BOARD FIDUCIARY RESPONSIBILITYAND
RESIDENTASSET PROTECTION STRATEGIES
Presented by:
Thomas E. SweeneyTsoules, Sweeney & Martin, LLC
29 Dowlin Forge Road, Exton, PA 19341Telephone: (610) 423-4200
2006 PANPHA Annual ConferenceHershey, PA
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BOARD FIDUCIARY RESPONSIBILITYAND
RESIDENT ASSET PROTECTION STRATEGIES
WHAT CAN WE DO?
LEGAL AND PRACTICAL CONSIDERATONS
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BOARD FIDUCIARY RESPONSIBILITYvs.
RESIDENT ASSET PROTECTION STRATEGIES
BACKGROUND
PANPHA – 2005- “Asset Protection – How to be a ‘Hard Target’ ”
BARCLAY FRIENDS - Member of Board of Directors- Chair/Vice Chair – Finance Committee- Chairperson: 2006-2007
HEALTH CARE ATTORNEY
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BOARD FIDUCIARY RESPONSIBILITYvs.
RESIDENT ASSET PROTECTION STRATEGIES
AGENDA
FIDUCIARY DUTY OF THE BOARD
LTC FACILITIES: CCRC; ALF; SNF LTC FACILITIES: CCRC; ALF; SNF
SCOPE OF SERVICESSCOPE OF SERVICES
CONTRACT REQUIREMENTSCONTRACT REQUIREMENTS
SUBSIDIES, GUARANTEES, TRUSTSSUBSIDIES, GUARANTEES, TRUSTS
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BOARD FIDUCIARY RESPONSIBILITYvs.
RESIDENT ASSET PROTECTION STRATEGIES
AGENDA
MEDICAID PLANNING – FUNDAMENTALS
- Millionaires & Medicaid- Medicaid Basics- Medicaid Planning- Single- Medicaid Planning – Married - Pennsylvania Filial Support Laws
LEGAL AND PRACTICAL ARRANGEMENTS/OPTIONS
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BOARD FIDUCIARY RESPONSIBILITY
THE NONPROFIT CORPORATION ACT OF 1988(15 Pa.C.S. §§5711 et. seq.)
ATTY. GEN. TOM CORBETT’S HANDBOOK FORCHARITABLE NONPROFIT CORPORATIONShttp://www.attorneygeneral.gov.consumers.aspx?id=227
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FIDUCIARY DUTIES
OFFICE OF INSPECTOR GENERAL (“OIG”)
CORPORATE RESPONSIBILITY AND CORPORATE COMPLIANCE: A RESOURCE FOR HEALTH CARE
DIRECTORS (April 2, 2003), Office of Inspector General
AN INTEGRATED APPROACH TO CORPORATE COMPLIANCE: A RESOURCE FOR HEALTH CARE(July 1, 2004)
See: http://www.org.hhs.gov/fraud/complianceguidance.htm/#2
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FIDUCIARY DUTIES
DUTIES OF DIRECTORS AND OFFICERS
THE DUTY OF CARE- Standard
- Reliance
THE DUTY OF LOYALTY- Faithfulness- Conflict of Interest
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FIDUCIARY DUTIESFIDUCIARY DUTIES
Reimbursement – Sources of PaymentReimbursement – Sources of Payment
LTC Organizations: CCRC; ALF; SNFLTC Organizations: CCRC; ALF; SNF
Contractual RightsContractual Rights
Resident Asset Protection StrategiesResident Asset Protection Strategies
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FIDUCIARY DUTIES
SOURCES OF PAYMENT
MEDICARE
MEDICAID
LTC INSURANCE
PRIVATE PAY
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FIDUCIARY DUTIES
SOURCES OF PAYMENT – MEDICARE Part A
Medicare Part A pays Skilled Nursing Care that is restorative care in a Medicare-approved skilled nursing facility following a 3-day hospital stay. This coverage pays for nursing services, bed and board, therapies, drugs, supplies, etc.
Day 1 – 20 Medicare pays all covered services
Day 21 -100 Medicare pays all except coinsurance payment
Day 101 Medicare pays 0%
Medicare does not cover lower levels of care
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FIDUCIARY DUTIES
Sources of Payment – Medicare Part A (Continued)
Most individuals go into a SNF on Medicare following a hospital stay, and do not receive 100 days of skilled care because they are found to have reached a maximum level of improvement before the 100 days are up.
The SNF will advise the person or their family verbally and in writing that Medicare will no longer provide coverage so that other payment arrangements need to be made.
Often payment arrangements will mean private pay or immediate application for Medical Assistance.
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FIDUCIARY DUTIES
SOURCES OF PAYMENT – PART B/MEDIGAP POLICIES
Medicare Part B pays for: Medical expenses (80% of costs); laboratory costs; outpatient treatment
Medigap insurance is private supplemental insurance which is designed to help pay Medicare coinsurance amounts. It is sold to cover gaps in coverage provided by Medicare. Companies selling Medigap insurance must each offer the same coverages so cost is the major difference between their policies.
If Medicare is not paying for skilled nursing care, then the Medicap policy is usually not applicable.
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FIDUCIARY DUTIES
SOURCE OF PAYMENT – MEDICAID
Rates are composed of the following components:
- Resident Care Costs (related to peer group)- Administrative Costs (caps are imposed)- Capital Costs (facility based)- Case Mix Index (Medicaid residents only) –
medical acuity
Rates are set quarterly - (1/1, 4/1, 7/1, 10/1) - changes based on facilities case mix index for prior years.
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FIDUCIARY DUTIES
SOURCES OF SOURCES OF PAYMENT – MEDICAID – MEDICAID (Continued)(Continued)
Not only does the Medicaid rate cover room Not only does the Medicaid rate cover room and board but other services either provided and board but other services either provided or paid for by the private pay resident such or paid for by the private pay resident such as over-the-counter medications, as over-the-counter medications, transportation to doctors’ offices, etc., transportation to doctors’ offices, etc., laundry services, palliative podiatry services.laundry services, palliative podiatry services.
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FIDUCIARY DUTIES
LONG TERM CARE (“LTC”) INSURANCE
LTC Insurance can cover care in a nursing home, a personal care home, an alternate care home, home health care or assisted living facility.
One must qualify to receive benefits on Medical necessity which means: (i) inability to perform 2-3 Activities of Daily Living (ADLs) without human help; and, (ii) cognitive impairment prevents functioning and/or accomplishment of ADLs.
Medigap policies – covers co-pays in Medicare.
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CONTINUING CARE RETIREMENT CENTERS(“CCRC”)
CONTINUING CARE PROVIDER REGISTRATION ACT (40 P.S. §3201 et seq.) (31 Pa. Code §151.1 et seq.)
CCRC REGULATED BY THE PA. INSURANCE DEPARTMENT: “No providers shall engage in the business of providing continuing care in this Commonwealth without a certificate of authority therefor obtained from the commissioner as provided for in this act.” 40 P.S. §3204(a)
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CCRC
DEFINITIONS – PA REGULATIONS
CONTINUING CARE
ENTRANCE FEE
LIVING UNIT
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CCRC
DEFINITIONS – PA REGULATIONS
PA RESIDENTS AGREEMENT
STATUTORY RESERVES
ENTRANCE FEE ESCROW
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CCRCCCRC
ACTUARIAL RESERVES COVER ALL LIABILITIES
OPERATING COSTS FOR: Shelter, Health Care, Dietary
CAPITAL COSTS FOR: Fixed Asset Depreciation, Replacement, Reimbursements
BUFFER FUNDS FOR: Adverse Experience, Assumption Errors, Margin
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CCRC
CONTRACT TYPES: CARF-CCAC
Type A (Extensive) Agreement: An entrance fee contract that includes housing, residential services, amenities, and unlimited specific health-related services with little or no substantial increase in monthly payments, except to cover normal operating costs and inflation adjustments.
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CCRC
CONTRACT TYPES: CARF – CCAC
Type B (Modified) Agreement: An entrance fee contract that includes housing, residential services and amenities and a specific amount of health care with no substantial increase in monthly payments, except to cover normal operating costs and inflation adjustments. After the specified amount of health care is used, persons served pay either a discounted rate or the full per diem rates for required health care services.
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CCRC
CONTRACT TYPES: CARFT – CCAC
Type C (Fee-For-Service) Agreement: An entrance fee contract that includes housing, residential services, and amenities for the fees stated in the resident agreement. Access to health care services is guaranteed, but it may be required at full fee-
for-service rates.
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CCRC
CONTRACT TYPES: CARF-CCAC
Type D (Rental) Agreement: Allows residents the opportunity to enter their housing and provides, but does not guarantee, access to health care services paid on a fee-for-services basis.
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CCRC
CONTRACT TYPES: CARF-CCAC
Equity Agreement: These types of agreements involve the actual purchase of real estate or membership. Includes condominiums and cooperatives.
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CCRC
CONTRACTUAL PROHIBITIONS AGAINST TRANSFERS(Example)
CCRC will not terminate this agreement if the resident
is unable to pay the full monthly service fee as a result of financial reverses provided such reverses, inCCRC’s sole judgment, are not the result of willful or unreasonable dissipation of the resident’s assets. A financial gift to relatives or friends is considered to be a willful dissipation of funds subject to termination of this agreement by CCRC. (emphasis added)
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CCRC
CONTRACTUAL PROHIBITIONS (Continued)
For the period that resident is unable to pay the full monthly service fee …, the amount … shall be calculated and … totaled. The resident or his estate shall pay … following the death of the resident, or at such time as the resident sells the balance of the life estate in his unit.
Resident grants CCRC right to review financial records, including … tax returns.
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CCRC
CONTRACTUAL PROHIBITIONS (Continued)
If a determination is made that Resident has willfully dissipated his or her assets or that Resident has sufficient and adequate assets to pay monthly service fee and resident refuses to pay monthly service fee or other amounts due, CCRC may terminate this Agreement.
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CCRC
CONTRACTUAL PROHIBITIONS (Continued)
Contractual Prohibition Against Transfer of Assets - Oak Crest Village, Inc. v. Murphy, 841 A.2d 816(Md. Ct. App. 2004)
Facts
Court Holding
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CCRC
DEFICIT REDUCTION ACT OF 2005
On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 (the “DRA”) into law.
The DRA includes a number of significant changes to the Federal Medicaid rules, particularly in regard to CCRC contracts.
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CCRC
Deficit Reduction Act of 2005 (Continued)
SEC. 6015. ENFORCEABILITY OF CONTINUING CARERETIREMENT COMMUNITIES (CCRC) AND LIFE CARE COMMUNITY ADMISSTION CONTRACTS
“…contracts for admission to a State licensed, registered, certified, or equivalent continuing care retirement community or life care community, including services in a nursing facility that is part of such community, may require residents to spend on their care resources declared for the purposes of admission before applying for medical assistance.”
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CCRC
TRUST ACCOUNT AGREEMENT
INDEPENDENT LIVING – RETIREMENT
PERSONAL CARE SERVICES
SKILLED NURSING FACILITY
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CCRC
TRUST ACCOUNT AGREEMENT
Equity Model – Resident share 50% in appreciated value upon resale
ALF or SNF are not included in CCRC contract. Resident obligated to pay.
Trust Agreement – permits CCRC to insure payment for ALF or SNF services from residents 50% equity, upon sale.
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CCRC
TRUST ACCOUNT AGREEMENT (Continued)
CCRC Arrangement: Resident/estate share equally in appreciated resale value of unit.
Trust Account Agreement: All refunds due the resident from sale of unit are deposited in Trust account, established by the Trust Account Agreement.
Parties to Trust Account Agreement: Resident, CCRC and local bank.
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CCRC
TRUST ACCOUNT AGREEMENT (Continued)
Trust Account is for the exclusive benefit of resident for payment for services provided by CCRC’s other ALF or SNF facilities.
Note: SNF is not licensed by Medicaid.
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PERSONAL HOME CARE/ASSISTED LIVING FACILITY (“ALF”)
LICENSURE
REGARDLESS OF THE LABEL/TITLE USED (PERSONAL CARE HOME/ASSISTED LIVING FACILITY) , A FACILITY MUST BE LICENSED BY THE DEPARTMENT OF PUBLIC HEALTH AS A PERSONAL CARE HOME IF IT PROVIDES PERSONAL CARE SERVICES. (55 Pa. Code § 2600)
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DEFINITIONS
PERSONAL CARE HOME OR HOME –
A premise in which food, shelter and personal assistance or supervision are provided for a period exceeding 24 hours, for four or more adults who are not relatives of the operator, who do not require the services in or of a licensed long-term care facility, but who do require assistance or supervision in activities of daily living or instrumental activities of daily living.(emphasis added)
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DEFINITIONS
PERSONAL CARE HOME OR HOME – (Continued)
The term includes a premise that has held or presently holds itself out as a personal care home and provides food and shelter to four or more adults who need personal care services, but who are not receiving the services. (emphasis added)
Personal Care Services includes activities of daily living or instrumental activities of daily living.
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ALF
ADL – Activities of Daily Living
The term includes eating, drinking, ambulating, transferring in and out of a bed or chair, toileting, bladder and bowel management, personal hygiene, securing health care, managing health care, self-administering medication and proper turning and positioning in a bed or chair.
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ALF IADL – Instrumental Activities of Daily Living
The term includes the following activities when done on behalf of a resident:
Doing laundry Shopping Securing and using
transportation Managing finances Using a telephone Making and keeping
appointments
Caring for personal possessions
Writing correspondence Engaging in social and
leisure activities Using a prosthetic
device Obtaining and keeping
clean seasonal clothing
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ALF
Who Pays for Personal Care Services ??
Private Pay is primary source covering ALF.Private Pay is primary source covering ALF. Medicaid does not pay for assisted living Medicaid does not pay for assisted living
services.services. Medicare does not pay for day-to-day costs;Medicare does not pay for day-to-day costs;
resident may qualify for Medicare Part B resident may qualify for Medicare Part B services. services.
Long Term Care Insurance Long Term Care Insurance
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ALF
PA Contract Requirements (31 Pa. Code §2600.25)
Contract shall be signed by representative of ALF and the payer, if different from the resident, and cosigned by the resident’s designated person, if any, if the resident agrees (emphasis added).
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ALF
PA Contract Requirements (Continued)
At a minimum, the Contract must specify:
- the fee schedule- the party responsible for payment
(emphasis added)
- refunds
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ALF
PA Contract Requirements (Continued)
A list of personal care services to be provided to the resident based on the outcome of the resident’s support plan, a list of actual rates that the resident will be periodically charged for food, shelter and services and how, when and by whom payment is to be made. (emphasis added)
Charges for holding a bed.
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ALF
PA Contract Requirements (Continued)
The home may not require or permit a resident to assign assets to the home in return for a life care contract/guarantee. A life care contract/guarantee is an agreement between the legal entity and the resident that the legal entity will provide care to the resident for the duration of the resident’s life. Continuing care communities that have obtained a Certificate of Authority from the Insurance Department and provide a copy of the certificate to the Department are exempt from this requirement.
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ALF
Financial Guarantees – Third Parties
Landlord/Tenant Relationship: resident leaves unit and signs Assisted Living Service Agreement
As inducement for Landlord (i.e., ALF) to:
- enter into apartment lease; or
- provide any assisted living services; or- provide access or admission to an assisted
living unit
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ALF
Financial Guarantees – Third Parties (Continued)
Guarantor (one or more parties) guarantees payment to Landlord (i.e., ALF) of the lease or any Assisted Living Agreement or any payment obligations related to assisted living services.
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ALF
TERMINATION/SUBSIDIES
Termination upon 30 days’ written notice for breach, including non-payment of charges.
Other grounds for termination; misrepresentation of financial information; misuse of financial resources; disbursement of funds to outside parties to the point you cannot meet your financial obligations.
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ALF
TERMINATION/SUBSIDIES (Continued)
No termination for nonpayment of charges, if the sole reason for such nonpayment is insufficient funds, beyond your control, and so long as sufficient resident assistance funds are available; use of resident assistance funds is in sole discretion of facility.
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ALF
TERMINATION/SUBSIDIES (Continued)
Resident is responsible for seeking assistance from family members before any subsidy by the facility may be granted.
If ALF provides subsidy, ALF agreement may be enforced against estate.
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SKILLED SKILLED NURSING FACILITY (“SNF”) FACILITY (“SNF”)
FEDERAL AND STATE REGULATIONS
“Improving the Quality of Care in Nursing Homes” – Institute of Medicine, 1986
Nursing Home Reform Act – OBRA 1987
Conditions of Participation in Medicare and Medicaid – 1989 Federal Regulations
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SNF
Federal and State Regulations (Continued)
Pennsylvania Department of Health licenses long-term care nursing facilities.
“Department incorporates by reference…Federal requirements for long-term care facilities (42 C.F.R. §483.1-483.75) as licensing regulations for long-term care nursing facilities [with limited exceptions]. 28 Pa. Code §201.2
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SNF
DEFINITION
Skilled or intermediate nursing care – Professionally supervised nursing care and related medical and other health services provided for a period exceeding 24 hours to an individual not in need of hospitalization, but whose needs are above the level of room and board and can only be met in a long-term care nursing facility on an inpatient basis because of age, illness, disease, injury, convalescence or physical or mental infirmity.
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SNF
DEFINITION (Continued)
The term includes the provision of inpatient services that are needed on a daily basis by the resident, ordered by and provided under the direction of a physician, and which require the skills of professional personnel, such as registered nurses, licensed practical nurses, physical therapists, occupational therapists, speech pathologists or audiologists.
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SNF
WHO PAYS FOR SNF SERVICES ?
Medicaid
Medicare – Limited
Private Pay
Long Term Care Insurance
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SNF
FEDERAL REGULATIONS
EQUAL ACCESS TO QUALITY CARE
A facility must establish and maintain identical policies and practices regarding transfer, discharge, and the provision of services under the State plan for all individuals regardless of source of payment.
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SNF
FEDERAL REGULATIONS (Continued)
THE FACILITY MUST:
NOT REQUIRE RESIDENTS OR POTENTIAL RESIDENTS TO WAIVE THEIR RIGHTS TO MEDICARE OR MEDICAID; AND
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SNF
FEDERAL REGULATIONS (Continued)
NOT REQUIRE ORAL/WRITTEN ASSURANCE THAT RESIDENTS OR POTENTIAL RESIDENTS ARE NOT ELIGIBLE FOR, OR WILL NOT APPLY FOR, MEDICARE OR MEDICAID BENEFITS; AND
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SNF
FEDERAL REGULATIONS (Continued)
Facility must not require a third party guarantee of payment to facility as a condition of admission or expedited admission, or continued stay in facility. However, facility may require an individual who has legal access to a resident’s income or resources available to pay for facility care to sign a contract, without incurring personal financial liability, to provide facility payment from resident’s income or resources (emphasis added); and
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SNF
FEDERAL REGULATIONS (Continued)
In the case of a person eligible for Medicaid, a nursing facility must not charge, solicit, accept or receive, in addition to any amount otherwise required to be paid under the State plan, any gift, money, donation, or other consideration as a precondition of admission, expedited admission or continued stay in the facility.
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SNF
CONTRACTUAL OBLIGATION BY RESPONSIBLE PARTY
Sunrise Health Care v. Azarigian,,821 A.2d 835 (Comm. App. 2003)
- FACTS- COURT HOLDING
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MEDICAID PLANNING
MILLIONAIRES AND MEDICAID
“Insurers Help Elderly Get Medicaid To Pay For Nursing Homes – Annuity That Converts Assets Into Income Can Let Even Affluent People Qualify – States Start to Crack Down”
The Wall Street Journal, June 6, 2001
“Some Heirs Find A Costly Surprise: Bill From Medicaid”
The Wall Street Journal, June 24, 2005
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MEDICAID PLANNING
Millionaires and Medicaid (Continued)
Georgetown University Long-Term Care Financing Project, “Medicaid’s Coverage of Nursing Home Costs: Asset Shelter for the Wealthy or Essential Safety Net” (April, 2005)
http://www.ltc.georgetown.edu/pdfs/nursinghomecosts.pdf
“There is little evidence that large numbers of the elderly are planning their estates for the purpose of acquiring easy access to Medicaid in the event they need nursing home care.”
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MEDICAID PLANNING
Millionaires and Medicaid (Continued)
National Academy of Elder Law Attorneys (NAELA) Survey of Members (April/May 2003)
suggests it is mainly the middle class, not wealthy, seniors who are involved in Medicaid planning.
http://www.elderlawanswers.com/resources/s4/r36488.asp
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MEDICAID PLANNING PLANNING
Millionaires and Medicaid (Continued)
United States Government Accountability Office
“Medicaid – Transfers of Assets by Elderly Individuals to Obtain Long-Term Care Coverage” (September 2005)(GAO-05-968)
“In 2002, over 80% of approximately 28 million elderly households had annual incomes of $50,000 or less…about 6 million elderly households (22%) reported transferring cash…In general, the higher the household asset level, the more likely it was to have transferred cash…”
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MEDICAID PLANNING
MEDICAID FUNDAMENTALS
Federal law contains broad guidelines relating to what services are covered by Medicaid and who is eligible. (Title XIX of Social Security Act)
Pennsylvania Legislative establishes statutory framework; Department of Public Welfare promulgates regulations. (62 P.S. §444.1 et seq.; 55 Pa. Code §§100-275; 1101-1251)
Medicaid is a federal-state matching program.
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MEDICAID PLANNING
FINANCIAL ELIGIBILITY
Medicaid Applicants Must Meet Financial Eligibility Requirements
Three Categories- Categorical: SSI Criteria- Institutionalized Home Applicant: Income
Less Than 300% of SSI- Medically Needy (Higher Income Individuals)
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MEDICAID PLANNING
MEDICALLY NEEDY ELIGIBILITY
U.S. Citizen/Resident Alien Resident of State 65 Years of Age or Disabled or Blind Care Must Be Deemed Medically Necessary Countable Resources Must Not Exceed $2,400
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RESOURCE ELIGIBILITY
An applicant/recipient is resource eligible for MA if his or her total resources that are counted in determining resource eligibility do not exceed the MA resource limit for the appropriate MA program.
In determining resource eligibility for MA, resources may be categorized in one of three categories: (1) available; (2) exempt (excluded); or (3) unavailable.
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AVAILABLE RESOURCES
All resources are counted unless “exempt” or unavailable in determining M.A. eligibility; partial ownership.
Examples of available resources:- real property (excludes home)- bank account- stocks, bonds, mutual funds, CDs- IRAs, Keogh, pension plans- Vehicles, boats and other vehicles- Cash surrender value
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EXEMPT OR EXCLUDED RESOURCES
Residential Property – Applicant or spouse lives in home; see DRA: homes valued in excess of $500,000 (states may increase to $750,000) are not excluded.
Household Goods
One Motor Vehicle
Burial Space
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MEDICAID LIABILITY
ASSSET TRANSFERS THAT CREATE MEDICAID PENALTY
Transfers of assets for less than fair consideration within look back period (now 5 years)
Calculation of Penalty Periods:
Uncompensated Value of Transfer ÷ Average Monthly Cost for Private Nursing Home Care
(July 1, 2005 = $6,062.35)
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MEDICAID LIABILITY
EXEMPT TRANSFERS THAT DO NOT INCUR A PENTALTY
To the Community/Spouse
Transfer of Home;- To Minor or Disabled Child- Caregiver Child Who Lives at Home- Sibling with Equity
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TECHNIQUES FOR THE UNMARRIED APPLICANT
Spending Down Assets
Buy clothing or medical equipment Pay debts; prepay scheduled bills Pay legal and professional fees Prepay funeral and burial expenses Take vacation Employ personal care assistance
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Techniques for Unmarried Applicant (Continued)
Convert Available Assets to Exempt Status
Trade In Exempt Motor Vehicle for More Expensive Model
Purchase New or More Expensive Home (if applicant still lives at home)
Make Home Improvements Purchase Household Goods Purchase An Annuity
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Techniques for Unmarried Applicant (Continued)
Period of Ineligibility Assess for asset transfers without fair consideration
No Period of Ineligibility- Pre-look Back Transfers (DRA expands look back period to 5 years)- Transfers of Excluded Assets (e.g., personal
property)- Exempt Transfers
• Transfer to Spouse
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Techniques for Unmarried Applicant (Continued)
“Half a Loaf Transfers”
Medicare transfer rules provide that the transfer penalty must be based upon the average cost of nursing facility care. This permits transfer of half the assets to a family member and use the other half for nursing home care prior to applying for Medicaid.
Illustration – See Attachment
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MARRIED APPLICANT
The Medicare Catastrophic Coverage Act of 1988(P.L. 100-360, 102 Stat.753, codified at inte alia, 42 U.S.C. §1396 r-5) and commonly called MCCA established a system for allocating income and resources between the Institutionalized and Community Spouse
Community Spouse (“CS”) is permitted to keep all of his/ her income; CS’s income may not be deemed available to pay care of Institutionalized Spouse (“IP”)
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MARRIED APPLICANT – INCOME
Minimum Monthly Maintenance Needs Allowance(“MMMNA”)
As of July 1, 2005, MMMNA is $1,604
MCCA permits IS to allocate some or all his/her monthlyincome to CS if needed to maintain MMMNA
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MARRIED APPLICANT – RESOURCES
Community Spouse Resource Allowance (“CSRA”)
CS allowed to keep one-half of the total value of the countable assets
CSRA is the amount of couples combined jointly and separately owned resources allocated to CS and unavailable to IS for determining eligibility to MA
CSRA = Minimum (July 1, 2005) is $19,020CSRA = Maximum (July 1, 2005) is $95,100
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PRE-ACT 42: HURLY RULE
CS has opportunity to protect more than the standard CSRA if CS income does not equal the MMMNA
Resource First Methodology – Hurly Settlement
CS is entitled to retain an amount equal to an unguaranteed, single lifetime commercial annuity
Under Hurly, no duty to purchase the annuity
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IMPACT OF ACT 42 and DRA
DRA and Act 42 legislatively modifies Hurly;DRA mandates income first methodology
Act 42 limits excess resources that can be retained by low-income CS
Use of annuity; DPW must be named beneficiary so it is reimbursed
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SPOUSAL REFUSAL
42 U.S.C. §1396-5(c)(3): An IS is not ineligible for Medicaid if the CS refuses to make resources in excess of the CSRA available, provided the IS assigns his/her support rights to the state.
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SPOUSAL REFUSAL (Continued)
MORENZ v. WILSON-COKER2nd Civ., No. 04-4107-CV 7/14/05
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DEFICIT REDUCTION ACT OF 2005 (“DRA”)
Look Back Period Lengthened to 60 Months Penalty Start Date Revised Hardship Waivers Treatment of Annuities Income – First Mandate Excess Home Equity Enforceability of CCRC Provisions Inclusion of Transfers to Purchase Life Estates
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PENALTY START DATE REVISED
DRA changes the way the penalty start date is calculated
The latter of:
- the first day of month when transfer madeOR
- date on which individual is eligible for Medicaidand is receiving LTC services
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PENALTY START DATE REVISED (Continued)
Since penalty begins to run after the person who made the gift can no longer pay for care, who pays:
- Spouse (out of protected assets)- Children (moral payment/Act 43 law suit by
NH)- Facility (uncompensated care)- Medicaid (individual qualifies under hardship category)
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PA FILIAL SUPPORT LAWS – ACT 43
Revitalization of a dormant statutory Revitalization of a dormant statutory support lawsupport law
Statutory obligation of adult children to Statutory obligation of adult children to financial support parents reinstated in financial support parents reinstated in Domestic Relations CodeDomestic Relations Code
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ACT 43
“All of the following individuals have the responsibility to care for and maintain or financially assist an indigent person regardless of whether the indigent person is a public charge:
(1) The spouse of the indigent person.(2) The child of the indigent person.(3) The parent of the indigent person.”
(23 Pa. C.S.A. §4601-4606)
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EXCEPTIONSEXCEPTIONS
-- If individual does not have If individual does not have sufficient sufficient financial ability.financial ability.
-- Support amount is set by court Support amount is set by court in in judicial district where resident judicial district where resident lives.lives.
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FINANCIAL LIMITS: LESSOR OF:
- 6 times the excess of the liable individual’s monthly average income over the amount required for reasonable support of the liable individual; or
- cost of the medical assistance for the aged.
- Contempt – failure to pay would result in six months in jail.
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ACT 43
PRESBYTERIAN MEDICAL CENTER v. BUDD832 A.2d 1066 (Pa. Super 2003)
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LEGAL AND PRACTICAL CONSIDERATIONS
ADMISSION FINANCIAL CRITERIA: FINANCIAL CRITERIA:
- Verification of resources; increase- Verification of resources; increase- - Actuarial criteria criteria- Financial spread sheet- Financial spread sheet- Consider “eldercare” transfers- Consider “eldercare” transfers
FINANCIAL ASSISTANCE FOR ALF SERVICESFINANCIAL ASSISTANCE FOR ALF SERVICES