October 5

VA Establishes Asset Limits and Transfer Penalties for Needs-Based Benefits

The Department of Veterans Affairs (VA) has finalized new rules that establish an asset limit, a look-back period, and asset transfer penalties for claimants applying for VA needs-based benefits. This is a change from current regulations, which do not contain a prohibition on transferring assets prior to applying for benefits such as Aid and Attendance.

The VA proposed the new regulations in January 2015. Three years later, after receiving more than 850 comments, the VA has finally published the final regulations, which are similar, with a couple of exceptions, to the proposed regulations.

In order to qualify for benefits under the new VA regulations, which go into effect October 18, 2018, an applicant for needs-based benefits must have a net worth equal to or less than the prevailing maximum community spouse resource allowance (CSRA) for Medicaid ($123,600 in 2018). Net worth includes the applicant's assets and income. For example, if an applicant's assets total $117,000 and annual income is $9,000, the applicant's net worth is $126,000. The net worth limit will be increased every year by the same percentage that Social Security is increased. The veteran's primary residence (even if the veteran lives in a nursing home) and the veteran's personal effects are not considered assets under the new regulations. If the veteran's residence is sold, the proceeds are considered assets unless a new residence is purchased within the same calendar year.

The VA has also established a 36-month look-back period and a penalty period of up to five years for those who transfer assets for less than market value to qualify for a VA pension. The look-back period means the 36-month period immediately before the date on which the VA receives either an original pension claim or a new pension claim after a period of non-entitlement. There is an exception for transfers made as the result of fraud, misrepresentation, or unfair business practices and transfers to a trust for a child who is not able to self-support.

The penalty period will be calculated based on the total assets transferred during the look-back period if those assets would have put the applicant over the net worth limit. For example, assume the net worth limit is $123,600 and an applicant has a net worth of $115,000. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $145,000, which exceeds the net worth limit. The penalty period will be calculated based on $21,400, the amount the applicant transferred that put his assets over the net worth limit (145,000-123,600).

Any penalty period would begin the first day of the month that follows the last asset transfer, and the divisor would be the applicable maximum annual pension rate for a veteran in need of aid and attendance with one dependent that is in effect as of the date of the pension claim. The penalty period cannot exceed five years, a change from the 10-year maximum in the proposed regulations.

The rules also define and clarify what the VA considers to be a deductible medical expense for all of its needs-based benefits. Medical expenses are defined as payments for items or services that are medically necessary; that improve a disabled individual's functioning; or that prevent, slow, or ease an individual's functional decline. Examples of medical expenses include: care by a health care provider, medications and medical equipment, adaptive equipment, transportation expenses, health insurance premiums, products to help quit smoking, and institutional forms of care.

As noted, the rules become effective on October 18,2018. To read the new regulations, click here.

October 2

Medicaid Director Needs to Hold Full Hearing on Facts Before Ruling Against Recipient

A New Jersey appeals court rules that a state Medicaid director could not rule against an assisted living facility resident who wanted to deduct the cost of a full-time aide from her income because the administrative law judge (ALJ) did not hold a full evidentiary hearing on whether the aide was medically necessary. G.F. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-3067-16T3, Sept. 12, 2018).

Assisted living resident G.F. received Medicaid benefits that required her to contribute some of her income to her care. She claimed a full-time aide was medically necessary to keep her from falling, and she asked to deduct the cost of the aide from her income. The state denied the request, and G.F. appealed.

In filings with the ALJ, the state did not dispute that the aide was medically necessary. Instead, the state argued that G.F. needed to be in a nursing home. The ALJ determined that there was no dispute as to facts, so it ruled for G.F. without an evidentiary hearing. The state Medicaid director ruled that because G.F.'s doctor did not testify at the hearing, G.F. did not prove that the aide was medically necessary and reversed the ALJ's decision. G.F. appealed to court.

The New Jersey Superior Court, Appellate Division, remands the state's decision for a full hearing on whether the aide is medically necessary. According to the court, while the director correctly determined that G.F. did not prove the aide was medically necessary, G.F. "did not present live testimony to support her claim because the parties agreed there was no need to do so, and the ALJ determined the matter could be decided on the papers."

For the full text of this decision, go to: https://www.njcourts.gov/attorneys/assets/opinions/appellate/unpublished/a3067-16.pdf?cacheID=Uga2KPl

September 28

Three Florida Elder Law Attorneys Publish Handook Warning of Unlicensed Practice of Law in Medicaid Planning

Many people who are not licensed attorneys promote themselves as “Medicaid Planners.”  A number of states have determined that non-lawyers who apply the law to a Medicaid applicant’s specific circumstances are engaging in the unlicensed practice of law (UPL).  Florida has been at the forefront of efforts to push back against UPL in this area.

Now, three Florida elder law attorneys have written a handbook aimed at educating nursing home and assisted living facility managers and staff in that state about the UPL as it pertains to Medicaid planning.  In writing the 142-page “Protecting Nursing Homes and Their Residents from the Unlicensed Practice of Law,” attorney Leonard E. Mondschein, and two Florida colleagues, John R. Frazier and Twyla L. Sketchley, hope to protect Florida facility administrators and staff from engaging in or unintentionally supporting the UPL.

“[The handbook] acts as both a marketing piece for nursing homes and ALF's as well as to give to prospective clients,” Mondschein said.  “Every state should have one so that the elder law attorneys in that state can use it to make their case on why a family should use an attorney for Medicaid Planning and why a nursing home should only refer to an attorney.”

Mondschein said that the Florida book can serve as a model for practitioners in other states.  “Since no one has ever done this before and with the rise of UPL in the Medicaid and VA Planning areas, the reader from another state can copy the basic format of the book and by researching his own state laws and bar rules, write a state-specific book as we did,” he said.  “It’s a new tool in the toolbox to fight UPL by educating the public, SNF, ALF facilities.”

The book explains to facility managers and staff:

  • what UPL is and how it happens;
  • how to protect, prevent and deter nursing home and assisted living facility residents from becoming victims;
  • how to protect themselves and their facility from becoming an unwitting participant in UPL activities; and
  • important actions they can take to fight UPL if they see it happening.

The handbook includes chapters on the possible legal consequences of negligent referral, examples of problems caused by non-lawyer Medicaid planners, trouble the nursing home can get in if nursing home employees know that a non-lawyer Medicaid planner is engaging in UPL, and possible consequences if a nursing home employee is paid a fee to refer Medicaid cases to a non-lawyer Medicaid planner.

The book also offers “Eight reasons to use an elder law attorney (and NOT a nonlawyer) to assist in qualifying a person for Medicaid benefits.”

To download the digital version of the handbook, go to www.miamieldercarelawyers.com and click the first download under “Free Books.”

September 25

Mother’s Transfer of House to Daughter Is Proper Medicaid Planning

A New Jersey appeals court holds that a mother's transfer of her house her daughter was appropriate as part of Medicaid planning and not a result of undue influence, but that the daughter is not entitled to attorney's fees. Estate of Guglielmelli (N.J. Super. Ct., App. Div., No. A-0375-17T1, Sept. 6, 2018).

Geraldine M. Guglielmelli lived with her daughter, Donna Mulford, who was her agent under a power of attorney. When Ms. Mulford could no longer care for her mother, Ms. Guglielmelli entered an assisted living facility. Ms. Mulford consulted an attorney about Medicaid planning, and on the attorney's advice Ms. Guglielmelli transferred her interest in her house to Ms. Mulford. Ms. Guglielmelli's other daughter, Denise Green, removed her from assisted living, and Ms. Guglielmelli hired another attorney to demand that Ms. Mulford produce accountings.

After Ms. Mulford produced the accountings, Ms. Guglielmelli filed exceptions, and the court held a hearing. The probate judge concluded that Ms. Guglielmelli voluntarily transferred her interest in her house to Ms. Mulford as part of Medicaid planning and awarded Ms. Mulford attorney's fees. Ms. Guglielmelli appealed.

The New Jersey Superior Court, Appellate Division, affirms in part, holding that the evidence supports the probate judge's decision regarding the transfer of the house. However, the court reverses the award of fees to Ms. Mulford, holding that there is no provision in state law for an award of fees in an accounting action.

For the full text of this decision, go to: https://www.njcourts.gov/attorneys/assets/opinions/appellate/unpublished/a0375-17.pdf?cacheID=avKhyqT

March 12

The Financial Burden of Health Care Spending: Larger for Medicare Households than for Non-Medicare Households

By Juliette Cubanski, Kendal Orgera, Anthony Damico, and Tricia Neuman via KFF.ORG

Medicare offers health and financial protection to nearly 60 million adults ages 65 and over and younger people with disabilities. However, the high cost of premiums, cost-sharing requirements, and gaps in the Medicare benefit package, combined with relatively low incomes among the Medicare population, can result in beneficiaries devoting a substantial share of their total household spending to health care costs.

This analysis compares health-related expenses as a share of total household spending for Medicare and non-Medicare households, using the 2016 Consumer Expenditure Survey (CE). We estimate how much Medicare and non-Medicare households spent on health care, including premiums, compared to other household spending (e.g., housing, transportation, and food). We also show how health expenses as a share of Medicare household spending varies by age (based on the oldest household member) and poverty level, and changes over time. Because the CE is a survey of the non-institutional population, it excludes out-of-pocket spending on nursing homes and other long-term care facilities, which is a significant share of average out-of-pocket costs for people with Medicare; thus this analysis understates the spending burden for households that incur long-term care facility costs, which may fall disproportionately on Medicare households.

Key Findings

Health expenses accounted for 14 percent of Medicare household spending in 2016, on average—more than double that of non-Medicare households (6%). The higher financial burden for Medicare households is attributable both to lower average total household spending than non-Medicare households ($37,962 vs. $58,810) and higher average health care spending ($5,355 vs. $3,809).

Spending on health expenses as a share of Medicare household spending increased with age (based on the oldest household member), as health care needs increase and spending on other items declines.

Middle-income Medicare households devoted a greater share of their household spending to health-related expenses than either the lowest- or highest-income Medicare households in 2016.

Among Medicare households with incomes below 100 percent of poverty, those with all household members also covered by Medicaid spent a considerably smaller share of household expenditures on health care in 2016 than those where no members were covered by Medicaid (4% vs. 17%, respectively).

Nearly 3 in 10 Medicare households spent 20 percent or more of their household spending on health-related expenses in 2016, while only 6 percent of non-Medicare households did so.

Findings

Health expenses accounted for 14 percent of Medicare household spending in 2016, on average—more than double the share of health spending by non-Medicare households (6%).

Spending on health care—for health insurance premiums, medical services and supplies, and prescription drugs—was a larger component of household spending for Medicare households than non-Medicare households in 2016 (14 percent versus 6 percent, respectively). On average, Medicare households devoted roughly similar shares of their total household spending to food, housing, and transportation in 2016 as did non-Medicare households, but a substantially larger share to health care expenses, and a smaller share to other expenses including education, entertainment, and apparel. Spending on health care overall has accounted for roughly the same share of Medicare household spending over time.

The higher financial burden associated with health-related expenses for Medicare households is attributable both to their lower average total household spending than non-Medicare households ($37,962 and $58,810, respectively) and their higher average health care spending ($5,355 and $3,809, respectively).

Health spending as a share of average Medicare household spending increased with age in 2016, as health needs increase and spending on other items declines.

Spending on health care as a share of total Medicare household spending varies by the age of the oldest household member. In 2016, households where the oldest member was age 75 or older spent a larger share of their total household spending on health care than households where the oldest member was age 65 to 74, on average. This is related to the fact that health spending tends to increase with age as health care needs rise, while spending on non-health items and overall financial resources tend to decrease. Average health care spending comprised 16 percent of total household spending for households in which the oldest member was age 75 or older, compared to an average of 13 percent for households where the oldest member was age 65 to 74.

Spending on health-related expenses represented a smaller share of total household spending (10%, on average) for people under age 65 who qualify for Medicare due to having a permanent disability than for older beneficiaries, with lower spending on all types of health-related expenses. Lower spending by younger Medicare households on all types of health-related expenses is likely related to the fact that the rate of Medicaid coverage is higher among younger people with disabilities on Medicare than among those ages 65 and older; in 2013, 46 percent of non-institutionalized Medicare beneficiaries under age 65 also had Medicaid coverage, compared to 12 percent of non-institutionalized beneficiaries ages 65 and older (based on analysis of the 2013 Medicare Current Beneficiary Survey). For people with low incomes and few assets, Medicaid helps pay the cost of Medicare premiums and cost-sharing requirements.

Medicare households with modest incomes spent a greater share of their total household spending on health-related expenses than either the lowest- or highest-income Medicare households in 2016.

Near-poor and middle-income Medicare households faced a greater health care spending burden in 2016 than the lowest- and highest-income Medicare households. For those with incomes between 100 percent and 399 percent of the federal poverty level (FPL), average health care spending as a share of household spending was 15 percent, compared to 12 percent for Medicare households with incomes above 400 percent of the FPL and 13 percent for Medicare households with incomes below 100 percent of the FPL ($11,511/individual and $14,507/couple ages 65 and over in 2016).

While the highest-income Medicare households (400 percent of the FPL or more) devoted a smaller share of their total household spending to health-related expenses than near-poor and middle-income households, their annual spending on health care in dollars was significantly higher ($8,247 on average, compared to $2,614, $4,126, $6,522, and $6,603 for those with incomes of less than 100 percent, 100-199 percent, 200-299 percent, and 300-399 percent of the FPL, respectively).

Medicaid substantially reduces health-related expenses in low-income Medicare households where beneficiaries are eligible for both Medicare and Medicaid, but not all of those with low incomes are covered by Medicaid.

The relatively low share of average total household spending on health care among Medicare households with incomes below 100 percent of the FPL ($11,511/individual and $14,507/couple ages 65 and over in 2016) can be partly attributed to the financial protections provided by Medicaid coverage. Yet not all low-income Medicare beneficiaries are covered by Medicaid, which may be due to asset levels, a challenging eligibility and enrollment process, or lack of awareness about eligibility. This leaves many low-income households exposed to considerable health care costs. Among Medicare households with incomes below 100 percent of the FPL, those with all household members also covered by Medicaid spent a considerably smaller share of household expenditures on health care in 2016 than those where no members were covered by Medicaid (4 percent versus 17 percent, respectively).

Annual dollar spending on health care by Medicare households below 100 percent of the FPL differed even more substantially than the share of household spending depending on whether or not all household members had Medicaid coverage. Average health care spending in 2016 by Medicare households below poverty with no members covered by Medicaid was nearly ten times that of the health spending by Medicare households below poverty with all members covered by Medicaid ($4,473 vs. $467, respectively).

Nearly 3 in 10 Medicare households spent 20 percent or more of their total household spending on health-related expenses in 2016, while only 6 percent of non-Medicare households did so.

Given the higher average spending on health-related expenses by Medicare households than non-Medicare households, it follows that a larger share of Medicare households spent 20 percent or more of their total household spending on health care. Nearly five times as many Medicare households as non-Medicare households devoted 20 percent or more of their total household spending to health-related expenses in 2016 (29% vs. 6%, respectively). The share of Medicare households with health care spending at this level increased by age, with 4 in 10 households with the oldest member age 85 or older devoting at least 20 percent of their total household spending to health-related expenses, compared to one-fourth (25%) of households with the oldest member age 65 to 74.

Some Medicare households incurred an even greater health care spending burden relative to their total household spending: just over 1 in 10 Medicare households (12%) spent 30 percent or more of their total household spending on health-related expenses, while 4 percent of Medicare households spent 40 percent or more on health care.

Conclusion

Medicare households spent 14 percent of their total household expenses on health-related expenses in 2016, on average—more than twice than the share among non-Medicare households. The financial burden of out-of-pocket health spending fell disproportionately on older households and those with modest incomes. Low-income Medicare households with no members who are also covered by Medicaid faced a higher health spending burden than low-income households where all members also have Medicaid coverage.

The higher financial burden associated with health-related expenses for Medicare households is attributable both to their lower average total household spending than non-Medicare households ($37,962 and $58,810, respectively) and their higher average health care spending ($5,355 and $3,809, respectively). Even if non-Medicare households spent the same amount on health expenses that Medicare households did, the spending burden would still be higher for Medicare households due to their lower average total household budget. These findings highlight the importance of monitoring health care affordability among Medicare beneficiaries—a majority of whom already live on tight budgets.

Methodology

This analysis uses data from the Bureau of Labor Statistics 2016 Consumer Expenditure Survey (CE). The CE provides data on expenditures, income, and demographic characteristics of consumers in the United States. The CE is a survey of households (“consumer units”), excluding people residing in institutions such as long-term care facilities. A consumer unit consists of any of the following: (1) all members of a particular household who are related by blood, marriage, adoption, or other legal arrangements; (2) a person living alone or sharing a household with others or living as a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent; or (3) two or more persons living together who use their incomes to make joint expenditure decisions. Financial independence is determined by spending behavior with regard to the three major expense categories: housing, food, and other living expenses.

The estimates presented in this analysis are averages for demographic groups of consumer units, not per capita estimates, and thus are not comparable to estimates based on other surveys that report per capita estimates, such as out-of-pocket health care spending reported in the Medicare Current Beneficiary Survey. Expenditures by individuals would differ from the average even if the characteristics of the group are similar to those of the individual. Another source of differences between averages reported here and elsewhere is that the spending data are based on survey self-reports and therefore are subject to nonsampling error, including the inability or unwillingness of respondents to provide accurate data.

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