Thursday, October 18, 2012

New Medicaid Spousal Impoverishment & Aging Waiver Qualification Figures for 2013

On October 16th, the Social Security Administration released its cost-of-living adjustment (COLA) for 2013. And the U.S. Department of Labor Bureau of Labor Statistics has recently released the consumer price index figures for September. These important numbers will impact tens of millions of seniors in 2013.

Increase in Social Security and SSI benefit payments

Monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 62 million Americans will increase 1.7 percent in 2013. The 1.7 percent COLA will begin for more than 56 million Social Security beneficiaries with payments they receive in January 2013.  Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2012.

The Social Security Administration also released the SSI Federal PaymentStandards (Federal Benefit Rate) for 2013 as follows:

  • Individual: $710/mo. (an increase from $698/mo. in 2012)

  • Couple: $1,066/mo. (an increase from $1,048/mo. in 2012)

Increase in Aging Waiver Program Income Limit

The Federal Benefit Rate (FBR) is used to determine qualification for many Medicaid funded benefit programs including the Pennsylvania Department of Aging (PDA) Aging Waiver program. The income limit for this home Waiver program is equal to 300% of the SSI Federal Benefit rate for an individual. 

This means that effective January 1, 2013 the new income ceiling should be:

  • $2,130 per month = Aging Waiver Program Income Limit for 2013

The Aging Waiver program is a vital support that can allow frail seniors to live in their homes rather than an institution. But it is difficult for individuals with income above this 300% FBR limit to qualify. However, it is possible in some cases. If you are above the income limit but would like to qualify for home Waiver services,  discuss the qualification rules with an experienced elder law attorney. 

New Protected Resource and Maximum Income Levels for the Community Spouse

The Federal Government has also published the consumer price index for all urban consumers, all items, U.S. city average (the CPI-U) for the month of September 2012. Using these figures it is possible to project some 2013 numbers that are critical to planning for married couples where one spouse is seeking Medicaid funded long term care benefits. 

In general, when your spouse is in a nursing home or needs home care under the Aging Waiver program, he or she will not qualify for Medicaid benefits until your combined savings are reduced to a certain level.  That permitted level of so-called "available resources" varies with each situation.  For nursing facility residents, the general rule is that the community spouse can keep ½ of the amount of available resources that were owned by the couple on the date of admission to the nursing facility.  However, this standard protected "Community Spouse Resource Allowance" is subject to a ceiling and a floor. 

In addition to being allowed to keep the resource allowance, the community spouse is also entitled to have a certain level of income called the Monthly Maintenance Needs Allowance. 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 spouse may be allowed to keep some of the institutional spouse's income.  If the income diverted from the institutionalized spouse is still insufficient, the community spouse may be able to keep additional resources.

These community spouse resource and income allowances are adjusted annually.  Although the new figures have not yet been announced by the Centers for Medicare and Medicaid Services, by law they are based on the consumer price index for all urban consumers published by the Bureau of Labor Statistics (the CPI-U) for September of the prior year. 

Thus, I can project that effective January 1, 2013, the new standard community spouse allowances should be as follows:
·       Minimum Community Spouse Resource Allowance = $23,184.
·       Maximum Community Spouse Resource Allowance = $115,920.
·       Maximum Community Spouse Monthly Income Allowance = $2,898.

Note: The current Minimum Monthly Income Allowance remains at $1,891.25 - it will be adjusted on July 1, 2013.

Readers should also note that a Community Spouse can often protect resources in excess of the above amounts through a number of planning techniques including the purchase of a Medicaid Annuity. (Be sure to consult an experienced elder law attorney before purchasing a Medicaid Annuity.)

Probably more than you want to know

Those readers who want to dig deeper into how the community spouse figures are determined can check the federal law at 42 U.S.C. § 1396r-5(f)(2)).  That statute established the initial community spouse resource allowance at levels of $12,000 minimum and $60,000 maximum for 1989 based on the CPI-U for September 1988.  It provided that these levels be increased by the same percentage as the percentage increase in the CPI-U between September 1988 and the September before the calendar year involved.

The CPI-U for September 1988 was 119.8The CPI-U for September 2012 was 231.407. This means that the CPI-U has increased 93.1611% over the period. I’ve rounded this percentage to 93.2%. 

As a result, the new community spouse figures for 2013 should be:

  • $12,000 + $11,184 = $23,184 - Minimum Resource Allowance for 2013

  • $60,000 + $55,920 = $115,920 – Maximum Standard Resource Allowance for 2013

The statute also established an initial maximum monthly maintenance needs allowance of $1,500 a month. (See 42 U.S.C. § 1396r-5(d)(3)(C)). This figure is increase in the same manner, as follows:

  • $1,500 + $1,398 = $2,898 – Maximum Monthly Maintenance Needs Allowance for 2013

The figures ultimately announced by the Centers for Medicare and Medicaid Services could be a little different than those above due to rounding. But the above projections should be pretty close, if not spot on. 

Thanks to my friend, fellow Elder Law Attorney Robert Clofine of York, Pennsylvania, for being the first to make note of these updated figures. 

Further Reading:
The Medicaid Long Term Care Eligibility Fact Sheet, Marshall, Parker and Associates.
Pennsylvania Care Management (provides Medicaid Annuities in Pennsylvania).
Historical CPI-U figures can be found online at

Monday, October 15, 2012

Your Family Estate Plan - National Estate Planning Awareness Week

Did you know that this week (October 15 – 21) is National Estate Planning Awareness Week.  Okay, I agree – we do already have too many “days” or “weeks” or “months” devoted to promoting good causes. But as an Estate Planning and Elder Law attorney I’ll admit to being particularly partial to this one. That’s because I have often seen how poorly things can go for families who don’t plan in advance.   

Estate Planning is about shaping the future – for yourself and for those you care about. It’s about protecting yourself and the people you love. It’s too important to procrastinate. 

Your estate plan says who gets what after you are gone. But a well prepared plan does so much more. It also allows you to take care of yourself by appointing the right people to handle your affairs and make decisions for you if you become disabled.  And it protects your spouse or partner, children and other beneficiaries from loss due to their incapacity, immaturity, creditors, family disputes and designing persons.  A smart plan will reduce costs like taxes and administrative expenses, and help things go as smoothly as possible.  

Estate planning uses tools like powers of attorney, health care directives, trusts, wills, beneficiary forms, and tax and long term care planning to increase our control over the uncertainties that face all of us. It does require that we face up to our mortality, and that means it can take some backbone to get started. Ultimately, most people feel a sense of relief and satisfaction when their planning is completed. We can’t control our future, but we can plan for it. And that feels pretty good.  

So, this week is a great time to get started on preparing or updating your estate plan for your family. 

Here is a copy of the Congressional Resolution creating National Estate Planning Awareness Week:

H. Res. 1499
In the House of Representatives, U. S.,
September 27, 2008.

Whereas it is estimated that over 120,000,000 Americans do not have up-to-date estate plans to protect themselves or their families in the event of sickness, accidents, or untimely death;

Whereas a 2004 Roper poll commissioned by the American Institute for Certified Public Accountants found that two-thirds of Americans over age 65 believe they lack the knowledge necessary to adequately plan for retirement, and nearly one half of all Americans are unfamiliar with basic retirement tools, such as a 401(k) plan;

Whereas careful estate planning can greatly assist Americans in preserving assets built over a lifetime for the benefit of family, heirs, or charities;

Whereas estate planning involves many considerations, including safekeeping of important documents, documentation of assets, operation of law in the various States, preparation of legal instruments, insurance, availability of trust arrangements, charitable giving, inter vivos care of the benefactor, and other important factors;

Whereas estate planning encourages timely decisions about the method of holding title to certain assets, the designation of beneficiaries, and the possible transfer of assets during the life of the benefactor;

Whereas many Americans are unaware that lack of estate planning and ‘financial illiteracy’ may cause their assets to be disposed of to unintended parties by default through the complex process of probate;
Whereas alternatives to disposition of assets after death, such as planned gift-giving, may accomplish a benefactor’s goal of providing for his or her family and favorite charities;

Whereas careful planning can prevent family members or other beneficiaries from being subjected to complex legal and administrative processes requiring significant expenditure of time, and greatly reduce confusion or even animosity among family members or other heirs upon the death of a loved one;

Whereas important considerations as to donation of organs and use of life support functions may be made through the estate planning process;

Whereas the implementation of an estate plan starts with sound education and planning, and then may require the proper drafting and execution of appropriate legal documents, including wills, trusts, and durable powers of attorney for health care;

Whereas the third week of October should be designated as ‘National Estate Planning Awareness Week’; and

Whereas the National Association of Estate Planners and Councils, representing over 28,000 estate planning professionals, together with the Universal Press Syndicate, the largest independent newspaper syndicate in the world, are prepared to provide such educational information to the public in a focused manner during National Estate Planning Awareness Week: Now, therefore be it

Resolved, That the House of Representatives--

(1) encourages the distribution of estate planning information by professionals to all Americans; and

(2) supports the designation of a ‘National Estate Planning Awareness Week’.

Saturday, October 13, 2012

Feds Approve Pennsylvania’s State Plan on Aging for 2012-2016

The Pennsylvania Department of Aging has announced that the U.S. Administration on Aging has approved Pennsylvania’s 2012-2016 State Plan on Aging.

At least every four years, the Administration on Aging requires that Pennsylvania submit a new State Plan on Aging which outlines the State’s goals and objectives. In preparing its plan for the next four years, the Department of Aging held public hearings and solicited written comments to obtain public input. The State Plan is required for Pennsylvania to receive federal funds under the
Older Americans Act (OAA).

Signed into law along with Medicare and Medicaid by President Lyndon B. Johnson in 1965, the OAA provides funds to States to support programs and services specifically focused on helping older individuals remain healthy, independent and safe. Perhaps best known are the "Meals on Wheels" and "Senior Center" programs, but the support is much broader. The OAA must be periodically reauthorized. Comprehensive
legislation was introduced on September 19, 2012 in the United States Senate to reauthorize and expand the OAA.

According to Brian Duke, Pennsylvania Secretary of Aging, the Pennsylvania State Plan clearly sets out the Department’s strategic direction as it attempts to meet the challenges and pursue the opportunities before us.

A copy of the plan can be accessed by going to:

For More Information on the Older Americans Act:

National Council on Aging: Older Americans Act

Senators Introduce Older Americans Act Reauthorization


Wednesday, October 3, 2012

Federal Appeals Court decision and HHS support Community Spouse Medicaid Annuities

The United States Circuit Court of Appeals for the Second Circuit has joined the Third Circuit, Ninth Circuit and Tenth Circuit Courts in upholding the right of the spouse of a nursing home resident to purchase a Medicaid annuity to protect her financial security.

In 2008 John Lopes entered a skilled nursing facility in Connecticut. At that time he and his wife, Amelia, had too much in assets for him to qualify for Medicaid to help pay the bills. More than a year later, in February 2010, after consulting an elder law attorney, Amelia spent down the excess resources that were preventing John from qualifying for Medicaid. She purchased a Medicaid compliant immediate annuity for $166,200.50. The annuity provided Amelia with fixed monthly payments of $2,340.83 for six years. The annuity including a provision that it could not be cashed-in, sold, assigned or otherwise transferred.

The purchase of the annuity reduced the couples' combined resources to the point where John could qualify for Medicaid long term care benefits. 

But John's application for Medicaid was denied by the State of Connecticut Department of Social Services.  The State said that the couple still had too many resources. In the State Medicaid Department's opinion Amelia could sell her right to monthly payments, and so it was a disqualifying resource. A third party, Peachtree Financial, had offered to buy Amelia's monthly payments for $99,000. 

Amelia and John's lawyer countered that the annuity payments were income to Amelia (which doesn't impact John's eligibility for benefits) and not a resource. Under Medicaid law, in making eligibility determinations a married couple's resources are combined and must be spent down if over applicable limits, but the spouse at home can keep all of his or her income.

Amelia's lawyer filed suit asking the federal court to order the Connecticut to grant Medicaid to John. 

The Federal District Court held in favor of John and Amelia. The State appealed this decision to the Federal Second Circuit Court of Appeals. On October 2, 2012, the Appeals Court issued its decision. It agreed with the lower court and with other appeals courts that had considered this issue. The Court held that under federal law, which the State of Connecticut is bound to follow, the annuity payments are income. The State cannot treat the payment stream from a non-assignable annuity as a countable resource for purposes of determining Medicaid eligibility. And John has been therefore eligible for Medicaid since the date he applied for it. Lopes v. Starkowski (USCA Second Circuit, October 2, 2012). 

While the Court in Lopes follows the reasoning of most other courts that have considered this issue, the decision has a unique aspect. The Court requested that the US Department of Health and Human Services (HHS) provide its views on (1) whether the income stream from the annuity should be treated as income or as a resource, and (2) the policy implications of resolving the case in favor of Mr. and Mrs. Lopes. 

The HHS view was that the Lopes and the lower court were correct.  It was appropriate to treat Amelia's entitlement to fixed immediate annuity payments as income not as a resource. As to public policy, HHS argued that "this interpretation coheres with the policy goals of Medicaid - in particular, protecting community spouses from impoverishment by permitting them to retain some of their assets, while recognizing that couples must apply a fair share of their combined resources toward the cost of care before receiving benefits."

Bottom line: The Lopes Court quotes with approval the words of the Ninth Circuit Court of Appeals in a similar case: "[T]he Medicaid statute allows the community spouse to purchase an annuity . . . allowing the spouse to convert his or her assets, which are considered in determining the institutionalized spouse's eligibility, to income, which is not considered."

The Lopes Court also quotes from the decision of the Third Circuit Court of Appeals in a Pennsylvania case, James v. Richman. I'm proud to say that the James case was brought by my law firm, Marshall, Parker and Associates on behalf of one of its clients. The James case really opened the door to the use of immediate annuities to protect the financial security of community spouses throughout the United States. 

Any married couple that could benefit from Medicaid assistance in paying for nursing home care should consider how a Medicaid annuity can help them. But please note that families should get expert help from an experienced elder law attorney before purchasing an annuity for Medicaid purposes. There are potential transfer penalties and other traps that can arise if you try to do this without expert guidance.  

Married couples who reside in Pennsylvania can get additional information how to use a DRA annuity and other options to protect their assets from the law firm of Marshall, Parker and Associates which can be reached at 1-800-401-4552.  Pennsylvania lawyers who are interesting in protecting their clients through purchase of a Medicaid annuity can contact Pennsylvania Care Management, at 570-326-1890 which offers the specialized type of annuity that is required.

Residents of other states may wish to seek the advice of a Certified Elder Law Attorney located in their state – a national list is available at

For More Reading:   

Another Appeals Court Upholds Medicaid Annuity Protections

Medicaid Annuities protect your assets if your husband or wife needs a nursing home

How to Use Community Spouse Annuities (video) 

How a Medicaid Qualifying Annuity Can Protect Your Savings if Your Spouse Enters a Nursing Home


Tuesday, October 2, 2012

Bill to Revise Power of Attorney Laws passes PA Senate

Senate Bill 1092 which would revise Pennsylvania’s laws governing financial powers of attorney was unanimously passed by the Pennsylvania Senate on October 1st.  The bill still has to be approved by the State House in the limited time remaining in this legislative session before it can be sent to the Governor. 

Among the changes that will result if SB 1092 becomes law:

(1)  Powers of Attorney executed after January 1, 2013 will need to be notarized [Section 5601(B)(3)].

(2)  Both the Notice form [Section 5601(C)] signed by the principal (maker) of the power of attorney and the Acknowledgment form [Section 5601(D)] signed by the agent are changed.

(3)  The law will more clearly allow a principal to authorize the agent to make gifts in order to minimize taxes, qualify the principal for a benefit program, or continue a gifting program established by the principal [Section 5603(A.1)(2)].  

(4)  The law will improve the protection of third parties (such as Banks) who are called upon to accept a power of attorney [Section 5608]. Third parties will also be able to ask the agent to certify the continuance of the power of attorney and ask for an opinion of counsel as to whether the agent is acting within the scope of their authority [Section 5608(E)].

(5)  The legislation will modify the law regarding the liability of third parties who refuse to accept an acknowledged power of attorney [Section 5608.1]. It is intended to fix the problems created by the Pennsylvania Supreme Court decision in Vine v. SERS Board.

It is not clear at this point in time (October 2, 2012) whether the House has the time remaining this year to consider and pass SB 1092. But, even if the legislation is not approved during this session, something similar is likely to be on a fast track towards enactment in 2013.