth of Pennsylvania. Here is how the situation of Penn Treaty and its subsidiaries were described in a 2015 Pennsylvania court opinion.
The Companies’ troubles began in the 1990’s, when they widely sold policies carrying generous benefits, which proved to be underpriced and poorly underwritten. These policies are referred to here as “OldCo policies,” because by 2002 the Companies were issuing better underwritten policies (the “NewCo policies”) which became profitable. The financial fallout from the sale of OldCo policies, however, resulted in the involvement of numerous state regulators, including the Pennsylvania Insurance Department, which commenced an eight-year period of formal supervision of the Companies. Rate increases for OldCo policies were a linchpin in the Companies’ prospects for improving their financial condition, but these required approval from state regulators across the nation, and efforts to obtain such approval attained disparate results. The inability to secure enough increases, and the Companies’ deteriorated solvency, apparently led to their ultimate consent to rehabilitation [and eventual liquidation]. In Re Penn Treaty Network,  PA Supreme Court, July 20, 2015.
On March 1, 2017 the Pennsylvania insurance commissioner announced it is now completing the final liquidation of Penn Treaty. Fortunately, policyholder losses are mitigated somewhat due to the existence of the state guaranty association system. Nevertheless, 50 percent of policyholders are expected to have claims in excess of what will be paid by the guaranty association.
Here is the Press Release Issued by the Pennsylvania Insurance Commissioner on 03/01/2017
Insurance Commissioner Announces Court Approval of Liquidation of Penn Treaty and American Network Insurance Companies; Assures Policyholders Claims Will Be Paid by State Guaranty Funds Pursuant to State Law
Harrisburg, PA - Insurance Commissioner Teresa Miller today announced the Commonwealth Court approval of petitions to liquidate Penn Treaty Network America Insurance Company and American Network Insurance Company, with policyholder claims to be paid through the state guaranty association system, subject to statutory limits and conditions.
“After a long and difficult eight-year legal process, the Court’s decision to approve the liquidation recognizes the companies’ financial difficulties are too great to be remedied, and that consumers are best protected through the state guaranty association system,” Commissioner Miller said. 
Commissioner Miller said the two companies have approximately 76,000 policyholders nationwide, with 9,000 residing in Pennsylvania.  More than 98 percent of Penn Treaty and American Network’s policies are long term care insurance.
Over the past several years, long term care insurance has posed significant challenges to insurers on a national level. The pricing of these policies for many insurance companies has proved to be insufficient as a result of claims greatly exceeding expectations and low investment returns.  Claims have exceeded expectations due to incorrect assumptions concerning the number of policyholders who would drop their coverage and the number of policyholders who would utilize their policy benefits, as well as the cost of providing those benefits. The pricing deficiencies and resulting financial losses have resulted in many long term care insurers seeking large premium rate increases and some leaving the market. 
In the case of Penn Treaty and American Network, the Pennsylvania Insurance Department determined that the magnitude of additional premium rate increases needed to remedy the companies’ financial difficulties (exceeding 300% on average) would severely harm policyholders and would not be permitted by state regulators, leaving no alternative other than to place the companies into liquidation.
“Policyholder claims will continue to be covered by the state guaranty association system pursuant to law, and policy claims will be paid subject to the applicable state guaranty association coverage limit and conditions. Policyholders should continue to file claims as they have been in the past, and must continue to pay their premiums in order to be eligible for guaranty association coverage,” Commissioner Miller said.  “State guaranty associations were created to protect state residents who are policyholders of an insolvent company that has gone out of business.  In each state, other insurance companies licensed in that state pay into a guaranty fund, and that money is used to cover claims when a company becomes insolvent and is liquidated.”
Under Pennsylvania law, claims of policyholders residing in Pennsylvania are paid up to the maximum amount provided for by the policy, subject to the guaranty association cap of $300,000.  The liquidator and the court will determine whether any payments for claims above the cap can be made from the companies’ remaining assets to any policyholders who may have claims in excess of the cap.  Actuarial models show about 50 percent of policyholders are expected to have claims in excess of what will be paid by the guaranty association covering their policies. 
Guaranty associations may seek to increase premiums.  Any guaranty association rate increase will be subject to approvals required by law which, depending on the state, may include a review process similar to rate requests filed by long term care insurers with state insurance regulators.
Policyholders should continue making premium payments to the following address:  Penn Treaty, P.O. Box 70257, Philadelphia, PA  19176-0257.  Claim submissions should continue to be sent to:  Penn Treaty, P.O. Box 7066, Allentown, PA  18105-7066.  Policyholders with questions about policies, claims, or related to liquidation should call Policyholder Services        at 1-800-362-0700.
Consumers can also contact the Insurance Department Bureau of Consumer Services at, or 1-877-881-6388.
Further Reading:
The State of Long-Term Care Insurance: The Market, Challenges and Future Innovations, National Association of Insurance Commissioners, May 2016 (downloads a .pdf file).

Monday, February 20, 2017

Older veterans - help with home care costs

Many older veterans are unaware that they can qualify for financial help in paying for the cost of home care. Most veterans completed their military service and moved on with their lives without looking to VA for any help.  But VA pension benefits can become important for these veterans in later life.
To qualify for VA pension the veteran must be 65 or older (or permanently and totally disabled for reasons not related to military service). In addition the veteran must have low income and only modest net worth. The veteran must have had 90 days of military service that included at least one day during a period of war.
To receive a pension, the veteran’s income must be below the maximum annual pension rate (MAPR) set by the government.  The pension program is designed to bring the veteran’s income up to that allowance. An increase in the MAPR is available to veterans (and widows of veterans) who are housebound or are in need of “aid and attendance.”
In determining the amount of the veterans income the VA will allow the deduction of unreimbursed amounts the veteran has paid for “medical expenses.” Depending on the circumstances medical expenses can include home nursing services such as assisting an individual with bathing, dressing, feeding and other activities of daily living.
Because medical expenses reduce countable income, an aging veteran who needs (or whose spouse needs) ongoing long term care services and supports may now be able to qualify for financial assistance from the VA. The extra funds can make all the difference in allowing the veteran to get the support needed to remain at home.
Pension eligibility is often overlooked because people are not aware of it at all or do not know that countable income is reduced by your out of pocket medical expenses. Pension benefits can also be available for a veteran who resides in an assisted living facility - where the entire cost may be deductible.
Pension, aid and attendance and housebound benefits can be a godsend for middle-income wartime veterans who are depleting their savings to cover health care costs. Our veteran earned these benefits by serving our nation during a time of war. Let’s make sure they get what they deserve.

For more information on VA pension benefits you can check with your County Director of Veterans’ Affairs, a Veterans Service Organization, or a lawyer who has been accredited by the VA. My law firm of Marshall, Parker and Weber has three lawyers on staff who have been VA accredited.

Friday, February 17, 2017

What is a "Durable" Power of Attorney?

A Power of Attorney is a legal document you use to authorize another person to act on your behalf. The rules governing powers of attorney are generally a matter of state law. Many state laws are based on the Uniform Power of Attorney Act. But the terminology and rules can vary substantially from state to state.  This article is based on Pennsylvania law as it exists in February 2017.
In Pennsylvania, the person granting the power is called the “principal.” The person who receives the authorization is called the “agent.” 
The authority granted by a POA depends on the language used in the document. Some powers of attorney are “limited.”  This means that the agent’s powers are limited to performing a single act or set of acts. For example you might give a limited POA to authorize someone to sell your car or house. On the other hand, the term “general” power of attorney is typically used to describe a document that gives the agent very broad powers.
Prior to 1974, the Pennsylvania law regarding powers of attorney was based entirely on the common law of agency. One aspect of that law was that an agent’s authority would terminate if and when the principal died or became incompetent. The disability of the principal served to revoke the agency.
However, many people wanted to be able to create a power of attorney that would designate someone else to act for them exactly because they had become incapacitated. They wanted to avoid the complications of creating a formal trust or the need to be subjected to guardianship proceedings. The aging of society and increasing longevity was exacerbating the need for a simpler and more accessible way for people to plan for their potential future incapacity.  
To meet this need, Pennsylvania enacted Act 295 of 1974 which modified the common law rule and allowed individuals to create a “durable” power of attorney. Pennsylvania law was modified a number of times thereafter and now provides[1] that unless specifically provided otherwise in the power of attorney, all powers of attorney shall be durable as provided in section 5604of Title 20 (durable powers of attorney). Section 5604 says:
§ 5604 Durable powers of attorney
Definition.--A durable power of attorney is a power of attorney by which a principal designates another his agent in writing. The authority conferred shall be exercisable notwithstanding the principal's subsequent disability or incapacity. A principal may provide in the power of attorney that the power shall become effective at a specified future time or upon the occurrence of a specified contingency, including the disability or incapacity of the principal.

Durable power of attorney not affected by disability or lapse of time.--All acts done by an agent pursuant to a durable power of attorney during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and his successors in interest as if the principal were competent and not disabled. Unless the power of attorney states a time of termination, it is valid notwithstanding the lapse of time since its execution.
As noted in Section 5604, a principal may provide in the power of attorney that the power shall become effective only upon the occurrence of the disability or incapacity of the principal. That type of contingent POA is typically referred to as “springing.”
Both Pennsylvania law and the Uniform Act[2] now provide that a power of attorney is presumed to be durable unless the document states otherwise. No special language is required. Nevertheless, it is wise to include a specific statement to that that the agent’s authority survives the principal’s incapacity. Although all states now allow durable powers of attorney, some require such specific wording in the document.  
Here are links to additional information on powers of attorney: