One-Third of Nursing Home Residents Injured or Killed In Treatment

Photograph by:
 Chalmers Butterfield

A federal study has found that about one-third of nursing home residents receiving skilled care were harmed by the treatment in the facility. The  study, conducted by the Department of Health and Human Services, Office of Inspector General (IG), is entitled, “Adverse Events in Skilled Nursing Facilities: National Incidence among Medicare Beneficiaries.” "Adverse events" reported include medical errors and more general substandard care that results in patient or resident harm, such as infections caused by the use of contaminated equipment.   A “skilled nursing” facility (SNF) provides specialized care and rehabilitation services to patients following a hospital stay of three days or more. There are more than 15,000 skilled nursing facilities nationwide, and about 90 percent of them are also certified as nursing homes, which provide longer-term care.

According to the study, an estimated 22 percent of residents experienced at least one adverse event that resulted in a prolonged stay, transfer back to a hospital, permanent harm, a life-sustaining intervention, or death. An additional 11 percent experienced temporary harm while in the nursing home. Physician reviewers determined that 59 percent of these adverse events and temporary harm events were clearly or likely preventable. 

Projected nationally, the study estimated that 21,777 patients were harmed and 1,538 died due to substandard skilled nursing care during one month, August 2011, the month for which records were sampled.  These projections suggest that as many as 261,324 patients are harmed, and 18,456 patients killed, annually, from skilled nursing facility care and treatment.

Veterans and Their Families Missing Benefit Opportunities

According to the most recent VA demographic report, there is an estimated U.S. veterans population of over 21 million, with approximately 2 million being WWII veterans. Of the total population, approximately 322,000 of these veterans are receiving VA non-service connected pension benefits. The number of surviving spouses receiving pension benefits is roughly 318,000. These statistics begged Karen McIntyre, President Veterans Information Services, Inc., to ask, "Why so Few?"

She recently wrote in the Veterans Information Services, Inc., newsletter, Veterans Family Matters that:

Non-service connected pension benefits are a needs based VA benefit for war time veterans and their surviving dependents. These benefits have absolutely nothing to do with an injury, condition, or death related to military service. Even though these benefits are needs based, the veteran or dependent does not have to be poor to receive them, because medical expenses such as Medicare and insurance premiums, prescriptions, full costs of assisted living, doctor and hospital co-pays, etc. are used to offset income and assets. 

Although some veterans and surviving spouses are obviously not eligible due to their financial situation or non-wartime service there is a huge number who are eligible, but do not know it. Unfortunately, the ability for our veterans and their families to get financial assistance for medical care has been a well kept secret that is just now being "let out of the bag". 

A single veteran, who served 90 days active duty with even one day during a qualified war time, may be eligible for up to $1,758.00 per month to help pay for home care, assisted living, nursing home care, and other medical necessities. A married veteran may be eligible for up to $2,085.00 per month, a surviving spouse for up to $1,130.00 per month, and a veteran married to a veteran for up to $2,790.00 per month. None of this money affects Social Security or other sources of income and ALL is tax free to the claimant.

Sadly, many vets and their families are unaware of these benefits.

Others incorrectly assume that they are ineligible, or relying upon shoddy assessments and/or poor advice, believe that there is nothing that they can do to become eligible for these benefits.  Others confuse the standards for eligibility with those for Medicaid. Eligibility planning for veterans benefits is very different than planning for Medicaid eligibility, and there are, as a result, a wider array of opportunities to qualify for these benefits.

If you know a veteran, pass this information along.  At a minimum, we owe those who served, and the families that sacrificed for and with them, an obligation to ensure that they receive what is promised to them. 

 

MyRA?

President Obama announced a new retirement savings program for people who do not currently have an employer-sponsored plan during his 2014 State of the Union message. The new investment product, called myRA, is a starter savings account aimed at low- and middle- income workers.

Similar to a Roth IRA, the myRA accounts will allow workers to invest money after tax and withdraw the money in retirement tax-free. Unlike a Roth IRA, however, the savings will be backed up by U.S. Treasury bonds, so investors will have a safer investment alternative designed never to risk the principal investment. The accounts, which are voluntary, will be available to married couples with modified adjusted gross incomes up to $191,000 and to individuals earning up to $129,000.

Workers can open a myRA with a minimal initial $25 investment. The plans are funded through paycheck deductions with contributions as small as $5 at a time. Savers will earn variable interest on the accounts, and there are no fees on the account. Principal contributed to the account can be withdrawn without penalty at any time.  There will be a penalty, however, for withdrawing the earnings i.e., interest, from the account before age 59 1/2. 

Once an account holder has accumulated $15,000, the account holder must roll the account into a traditional Roth IRA, which will then be subject those rules. In addition, the accounts last only 30 years, so at the end of that time the funds must be rolled into a traditional Roth IRA, even if the $15,000 maximum limit has not been reached.  It is unclear whether an account holder can open a new account after a period of time in order to avoid contributions being rolled up, and subject to traditional Roth IRA withdrawal rules.  

Employees who switch jobs will be able to keep their myRA accounts without cashing them out. Workers would also be able to contribute to the same account from multiple part-time jobs. The new accounts will initially be offered through a pilot program with employers who choose to participate and should be available at the end of the year.

Critics contend that the myRA initiative will do little to address the retirement savings gap because enrollment will not be automatic and contributions will be invested only in low-return Treasuries.  The requirements that the myRA rolls up into a traditional Roth IRA at either the $15,000 limitation or upon thirty years is at best going to create confusion.  At worst it will cause account participants to mistake the flexibility and ease of the accounts prior to roll-up in planning, and fail to carefully consider the more cumbersome rules governing Roth IRA distributions after roll-up.  Unexpected tax consequences may follow.

"Qualified" distributions from a Roth IRA are not included in gross income for individual tax purposes. That is deceivingly simple: a "qualified" distribution from a Roth IRA is tax-free, i.e., no taxes due on the principal, and no taxes due on the earnings.

The reason that "simple" is deceiving is the rules that define a qualified distribution.  To be qualified, the distribution MUST be:

• Made on or after the date you become age 59 1/2; OR
• Made to your beneficiary, or to your estate, after you die; OR
• Made to you after you become disabled within the definition of the IRS code; OR
• Used to pay for qualified first-time homebuyer expenses.

But,  even if one of the qualifications above are met, the distribution is STILL not qualified if it is made within a five-tax-year period. Complicating matters further is that tax-years are NOT necessarily the same as five calendar years.

So, in effect, there are two sets of rules that must be met before a Roth IRA distribution becomes qualified, and therefore tax-free: The distribution rules and the five-tax-year rules. Unless both sets of rules are met, the distribution will NOT be qualified, and the earnings will be subject to tax, and possibly penalties.

The direct investment in treasuries may be a safer alternative for many investors, and it will benefit the treasury by encouraging direct investment.  But, is the myRA an example of the government giving with one hand only to take with the other?  Perhaps, only time will tell. 

For the press release detailing the new myRA account, click here.

Appealing Medicare Refusal to Cover Care

Sometimes Medicare will decide that a particular treatment or service is not covered and will deny a beneficiary's claim. Many of these decisions are highly subjective and involve determining, for example, what is "medically and reasonably necessary" or what constitutes "custodial care." If a beneficiary disagrees with a decision, there are reconsideration and appeals procedures within the Medicare program.

While the federal government makes the rules about Medicare, the day-to-day administration and operation of the Medicare program are handled by private insurance companies that have contracted with the government. In the case of Medicare Part A, these insurers are called "intermediaries," and in the case of Medicare Part B they are referred to as "carriers." In addition, the government contracts with committees of physicians -- quality improvement organizations (QIOs) -- to decide the appropriateness of care received by most Medicare beneficiaries who are inpatients in hospitals.

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What Are the House Ownership Options When Parents and Adult Children Live Together?

Bailey House,  Somers Hamlet Historic District
in Somers, NY, USA

Increasingly, several generations of American families are living together. According to a Pew Research Center analysis of U.S. Census data, more than 50 million Americans, or almost 17 percent of the population, live in households containing two adult generations. These multi-generational living arrangements present legal and financial challenges around home ownership.

Multi-generational households may include "boomerang" children who return home after college or other forays out into the world, middle-aged children who have lost jobs in the recent recession, or seniors who no longer can or want to live alone. In many, if not most, cases when mom moves in with daughter and son-in-law or daughter and son-in-law move in with mom, everything works out well for all concerned. But it's important that everyone, including siblings living elsewhere, find answers to questions like these:

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Using a No-Contest Clause to Prevent Heirs from Challenging a Will or Trust

Property of Darrellksr From Wikimedia Commons

If you are worried that disappointed heirs could contest your will or trust after you die, one option is to include a "no-contest clause" in your estate planning documents. A no-contest clause provides that if an heir challenges the will or trust and loses, then he or she will get nothing.

A simple "no-contest clause" will protect only the instrument, such as the trust or will.  An enhanced "no-contest clause" will identify and protect other estate planning decisions, such as a beneficiary designation of an annuity, retirement plan, IRA, Keogh, pension or profit-sharing plan or insurance policy,  a buy-sell agreement, a family partnership agreement, a limited liability company, or a marital agreement (pre- or post- nuptial), and may even penalize family members that conspire to frustrate the estate plan.

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Understanding the Medicaid Look-back Period

Medicaid uses a "look-back" period in determining Medicaid eligibility.  Medicaid, unlike Medicare, is a means-tested program, which means that you are only eligible for it if you do not have sufficient means, or have very few assets. The government does not permit the transfer all of a person's assets in order to qualify for Medicaid, so it has imposed a penalty on people who transfer assets without receiving fair value in return, often called a transfer penalty.  Transfers of assets for less than fair market value are considered "improper transfers."

In order to identify who has transferred assets, states require a person applying for Medicaid to disclose all financial transactions he or she was involved in during the five (5) years immediately prior to submitting the Medicaid application. This five-year period is known as the "look-back period." The Department of Medicaid or other appropriate state agency determines whether the Medicaid applicant transferred any assets for less than fair market value during this period.

Any transfer can be scrutinized, no matter how small. There is no exception for charitable giving or gifts to grandchildren. Informal payments to a caregiver may be considered a transfer for less than fair market value if there is no written private care agreement, and even these are scrutinized carefully. Similarly, loans to family members can trigger a penalty period if there is no written documentation establishing the existence and reasonableness of the loan. The burden of proof is on the Medicaid applicant to prove that the transfer was not made in order to qualify for Medicaid.

Transferring assets to certain recipients will not trigger a period of Medicaid ineligibility even if the transfers occurred during the look-back period. These exempt recipients include the following:

• A spouse (or a transfer to anyone else as long as it is for the spouse's benefit);
• A blind or disabled child;
• A trust for the benefit of a blind or disabled child;
• A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances).  

In addition, special exceptions apply to the transfer of a home. The Medicaid applicant may freely transfer his or her home to the following individuals without incurring a transfer penalty:

• The applicant's spouse;
• A child who is under age 21 or who is blind or disabled;
• Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances);
• A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home;
• A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

If the state Medicaid agency determines that a Medicaid applicant made a transfer for less than fair market value, it will impose a penalty period. This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state.

Transfers to a person's revocable trust are not considered improper transfers, because they do not affect "ownership" for purposes of Medicaid.  In other words, a revocable trust is not a Medicaid planning trust and does not shield assets from Medicaid spend down.  In Ohio, a couple may apply for and receive Medicaid if the home is in their revocable trust, due to changes to the law in 2016.  An attorney should be consulted nonetheless because leaving a home in a trust after Medicaid eligibility can be disadvantageous and inadvisable, of course depending upon the trust terms.  Consult an attorney when applying for Medicaid, and after eligibility to ensure proper management of the assets.  

If you have transferred assets within the past five years and are planning on applying for Medicaid, consult with your attorney to find out if there are any steps you can take to prevent incurring a penalty.

Revised 12/1/16

Conveyance to Son Was Fraudulent, But His Siblings May Also Be Liable Under Filial Support Law

North Dakota is apparently utilizing its filial responsibility statute in allocating long term care liabilities.  North Dakota's highest court recently held that a nursing home resident's sale of property to his son should be set aside as a fraudulent conveyance, but the trial court should not have declared the son personally responsible for his parent's debt under the state's filial responsibility law without also deciding whether his siblings where liable under the same law. Four Seasons Healthcare Center v. Linderkamp (N.D., Nos. 20120432, 20120433, Sep. 4th, 2013).

Earl and Ruth Linderkamp owned a farm. They leased the land to one of their sons, Elden, who farmed the property. Elden claimed that he had an oral agreement with his parents that they would compensate him for improvements to the land as part of the consideration to buy the property at a later date. In 2006, the Linderkamps sold the property to Elden for $50,000, well below its market value. Elden claimed he had made more than $100,000 in improvements to the property. Soon after, the Linderkamps entered a nursing home where they remained until their deaths, leaving a total of $93,000 in unpaid nursing home charges.

After the Linderkamps died, the nursing home sued Elden to set aside the property transfer as a fraudulent conveyance. The trial court set aside the conveyance, finding the Linderkamps did not receive equivalent value in exchange for the property. The court also determined Elden was personally responsible for his parents' debt under the state's filial responsibility law, but refused to determine his siblings' liability. Elden appealed, arguing the conveyance was not fraudulent and the court should not impose personal liability against him for his parents' nursing home debt.

The North Dakota Supreme Court affirmed in part, holding the conveyance was fraudulent, but remanded the case to determine whether Elden is personally responsible for the debt. According to the court, there was no evidence of an oral agreement or improvements made to the property "and the conveyance was made when there was a reasonable belief the parents would be entering a nursing home and would not be able to fully pay for their long-term care." The court concluded, however that the trial court erred in finding Elden personally liable for his parents' nursing home debt without deciding the other children's potential liability under the filial responsibility law.

For the full text of this decision, go here.

Things to Remember at Tax Time

April 15^th is approaching and it is time to begin crossing T's and dotting I's in preparation for paying taxes. As tax time draws near, you want to make sure you file all the proper forms and take all deductions you're entitled to. Following are some things to keep in mind as you prepare your tax form.

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Because Who is Perfect? Get Closer.

"It is special to see yourself like this."
Because Who is Perfect? 

This blog has never before provided a link to a video.  This is the first.  It is a truly inspiring video urging  identification with those suffering disabilities.  A simple message, "Get Closer." Enjoy!    

Get Closer!

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.