Three Surprises to Watch Out for When Paying for Long Term Care

Chris Orestis, executive vice president of GWG Life, has penned an excellent article for The Independent: 

"More than 70 percent of Americans over the age of 65 will need long-term health care services, according to the U.S. Department of Health and Human Services. Yet, according to the Employee Benefit Research Institute, only 13 percent of those who received professional home health care had long-term insurance policies, which can protect seniors from high out-of-pocket costs.

There is a wide gap of people without long-term care insurance, or LTCI, and some of the alternatives carry little-known laws and legal liabilities that can pose  problem to the care recipient and their families.

The growing long-term care funding crisis has brought lawsuits and mandated claw-back actions against families in attempts to recover monies spent on long-term care. There is a growing need for consumers to consider all their available financial options to fund long-term care, and that can include selling a life insurance policy.

Often the weight for long-term care falls on the family, and they need to avoid a financial surprise that can come late in life for their loved ones.

There are three surprises to watch out for when paying for long-term care and key things people should know about alternative ways of paying for it as well as the possible problems those can present down the road.

States can sue for Medicaid recovery of LTC

Many families assume that once a senior is approved for Medicaid coverage of long-term care, the only thing left to worry about is maintaining financial and functional eligibility. You’ve proven that a loved one cannot afford the level of care he or she requires, but that doesn’t mean there isn’t anything left to worry about in terms of covering and repaying costs. The Omnibus Budget Reconciliation Act of 1993 requires states to implement a Medicaid estate-recovery program, which allows states to sue families via probate court to recover Medicaid dollars spent on a family member’s long-term care. A report by the Office of the Inspector General showed that Medicaid, the primary source of long-term coverage, recovers hundreds of millions of dollars from families every year. But as budget pressures on states increase, estate-recovery actions are likely to become even more aggressive.

Watch out for withheld information on life insurance

Selling or borrowing against a life insurance policy in the secondary market, a process called a life settlement, is a way to help people find alternative funding sources for long-term care. A number of states have passed legislation mandating consumer disclosure about the secondary market before their policies ill be allowed to lapse.

Be aware of filial responsibility laws

These impose a duty upon adult children for the support of their impoverished parents and can be extended to other relatives. These laws can include criminal penalties for adult children or close relatives who fail to provide for family members when challenged to do so. Attorneys for nursing homes are testing the laws by filing lawsuits on behalf of indigent parents to recover funds. Currently, 28 states [including Ohio]  and Puerto Rico have filial responsibility laws in place."

Proper estate and financial planning, and Aging in Place Planning in particular, demands consideration of  long term care financing opportunities, and avoidance of adverse consequences like those discussed in the article.   

Trump Administration deploys Medicaid Scorecard

In June, the Trump administration embarked on a basic change to Medicaid that for the first time evaluates states based on the health of millions of Americans and the services they use through the vast public insurance program for the poor.  Centers for Medicare and Medicaid Services CMS), deployed a “scorecard” that compiles and publicizes data from states for both Medicaid and the Children’s Health Insurance Program (CHIP), a companion for youngsters in working-class families.

This first scorecard includes state-by-state information showing that, on average, just over half the women on Medicaid are getting care while they are pregnant and after giving birth. Only three in five babies get checkups during their first 15 months, and less than half of children and teenagers have preventive dental visits.These and other measures show wide variations among states, though the initial version does not explicitly rank them. The scorecard also makes public for the first time measures of governments’ performance, such as how long both state and federal health officials take when states request “waivers” to deviate from Medicaid’s ordinary rules.

The Trump administration did not initially attach any consequences to how states make out, and indeed has declined to "rank" states.  That could change over the next few years as CMS refines and adds to the scorecard and members of Congress assess what it shows.  

The Trump Administration, through Seema Verma, head of CMS, explained that the scorecard is intended to initiate a conversation about health outcomes.  Medicaid pays for roughly half the nation’s births, but there is no data or discussion how or why states vary in birth outcomes.

The scorecard is part of a fundamental recalibration of the power relationship in Medicaid between the federal government and states. Since the program was created in 1965 as part of Lyndon Johnson’s War on Poverty, both have shared responsibility for paying for and defining the eligibility and benefits.  Medicaid now covers more than 67 million individuals, while CHIP covers nearly 6.5 million.

In the Trump era, federal health officials have been eager to give states more flexibility over Medicaid’s rules and benefits. Most significantly, the administration told states this year that it will allow them to require people to work or participate in other forms of “community engagement” to qualify for the program.

Such flexibility must be accompanied by heightened federal efforts to keep tabs on how well each state’s Medicaid program is functioning. Verma has said that “With all the flexibility must come accountability. We must be honest with ourselves and honest with our stakeholders . . . about how well we are doing.”

The scorecard’s initial information is based on states that voluntarily report a series of measures about the health of their Medicaid and CHIP enrollees. It shows, for instance, that the percentage of adults on Medicaid with high blood pressure under control as of 2016 varied from 26 percent in Louisiana to 72 percent in Rhode Island. The percentage of children ages 3 to 6 on Medicaid and CHIP who were getting adequate doctors’ care varied from 48 percent in Alaska and Idaho to 86 percent in Massachusetts.

Verma did not specify what additional information will be in later scorecards, but she said federal officials might be interested in how many people on Medicaid are working or volunteering, regardless of whether a state has imposed work requirements in its program.

Aging in Place Frustrated By Morass of Regulations- Federal Court Orders State to Give Senior Opportunity to Return Home

It is rare that a single case admits the existence of the morass of laws and regulations frustrating "Aging in Place" as a discreet planning objective.  It is rarer still that a judge carefully outlines just how these laws and regulations frustrate a patient's simple desire to "return home."  We find both in the opinion of the Hon. Jane Maghus-Stinson, Chief Judge United States District Court Southern District of Indiana, in the case Vaughn v. Wernert (S.D. Indiana, June 1, 2018).

Karen Vaughn, a woman living with quadriplegia in her own apartment for some 4o years, was held against her will in a care facility following a hospitalization for a temporary illness. The temporary illness did not alter dramatically her functional or cognitive capability. She wanted to go home. The state refused to let her "return home," arguing that it could no longer find a home care agency that could provide the level of services Ms. Vaughn needed following a tracheotomy in 2012.  The Court introduced the case as follows:

This case is before the Court because Karen Vaughn, a woman living with quadriplegia, has been institutionalized in hospitals and nursing homes for nearly two years, and she wants to go home. She desires and is eligible to receive home-based care, and she seeks to require Defendants, various entities of the Indiana Family and Social Services Administration, to provide that care. She raises claims under the Americans with Disabilities Act, the Rehabilitation Act, and the Medicaid Act, arguing that Defendants have failed to provide her with the medical assistance for which she qualifies, thereby institutionalizing her against her will. Ms. Vaughn seeks injunctive relief, requiring Defendants to take whatever measures are necessary and required by law to provide her with community-based care in the setting of her home (emphasis added).

The  case permitted  Judge Maghus-Stinson to revisit the Supreme Court's landmark 1999 decision in Olmstead v. L.C., 527 U.S. 581 (1999), in which the the U.S. Supreme Court ruled that states can violate Title II of the Americans With Disabilities Act of 1990 (ADA) if they provide only institutional care for the disabled when the disabled could be appropriately served in a home or community-based setting. While the Olmstead decision involved two women with developmental disabilities and mental illness who were residents of a psychiatric hospital, it has been interpreted to extend beyond those specific circumstances. The decision is seen to apply to people with physical as well as mental disabilities, to those in nursing homes, and to those living in the community and at risk of institutionalization. As a result, Olmstead has generated considerable discussion regarding the provision of long-term care services, not only for people with disabilities who currently need services, but also for the growing numbers of aging baby boomers who might need care in the coming decades. The Medicaid program is also seen to be governed by Olmstead, which program permits states to make many of their own decisions, within broad federal guidelines, about whom and what long-term care services to cover, and in what settings.

In Vaughn, ruling on cross motions for summary judgment, the court rejected the state's arguments that home or community based care was unavailable to Ms. Vaughn.  The court ruled that these were only unavailable to Ms. Vaughn because of the complexity in reimbursement rates, not because of the availability of appropriate care providers.  Judge Jane Magnus-Stinson observed,  in ruling in favor of Ms. Vaughn, that:

"...the undisputed medical evidence establishes that at or near the time of the filing of this Complaint, Ms. Vaughn’s physicians believed that she could and should be cared for at home—both because home healthcare is medically safer and socially preferable for her, and because Ms. Vaughn desires to be at home... That support has continued throughout the pendency of this litigation, through at least April of 2018 when Dr. Trambaugh was deposed. Based on the evidence before this Court, it concludes as a matter of law that Ms. Vaughn has established that treatment professionals have determined that the treatment she requests—home healthcare—is appropriate."

The court traced, and criticized, the almost indecipherably complex nature of Medicaid waiver programs that fund portions of home care:

Defendants' [the State] own administrative choices—namely, the restrictions they have imposed on Ms. Vaughn’s home healthcare provision pursuant to their Medicaid Policy Manual—have resulted in their inability to find a caregiver, or combination of caregivers, who can provide Ms. Vaughn’s care in a home-based setting. It may be the case that other factors, such as the nursing shortage or inadequate reimbursement rates, contribute to or exacerbate the difficulty in finding a provider. But, at a minimum, Ms. Vaughn has established that Defendants' administrative choices, in addition to their denials of her reasonable accommodation requests, have resulted in her remaining institutionalized.

The court explained:

"[The state's] efforts to locate a home healthcare provider were expressly limited by two factors: the reimbursement rate offered by Defendants to home healthcare providers, and the "Medicaid Policy Manual" requirements that certain tasks be performed by skilled medical professionals. But, as Defendants discovered in attempting to locate care providers for Ms. Vaughn, no skilled medical provider will provide the care at the reimbursement rates authorized by the State. Significantly, however, both Ms. Vaughn and her health care providers disagree with the Manual's requirement that a skilled level of care is necessary for some of the tasks associated with Ms. Vaughn's care. Ms. Vaughn has requested relief from the Manual's skilled care requirements. Defendants have offered no source of authority aside from the Medicaid Policy Manual itself as to why it cannot accommodate Ms. Vaughn's request for some skill-level service modifications (emphasis added).

Discussing the State's designations of services as either skilled, or non-skilled, the Court's frustration is obvious:

"...some of these services can be performed by either skilled or non-skilled

caregivers, as deemed appropriate in an individual's plan of care. Some of these overlapping services include active and passive exercise (which is, interestingly, only listed as skilled care on the corresponding respiratory disorders chart), stimulation, and vital signs. In yet another chart, regarding "Gastrointestinal Disorders," vital signs are listed as only skilled care services, and exercise is listed as only a non-skilled care service. In the "Central Nervous System Disorders" chart, "positioning" is listed as only a non-skilled care service,  but on the "Musculoskeletal Disorders" chart, "position changes" are listed as only a skilled care service. [citations and footnotes ommitted]. 

The Court simply cannot make heads or tails of these designations, and Defendants have offered no explanation whatsoever as to the basis for their categorizations in the first place, or the inconsistencies among them in the second. Defendants have also offered no explanation as to how those distinctions might be "necessary for the provision of the service." As Steimel explained, Defendants "cannot avoid the integration mandate by binding [their] hands in [their] own red tape." Steimel, 823 F.3d at 916.

Judge Maghus-Stinson recognized that the court could not simply order Ms. Vaughn's "return home" as an appropriate remedy under the law.  Instead she set a "remedy hearing" to explore all proposals, while  urging the parties to meet prior to that hearing in hopes of finding a mutually agreeable plan.  One hopes that the State will remove the impediments in the path to Ms. Vaughn's return home. 

Astronaut Buzz Aldrin Subject of Guardianship Dispute

Buzz Aldrin: en.wikipedia.com

Astronaut Buzz Aldrin is fighting an attempt by two of his three children to place him under involuntary court-appointed guardianship, according to the Washington Post. The eighty-eight year old, the second person ever to walk on the moon, denies that he is incompetent, and is suing his children, and a former manager, for elder exploitation, financial abuse, and defamation.

Aldrin's children claim that they only are trying to protect the legendary astronaut, who they claim is paranoid and in cognitive decline.  An ABC News report suggests that the family dispute actually began in 2016 after Aldrin collapsed while on an expedition to the South Pole, and had to be evacuated.  The children allegedly sought to limit his activities after the incident, including curtailing what they saw as a lavish lifestyle.

According to the Wall Street Journal,  Aldrin voluntarily submitted to a mental evaluation in April, and passed with flying colors.  An independent doctor determined that Aldrin remains "cognitively intact and retains all forms of decisional capacity." 

Of course, the children blame the lawsuit and allegations of financial exploitation on Aldrin's lack of capacity.  “Let it be clear that every one of these allegations are products of the increased confusion and memory loss that Dad has demonstrated in recent years,” Andy and Jan Aldrin told the Washington Post.  They claim that Aldrin started associating with a third parties who were “trying to drive a wedge between Dad and the family,” Andy Aldrin said. The siblings said they would not allow “opportunistic agents to grab the spotlight, break our family apart.”

Buzz Aldrin has walked on the moon, received both the Distinguished Flying Cross in the Korean War and the Presidential Medal of Freedom, and visited the White House.  He frequently discusses space exploration, and envisions humans living on Mars.  

The Wall Street Journal observes that Aldrin's "legacy in space is secure. On earth it’s another matter." Perhaps in space, there will exist a better system for dealing with allegations of cognitive decline, and a system preventing third party control of a person's financial and non-financial legacy. 

Nursing Home Fails in Effort to Remove Resident's Guardian Over Failed Medicaid Application

Nursing homes often develop a tense relationship with the fiduciaries that represent their residents' interests.   Trustees, guardians, and agents (attorneys-in-fact) should be aware that a nursing home, or any other institution, might lose confidence of the fiduciary and seek his or her replacement.  A recent New Jersey case concerned the legal dispute that arose when the nursing home sought to replace a resident's court-appointed guardian.  

A public guardian was appointed for Y.M., a nursing home resident. The guardian applied for Medicaid on Y.M.'s behalf. The state denied the application, and the guardian appealed, but then withdrew the appeal and submitted a new application.

The nursing home filed a motion to remove the public guardian and replace the guardian with one of two other individuals. The nursing home argued that the public guardian had made errors in the Medicaid application and failed to set up a qualified income trust (QIT) for Y.M., which resulted in the denial of the Medicaid application. Y.M. argued that the alternate guardians suggested by the nursing home had a conflict of interest. The trial court denied the nursing home's motion, and the nursing home appealed.

A New Jersey appeals court ruled against the nursing home's effort to remove the resident's guardian.  The nursing home filed a motion to remove the resident's court-appointed public guardian because the resident's initial Medicaid application, prosecuted by the guardian, was denied.  The appellate court ruled that the denial of the Medicaid application was not proof that the guardian was not acting in the resident's best interest. In the Matter of Y.M. (N.J. Super. Ct., App. Div., No. A-4532-16T4, June 8, 2018). According to the court, "aside from the payment of Y.M.'s debt to the facility, [the nursing home] provided no other information to convince the judge Y.M. was dissatisfied with [the public guardian]."