Monthly Archives: December 2015

No Penalty Period for Medicaid Applicant Who Sold House for Far Less Than Tax Assessment Value

December 23, 2015

A New York appeals court rules that the state should not impose a penalty period on a Medicaid applicant who sold her house for less than one-fifth of its tax assessed value because the price was fair market value based on the property’s condition. Matter of Whittier Health Services, Inc. v. Pospesel (N.Y. App. Div., 3rd Dept., No. 520890, Nov. 25, 2015).

A nursing home applied for Medicaid on behalf of a resident. The state determined that the applicant sold her home for less than market value within the look-back period and assessed a penalty period. Tax assessment records showed the property was valued at $143,511, but the applicant sold the home for $23,122.

The nursing home appealed, arguing that the house was sold for fair market value because it needed significant repairs and was sold to someone who was not related to the applicant. After a hearing, the state affirmed the penalty, and the nursing home appealed to court.

The New York Supreme Court annuls the penalty period based on the sale of the house. According to the court, the evidence shows the sale was an arms-length transaction and “a recent arm’s length sale is a more accurate indicator of actual market value of the [applicant’s] property than the tax assessment records relied upon by” the state.

For the full text of this decision, go to:

Guardian May Not Deduct Fee From Medicaid Recipient’s Income

December 23, 2015

A Florida appeals court rules that the guardian of a Medicaid recipient may not deduct a guardianship fee from the recipient’s income because the fee is not medically necessary. Lutheran Services Florida, Inc. v. Department of Children and Families (Fl. Ct. App., 2nd Dist., No. 2D13-5840, Nov. 25, 2015).

Lutheran Services Florida (LSF) is the court-appointed guardian of nursing home resident Larry Peron. LSF’s duties include reviewing Mr. Peron’s medical treatment and giving consent for medical procedures. When Mr. Peron qualified for Medicaid, he paid the majority of his income to the nursing home as the patient responsibility amount.

LSF obtained a court order authorizing that a monthly $200 guardianship fee be deducted from Mr. Peron’s income and petitioned the Department of Children and Families to deduct the guardianship fee from Mr. Peron’s patient responsibility amount. The Department denied the petition, determining that the fee cannot be deducted from a Medicaid recipient’s income because it is not “medically necessary” under state law.  A hearing officer upheld the determination, noting that state law defines medically necessary as services provided in accordance with generally accepted standards of medical practice and reviewed by a physician. LSF appealed.

The Florida Court of Appeals affirms, holding that the guardianship fee is not medically necessary. According to the court, state law allows only deductions from a Medicaid recipient’s income for “medical or remedial care services rendered by a medical professional directly to the Medicaid recipient.” The court acknowledges that this result leaves a gap “wherein a guardian of an incapacitated ward who provides the necessary consent for medically necessary treatment cannot be compensated for its services under the state’s Medicaid program,” and suggests that the legislature look into changing the law.

For the full text of this decision, go to:,%202015/2D13-5840.pdf

State Properly Rejected Medicaid Application When Requested Verifications Were Not Provided

December 23, 2015

A New Jersey appeals court rules that the state properly rejected a Medicaid application because the appropriate verifications were not provided, preventing the state from determining whether the applicant’s property and life insurance policy were available resources. A.T. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-3341-13T3, Nov. 23, 2015).

A.T. entered a nursing home and her son, S.T., applied for Medicaid on her behalf. The state requested verification regarding A.T.’s bank account statements, the deed for property she owned, and proof that a life insurance policy had been liquidated. S.T. did not provide the requested verifications, and the state denied Medicaid benefits. After selling A.T.’s property and converting the life insurance policy to an irrevocable trust, S.T. again applied for benefits on A.T.’s behalf, and the state approved the application.

After the nursing home filed a complaint against A.T. and S.T. for non-payment of services, S.T. appealed the original denial of Medicaid benefits. A hearing officer ruled that the original application was properly denied due to lack of verification. S.T. appealed to court, arguing that the state did not distinguish which documents were necessary to make an eligibility determination.

The New Jersey Superior Court, Appellate Division, affirms the original denial of Medicaid benefits. According to the court, the state could not determine whether the property and life insurance policy were available resources until it received the requested verifications.

For the full text of this decision, go here:

Elder Law Extra

December 22, 2015

newsboy_smA weekly roundup of recent elder law news and practice development articles culled from news sources around the nation.  Click on the headline to read the full article.

Attorney Who Borrowed Money From Elderly Client Is Suspended

December 22, 2015

New Jersey’s highest court suspends for one year an attorney who borrowed money from his vulnerable, elderly client. In the Matter of William J. Torre (N.J., No. 075524, Dec. 16, 2015).

William Torre prepared a will for M.D. and represented her for several years. When M.D. was 86 years old and legally blind, she named Mr. Torre as her attorney-in-fact and as executor of her estate. Mr. Torre told M.D. about his financial difficulties, and she agreed to loan him $100,000, which was 70 percent of her life savings. Mr. Torre drew up an unsecured promissory note. M.D. loaned Mr. Torre the money without getting the advice of another attorney. Mr. Torre made only two payments on the loan before M.D. died.

The state office of attorney ethics (OAE) filed a complaint against Mr. Torre for violating rules of professional conduct regarding conflict of interest. Mr. Torre admitted the terms of the promissory note were not fair or reasonable and requested a censure. The OAE recommended he be suspended for three months.

The New Jersey Supreme Court suspends Mr. Torre for one year. Noting the growing problem with elder abuse and the egregious circumstances presented by the case, the court determines a suspension longer than three months is necessary. According to the court, Mr. Torre caused “substantial harm to a vulnerable, eighty-six-year-old victim,” so a “one-year suspension is warranted to protect the public and guard against elder abuse by lawyers, and to help preserve confidence in the bar.”

For the full text of this decision, go to:

Trustee’s Attorney Does Not Owe Duty to Trust Beneficiary

December 22, 2015

Rhode Island’s highest court rules that an attorney representing the trustee of a trust does not owe a duty of care to the trust beneficiary, so the beneficiary cannot sue the attorney for legal malpractice. Audette v. Poulin (R.I., No. 2015-53-Appeal, Dec. 9, 2015).

Richard Audette was the beneficiary of a charitable trust that included a provision allowing him to live rent-free on trust property. Mr. Audette’s parents moved in with him over the trustee’s objections. The trustee consulted with attorney David Correira and instituted an action to evict Mr. Audette. Mr. Correira represented the trustee in this matter and other matters relating to the trust.

Mr. Audette sued Mr. Correira for legal malpractice, arguing that Mr. Correira’s advice to the trustee led the trustee to mismanage the trust. The trial court ruled that Mr. Correira did not owe a duty of care to Mr. Audette. On appeal, Mr. Audette argued that his claim should be able to proceed because Mr. Correira owed a duty to the trustee and the trustee and Mr. Audette both had a similar interest in the trust.

The Rhode Island Supreme Court affirms, holding that an attorney for a trustee does not owe a duty of care to a beneficiary of that trust. According to the court, because the interests of the trustee and Mr. Audette were adverse, there was no “identity of interest” between the parties.

For the full text of this decision, go to:

How to Choose a Trustee

December 12, 2015

trustIf you create a trust, you will need a separate person or institution, called a “trustee,” to manage the trust either now or in the future, depending on the type of trust.  Choosing the right trustee is crucial to making sure your wishes are carried out. The choice is important because being a trustee can be a difficult job, with a trustee’s duties including making proper investments, paying bills, keeping accounts, and preparing tax returns.

A trust is a legal arrangement through which a trustee holds legal title to property for another person, called a “beneficiary.” The trust document will name the trustee, although there are several different types of trusts. The simplest one is a revocable living trust in which the person who creates the trust maintains control of the trust while he or she is alive. In this situation, the trust document will name a successor trustee to take over after the original trustee dies or becomes incapacitated. Other trusts — such as an irrevocable trust or special needs trust — may have a separate trustee from the start.

The law isn’t very strict about who may serve as your trustee, as long as the person is legally competent, meaning he or she is over 18 years of age and is capable of managing his or her own affairs. The main consideration when selecting a trustee is picking someone who is trustworthy. The trustee has a duty to manage the trust in the beneficiary’s best interest. The trustee does not need legal or financial expertise, but he or she must have good judgment. In the case of a special needs trust, the trustee should have knowledge of federal benefits programs.

Another consideration is that the trustee be able to manage the trust for an extended period of time. Your choice of trustee should be someone who will likely be around for a long time and who has the time to devote to trustee duties. It is important that the trustee be of sound mind and body.

If you don’t know anyone who meets these qualifications, you can look into hiring an independent trustee. This can be an individual or an institution with no beneficial interest in the trust. Some examples include: a bank or trust company, a professional trustee, an investment advisor or manager, an investment banker, an accountant or a lawyer. In addition to being independent, a professional trustee will usually have experience and expertise in managing trusts. If you aren’t comfortable with having a stranger manage the trust, it may be possible to choose a family member and a professional trustee as co-trustees. The downside to hiring an independent trustee is that the trustee will charge a fee, which is usually a percentage of the trust.

Whomever you choose as trustee, it is important to revaluate your choice every few years. The person who is right today may not be right tomorrow. Your attorney can help you determine who is the best trustee for you.

For more information about trusts, click here.

For information about what to ask before becoming a trustee, click here.

New Federal Budget Ends Two Spousal Social Security Claiming Strategies

December 12, 2015

Social Security card and cashThe federal budget agreement that President Obama signed into law November 2, 2015, spells the end to two Social Security strategies that some spouses have used to maximize benefits. The strategies were worth tens of thousands of dollars over a lifetime for some couples and their impending demise may require beneficiaries to take action before the changes take effect or reconsider their retirement plans.

According to Social Security’s rules, the spouse of a worker cannot claim a spousal benefit unless the worker has applied for Social Security benefits. Currently, a worker is able to file for Social Security benefits at full retirement age, which is now 66, and then suspend benefits. This strategy — called “File and Suspend”  — allows the worker’s spouse to begin receiving spousal benefits while the worker postpones receiving benefits. The longer the worker delays retirement, the more delayed retirement credits he or she will accumulate (up to age 70), resulting in a larger Social Security check.

Under the new law, a spouse cannot begin receiving benefits until the worker is actually receiving benefits, too. Workers can still file and suspend, but spouses (or other dependents, including minor and disabled children) cannot receive benefits during the suspension. The law will take effect on April 30, 2016, but it does not affect workers who have already filed and suspended benefits. Workers who are at least 66 or will turn 66 before the effective date of the law may still file and suspend in order to trigger benefits for their spouse.

The law also changes another rule that allows a spouse who takes benefits at full retirement age to choose whether to take spousal benefits or benefits on his or her own record. This strategy – commonly known as “Claim Now, Claim More Later”  — allows a higher-earning spouse to claim a spousal benefit at full retirement age. Then at 70, the higher-earning spouse would claim the maximum amount of his or her retirement benefit and stop receiving the spousal benefit.

If you are 62 or older by the end of 2015, you will still be able to choose which benefit you want at your full retirement age. Under the new law, when workers who are not 62 by the end of 2015 apply for spousal benefits, Social Security will assume it is also an application for benefits on the worker’s record. The worker is eligible for the higher benefit, but he or she can’t choose to take just the spousal benefits and allow his or her own benefits to keep increasing until age 70. This new rule does not apply to survivor’s benefits. A surviving spouse will still be able to choose to take survivor’s benefits first and then switch to retirement benefits later if the retirement benefit is larger.

Contact your elder law attorney or financial advisor to determine if you should take any action before the new rules become law.

For more information on who is affected by the rules, click here.

For questions and answers on the changes, click here.

Medicare Announces Parts A and B Premiums and Deductibles for 2016

December 12, 2015

Medicare providerThe Centers for Medicare and Medicaid has announced the Medicare premiums, deductibles, and coinsurances for 2016. As expected, for the third year in a row the standard Medicare Part B premium that most recipients pay will hold steady at $104.90 a month.  However, about 30 percent of beneficiaries will see their Part B premium rise to $121.80 a month.  Meanwhile, the Part B deductible will increase for all beneficiaries from the current $147 to $166 in 2016.

The Part B rise was supposed to be much steeper for the 30 percent of beneficiaries who are not “held harmless” from any increase in premiums when Social Security benefits remain stagnant, as will be the case for 2016.  But the premium rise was blunted by the Bipartisan Budget Act signed into law by President Obama November 2.  Medicare beneficiaries who are unprotected from a premium increase include those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and “dual eligibles” who receive both Medicare and Medicaid benefits.

For beneficiaries receiving skilled care in a nursing home, Medicare’s coinsurance for days 21-100 will go up from $157.50 to $161.  Medicare coverage ends after day 100.  (For more on Medicare’s nursing home coverage, click here.)

Here are all the new Medicare figures:

  • Basic Part B premium: $104.90/month (unchanged)
  • Part B premium for those not “held harmless”: $121.80
  • Part B deductible: $166 (was $147)
  • Part A deductible: $1,288 (was $1,260)
  • Co-payment for hospital stay days 61-90: $322/day (was $315)
  • Co-payment for hospital stay days 91 and beyond: $644/day (was $630)
  • Skilled nursing facility co-payment, days 21-100: $161/day (was $157.50)

Higher-income beneficiaries will pay higher Part B premiums:

  • Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $170.50 (was $146.90).
  • Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $243.60 (was $209.80).
  • Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 will pay a monthly premium of $316.70 (was $272.70).
  • Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more will pay a monthly premium of $389.80 (was $335.70).

Rates differ for beneficiaries who are married but file a separate tax return from their spouse:

  • Those with incomes between $85,000 and $129,000 will pay a monthly premium of $316.70 (was $272.70).
  • Those with incomes greater than $129,000 will pay a monthly premium of $389.80 (was $335.70).

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premiums. So the income reported on a beneficiary’s 2014 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2016. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements.  The average Medicare Advantage premium is expected to decrease slightly, from $32.91 on average in 2015 to $32.60 in 2016.

For Medicare’s press release announcing the new  figures, click here.

For Medicare’s “Medicare costs at a glance,” click here.

For more about Medicare, click here.

Activities of Daily Living Measure the Need for Long-Term Care Assistance

December 12, 2015

CaregiverMost long-term care involves assisting with basic personal needs rather than providing medical care. The long-term care community measures personal needs by looking at whether an individual requires help with six basic activities that most people do every day without assistance, called activities of daily living (ADLs). ADLs are important to understand because they are used to gauge an individual’s level of functioning, which in turn determines whether the individual qualifies for assistance like Medicaid or has triggered long-term care insurance coverage.

The six ADLs are generally recognized as:

  • Bathing. The ability to clean oneself and perform grooming activities like shaving and brushing teeth.
  • Dressing. The ability to get dressed by oneself without struggling with buttons and zippers.
  • Eating. The ability to feed oneself.
  • Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again.
  • Toileting. The ability to get on and off the toilet.
  • Continence. The ability to control one’s bladder and bowel functions.

There are other more complicated tasks that are important to living independently, but aren’t necessarily required on a daily basis. These are called instrumental activities of daily living (IADLs) and include the following:

  • Using a telephone
  • Managing medications
  • Preparing meals
  • Housekeeping
  • Managing personal finances
  • Shopping for groceries or clothes
  • Accessing transportation
  • Caring for pets

Long-term care providers use ADLs and IADLs as a measure of whether assistance is required and how much assistance is needed. In order to qualify for Medicaid nursing home benefits, the state may do an assessment to verify that an applicant needs assistance with ADLs. Other state assistance programs also may require that an applicant be unable to perform a certain number of ADLs before qualifying. In addition, long-term care insurance usually uses the inability to perform two or more ADLs as a trigger to begin paying on the policy.