IRS issues Proposed Regs for ABLE Accounts

The IRS has issued proposed regulations implementing Sec. 529A, which authorizes states to offer specially designed tax-favored accounts for the disabled (ABLE accounts). Sec. 529A was added by the Achieving a Better Life Experience (ABLE) Act of 2014, which was part of the Tax Increase Prevention Act of 2014.

ABLE accounts were created in recognition of “the special financial burdens borne by families raising children with disabilities and the fact that increased financial needs generally continue throughout the disabled person’s lifetime” (preamble, p. 5). Contributions made to an individual’s ABLE account can be used to meet the individual’s qualified disability expenses.

One account is permitted to be set up per eligible individual and total annual contributions are restricted to the amount excluded under Sec. 2503(b) for gift tax purposes ($14,000 for 2015, but inflation adjusted). Amounts contributed in excess of those limitations must be returned to the contributors on a last-in, first-out basis by the due date of the beneficiary’s tax return (including extensions) for the year in which the contributions were made and are subject to a 6% excise tax if they are not returned.

Sec. 529A allows a state (or agency or instrumentality) to create a qualified ABLE program under which a separate ABLE account may be established for a disabled individual who is the designated beneficiary and owner of that account. Contributions to that account are subject to both an annual and a cumulative limit, and, when made by a person other than the designated beneficiary, are treated as nontaxable gifts to the designated beneficiary.

Distributions made from an ABLE account for qualified disability expenses of the designated beneficiary are not included in the designated beneficiary’s gross income, but the earnings portion of distributions from the account in excess of the qualified disability expenses is includible in the designated beneficiary’s gross income. An ABLE account may be used for the long-term or short-term needs of the beneficiary. One of the most important provisions of these accounts is that they are generally not counted when determining the disabled person’s qualification for needs-based federal programs.

To qualify, the program must be established and maintained by a state or a state’s agency or instrumentality; permit the establishment of an ABLE account only for a designated beneficiary who is a resident of that state, or of a state contracting with that state; permit an ABLE account to be established only for a designated beneficiary who is an eligible individual; limit a designated beneficiary to only one ABLE account, wherever located; permit contributions to an ABLE account established to meet the qualified disability expenses of the account’s designated beneficiary; limit the nature and amount of contributions that can be made to an ABLE account; require a separate accounting of each designated beneficiary’s account; limit the designated beneficiary to no more than two opportunities in any calendar year to provide investment direction; and prohibit pledging an interest in an ABLE account as security for a loan.

Because eligible individuals often will not be able to set up their own accounts, the rules allow a person with power of attorney or the beneficiary’s parent or guardian to set up the account. Each account must be for an eligible individual, which means the individual is entitled to benefits based on blindness or disability under title II or XVI of the Social Security Act and the blindness or disability occurred before the date on which the individual turned 26, or the individual obtains a disability certification meeting requirements specified in the regulations.

To ease the administrative burdens and in recognition that some people may move in or out of disabled status, in years in which an eligible individual is no longer eligible, the plan cannot accept additional contributions and will not be deemed to make a distribution, but the account can remain open. The rules also are flexible in the requirements for annual recertifications of disability.

For more, go here.

Use of Filial Responsibility to Collect a Nursing Home Debt Survives Federal Challenges

The State of Pennsylvania is racking up victories supporting the use of filial responsibility in resource recovery of Medicaid benefits.  Future courts will likely point to the Second Circuit Court's decision in Eades v. Kennedy, PC Law Offices (U.S. Ct. App., 2nd Cir., No. 14-104-cv, June 5, 2015) as a peculiarly important case paving the way for greater reliance upon filial responsibility.  Aside from the fact that the case concerned an effort to collect funds from a Medicaid recipient's family who were residents of another state, the court specifically rejected any claim that existing federal law preempts  state filial responsibility.

The U.S. Court of Appeals held that a law firm that was attempting to collect a debt from a nursing home resident's family did not violate debt collection law when it filed a lawsuit against the family based on Pennsylvania's filial support law.  Joni Eades' mother died owing the Pennsylvania nursing home she resided in around $8,000. The nursing home hired Kennedy, PC Law Offices to collect the debt from Ms. Eades and her father, who resided in the State of New York. Kennedy sent a letter to Ms. Eades, stating that she could be held liable for the debt under Pennsylvania's filial support statute. During a phone call with Ms. Eades, a Kennedy employee allegedly stated that if the debt was not paid, Kennedy would put a lien on her father's house and garnish her wages.

Kennedy filed a complaint against Ms. Eades and her father for failing to pay the debt. Ms. Eades and her father filed a lawsuit in federal court against Kennedy alleging that it violated the fair debt collection law. The district court granted Kennedy's motion to dismiss, ruling that it did not have jurisdiction over Kennedy and that Ms. Eades’ obligation to pay the nursing home was not a debt. Ms. Eades and her father appealed.

The U.S. Court of Appeals, Second Circuit, affirmed in part but remanded  part of the case. The court held that while the court does have jurisdiction over Kennedy and while Ms. Eades' obligation to pay the nursing home was a debt, there was no conflict between the federal nursing home law and Pennsylvania's support law, so filing a lawsuit under the filial support law did not violate the debt collection law.

The court held that federal law did not preempt the Pennsylvania law.  Eades argued that the federal Nursing Home Reform Act (NHRA), which prohibits nursing homes from requiring third party guarantees of payment, preempted the Pennsylvania law.  The court disagreed: 

"[T]he NHRA is not inconsistent with the Pennsylvania indigent support statute, which holds an indigent person’s spouse or child liable for the person’s maintenance or financial support, unless the spouse or child is financially unable to support the indigent person or meets other statutory exceptions. 23 Pa. Cons. State 4603(a).  By its terms the Pennsylvania statute does not appear to condition the continuing care of the indigent person on a family member’s financial support. Thus, a nursing home can petition a court to order an indigent resident’s spouse or child to pay for the resident’s nursing home care pursuant to the state statute without violating the NHRA, as long as the nursing home refrains from conditioning the resident’s admission, expedited admission, or continued stay on a third party guarantee of payment. For these reasons, we conclude that the indigent support statute does not conflict with the NHRA."

The court did remand the case to the district court to consider the the issue of whether the phone call from the Kennedy employee to Ms. Eades violated the debt collection law.

For the full text of this decision, go here.

SSA Clarifies Its Position on Court-Established (d)(4)(A) Trusts

Responding to criticism from advocates that the Social Security Administration (SSA) was unfairly refusing to allow court-established (d)(4)(A) trusts to qualify as exempt resources for Supplemental Security Income (SSI) purposes, the SSA has issued an Administrative Message clarifying its policy regarding these trusts and ordering officials to approve the trusts if they meet the other (d)(4)(A) requirements and were not created prior to the order issued by the court.

Apparently based on the SSA's Trust Training Fact Guide, some SSA offices have recently been refusing to approve court-established (d)(4)(A) trusts because they were not created by a court "order."  Since people with disabilities are unable to establish their own (d)(4)(A) trusts, if the SSA's position were uniformly applied it would mean that no court could ever establish a (d)(4)(A) trust unless it did so on its own initiative.

The SSA has now issued an Administrative Message, first published by Illinois attorney and Social Security expert Avram L. Sacks on the NAELA members listserv, explaining that the rejection of court-established (4)(d)(A) trusts is inappropriate when the trust was not finalized prior to the court's action.  The message states that "[i]n the case of a special needs trust established through the actions of a court, the creation of the trust must be required by a court order for the exception in section 1917(d)(4)(A) of the Act to apply. That is the special needs trust exception can be met when courts approve petitions and establish trusts by court order, so long as the creation of the trust has not been completed before, the order is issued by the court. Court approval of an already created special needs trust is not sufficient for the trust to qualify for the exception. The court must specifically either establish the trust or order the establishment of the trust."

The message goes on to give four clarifying examples of situations where trusts may or may not fit this criteria.  In the first example, an SSI beneficiary's sister petitions the court to create and order the funding of a trust to hold the beneficiary's inheritance.  The sister provides a draft trust to the court.  When the court issues an order approving the petition and ordering the creation of the trust, it will meet the requirements of SI 01120.203B.1.f.  In the second example, a judge orders the creation of a trust to hold a settlement, and the trust document lists the settlement as the trust's original corpus.  This trust also passes muster with the SSA.  In the two negative examples, the SSA claims that when a court approves a trust that has already been created ahead of time, or when a court amends a defective trust with a nunc pro tunc order to make the amendment retroactive to the date the trust was originally created, the trusts will not qualify for the special needs trust exception.

Click here to read the SSA's entire message.

Get legal Advice When Applying for Medicaid- State Can Recover From a Medicaid Recipient's Estate Even Though Estate Would Have Qualified for Hardship Waiver

A recent case underscores the importance of seeking and obtaining legal advice when dealing with Medicaid resource recovery.  A Michigan appeals court has ruled that a Medicaid recipient's estate cannot avoid estate recovery by claiming undue hardship because the state didn't pursue a hardship waiver when it had the chance. In re Estate of Clark (Mich. Ct. App., No. 320720, May 28, 2015).

Larry Wykle enrolled his mother, Violet Clark, in Medicaid. The application included an acknowledgment that the state may try to recover for services from Ms. Clark's estate and that the state may agree not to pursue recovery if an undue hardship exists. After Ms. Clark died, Mr. Wykle became the administrator of her estate. The state notified Mr. Wykle that it intended to recover Medicaid expenditures. The notice included information about applying for a hardship exemption. The estate's only asset was a house that was valued at less than the average price of a home in the area, which under the state Medicaid plan would have made it eligible for a hardship exemption.

Mr. Wykle did not pursue the hardship waiver and he denied the state's claim. The state sued the estate. Mr. Wykle argued that the estate could not collect against the estate because the value of the home qualified for a hardship waiver, and that the state did not provide Mr. Wykle with information how to apply for a hardship waiver, informing him only that such a waiver was available.  The trial court granted the estate summary judgment because the estate consisted only of a modest household and the state did not provide Mr. Wykle with information on how to apply for a hardship waiver when he enrolled Ms. Clark in Medicaid.The state appealed.

The Michigan Court of Appeals reversed, holding that Mr. Wykle received proper notice of the hardship exemption and that the hardship exemption does not prevent the state from pursuing estate recovery against an estate that might have qualified, but did not apply. The court rules that Mr. Wykle "cannot now attempt to avail himself of the waiver’s benefits without having followed the procedural rules necessary to claim the benefit." In addition, the court rules that the written notice about the waiver in the application was sufficient.

For the full text of this decision, click here.

State Cannot Modify Penalty Period Unless All Transferred Assets Are Returned

A New Jersey appeals court has held that a Medicaid applicant's penalty period cannot be modified unless all the assets transferred during the look-back period are returned. C.C. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-4291-13T4, May 29, 2015 unpublished).

C.C. sold her house and gave half the proceeds ($99,233.75) to her nephews. She applied for Medicaid and the state imposed a 387-day penalty period based on the transfer. During the penalty period, her nephews returned $17,000 to pay for her care.

C.C. argued that the state should reduce her penalty period because the nephews returned $17,000. The state determined that it could not reduce a penalty period unless all the transferred funds are returned. C.C. appealed to court.

The New Jersey Superior Court, Appellate Division, agreed with the state that the penalty period should not be changed. The court holds that "both federal and state law require the return of all assets transferred during the look-back period in order to modify the penalty."

For the full text of this decision, click here.

Spouses of Hospice Residents Less Likely to Become Depressed

Symptoms of depression are less common in the spouses of hospice residents when compared to families where hospice was not involved, a recent study suggests.  Investigators at Mount Sinai's Icahn School of Medicine in New York City studied data from a national survey and Medicare claims, and followed more than 1,000 surviving spouses of deceased patients who were over age 50. They found those whose spouses were in hospice for at least three days were less depressed, and the positive effect was more prominent a year after the death.

Although they could not correlate specific services with improvement of symptoms, hospice offered medical services, symptom management, spiritual counseling, social services and bereavement counseling.  These services are provided to patients and their immediate families.

Approximately 45% of terminally ill residents die while receiving hospice care in the U.S, more than a 20% increase from the past decade.

This was the first national study to examine the mental health of spouses of residents with all types of serious illnesses.  Prior studies focused mostly on cancer patients and their families.

Source: McKnight's

Husband Acquitted of Nursing Home Rape of His Wife

The jury acquitted the 78-year-old retired farmer and former state legislator of sex-abuse charge in a case that captured international attention.

To read my prior post regarding and including a background of this case, click here.

Prosecutors had contended he was guilty of the felony because he had sexual contact with his wife after nursing-home staff members told him her Alzheimer's disease had stolen her ability to consent. The case raised wide-ranging questions regarding the law, and relationships between persons where one suffers from dementia. The defendant's attorney, in fact, warned that conviction might cause partners to avoid visitations in order to avoid potential criminal culpability.

Regardless the outcome, the case has led to a heightened awareness regarding the need for dialogue regarding such matters.  See, for example, Eliza Gray's article, "Why Nursing Homes Need to Have Sex Policies," published in Time magazine.  

Elder Justice Website Aids Reporting Elder Abuse and Financial Exploitation

The United States Department of Justice has launched the Elder Justice Website, as part of the Elder Justice Initiative designed to provide a coordinated federal response by emphasizing various public health and social service approaches to the prevention, detection, and treatment of elder abuse. Victims and family members will find information about how to report elder abuse and financial exploitation in all 50 states and territories by simply entering a zipcode.

The Elder Justice Act represents Congress’s first attempt at comprehensive legislation to address abuse, neglect, and exploitation of the elderly at the federal level. 

On the Elder Justice Website, individuals will find information about how to go about reporting elder abuse and financial exploitation.  The website is intended to serve as a “dynamic resource” and will be updated to reflect any changes in the law and current news in the elder justice field.

Payments from Special Needs Trust Causes Section 8 Ineligibility

Special Needs Trusts (SNT's) are generally designed to prevent beneficiaries from losing their Medicaid and Social Security eligibility.  These trusts are not without challenges and possible disadvantages.  In resolving  Social Security and Medicaid issues, SNTs often sacrifice other opportunities.  HUD's Section 8 housing assistance program, for example, has no language in its rules that expressly recognizes and protects SNTs.  A federal district court recently held that a local housing authority properly counted payments from a SNT as income when it determined that a Section 8 beneficiary was no longer eligible for a housing voucher.  DeCambre v. Brookline Housing Authority (D.Mass., No. 14-13425-WGY, March 25, 2015).

Kimberly DeCambre is the beneficiary of a court-established first-party special needs trust that was funded with the proceeds from a $330,000 personal injury settlement.  Ms. DeCambre receives Supplemental Security Income (SSI) and Medicaid due to a variety of serious medical conditions, and she also received a Section 8 housing voucher.  In fall 2013, the Brookline Housing Authority (BHA), the local agency that administers Ms. DeCambre's housing voucher, informed Ms. DeCambre that she was no longer eligible for Section 8 because the trust had disbursed more than $60,000 during the year for her car, phone, Internet, veterinary care for her pets and travel expenses.   A hearing officer upheld the BHA's decision.

Ms. DeCambre filed suit against the BHA in state court and her claims were removed to federal court.  Ms. DeCambre claimed that the BHA violated her civil rights by counting the payments from the trust as income and by discriminating against her due to her disability.  She also raised several due process claims.  Instead of hearing arguments on Ms. DeCambre's request for a preliminary injunction, the parties agreed to a case stated hearing to resolve Ms. DeCambre's underlying claims. At this hearing, Ms. DeCambre posited that it was improper to treat the distributions from the trust as income when, according to Department of Housing and Urban Development (HUD) rules,  the same payments would not be considered income had she simply taken the settlement as a lump sum outside of a trust.   

The U.S. District Court for the District of Massachusetts reversed, ruling that the BHA properly terminated Ms. DeCambre's Section 8 benefits.  Although sympathizing with trust beneficiaries who have difficulty  retaining Section 8 benefits, the court determined that it is "unable to find any regulatory support for DeCambre's argument that her Trust expenditures must be excluded from annual income and that her Trust corpus remained a lump-sum settlement.  To the extent BHA treated DeCambre's expenditures as spending from an irrevocable trust, rather than from a personal settlement fund, the Court holds that their determination was a reasonable one." The court also ruled that Ms. DeCambre's due process claims failed because she did not have a property interest in Section 8 benefits and was afforded ample hearings.  The court concluded that Ms. DeCambre was not discriminated against due to her disability because HUD treats special needs trust and non-special needs trust beneficiaries equally when it comes to income attribution.

To read the full text of the court's decision in this case, click here. 

To read a previous article regarding the complexities involved in crafting SNTs, click here and here.

Estate Plans Should Consider and Attempt to Resolve Guardianship

Well-crafted estate plans consider and attempt to resolve issues arising from incapacity and incompetency. Many estate plans are crafted to avoid or prevent guardianship. A recent New Jersey case illustrates why these concerns are worthy of attention.  After a trial court refused to consider the wishes of a putative ward, both respect to choice of guardian and place of residence, and accepted a "settlement" regarding guardianship to which the ward objected, a New Jersey appellate court was compelled to rule that a person who is incapacitated may still be able to express a preference as to his or her choice of a guardian or place of residence, both of which the court must consider before making rulings regarding the ward.  Matter of the Guardianship of Walter J. Macak, 377 N.J. Super. 167 (App.Div. 2005).

In the case, Mr. Macak’s daughter filed a complaint seeking the appointment of a guardian for her father and his million dollar estate based on her claim that he was incapacitated. The impetus for the complaint was her concern that Mr. Macak had Alzheimer’s disease, was unable to manage his finances, and was falling prey to financial “scam artists.”  Mr. Macak directed his attorney to oppose the guardianship application and specifically indicated that, if he was declared incapacitated, he was opposed to having his daughter appointed as his guardian.

Instead of opposing the guardianship or advocating for Mr. Macak's choice of guardian, his attorney negotiated a “settlement” under which she signed a consent order on Mr. Macak's behalf. The consent order, which the trial court signed without holding a hearing or making findings of fact and conclusions of law, declared Mr. Macak to be incapacitated and appointed another attorney as his guardian, and providing that the guardian could "continue" Mr. Macak’s “gifting program” of giving his daughter $ 18,000 per year.  The "settlement" also required that Mr. Macak  sign a separate written agreement with the attorney appointed as his guardian, in which he agreed to move out of his house into an assisted living facility within five days of the date of the agreement, but that she (his guardian) would agree to permit him to visit his house on a regular basis.

After the court-appointed guardian refused him access to his house, Mr. Macak sought to set aside the guardianship, claiming he had signed the guardianship “agreement” under duress, duress being the threat that if he failed to sign, his daughter would be appointed as his guardian. Mr. Macak also contended that he was not legally incapacitated but only needed assistance in managing his finances, and on that basis asked the court to appoint a conservator.

Tenant's Estate Sues Landlord for Buyout Payment- Contracts and Agreements Are Assets

Estate planning is a discipline that requires periodic consideration and reconsideration of your circumstances as they change. When the estate plan involves a trust or other entity, contracts and agreements that are assets of your estate, should work within the estate plan.  Oil and gas leases, land installment contracts, rental agreements, installment sales, notes, security interests that you take in other's property, and the like, should be crafted in order to ensure that these assets remain viable assets of your estate after your death, and are marshaled and disposed in accordance with your wishes.  Sometimes, this is a simple task of assigning or conveying the rights to your trust, company, or other entity. These are too often overlooked, though, leading to unnecessary loss, risk, and legal dispute.  

A recent example resulted in a New York City landlord and the estate of one of the landlord's tenants fighting over whether the landlord is required to continue paying on a buyout of the tenant now that the tenant is deceased.

Walter Blomeyer, a black-cab driver, lived for decades in a single-room apartment in a building owned by Icon Realty Management, according to a recent article in the New York Post.  When Icon decided to convert the building into luxury condominiums, it offered to pay Mr. Blomeyer $525,000 to  induce him to move. Mr. Blomeyer accepted the deal, which required Icon to pay Mr. Blomeyer an initial sum of $300,000, allow him to live rent-free in another one of their buildings for a year, and make a final $225,000 payment.

Unfortunately, Mr. Blomeyer died in February of a heart attack before the final payment was made.  Icon has refused to make the payment to Mr. Blomeyer's estate. Mr. Blomeyer's estate was forced to file suit against Icon for $225,000. According to the Post, Icon's attorney argues it doesn't have to pay the estate because there was nothing in the agreement about the estate benefiting from the agreement.  "His estate is entitled to nothing," the lawyer said.

If the agreement had been reviewed by the estate planning attorney prior to execution, the agreement could have been easily modified to remove any doubt that the obligation was owed to Mr. Blomeyer, "his heirs and/or assigns" and that payments could be made to him, "his estate, his personal representative, or the trustee of his trust." Simple language, and as my niece would say, "mischief managed."

For the article about this case from the New York Post, click here. 

Husband Charged with Raping His Wife- Nursing Home Aids Claim Dementia Made Consent Impossible

Henry Rayhons, is accused of having sexual relations with his wife at a nursing home when she was unable to give consent due to Alzheimer's disease. He's charged with one count of felony sexual abuse.

 Donna Lou Rayhons’ dementia advanced so quickly in the months before her death she couldn't recall how to eat, thought her mashed potatoes were eggs and couldn't make decisions on her own, care center workers testified.  Prosecutors say Henry Rayhons had sexual relations with his wife on May 23, 2014, in her room at the care center. Prosecutors say he was told earlier that month that his wife was no longer able to consent to sex.

Donna Lou Rayhons died in August. Henry Rayhons was arrested five days later.

A 14-member jury, eight women and six men, heard testimony from Barrick and other staff who worked at the care center, Garner police and Dr. John Brady of Garner Medical Clinic. Prosecutors spent much of the day asking the care center workers and doctor about Donna Lou Rayhon's condition and her husband's behavior in the weeks leading up to the alleged incident.

Charge nurse Shari Dakin testified she didn't see Donna Lou Rayhons make a single decision on her own without help in the months she lived in the care facility in Garner.

"You could see that Donna had Alzheimer's — she was not like you and I," Dakin said. "She was just in her pleasant little world, her own little world."

Barrick told the jury that Henry Rayhons was upset when told he could no longer take his wife out of the care center as he had in the past.  She said he took Donna Rayhons to a doctor, after telling staff they were going for breakfast, in a bid to get overnight visits reinstated.

The doctor, John Brady, told jurors Henry Rayhons made an unsolicited comment while in the exam room with his wife.  "Mr. Rayhons expressed his frustration with not being able to take Donna outside the facility as they had been doing previously," said Brady, of Garner Medical Clinic. "He made an unsolicited comment about his frustration with the family, but saying it's not like I'm going to take her out for sex or anything."

Jurors were shown surveillance footage of Henry Rayhons walking to and from his wife's room on May 23. On the way out, he drops an item in a laundry cart.  Witnesses said it was a pair of Donna Rayhons' underwear. Police collected the undergarments as evidence. Sheets, a blanket and Donna Rayhons' comforter also were taken for testing.

Henry Rayhons' attorney, Joel Yunek, questioned how often laundry was done. He also pointed out Donna Lou Rayhons' roommate, who reported the alleged incident, never explicitly said she heard the Rayhons having sex.

He said it may have been what care center workers thought she implied, but not what she actually said. In his opening statement, Yunek said there's no physical evidence his client had sex with his wife on May 23, as prosecutors contend.

Yunek asked several witnesses whether anyone ever saw Donna Rayhons act afraid of her husband, or show any signs he was mistreating her.  Apparently no one testified that she complained, and no one reported any signs he was mistreating his wife. Though often "pleasantly confused," Donna Rayhons spoke warmly of her husband, Concord Care Center employee Brittany Bouslaugh reportedly said Monday.  "She said 'He takes me out and he buys me these beautiful things and beautiful jewelry'," Bouslaugh said. "And, she was just very, very happy."

Defense lawyer Joel Yunek contended in his opening statement that Henry Rayhons had lost a "power struggle" with two of his stepdaughters, which led to his wife being placed in a nursing home against his will last March. One of the step-daughters petitioned for, and received appointment as a guardian for her mom.  After the felony charge was filed last August, Henry Rayhons' supporters suggested the prosecution was sparked by bad feelings between him and two of his stepdaughters.

According to the New York Times, "it is rare, possibly unprecedented, for such circumstances to prompt criminal charges. Mr. Rayhons, a nine-term Republican state legislator, decided not to seek another term after his arrest."

For more on this case, click here, here, here, and here. 

"Extra Help" Aids People With Limited Incomes Pay for Medicare Prescription Drug Coverage

Extra Help is a federal program that helps people with limited incomes to pay the costs associated with Medicare prescription drug coverage (Medicare Part D). Extra Help is administered by the Social Security Administration. To qualify, you must meet income and asset guidelines that are determined by the federal government each year. If you are single in 2015, your monthly income must be below $1,471 ($1,991 for couples), and your assets must be up to $13,640 ($27,250 for couples) in order to qualify for Extra Help.

In order to have Extra Help, you must get your prescription drug coverage through Medicare Part D. You can get this coverage through both a stand-alone Part D plan that works with Original Medicare, or through a Medicare Advantage plan that includes prescription drug coverage. Extra Help does not work with other forms of prescription drug coverage, such as coverage from an employer. If you do not have a Part D plan, Extra Help gives you a Special Enrollment Period to enroll in a Part D plan outside of typical enrollment periods.

Depending on your income and assets, you may qualify for either full or partial Extra Help. With either program, you don't pay the full cost of your drugs on your plan’s formulary (the list of covered drugs) that you buy at a pharmacy in your plan’s network. You also can use a mail-order pharmacy with Extra Help. Extra Help can also assist with your monthly Part D premium and annual deductibles.

You can apply online, through the Social Security Administration by calling the National Hotline at 800-772-1213, or by visiting your local Social Security office. 

Extra Help is automatically provided to anyone who has a Medicare Savings Program, receives Supplemental Security Income (SSI), or has Medicaid.  

If you do not qualify for Extra Help, your state may have a State Pharmaceutical Assistance Program (SPAP) that can assist with prescription drug costs. Eligibility requirements and program benefits may vary, depending on the program. Contact your local State Health Insurance Assistance Program (SHIP) to see if there is one available in your state. To find your SHIP, visit www.shiptacenter.org or call 877-839-2675.

Click here or here to read more about Extra Help and to learn about whether you may qualify for Extra Help. Click here to learn about other programs and ways that can help lower your prescription drug costs.

Cleveland Attorney Accused of Stealing $115,000 from Estate

An 84-year-old Cleveland attorney is accused of stealing $115,000 from the estate of a client, and using the money to pay his bills.

Gerald Cooper is charged in federal court with wire fraud for stealing from the estate of Henry Luke. He used the money to pay credit card bills, sports tickets and mortgage payments, among others, prosecutors allege.

The charges were filed Tuesday in an information, which usually means a guilty plea is forthcoming.

Cooper, a Pepper Pike resident, was admitted to practice law in Ohio in 1957. The Supreme Court of Ohio's website lists him as retired.Gordon Friedman, Cooper's attorney, told a local paper that his client is working toward paying all of the money back.

"He has had an outstanding and remarkable career as a lawyer," Friedman said. "It is unfortunate that this final moment of his practice is kind of a dark mark on his reputation." According to the information:  Cooper filed an application to administer Luke's estate in Cuyahoga County Probate Court. Between February and March 2014, he received $138,397 from three of Luke's bank accounts.

Cooper then took $115,000 from the estate between February to October 2014 by writing a series of checks. The money then went into his personal account.

You can read the entire article here.

Nursing Home Resident Not Entitled to Hearing on Readmission After Hospitalization

Nursing homes have almost unlimited authority to refuse to readmit a resident following a hospitalization.  This was demonstrated  recently in an Illinois appeals court case which ruled that a nursing home resident who entered a hospital while waiting for a hearing on an involuntary discharge, was not entitled to a hearing when the nursing home refused to readmit him. Gruby v. Department of Public Health (Ill. Ct. App., 2nd Dist, No. 14-MR-0354, March 26, 2015).

Marvin Gruby was a resident of Manorcare Highland Park nursing home. The nursing home issued him a discharge notice, claiming that Mr. Gruby threatened the safety of individuals in the nursing home. Mr. Gruby requested a hearing as was his right under state law. Before the hearing could take place, however, Mr. Gruby entered the hospital for a scheduled procedure. The nursing home notified Mr. Gruby that he would not be able to return to the facility after his hospitalization and it withdrew the notice of discharge.

Mr. Gruby argued that he was entitled to a hearing on the discharge. The administrative law judge determined that a hearing was no longer necessary and closed the case. Mr. Gruby appealed to court. The court ruled that the controversy became moot when the nursing home withdrew the notice of discharge. Mr. Gruby appealed, arguing that he was still a resident of the nursing home while he was in the hospital. Under federal regulations, if a nursing home resident enters a hospital for 10 days or less, the nursing home may not refuse to readmit the resident on the basis of his or her Medicaid status.

The Illinois Court of Appeals affirmed the administrative law judge's decision, holding that under federal nursing home law, Mr. Gruby is not entitled to a hearing for being denied readmission to the nursing home. According to the court, Mr. Gruby did not remain a resident of the nursing home once he was admitted to the hospital because the 10-day bed hold requirement applies only to the Medicaid provisions. The court rules that when the nursing home withdrew its notice of discharge, there was no longer a need for a hearing. The nursing home, in effect, is permitted to circumvent the resident's rights by simply refusing readmission of the the resident, so long as the refusal is not because of the resident's Medicaid status.  

For the full text of this decision, click here. 

Life Estate Renders Medicaid Applicant Ineligible

Life estates are frequently used by seniors to gift real property to family members because the seniors are assured that the retained life estate secures their use and enjoyment of the property for the remainder of  their life.  These estates, however, present complicated tax and legal issues rarely considered and resolved prior to the gift.  

Life estates often complicate Medicaid eligibility.  See, for example, my prior article, "Entire Value of Property in Which Medicaid Recipient Had Life Estate is Recoverable in Idaho."    In a more recent example, North Dakota's highest court ruled that a Medicaid applicant who had a life estate in property is entitled to the income generated from that property, even though she argued she permanently gifted the income to her son. Bleick v. North Dakota Dept. of Human Services (N.D., No. 20140103, March 24, 2015).

Shirley Bleick transferred property to her son in 1988, reserving a life estate for herself, and then she moved off the property.  In 1992, her son leased a portion of the property to another farmer for $8,200 a year. The rental income went to Ms. Bleick's son. In 2011, Ms. Bleick applied for Medicaid benefits, but the application was denied. The state determined that Ms. Bleick should be receiving a portion of the rental income, so her countable assets exceeded the maximum limit.

Ms. Bleick appealed the state's decision, arguing she gifted the right to the income to her son. The trial court affirmed the state's decision to deny Medicaid benefits, and Ms. Bleick appealed.

The North Dakota Supreme Court affirmed, holding that the income stream from the life estate exceeds the asset limits for Medicaid benefits. According to the court, if Ms. Bleick intended to gift all the income from the property to her son, she could have released the life estate and transferred title to the property. The court ruled that the rental income, if it is viewed as a gift, is an annual gift. One justice dissented, arguing that all the evidence indicates that Ms. Bleick intended to permanently gift the income to her son.

The lesson could not be more clear: consult with an elder law attorney before making gifts in order assure that the consequences of the transaction are fully understood and considered. For more information, see "Six Questions to Ask Before Making Gifts."    

For the full text of this decision, go to: 

http://www.ndcourts.gov/court/opinions/20140103.htm

NAELA Says the VA Could Be Sued If Proposed Transfer Regs Are Enacted

In its response to the Department of Veterans Affairs’ proposed regulations that would establish a look-back period and asset transfer penalties for pension claimants, the National Academy of Elder Law Attorneys’ (NAELA) raises the prospect that the VA could be sued if the rules take effect.  

As previously reported, proposed Section § 3.276 would establish a 36-month look-back period and a penalty period of up to 10 years for those who dispose of assets to qualify for a VA pension. Currently, there is no prohibition on transferring assets prior to applying for needs-based benefits, such as Aid and Attendance. 

“[W]e express the serious concern that the proposed rule’s 3-year look-back period and transfer of assets penalty exceed statutory authority, opening up VA to future litigation and causing additional uncertainty for Veterans and their families,” write Bradley J. Frigon, NAELA’s president, and Victoria Collier, Chair of NAELA’s VA Task Force, in March 17, 2015, comments on the proposed rules.

Frigon and Collier argue that the proposed rules do not meet the standard of either an explicit or implicit delegation by congressional statute that the U.S. Supreme Court set forth in Chevron USA, Inc. v. NRDC, Inc., 467 U.S. 837 (1984).  They point out that Congress had the opportunity from 2012 to 2014 to create Medicaid-like transfer rules but that each proposal died in session.

NAELA’s comments also maintain that the proposed transfer penalties exception is too narrow.  “Veterans and their surviving spouses will be unjustly penalized for prior transfers that had absolutely nothing to do with VA pension eligibility," Frigon and Collier write. “Gifts to children at holidays and birthdays will be penalized. Donations to places of worship will be penalized. Contributions to charities will be penalized. All because there is a presumption that the transfer was made for the purpose of qualifying for VA pension. . . . The final rule should require that transfers only made for the sole purpose of qualifying for VA pension be penalized.”

The 27-page comments highlight a number of other flaws in the proposed regulation, including that it should allow for partial cures, that the time allowed to cure transfers should be expanded, that the rule disproportionately harms surviving spouses of veterans, and that the proposed net worth limits are harsher than Medicaid’s limits.

Alimony Obligation May Require Involuntary VA Admission

Victor Rizzolo and Barbara Jones divorced when Mr. Rizzolo was 84 years old. The court ordered Mr. Rizzolo to pay Ms. Jones alimony. Five years later, Mr. Rizzolo's health began to fail, so he moved in with son, who hired a caregiver for him.

Mr. Rizzolo asked the court to end the alimony payments, arguing that his income -- which was limited to VA disability payments and Social Security -- was needed to pay the caregiver. The trial court ruled against Mr. Rizzolo, finding that he had not done all that he could to meet his alimony obligations; if he entered a VA facility, the court found that he would be able to receive care and pay the alimony.  Because the court did not end the alimony obligation, Mr. Rizzolo appealed.  Perhaps he wishes he had not appealed, because, although the appeals court ruled in his favor, the court remanded the case describing an ominous potential outcome- his involuntary institutionalization in order to preserve his income for payment of alimony. 

The New Jersery Superior Court, Appellate Division, reversed, holding that the trial court did not hear evidence about whether entering a VA facility was really appropriate. According to the court, "although the [trial] court may on remand conclude that it is equitable to require [Mr. Rizzolo] to enter a VA facility against his wishes in order to use his limited income to continue to pay alimony, allowing [Ms. Jones] to preserve her assets until [Mr. Rizzolo's] death makes alimony no longer available, it may only do so upon consideration of competent evidence and a qualitative analysis of both parties' circumstances."

The court ruled that the trial court must first consider all the evidence before it can order an 89-year-old veteran in failing health to enter a Veteran's Administration (VA) facility against his will in order to ensure he had enough assets to pay alimony. Sometimes one can only exclaim, "wow!"  See, Rizzolo v. Jones (N.J. Super. Ct., App. Div., No. A-1800-13T2, March 2, 2015).  

Hopefully, his son will seek to introduce evidence regarding the relative quality of care available at home versus that available in an institution, and the court will consider carefully his quality of life concerns vis-a-vis his financial obligations. See, for example my articles, "One-Third of Nursing Home Residents Harmed In Treatment," Hapatitis Infection Risk in Nursing Homes Up 50%; Infection Risk Across the Board Increases, and "Most Terminal Dementia Patients in Nursing Homes Given Pointless and Potentially Dangerous Drugs"

For the full text of this decision, go to:
http://njlaw.rutgers.edu/collections/courts/appellate/a1800-13.opn.html

White House Proposes New Rules to Protect Investors Saving for Retirement

You might think that the top priority of the broker or financial adviser managing your retirement funds is to maximize your returns, but that’s not always the case.  Some steer their clients to bad retirement investments with high fees and low returns because they get higher commissions or other incentives to do so.  And there’s nothing currently in the law that requires advisers to put their clients’ interests first.

The Obama Administration has proposed new rules to change this and require financial advisers to act in the best interests of their clients. The move is designed to increase the amount investors receive in retirement.

Americans may lose as much as $17 billion every year because of bad financial advice from advisors with conflicts of interest, according to a report by the President's Council of Economic Advisors. Many financial advisors have a sales incentive to steer clients into investments that offer higher payments to the advisor but are not necessarily the best option for the client. According to the report, a retiree getting advice from an advisor with a conflict of interest when rolling over a 401(k) balance at retirement can lose an estimated 12 percent of the value of his or her savings.

To confront this problem, President Obama has directed the Department of Labor to promulgate new rules that require financial advisors to act like fiduciaries. This means they must put their clients' interests above their own. The new rules would prevent brokers and financial advisers from rolling over retirement accounts unnecessarily or putting clients' savings into investments with high fees and low returns when there are better options.

The Department of Labor will publish the new rules and then hold a hearing on the rules and accept public comments. The financial industry is fighting the proposed rules, arguing that they will disadvantage small savers by increasing costs. 

“What they are saying,” says business columnist Darrell Delamaide writing in USA Today, “is that they are currently willing to offer their services to the low-income bracket because they will reap even higher profit from hidden costs and fees. Their opposition to the rule is virtually proof that it is necessary.”

For more information about the new rules, click here and here. 

To read the report from the Council of Economic Advisors, click here. 

Retiring Abroad with a Long-Term Care Insurance Policy

As more people consider retiring abroad, questions arise regarding how an overseas retirement will affect long-term care insurance benefits. If you are planning to relocate out of the country and want to purchase or already have long-term care insurance, the first and best advice is to read carefully the fine print on your policy.

Not all long-term care insurance policies cover care in other countries.  Even if care is covered, the benefits are often severely limited. Some companies pay benefits overseas, but the benefit is less than the amount an insured getting care in the U.S. receives. For example, one insurer pays up to 50 percent of the nursing home benefit purchased for care received outside the United States. Other companies provide  a full benefit amount, but for a limited time (for example, one year).  Once you reach the limit, you will be required to move back to the U.S. to continue your remaining coverage. Still other companies limit both the benefit and the time covered, or they may cover you only if you relocate to an English-speaking country.

To find out whether your policy covers long-term care in other countries, first look at the exclusions. Next look for a section called "international benefits" or "out of country coverage." If your policy does limit care overseas, you should not cancel it immediately because it can be hard to get coverage again. Talk to your insurance agent, attorney or financial advisor first. Instead of cancelling, it may make sense to lower your premium by reducing your benefits.

For more information on what to consider before moving to another country, click here. 

For more about long-term care insurance, click here.

Scientists have found that non-invasive ultrasound technology can be used to treat Alzheimer's disease and restore memory. Researchers discovered that the innovative drug-free approach breaks apart the neurotoxic amyloid plaques that result in memory loss and cognitive decline.  The Report was published  in Science Translational Medicine,  Vol. 7, Issue 278, pp. 278ra33 (March 11,  2015), and reported in Science Daily.

Art Collector's Estate Claims Attorney's Drafting Error Cost It $25 Million

The estate of a prominent art collector has sued the attorney who drafted the art collector's will for legal malpractice. The lawsuit, filed in the New York Supreme Court, claims the attorney's error will cost the estate $25 million in taxes.

Collector Robert Ellsworth, whom The New York Times once called “the king of Ming” for his renowned collection of Asian art, hired attorney George Bischof to draft his will. In 2010, Bischof drafted a will that left Ellsworth's estate outright to his friend, Masahiro Hashiguchi, with six charities as contingent beneficiaries. In 2013, Ellsworth changed his will to name Bischof as the sole trustee of a residuary trust. Under the new will, the residue of the estate was left to a discretionary trust that benefited Hashiguchi during his life and then the remainder of the trust was left to charity.

The lawsuit alleges that Bischof drafted the will in a manner that did not allow the trust to qualify as a charitable remainder trust and therefore meet the criteria for the federal estate tax charitable deduction. According to the lawsuit, because of the "negligently and carelessly" drafted trust, the estate will have to pay $25 million in estate taxes that it wouldn't have had to pay if the trust had been properly drafted.

For more about this case from artnet, click here.