Medical Services Medicare Won't Cover

While Medicare covers a wealth of preventive and medically necessary doctor's visits and procedures, there are some common medical services Medicare don't cover or covers only under specific circumstances. "Medicare doesn't cover eyeglasses, hearing aids or dental benefits," says Juliette Cubanski, a Medicare policy analyst at the Kaiser Family Foundation. "If you don't have supplemental coverage, then most people who need those services would end up having to pay out of their own pocket."

Here are some common medical services many older people need that traditional Medicare won't pay for:

Click here for the rest of the article from My Daily Finance.

Price of Long-Term Care Insurance Policy Drops, At Least for 55-Year-Old Males

A healthy 55-year-old man can expect to pay $925 annually for $164,000 in current long-term care insurance benefits, according to the 2014 Long-Term Care Insurance Price Index, an annual report from the American Association for Long-Term Care Insurance, an industry group. The Association noted that identical coverage cost 15 percent more in 2013, meaning that the annual premium has actually declined for men.

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New Rules Make It More Difficult to Get a Reverse Mortgage

The federal government has tightened the rules regarding reverse mortgages, making it harder for some seniors to get these types of mortgages and reducing the amount of their home’s value that they can tap. The new rules are an effort to strengthen the federal Home Equity Conversion Mortgage (HECM) program, which insures almost all reverse mortgages and which has seen default rates rise.

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Medicaid Expansion Signups Hindered By Fear of Estate Recovery

A fear that the government will seize their house after they die is causing some people to not sign up for expanded Medicaid under the Affordable Care Act (ACA). A long-standing provision in Medicaid law allows states to recoup Medicaid costs by putting a claim on the home or other assets of older deceased Medicaid recipients.

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In 1993, Congress passed a law requiring that states try to recover from the estates of deceased Medicaid recipients whatever benefits they paid for the recipient's long-term care. But the law allows states to go further and recover all Medicaid benefits from individuals over age 55, including costs for any medical care, not just long-term care benefits.

The ACA gives states the option of expanding Medicaid eligibility to individuals and families with incomes up to 133 percent of the poverty line, and so far 26 states have taken this option. Now that more people are becoming eligible for Medicaid under the ACA, there are potentially more people who may have their houses (or other valuable assets) sold after they die to pay off Medicaid debt. People subject to this estate recovery would have to live in one of the 26 states, and their state would have to be recovering the costs of all Medicaid benefits, not just long-term care. Still, there are protections: the state cannot take a house if there is a surviving spouse, a child under age 21 or a child of any age who is blind or disabled.

According to the Washington Post, the realization that their house might be subject to estate recovery is giving some with low incomes second thoughts about signing up for Medicaid, even though not doing so will likely mean going without any insurance at all. ACA plans bought in the regular marketplace are not subject to estate recovery, but individuals who qualify for expanded Medicaid coverage are not able to get a subsidy to buy coverage in the marketplace. If someone doesn't want to be subject to estate recovery, there are two options: buy a plan from the marketplace without a subsidy, or buy no insurance at all.

In order to encourage people to sign up for Medicaid, both Oregon and Washington have changed their rules to allow estate recovery only for long-term care debt. In addition, advocates are asking the federal government for clarification on whether Medicaid estate recovery will apply to people who purchase expanded Medicaid coverage.  A spokesman for the Centers for Medicare and Medicaid Services told the Post, "We recognize [the] importance of this issue and will provide states with additional guidance in this area soon." 

For the Washington Post article, click here.

For more on Medicaid's estate recovery rules, click here.

Key 2014 Dollar Limits for Medicaid Long-Term Care Coverage Released

The Centers for Medicare & Medicaid Services (CMS) has released the 2014 federal guidelines for how much money the spouses of institutionalized Medicaid recipients may keep and the limit on how much a home can be worth for its owner to still qualify for Medicaid.

The Centers for Medicare & Medicaid Services (CMS) has released the 2014 federal guidelines for how much money the spouses of institutionalized Medicaid recipients may keep and the limit on how much a home can be worth for its owner to still qualify for Medicaid.

In 2014, the spouse of a Medicaid recipient living in a nursing home (called the "community spouse") may keep as much as $117,240 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care. Called the "community spouse resource allowance," this is the most that a state may allow a community spouse to retain without a hearing or a court order. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2014 will be $23,448.

Meanwhile, the maximum monthly maintenance needs allowance for 2014 will be $2,931. This is the most in monthly income that a community spouse is allowed to have if her own income is not enough to live on and she must take some or all of the institutionalized spouse's income. The minimum monthly maintenance needs allowance – the income level below which a state may not allow a community spouse to fall if income from the institutionalized spouse is available -- is $1,938.75 in the lower 48 states ($2,422.50 for Alaska and $2,231.25 for Hawaii).  This figure took effect July 1, 2013, and will not rise until July 1, 2014.

In determining how much income a particular community spouse is allowed to retain, states must abide by this upper and lower range. Bear in mind that these figures apply only if the community spouse needs to take income from the institutionalized spouse. According to Medicaid law, the community spouse may keep all her own income, even if it exceeds the maximum monthly maintenance needs allowance.

Home Equity Limits

Medicaid will not cover long-term care services for applicants whose homes are valued above a certain limit.  For 2014, that limit is $543,000, although states have the option of increasing this equity limit to $814,000. But the house may be kept with no equity limit if the Medicaid applicant's spouse or another dependent relative lives there.

These new figures (except for the minimum monthly maintenance needs allowance) take effect on January 1, 2014.

For more on protections for the healthy spouse, click here.  For more on Medicaid’s asset rules, click here.

Banks Can Report Abuse of Elderly Without Violating Privacy Laws

UC Irvine's Center of Excellence on Elder
Abuse and Neglect - committed to eliminating
 abuse of the elderly

The Federal Government has issued new guidelines aimed to help banks understand how to report suspected financial elder abuse without violating privacy laws. It was co-authored by eight federal agencies, including the FTC, SEC, FDIC, and the new Consumer Financial Protection Bureau. The privacy protection law in question is the 1999 Gramm-Leach-Bliley Act (GLBA).

As the Guidance explains, GLBA allows banks to disclose private information “to comply with…state laws that require reporting by financial institutions of suspected abuse.” It may also be released to respond to a government investigation or to respond to judicial process. The guidance was issued to reassure financial institutions that they will not run afoul of federal law by reporting suspected abuse as required under state law.

Ohio law protects the disabled and elderly from abuse, neglect, and exploitation, and requires certain professionals, including doctors, nurses, lawyers, physical therapists, social workers, law enforcement and emergency response personnel. having reasonable cause to believe that an elderly person is in need of protective services to report such information.

Ohio law does not currently require financial professionals such as tellers to report.  Ohio law does, however, protect any person that does report suspected abuse, whether or not required to report.  Any person who makes a report with reasonable cause to believe that an adult is suffering abuse, neglect or exploitation is immune from civil or criminal liability under Ohio law.

The importance of banking professionals in identifying abuse and exploitation cannot be overstated.  According to Richard Cordray, Director of the Consumer Financial Protection Bureau:

"Many older consumers are known personally by the tellers in their local banks and credit unions. These employees may be able to spot irregular transactions, abnormal account activity, or unusual behavior that signals financial abuse sooner than anyone else can. Today’s guidance makes clear that reporting suspected elder financial abuse generally is not subject to these same concerns and does not violate the Gramm-Leach-Bliley Act.

The guidance mentions repeated large withdrawals, debit transactions uncommon for an older adult, random attempts to wire large amounts and the closing of CDs or accounts despite penalties as possible signs of elder financial abuse. 

  

For more information on the new federal guidance, see here, or see the full document here.

Medicaid Applicant Penalized for Assignment of Life Insurance to Funeral Trust

An Illinois appeals court recently held that a Medicaid applicant who purchased a life insurance policy that was assigned to a trust designed to pay funeral expenses is subject to a transfer penalty because the funds could be used for something other than funeral expenses pursuant to the terms of the trust.. Evans v. State (Ill. Ct. App., No. 4-12-1082, Dec. 24, 2013).

Nursing home resident Peggy Evans applied for Medicaid benefits and several days later purchased a life insurance policy for $12,000. The proceeds of the policy were assigned to an irrevocable trust. The trust provided that the trustee pay Ms. Evans' funeral and burial expenses if a bill was presented within 45 days of Ms. Evans' death.  The trust provided further  that in the event that a bill was not presented within that time frame, the assets would be distributed to Ms. Evans' children. The state approved her Medicaid application, but assessed a penalty period based on the transfer.

Ms. Evans' appealed, arguing the transfer to the life insurance policy was exempt from a penalty because the funds were for funeral and burial expenses. Normally, transfers to a funeral trust do not result in a penalty because the funds are used to for satisfying  funeral and burial expenses   The the Department of Human Services denied her appeal, and the trial court affirmed the decision. Ms. Evans appealed.

The Illinois Appeals Court affirmed, holding that the transfer to the life insurance policy was not exempt, so the state correctly assessed a penalty period. According to the court, in order for prepaid burial expenses to be exempt from a transfer penalty there has to be a burial contract in place, which was not the case here. In addition, "the funds can only be used to pay funeral expenses, also not the case here, as the structure of the trust could allow the funds to pass to Evans' children instead of paying funeral expenses."

The decision did not disclose who drafted the trust, or whether counsel reviewed or approved the trust.  Nonetheless, the decision underscores the importance of crafting a funeral trust with appropriate and effective limitations.

For the full text of this decision, go here.

Filial Responsibility- Complicating Estate, Retirement and Asset Protection Planning

Twenty-eight states currently have laws making adult children responsible for their parents if their parents can't afford to take care of themselves. While these laws are rarely enforced, there is growing pressure upon states to use these laws as a way to save on Medicaid expenses.

These laws, called filial responsibility laws, obligate adult children to provide necessities like food, clothing, housing, and medical attention for their indigent parents. According to the National Center for Policy Analysis, a conservative research organization, 21 states allow a civil court action to obtain financial support or cost recovery, 12 states impose criminal penalties on children who do not support their parents, and three states allow both civil and criminal actions. (For a list of the states and citations to state statutes, click here.  Note that Idaho's and New Hampshire's statutes have since been repealed.)

Generally, most states do not require children to provide care if they do not have the ability to pay. States vary on what factors they consider when determining whether an adult child has the ability to pay. Children may also not be required to support their parents if the parents abandoned them or did not support them.

The passage of the Deficit Reduction Act of 2005 made it more difficult to qualify for Medicaid, which means there may be more elderly individuals in nursing homes with no ability to pay for care. In response, nursing homes may use the filial responsibility laws as a way to get care paid for. For more information, click here.

For a discussion of filial responsibility laws in the New York Times's "New Old Age" blog, click here.

Tragic Consequences Result from Simple or Do-It-Yourself Medicaid Planning

Simplistic or Do-It-Yourself Medicaid planning is a "cure worse than the disease."  Yet another in a long line of tragic cases illustrates why seniors should not engage in reckless transfer of assets to children in the hope of avoiding long term care or nursing home costs. Too often, they witness their fortune lost, wasted, or appropriated.  Perhaps the only thing worse than losing a hard earned fortune to nursing home cost, is being rendered penniless and potentially homeless as a result of a simple transfer of wealth to a trusted child.

In 2002, Dorothy Stutesman transferred $142,742 to her daughter, Holly Woodworth, so she would not have assets in her name if she ever needed Medicaid. In April 2010, Woodworth transferred the money to a trust designed to protect the assets from creditors. The entire corpus of the trust was used to purchase an annuity to benefit Woodworth. In February 2011, Woodworth filed for bankruptcy.

The bankruptcy trustee sought to void the trust, arguing it was a fraudulent transfer under bankruptcy code. Woodworth did not dispute that the transfer was fraudulent, but she argued that the property was never part of her estate because she was holding it in a constructive trust for her mother.

The U.S. Bankruptcy Court for the Eastern District of Virginia entered judgment for the bankruptcy trustee, holding that Woodworth clearly had complete ownership of the funds. According to the court, “Ms. Stutesman can’t have it both ways — she can’t part with title for purposes of Medicaid eligibility, and at the same time claim that she retained an equitable title to the asset. To allow this kind of secret reservation of equitable title would be to sanction Medicaid fraud.”

Read More

Source: Habiger, Richard, "Daughter who declared bankruptcy must repay $142,742," Southern Business Journal, http://thesouthern.com/business/daughter-who-declared-bankruptcy-must-repay/article_deae48d0-2aa4-11e3-8086-0019bb2963f4.html

Pennsylvania's Filial Support Law Survives Federal Challenge

Pennsylvania's filial support statute has survived a multi-faceted challenge in federal court. Filial responsibility includes the legal responsibility of a child to care for an indigent parent.  Pennsylvania recently began enforcing its filial responsibility laws, wielding the the legal obligation as a sword in Medicaid resource recovery, in effect requiring a child to reimburse the State for paying through Medicaid the cost of the parent's long-term care. Simply, a child may remain responsible for a parent's long term care costs.  

The U.S. District Court, Western District of New York upheld Pennsylvania's use of filial responsibility in Medicaid resource recovery holding that it was not preempted by  the federal Nursing Home Reform Act, and that collection of a Medicaid  debt created by the statute does not give rise to a Fair Debt Collection Practices Act claim.  Eades v. Kennedy, PC Law Offices (U.S. Dist. Ct., W.D. N.Y., No. 12-CV-6680L, Dec. 3, 2013).  Levere Pike, a New York resident, placed his wife in a Pennsylvania nursing home. After Mr. Pike's wife died, the nursing home hired a law firm that attempted to collect payment from him and his daughter, Joni Eades. The law firm eventually filed a lawsuit in Pennsylvania that is still pending.

Mr. Pike and Ms. Eades sued the law firm, arguing that the attempts to collect the debt violated the Fair Debt Collection Practices Act (FDCPA). They also argued that Pennsylvania’s filial responsibility law is preempted by the portion of the Nursing Home Reform Act (NHRA) that prohibits a nursing home from requiring a third-party guarantee as a condition of admission. The law firm filed a motion to dismiss.

The U.S. District Court, Western District of New York, granted the motion to dismiss, holding the court does not have jurisdiction over Mr. Pike and Ms. Eades' claims. The court went on to conclude that even if it did have jurisdiction, debts created by filial support statutes do not give rise to claims under the FDCPA.  In addition, according to the court, the filial support statute is not preempted by the NHRA because the two laws do not "cover the same territory."  Although arguably the decision is mostly dicta, the court's decision illuminates how federal courts are likely to view filial responsibility in the event that more states follow Pennsylvania in applying filial responsibility to Medicaid recourse recovery.

For the full text of this decision, go here.  

Medicare Ends ‘Improvement Standard’ which Required 'Likelihood of Improvement' in Chronic Conditions before Coverage of Skilled Care and Therapy Services

The Centers for Medicare & Medicaid Services has updated the program manuals used by Medicare contractors in order to “clarify” that coverage of skilled nursing and skilled therapy services does not depend on a beneficiary’s potential for improvement but rather on the beneficiary’s need for skilled care.  The manual update is part of the January 2013 settlement agreement in Jimmo v. Sebelius, No. 11-cv-17 (D. Vt.), which ended Medicare’s longstanding practice of requiring beneficiaries to show a likelihood of improvement in order to receive coverage of skilled care and therapy services for chronic conditions.

The Center for Medicare Advocacy, which along with Vermont Legal Aid represented the plaintiffs in Jimmo, announced that the Medicare Policy Manuals have been revised pursuant to the Jimmo settlement.  The Center and Vermont Legal Aid have been reviewing and providing input on drafts of the manual revisions.

“As with all components of settlement agreements, the Jimmo revisions are not perfect,” said Judith Stein, the Center’s Executive Director. “But they should go a long way to ensuring that skilled care is covered by Medicare for therapy and nursing to maintain a patient’s condition or slow decline – not just for improvement.”

CMS states in the Transmittal announcing the Jimmo Manual revisions: 

No “Improvement Standard” is to be applied in determining Medicare coverage for maintenance claims that require skilled care. Medicare has long recognized that even in situations where no improvement is possible, skilled care may nevertheless be needed for maintenance purposes (i.e., to prevent or slow a decline in condition). The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition. Thus, such coverage depends not on the beneficiary’s restoration potential, but on whether skilled care is required, along with the underlying reasonableness and necessity of the services themselves. The manual revisions now being issued will serve to reflect and articulate this basic principle more clearly. [Emphasis in original.]

The next step in the Jimmo settlement is an educational  campaign that CMS will soon mount to explain the settlement and the revised manual provisions to Medicare contractors, providers, adjudicators, patients, and caregivers. CMS’s educational campaign should consist of national calls, forums, written materials, training, and changes to its website.

At a session on the Jimmo settlement that was part of the National Aging and Law Institute in November, Stein urged attorneys to inform the Center of any cases where coverage has been denied because the patient was not improving.  The Center would also appreciate any feedback on the upcoming educational campaign.  E-mail cases or comments toimprovement@medicareadvoacy.org 

The CMS Transmittal for the Medicare Manual revisions, with a link to the revisions themselves, is posted on the CMS website.  The CMS MLN Matters article is also available there under “Downloads.”

Supreme Court to Decide Whether Inherited IRA's Protected from Creditors

The U.S. Supreme Court has agreed to hear a case that will decide whether inherited individual retirement accounts (IRAs) are available to creditors in bankruptcy. The decision in Clark v. Rameker will resolve a split between the lower courts.

Heidi Heffron-Clark inherited a $300,000 IRA from her mother. Inherited IRAs must be distributed within five years. During the five-year period, Mrs. Clark and her husband filed for bankruptcy. The Clarks argued the IRA was exempt from creditors because bankruptcy law protects retirement funds. A district court agreed with the Clarks, but the 7th Circuit U.S. Court of Appeals reversed in Clark v. Rameker (714 F.3d 559 (2013)), holding that the money in the IRA no longer constituted retirement funds.

Meanwhile, the 5th Circuit U.S. Court of Appeals decided in In re Chilton (674 F.3d 486 (2012)), that funds from an inherited IRA should be exempt. The U.S. Supreme Court will resolve this issue later this term.

For more information about this case, click here.

Ambulance Driver Charged with Homicide in Death of Nursing Home Resident

McKnight's reports that the New York Attorney's General office has indicted a former medical transport driver for criminally negligent homicide related to the death of a nursing home resident.  

Driver Juan Garcia was working for Maeleen Ambulette Transport Inc. while transporting an elderly nursing home resident back to the facility from a dialysis appointment, when he came to an abrupt stop. The resident apparently was thrown from her wheelchair in the August 2010 incident. Garcia, 49, has admitted he had not buckled the resident's seatbelt, according to the attorney general's office.

Even though a certified nursing assistant in the ambulette asked Garcia to take the resident to the hospital, he proceeded to drive to the Gold Crest Care Center, the charges state. The resident subsequently underwent surgery for a fractured hip and died about a month later from complications.

“Had [Garcia] taken the most basic safety precautions, this vulnerable nursing home resident would not have died in this horrific way,” Attorney General Eric T. Schneiderman stated.  Garcia was arraigned in Bronx County Supreme Court and released on his own recognizance, according to Schneiderman's office. He faces up to four years in prison if convicted.

Debt Owed to Nursing Home Is Dischargeable in Bankruptcy Court

A bankruptcy court rules that a nursing home cannot claim debt owed by the husband of a nursing home resident to the nursing home is nondischargeable as a domestic support obligation. In re Langan (Bankr. Dist. S.D., Nos. ADV-13-3003, BR 13-30001, Oct. 18, 2013).

Anna Langan died owing debt to the nursing home that provided her care.  The nursing home sued Mrs. Langan's husband, Francis Martin Langan, and Mr. Langan settled, agreeing to pay the nursing home $28,000. The settlement provided that Mr. Langan would not file for bankruptcy within 91 days following the nursing home's receipt of the settlement payment. Mr. Langan filed for bankruptcy one month later.

The nursing home filed a claim with the bankruptcy court, seeking a determination that its claim against Mr. Langan is nondischargeable debt. The nursing home alleged that Mr. Langan failed to pay for his wife's care even though he had assets to do so. Under bankruptcy law any debt "for a domestic support obligation" is exempted from a debtor's general discharge. Mr. Langan asked the court to dismiss the nursing home's claim.

The United States Bankruptcy Court, District of South Dakota, grants Mr. Langan's motion to dismiss, holding that the debt is not exempt from discharge. According to the court, because the nursing home "is not [d]ebtor's spouse, former spouse, or child, and the debt did not arise from a divorce or separation agreement," the debt does not fall under the "domestic support obligation" exception from discharge.

For the full text of this decision, click here.

Mishandling of Nursing Home Trust Accounts a Growing Problem

Many nursing home residents have have "resident trust funds" or "personal accounts" managed by the facility. It may be that the residents have no family members or family members do not want the responsibility, or the nursing facility prefers to manage the resident’s income. Recently, USA Today did an investigative report in which 1,500 facilities have been cited for mishandling of funds in such resident trust accounts. Most of the deficiencies were related to failing to pay interest on the money held, inadequate accounting, or failure to give residents sufficient access to their money. However, there were egregious cases where funds were misappropriated by those who were intended to protect them. Go here to read the full article.   

The USA Today article explains the problem, describes specific examples of account misuse, and provides some practical solutions to  minimize the risk of loss associated with these accounts.  In every case, the resident should have an effective General Durable Power of Attorney in place naming a trusted agent and  alternates. Many nursing home residents are unable to monitor their own accounts, or may be unable to monitor their own accounts during periods of illness, disability, or incapacity. An attorney-in-fact empowered by a Power of Attorney document can monitor the resident account, and even minimize its use by keeping a limited amount of funds in the account. If the agent is willing and able to pay the resident’s bills, the use of the account will be limited to small purchases and will be less tempting to those who are using the accounts for their own purposes.

Fortunately, the resident fund accounts are usually insured.  An attorney-in-fact can make a claim against the insurance company is a loss is discovered.  Such a claim may be frustrated if the resident is unable to prosecute a claim.  It is important that losses are identified quickly, and claims made timely.  

The attorney-in-fact should also make sure that ultimate disposition of the account is provided for, either by an assignment of the account to the resident's revocable trust, or by a transfer upon death or payable upon death designation.  Otherwise the account may require probate court disposition.