Irrevocable "Sole Benefit" Trusts Countable as Medicaid Assets in Michigan

A trio of Michigan cases have invalidated the use of Irrevocable Sole Benefit Trusts in Medicaid planning for marital couples.  A Michigan appeals court has held that assets placed in an irrevocable trust by a Medicaid recipient's spouse are countable assets because the principal in the trust can be paid to or for the benefit of the community (non-institutionalized) spouse.  See,  Hegadorn v. Department of Human Services Director (Mich. Ct. App., No. 329508, June 1, 2017); Lollar v. Department of Human Services Director (Mich. Ct. App., No. 329511, June 1, 2017); and Ford v. Department of Health and Human Services (Mich. Ct. App., No. 331242, June 1, 2017).

Three women entered nursing homes. Their husbands created irrevocable "sole benefit trusts." The trusts allowed the trustee to distribute principal to the husbands as necessary with the expectation that all the resources would be used up during the husbands' lifetimes. The trusts prohibited distribution of assets to the women A few months later, the women applied for Medicaid. The state determined that the trusts were available assets and denied the applications.

The women appealed, arguing that the trusts were not countable assets because they were for the sole benefit of the husbands. After three trials, two trial courts ruled that the assets in the trust were not available, and the state appealed and the Michigan Court of Appeals decided the cases together.

The Michigan Court of Appeals held that the trusts are available assets and reversed the decisions of two trial courts. The court ruled that when states make an initial eligibility determination, "an institutionalized individual’s assets includes not only those that he or she has, but also those that his or her spouse has" (emphasis in the original).  According to the court, because "there was a 'condition under which the principal could be paid to or on behalf of the person from an irrevocable trust,' the assets in the trusts were properly determined to be countable assets."

The cases underscore the challenges consumers and planners face in crafting estate planning documents.  The holdings remind consumers that there are a variety of types and kinds of irrevocable trusts, and that they do not all work the same or accomplish the same objectives.  Competent counsel can and do sometimes misapprehend the planning area and options, particularly when planners rely upon consensus planning, and periodic approval by low level caseworkers.  

The best long term care plans consider and accomplish, if possible, each of the following (in order of priority): 1) adoption of the best available health care plan, including medically necessary home health care in order to avoid unnecessary long term institutional care; 2) adoption of an "Aging in Place" philosophy and incorporation and expression of the philosophy in estate planning documents; 3) adoption and maintenance of a sound financial plan to protect income and ensure available resources to pay for alternatives to long term institutional care;  4) settling a revocable trust to protect against guardianship, protect assets and decision-making from institutional control in order to reduce the risk of unnecessary institutionalization; 5) settling an asset protection trust to shield selected assets  for the benefit of a community (non-institutionalized) spouse and to protect inheritance;and; 6) making the home suitable for long term care needs.  

It is vitally important to begin the planning with consideration of the proper Medicare health care option.  Quite simply, every legal and financial plan is made more capable by proper health care insurance planning, and many may be rendered utterly useless by inadequate health care planning.  Please contact our office if you want or need a referral to competent and capable health care planners.  

To read the full opinion, go here.  If you are interested in the history of the use of Sole Benefit Trusts, particularly in Michigan, go here and here, and for an argument advocating why Sole Benefit Trust assets should be protected from Medicaid spend down, go here.       

   

Maryland Repeals Filial Responsibility Law

Maryland has repealed its little-used filial responsibility law. Maryland's filial responsibility law provided that adult children are obligated to financially support an indigent parent with basic needs such as food, care, shelter, and clothing. The law was not used much in nursing home cases because Maryland law also prohibits a nursing home from holding adult children responsible for a parent's nursing home bill unless the child consents in writing to be financially responsible. However, the law could have been used when a parent under age 65 was under the care of a psychiatric hospital, or for parents receiving nursing home care paid for by Medicaid in resource recovery after the parent's death.

 Although, like many states, Maryland never used its filial responsibility law to seek repayment of Medicaid benefits, other states have followed the recommendation of the  Centers for Medicare & Medicaid Services (CMS) policy analysts in expanding Medicaid resource recovery efforts to include application of the law.  These states include Pennsylvania, Connecticut and South Dakota.  

  

The repeal saw bipartisan support.  The arguments for repealing the law included that filial responsibility laws were a holdover from Elizabethan times, and that a parent’s failure to exercise sound financial planning should not burden the parent’s adult children.  Of course, one only needs to witness the chaos created by filial responsibility laws in Pennsylvania to justify repeal. 

Idaho repealed its filial responsibility law in 2011.  Only Maryland and Idaho have repealed filial responsibility laws in the modern age, rejecting the havoc that such laws often play play in creating family disputes and  discord, and in potentially negating responsible long term care financial and estate planning.   A host of other states continue to keep and enforce filial responsibility as state law.

 To read the full repeal, go here.

CDC Reports that LTC the Overwhelming Source of Legionnaires' in Healthcare Facilities

Legionnaires' disease tends to be more common and deadly within post-acute care facilities than others — and providers need to do more to reduce the risk to residents.

Researchers with the Centers for Disease Control and Prevention recently conducted a study finding that 76% of Legionnaires' cases reported in 2015 could be traced to healthcare facilities. Of those cases, 80% were linked back to long-term care facilities, followed by 18% at hospitals and 2% to both.

Eighty-eight percent of Legionnaires' cases that year were reported in patients older than 60, the CDC said. About 25% of patients in healthcare facilities who contract legionnaires' die from it. That's two-and-a-half times the rate of all who contract the disease, which comes from inhaling water containing Legionella bacteria.

According to an article in McKnight's:

“Legionnaires' disease in healthcare facilities is widespread, deadly and preventable," CDC Acting Director Anne Schuchat, M.D. said during a press conference. “People can inhale the bacteria from small water droplets from showers, water therapy spas, baths, cooling towers, decorative fountains and medical equipment, like respiratory therapy equipment.”

The report comes three days after the Centers for Medicare and Medicaid Services issued a memo to surveyors explaining that healthcare providers soon will be expected to have policies in place to reduce the risk of Legionnaires'.

Marc Siegel, M.D., told providers to monitor patients with pneumonia for Legionnaires', and to keep their facilities sterile, according to MedlinePlus.

“This is all about improper maintenance, improper sanitation and improper sterilization, and a vastly underreported problem,” Siegel reportedly said.

Legionnaires' disease is a severe, often lethal, form of pneumonia.  Like many diseases, it presents greater risk to populations likely to reside in skilled nursing facilities, such as:

• People 50 years or older;
• Current or former smokers;
• People with a chronic lung disease (like chronic obstructive pulmonary disease or emphysema);
• People with weak immune systems or who take drugs that weaken the immune system (like after a transplant operation or chemotherapy);
• People with cancer;
• People with underlying illnesses such as diabetes, kidney failure, or liver failure.

The fatality rate of Legionnaires' disease has ranged from 5% to 30% during various outbreaks, but "Hospital-acquired" Legionnaires' has a fatality rate of 28%.  

Medical Evidence in VA Claims

Although many factors are considered in the determination of eligibility for Veterans Administration (VA) benefits, one of the most important factors is assembly and production of the medical evidence.  Karen McIntyre, R.N., and a VA Accredited Agent has penned an excellent article regarding the importance of of medical evidence supporting VA claims. She writes:

In both service connected and non-service connected claims, the medical and mental condition of the veteran is crucial in the outcome of the claim. In service connected disability compensation claims, there are two routes to take; i.e. nexus or presumptive.

In nexus claims, the veteran (or survivor) must show a likely connection between the disability (or death) and military service.  In other words, does the disability (or did the death) have a connection in some way to military service and if so, how?  Proof of this rests in the medical evidence.

In presumptive claims, the claimant does not have to prove a nexus between military service and the condition (or death).  In these claims, only proof of the condition (or cause of death) during a statutory time frame and/or place of service must be shown.  These claims are much easier to win than nexus claims.

In both claims, the veteran's condition must be authenticated by a medical professional; ideally, by a private physician since many VA doctors are notorious for their lack of cooperation.  It is true that the VA will want their own doctors to exam the veteran filing a disability compensation claim, but the additional supporting evidence from the private sector can go a long way in winning a claim.

Since there are no official guidelines for doctors, Ms. McIntyre  suggests thati t may be beneficial for the claimant or his/her representative to seek medical assistance from a qualified registered nurse or other medical professional who fully understands not only diseases and conditions, but also the VA's interpretation of its unique and crucial forms.

Do-Not-Hospitalize Orders Underutilized, Could Reduce Hospital Stays

Do-not-hospitalize (DNH) orders help reduce the number of hospital stays and emergency department visits for nursing home residents, but they are used by a relatively small portion of the population, according to a new study reported by McKnight's.

Researchers with Rutgers University and State University of New York at Albany analyzed data for more than 6,000 nursing home residents to determine the impact of DNH orders. Their findings showed 61% of residents had do-not-resuscitate orders and 12% had feeding restrictions, but just 6% had DNH orders.

Residents with DNH orders had significantly fewer unnecessary hospital stays and emergency department visits in their last 90 days of life than residents without them, the researchers reported in the May issue of JAMDA. The orders also helped reduce hospital stays for residents with dementia.

The findings suggest skilled nursing providers should encourage residents to complete DNH orders, researchers said, in order to “promote integration of the resident's values and goals in guiding care provision toward the end of life."

"Guardianship: As your Special Needs Child Becomes An Adult:" New Video from Summit County Probate Judge Stormer

Summit County Probate Court Judge Elinore Marsh Stormer has released a new video titled "Guardianship: As your Special Needs Child Becomes An Adult," to help parents of developmentally disabled children make decisions about their child's transition into adulthood.  In the video, parents ask questions about guardianship, and share their hopes and dreams about their developmentally disabled child.  

The video is just another in a series of videos that Judge Stormer has published to help people understand the probate court's role, and facilitate probate and guardianship related decision-making.  All of the videos can be found here. 

B Cepacia Outbreak at Nursing Homes Traced to Contaminated Medical Products

Researchers have traced an outbreak of Burkholderia cepacia ,  also called B. cepacia, at skilled nursing facilities (SNFs) spanning five states to contaminated saline flushes. B. cepacia poses little medical risk to healthy people, but poses serious risk to the elderly, young children, cancer patients, pregnant women, and people with chronic health problems like weakened immune systems or chronic lung diseases.  B. cepacia bacteria are often resistant to common antibiotics, and the mortality rate for already compromised patients, for example, those with lung diseases like Cystic Fibrosis, is particularly high. 

The outbreak was discovered on Sept. 22, 2016, when four B. cepacia bloodstream infections were found in patients receiving IV therapy at a Maryland skilled nursing facility. Officials notified colleagues across state lines, and clusters of B. cepacia infection were discovered in other SNFs.  Investigators abstracted patient records and visited SNFs affected by the outbreak in two states in the hope of finding the source. The investigators found that all the infected patients were staying at SNFs supplied by a certain pharmacy that on Sept. 1 began distributing saline flushes from a specific manufacturer. They then focused on SNFs using flushes from that manufacturer.

The investigators found 162 cases of B. cepacia infection at 59 facilities in five states. Epidemiologic and laboratory evidence indicates the contamination of saline flushes produced by the manufacturer was the source of the outbreak, but  investigation and surveillance for more cases of B. cepacia are ongoing.

This is not the only recent outbreak of B. cepacia linked to contaminated medical products. A 2016 multistate B. cepacia outbreak was traced to syringes of liquid docusate, a stool softener. 

Universal Life Insurance Policy Holders Face Premium Hikes

Over just the last two years, tens of thousands of universal life policyholders have been hit with double-digit premium increases from companies such as Axa Equitable, Voya Financial, and Transamerica.  

Universal life is a permanent and somewhat flexible hybrid life insurance policy that is intended to combine the reasonably affordable aspects of term insurance with a savings element similar to whole life. Universal life insurance typically offers policyholders a “cash value” savings account that earns tax-exempt interest along with the flexibility to adjust premiums and to increase or decrease death benefits. The policy’s investment account accumulates cash when interest rates are high, but can plummet when rates are low. In the 1980s and ’90s, the most common guaranteed rate in universal life contracts was 4%; some insurers guaranteed more.  Many new policies are tied to the stock market and don’t guarantee returns at all.  

Life insurers blame the economy for the premium increases. Interest rates began to slowly decline in the 1980s, but then plummeted during the 2008 recession as the Federal Reserve tried to improve economic conditions by making money cheap to borrow. But low interest rates are bad for the investment.  Low interest rates mean  lower profits.  In response, life insurers have begun to raise premiums on older universal life policies.

Understandably, universal life policyholders, many of whom were assured by agents that their premiums would never increase, are angry.   There are now a dozen lawsuits against insurers who sold those policies

Of course, regulatory reforms are suggested to help minimize the impact of these premium increases.  The New York Department of Financial Services, for example, proposed a rule that would require insurers to notify the agency at least 120 days before an “adverse change” in “non-guaranteed elements of an in-force life insurance or annuity policy.” This rule would also force insurers to notify consumers at least 60 days before the change. The regulation could be used as a precedent for other state insurance departments.  The Consumer Federation of America last year sent a letter to all state insurance commissioners asking them to study and prohibit any unfair price increases being imposed on consumers owning universal life policies.  Regardless, these reforms don't offer insureds a financial solution- only time to react.

Scott Hanson, a senior partner and founding principal of Hanson McClain,  a financial advisory firm in Sacramento, California,  offers the following advice to insureds holding universal life policies:

• Get ahead of the curve by contacting your insurer to find out just how much your policy’s cash reserves are worth.  Depending on the amount you have accrued over the years, you might be able to afford future premium hikes.

• Alternatively, consider working with your insurer to lower the policy’s death benefit, and by extension, your costs.

• You could also inquire about changing policies. What else does your insurer have to offer you? Fair warning: It can be hard to get approved for a life insurance policy when you’re in your 60s or older.

• If all else fails, you could look for a life insurance agent or company who would buy the policy from you now in exchange for receiving the death benefit later.

For more information regarding life insurance in estate and financial planning, go here.

Oregon Court Orders DHS to Restore In-home Care- An Object Lesson in a State's Lack of Commitment to Home and Community Based Care

When state and federal agencies proclaim support for aging in place and home based care, there is reason to doubt their resolve.  A recent example can be found courtesy of a court case against the Oregon Department of Human Services (DHS).  A court has ordered Oregon DHS to restore previous levels of in-home care services, at least temporarily, to people with intellectual and developmental disabilities in a federal lawsuit contesting recent cuts.

DHS determines every year how many hours of in-home care someone with an intellectual or developmental disability is eligible to receive.  Disability Rights Oregon, an advocacy organization that filed the suit last week, objects to how those decisions are made, saying the process lacks clarity.

The lawsuit alleges that under federal law, the agency violated the civil and due process rights of Oregonians receiving these services, as well as the Medicaid requirement that the Office of Developmental Disabilities Services must provide such services “as needed.”  Last year, the agency implemented a new assessment method on a rolling basis, which the lawsuit argues resulted in a reduction of in-home care hours for many people — although the amount of help they needed at home had not changed.  Not all people receiving in-home care services have yet felt reductions, because the changes have been implemented gradually.

In 2013, after the expansion of Medicaid under the Affordable Care Act, and a specific federal funding option called the Community First Choice Plan that provided funds so people with disabilities could access community-based services, there were significant increases in those eligible for in-home care — and in costs to the state.  In 2015, Oregon legislators agreed to pay for the unanticipated costs in the upcoming budget cycle, but asked DHS to come up with a way to contain the rate of cost growth in the future. That became the method that advocates are now contesting in court.  Cost of care

The Department of Human Services makes up a significant chunk of the state’s approximately $20 billion general fund budget, which lawmakers are busy trying to balance in the face of an approximately $1.6 billion shortfall.  Reducing in-home care for people with intellectual and developmental disabilities by 30 percent, as DHS had planned prior to the court order, would have saved the state’s general fund a comparatively paltry  $6 million in the upcoming two-year budget.  

Cost considerations, i.e., saving $6 million of a $1.6 billion shortfall, could send people with intellectual and developmental disabilities currently being treated at home to foster care, group homes, and skilled nursing facilities.  To put this in context,  a state audit found that Oregon Health Plan caseworkers were “knowingly” extending benefits to illegal immigrants and unqualified people. Also, 4,400 people who were above the income limits still received benefits. The total cost to Oregon taxpayers is $4.3 million a year.   Further, an Oregonian survey helped to unveil $1.4 billion in uncollected debts to the state. It appeared that most state agencies have a collection problem and the actual cost may be even higher than $1.4 billion. Among the examples was a business that bought $50,000 of supplies made by blind workers under the State Commission for the Blind, for which they never paid. 

Home and community based care, it would seem, is a too-easy target for money-grubbing administrators.   

This article is heavily reliant upon the article found here.

May is Older Americans Month

May is  Older Americans month. The Administration for Community Living (ACL)  has a website dedicated to older Americans month.  The theme for 2017 is Age Out Loud.  Need ideas for events? ACL offers that here.  Helpful hints for using social media are offered as well.

The following comes from ACL:

Getting older doesn’t mean what it used to. For many aging Americans, it is a phase of life where interests, goals, and dreams can get a new or second start. Today, aging is about eliminating outdated perceptions and living the way that suits you best.

Take Barbara Hillary, for example. A nurse for 55 years who dreamed of travel, at age 75 Hillary became the first African American woman to set foot on the North Pole. In 2011, at age 79, she set another first when she stepped onto the South Pole. Former president George H.W. Bush celebrated his 90th birthday by skydiving. Actress Betty White, now 95 years old, became the oldest person to host Saturday Night Live in 2010, coincidentally during May—the same month recognized as Older Americans Month (OAM).

Since 1963, OAM has been a time to celebrate older Americans, their stories, and their contributions. Led by the Administration for Community Living (ACL), the annual observance offers a special opportunity to learn about, support, and recognize our nation’s older citizens. This year’s theme, “Age Out Loud,” emphasizes the ways older adults are living their lives with boldness, confidence, and passion while serving as an inspiration to people of all ages.

Our firm will use OAM 2017 to focus on how older adults in our community are redefining aging—through work or family interests, by taking charge of their health and staying independent for as long as possible, and through their community and advocacy efforts. We can also use this opportunity to learn how we can best support and learn from our community’s older members.

Throughout the month, I and my paralegals will conduct activities and share information designed to highlight changes in care giving and long-term care than empower aging Americans to age in place.  We encourage you to get involved by sharing this post and other articles from this blog, referring a client to suitable social, financial, or legal services that s/he might protect themselves from medical, legal, and financial threats.  Later this month, we will post a video regarding Aging in Place, and its importance in medical, legal, and financial planning. 

Join us and ACL as we speak up for #OAM17 and #AgeOutLoud this May!