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."