Marshall Elder and Estate Planning Blog

Obama Budget Proposes to Close Estate and Gift Tax Loopholes

2012-02-20T13:36:00.000-05:00

The2013 Budget Proposal recently submitted by the Obama Administration would returnfederal estate, generation skipping (GST), and gift taxes to 2009 levels. Thetop tax rate would be 45 percent and the exclusion amount would be $3.5 millionfor estate and GST taxes, and only $1 million for gift taxes. In addition, theportability of unused estate and gift tax exclusion between spouses would bemade permanent.

If adopted by Congress, the Obama proposals would beeffective for the estates of decedents dying, and for transfers made, after December31, 2012.

Currently, the estate, GST and gift tax rate is only 35percent, and each individual has a lifetime exclusion for all three types oftaxes of $5 million (indexed for inflation). However, unless Congress and thePresident can agree, in 2013 the tax rate and tax brackets, the amount of theexclusions and the law governing these three types of taxes will revert to thelaw that was in effect in 2001 prior to the enactment of the Bush tax cuts ofthat year.

There will be tremendous pressure on lawmakers to preventthe default reversion of tax rates to 2001 levels. No action by Congress willmean a maximum tax rate next year of 55 percent, plus a 5-percent surcharge onthe amount of the taxable estate between approximately $10 million and $17.2million (designed to recapture the benefit of the lower rate brackets). Theexclusion for estate and gift tax purposes would be reduced to $1 million, an80% reduction from the current level. And there would be no portability ofunused exclusions to a surviving spouse.

While most of the public attention will likely be focused onthe tax threshold issue ($5 million vs. $3.5 million vs. $1 million), the ObamaAdministration’s budget proposes a numberof “loophole” closing measures that may be of even greater potential significanceto the wealthy. In addition to the decrease from current exclusion thresholdsand increase in tax rates, the Obama Administration proposes to put new limitson a number of estate tax reduction devices that are currently in wide use. The proposals include:

ValuationDiscounts. Estateplanners are able to utilize a number of techniques designed to reduce thevalue of the transferor’s taxable estate and discount the value of the taxabletransfer to the beneficiaries of the transferor without reducing the economicbenefit to the beneficiaries.

The Administration’s proposal would limit the availabilityof such valuation discounts by creating an additional category of restrictions(“disregarded restrictions”) that would be ignored in valuing an interest in afamily-controlled entity transferred to a member of the family if, after thetransfer, the restriction will lapse or may be removed by the transferor and/orthe transferor’s family.

Require a MinimumTerm of Ten Years for Grantor Retained Annuity Trusts (GRATS). GRATs area popular technique for transferring wealth while minimizing the gift tax costof transfers. A GRAT is an irrevocabletrust funded with assets expected to appreciate in value, in which the grantorretains an annuity interest for a term of years. At the end of that term, providedthat the grantor has survived, the assets then remaining in the trust aretransferred to (or held in further trust for) the beneficiaries. The greaterthe appreciation in the value of the assets held by the trust, the greater thetransfer tax benefit achieved.

Taxpayers have become adept at maximizing the benefit ofthis technique, often by minimizing the term of the GRAT (thus reducing therisk of the grantor’s death during the term), in many cases to two years, andby retaining annuity interests significant enough to reduce the gift tax valueof the remainder interest to zero or to a number small enough to generate onlya minimal gift tax liability.

This Administration’s proposal would require, in effect,some downside risk in the use of this technique by imposing the requirementthat a GRAT have a minimum term of ten years and a maximum term of the life expectancyof the annuitant plus ten years. The proposal also would include a requirementthat the remainder interest have a value greater than zero at the time theinterest is created and would prohibit any decrease in the annuity during theGRAT term. This proposal would apply to trusts created after the date ofenactment.

Limit the Durationof the Generation-Skipping Transfer Tax Exemption. A generation-skippingtransfer (GST) tax is imposed on gifts and bequests to transferees who are twoor more generations younger than the transferor. The GST tax was enacted toprevent the avoidance of estate and gift taxes through the use of a trust thatgives successive life interests to multiple generations of beneficiaries.

The GST tax is a flat tax on the value of the transfer atthe highest estate tax bracket applicable in that year. Each person has alifetime GST tax exemption ($5,120,000 in 2012) that can be allocated totransfers made, whether directly or in trust, by that person to a grandchild orother “skip person.”

The allocation of GST exemption to a transfer or to a trustexcludes from the GST tax not only the amount of the transfer or trust assetsequal to the amount of GST exemption allocated, but also all appreciation andincome on that amount during the existence of the trust. Because many states,like Pennsylvania, have done away with any limits on the tenure of trusts, GSTtrusts can now continue, and avoid estate, gift and GST taxation, inperpetuity.

The Administration’s proposal would provide that, on the90th anniversary of the creation of a trust, the GST exclusion allocated to thetrust would terminate.

Place new limitson the use of Grantor Trusts. A grantor trust is a trust of which an individual is treatedas the owner for income tax purposes. For income tax purposes, a grantortrust is taxed as if the grantor or another person owns the trust assetsdirectly, and the deemed owner and the trust are treated as the same person.Thus, transactions between the trust and the deemed owner are ignored. For transfer(estate and GST and gift) tax purposes, however, the trust and the deemed ownerare separate persons, and under certain circumstances the trust is not includedin the deemed owner’s gross estate for estate tax purposes at the death of thedeemed owner.

Estate planning attorneys exploit the lack of coordinationbetween the income and transfer tax rules applicable to a grantor trust throughtechniques like the “intentionally defective grantor trust” that can transfersignificant wealth to children or others without gift or estate taxation.

To the extent that the income tax rules treat a grantor of atrust as an owner of the trust, the Administration’s proposal would (1) includethe assets of that trust in the gross estate of that grantor for estate taxpurposes, (2) subject to gift tax any distribution from the trust to one ormore beneficiaries during the grantor’s life, and (3) subject to gift tax the remainingtrust assets at any time during the grantor’s life if the grantor ceases to betreated as an owner of the trust for income tax purposes.

Basis ConsistencyRequirements. This proposal would help ensure that the basis of theproperty in the hands of the recipient be no greater than the value of thatproperty as determined for estate or gift tax purposes (subject to subsequent adjustments).

In order that taxpayers are aware of and use the appropriatebasis, a reporting requirement would be imposed on the executor of thedecedent’s estate and on the donor of a lifetime gift to provide the necessaryvaluation and basis information to both the recipient and the Internal RevenueService.

Conclusion

Of course, taxes are a contentious issue on Capitol Hill andit is quite possible that none of the “loophole” reforms proposed by the ObamaAdministration will be enacted. However, to the extent that loophole closurescan be viewed as distinct from tax increases, we could well see one or more ofthe above provisions become law. Dependingon what happens politically, we could someday look back on 2012 as the last goldenyear for wealth transfer opportunities.

IRS Extends Deadline for Estates to Make Portability Election for Surviving Spouse

2012-02-17T21:56:00.001-05:00

On February 17, 2012 the Internal Revenue Service issued guidance that it will allow certain estates of married individuals who died during the first six months of 2011 an extension of the deadline to make the portability election. The extension applies to estates where the fair market value of the decedent’s gross estate does not exceed $5,000,000.

The portability election passes along a decedent’s unused estate and gift tax exclusion amount to a surviving spouse. An extension is available to estates of married individuals with assets of $5 million or less, but only if the decedent died in the first six months of 2011, and the executor files Form 4768 requesting an extension no later than 15 months after the decedent's date of death.

The extra time is available to an estate even if the estate did not request an automatic six-month filing extension on Form 4768 prior to the regular nine-month filing deadline. As a result, these estates will now have until 15 months after the date of death, rather than the usual nine months, to make the election by filing an estate tax return on Form 706. Thus, the first estate tax returns for estates eligible to make the portability election (because the date of death is after Dec. 31, 2010) are now due on Monday, April 2, 2012.

Affected estates should submit both a properly-prepared Form 4768 and Form 706 to the IRS no later than 15 months after the decedent’s date of death. Further details are in Notice 2012-21, posted on IRS.gov.

For more information about the portability election see:

IRS publishes new Estate Tax Return Form (706) and Instructions

Estate and Gift Tax Portability Law Creates some Unconventional Planning Opportunities

Portability Provision of Estate Tax law may be "Wolf in Sheep's Clothing"

No shocks for seniors in Governor’s Regulatory Agenda

2012-02-12T13:19:00.002-05:00

Each year Pennsylvania regulatory agencies are required to publish anagenda of regulations that are under development or consideration. The agendasare intended to provide members of the regulated community with advance noticeof regulatory activity and to increase public participation in the regulatoryprocess.

The Governor’sRegulatory Agenda published on Saturday February 12, 2012 shows thatPennsylvania’s Departments of Aging and Welfare are considering some important regulatory changes. However, regulatory changes by these agenciesare being constrained by the maintenance-of-effort (MOE) requirements in thefederal health reform law (the Patient Protection and Affordable Care Act).

The MOE provisions prohibit states from making it more difficult forpeople to become eligible for Medicaid until the major components of healthreform go into effect no later than January 1, 2014. The idea is to preventbudget strapped states from trying to save money by imposing new eligibilitylimitations on Medicaid.

As a result, the Department of Welfare’s ability to make regulatorychanges is limited in a majority of the areas of its budget. On the other hand,the Department is relatively free to implement regulatory changes that it feelswill reduce costs in areas that are completely state-funded programs and in providerrates.

The Governor’s Agenda represents the Administration's presentintentions regarding future regulations. Things may change (and often do). Hereis a list of some of the regulatory matters under consideration which might significantlyimpact seniors.

DEPARTMENT OF AGING

Protective Servicesfor Older Adults (PA Code Title VI Chapter 15). The Older AdultsProtective Services Act is under review in light of current interest inenhancing protections for vulnerable Pennsylvanians, the decision of the PASupreme Court in Nixon et al. v. Commonwealth, et al. (which found thecurrent protective services law to be unconstitutional) and numerous technicaland administrative provisions that need to be revised. Regulations areroutinely being reviewed as numerous pieces of pending legislation are beingconsidered in addition to this omnibus proposal. Estimated for December 2012.

Long-Term CareOmbudsman Program (PA Code Title VI Chapter 23). The Department wishesto promulgate regulations for the Long-Term Care Ombudsman program in order tobring it into conformity with national standards. Estimated for June 2012.

DEPARTMENT OF PUBLIC WELFARE

Pharmacy BenefitPackage Change (55 Pa. Code Chapter 1121). Act 22 of 2011 requires the Department to establishbenefit packages for pharmacy services for medical assistance recipients 21years of age or older, and any exceptions to such benefit packages as theDepartment determines are appropriate during state fiscal year 2011-2012. Thisregulation package is codifying the pharmacy benefit package changes which werepublished in the Pharmacy Benefit Package notice at 41 Pa.B. 6455 (December 3,2011). Estimated for June 2012.

StateSupplementary Payment Levels (55 Pa. Code Chapter 299).The purpose of this final-omitted rulemaking is to codify the SSP levels in thetext of 55 Pa. Code § 299.37 and to rescind Appendix A (relating to SSP paymentlevels). This regulation is being promulgated under the authority of Act2011-22. Estimated for April 2012

Long Term LivingHome and Community Based Services (55 Pa. Code Chapter 52). The regulationwill establish provider qualifications and payment provisions for providersrendering services under the Aging, Attendant Care, COMMCARE, Independence andOBRA Home and Community Based Service waivers and the Act 150 program. Thisregulation is being promulgated under the authority of Act 2011-22. Estimatedfor April 2012.

Appeal and FairHearing and Administrative Disqualification Hearings (55 Pa. Code Chapter275). This regulation will update definitions, streamline administrativepractices, and incorporate hearing procedures that will support efficiency inthe hearing and appeals process. Estimated for July 2012.

DEPARTMENT OF REVENUE

In addition to the above, the Department of Revenue is proposingto codify its policy for taxation of estates and trusts and to amend existingregulations in regard to realty transfer taxes. Both actions may haveimplications for planning for seniors.

Amendments toEstates and Trusts—Personal Income Tax Regulations (61 Pa. Code Chapters101, 103, 105, and 117). The Department is promulgating this regulation tocodify the Department's policy for the taxation of estates and trusts in theCommonwealth and to provide clear instructions for taxpayers regardingreporting requirements. Estimated for July 2012.

Amendments toRealty Transfer Tax Regulations (61 Pa. Code Chapter 91). Proposed Regulation published at 41 Pa.B. 6220 (November 19, 2011). FinalAmendments to the Realty Transfer Tax regulations are being proposed to improvethe clarity and effectiveness of the regulations. Estimated for December 2012.

For More information

The Governor’sRegulatory Agenda as published in the Pennsylvania Bulletin on SaturdayFebruary 12, 2012.

Community Spouse Minimum Income Allowance will Increase to $1,891.25 on July 1, 2012

2012-02-09T12:13:00.001-05:00

If a marriednursing home resident receives Medicaid long-term care benefits, his or hercommunity spouse is entitled to retain a certain minimum level of income calledthe Minimum Monthly Maintenance Needs Allowance (MMMNA). If the communityspouse's own income is insufficient to provide this income allowance, incomecan be diverted from the institutionalized spouse.

The minimum MMMNA is set by federallaw and is adjusted each year to keep up with inflation. Pennsylvania makesthe MMMNA adjustment on July 1^st of each year.

The spousal income allowance is based on the federal poverty level. The MMMNA must be at least 150% of the federalpoverty level for a family of two plus an excess shelter allowance. On January26th, the federal poverty guidelines for 2012 were published in the FederalRegister. The rates are available on thewebsite of the Departmentof Health and Human Services.

As a result of the new guidelines, on July 1, 2012, the minimumMMMNA will be increased from $1,838.75 to $1,891.25 per month. The actualMMMNA can be higher depending upon the monthly shelter related expensesincurred by the community spouse. The maximum income allowance during 2012 is $2,841.

Federal law also protects theresources of the community spouse. The protected resource amounts for 2012 (whichare not linked to the new federal poverty level) are a minimum resourceallowance of $22,728 and a maximum resource allowance of $113,640. It isimportant to note that a community spouse can usually protect resources inexcess of the specified maximum through the purchase of a DRA compliant annuity.

Other programs with eligibilitylevels that are reliant on the federal poverty level (FPL) include the following programs that can help pay Medicare premiums for low income beneficiaries:

Qualified Medicare Beneficiaries (QMBs): Medicaid will pay all Medicare cost sharing (includingPart B and any MedicarePart A premiums) for Medicare Beneficiaries with incomes up to 100% FPL andlimited resources: The income limits for2012 are $930.83/month for an individual; $1,260.83/month for a couple.

Specified Low-income Medicare Beneficiaries (SLMBs): Medicaid will pay the Medicare Part B premiums forMedicare beneficiaries with incomes between 100% FPL and 120% FPL and limitedresources: The income limits for 2012 are $1,117/month for an individual;$1,513/month for a couple.

Qualified Individual (QI): States may pay (based on funds available) Medicare Part Bpremiums for Medicare beneficiaries with incomes between 120% FPL and 135% FPLand limited resources: The income limits for 2012 are $1,256.63/month for anindividual; $1,702.13/month for a couple.

Medicare Part D Low-Income Subsidy:

MedicarePart D is Medicare’s prescription drug coverage. Low income beneficiarieswith limited resources may receive either a full or partial subsidy. A fullsubsidy is available for those who otherwise qualify and have incomes of$1,256.63/month for an individual and $1,702.13/month for a couple. A partial subsidyis available for those who otherwise qualify and have incomes of $1,396.25/monthfor an individual and $1,891.25/month for a couple.

The methods of calculating an applicants income can vary with the program. Some receipts that you might personally consider tobe income may not counted in determining whether you qualify and a limitedamount of your countable income may be disregarded. And the size of your family unit may impact your eligibility level for some programs. If you are in doubt as towhether you qualify for any of these benefits contact your state Medicaidagency. In Pennsylvania, interestedpersons can get further information and apply for benefits through their local CountyAssistance Office.

For further information you may wish to visit:

PennsylvaniaDepartment of Public Welfare website (note that the figures on this pagehave not been updated from the 2009 figures).

2012Poverty Guidelines: How Poverty Levels Affect Eligibility for Many FederalPublic Benefit Programs, Center for Medicare Advocacy.

The MedicaidLong Term Care Eligibility Fact Sheet, Marshall, Parker and Associates.

MedicaidAnnuities protect your assets if your husband or wife needs a nursing home,Marshall Elder and Estate Planning Blog.

Elder Law in Pennsylvania Third Edition is Published

2012-02-08T18:34:00.000-05:00

I am pleased toannounce that a new edition of Elder Lawin Pennsylvania has just been published by the Pennsylvania Bar Institute(PBI). ElderLaw in Pennsylvania, Third Edition is now available for purchase from PBIPress. The book is a comprehensive reference source for lawyers and otherprofessionals who advise older Pennsylvania residents and their families.

I wrote the firstedition of Elder Law in Pennsylvania in 2005. It became one of PBI’s most popular titlesand was the 2006 recipient of the international Association for Continuing LegalEducation (ACLEA) Book Award for Outstanding Achievement. A second editionfollowed in 2008. But the area of elder law is constantly evolving and the timehas come for a new publication.

Last year I asked a wonderful group of experts in elder law to help me put together a completely updated newedition of Elder Law in Pennsylvania.Elder law lawyers have always been generous in sharing their best ideas, forms, and practice tips with other lawyers.We seem to have a sense of common purpose and understand that by pooling ourknowledge, energies, and talents we can better protect our clients. The 2012update of the book benefits from the accumulated knowledge of the wonderfulgroup of lawyers who agreed to help. I’ve listed their names below.

To be ableto meet the needs of our older clients, lawyers must be able to move beyond thetraditional legal realms of estate and tax planning, and provide advice onMedicare, Medicaid, Social Security, estate recovery, powers of attorney andhealth care decision making, elder abuse, veterans benefits, and the network ofpublic and private services and programs that can help families who arestruggling to cope with a long term illness. These are the topics presented in ElderLaw in Pennsylvania, Third Edition.

Aging can present overwhelming problems for our older clientsand their families. As lawyers, we can’tmake mom or dad young again, or cure them if they are sick, but if we arewilling and knowledgeable and committed we can guide our clients through themaze of issues confronting them, lift a lot of burdens off of them, and do alot of good for people who may be particularly powerless and dependent.

The challenges for the lawyer are great, but so are the opportunitiesand satisfactions. The new ElderLaw in Pennsylvania, Third Edition, is dedicated to helping thePennsylvania lawyer meet these challenges.

The co-authors of the Third Edition are:

Janet Colliton,Esq., Colliton Law Associates, West Chester

BrianScott Dietrich, Esq., Law Office of Brian Scott Dietrich, P.C.,Blue Bell

MartinJ. Hagan, Esq., Law Firm of Martin J. Hagan LLC, Pittsburgh

MarielleF. Hazen, Esq., Law Office of Marielle Hazen, Harrisburg

DavidR. Lipka, Esq., Law Offices of David R. Lipka, Plymouth

DionysiosC. Pappas, Esq., Vasiliadis & Associates, Bethlehem

ProfessorKatherine C. Pearson, Dickinson School of Law of the PA StateUniversity, Carlisle

SanfordL. Pfeffer, Esq., Philadelphia Corporation for Aging, Philadelphia

JenniferK. Roche, Esq., Heckscher, Teillon, Terrill & Sager, WestConshohocken

MargaretE.W. Sager, Esq., Heckscher Teillon Terrill & Sager, P.C.,West Conshohocken

SallyL. Schoffstall, Esq., Schoffstall & Focht, Orefield

JacquelineJ. Shafer, Esq., Elliott Magee & Shafer, L.L.P., Doylestown

EllenR. Wase, Esq., Wase & Wase, Philadelphia

JeffreyA. Marshall, JD, CELA, Editor & Author, Elder LawFirm of Marshall, Parker & Associates, LLC, Williamsport

Tax Refunds don’t impact eligibility for Medicaid and SSI

2012-02-01T08:41:00.003-05:00

As we enter tax season, many Americans will begin receivingtax refunds. Some refund recipients will be receiving public benefits from theSSI and/or Medicaid programs.

It’s important to remember that tax refunds received in 2012are disregarded for 12 months for purposes of determining eligibility forfederally funded assistance programs like Medicaid or SSI. This rule is positivefor beneficiaries of these programs.

As a result of The Tax ReliefAct of 2010, tax refunds may not be treated as countable income for SSI orMedicaid purposes. As noted in an Informational Bulletin issued by the government’sCenters for Medicare and Medicaid Services (CMS):

“[t]ax refunds and advance payments arenot to be counted as income when determining eligibility under Medicaid or CHIPfor the recipient of the payment, or for any other individual. Therefore, inaddition to not counting the refund or payment as income to the individual, anypayment made is not countable as income when determining Medicaid or CHIPeligibility for a spouse or other family members. Tax refunds and advancepayments may not be counted as income to someone else even if they are given tothat person.”

CMCSInformational Bulletin Dated February 2, 2011

Any money received through a tax refund will not be a countableresource for 12 month following receipt of the funds. SSI and Medicaidrecipients are under no obligation to segregate the funds from their otherresources. The same rule applies to tax refunds received prior to an applicationfor SSI or Medicaid, which means that so long as an applicant can point tofunds in his account that are traceable to a tax refund during the previous year,those funds will not be a countable resource until the year has passed.

The CMS' Informational Bulletin addresses what happens whenan applicant seeking Medicaid long-term care benefits places a tax refund intoa trust. According to the bulletin, the Tax Relief Act

"effectively precludes applyingpenalties under section 1917(c) of the Social Security Act to individuals who,in applying for long term care benefits under the Medicaid program during the periodin which tax refunds or advance payments are not countable either as income orresources . . . dispose of part or all of the refunds or advance payments in amanner that normally would be considered a transfer of assets for less thanfair market value."

The new treatment applies to any refunds or credits receivedafter December 31, 2009 through December 31, 2012. The relevant statutoryprovisions are found in Section728 of the Tax Relief Act of 2010. That section reads:

REFUNDSDISREGARDED IN THE ADMINISTRATION OF FEDERAL PROGRAMS AND FEDERALLY ASSISTEDPROGRAMS.

`(a) In General- Notwithstanding anyother provision of law, any refund (or advance payment with respect to arefundable credit) made to any individual under this title shall not be takeninto account as income, and shall not be taken into account as resources for aperiod of 12 months from receipt, for purposes of determining the eligibilityof such individual (or any other individual) for benefits or assistance (or theamount or extent of benefits or assistance) under any Federal program or underany State or local program financed in whole or in part with Federal funds.

`(b) Termination- Subsection (a) shallnot apply to any amount received after December 31, 2012.'

Are we Abandoning our Nursing Home Residents?

2012-01-29T06:34:00.000-05:00

No one wants to end up in a nursing home. But, most of us recognize that someday we mayneed the level of medical and nursing care and rehabilitation services that canbe best provided in a skilled nursing facility. Placement into this high level of care may betemporary or permanent. Either way, it will most likely unpleasant and expensivebut necessary.

For many years federal and state governments have been emphasizingthe benefits of keeping people out of nursing homes and at home or in morehome-like settings liked assisted living facilities. This movement was spurred on by the 1999 U.S.Supreme Court decision in Olmstead v. L.C.,527 U.S. 581 (1999).

In Olmstead, theCourt held that the unnecessary placement of individuals in nursing homes constitutesdiscrimination under the Americans with Disabilities Act (ADA). This means thatstates are required to serve individuals with disabilities in community settingsrather than in institutions if it is appropriate and reasonable to do so.

In addition to this legal requirement, states have a strong financialincentive to keep people at home. Home care is generally accepted as costing muchless than nursing facility care. Supposedly,Medicaid dollars can support nearly three older people and adults with physicaldisabilities in home and community-based settings for every person in a nursingfacility. States that invest in keepingpeople at home may thus be able to reduce their rate of Medicaid spending onlong-term care.

Politics also dictates that states favor home care. Votingconsumers prefer the idea of staying home. Who doesn’t want to remainindependent and live at home as long as possible? Politicians universally expresssupport for this strong voter sentiment.

The confluence of these powerful factors is pushing our longterm care delivery system towards care provided at home rather than in anursing home. Home health agency franchises are growing rapidly, while skilled nursinghomes are closing or transitioning to a lower assisted living level. Thissounds like a good trend, doesn’t it? Theanswer is - maybe not for everyone.

The truth is, much as we all want to stay out of a nursinghome, some of us may someday require a level of nursing care that cannot beprovided at home. The placement of a parent,or spouse, or yourself in a skilled nursing facility might be the best choice –and the only reasonable choice. We are not going to be able to do away completelywith the need for nursing home care.

Because of the growth in home and community based alternatives,the people residing in nursing homes are older and sicker than ever. They usually need to be where they are. Formany of them, there are no other appropriate options.

In most of our nation’s nursing homes a majority of theresidents have exhausted their ability to pay in full and are on Medicaid. Now,Medicaid reimbursement rates to nursing facilities are being cut back. This is perhaps consistent with our attitudeof general disfavor for this care setting. But, Medicaid residents were alreadynot profitable for many facilities, and the reimbursement reductions will makethe situation even worse. Medicarepayments are being cut as well. So it isno wonder that few new skilled nursing facilities are being built. And existingnursing homes are cutting staff and services and other costs wherever possible.

I fear that an undesirable result of the growing focus on home care maybe a continuation of the trend toward ever more inadequate care being deliveredto ever sicker residents in outdated nursing homes by overworked and underpaidstaff. This downward spiral will likely accelerateif proposals to “blockgrant” Medicaid in order to “free” states from federal regulations (e.g.regarding nursing home staffing levels) are enacted by Congress.

Another undesirable result may be that many ofour sickest and most disabled, those who really need the care provided in askilled nursing home, may be forced to receive inadequate services in anunregulated and inappropriate home environment.

Are we moving toward abandoning the sickest of our elderlyunder the guise of providing them with the “option” to stay home? Don’t we need to provide care to those whocan no longer remain home? Don’t we needto build some new nursing facilities and pay their operators enough to haveenough trained staff to provide adequate care?

In Olmstead theSupreme Court held that states should serve disabled individuals in communitysettings if it is appropriate and reasonable to do so. But we must notlet the trend towards often desirable and cost effective home and communitybased care blind us to the needs of those for whom the only appropriate andreasonable care setting is a skilled nursing facility.

Nursing home residents are not the detritus of our society. Theyare our parents and grandparents, brothers and sisters and, perhaps someday,ourselves. There are currently between 1.5 million to 1.8 million nursing homeresidents in the United States. They are among our society’s most dependent anddefenseless individuals. How can a moral society abandon them?

Most Popular Marshall Elder and Estate Planning Posts of 2011

2012-01-23T16:35:00.000-05:00

Thank you to all the readers of this blog for your supportduring the past year. Here is a list of the most popular Marshall Elder andEstate Planning Blog posts of 2011 (by number ofpage views):

1. Estateand Gift Tax Exclusion Amounts should rise in 2012

2. FederalCourt voids Restrictions on Pooled Trusts

3. Pennsylvania'sAdult Protective Services Law becomes effective - or does it?

4. IRSAnswers Estate, Gift and Generation-Skipping Transfer Tax Questions

5. Estateand Gift Tax Portability Law Creates some Unconventional Planning Opportunities

6. GaryAlexander to be new Secretary of Public Welfare

7. GreatSongs about Aging

8. Vinecase casts doubt on Powers of Attorney

9. MakingSense of Medicaid Block Grant Proposals

10. Medicarepayment cuts to nursing homes hit on October 1st

Estate Planning: A Gift to your Loved Ones

2012-01-22T13:50:00.000-05:00

Somepeople think that "estate planning" is only of concern to the verywealthy. Mostly ploys, they assume, toskirt tax while passing on huge piles of wealth from one generation to another.

Buteven if limiting death taxes is not a critical issue for you, the careful useof wills, trusts, powers of attorney and other legal planning tools can ensurethat the things that you do own, whatever their value, are protected andwill be distributed not haphazardly, but in the way that best cares for yourfamily.

Moneyleft to children or grandchildren, for instance, can be passed on with stringsattached, so that it is protected against being frittered away. Investments, property and possessions earnedby you and your spouse can be earmarked to eventually pass to your children so that they stay in the family rather than going to husband or wife numbertwo. You can make sure your children are treated fairly and rectify lifetimeinequalities. Family conflicts and jealousies can be avoided.

Inthe over 30 years I’ve been helping families plan, I have seen how poorplanning can devastate the people who dad or mom only wanted to help. I’ve seeninheritances that have been lost to bad sons-in-law, been given awayto “cults,” and been confiscated by children’s creditors. I've seen family relationships destroyedmore times than you can imagine.

And the most effective estate planning is about much more than just planning for your heirs. It also involves lifetimeplanning through use of legal tools like powers of attorney, trusts, familyagreements, and health care directives. These tools help you retain control over your affairs and financialsecurity during your lifetime. If you ever become incapacitated, they helpensure that the decisions that are made for you will be the ones you would havemade yourself, and the person making the decisions will be the person youchose. Lifetime planning can greatlyease the burdens placed on your family in the event of your incapacity by givingthe right people the power to do what needs to be done consistent with your wishes.

Okay,I'll admit that thinking about what will happen in the event of your death or incapacityisn't much fun. It may force you to address family issues and conflicts that you havebeen avoiding for years. It may force you to come up with a plan instead of waiting for answersthat may never come - like will a child finally “grow up” or will a marriage “workout.”

Butwe all need to recognize that life is uncertain and putting off planning isdangerous. Just this past week a friend ofmine collapsed on a basketball court of a massive heart attack. Young,vigorous, in great shape, he hadn’t gotten around to planning. Although he survived, he is notcompetent. And since he created no powersof attorney or health directives, his family is already lost and strugglingwith handling his affairs.

Thetime to get started is now, while you are healthy and competent. This is the best time to create a thoughtfuland loving, estate plan. As changesoccur in your life and that of your family, you can update your planaccordingly. But you need to get a basic plan in place now. Or, if you created a plan years ago which isno longer appropriate, you need to get it updated.

Theprice for your procrastination may have be be paid by your loved ones and survivors. The price may be paid in frustration, in money,in delay, and in hurt feelings. If youdon't put your affairs in order you leave your family's financial security tothe ungentle mercy of inflexible laws and slow moving courts.

Andyes, if you have acquired anything of value, failure to plan may result in anunnecessary bequest to the Government. Pennsylvania inheritance taxes range up to the 15% level, and taxationbegins at dollar one. An estate that isonly worth $100,000 can incur an inheritance tax of $15,000. For people ofgreater wealth, there are also federal estate taxes to consider, with rates that are scheduled to go up to a maximum of55% in 2013.

Acarefully drawn estate plan will guard your family's finances, provide for thespecial needs of your heirs, and ease the administrative burden on yoursurvivors. And you know what? You willlikely feel much better when you have taken care of this unpleasant thoughnecessary task. When my clients completetheir estate planning, they often tell me that they feel like an enormousburden has been lifted off their shoulders.

Make a loving gift to yourfamily. Set up an appointment with an estate planning attorney now. If you live in Northcentral and NortheasternPennsylvania, you can call Marshall,Parker and Associates at 800-401-4552 to get started

DPW backs off policy on home sales by Community Spouses

2012-01-15T07:16:00.001-05:00

When a married individual needs long-term nursing home care,the cost of care can jeopardize the financial security of the spouse at home. Withaverage nursing home costs in Pennsylvania exceeding $8,000 a month, the spouseat home can easily become impoverished.

In 1988 President Reagan signed measures into law that were beendesigned to protect the at-home spouse from impoverishment. States are requiredto comply with these federal rules in determining whether the resources of the spouseat home (called the “Community Spouse”) must be used to pay for theinstitutionalized spouse’s care. States must follow these federal rules.

One of the spousal impoverishment rules is that the value ofthe home of the Community Spouse (“CS”) is not to be counted in determining thefinancial eligibility of the institutionalized spouse for Medicaid. The home ofthe CS is a protected asset if it has a value of $525,000or less. But what if the CS sells the home after theInstitutionalized Spouse (IS) qualifies for Medicaid nursing home benefits? Can the CS keep the proceeds of thesale?

The Department of Public Welfare (“DPW”) is the Pennsylvaniastate agency that decides who qualifies for Medicaid. When the CS sells thehome “post eligibility,” DPW’s written policy has been to count any sale proceedsthat are not immediately used to purchase a new home as resources that areavailable to pay for the IS’s care. This means that the IS will typically lose their Medicaid if the CS sells the home.

In June 2011 DPW issued a policy clarification to its localCounty Assistance Offices to advise them to follow this policy. PolicyClarification PMN15842440 states, inpart:

If the CS sells the property, theentire value of the property will be counted as a resource for the IS. It doesnot matter that the property was titled only in the name of the CS. When theproperty is sold, all of the proceeds are considered available to the IS exceptfor the amount used to purchase a new residence. The purchase of the newresidence should be within three months. Proceeds remaining after the purchaseof the new residence may be transferred to the CS, but only up to the CommunitySpouse Resource Allowance figure.

Now, DPW has apparently been forced to back off its position that theproceeds of a post-eligibility sale of a residence owned solely by a community spousecan be treated as an available resource of the institutionalized spouse.

In a case brought in federal court for the Eastern Districtof Pennsylvania [DeMarco v. Alexander (Docket No 11-6444-RBS] Wife had been ina Skilled Nursing Facility and receiving Medicaid long term care (MA-LTC)benefits since 2003. In 2003 the homewas transferred from joint names to the sole name of her Husband.

In 2008 Husband sold the home for $245,732 and placed theproceeds into an account in his sole name. DPW thereupon discontinued Wife’sMA-LTC due to excess resources. Wifeappealed and lost at fair hearing. She and her husband then filed an action infederal court. In the federal courtcase, DPW backed down and agreed to reinstate wife’s eligibility. The government lawyers signed a settlementstipulation that conceded that the proceeds from the sale of the homebelong entirely to the CS and have no effect on the continued eligibility ofthe IS for Medicaid benefits.

DPW likely backed off because its written policy as set out inPMN15842440 is in pretty clear violation of the spousal impoverishmentprotections mandated by federal law. The federal Medicaid rules prohibit statesfrom attributing resources of the CS to the IS after the IS has established eligibility.Here is what the federal law says:

During the continuous period in whichan institutionalized spouse is in an institution and after the month in whichan institutionalized spouse is determined to be eligible for benefits underthis [subchapter], no resources of the community spouse shall be deemedavailable to the institutionalized spouse. 42 U.S.C. 1396r-5(c)(4).

As one federal court put it, “Congress appears to have meantwhat it said: once the institutionalized spouse’s eligibility is determined,the state is not authorized to take any resources belonging to the communityspouse and deem them available to the institutionalized spouse. Houghton v. Reinertson, 382 F.3d 1162(10th Cir. 2004).

Although DPW backed off when pressed by the knowledgeableand ardent advocates for the DeMarco family, lawyers should not assume that itwill withdraw the policy set out in PMN15842440. For example, DPW has neverrescinded its policy on DRA compliant annuities (see OPS0702208)despite a number of state and federal court decisions holding that policy to bein violation of federal law and enjoining its enforcement. (See, James v. Richman,547 F.3d 214 (3 Cir. 2008); Weatherbee v. Richman, 595 F. Supp. 2d 607(W.D.Pa.2009), aff’d 2009 U.S. App. LEXIS 24939, 2009 WL 3792406 (3d Cir. 2009).

This means that lawyers representing couples where one is in a nursing home will need to be aware of the law and be ready, willing, and ableto fight DPW at fair hearing and even in federal court. And consumers facing devastating long term care costs need to seek that kind of lawyer/advocateto represent them and protect their rights under the law.

Older Americans forced to skip doctor appointments to save money

2012-01-12T08:24:00.003-05:00

OlderAmericans are being forced to skip doctor appointments and change or reduce theirprescriptions in order to save money according to the January2012 newsletter of the Employee Benefit Research Institute.

The newsletter reports that more than 1 in 5 (21.5 percent)of those aged 50 or above made prescription drug changes such as switching tocheaper generic drugs, getting free samples, stopping pills or reducingdosages, and nearly as many (19.4 percent) skipped or postponed doctorappointments to save money.

LESS HEALTHY DO MORE ADJUSTMENTS: Amongthose in (self-reported) poor health, 29.9 percent made prescription drugchanges and 36.5 percent skipped or postponed doctor appointments to savemoney. For those in excellent health, the comparable numbers were 15.3 percentand 9.5 percent, respectively.

SINGLE WOMEN AND BLACKS ADJUST MOST:Among different demographic groups, single women and blacks had the highestinvoluntary spending adjustments: 22.8 percent and 24.8 percent of single womenmade prescription drug changes and skipped or postponed doctor appointments tosave money. Similar numbers for blacks were 25.9 percent and 27.3 percent,respectively.

The data is from a 2009 Internet Survey of the Health and RetirementStudy.

While it makes sense for our society to encourage seniors tobe frugal in their health expenditures, skipping doctor appointments and reducingor stopping their prescribed medications is probably not frugal in the longrun. Perhaps Health Reform can modifythe current dysfunctional model and allow seniors to make more strategic decisionsabout their health care needs that leads to both better health and reducedexpenditures.

Pennsylvania may impose asset test for food stamps

2012-01-11T08:46:00.000-05:00

Low income Pennsylvania seniors with over $3,250 incountable assets may no longer be able to qualify for food stamps beginning onMay 1.

According to the Philadelphia Inquirer, the Department ofPublic Welfare (DPW) has decided that people under 60 with more than $2,000 insavings and other assets should no longer be eligible for food stamps. For peopleover 60, the limit will be $3,250. Houses and retirement benefits and a car willnot be counted as assets.

Under current rules there is no asset test. Eligibility for food stamps (known as the SupplementalNutrition Assistance Program, or SNAP) has been based solely on theapplicant’s income and expenses. In Pennsylvania, people can access SNAP ifthey make 160 percent of the federal poverty level or less. For a family offour, the poverty level is $22,350. A household with an elderly or disabled member has a higher limit of 200% of the poverty level.

The state's plan was quietly announced in a Dec. 28 letter from DPW to the U.S.Department of Agriculture. The letter was obtained by The Inquirer. The food stamp program is administered by thestate, but is funded by the federal government. Pennsylvania receives about$2.5 billion in federal SNAP funds annually and pays about $160 millionannually in state money to maintain the program.

Given the federal funding, any state savings resulting from the policy change willlikely be minimal and the additional work needed to check on assets couldactually raise state costs and workloads for the Department.

Federal law does permit states to impose an asset test forfood stamps. However, the national trend,supported by both Democrat and Republican state administrations, has been to doaway with asset limitations. A majorityof states have gotten rid of asset tests completely, while others have raised the amountof allowable assets.

Welfare Department spokesperson Ann Bale is quoted by theInquirer as saying that the asset test was a way to ensure that "peoplewith resources are not taking advantage of the food-stamp program," fundedby federal money. In addition, Bale said, the test was related to DPW SecretaryGary Alexander's initiative to reduce waste, fraud, and abuse across alldepartment programs.

Critics of the change in DPW policy say that instituting anasset test for SNAP benefits will have the effect of saving the federalgovernment money by limiting SNAP payments, while at the same time costingPennsylvania more money. They suggest that it will particularly punish elderlypeople saving for their burials, poor people trying to save enough money to getout of poverty, and working- and middle-class people who lost their jobs in therecession and may now have to liquidate assets to feed their families.

Fewer people on SNAP means more folksheading to food pantries, which is bad news, according to Bill Clark, executivedirector of Philabundance, the largest hunger-relief agency in the region.

"I'm very pessimistic about ourability to meet people's needs," Clark said. "This will be amind-boggling, self-inflicted wound. It makes no compassionate, political, oreconomic sense."

For many elderly especially, $3,250 inthe bank serves as "the poor man's medical insurance," Clark said.

That sounds about right, said DorisGray, 72, a divorced, college-educated former graphic artist from Mount Airywith a heart condition who gets $200 a month in food stamps.

Rent, insurance, and medical costs aremore than her $1,079 monthly Social Security check. She relies on $14,000 insavings to survive, but Gray estimates it will be depleted in two years.

But before that -- as of May 1, if theDPW plan holds -- her food stamps will be gone. "It means I'll have togive up paying for my health insurance," she said. "I can't affordfood and insurance.

"I feel panic, dismay, andbewilderment. The state doesn't understand that there are so many of us peopleliving on the edge."

The Welfare Department’s decision to impose an asset test onfood stamp recipients is perhaps a good example of the kinds of poor decisions thatcan result when policy changes are made in secret. Getting input from thepeople who will be affected by a policy change can take time, but usuallyresults in more informed and better policy decisions.

The Legislature has granted the Department of Public Welfarea one-year exemption from the requirements for public notice and input onrulemaking decisions. Hopefully that exemption, as set forth in Act22 of 2010, will not be extended.

Perhaps the Department of Public Welfare will reconsider itsdecision before implementing the new asset test on May 1^st.

For more information:

Pennsylvaniato impose asset test for food stamps (Philadelphia Inquirer article)

HelloBig Brother: Welfare Secretary given power to change rules without normaloversight

Corbett Plan for Food Stamp Asset Test Downplayed

PennsylvaniaDepartment of Public Welfare Supplemental Nutrition Assistance Programwebpage

Philabundance

LIHEAP heating assistance program to see reductions

2012-01-08T10:35:00.000-05:00

Pennsylvania’s Low-Income Home Energy Assistance Program(LIHEAP) helps low-income families pay their heating bills. LIHEAP is a grant.You do not have to repay it.

To receive help

• You don’t have to be on public assistance

• You don’t need to have an unpaid heating bill

• You can either rent or own your home

According to an article in the HarrisburgPatriot News, the PA Department of Public Welfare, which operates LIHEAP programin Pennsylvania, has raised the income threshold to qualify for assistance andlowered the benefit payout amounts. The changes result from reduced fundingfrom the federal government. The state received an allocation of $207 millionfor LIHEAP, which is less than last year.

According to the Patriot News article, DPW spokeswoman AnneBale said that Pennsylvania’s LIHEAP benefits can last through March, which iswhen the season begins to taper off. “But once the money is gone, she said,it’s gone. Those who qualify for LIHEAP benefits and think they will need themshould apply now, Bale said.”

You can apply for LIHEAP online, by completing a mail-inapplication, or by contacting your local County Assistance Office or the LIHEAPhotline at 1-866-857-7095. Applicantswho received benefits last year should automatically receive a mail-inapplication.

For application links andfurther information, visit the DPW heating assistance LIHEAPwebpage: http://www.dpw.state.pa.us/foradults/heatingassistanceliheap/index.htm

For the Patriot News article see: LIHEAPassistance for heating bills has less money to give out

Federal Judge Prevents California cuts to Medicaid

2012-01-02T09:33:00.000-05:00

In March 2011 California enacted significant paymentreductions for many classes of services provided under its state Medicaidprogram (Medi-Cal). Payments to some providers were to be reduced by 10% ofmore. The cuts were intended to help fill a multi-billion dollar deficit in thestate budget.

Because Medicaid is funded largely by the federal government,the cuts required federal approval. On October 27^th, The Centers forMedicare and Medicaid Services (CMS) approved California’s proposed MedicaidState Plan Amendment effective retroactively to June 1, 2011. The California HospitalAssociation (CHA) immediately filed suit to block the cuts. CHA wasrepresenting hospitals with skilled nursing units inside them which provide Medicaidcovered nursing services to Medi-Cal beneficiaries.

CHA asked the court to enjoin the implementation of the payment cuts because such massive reductions would threatenthe ability of many hospitals to continue to operate skilled nursingunits at all. And the closure of hospital basedunits would create significant gaps in access to skilled nursing services forMedi-Cal beneficiaries and reduce quality of care, particularly for persons residingin medically underserved rural areas.

Under federal law state Medicaid plans are required to make paymentssufficient to attract enough providers so that care and services provided toMedicaid patients are at least as good as those offered the general public. States must “provide such methods and procedures relating to the utilization of,and the payment for, care and services available under the plan . . . to assurethat payments are consistent with efficiency, economy, and quality of care andare sufficient to enlist enough providers so that care and services areavailable under the plan at least to the extent that such care and services areavailable to the general population in the geographic area.” 42U.S.C. § 1396a(a)(30)(A).

On December 28^th Federal Judge Christina Snyder issueda preliminary injunction which temporarily prevents California fromimplementing the 10% cuts and found that CHA was likely to eventually succeedat a trial of the case, CaliforniaHospital Association v. Toby Douglas. The Court issued a similar order in asuit brought by pharmacies.

In her opinion Judge Snyder refused to defer to the approvaldecision made by the federal regulators at CMS. She found that CMS’s relianceon a state generated analysis of the cuts impact on access and quality of care wouldlikely be found to be arbitrary and capricious.

The Court was able to dodge a critical preliminary issue inthe case: whether CHA had “standing” to bring this action at all. Can private parties bring an action againstthe state to enforce Section 30(A) of Medicaid law, or does only the federalgovernment have that right?

For the time being private parties like CHA can contestthis kind of state decision, at least in California. But the “standing” issue iscurrently being decided by the United States Supreme Court in another case fromCalifornia, Toby Douglas v. The Independent Living Center of SouthernCalifornia.The Supreme Court decision in that earlier case, expected early this year, willeventually determine the fate of Judge Snyder’s injunction in CaliforniaHospital Association v. Toby Douglas. 31 states, including Pennsylvania,joined in filing an amicus brief in support of California in the earlier case thatis now before the Supreme Court. They do not want cuts they make in their stateMedicaid programs to be challenged by private parties. Neither does the federal government.

Underlying this case is a fundamental policy question: does a State's fiscal crisis outweigh the serious irreparable injury that will be suffered by Medicaid beneficiaries who are the ultimate casualties of these types of cuts. Judge Snyder's answer - "State budgetary considerations do not . . . in social welfare cases, constitute a critical public interest. . . . In contrast, there is a robust public interest in safeguarding access to health care for those eligible for Medicaid." We may soon learn what the US Supreme Court has to say on this subject.

Update: On February 22, 2012, the US Supreme Court vacated the lower court's decision in Toby Douglas v. The Independent Living Center of SouthernCalifornia and sent the case back for further consideration in light of the federal government's approval of cuts. Justice Breyer, writing for the majority of the court stated:

The federal agencycharged with administering the Medicaid program has determined that thechallenged rate reductions comply with federal law. That agency decision doesnot change the underlying substantive question, namely whether California’sstatutes are consistent with a specific federal statutory provision (requiringthat reimbursement rates be “sufficient to enlist enough providers”). But itmay change the answer. And it may require respondents now to proceed by seekingreview of the agency determination under the Administrative Procedure Act(APA), 5 U. S. C. §701 et seq., rather than in an action againstCalifornia under the Supremacy Clause.

However, four of the nine Justices would have reversed the lower court and found that:

When Congress did notintend to provide a private right of action to enforce a statute enacted underthe Spending Clause, the Supremacy Clause does not supply one of its own force.

Thus, the issue of whether private parties have standing to sue states to enforce federal Medicaid standards remains open for now - at least temporarily. But things don't look good for CHA and other private plaintiffs.

ObamaAdministration Approves new California Medicaid cuts while Supreme CourtDecision on prior cuts is pending

CaliforniaBarred by Judge From Cutting Medi-Cal Rates

Pharmacistswin a halt to cuts

Great Songs about Aging

2011-12-29T08:51:00.000-05:00

BeforeChristmas I was playing with my guitar - trying to learn the chords to the song“Beloved Wife” as sung by Natalie Merchant. Maybe because my wife and I have been married for over 40 years thissong really gets me. I love it. And Istarted thinking of other songs about aging that I’ve grown to love aswell. I decided to make a list.

As I worked on my list Irealized that there must be a lot of great songs out there – related to aging –that I’ve never even heard. So, I sent out an email that asked participants inthe National Academy of Elder LawAttorneys' member’s listserv to suggest additional songs. The response wasoverwhelming - from Country and Bluegrass, Folk and Blues, Rock and Broadway, the suggestions flooded in. While I was already aware ofmany of the songs, there were quite a few that were new to me. Some of themmade me laugh, others tore me up completely.

I had awonderful Christmas holiday sorting through and listening to the suggested songs. And I promised to compile a list of some ofthe ones that most appealed to me (with emphasis on songs that are easilyavailable via hyperlink).

So, here is JeffMarshall’s List of Great Songs about Aging – with help from my friends - in alphabetical order with hyperlinks. Thanks toeveryone who contributed. I hope you enjoy them. And if you decide to come upwith your own list, perhaps you will share a song or two by adding a comment below.

100 Years – Five for Fighting

All My Rowdy FriendsHave Settled Down - HankWilliams, Jr.

Angel Band – Old and in the Way

As Good As I OnceWas - Toby Keith

Beloved Wife - Natalie Merchant

Borrowed Time – John Lennon

Cat’s in the Cradle – Harry Chapin

Done Got Old - Junior Kimbrough

Don’t Blink – Kenny Chesney

Don’t Let Us GetSick – Warren Zevon

End of the Line – Traveling Wilburys

Father and Son – Cat Stevens

Forever Young – Alphaville

Gentle Annie – (Stephen Foster) - Jay Unger

Glory Days – Bruce Spingsteen

Good Riddance (Timeof your Life) - Green Day

Grandma’s Hands – Bill Withers

Grow Old Along WithMe - Mary Chapin Carpenter

Hands of Time - Ron Sexsmith

Hazy Shade of Winter – Simon and Garfunkel

He Went To Paris - Jimmy Buffett

Hello in There – John Prine

In Color - Jamey Johnson

It was a Very GoodYear - Frank Sinatra

Just Breathe - Pearl Jam

Living Years - Mike & the Mechanics

My Generation – the Zimmers

My Way – Frank Sinatra

No Time at All – from Pippin

Not Dark Yet – Bob Dylan

Ol' Man River - Paul Robeson

Old Friends – Simon and Garfunkel

Old Man – Neil Young

Our Town – James Taylor

Remember When – Alan Jackson

Rockin` Chair - Hoagy Carmichael

September Song – Willie Nelson

Shouldn’t I be lessin Love with you - from “I LoveYou, You're Perfect, Now Change”

Silver Threads Amongthe Gold – John McCormack

Skin – Chris Trapper

Still Crazy AfterAll These Years – Paul Simon

Stop This Train – John Mayer

Summer of 69 – Bryan Adams

Teach Your Children - Crosby, Stills & Nash

That Lonesome Road – James Taylor

The Circle Game – Joni Mitchell

The Dutchman - Steve Goodman

The Way - Fastball

The Way We Were – Barbara Streisand

Through the Years – Kenny Rogers

Time - Pink Floyd

Time Passages – Al Stewart

Too Old To Cut theMustard Anymore – RosemaryClooney with Marlene Dietrich

Turn, Turn, Turn – The Byrds

Waitin' On A Woman – Brad Paisley

When I Get My Wings - Will Hoge

When I Go –Dave Carter and Tracy Grammer

When I'm Gone - Phil Ochs

When I’m 64 – The Beatles

When You’re Old andLonely – The Magnetic Fields

Where’ve You Been - Kathy Mattea

You’re Aging Well – Dar Williams

PA Expands Support Program for Caregivers

2011-12-24T14:58:00.000-05:00

As many as 400,000 Pennsylvanians suffer from Alzheimer’s or another type of dementia, and seven out of 10 of those are cared for at home by family, neighbors or friends. It is estimated that more than 1.3 million Pennsylvanians are informally caring for elderly parents or other family members or friends at home. Most are unpaid.

The economic value of the Pennsylvania’s caregivers has been estimated at more than $15 billion a year. These informal caregivers are the heart and soul of our long-term care delivery system. Often working under conditions of tremendous stress, they provide the majority of care and services received by our frail and elderly citizens. Without the support of these unpaid individuals many more care recipients would be forced into Medicaid funded nursing homes at an enormous added cost to taxpayers. There is little doubt that Pennsylvania’s caregivers are deserving of all the support the state can provide.

Pennsylvania has finally updated a long running program that provides some financial support, services and training for those who are giving care to another individual. Since 1990, the Pennsylvania’s Family Caregiver Support Program has worked to keep care recipients at home.

When it began in 1990, Pennsylvania’s program was a model for the rest of the nation. But limitations in the program constrained its usefulness and resulted in allocated funding going unspent. Support was available only to caregivers who were related to and living with the care recipient. And the initial financial reimbursement limits of $200 per month for out of pocket expenses (e.g. adult diapers) and $2,000 for one-time home modifications (e.g. ramps) were never increased during the over two decades of the program’s operation.

Act 112 of 2011 signed into law on December 22, 2011, expands Pennsylvania’s two decades old Family Caregiver Support Program. It amends the law that is codified at 62 P.S. Sections 3061-3068, with implementing regulations located in Title 6 of the Pennsylvania Code at Chapter 20. The new law will be effective date in 60 days. It will probably take a while for the regulations to be updated by the Department of Aging.

Here are some highlights of program changes specified by Act 112:

The word “Family” is replaced with “Pennsylvania” in the name of the Act because individuals who are primary caregivers but who are not relatives of the care receiver will now be able to participate. The new name is the “Pennsylvania Caregiver Support Act.”

Definitions are added for the terms “adult with chronic dementia” and “care receiver."

Adult with chronic dementia" is defined as “A person 18 years of age or older residing within this Commonwealth who has an irreversible global loss of cognitive function causing evident intellectual impairment which always includes memory loss, without alteration of state of consciousness as diagnosed by a physician and is severe enough to interfere with work or social activities, or both, and to require continuous care or supervision.”
"Care receiver" is defined as “A functionally dependent older adult or other adult with chronic dementia who is being cared for by a primary caregiver.”

The term “primary caregiver” is redefined to delete the requirements that the caregiver be a relative of and reside in the same household as the care receiver. A primary caregiver is the “one identified adult family member or other individual who has assumed the primary responsibility for the provision of care needed to maintain the physical or mental health of a care receiver and who does not receive financial compensation for the care provided.”

Section 4 of the Act describes the primary persons to be served as “unpaid, primary caregivers who provide continuous care to a care receiver.” The Department of Aging is directed to give priority in awarding assistance paid by Lottery funds to primary caregivers who are caring for an adult 60 years or older with chronic dementia, such as Alzheimer’s disease.

Section 5 of Act makes only modest modifications to the level of reimbursement available to caregivers. Eligibility is only available if the care receiver’s household has limited income. Two levels of income eligibility are established: (1) 200% of poverty and (2) 380% of poverty.

(1) In general, the maximum amount available to a qualified primary caregiver whose care receivers' household income is under 200% of the Federal Poverty Guideline (FPG) cannot exceed $200 per month for out-of-pocket expenses incurred for services including respite services and consumable supplies like incontinence pads. This is the same amount first established in 1990. However, Act 112 does provide for a limited exception: In individual cases of demonstrated need the maximum amount can be increased up to $500 per month. The need must be specifically documented in the care plan and reimbursement is limited to $200 if the Area Agency on Aging’s average monthly reimbursement exceeds $300 across its entire caregiver support program caseload. The maximum amount available for home modifications remains at the 1990 level of $2,000. (Note that 200% of the 2011-2012 FPG is $1,815 a month for a 1 person household and $2,452 a month for a 2 person household).

(2) Where the care receivers household income is greater than 200% of the FPG but under 380% the primary caregiver must pay some portion of the out of pocket expenses covered by the act, based on a sliding scale established by the Department of Aging. If the care receiver’s household income is above 380% of the FPG no benefits can be paid under the act.

The Act’s removal of the caregiver support program’s familial and residency restrictions are important and legislators and advocates who have been working toward that goal for years are to be congratulated. However, the failure of the Legislature to approve additional increases in the 21 year old reimbursement levels is disappointing. An earlier version of the legislation that would have increased the reimbursement and home modification ceilings more substantially was unanimously approved by the House, but reduced in the Senate back to near the 1990 amounts.

For some caregivers a little more reimbursement could make the difference in avoiding institutional placement of the care receiver. Pennsylvania recently scored 46th in the nation in support of caregivers. The meager and constrained increases in Act 112 are unlikely to make for much of a change in that embarrassing ranking.

Medicaid Home Equity Disqualification Threshold increases to $525,000

2011-12-13T09:42:00.000-05:00

Medicaidlong term care benefits are a primary source of payment of the cost of care formany seniors who reside in nursing homes. It also pays for frail seniors to beable to remain in their homes under programs like Pennsylvania’s Aging Waiver and Life programs.

Formany of these recipients of Medicaid long term care benefits it is crucial thatthe equity they own in their homes is exempted in determining their eligiblity.Prior to the enactment of the Deficit Reduction Act of 2005 (DRA), Medicaid disregarded thefull value of an Medicaid long term care applicant’s primary home as long asthe home owner was residing there or evidenced an intent to return to the home.

Section6014 of the DRA made a fundamental change in this treatment. This provision (whichis codified at 42 U.S.C. 1396p(f)) specifies that some individuals withsubstantial home equity are disqualified for Medicaid long-term care assistance.The idea was to force individuals with substantial equity in their homes to tapinto that equity to pay for their care before applying for Medicaid long termcare benefits.

The DRAinitially set an equity interest of $500,000 as the threshold fordisqualification. States were given the option to increase this level to$750,000 but Pennsylvania declined to do so. The law also specified that beginningin 2011 the threshold would be adjusted for inflation based on the percentageincrease in the consumer price index -Urban (CPIU).

As aresult, effective January 1, 2012 the disqualification standard is increasing from$506,000 to $525,000. This means that in 2012 Medicaid will not pay forlong-term care services for some individuals whose equity interest in theirhome exceeds $525,000. This provisionapplies to both institutional care and Waiver programs.

However, there aresignificant exceptions to the application of the home equity disqualificationrule. The $525,000 limitation will not apply if the applicant has a spouse, achild under age 21, or a child who is blind or disabled, any of whom lawfullyreside in the home. The limitation is also to be waived in the case of ademonstrated hardship. (See 42 U.S.C. 1396p(f)(4). InPennsylvania see also 55 Pa.Code § 178.62a).

The home thus remainsconditionally excluded as a resource regardless of the value of the equityinterest of the applicant for Medicaid long term care if either one ofthe following conditions is met:

1. Theapplicant/recipient has less than a $525,000 “equity interest” in the home.

Indetermining the value of home equity, States should follow the basic policiesof the Supplemental Security Income (SSI) program. The equity value of aresource is the current market value minus any encumbrance on it. Currentmarket value is the going price of the home, or the amount for which it canreasonably be expected to sell on the open market in the particular geographicarea involved. An encumbrance is a legally binding debt against the resource.This can be a mortgage, reverse mortgage, home equity loan, or other debt thatis secured by the home. States should follow their existing policies todetermine current market value. States should also apply their usualverification procedures if an encumbrance is alleged.

If thehome is held in any form of shared ownership, e.g., joint tenancy, tenancy incommon, or other arrangement, only the fractional interest of the applicant formedical assistance for nursing facility or other long-term care services shouldbe considered. For example, if the home is owned in joint tenancy by anapplicant and a sibling, one-half of the home’s current market value should beused in calculating the equity value of the individual, unless the individualcan rebut the presumption that he or she has equal ownership interest in theproperty. See CMS State Medicaid Director Letter datedJuly 27, 2006, Enclosure to Section 6014, Section II.

A nursing home applicantwith home equity under $525,000 and who has no qualified relative residing inthe home must state his or her intention to return to the residence for theproperty to be excluded. If the applicant does not intend to return to theresidence, it will be excluded for six months while the applicant makes a goodfaith effort to sell it. (See 55 Pa.Code 178.51(a)) Proceeds from the sale of an excludedresidence are also excluded if the applicant intends to purchase anotherexcluded residence within three months. (See 55 Pa.Code 178.77).

2. The applicant/recipient’s spouse or child who is under age21 or is blind or permanently and totally disabled is residing in theindividual’s home.

Readers should notethat the home equity limitation described in this article does not change thegeneral rule that excludes a home of any value for purposes of determiningeligibility for Medicaid. The limitation applies only to Medicaid payment for nursingfacility services, or other long-term care services.

The $525,000 cap maycreate an eligibility problem for unmarried individuals, and for marriedcouples where neither is able to reside at the premises. Because they tend tolive longer, the rule disproportionately impacts widows and other older women.

For furtherinformation see: “CMS State Medicaid Director Letter datedJuly 27, 2006, Enclosure to Section 6014, Section II” which isavailable on the Marshall, Parker and Associates website, www.paelderlaw.com,at http://www.paelderlaw.com/pdf/cms_transfer_of_assets.pdf.

Why Single People should do Estate Planning

2011-12-06T06:52:00.001-05:00

Ifyou are unmarried and don’t have children you may think that “estate planning”is unimportant to you. Many singles believe that estate planning is only aconcern for married couples or people with children or people who are verywealthy. But this is not true. Single people of modest means can benefit fromforethought and preparation for the future – a future that someday may involvetheir incapacity and will certainly include their death.

Mostpeople think that estate planning only involves signing a will and taking othersteps to ensure that upon your death the things that you own pass to the rightpeople, in the right manner, at the right time. But it’s much more than justplanning for death.

Estateplanning also involves planning for possible future incapacity though the useof tools like powers of attorney and health care directives. These legal documentswill help you retain control over your affairs in the event of your temporaryor permanent incapacity so that the decisions that will be made for you will bethe ones you want made, and the person making the decisions will be the personyou choose.

Althoughyou may not be aware of it, you already have an estate plan - because thegovernment has prepared one for you. The government plan is your default – itgoverns what happens if you don’t take the time to plan for yourself. Here iswhat the government plan does:

It says who is authorizedto make health care decisions for you if you get sick and can’t make your own.It also specifies the kinds of decisions this “representative” can make on yourbehalf. The authority granted underPennsylvania law (Act 169 of 2006)is very broad. If you don’t want thatfamily member who never liked you to have the authority to “pull your plug’ youshould probably take the time to create a Health Care Powerof Attorney.
The Government plansays that a court will decide who will be given authority to handle yourfinancial affairs if you are no longer able to manage on your own. A Judge willdecide, based on limited facts, perhaps after a court hearing that lasts only a few minutes, to turnall your finances over to someone. If you don’t want to leave your financialfate to a Judge and appointed guardian, you should take the time to create a financialpower of attorney. Your financial power of attorney document will authorize theperson you choose to step in for you and it will state the amount of authoritythey will have, and won’t have.

Your Government plansays who will be in charge of distributing your money, property, and personalbelongings when you die. It also sets up a default list of people who will getyour stuff. If you are unmarried and have no children, this can get verycomplicated and confusing, and people who you didn’t like (and perhaps didn’teven know) can wind up with your money, property, and special personal items. Ifthis doesn’t sound good to you, you need to take the time to create your ownWill.

Ifyou are single, you can stick with your government estate plan or you can optout of it and create your own. But, unless you can figure out how to liveforever and in good health, your estate plan is likely to someday become veryimportant.

Thisblog and the Marshall, Parker andAssociates website have a number of articles that can get you started onthe job of preparing your own financialpower of attorney and health caredirective. Of course, these documents are too important to your future to be "do it yourself." See a experienced elder law and estate planning lawyer to make sure you get things right.

New Spousal Impoverishment and Aging Waiver Standards for 2012

2011-12-01T06:40:00.001-05:00

The Centers for Medicare and MedicaidServices (CMS) has announced the new standard maximum spousal protectedresource level for Medicaid Long Term Care benefits effective January 1, 2012.

Community SpouseAllowance

In general, when yourspouse is in a nursing home, or needs home care under Pennsylvania’s AgingWaiver or LIFE programs, he or she will not qualify for Medical Assistance(Medicaid) benefits until your savings are reduced to a certain level. That permitted level of so-called "available resources" varies witheach situation. For nursing facility residents, Pennsylvania’s generalrule is that the community spouse can keep ½ of the amount of availableresources that were owned by the couple on the date of admission to the nursingfacility. However, this protected "Community Spouse ResourceAllowance" is subject to a ceiling and a floor as noted below.

In addition to beingallowed to keep the resource allowance, the community spouse is also entitledto have a certain level of income called the Minimum Monthly Maintenance NeedsAllowance. The income allowance is also subject to a ceiling and a floor. If the community spouse does not have the required level of income, the spousemay be allowed to keep some of the institutional spouse's income. If theincome diverted from the institutionalized spouse is still insufficient, thecommunity spouse may be able to keep additional resources.

Note that manycommunity spouses protect additional resources through the purchase of a DRAcompliant annuity (see my post “MedicaidAnnuities protect your assets if your husband or wife needs a nursing home”). The state typically does not object to thepurchase of a properly structured DRA compliant annuity. You should seek thehelp of an experiencedelder law attorney to learn more about using DRA annuities to protect your incomeand savings from your spouse’s nursing home costs.

These communityspouse resource and income allowances are adjusted annually. EffectiveJanuary 1, 2012, the new base standards will be as follows:

- Minimum Community Spouse ResourceAllowance - $22,728.

- Maximum Community Spouse ResourceAllowance -$113,640.

- Maximum Community Spouse Monthly IncomeAllowance - $2,841.

Note: The MinimumMonthly Income Allowance is currently $1,838.75 - it will be adjusted on July1, 2012.

Federal Benefit Rate

The Social SecurityAdministration has announced the SSI Federal Benefit Rate Standards for 2012 asfollows:

- Individual - $698.00 per month

- Couple - $1,048.00 per month

PDA Aging WaiverProgram

The Federal Benefitrate is used to determine qualification for many Medicaid public benefit programsincluding the Department of Aging Home Waiver and the LIFE programs. The incomelimit for the Aging Waiver and LIFE programs is equal to 300% of the SSIFederal Benefit rate for an individual. This means that effective January 1,2012 the new income ceiling should be $2094 per month.

Under Pennsylvaniarules, individuals with income above this amount generally cannot qualify forthe Aging Waiver program.

New law will limit future Medicaid eligibility for seniors on Social Security

2011-11-26T14:39:00.001-05:00

A little known provision in a law signed last week changes a method of calculating eligibility for Medicaid that would eventually havebenefited middle-income seniors on Social Security. It will reduce the future ability of many seniorsto qualify for Medicaid based health care benefits.

On November 21, 2011, H.R. 674, whichincludes the “3%Withholding Repeal and Job Creation Act,” was signed into law by PresidentObama. Unusual for this Congress, the Act was enacted with strong bi-partisansupport.

The main feature of the Withholding Repeal Act was the repealof a tax policy set to take effect on January 1, 2013. That policy would haverequired federal and state government agencies to withhold 3% of their paymentsto contractors for many products and services. For example, 3% of the amountdue from Medicare to a nursing home for providing Medicare covered services toa resident would have been withheld. Amounts withheld would have been creditedagainst the income taxes ultimately due from the nursing home, but one caneasily imagine that cash flow and other problems would be created for thecontractor.

Healthcare provider groups lobbied hard for repeal of 3% withholding.The American Medical Association argued that the 3% withholding was anadditional burden on physicians who treat Medicare beneficiaries. The AmericanHealth Care Association described repeal as a victory for both providers andnursing facility residents. To help ensure passage the repeal measure was bundledin H.R. 674 with a very popular measure that provides tax credits for companiesthat hire unemployed veterans.

The withholding requirement had been intended to improve taxcompliance by some government contractors. The estimated cost of its repeal is $11.2billion over the 2012-2021 period. The question for Congress was how to pay forthe repeal without increasing the deficit. Democrats originally proposedfunding the repeal by reducing corporate tax breaks for the US oil and gasindustry, but this was rejected by the Republican-controlled House. Eventually,the House funding provision was adopted – it involves doing away with aperceived “glitch” in the Affordable Care Act (ACA) that would have allowed somemiddle-class couples to enroll in Medicaid starting in 2014.

Under the ACA, non-taxable Social Security income was not tobe included in the calculation of income for purposes of determining Medicaideligibility. This meant that a couple with income (including non-taxable SocialSecurity) as high as $60,000 per year could have become dually eligible forboth Medicare and Medicaid. Now, under the Withholding Repeal Act, non-taxable SocialSecurity benefits will be included as income when calculating income forpurposes of determining Medicaid eligibility.

Since the ACA provision for exempting non-taxable Social Security income for purposes of Medicaid had not yet taken effect, the change in methodology has received little notice. Easy come, easy go, I guess.