Tuesday, January 31, 2017

Merger of Pennsylvania Human Service Agencies Proposed by Governor

Governor Tom Wolf is proposing that four Pennsylvania agencies be consolidated into a new Department of Health and Human Services (HHS). The merger would involve the current Departments of Aging (PDA), Drug and Alcohol Programs (DDAP), Health (DOH), and Human Services (DHS).
According to a press release issued by the Governor’s office:
Seniors will also have a single agency as their point of contact within state government to receive health and human services. Instead of receiving prescription assistance from PACE through PDA, applying for an aging waiver through DHS while seeking home and community-based services from PDA, finding where to dispose of unwanted or expired prescription drugs through DDAP, or searching for information on the quality of nursing homes through DOH, seniors would find the services they need through the Department of Health and Human Services. Furthermore, the creation of this department will have no impact on how lottery fund monies are used to support senior programs…
The Wolf Administration is dedicated to continuing to provide the same quality services for seniors and individuals with disabilities and will dramatically improve the delivery of services like health screenings, programs to allow individuals to remain in their homes and communities, adult protective services, and home health care and housing supports, though [sic] the creation of this new department.
According to pennlive.com, Administration spokesperson Sarah Galbally told reporters that staffing cuts will be minimal. "It's not about service cuts," she said. Rather, she said the goal is to make agencies deliver service in a consumer-friendly way and "as much of a one-stop shop as possible for residents." While there is no concrete timetable, it is hoped that the consolidation would be completed in the 2017-18 year. The Pittsburgh Post-Gazette reports that the administration wants to have legislation creating the new department passed by the end of June.
The consolidation proposal seems to be receiving a relatively positive bi-partisan initial response from both legislators and advocates. Personally, I fear we may face a period of confusion and disarray while the state works to merge highly disparate systems and personnel. But the current patchwork of agencies and programs is certainly discombobulated. In the long run consumers may be better served by one agency and the state may save some money.
The merger will require legislative approvals. More details should emerge during upcoming Senate and House Budget hearings.

Friday, January 20, 2017

Why Didn't my Medigap Policy pay for Physical Therapy?

[The following article was written by Matthew J. Parker of Marshall, Parker and Weber]
A client recently asked me why his Medigap Policy Plan F did not cover physical therapy received in a nursing home after a slip and fall. Medigap policies are intended to cover the co-pays and deductibles associated with traditional Medicare A and B. 
The Medigap Plan F is one of the more comprehensive Medigap Plans you can purchase. It not only covers the traditional co-pays and deductibles associated with hospital stays and doctor’s visits, but also the co-pay associated with Medicare related nursing home stays that last more than 20 days – currently $164.50 per day.
Turns out he had a high deductible Plan F policy. This type of Medigap policy requires the insured to spend an out of pocket maximum expense of $2,200 (in 2017) before the policy pays anything. So he had to use his own funds to pay for his wife’s stay at the nursing home. He was unaware that the reduced premium he was paying for the policy came with the obligation to pay more out of pocket when he needed to use the benefits.
Many of my clients have no idea what their Medigap policy will cover. The policies are typically purchased within 6 months of acquiring Medicare Part B when they can be acquired without regard to an applicant’s health. 
Medigap Plans are standardized in most states (Visit www.medicare.gov to compare the alphabet soup of plans). The initial purchase decision for a Medigap Plan may be based on the premium. Lower premium plans such as Plans K and L cover only a percentage of the co-pays and deductibles associated with Medicare Part A and B and have an out of pocket maximum that must be met before coverage starts. That can be a shock to the insured when significant costs are incurred years after the policy is purchased.
Carefully choose your Medigap plan at the time you acquire Medicare Part B.  Anticipate the coverage you may need years after acquiring the insurance. The plans are guaranteed renewable. However, if you want to drop your plan after the 6 month grace period, you will likely need to be underwritten for a new Medigap plan. Given your age and health conditions, you may not be insurable

Thursday, January 19, 2017

What is the Medicaid Transfer Penalty Divisor in Pennsylvania for 2017?

For many Pennsylvania families qualification for Medicaid long-term care benefits is critical to meeting the cost of care for a frail family member. But, an applicant for this government assistance may be made ineligible for benefits if he or she has disposed of assets for less than fair market value during a five year look-back period. 
Imposition of a transfer penalty denies benefits for individuals who otherwise need and qualify for Medicaid long term care benefits. A denial can also effectively make an individual’s children liable for the costs of the needed care. See: Law Can Require Children to Pay Support for Aging Parents.
The transfer penalty applies when a transfer was made by the individual applying for Medicaid long-term care benefits, or their spouse, or someone else acting on their behalf.
Unless the transfer is for some reason exempt, if an asset was transferred for less than fair consideration within the look-back period, then a period of ineligibility is imposed based on the uncompensated value of that transfer.
New Penalty Divisor for 2017
The length of the penalty period is calculated by taking the uncompensated value of the asset transfer and dividing it by the average private patient cost of nursing facility care in Pennsylvania at the time of application for benefits. The average cost to a private patient of nursing facility care is often referred to as the “private pay rate” or the “penalty divisor.”
The penalty divisor is revised each year as nursing facility care costs increase. As of January 1, 2017, the penalty divisor is set at $321.95 per day. This means that the PA Department of Human Services has calculated that the average monthly nursing facility private pay rate in Pennsylvania is $9,792.65 a month. [The penalty divisor is different in states other than Pennsylvania].
Uncompensated transfers made during the look-back period will be calculated at one day of ineligibility for every $321.95 transferred away. In Pennsylvania, a transfer penalty will be imposed when the value of transfers made in a month exceeds $500.   

The rules are complicated. Seniors considering making gifts or other transfers of assets are well advised to consult with an experienced elder law attorney before completing the transaction. 

Monday, January 16, 2017

Social Security Full Retirement Age Moves Higher this Year

What is Full Retirement Age?
Why is Full Retirement Age Important?
How is Full Retirement Age Changing in 2017?
Were you born after January 1, 1955? If so, you should be aware that the Social Security Full Retirement Age is increasing starting this year. This impacts your benefits – and not in a good way.
Full retirement age (FRA) is the age at which a worker first becomes entitled to full (unreduced) retirement benefits. 
Workers can claim benefits early, once they reach age 62. But if you claim before your FRA, you receive permanently reduced benefits. On the other hand, if you wait until after your FRA to begin your claim, your benefits will be increased through what are called delayed retirement credits. This means that the longer you wait (up to age 70), the more you will eventually receive each month. The reduction (or increase) in benefits is permanent: it will continue for the remainder of your life.
To understand how this works, see my earlier blog post: Claiming Social Security Retirement Too Early can be a Big Mistake.
For many years the FRA was age 65. However, because people were living longer, Congress wrote gradual increases in the age into the law. For workers born between 1938 through 1943 the FRA increased in two-month increments for each successive birth year. For workers born between 1944 and 1954, the FRA held steady at age 66. But for people born in 1955 and after it increases again in two-month increments each year until it reaches age 67 (for workers born in 1960 or later).
This means that workers who turn 62 in 2022 or later will be subject to an FRA of 67. The chart below illustrates these changes.
The earliest age at which workers may start to receive reduced retirement benefits remains 62; however, benefit reductions at that age will be larger for workers whose FRA is higher. For example, workers born in 1954 (whose FRA is 66) receive a permanent 25 percent reduction in their monthly benefit amount if they claim benefits at age 62 rather than at the FRA. However, workers born in 1960 (whose FRA is 67) will receive a 30 percent benefit reduction if they claim benefits at 62.
In other words, an increase in you FRA reduces your lifetime benefits regardless of the age at which you initially claim benefits. The percentage of the reduction depends on the age at which you choose to claim benefits. To raise your monthly benefit you can delay claiming until a later age, but that means you will receive benefits for fewer years.   
It’s quite possible that the FRA will be increased again for younger workers. One way Congress could improve the long term financial stability of Social Security would be to raise the retirement age to 68. The Congressional Budget Office estimates that a one-year increase in the FRA would shrink federal Social Security outlays by 7 percent by 2046 compared to what would occur under current law. Note that any such additional increase in the FRA would probably only be applied to younger workers, not those close to retirement.

Age To Receive Full Social Security Benefits 
(Called "full retirement age" or "normal retirement age.")
1937 or earlier65
193865 and 2 months
193965 and 4 months
194065 and 6 months
194165 and 8 months
194265 and 10 months
195566 and 2 months
195666 and 4 months
195766 and 6 months
195866 and 8 months
195966 and 10 months
1960 and later67
*If you were born on January 1st of any year you should refer to the previous year. (If you were born on the 1st of the month, we figure your benefit (and your full retirement age) as if your birthday was in the previous month.)

Further Reading

Sunday, January 8, 2017

Nursing Home Residents Gain More Control Of Their Care

Last September I wrote about the Federal Government’s update and reform of its regulation of long-term care facilities. See, “Government Updates Nursing Home Regulations.”
In my prior posting I focused on the controversial sections limiting the use of arbitration agreements in nursing facility admission contracts. That aspect of the new rule is currently in limbo due to a lawsuit brought by the nursing home industry.
But the updated nursing home regulations span a much broader landscape as they attempt to improve the quality of life and care for nursing home residents.
Here is an article published recently by Kaiser Health News that discusses some of the other changes being advanced under the new rule. It is republished here with permission of Kaiser Health News.
By Susan Jaffe January 4, 2017
About 1.4 million residents of nursing homes across the country now can be more involved in their care under the most wide-ranging revision of federal rules for such facilities in 25 years.
The changes reflect a shift toward more “person-centered care,” including requirements for speedy care plans, more flexibility and variety in meals and snacks, greater review of a person’s drug regimen, better security, improved grievance procedures and scrutiny of involuntary discharges.
“With proper implementation and enforcement, this could really transform a resident’s experience of a nursing home,” said Robyn Grant, director of public policy and advocacy for the Consumer Voice, a national group that advocates for residents’ rights.
The federal Medicare and Medicaid programs pay for most of the nation’s nursing home care — roughly $75 billion in 2014 — and in return, facilities must comply with government rules. The new regulations, proposed late last year by Health and Human Services Secretary Sylvia Mathews Burwell, take effect in three phases. The first kicked in in November.
They allow residents and their families “to be much more engaged in the design of their care plan and the design of their discharge plans,” said David Gifford, a senior vice president at the American Health Care Association, which represents nearly 12,000 long-term-care facilities.
Grant goes even farther, saying the new approach puts “the consumer in the driver’s seat.” Until now, she noted, a person’s care has too often been decided only by the nursing home staff. “And if the resident is lucky, he or she is informed about what that care will entail, what will specifically be done and who will do it.”
HHS reviewed nearly 10,000 comments on its draft proposal before finalizing changes. One controversial measure in the department’s final rule would prohibit nursing homes from requiring residents to agree in advance to have any disputes settled through a privately run arbitration process instead of the court system. The industry association objected, claiming that Medicare officials have authority only to regulate matters related to residents’ health and safety and that an individual’s rights to use arbitration cannot be restricted. The ban is on hold until the association’s lawsuit, to force the government to drop the provision, is decided.
Here are highlights of the requirements now in effect:
Making the nursing home feel more like home: The regulations say that residents are entitled to “alternative meals and snacks … at non-traditional times or outside of scheduled meal times.” Residents can also choose their roommates, which may lead to siblings or same-sex couples being together. And a resident also has “a right to receive visitors of his or her choosing at the time of his or her choosing,” as long as it doesn’t impose on another resident’s rights.
Bolstering grievance procedures: Nursing homes must now appoint an official who will handle complaints and follow a strengthened grievance process. Decisions must be in writing.
Challenging discharges: Residents can no longer be discharged while appealing the discharge. They cannot be discharged for non-payment if they have applied for Medicaid or other insurance, are waiting for a payment decision or appeal a claim denial.
If a nursing home refuses to accept a resident who wants to return from a hospital stay, the resident can appeal the decision. Also, residents who enter the hospital have a right to return to their same room, if it is available.
A state’s long-term-care ombudsman must now get copies of any involuntary discharges so the situation can be reviewed as soon as possible.
Expanding protection from abuse: The definition of abuse now includes financial exploitation. Nursing homes are prohibited from hiring any licensed professional who has received a disciplinary action because of abuse, neglect, mistreatment or financial exploitation of residents.
Ensuring a qualified staff: Consumer groups had urged federal officials to set minimum staffing levels for registered nurses and nursing staff, but the industry had opposed any mandates and none was included in the final rule. Instead, facilities must have enough skilled and competent staff to meet residents’ needs. There are also specific training requirements for caring for residents with dementia and for preventing elder abuse.
“Competency and staffing levels are not mutually exclusive,” said Toby Edelman, a senior policy attorney at the Center for Medicare Advocacy. Person-centered care and other improvements “don’t mean anything if you don’t have the staff who know the residents … and can figure out why Mrs. Smith is screaming.”

Yet, requiring a certain number of nurses could backfire, said Gifford. “It could actually result in places that are above those ratios lowering their staffing levels and other places that would increase staffing when they don’t need it and could be putting their resources into better care to meet the needs of the residents.”

Thursday, January 5, 2017

Medical Deduction Threshold for Seniors Increases

There are new maximum deduction amounts for long-term care insurance premiums for 2017. Policyholders over 70 can potentially deduct up to $5,110 in premiums. But the 2017 threshold for deducting these and other medical expenses has increased from 7.5% to 10% of adjusted gross income for taxpayers over age 65.
Here is a recent article on this subject written by my colleague, Elizabeth White, CELA*
The IRS has issued new maximum deduction amounts for long-term care insurance premiums for 2017. It is important for long-term care insurance policy holders to be aware that at least a portion of the premiums paid for qualified long-term care insurance policies may fall under the medical expense deduction. However, seniors must also understand that the medical deduction threshold for those over 65 years old has increased for the 2017 tax year.
The maximum amount that a policyholder can deduct for payment of long-term care insurance premiums on his or her income taxes is indexed for inflation as calculated each year by the IRS. The amount that is deductible may not be the full amount of the premiums paid. Additionally, like other medical expense deductions, this is available only to those who choose to itemize deductions and is subject to the medical deduction threshold.
The amount that is deductible is based upon the policyholder’s age, and rises for an older individual. Any amount paid above the IRS limit is not deductible as a medical expense.
In 2017, a person who is 40 years old or younger has a maximum deduction of $410.00. Someone between the ages of 40 and 50 can take a maximum deduction of $770.00. A 60 through 70 year old can deduct a maximum of $4,090 next year. Policyholders over 70 can deduct up to $5,110 in premiums on his or her income tax return.
When determining the maximum premium amount that is deductible, as with other medical expense deductions, long-term care insurance premiums fall under the medical expense deduction threshold, sometimes referred to as a floor. In 2016, and for some years prior to that, those over the age of 65 could deduct medical expenses at a lower threshold of above 7.5% of his or her adjusted gross income. However, the threshold has increased for medical costs to 10% of adjusted gross income for all filers starting in 2017.
As an example, let’s look at Bob, a 71 year old who had an adjusted income of $50,000.00 a year. Bob has $8,000.00 in medical expenses, which includes $6,000.00 in qualified long-term insurance premiums paid in 2017.
While Bob can use all of his qualified medical expenses, including his long-term care insurance premium, his resulting tax deduction is only for total qualifying medical expenses above and beyond the 10% floor of his adjusted gross income. In other words, Bob needs qualifying medical expenses exceeding $5,000.00 a year to take the medical deduction, and then only his qualifying expenses in excess of that $5,000.00 can be deducted.
Bob would have $2,110.00 in deductible medical expenses:
$5,110.00 maximum long term- care insurance premium deduction      2017   +        $2,000.00 in other medical expenses
=        $7,110.00 allowable medical expenses
$7,110.00 allowable medical expenses
  • $5,000.00 floor
=        $2,110.00 in deductible medical expenses
Contrast this with 2016 where Bob has a 7.5% floor, which would allow for deductions over and above $3,750.00 a year. In 2016 with the same income and medical expenses, and a long-term care insurance maximum deduction maximum of $4,870.00, Bob would have $3,120.00 in allowable medical deductions.
In 2016, Bob would have $3,120.00 ($1,010.00 more than 2017) in deductible medical expenses:
$4,870.00 maximum long-term care insurance premium deduction 2016
+        $2,000.00 in other medical expenses
=        $6,870.00 allowable medical expenses
$6,870.00 allowable medical expenses
  • $3,750.00 floor
=        $3,120.00 in deductible medical expenses
It is important to have a team of professionals that can work together for you to determine what is best for your long-term care needs, income tax situation, and estate planning wishes. At Marshall, Parker & Weber our attorneys welcome working with your financial advisor and accountant to develop a multidisciplinary plan that works best for you.
*Elizabeth White has been Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation.