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Congress proposes limits on Medicaid annuities

A recent bill proposed by Oklahoma Representative Mark Mullin seeks to put some limits on the over-use of annuities in Medicaid planning.  Ever since the passage of OBRA ’93 and the resulting HCFA Transmittal 64, excess resources have been allowed to be converted into a narrowly prescribed single premium immediate annuity (SPIA).  The bill, H.R. 181, has been approved by the House Energy and Commerce Committee as one of its first actions of the new Congress.

The bill’s primary purpose is to close the so-called annuity loophole which allows for annuitization by the community spouse of unlimited excess resources in order to qualify the institutional spouse for nursing homes.  In 48 states, the community spouse can have an unlimited income and does not need to support the institutional spouse’s monthly care costs once the couple has spent down assets below the community spouse resource allowance.  Because the purchase of the annuity is part of the federal safe harbor rules that exempt the purchase from transfer penalties, the purchase of large, short-duration annuities caught the attention of members of Congress who seek to impose some limits.

H.R. 181 would treat one-half of the annuity income received by the community spouse’s annuity as available to contribute towards the cost of care of the institutional spouse.  As this bill progresses, the CMP™ Governing Board will continue to keep tabs on its progress and support advocacy efforts to stop its enactment.  To visit our advocacy page to help defeat H.R. 181, click here.

Stop H.R. 181: Protect Community Spouses

H.R. 181 seeks to force a community spouse to contribute income from a Medicaid annuity towards the cost of care of a community spouse.  This proposed legislation is ill-advised and punitive to the most vulnerable among us, elderly spouses of those in nursing homes who have struggled to save all of their lives.

This measure would disproportionately affect elderly women who often long outlive their institutional spouses and would likely force them into poverty at a faster rate through no fault of their own.

The primary use of a Medicaid annuity is to avoid the need for the community spouse to have to divorce the institutional spouse as the sole means of protecting retirement resources when one spouse enters the nursing home. The passage of this bill will inevitably lead to a higher rate of elderly divorces.

In 2006, Congress already passed rules in the Deficit Reduction Act that made the state the primary beneficiary of spousal annuities which allowed for recovery of unused portions of the funds to reimburse Medicaid for the institutional spouse’s cost of care. Now Congress wants a piece of the community spouse’s income and wants everything left over.  This will financial devastate most community spouses who use those funds to help sustain themselves for their own retirements; as a result of impoverishing the community spouse more quickly, H.R. 181 is likely to put more community spouses on other government benefit programs that they would have avoided if they would have been able to retain some of their retirements savings.

The Certified Medicaid Planner™ Governing Board encourages our members and their clients to take a stand.  Here are several ways you can help defeat H.R. 181 and protect community spouses:

  • SPEAK UP – At first blush, this looks like a noble effort to close a loophole that lets wealthy people take advantage of Medicaid rules.  If you let that be the narrative, then H.R. 181 will pass.  But the truth is different.  These rules have been in place with the purpose of helping community spouses avoid impoverishment, to encourage the use of private retirement plans (defined contribution plans) over the traditional pensions (defined benefit plans), and to help avoid elderly divorces.  You can help by writing letters to the editor of your local paper, speaking up on social media by promoting this page to people in your network, and speaking out publicly through community forums, lectures and public events.  If you would like talking points, please email info@cmpboard.org.
  • TELL YOUR STORY – We cannot let proponents of this bill to make it look like these annuities are only used by yacht-owning country clubbers to protect vast nest eggs. The average Medicaid immediate annuity is less than $100,000 and the life expectancy of most community spouses is typically two or three times as long as their institutional spouses’ life expectancy. Have you our your client used a Medicaid annuity to help avoid elderly divorce or to avoid total financial ruin?  We want to hear your stories.  We can share your stories with the policymakers and the public to help them understand how and why these annuities are used.  If you have a good story to tell, send it to us at info@cmpboard.org.
  • TALK TO YOUR MEMBER OF CONGRESS – Letters and emails to your members of Congress can have an impact.  Many members of Congress have open office hours in their district or public forums where they want to hear from you.  Letting them know how horrible an idea H.R. 181 is can help raise their level of understand of the complexities that surround this issue.  Contact us for a sample letter to your Congressman by emailing us at info@cmpboard.org.

The CMP™ Govenring Board is committed to raising awareness of issues that impact its members and their clients.  H.R. 181 is a poorly thought through bill that should be stopped and your support and advocacy efforts can help.

Ban on nursing home arbitration clauses likely counterproductive

cmslogo1The Centers for Medicare and Medicaid Services (CMS) – the government entity that runs Medicare and Medicaid – has proposed a rule change that takes effect this month. For the first time, it bans pre-dispute arbitration clauses from nursing home admissions contracts. As you can imagine, elder advocates are applauding the return of the right to sue for patients and nursing homes are understandably up in arms. A recent federal suit was filed by a nursing home industry trade group intent on stopping the ban from taking effect.

What does the rule change actually mean? Let’s start out with the nursing home admissions process. If you need to go into a nursing home, you start by signing a small stack of papers which include an admissions contract that spells out the rights and obligations of both the nursing home itself and the patient going into the facility. This includes things like the services covered by the payment for care and how much will actually be charged to the patient, usually a daily rate, for those services. It is inside of these contracts that nearly all nursing homes include a pre-dispute arbitration clause.

Mind you, people are not necessarily choosing to go into a nursing home, they’re being forced by their health circumstances to seek admission to these facilities – often from a discharge from a hospital stay. The admissions contracts are contracts of adhesion, basically take it or leave it. It’s not like the patient can negotiate with the nursing home upon entry because patients are typically taking the next available bed in a system that often has shortages of beds and waiting lists for entry. Many would say that unfairly causes the agreement to give away lawsuit rights to be done under duress. From that standpoint, banning them seems like a proper thing to do to help balance the scales between the patient and the facility.

A pre-dispute arbitration clause is just that, a clause in the admissions contract that says if the patient has a problem with the nursing home, he or she must file their grievance with an arbitrator rather than go to court. Arbitration is an alternative dispute resolution technique that avoids the expense and public nature of typical court proceedings. In arbitration, the dispute is submitted to a third party (the arbitrator) who resolves the dispute after hearing a presentation by both parties. This is usually considered less expensive and faster than litigation, but many consider it a disadvantage to a potential plaintiff because there is limited recourse if they lose. Additionally, the lack of transparency of arbitration leads many to wonder if the process is truly objective.

The rule change is significant to patients in that it now opens up litigation for grievances and mistreatment perpetrated by nursing home operators. It is expected to create a new cottage industry of nursing home negligence lawsuits as soon as the pathway to the courthouse is cleared. Most consider that it would lead to higher awards, which in our system of consumer protection, is meant to serve as a deterrent against future nursing home abuse issues. In short, if nursing homes know they’re going to have to pay, they’ll be more careful and less likely to allow patients to be cared for so poorly.

That all sounds well and good, and very well may be. Nursing homes use arbitration clauses as a way to mitigate risk, which is also a way to mitigate costs. If the abolition of arbitration clauses opens the floodgate of litigation, it’s likely to get costly for nursing home providers. Their cost of defending lawsuits will go up. Their cost of resolving disputes, in terms of higher judgments, will also go up. The end result, prices for care in an already costly system will have to go up to compensate.

Nursing homes are a mixture of for-profit and non-profit entities. Because over half of all care is provided for by government benefits in the form of Medicare and Medicaid, the care provided has to stay within the fixed rates that the government pays. Compared to the actual cost of care charged to a paying customer, compensation from Medicare and Medicaid take a major haircut. For instance, the average daily rate for a nursing home for 2016 in Pennsylvania is $302.42 per day, but the average Medicaid reimbursement rate is only $211.79 per day, a nearly 30% reduction.

No matter your position on whether nursing home should or shouldn’t be allowed to include arbitration bans, there’s one thing that both sides agree upon: prohibiting arbitration will cost the nursing homes more money. CMS knows this, but it’s not doing anything to increase its reimbursement rate for care. So the nursing homes are left to do the only thing they can when faced with higher cost of doing business, raise prices on those that actually pay the bill or stop providing services to Medicaid and Medicare patients altogether.

The net effect for the individual harmed by the nursing home is likely a come-up from whatever paltry award they would have received from arbitration. The net effect on seniors as a whole will be to either drive up nursing home prices for those that pay or reduce the amount of government subsidized beds available, neither of which are a good outcome in a system already struggling to meet the rising tide of seniors in need.

EDITOR’S NOTE: On November 7, 2016, the U.S. District Court for the Northern District of Mississippi granted a request by the American Health Care Association to bar CMS from implementing the rule that bans nursing home arbitration agreements.  For a full copy of the 20-page opinion, click here.

Article provided courtesy of MedicaidAnswers.net. All rights reserved.

 

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Important 2016 Dollar Limits for Medicaid

CMS_BannerImageCMS Releases 2016 Spousal Impoverishment Figures

CMS (Centers for Medicare and Medicaid Services) has released the new annual spousal impoverishment and SSI figures for 2016. CMS has there will be NO change from 2015 figures.

Here is a quick recap of the new figures and what they mean:

2016 ASSET LIMITS:

The 2016 minimum Community Spousal Resource Allowance (CSRA) is $23,844. The 2016 maximum CSRA is $119,220.

Reminder, in the straight deduction states (e.g., California, Florida, etc.) the Max CSRA is the asset cap. Any asset amount below that is sufficient to qualify for long-term care Medicaid. For example, if a couple has $90,000 in countable assets, then in the straight deduction states they do not need to spend down any further. Also, in straight deduction states the minimum CSRA is never a factor.

In the one-half deduction states (e.g., Michigan, Ohio, etc.), the minimum and maximums are both used. Take the couple with the $90,000. In a one-half deduction state, the CSRA calculation would take the total countable resources and divide it in half ($90,000/2=$45,000) to determine CSRA amount of $45,000.

Where the maximum is used in a one-half deduction state is when the countable resources exceed double the maximum. For instance, a couple with $400,000 in countable assets would only be able to set aside $119,220 for the CSRA. The remaining assets would be exposed to the Medicaid spend down.

The minimum CSRA acts as a floor and only factors in when the total amount of assets divided in half fall below the minimum. For example, if a couple has $45,000, then the CSRA would not be $22,250 because that amount is below the minimum. The CSRA in that case would default to the minimum $23,884.

Remember, too, CSRA calculations in one-half deduction states are based on the snapshot date and not the application date.

2016 HOME EQUITY LIMITS:

The minimum Home Equity Limit in 2016 is $552,000. In the handful of states that have adopted an upper limit, that amount is $828,000 for 2016.* The basic limit was set just before the collapse of the housing market. As the housing market has nearly seen a full recovery to pre-collapse values, this equity limit has become a serious factor for long-term care Medicaid applicants. NOTE: This limit does not apply to long-term care Medicaid applicants who are married.

*IMPORTANT INFORMATION: A bill has been proposed to not allow states to make an upward departure from the $552,000 limit.

President signs NOTICE Act into law

Notice Act Picture RedIn August, President Obama signed into law the Notice of Observation Treatment and Implication for Care Eligibility Act (“NOTICE Act”).  This Act will greatly help families who transition from a hospital to a nursing home and are looking for Medicare payment while they can organize their affairs to move towards Medicaid qualification. The NOTICE Act requires hospitals to notify Medicare patients when they are receiving “observation care” but have not been formally admitted to the hospital.

The bill is meant to help Medicare beneficiaries with a recurring problem.  Many face sticker shock after a hospital stay when they go to a skilled nursing facility (SNF) or rehab facility.  Medicare will not cover the tab of the post-hospital stay, which leaves the patient immediately subject to paying out-of-pocket at private pay rates.

To qualify for Medicare coverage in a post-hospital SNF stay, a Medicare beneficiary must first spend three (3) consecutive midnights as an admitted patient in a hospital; observation days don’t count towards that requirement.  It had become commonplace for people needing nursing home placement to seek a hospital stay first, so as to have the assistance of the hospital in locating an available nursing home bed and having Medicare pay for some or all of the first 100 days of care.

The rule providing for payment from Medicare often buys families time to sort through their finances and prepare for the high cost of long-term care.  Medicare typically will pay for the first 20 days of care and then cover a portion of care for the next 80 days.  This 100-day window will gives families 2 or 3 solid months to begin the daunting task of planning for how to pay for long-term care expenses.

Within the last few years, hospitals were using their ability to put someone in “observation” and then discharging them to the nursing home.  Most Medicare beneficiaries would not know at the time they are in the hospital whether they were admitted or on observation status.  After leaving the hospital, they would end up in rehab with no help from Medicare.  The sticker shock of getting the first month’s nursing home bill would cause many to panic, especially when they thought Medicare was going to pay for the services.

While this deceptive practice is not being eliminated by the NOTICE Act, the hospital is now required to put a patient and their family on notice that they are under observation and have not been formally admitted. This will let families know that they do not have a Medicare-funded grace period in the hospital and will be on the hook for costs after discharge immediately.  This also gives the family a head’s up that they need to contact a Certified Medicaid Planner™.

For a full copy of the NOTICE Act, click here.

Not All Designations are Created Equal

designations-255According to FINRA, of the hundreds of financial designations there are currently only seven financial designations in the United States that have achieved a notable level of accreditation. Accreditation is a difficult process for any certification to go through because it measures a program’s capabilities against very high standards.

You must truly be careful what you call yourself and the specialization you claim to have knowledge in. Advisors around the country have been using designations offed up by fly-by-night certification programs. These pay-for designations have virtually no checks and balances and basically give the certification to anyone who wants it – regardless of their actual knowledge level or sophistication in the subject matter.

For example, Massachusetts as LPL recently found out the hard way.

After a number of complaints in the last decade, Massachusetts decided that it needed to curb overuse of these designations because they were part of an overall “broader pattern of deceptive marketing to seniors.” Under regulations established in 2007, the Secretary of the Commonwealth was given the authority to identify which accrediting bodies from which it would recognize designation. Only designations that are accredited with the American National Standards Institute (ANSI) and the National Coalition for Certifying Agencies (NCCA) are being accepted for advisors to use.

A review of LPL marketing material by Massachusetts regulators found that there were 10 designations that might have violated state regulations, which gave rise to a regulatory action and a $250,000 fine levied against LPL.

 

Medicaid Turns 50!

50-medicaid-255July marked the 50th year anniversary of President Lyndon B. Johnson’s signature, creating the federal and state health care program called Medicaid.

In 1965, Medicaid was designed to provide health care for people as well as serve the many different needs of everyone in the country. Today, the program provides health care to one in every five Americans. Medicaid has also provided help in health care coverage when certain life events occur within a family – losing a job, having children with disabilities, needs for seniors and their families, etc.

Medicare, which was created at the same time, was meant to cover health insurance costs for seniors during retirement. The one thing legislators did not include in Medicare was payment for costs of long-term care. Those were excluded specifically because even in 1965 it was anticipated that life expectancies would continue to get longer and the true future cost of long-term care was so hard to predict, they felt it better left to Medicaid to be used as a fall-back if people ran out of money to pay for care.

Over 50 years, the program has evolved.

On June 8, 1988, Congress passed the Medicare Catastrophic Coverage Act of 1988 (MCCA), which was signed into law by President Ronald Reagan on July 1, 1988. This added the first-ever “Spousal Impoverishment” provisions for long-term care Medicaid as a result of seeing so many families have to spend down assets while a spouse lived in the community and needed those funds.

There was never a penalty for gifting assets to qualify and there continues to be no penalty for gifting assets to qualify for health insurance. However, thirty years later President Clinton signed OBRA ’93 on August 10, 1993. It added a 3-year look back and penalties for gifts and uncompensated transfers. Additionally, OBRA ’93 included the first ever requirement for states to implement estate recovery which was intended to recoup the costs of long-term care from seniors who were still allowed to keep their homes as exempt assets during the Medicaid eligibility process.

Another decade later, George W. Bush signed the Deficit Reduction Act of 2005 on February 8, 2006. With the passage of the DRA, long-term care Medicaid eligibility rules were tightened even further. This included an expansion of the look back period to 5 years and a change in the start date of transfer penalties. Additionally, at a time when home values were soaring, Congress enacted a cap on home equity limits for single long-term care Medicaid applicants.

Over the next year the CMP™ Governing Board will be highlighting changes to Medicaid and incorporating historical content into its continuing education program. To have access to these programs and more, learn about getting certified at www.cmpboard.org.

Medicaid hits 50-year milestone

Medicaid Turns 50July marked the 50th year anniversary of President Lyndon B. Johnson’s signature, creating the federal and state health care program called Medicaid.

In 1965, Medicaid was designed to provide health care for people as well as serve the many different needs of everyone in the country. Today, the program provides health care to one in every five Americans. Medicaid has also provided help in health care coverage when certain life events occur within a family – losing a job, having children with disabilities, needs for seniors and their families, etc.

Medicare, which was created at the same time, was meant to cover health insurance costs for seniors during retirement.  The one thing legislators did not include in Medicare was payment for costs of long-term care.  Those were excluded specifically because even in 1965 it was anticipated that life expectancies would continue to get longer and the true future cost of long-term care was so hard to predict, they felt it better left to Medicaid to be used as a fall-back if people ran out of money to pay for care.

Over 50 years, the program has evolved.

On June 8, 1988, Congress passed the Medicare Catastrophic Coverage Act of 1988 (MCCA), which was signed into law by President Ronald Reagan on July 1, 1988.  This added the first-ever “Spousal Impoverishment” provisions for long-term care Medicaid as a result of seeing so many families have to spend down assets while a spouse lived in the community and needed those funds.

There was never a penalty for gifting assets to qualify and there continues to be no penalty for gifting assets to qualify for health insurance.  However, thirty years later President Clinton signed OBRA ’93 on August 10, 1993.  It added a 3-year look back and penalties for gifts and uncompensated transfers.  Additionally, OBRA ’93 included the first ever requirement for states to implement estate recovery which was intended to recoup the costs of long-term care from seniors who were still allowed to keep their homes as exempt assets during the Medicaid eligibility process.

Another decade later, George W. Bush signed the Deficit Reduction Act of 2005 on February 8, 2006.  With the passage of the DRA, long-term care Medicaid eligibility rules were tightened even further.  This included an expansion of the look back period to 5 years and a change in the start date of transfer penalties.  Additionally, at a time when home values were soaring, Congress enacted a cap on home equity limits for single long-term care Medicaid applicants.

Over the next year the CMP™ Governing Board will be highlighting changes to Medicaid and incorporating historical content into its continuing education program.

Free Webinar: How to become a CMP™

An aging population has increased the need for long-term care Medicaid planning and advisors who are qualified to provide quality planning assistance.  With the NCCA accreditation of the Certified Medicaid Planner™ designation, legal, financial and medical professionals around the country are looking to get certified to enhance their professional careers and stand out in their profession by seeking the CMP™ designation.

The CMP™ Governing Board will be holding an informational webinar on Monday, May 18, 2015 at 2:00 pm.  Led by the Chair of the CMP™ governing board, this webinar will go through requirements to become a CMP™, the process involved in pursuing certification, as well as the advantages of obtaining the designation.

If you missed the live webinar, don’t worry! You can still register and view a recording of the webinar. To register click here:

CMP Webinar Image

 

Jimmo v. Sebelius: Update on Medicare Nursing Home Payment Class Action

Jimmo v. Sebelius

In 2007, Glenda Jimmo – a 78-year old Vermont mother of 4 – lost her right leg from Diabetes. Medicare will typically provide 20 days of full coverage and an additional 80 days of partial coverage for skilled care following a hospital stay. However, she was denied Medicare coverage as her condition was determined to be “unlikely to improve.”

The denial prompted a class-action law suit by Jimmo, along with the National Multiple Sclerosis Society, the Paralyzed Veterans of America, the Alzheimer’s Association, the National Committee to Preserve Social Security and Medicare, and the Parkinson’s Action Network. These groups represent those who are suffering from chronic conditions, and routinely denied Medicare coverage for this same reason.

While Medicare is supposed to provide coverage for 100 days of skilled services for eligible beneficiaries, many don’t receive the total 100 days. Once a patient reaches a point when they are no longer “improving,” Medicare reserved the right to stop coverage, based on the “improvement standard.” However, this was something that had crept into provider language but was never actually part of a properly articulated standard – hence the basis for the lawsuit. The federal court judge overseeing Jimmo’s case approved the settlement agreement, requiring Medicare to clarify its regulations to prevent future denials or discontinuations of what Medicare considers to be maintenance coverage.

A premature denial of Medicare can be very expensive to a family. Most Medicaid planners utilize the 100-day window to assist the family in preparation for Medicaid eligibility at the end of the 100-day period. In fact, depending on when the 100-day coverage period expires, this can often buy the family 4 full months in which to prepare for Medicaid eligibility. Premature denial of Medicare can accelerate the timetable and create a period of time where the family might have to pay full price for the cost of care when they otherwise would not have to do so.

With the forcible removal of this improvement standard, patients in nursing homes and other skilled health service centers can be more confident that they will not be denied Medicare coverage prematurely. These changes apply to those under Medicare Advantage as well as traditional Medicare. Medicare beneficiaries requiring skilled services to maintain or prevent deterioration regardless of underlying illness, disability, or injury in all three care settings covered by Medicare.

You would think the success in the class action would have been the slam-dunk Jimmo needed to revisit her appeal, but the Medicare Appeals Council rejected her appeal again, continuing to cite the improvement standard. In what can only be seen as high irony, Medicare has changed the rules that affect millions of Medicare beneficiaries and the catalyst poster-child for the reform gets jilted by the Medicare Appeals Council. This forced her attorneys to file another lawsuit in June of this year to force the issue again, and it was resolved with Jimmo finally receiving the coverage she and so many Americans deserve.

The denial in her own case continues to point out for advocates across the country the confusion that continues to exist on this matter even within the Medicare apparatus itself. For help understanding how Medicaid and Medicare interact, find a Certified Medicaid Planner™ in your area to assist with long-term care planning. For information on becoming a Certified Medicaid Planner to help your clients with these issues, click here.