BOARD FIDUCIARY RESPONSIBILITY AND RESIDENT ASSET PROTECTION STRATEGIES Presented by: Thomas E....

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

TSMTSMCopyright Copyright © Tsoules, Sweeney & Martin, © Tsoules, Sweeney & Martin,

LLCLLC 22

BOARD FIDUCIARY RESPONSIBILITYAND

RESIDENT ASSET PROTECTION STRATEGIES

WHAT CAN WE DO?

LEGAL AND PRACTICAL CONSIDERATONS


LLCLLC 33

BOARD FIDUCIARY RESPONSIBILITYvs.


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


LLCLLC 44



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


LLCLLC 55



AGENDA

MEDICAID PLANNING – FUNDAMENTALS

- Millionaires & Medicaid- Medicaid Basics- Medicaid Planning- Single- Medicaid Planning – Married - Pennsylvania Filial Support Laws

LEGAL AND PRACTICAL ARRANGEMENTS/OPTIONS


LLCLLC 66

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

http://www.attorneygeneral.gov.consumers.aspx/?id=227

http://www.attorneygeneral.gov.consumers.aspx/?id=227


LLCLLC 77

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

http://www.org.hhs.gov/fraud/complianceguidance.htm/#%20BOARD%20FIDUCIARY%20RESPONSIBILITY%20AND%20RESIDENT%20ASSET%20PROTECTION%20STRATEGIES


LLCLLC 88

FIDUCIARY DUTIES

DUTIES OF DIRECTORS AND OFFICERS

THE DUTY OF CARE- Standard

- Reliance

THE DUTY OF LOYALTY- Faithfulness- Conflict of Interest


LLCLLC 99

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


LLCLLC 1010

FIDUCIARY DUTIES

SOURCES OF PAYMENT

MEDICARE

MEDICAID

LTC INSURANCE

PRIVATE PAY


LLCLLC 1111

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


LLCLLC 1212

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.


LLCLLC 1313

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.


LLCLLC 1414

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.


LLCLLC 1515

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.


LLCLLC 1616

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.


LLCLLC 1717

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)


LLCLLC 1818

CCRC

DEFINITIONS – PA REGULATIONS

CONTINUING CARE

ENTRANCE FEE

LIVING UNIT


LLCLLC 1919

CCRC

DEFINITIONS – PA REGULATIONS

PA RESIDENTS AGREEMENT

STATUTORY RESERVES

ENTRANCE FEE ESCROW


LLCLLC 2020

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


LLCLLC 2121

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.


LLCLLC 2222

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.


LLCLLC 2323

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.


LLCLLC 2424

CCRC


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.


LLCLLC 2525

CCRC


Equity Agreement: These types of agreements involve the actual purchase of real estate or membership. Includes condominiums and cooperatives.


LLCLLC 2626

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)


LLCLLC 2727

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.


LLCLLC 2828

CCRC


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.


LLCLLC 2929

CCRC


Contractual Prohibition Against Transfer of Assets - Oak Crest Village, Inc. v. Murphy, 841 A.2d 816(Md. Ct. App. 2004)

Facts

Court Holding


LLCLLC 3030

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.


LLCLLC 3131

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.”


LLCLLC 3232

CCRC

TRUST ACCOUNT AGREEMENT

INDEPENDENT LIVING – RETIREMENT

PERSONAL CARE SERVICES

SKILLED NURSING FACILITY


LLCLLC 3333

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.


LLCLLC 3434

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.


LLCLLC 3535

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.


LLCLLC 3636

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)


LLCLLC 3737

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)


LLCLLC 3838

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.


LLCLLC 3939

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.


LLCLLC 4040

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


LLCLLC 4141

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


LLCLLC 4242

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).


LLCLLC 4343

ALF

PA Contract Requirements (Continued)

At a minimum, the Contract must specify:

- the fee schedule- the party responsible for payment

(emphasis added)

- refunds


LLCLLC 4444

ALF


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.


LLCLLC 4545

ALF


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.


LLCLLC 4646

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


LLCLLC 4747

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.


LLCLLC 4848

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.


LLCLLC 4949

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.


LLCLLC 5050

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.


LLCLLC 5151

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


LLCLLC 5252

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


LLCLLC 5353

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.


LLCLLC 5454

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.


LLCLLC 5555

SNF

WHO PAYS FOR SNF SERVICES ?

Medicaid

Medicare – Limited

Private Pay

Long Term Care Insurance


LLCLLC 5656

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.


LLCLLC 5757

SNF

FEDERAL REGULATIONS (Continued)

THE FACILITY MUST:

NOT REQUIRE RESIDENTS OR POTENTIAL RESIDENTS TO WAIVE THEIR RIGHTS TO MEDICARE OR MEDICAID; AND


LLCLLC 5858

SNF


NOT REQUIRE ORAL/WRITTEN ASSURANCE THAT RESIDENTS OR POTENTIAL RESIDENTS ARE NOT ELIGIBLE FOR, OR WILL NOT APPLY FOR, MEDICARE OR MEDICAID BENEFITS; AND


LLCLLC 5959

SNF


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


LLCLLC 6060

SNF


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.


LLCLLC 6161

SNF

CONTRACTUAL OBLIGATION BY RESPONSIBLE PARTY

Sunrise Health Care v. Azarigian,,821 A.2d 835 (Comm. App. 2003)

- FACTS- COURT HOLDING


LLCLLC 6262

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


LLCLLC 6363

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.”

http://www.ltc.georgetown.edu/pdfs/nursinghomecosts.pdf


LLCLLC 6464

MEDICAID PLANNING


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

http://www.elderlawanswers.com/resources/s4/r36488.asp


LLCLLC 6565

MEDICAID PLANNING PLANNING


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…”


LLCLLC 6666

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.


LLCLLC 6767

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)


LLCLLC 6868

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


LLCLLC 6969

MEDICAID PLANNING

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.


LLCLLC 7070

MEDICAID PLANNING

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


LLCLLC 7171

MEDICAID PLANNING

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


LLCLLC 7272

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)


LLCLLC 7373

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


LLCLLC 7474

MEDICAID PLANNING

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


LLCLLC 7575


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


LLCLLC 7676

MEDICAID PLANNING


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


LLCLLC 7777

MEDICAID PLANNING


“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


LLCLLC 7878


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”)


LLCLLC 7979

MEDICAID PLANNING

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


LLCLLC 8080

MEDICAID PLANNING

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


LLCLLC 8181

MEDICAID PLANNING

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


LLCLLC 8282

MEDICAID PLANNING

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


LLCLLC 8383

MEDICAID PLANNING

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.


LLCLLC 8484

MEDICAID PLANNING

SPOUSAL REFUSAL (Continued)

MORENZ v. WILSON-COKER2nd Civ., No. 04-4107-CV 7/14/05


LLCLLC 8585

MEDICAID PLANNING

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


LLCLLC 8686

MEDICAID PLANNING

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


LLCLLC 8787

MEDICAID PLANNING

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)


LLCLLC 8888

MEDICAID PLANNING

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


LLCLLC 8989

MEDICAID PLANNING

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)


LLCLLC 9090

MEDICAID PLANNINGMEDICAID PLANNING

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.


LLCLLC 9191

MEDICAID PLANNING

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.


LLCLLC 9292

MEDICAID PLANNING

ACT 43

PRESBYTERIAN MEDICAL CENTER v. BUDD832 A.2d 1066 (Pa. Super 2003)


LLCLLC 9393

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


LLCLLC 9494

LEGAL AND PRACTICAL CONSIDERATIONS

DRA and CCRC Declared Assets

CCRC – Trust Account

Third Party Guarantees- ALF- SNF (Limited)

Pennsylvania Filial Support Laws

BOARD FIDUCIARY RESPONSIBILITY AND RESIDENT ASSET PROTECTION STRATEGIES Presented by: Thomas E....

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