March 14

Group of Experts Recommends Major Changes to Financing and Delivery of Long-Term Care

A diverse group of long-term care policy experts and stakeholders has issued a report proposing major changes in the way long-term care is financed and delivered in the United States. The Long-Term Care Financing Collaborative’s report proposes a new catastrophic long-term care insurance program as well as changes to Medicaid’s long-term care benefit.

The Collaborative spent three years studying long-term care in the U.S., and although its members represent a broad range of ideological views, they were able to agree on a number of key recommendations to pay for and improve long-term care services.

The Collaborative’s main recommendation is to establish a universal catastrophic insurance program aimed at providing financial support to those with high levels of long-term care needs over an extended period of time. The idea is for individuals with high levels of long-term care needs to pay for their own care for one or two years and then receive a lifetime daily benefit. Individuals with lower lifetime incomes would be eligible to receive the catastrophic benefits sooner than individuals with higher incomes.

The Collaborative also recommends changing Medicaid law to provide the same services to institutional and non-institutional recipients. The goal would be to make Medicaid more flexible and responsive to the needs of individuals.

Other recommendations include encouraging private sector initiatives to revitalize long-term care insurance to lower costs and increase enrollment for non-catastrophic risks, and increasing retirement savings and improving education on long-term care costs.

To read the full report, go here: http://www.convergencepolicy.org/ltcfc-final-report/.

For an analysis by collaborative member Howard Gleckman of the Urban Institute, click here.

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March 10

Trust Is an Available Asset Because Trustees Have Discretion to Make Distributions

A New York appeals court rules that a Medicaid applicant’s trust is an available asset because the trustees have discretion to make distributions to her. In the Matter of Frances Flannery v. Zucker (N.Y. Sup. Ct., App. Div., 4th Dept., No. TP 15-01033, Feb. 11, 2016).

Frances Flannery was the beneficiary of a trust that granted her children, as the trustees of the trust, the authority to distribute as much of the principal as they felt in their discretion was necessary to provide for Ms. Flannery’s health and welfare. Ms. Flannery applied for Medicaid, and the state denied her benefits after determining the trust was an available asset.

Ms. Flannery appealed, arguing that the trust is not an available asset because her children refuse to make distributions of the principal to her. After a hearing, the state affirmed the denial of benefits, and Ms. Flannery appealed to court.

The New York Supreme Court, Appellate Division, affirms the denial of Medicaid benefits. According to the court, “because the principal of the trust may, in the discretion of [Ms. Flannery’s] children be paid for [Ms. Flannery’s] benefit,” the principal of the trust is an available asset “despite the fact that her children refuse to exercise their discretion to make such payments of principal.”

For the full text of this decision, go to: http://www.nycourts.gov/courts/ad4/Clerk/Decisions/2016/02-11-16/PDF/0066.pdf

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March 7

State Cannot Retroactively Recover Medicaid Benefits from Estates

A Michigan appeals court rules that the state cannot recover Medicaid benefits from estates before the date that the estate recovery program was implemented. In re Estate of Gorney (Mich. Ct. App., No. 323090, Feb. 4, 2016).

Four individuals applied for Medicaid benefits sometime before 2010. They did not receive any notification about estate recovery at the time of their initial application. In 2011, the state received federal approval for its estate recovery program, and the state determined that July 1, 2010, was the effective date. In 2012, the Medicaid recipients applied for Medicaid redetermination and received notice that the state could seek recovery for Medicaid benefits from their estates.

When the recipients died, the state filed claims against their estates to recover Medicaid benefits paid since July 1, 2010, but the estates denied the claims. The probate court rejected the state’s claim, and the state appealed. The estates argued that the state violated due process by recovering benefits paid since July 1, 2010, when the state did not notify them about the estate recovery program until 2012. 

The Michigan Court of Appeals affirms in part, holding that while the notice provided to the estates in 2012 did not violate due process, the state could not recover benefits retroactive to July 1, 2010. According to the court, “by applying the recovery program retroactively to July 1, 2010, the Legislature deprived individuals of their right to elect whether to accept benefits and encumber their estates, or whether to make alternative healthcare arrangements.”

For the full text of this decision, go to: http://publicdocs.courts.mi.gov:81/OPINIONS/FINAL/COA/20160204_C323090_52_323090.OPN.PDF

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March 3

Medicaid Applicant’s Irrevocable Trust Is an Available Resource Because Trustee Can Make Distributions

An Alabama appeals court rules that a Medicaid applicant’s special needs trust is an available resource because the trustee had discretion to make payments under the trust. Alabama Medicaid Agency v. Hardy (Ala. Civ. App., No. 2140565, Jan. 29, 2016).

Denise Hardy inherited a one-half interest in a house and placed it in an irrevocable trust. The trust instrument stated that the trustee could distribute income to Ms. Hardy at the trustee’s discretion and that the trust was intended to be a special needs trust. Ms. Hardy entered a nursing home and applied for Medicaid. The state determined that the trust was an available resource.

Ms. Hardy appealed, and an administrative law judge agreed that the trust was an available resource. Ms. Hardy appealed to court, arguing that the trust was not available because it was irrevocable and could not be altered. The trial court reversed the state’s decision and ordered the state to pay Ms. Hardy benefits. The state appealed.

The Alabama Court of Civil Appeals reverses, holding the trust is an available resource. According to the court, a trust is an available resource if there is any circumstance under which payments can be made to the beneficiary, and that in this case, “if the house was sold and half of the proceeds of the sale were placed in the trust, the trustee could then make distributions as required by the terms of  [Ms.] Hardy’s trust.”

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