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 www.donatelifepa.org/registration. 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 www.donatelife-pa.org 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 www.hgrpa.org .
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: http://www.paable.gov/
The National ABLE Resource Center: http://www.ablenrc.org/
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 www.insurance.pa.gov, 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).