Author Archives: Administrator

Some nursing homes are illegally evicting elderly and disabled residents who can’t afford to pay

January 22, 2020

courtesy of NAELAeBulletin:

By Katie Engelhart
to see graphics within article, go to:

BISHOP, Calif. — When Jamie Moore arrived home on a Thursday evening in March, she was surprised to find her mother-in-law in her living room. Glenda Moore, 67, had been sitting in her wheelchair for hours. Without anyone to help her to the bathroom, she’d had an accident. She was also having trouble breathing. “It was awful,” Jamie Moore recalled.

Glenda Moore told Jamie that she had been discharged from the Bishop Care Center nursing home, in Bishop, California. She had been living at the nursing home — a sprawling brick building on the side of a state highway — for several weeks, recovering from a back surgery that unexpectedly left her unable to walk much or take care of herself.

Several days earlier, nursing home administrators had shown Glenda Moore a letter from Medicare, explaining that her rehabilitation coverage was ending. She was unable to pay the nursing home’s more-than-$7,000 monthly fee, so, thinking she had no other options, she left. (A relative dropped her off at Jamie’s home, where Glenda Moore had lived previously, without telling Jamie.)

“They pushed her out and she was not ready,” Jamie Moore, who has worked as a nursing assistant, said. “She was not ready at all.”

As the family later learned, Glenda Moore had the right to appeal the Medicare decision, or to apply for Medicaid — and, if she qualified (which she later did), to stay in the nursing home on Medicaid for as long as she needed nursing care. Instead, Moore’s family said, Moore became one of thousands of Americans discharged against their wishes or evicted from nursing homes each year. (The Bishop Care Center maintains that Moore’s health had improved and that she voluntarily left the facility, and points out that they gave her a document noting her right to appeal the Medicare decision.)

Nationally, long-term care ombudsmen, who advocate for elderly and disabled residents of nursing homes and assisted living facilities, received 10,610 complaints about discharges and transfers in 2017, up from 9,192 in 2015. The ombudsmen, whose work is federally mandated and state-funded, receive more complaints about discharges and transfers than any other grievance.

The complaints likely expose just a small fraction of the problem, said Kelly Bagby, vice president at the AARP Foundation, a nonprofit that serves vulnerable people over 50.

“Most people don’t even know they have rights,” she said. And many complaints never result in a formal state investigation.

Advocates, experts and the federal government say that nursing homes tend to evict low-income, longer-term residents who receive Medicaid, to make room for shorter-term rehabilitation patients who are covered by Medicare. Medicare reimburses nursing homes at a higher rate than Medicaid, so it’s more lucrative for facilities to house Medicare patients who stay for short stints before recovering and moving elsewhere.

In California, for example, the average state Medicaid reimbursement for a nursing home is $219 per day, according to the California Association of Health Facilities, while Medicare may reimburse more than $1,000 per day, but only for up to 20 days, when patients must begin paying part of the fees. (Medicare coverage ends completely after 100 days.) Advocates say that eviction notices are often handed out around the 20-day mark.

“It is illegal to discriminate against residents based on payment source, but it happens all the time,” said Tony Chicotel, attorney at the California Advocates for Nursing Home Reform, a nonprofit that supports long-term care residents in the state. “It feels like there’s just a tidal wave of cases.”

Chicotel said he receives calls every day from panicked residents or family members being threatened with discharge from a long-term care facility.

Deborah Pacyna, director of public affairs at the California Association of Health Facilities, a trade association representing nursing homes, told NBC News that improper and illegal discharges are “a really rare thing,” and that the issue is exaggerated by media attention.

She added that California’s Medicaid program, Medical, does not provide “adequate funding” to care for many patients with complicated health issues and behavioral disorders. “Medicare pays more. Those people are rehab patients; they’re in and out,” she said. “That is how they break even,” she added of nursing homes. “Society’s problems are manifesting themselves on the doorsteps of nursing homes.”

‘You’re just a piece of garbage’

Nursing homes are legally permitted to evict residents under several conditions: if a resident’s health improves sufficiently; if his presence in a facility puts others in danger; if the resident’s needs cannot be met by the facility; if he stops paying and has not applied for Medicare or Medicaid; or if the facility closes. Facilities are obligated under federal law to give 30 days’ notice, in writing, and also to work with the resident on a transition plan.

Bagby, of the AARP, said that while some residents are issued formal discharge letters with advance notice, others are asked or pressured to leave with “no due process rights, no notice.”

In one case in Los Angeles, in April 2018, Ronald Anderson said he was woken at night by the nursing home staff at the Avalon Villa Care Center and told he was being evicted. Anderson, 51 at the time, had moved into the facility over a year earlier to recover from a partial foot amputation. He said he was loaded into a van and dropped off on a sidewalk in downtown Los Angeles, which has one of the largest homeless populations in the country, according to a report from the California Department of Public Health.

Anderson, who is diabetic, was left in a wheelchair without his insulin or testing supplies — on a street cluttered with tent encampments and broken glass. The Department of Public Health report noted that he could have slipped into a coma or died.

“You’re just a piece of garbage,” Anderson said, from the Union Rescue Mission homeless shelter in Los Angeles where he now lives. “They’ll kick you right out on the curb.”

Avalon Villa Health Care, which runs the nursing home, later paid $450,000 to settle a civil complaint filed by the Los Angeles city attorney in response to Anderson’s case and other evictions of homeless residents, with the money going toward civil penalties, hiring and training Avalon Villa staff and finding temporary housing for the facility’s homeless residents. The city attorney set up an emergency hotline and invited members of the public to report cases of resident abandonment.

A lawyer for the Avalon Villa Care Center told NBC News that the facility “strongly disputes that it has inappropriately discharged any patients” and “rejects the allegations of the city attorney.”

The Rev. Andy Bales, director of the Union Rescue Mission, said “resident dumping” from nursing homes and hospitals is so common that the shelter set up a security camera outside — which Bales calls “the dump cam” — to capture evidence of it. He said he is aware of at least four instances from the last year in which people have been dropped off on nearby streets by hospitals or nursing homes — though he believes the number is higher. As a result of the security camera, he said, “They won’t dump them off in front of us anymore.”

California’s long-term care ombudsmen received 1,404 complaints about nursing home evictions in 2018, up from 1,022 in 2014. Several lawsuits concerning nursing home discharges have recently been filed in the state.

Molly Davies, a California long-term care ombudsman, said that in addition to receiving more complaints about evictions, “there has also been an uptick in the egregiousness of some of these cases.”

In some instances, she and other experts said, nursing homes drop residents off at a low-cost motel and pay for a night or two. “We’ve seen cases with residents who have dementia put into a van and dropped downtown onto the streets, without the ability to care for themselves,” she said.

The California Department of Public Health does not track where nursing homes discharge patients, according to a department spokesman, nor does the California long-term care ombudsman program. In some instances, however, routine state inspections and inspections following complaints uncover problems.

In a 2018 incident, described in a California Department of Health and Human Services report, a Rosemead nursing home discharged a resident to a hotel without any medical equipment and without ensuring that the hotel was “a safe environment.” The female resident still required assistance with activities such as using the toilet and bathing, and was found to lack “the capacity to make her needs known.” The nursing home received a federal “deficiency” citation.

In another case that resulted in a deficiency citation, a nursing home resident who “needed extensive assistance” to move between locations in his bedroom was discharged to a motel — and, a few days later, ended up in a hospital for emergency care.

These practices are not unique to California. In Maryland, one nursing home resident was dropped off in Baltimore, a city she had never been to, according to the state attorney general’s office. In another instance, a Washington County Sheriff’s deputy accused a nursing home of discharging a resident to a storage unit on a hot summer day.

Even when residents appeal eviction decisions through a state process and win the right to return to a nursing home, that nursing home sometimes refuses to readmit them, a group of plaintiffs told the Ninth Circuit Court of Appeals found in July. The case is still pending, but the appeals court agreed with the plaintiffs that federal law does not allow “meaningless show trials that allow nursing homes to persist in improper transfers and discharges.”

The California Department of Health Care Services, the California Department of Public Health and the federal Centers for Medicare & Medicaid Services all declined to comment, citing department policy not to comment on pending litigation.

A push for enforcement

In 2016, the Centers for Medicare & Medicaid Services strengthened regulatory requirements around nursing home discharges and transfers, specifying that residents cannot be evicted for nonpayment while they are in the process of applying for Medicaid or appealing a Medicaid denial. A year later, the agency announced an initiative to prevent illegal nursing home discharges, acknowledging that “some discharges are driven by payment concerns, such as when Medicare or private pay residents shift to Medicaid as the payment source.”

So far, the agency has approved $784,630 for a program in California that focuses on training nursing home staff on discharge regulations, a spokeswoman said in an email. The agency also provided $84,00 for a smaller project in Montana. Beyond that, the agency is not acting directly to address illegal evictions but is instead encouraging states “to propose projects that seek to address facility-initiated discharges that violate federal regulations,” the spokeswoman said by email.

Advocates for nursing home patients said more is needed. They want both federal and state agencies to do more to enforce existing rules on evictions.

“We haven’t seen any change in practice,” said Davies, the California long-term care ombudsman. “We haven’t seen a reduction in inappropriate transfers and discharges. There are certain enforcement tools that they have that they aren’t using consistently.” These tools, she said, include substantial fines.

But the federal government has made changes that reduced fines against nursing homes that harm or endanger residents. Nursing homes used to receive fines for each day a violation was observed, but after a change the Trump administration implemented in July 2017, nursing homes are now usually fined just once per retroactive violation.

Robyn Grant, director of public policy and advocacy at the National Consumer Voice for Quality Long-Term Care, an advocacy group, says this change can affect the way illegal evictions are punished. For instance, a nursing home that evicts a patient and refuses to readmit the person may be fined one time, instead of every day that the resident is denied access to a bed.

In the first 18 months following the change in guidelines, nursing homes across the country paid about $47 million less in fines for all violations compared to the previous 18-month period, said Dr. David Gifford, senior vice president of quality and regulatory affairs at the American Health Care Association, the nursing home industry’s main lobbying group.

Gifford told NBC News that the change was not about saving the industry money, but was meant to ensure consistent standards. He said the new fine structure incentivizes nursing homes to report violations and improve resident care.

‘I thought I was completely covered’

After she left the Bishop Care Center nursing home in March, Glenda Moore grew sicker. Over the following weeks, she cycled among her son and daughter-in-law’s home, several emergency rooms and another nursing home an hour away. According to her son and daughter-in-law, she was diagnosed with a bladder infection and pneumonia.

“I don’t want to be a burden on the kids,” Glenda Moore told NBC News in an interview in April. “I had retirement insurance, I had Medicare, I thought I was completely covered. That doesn’t count for anything … I had no idea.”

In May, her family appealed her discharge from the center. At a hearing conducted by the California Department of Health Care Services, the nursing home’s administrator said Glenda Moore had left willingly, according to the state’s summary report.

The state’s hearing officer ultimately found that the facility “failed to meet all of the regulatory-mandated discharge planning requirements.” However, the hearing officer ruled in favor of the nursing home, noting that Glenda Moore agreed to leave and was given paperwork notifying her of her right to appeal Medicare’s noncoverage decision.

By late July, her weight had dropped to about 80 pounds. She was hospitalized, and on Aug. 2 she died from acute renal failure and cardiopulmonary arrest.

Her family believes she wouldn’t have become so sick if she had been able to stay in the Bishop Care Center for a few weeks longer, until she was more stable.

Jamie Moore said her mother-in-law’s experience has changed the way she thinks about her own retirement.

“I never thought about it much until now. It scares the crap out of me,” she said. “The system is the system. What are you doing to do?”

Reps. Sánchez and Schakowsky Introduce Legislation to Protect Elderly Nursing Home Residents

January 22, 2020

courtesy of NAELAeBulletin:

December 5, 2019
Press Release

Washington, DC – U.S. Representatives Linda T. Sánchez (D-CA) and Jan Schakowsky (D-IL) today introduced the Fairness in Nursing Home Arbitration Act to protect the legal rights of elderly Americans. This legislation would prohibit long-term care facilities from requiring or soliciting residents to enter into pre-dispute, mandatory, binding arbitration agreements.

Rep. Linda Sánchez – “This legislation is about putting patients and families first. The decision to transfer a parent or loved one to a long-term care facility is heart-wrenching. I still remember the day we moved my late father into a nursing home. My family and I were focused on the quality of care and range of services the facility would provide him. We were not focused on the language in the agreement that would limit his rights should something go wrong. Under this bill, families will no longer have to worry about losing their right to a day in court. I urge my colleagues to join me in protecting one of our most vulnerable groups in society, the elderly.”

Jan Schakowsky – “Every day, families bring their loved ones to nursing homes all around the country, certain that they will receive the high-quality care and comfort they need. Unfortunately, many of them unknowingly sign away their right to seek justice and are forced into an often unfair arbitration process should a nursing home resident be harmed. Whether it’s willful neglect or a simple accident, residents and their families should have the right to seek justice in front of a judge and jury, and not be locked into a conference room for forced arbitration.”

Full bill text available here.

This legislation is endorsed by:

  • AARP
  • California Advocates for Nursing Home Reform
  • Caring Across Generations
  • Center for Medicare Advocacy
  • Justice in Aging
  • Long Term Care Community Coalition (LTCCC)
  • National Academy of Elder Law Attorneys
  • National Association of Local Long Term Care Ombudsman (NALLTCO)
  • National Association of Social Workers (NASW)
  • National Association of State Long-Term Care Ombudsman Programs (NASOP)
  • National Consumer Voice for Quality Long-Term Care
  • Public Citizen
  • Service Employees International Union (SEIU)

Rep. Sánchez first introduced the Fairness in Nursing Home Arbitration Act in the 110th Congress after hearing numerous testimony during her time as Chairwoman of the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law.

AARP Senior Vice President of Government Affairs Bill Sweeney – “When individuals and their families make the difficult decision to enter a nursing home, often in emergency situations, they should not be forced to sign away their legal rights through mandatory arbitration agreements. AARP supports the Fairness in Nursing Home Arbitration Act because it would prohibit these fundamentally unfair contract provisions. In the heartbreaking cases where loved ones in nursing homes are abused or injured, they should not lose access to the judicial system. We thank Representatives Sánchez and Schakowsky for their important work on this issue.”

American Association for Justice CEO Linda Lipsen – “Forced arbitration strips our nation’s most vulnerable citizens of their legal rights when a nursing home corporation’s negligence causes the injury or death of a patient. We applaud Rep. Sánchez for introducing the Fairness in Nursing Home Arbitration Act and ask Congress to act quickly to restore long-term care patients with their constitutional right to be heard by a judge and jury.”

Long Term Care Community Coalition Executive Director Richard J. Mollot – “LTCCC believes pre-dispute arbitration agreements are inherently unfair to residents and families. When a resident enters a facility, they are not likely to be in a position to truly consider what future problems may occur. Most people are overwhelmed by the situation and trust that the nursing home is providing them with paperwork to sign that is both necessary and in the resident’s best interest. Nobody knowingly enters a nursing home expecting that they will be abused or neglected.”

Public Citizen Counsel for Civil Justice and Consumer Rights Remington Gregg – “We thank Rep. Sánchez for being a champion for seniors. If seniors are injured, abused, or otherwise harmed, they and their families should have peace of mind that they will be able to hold corporate wrongdoers accountable in court and receive the justice they deserve.”

Center for Medicare Advocacy Policy Attorney Dara Valanejad – “Too often, nursing home residents and families enter into pre-dispute arbitration agreements in the midst of physical and emotional crises. The Fairness in Nursing Home Arbitration Act of 2019 will ensure that long-term care residents and those in community-based settings are not forced, coerced, or “requested” to waive their right to court proceedings before a dispute even arises. Our nation’s most vulnerable individuals deserve to be protected from these pre-dispute arbitration agreements.”

National Consumer Voice for Quality Long-Term Care Director of Advocacy & Outreach Robyn Grant – “The National Consumer Voice for Quality Long-Term Care thanks Congresswomen Sánchez and Schakowsky for their leadership in protecting nursing home residents and individuals receiving Medicaid-funded home and community -based services from forced pre-dispute arbitration agreements. Such agreements are fundamentally unfair to consumers of long-term services and supports in any setting. They pressure people to decide how to settle a dispute – which could involve gross negligence, abuse, or even death – before a dispute arises and without any information about the dispute. Once signed, the individual loses forever their constitutional right to pursue action in a court of law. These agreements take advantage of consumers at their most vulnerable and stack the deck against them by frequently allow the long-term care provider to select the arbitrator, the rules for the arbitration process, and where the arbitration will be held. But pre-dispute arbitration agreements harm more than the individual who is seeking justice and accountability. Because the agreements usually are confidential, the public, including those looking for a nursing home, will never know the nursing home’s full track record – no matter how bad – because it is hidden. We applaud both Congresswomen for their commitment to ending this shameful practice and upholding the rights of vulnerable individuals in need of care.”

 

Google Seeks Help From People With Down Syndrome

January 22, 2020

courtesy of NAELAeBulletin:

From Siri to Alexa, voice assistants are everywhere, but the technology tends to miss every third word that people with Down syndrome say. Now a new effort is underway to change that.

Google is partnering with the Canadian Down Syndrome Society to collect voice samples from adults with Down syndrome in order to program its algorithm to better decipher the unique speech patterns of this population.

Speech is often altered in those with Down syndrome due to variances in the facial skeletal and muscular systems, according to the Canadian Down Syndrome Society. However, in a small pilot, Google and the nonprofit group found that there were enough similarities across those with the chromosomal disorder to train the voice assistant technology.

“With the help of the Canadian Down Syndrome Society we were able to sample a small group to test whether there were enough patterns in the speech of people with Down syndrome for our algorithm to learn and adapt,” said Julie Cattiau, product manager at Google. “It’s exciting to see the success of that test and move into the next phase of collecting voice samples that represent the vocal diversity of the community. The more people who participate, the more likely Google will be able to eventually improve speech recognition for everyone.”

Participants in the Google effort known as Project Understood are asked to record themselves speaking 1,700 simple phrases like “strawberry jam is sweet.” The company will then use the data to improve its speech recognition models.

The Canadian Down Syndrome Society is hoping to solicit at least 500 voices. Given the increasing role of technology in everyday life, the Down syndrome group said the impact is likely to be significant.

“For most people, voice technology simply makes life a little easier,” said Laura LaChance of the Canadian Down Syndrome Society. “For people with Down syndrome, it has the potential for creating greater independence. From daily reminders to keeping in contact with loved ones and accessing directions, voice technology can help facilitate infinite access to tools and learnings that could lead to enriched lives.”

Project Understood is associated with Google’s Project Euphonia, a broad effort announced earlier this year to train computers to better understand and transcribe the words of those with speech impairments.

New Law Makes Big Changes to Retirement Plans

January 22, 2020

President Trump has signed a spending bill that makes major changes to retirement plans. The new law is designed to provide more incentives to save for retirement, but it may require workers to rethink some of their planning.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act changes the law surrounding retirement plans in several ways:

  • Stretch IRAS. The biggest change eliminates “stretch” IRAs. Under the previous law, if you named anyone other than a spouse as the beneficiary of your IRA, the beneficiary could choose to take distributions over his or her lifetime and to pass what is left onto future generations (called the “stretch” option). The required minimum distributions were calculated based on the beneficiary’s life expectancy. This allowed the money to grow tax-deferred over the course of the beneficiary’s life and to be passed on to his or her own beneficiaries. The SECURE Act requires non-spouse beneficiaries of an IRA to withdraw all the money in the IRA within 10 years of the IRA holder’s death. In many cases, these withdrawals would take place during the beneficiary’s highest tax years, meaning that the elimination of the stretch IRA is effectively a tax increase on many Americans. This provision will apply to those who inherit IRAs starting on January 1, 2020.
  • Required minimum distributions. Under prior law, you have to begin taking distributions from your IRAs beginning when you reach age 70 ½. Under the new law, individuals who are not 70 ½ at the end of 2019 can now wait until age 72 to begin taking distributions.
  • Contributions. The new law allows workers to continue to contribute to an IRA after age 70 ½, which is the same as rules for 401(k)s and Roth IRAs.
  • Employers. The tax credit businesses get for starting a retirement plan is increased and the new law makes it easier for small businesses to join multiple-employer plans.
  • Annuities. The newly enacted legislation removes roadblocks that made employers wary of including annuities in 401(k) plans by eliminating some of the fiduciary requirements used to vet companies and products before they can be included in a plan.
  • Withdrawals. The new law allows an early withdrawal of up to $5,000 from a retirement account without a penalty in the event of the birth of a child or an adoption. Currently, there is a 10 percent penalty for early withdrawals in most circumstances.

Given these changes, workers need to immediately reevaluate their estate plans. Some people have used stretch IRAs as an estate planning tool to pass assets to their children and grandchildren. One way of doing this has been to name a trust as the IRA’s beneficiary, and these trusts may have to be reformed to conform to the new rules. If a stretch IRA is part of your estate plan, consult with your attorney to determine if you need to make changes.

To read the legislation, click here.  For more on the new law, click here and here.

A Change in Medicare Has Therapists Alarmed

January 22, 2020

courtesy of NAELAeBulletin:
by Paula Span

Nov. 29, 2019

Medicare revamped its reimbursement policy for physical, occupational and speech therapy in nursing homes. That has left some patients with less help.

In late September, a woman in her 70s arrived at a skilled nursing facility in suburban Houston after several weeks in the hospital. Her leg had been amputated after a long-ago knee replacement became infected; she also suffered from diabetes, depression, anxiety and general muscular weakness.

An occupational therapist named Susan Nielson began working with her an hour a day, five days a week. Gradually, the patient became more mobile. With assistance and encouragement, she could transfer from her bed to a wheelchair, get herself to the bathroom for personal grooming and lift light weights to build her endurance.

That progress ended abruptly on Oct. 1, when Medicare changed its payment system for physical, occupational and speech therapy in nursing homes. Ms. Nielson, employed by Reliant Rehabilitation, which supplies therapists to almost 900 nursing facilities, said that her allotted time with the woman was reduced from 60 minutes to just 20 or so minutes a day, not even long enough to help her leave her bed.

“I’m not able to do my job,” Ms. Nielson said. “This person had the potential to do more, and I couldn’t help her.”

The same lament is being expressed by therapists nationwide. Professional organizations, including the American Physical Therapy Association and the American Occupational Therapy Association, report that the new Medicare policy has prompted some nursing home chains and rehab companies to scale back the treatment they provide to patients, and to lay off therapists or switch them to part-time status.

The organizations’ members are also speaking out about the pressure they feel to conduct therapy in groups rather than one-on-one. Medicare allows up to 25 percent of patients’ therapy to take place in groups — and some employers reportedly began requiring that percentage on Oct. 1, whether therapists thought their patients would benefit or not.

“Patients’ needs didn’t change overnight,” said Kara Gainer, director of regulatory affairs for the American Physical Therapy Association. “So what changed?” Although some companies have reacted responsibly to the new system, she said, “some are bad actors who put profits before patients.”

Her members have responded with “concern, fear, outrage,” she added. A new Facebook group, Rehab Therapists for a Union, swiftly attracted more than 20,000 members. A petition on Change.org, asking the Department of Health and Human Services to intervene, garnered 80,000 signatures.

Before Oct. 1, Medicare reimbursed nursing homes for therapy based on the number of minutes provided to each patient, up to 720 minutes a week. The goal is to help patients regain mobility and the ability to perform daily tasks, so that they can safely return home.

For years, however, federal investigators and advisers have reported that nursing homes frequently provided the maximum number of minutes of therapy, regardless of whether patients needed that much treatment.

“Therapy was sort of a profit center,” said Sharmila Sandhu, who directs regulatory affairs at the American Occupational Therapy Association. “The more therapy, the higher the reimbursement.”

The new approach, called the Patient-Driven Payment Model, eliminates such incentives; now facilities are paid based on patients’ diagnoses and characteristics. In an email, a spokesman for the Centers for Medicare and Medicaid Services called the P.D.P.M. “a historic reform” that will “appropriately reflect each resident’s actual care needs.”

“This is a well-intended policy, a real sea change in how we pay for care,” said David Grabowski, a health care policy researcher at Harvard Medical School who is organizing a study of the policy’s effects.

But about 70 percent of the nation’s 15,000 or so nursing homes are for-profit and have proved adept at maintaining profit margins despite policy shifts, said Toby Edelman, senior policy attorney at the Center for Medicare Advocacy.

Without volume incentives, nursing homes may direct therapists to administer less therapy and to see patients in groups, reducing the number of professionals required and lowering labor costs.

“The risk before was overprovision of therapy,” Dr. Grabowski said. “Now the real concern is underprovision.”

What the Secure Act is All About

January 22, 2020

by Harry S. Margolis Esq.

As part of the spending bill that recently passed Congress, effective January 1, 2020, new retirement plan rules will apply. They included in the Secure Act, which is an acronym standing for Setting Every Community Up for Retirement Enhancement. A big part of the bill encourages small employers to band together to offer retirement plans, which is the reason for the title. But here’s what may affect you and your family.

  1. Later Required Beginning Age. For those who have not already reached age 70 1/2 by the end of 2019 (meaning they were born on or before June 30, 1949), they can delay taking their required minimum distributions until the April 1st of the year they reach 72, rather than 70 1/2. If you were born after June 30, 1949, you can still choose to withdraw without penalty, other than paying taxes on the amount withdrawn, any time after age 59 1/2, you just don’t have to do so quite as early.
  2. A Shorter Time Period for Withdrawing from Inherited IRAs. Up until now, anyone who inherited a retirement plan who was not a spouse of the deceased owner had to begin taking minimum distributions the following year, but could take them out based on their own life expectancy, meaning that a younger person could stretch out the withdrawals and enjoy the tax deferral for many years. Under the new rules, with some exceptions, inherited IRAs must now be entirely withdrawn within 10 years of the death of the initial owner. This restrictions only applies to those retirement plans inherited after this year.
  3. The Exceptions. The New Inherited IRA rules don’t apply to spouses of the deceased owner who can continue to convert inherited IRAs to their own ownership. In addition, there are exceptions for:
    • minor children,
    • individuals with disabilities and chronic illnesses, and
    • those who are less than 10 years younger than the original owner.

    The exception may also apply to special needs trusts.

  4. You Can Keep Contributing if You Keep Working. Under the old rules, those over age 70 1/2 who continued to work could continue to contribute to their work-related 401(k) plans Roth IRAs but not to their own IRAs. Now they can continue to contribute to traditional IRAs as well. Of course, after age 72 this creates the interesting situation of continuing to contribute at the same time you’re required to withdraw.

The New Rules and Trusts

While these new rules effect no changes for planning with respect to spouses, they may for children and others. Some parents provide for continuing trusts for their children and grandchildren in order to provide creditor or divorce protection or for special needs planning purposes. These are drafted as “accumulation” or “conduit” trusts under complex retirement plan rules. The new rules won’t affect “accumulation” trusts, but some parents may want to change their “conduit” trusts.

“Conduit” trusts get their name because they provide that any required minimum distributions from retirement plans held by the trusts must be distributed annually to the beneficiaries. Parents may have agreed to this provision knowing that such distributions will be relatively small each year since they’re stretched out over the beneficiary’s lifetime. In some instances, they may not want larger distributions made during the first 10 years after their deaths, as would be required as the trusts are currently drafted.

Conclusion

Undoubtedly, unanticipated results will arise as the new rules affect real-life situations. We’ll continue to better understand the impact of the new rules and let you know how the work. Also, don’t hesitate to be in touch or post any questions you might have. We’ll do our best to find answers.

Feds Release 2020 Guidelines Used to Protect the Spouses of Medicaid Applicants

January 22, 2020

The Centers for Medicare & Medicaid Services (CMS) has released the 2020 federal guidelines for how much money the spouses of institutionalized Medicaid recipients may keep, as well as related Medicaid figures.

In 2020, the spouse of a Medicaid recipient living in a nursing home (called the “community spouse”) may keep as much as $128,640 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care. Known as the community spouse resource allowance or CSRA, this is the most that a state may allow a community spouse to retain without a hearing or a court order. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2020 will be $25,728.

Meanwhile, the maximum monthly maintenance needs allowance (MMMNA) for 2020 will be $3,216. This is the most in monthly income that a community spouse is allowed to have if her own income is not enough to live on and she must take some or all of the institutionalized spouse’s income. The minimum monthly maintenance needs allowance for the lower 48 states remains $2,113.75 ($2,641.25 for Alaska and $2,432.50 for Hawaii) until July 1, 2020.

In determining how much income a particular community spouse is allowed to retain, states must abide by this upper and lower range. Bear in mind that these figures apply only if the community spouse needs to take income from the institutionalized spouse. According to Medicaid law, the community spouse may keep all her own income, even if it exceeds the maximum monthly maintenance needs allowance.

The new spousal impoverishment numbers (except for the minimum monthly maintenance needs allowance) take effect on January 1, 2020.

For a more complete explanation of the community spouse resource allowance and the monthly maintenance needs allowance, click here.

Home Equity Limits:

In 2020, a Medicaid applicant’s principal residence will not be counted as an asset by Medicaid if the applicant’s equity interest in the home is less than $595,000, with the states having the option of raising this limit to $893,000.

For more on Medicaid’s home equity limit, click here.

Medicare Part D: A First Look at Prescription Drug Plans in 2020

December 24, 2019

courtesy of NAELA eBulletin:

During the Medicare open enrollment period  from October 15 to December 7 each year, beneficiaries can enroll in a plan that provides Part D drug coverage, either a stand-alone prescription drug plan (PDP) as a supplement to traditional Medicare, or a Medicare Advantage prescription drug plan (MA-PD), which covers all Medicare benefits, including drugs.

Click here for the entire article and the issue brief

Medicaid’s Treatment of the Home

December 24, 2019

Nursing home residents do not automatically  have to sell their homes in order to qualify for Medicaid, but that doesn’t mean the house is completely protected. The state will likely put a lien on the house while the resident is living and attempt to recover the property after the resident has passed away.

Medicaid will not count a nursing home resident’s home as an asset when determining eligibility for Medicaid as long as the resident intends to return home (in some states, the nursing home resident must prove a likelihood of returning home). In addition, the resident’s equity interest in the home must be less than $585,000, with the states having the option of raising this limit to $878,000 (figures are adjusted annually for inflation; these are for 2019).

The equity value of the home is the fair market value minus any debts secured by the home, such as a mortgage or a home equity loan. For example, if your home has a fair market value of $400,000 and an outstanding mortgage of $100,000, the equity value is $300,000. Your equity interest depends on whether you own the home by yourself or with someone else.  If you own the home by yourself, your equity interest is the entire equity value.  If you own your home jointly with your spouse or someone else, your equity interest is only half of the home’s equity value.

The home equity rule does not apply if the Medicaid applicant’s spouse or a child who is under 21 or is blind or disabled lives in the home.

While the house may not need to be sold in order to qualify for Medicaid, state Medicaid agencies will likely place a lien on any real estate owned by a Medicaid beneficiary during his or her life. The state cannot impose a lien if a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living in the house.

Once a lien is placed on the property, if the property is sold while the Medicaid beneficiary is living, not only will the beneficiary cease to be eligible for Medicaid due to the cash from the sale, but the beneficiary would have to satisfy the lien by paying back the state for its coverage of care to date. In some states, the lien may be removed upon the beneficiary’s death. In other states, the state can collect on the lien after the Medicaid recipient dies. Check with your attorney to see how your local agency handles this.

Even if the state did not place a lien on the home during the Medicaid beneficiary’s life, the home may still be subject to estate recovery after the Medicaid recipient’s death, again depending on the state.

There are steps you can take to protect your home. Contact your attorney to learn more.

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