Married Couples Should Reconsider Home Ownership In Trust

A narrowly divided Ohio Supreme Court has ruled that the transfer of a home between spouses prior to Medicaid eligibility is an improper transfer and is subject to the community spouse resource allowance (CSRA) cap.  Estate of Atkinson v. Ohio Department of Job and Family Services (Ohio, No. 2013–1773, Aug. 26, 2015). More particularly, the decision means that home ownership in a revocable trust is not without consequence when applying for Medicaid.  

The facts of the case present what was "garden variety" conduct of a client before applying for Medicaid.  In 2000, Marcella Atkinson and her husband transferred their home into a revocable living trust. In April of 2011, Mrs. Atkinson entered a nursing home and soon applied for Medicaid benefits. In August 2011, following Medicaid’s “snapshot” of the couple’s assets, the home was removed from the trust and placed in Mrs. Atkinson's name. The next day, Mrs. Atkinson transferred the house to her husband. Most attorneys counselled clients regarding such a procedure, and many county caseworkers told applicants of these steps, seemingly necessary to avail the community spouse of the exemption available to the family home.

It is important to know what the "snapshot"  means;  the "snapshot date" is the day on which the ill spouse enters either a hospital or a long-term care facility in which s/he then stays for at least 30 days. This is called the "snapshot" date because Medicaid is taking a picture of the couple's assets as of this date. 

The State in Atkinson, however, determined an improper transfer had occurred and imposed a penalty period.  Mrs. Atkinson passed away, and her estate appealed to court, arguing that under federal and state statutes a spouse is not ineligible from receiving Medicaid for transferring a home to the other spouse, and that an institutionalized spouse may transfer unlimited assets to the community spouse between the date the spouse is institutionalized and the date that the spouse's Medicaid eligibility is determined. The estate lost at both the trial court and the Ohio Court of Appeals, and the estate appealed.  

In a 4-3 decision, the Supreme Court of Ohio ruled that transfers between spouses are not

unlimited after the snapshot date and before Medicaid eligibility and that such transfers are proper only up to the amount that fully funds the CSRA. The snapshot date is the first day of institutionalization The court rejected the estate’s reliance on the Sixth Circuit Court of Appeals’ holding in Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25, 2013) that an annuity purchased by a community spouse before a Medicaid eligibility determination is not an improper transfer, finding that the purchase of annuities are subject to special rules and “not applicable under these facts.”  The court remanded the case for review of the penalty imposed because the Medicaid agency may have applied the wrong statute.  “Neither federal nor state law,” the court wrote, “supports the agency's confiscation, after the CSRA has been set, of the entire amount of transferred assets, some or all of which may have already been allocated to the community spouse on the snapshot date.”

A dissent joined by three justices states that “What this family did is and was permitted by state and federal law. . .  the home is explicitly excluded from the definition of 'resources' for purposes of establishing the CSRA.” [emphasis in original].  The dissent reads in part:

It is clear that the law treats the marital home very carefully to prevent spousal impoverishment at the end of life. And that is the public policy we should be embracing. Based on the plain language of the federal statutes and the Ohio Administrative Code, as well as the holding of the United States Court of Appeals for the Sixth Circuit in Hughes v. McCarthy, 734 F.3d 473, I would hold that the transfer of the home between spouses prior to Medicaid eligibility being established is not an improper transfer and is not subject to the CSRA cap.

The case has significant implications for routine planning using a revocable trust.  Typically, a marital couple would convey the home to the revocable trust in order to accomplish objectives best accomplished with the trust.  Now, the transfer to the trust is problematic, because the home could not be transferred to a community spouse after a spouse enters an institution.

The ill effect is not necessarilly loss of the home; since the home is illiquid it would not be spent down.  The community spouse's CSRA, however, which represents the maximum amount of resources permitted the community spouse from the countable assets, currently $119,220.00, would be compromised, and possibly lost.  The ill effect would be the community spouse being forced to spend down the liquid assets that would otherwise keep him or her from impoverishment.   

Although the ill effect might be avoided if the need for long term care follows a possible event triggering the need, such as when a person suffers from dementia, there is never a guarantee that a person won't suffer an immediate catastrophic event, such as an automobile accident, stroke, aneurysm, heart attack, adverse drug reaction, complication to a routine medical procedure, fall, or the like.  In these cases a couple may be rendered powerless to improve their situation, and the home value will remain a countable asset.  

Our office is recommending that couples consider preparing a deed transferring the property from the trustees of the trust to the spouses/grantors of the trust, holding the property in a joint tenancy with full rights of survivorship, and employing a Transfer On Death Affidavit conveying the property at the death of the survivor to the trustee of the trust.  This strategy avoids probate, and confers to the home the other benefits of the trust at death (e.g., asset protection planning for your beneficiaries, equitable or proportional distribution of assets, private management, and the like).  

The obvious adverse consequence of this tactic is the home is no longer protected in the same way from guardianship.  A trust avoids guardianship by 1) identifying an alternate decision-maker and thereby eliminating the need for a guardian, 2) removing the incentive for hostile or predatory guardianship by removing assets from the guardianship estate, and 3) setting forth a procedure for appointment of a successor decision-maker with your personal physician empowered to decide issues of competency or capacity rather than reliance upon governmental or judicial determinations.  With the home removed from the protection of the trust, it might remain an incentive for a hostile guardian.

The nature of the home as an asset, and particularly the need of the community spouse to live in the home, however, should make the guardianship risk acceptable; it is unlikely a guardian will be able to obtain permission to sell a home when there is a spouse requiring the home as a residence.  In most cases, the relatively small risk must be balanced against the ill effect of a potential future need for Medicaid. 

Clients and advisers should take this risk seriously because the need for long-term care is inherently unpredictable, and the risk cannot be easily discounted.  The cost, too, of long-term care is unpredictable.  Medicare does not, typically, pay for long-term care.  Only long-term care insurance (preferably a policy that leverages a death benefit for long-term care benefits) or a robust financial plan can buttress your assets in meeting the cost of long-term care. 

To read the article discussing the oral arguments, which took place over a year before the Supreme Court's decision, go here.

For the full text of this decision, click here.

This blog post was originally published here.

Non-Profit Long-Term Care Safer than For-Profit

A Canadian study reported by McKnight's concludes that for-profit long-term care facilities have significantly higher rates of mortality and hospital admissions than their not-for-profit counterparts. The study noted that while there is significant variance in how long-term care faciltities are owned and operated, more than half of facilities in Canada, the United States, and the United Kingdom are managed by for-profit institutions, with the greatest variance being among not-for-profit facilities, which can be managed by private (e.g., religious or lay) or public (e.g, municipal, provincial, or federal) corporations.

According to McKnights, the study,  published in the Journal of Post-Acute and Long-Term Care Medicine  examined admissions at 384 for-profit and 256 not-for-profit long-term care facilities in Ontario, Canada, between January 2010 and March 2012. One year after admission, the for-profit facilities showed an overall mortality rate of 207.5 residents per 1,000 person-years, compared to a rate of 184 for not-for-profit facilities. The hospitalization rate for for-profit facilities at the one year mark was 462.4 per 1,000 person-years, while the rate for not-for-profit facilities was 358.0.

Lead researcher Peter Tanuseputro, M.D., wrote in discussing the results:

“We have shown that residents in for-profit homes consistently and robustly experience higher mortality and hospitalization rates. This occurred in an environment with common funding mechanisms, and a centralized system that leads to largely similar residents being accepted in both types of homes. It has been hypothesized that differences in outcomes may be related to reinvestments that not-for-profit facilities make into patient care that otherwise would be consumed as profit in for-profit facilities.” 

Researchers said the differences could also be due to not-for-profit facilities being more closely associated with acute care facilities, the level of a facility's ties to the community, differences in capital funding and whether a facility is associated with a chain.

The study confirmed the findings of a previous 2009 survey,
which determined that "not-for-profit nursing homes deliver higher quality care than do for-profit nursing homes."  This earlier study focused on quality citations, staffing levels, and incidence of certain adverse health events, such as prevalence of low pressure ulcers, rather than mortality rates and hospitalizations. 

To read the McKnight's article, go here.

To read the full study, go here.

No Increase in Social Security Benefits Next Year

For just the third time in 40 years, millions of Social Security recipients, disabled veterans and federal retirees can expect no increase in benefits next year.  By law, the annual cost-of-living adjustment, "COLA," is based on a government measure of inflation. 

The government is scheduled to announce the COLA — or lack of one — on Thursday, when it releases the Consumer Price Index for September. Inflation has been so low this year that economists say there is little chance the September numbers will produce a benefit increase for next year. Prices actually have dropped from a year ago, according to the inflation measure used for the COLA.

Congress enacted automatic increases for Social Security beneficiaries in 1975, when inflation was high and there was a lot of pressure to regularly raise benefits. Since then, increases have averaged 4 percent a year.  Only twice before, in 2010 and 2011, have there been no increases. 

Almost 60 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,224.  The COLA also affects benefits for about 4 million disabled veterans, 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor. Many people who get SSI also receive Social Security. 

In all, the COLA affects payments to more than 70 million Americans, more than one-fifth of the nation's population. 

Medicare premiums, however, will increase.

Good Care Is the Best Medicine for Alzheimer's

Lou-Ellen Barkan, President and CEO of the New York City Chapter of the Alzheimer’s Association, writing in the Huffington Post Blog, makes a very poignant observation: "in the absence of an effective therapy for [Alzheimer's Disease], effective care remains the best therapy."

She continues:

And providing quality care has never been more important. Today, Alzheimer's disease is the sixth leading cause of death in the United States and the only cause of death among the top 10 that cannot be prevented, cured, or even slowed. Right now, 5.3 million Americans have this deadly disease - more than a quarter of a million right here in New York City. By 2030, without treatments or a cure, nationwide, this number will skyrocket to 13.8 million.

Worldwide, top researchers, scientists, and medical professionals at renowned hospitals, universities, research centers, and pharmaceutical companies are working day-in and day-out to discover the causes, to develop effective treatments, and to find a cure for Alzheimer's and related dementias. Whether they are investigating beta-amyloid plaques, tau protein tangles, genetics, the effect of environment or lifestyle, their dedication is unparalleled. 

And while great strides have been made over the past decade in diagnostics - allowing us to get help earlier to those who need it most - Alzheimer's research remains poorly funded in comparison to other diseases with far fewer patients. For instance, total funding allocated by the National Institutes of Health (NIH) for HIV/AIDS research dwarfed the funding for Alzheimer's in 2014 (almost $2.978 billion vs. $562 million), yet almost five times as many Americans today are living with Alzheimer's than HIV (1.1 million). In the absence of an effective therapy, our focus MUST be on care. 

For more than 30 years the Alzheimer's Organization, nationally, and through Local Chapters like the one headed by Ms. Barkan, have provided compassionate care and life-saving support for hundreds of thousands of  with dementia and their caregivers.  Among these is the groundbreaking wanderer's safety program developed by the Mew York Chapter's own Jed Levine in the early 1990s, which became one of the prototypes for the nationwide MedicAlert® Foundation + Alzheimer's Association Safe Return® program.

Seniors, their families, and caregivers can support and implement these caregiving efforts through good financial and estate planning.   

Nursing Home Resident Disqualified for Transfer of Assets Eligible for Undue Hardship Exception

A New York appeals court recently held that a nursing home is  eligible for the undue hardship exception to a Medicaid penalty period, even though the home had not filed to, or threatened to evict her, because she was insolvent and unable to recover the assets, and because no other nursing home would accept her. Matter of Tarrytown Hall Care Center v. McGuire (N.Y. Sup. Ct., App. Div., 2nd Dept., No. 2849/12, April 16, 2014).

Margaret Traino lived at Tarrytown Hall Care Center from June 2008 until her death in April 2011. She was insolvent and subject to a Medicaid penalty period due to a transfer of assets for less than fair market value. The nursing home applied to the state to receive Medicaid reimbursement for the penalty period under the undue hardship exception.

The state denied the nursing home's application, ruling that the facility failed to show that Ms. Traino was unable to receive appropriate medical care without Medicaid because it did not attempt to evict Ms. Traino. The nursing home appealed.

The New York Supreme Court, Appellate Division, set aside the state's decision, holding that there is no requirement that a nursing home commence an eviction proceeding in order to prove undue hardship. According to the court, the nursing home showed that Ms. Traino "was unable to obtain appropriate medical care without the provision of Medicaid by offering proof that the decedent was insolvent and unable to recover transferred assets, and that no nursing facility which could provide her with the necessary level of care would accept her."

For the full text of this decision, go here.

Nursing Home Residents Twice as Likely to Suffer Fractures

A Canadian survey has revealed that older adults living in long-term care facilities are more than twice as likely as their peers living at home to suffer a fracture.  New guidelines endorsed by the Scientific Advisory Council of Osteoporosis Canada provide guidelines designed to reduce the risk.  The guidelines are similar to those those made by the Society for Post-Acute and Long-Term Care Medicine in the U.S., and those for residential care facilities in Australia.

Go here to read the original article in The Hospitalist.

The "Residents' Bill of Rights" is NOT the Residents'-- Federal Nursing Home Act Creates NO Private Causes of Action

A Federal District Court has ruled that the Federal Nursing Home Reform Act, which among other things requires the provision of certain services to each resident, does not create a private cause of action.  The Act is most widely known for creating the Residents' Bill of Rights, but apparently, the right to seek redress for injury or loss resulting from the failure of a nursing home to enforce these rights is not among them.

The Plaintiff, Joanne Fiers' filed a claim after the death of her brother, Richard Bendel, while he was a resident at Lakeview Health Center in West Salem, Wisconsin. Bendel, suffered from severe dementia and was a known elopement risk; he therefore required increased supervision.  Bendell left the facility unattended, fell and suffered injuries that led to his death in February 2014.  A certified nursing assistant watched Bendel walking toward one of the facilities exits, but failed to do anything to prevent his leaving.  Two other certified nursing assistants allegedly ignored an audible door alarm as Bendel exited the facility. After he exited, Bendel walked across a roadway, tripped on a curb, and fell, sustaining critical injuries from which he would succumb four days later.  

Several days later, the Wisconsin Department of Health and Human Services investigated the "elopement incident."  The facility was cited with an "Immediate Jeapardy Violation."  

In addition to seeking compensatory and punitive damages for pain and suffering as a result of the nursing home's negligence, Fiers also alleged that Lakeview violated Bendel's resident rights under Section 1983, rights set forth in the  Federal Nursing Home Reform Act (which includes but is not limited to the Residents' Bill of Rights).

The U.S. District Court for the Western District of Wisconsin ruled Section 1983 does not create a right of redress because FNHRA does not create private, enforceable rights for residents, and further that Fiers' complaint failed to identify specifically the rights that Lakeview violated. In order to allege a deprivation of rights under the FNHRA, the court ruled that Fiers was required to show that FNHRA was meant to benefit residents in a way that was not  “vague and amorphous."  No penumbra of a right to adequate health care, or a logical extension of rights and remedies, is countenanced by the court's opinion.

The Act, the court explained, was written to describe what a nursing home has to do to receive government funding, not what rights it is required to provide residents. Apparently the "Residents' Bill of Rights," would have more aptly been called, the "Nursing Homes' Obligations For Federal Funding Without Regard to Residents' Rights, Privileges, or Redress."  Yes, that is much clearer.  

The court granted Lakeview's motion to dismiss Fiers'  Section 1983 complaint.

The Plaintiff will, of course, continue to pursue her claims for negligence against the facility, but will have to do so in state, rather than federal court. In some states, citations against a nursing home for violating standards of care are not admissible in court.        

To read the court's opinion, go here.

To read the McKnight's article about the case, go here.

California Elder Abuse Law Protects Only Residents

A California appeals court has ruled that an 85-year-old man is not a protected elder under the state’s financial elder abuse law because he does not reside in California. Galt v. Wells Fargo Bank, N.A., (Cal. Ct. App., 2^nd Dist., No. B261792, Sept. 21, 2015).

Randolph Galt, who is 85 years old, lives in Australia and Washington State. Mr. Galt is one of the income beneficiaries of a trust established by his grandfather in California. Wells Fargo Bank is the trustee. After Mr. Galt delegated investment decisions for the trust to a new investor, the investor was not able to make changes to the trust and the value fell from $26 million to $13 million.

Mr. Galt sued the bank for financial elder abuse under a California state law, arguing that the bank intentionally refused to allow the new investor to make decisions for the trust. The trial court ruled that Mr. Galt did not have standing to pursue the claim because he did not meet the definition of "elder" under the state law. The state law defines an "elder" as anyone 65 years of age or older who is residing in the state. Mr. Galt appealed.

The California Court of Appeals affirmed, holding that Mr. Galt does not have standing to pursue a financial elder abuse claim under state law. According to the court, "by his own admission, [Mr.] Galt does not reside in this state; consequently, under the plain meaning of the statute, he is not an elder."

For the full text of this decision, go here.