Thursday, September 27, 2012

How Gifts Can Affect Medicaid Eligibility

We’ve all heard that it’s better to give than to receive, but if you think you might someday want to apply for Medicaid long-term care benefits, you need to be careful because giving away money or property can interfere with your eligibility.

Under federal Medicaid law, if you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time (called a transfer penalty), depending on how much money you transferred. Even small transfers can affect eligibility. While federal law allows individuals to gift up to $13,000 a year without having to pay a gift tax, Medicaid law still treats that gift as a transfer.

Any transfer that you make, however innocent, will come under scrutiny. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it could affect your Medicaid eligibility down the road. Similarly, gifts for holidays, weddings, birthdays, and graduations can all cause a transfer penalty. If you buy something for a friend or relative, this could also result in a transfer penalty.

Spending a lot of cash all at once or over time could prompt the state to request documentation showing how the money was spent. If you don't have documentation showing that you received fair market value in return for a transferred asset, you could be subject to a transfer penalty.

While most transfers are penalized, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:
  • your spouse
  • your child who is blind or permanently disabled
  • a trust for the sole benefit of anyone under age 65 who is permanently disabled
In addition, you may transfer your home to the following individuals (as well as to those listed above):
  • your child who is under age 21
  • your child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time
  • a sibling who already has an equity interest in the house and who lived there for at least a year before you moved to a nursing home
Before giving away assets or property, check with your elder law attorney to ensure that it won't affect your Medicaid eligibility. To find an attorney near you, click here.

For more information on Medicaid’s transfer rules, click here.

For more on the gift tax rules, click here.

Reprinted with the permission of ElderLawAnswers.

Thursday, September 20, 2012

Doctor Not Liable for Dementia Patient's Fatal Crash

A California jury has found that a doctor has no responsibility for a fatal car crash caused by an 85-year-old patient whom he had diagnosed with dementia but not reported to authorities.

Lorraine Sullivan was driving with her longtime partner William Powers, 90, when she suddenly turned left and into the path of an oncoming car.  Sullivan survived but Powers died of his injuries.  As reported in the Los Angeles Times, Powers’ family sued Sullivan’s doctor, Arthur Daigneault, for wrongful death, arguing that he should have taken steps to have Sullivan’s license revoked.

Doctors are generally not required to report patients they believe are unsafe, but California is one of a handful of states that has such a rule. California requires doctors to report to local health officials patients with "disorders characterized by lapses of consciousness," including dementia.  However, doctors may use their own clinical judgment about whether a patient is a danger on the road.

In 2007, Sullivan complained of memory loss to Dr. Daigneault.  After tests showed a slight decline in cognitive functioning over the following year, Dr. Daigneault prescribed an Alzheimer’s drug, and then switched her to a different drug when she said her memory loss was worsening.  Sullivan’s daughter testified that her mother, whom she saw weekly, successfully hid her dementia diagnosis from her. 

After deliberating for half an hour, an Orange County jury found that Dr. Daigneault did not violate standards of care or state law by not reporting Sullivan to authorities.

The Los Angeles Times notes that “the case casts a spotlight on a problem that will grow more common as the population ages and doctors see more dementia and other conditions related to old age, such as slowed reflexes, lack of alertness and diseases that can trigger lapses of consciousness.”  Drivers 80 and older are involved in 5.5 times as many fatal crashes per mile driven as middle-aged drivers, according to Consumer Reports.  Fifty-seven million drivers older than 65 are expected to be driving U.S. roads by 2030, nearly double the 2007 figure.

The potential risks of elderly drivers gained nationwide attention when a an 86-year-old man drove his car into a farmers market in Santa Monica, California, in July 2003, killing 10 people and injuring 63.  Three years later the driver, George Weller, was found guilty of 10 counts of vehicular manslaughter but was sentenced to five years' felony probation due to his advanced age.  Weller died in 2010.

For an article on confronting an unsafe driver, click here.

For a list of state licensing renewal provisions for older drivers, click here.

Reprinted with the permission of ElderLawAnswers.

Friday, September 14, 2012

Specialists Help Seniors Buy or Sell a Home

Seniors who are buying or selling a house often have very different issues than younger buyers and sellers. Seniors may be contemplating downsizing or moving to a more accessible home, or they may be looking for a way to age in place. A Seniors Real Estate Specialist (SRES) can help senior sellers, buyers, or renters navigate these issues.

SRESs are realtors who have completed a series of courses on how to help seniors and their families with real estate transactions. They specialize in helping people age 50 and older, and they can be used for selling, buying, or renting. An SRES can help seniors look at all the options available, from staying in their home to buying a new home to moving to an assisted living facility.

The first thing to consider is whether you need to sell or whether there might be alternatives that would allow you to remain in the home. If a sale is necessary, then an SRES can help guide you through the process.

Seniors who are selling their homes may need help de-cluttering and staging their houses for sale. SRESs also are familiar with the senior housing options in an area and can help you buy a home. For example, if you are purchasing a home later in life, you may want to make sure you have a property that has a good market value and can be easily sold by your heirs.

Other things to keep in mind when buying a home are transportation access, too many stairs, and a friendly neighborhood.

For more information about SRESs or to find one near you, click here.

Reprinted with the permission of ElderLawAnswers.

Thursday, September 6, 2012

The Other Senior Health Care Program: Romney/Ryan's Vision for Medicaid

How Republican Mitt Romney’s vice presidential pick would change Medicare has been getting a lot of attention, but Rep. Paul Ryan’s (R-WI) proposed cuts to the Medicaid program, which Mr. Romney and the Republican party have now adopted, are bigger and arguably more drastic.

Although most Medicaid recipients are poor children and their families, the program also covers the cost of nursing home and other long-term care for more than 4.4 million Americans, most of them elderly.  In addition, Medicaid helps millions of low-income seniors afford Medicare.

As with his Medicare proposal, Ryan’s plan for changing Medicaid, which has twice passed the Republican-led House, is all about shifting costs away from the federal government and onto others.  Whereas with Medicare Ryan would limit the federal government’s exposure and shift additional costs to seniors, in the case of Medicaid Ryan would shift the risk to the states and ultimately to beneficiaries, including seniors.  But, unlike with Medicare, the change would start right away.

The proposal would turn federal Medicaid funding to states into a "block grant," something proposed by George W. Bush in 2003 and by Newt Gingrich in 1995. Rather than the current system, under which the federal government matches every dollar that states spend on Medicaid, under the Ryan plan starting next year states would receive a fixed amount every year, which would only increase with population growth and the overall cost of living.  The grants would be indexed to grow much more slowly than health care costs and would not take account of economic downturns or natural disasters like Hurricane Katrina, when Medicaid rolls temporarily expand.

The result, according to an analysis by the non-partisan Congressional Budget Office, is that by 2022 federal funding for Medicaid would fall 35 percent below what the government now is projected to provide states, and the shortfall would be 49 percent by 2030.

States are hardly likely to make up for this dramatic funding loss by boosting their own Medicaid spending.  Instead, they will find ways to cut people, including some applicants for long-term care coverage, from Medicaid eligibility.  How many people? According to an Urban Institute analysis, between 14 million and 27 million fewer Americans would be covered by Medicaid in 2021 than under the current system.

Not only would millions more citizens be uninsured or underinsured, but states would reduce benefits and cut already-low payment rates to health care providers, meaning that more doctors, hospitals, and nursing homes would refuse Medicaid patients. It would be easier for states to make these changes than under current law because the Ryan plan would give states additional flexibility in designing their Medicaid programs and eligibility criteria.  Key protections for nursing home residents, such as those protecting residents' spouses from impoverishment and setting limits on when states can place liens on homes, could go by the wayside.

Ryan would also overturn the new health reform law, the Affordable Care Act, thus preventing 11 million people from gaining Medicaid coverage by 2022, according to Congressional Budget Office estimates.  This means that the total number of Americans that the Ryan plan would cut from the Medicaid program could approach 40 million.

Ryan and his supporters point to the savings to the federal budget over the next decade: about $750 billion through the block grants and $642 billion by repealing the Affordable Care Act.  This, they contend, will address Medicaid's growth.  Since June 2007, just before the start of the recession, some 10 million people have been added to Medicaid's rolls.

Update: the proposed changes to Medicaid are now part of the Republican party platform.

More resources:
Primer: How Paul Ryan's Plan Would Change Medicaid (PBS NewsHour)
Is Medicaid Doomed? How Ryan's Plan Would Affect America's Very Poorest (The Atlantic)
Paul Ryan’s biggest budget cuts are to Medicaid, not Medicare (The Washington Post)
How the Ryan Budget (and Republican Platform) Would Hurt Current Nursing Home Residents (Center for Medicare Advocacy)

Reprinted with the permission of ElderLawAnswers.

Friday, August 31, 2012

How Would Paul Ryan Change Medicare?

Last year, we reported that House Budget Committee Chairman Paul Ryan (R-WI) proposed a budget that would radically reshape Medicare and shift more costs to seniors and the disabled. At the time, we noted that “the plan may well become the Republican Party's de facto platform in 2012.”

Little did anyone know that the plan’s architect would become Republican candidate Mitt Romney’s choice as his running mate, putting the Ryan plan for Medicare center-stage less than three months before the election.  It is time, then, to review Rep. Ryan’s latest proposal to overhaul the popular Medicare program. 

Ryan would end Medicare as a government-funded program that pays all costs except for deductibles and co-pays.  Instead, Ryan would shift financial risk from the government to Medicare's beneficiaries.  Each beneficiary would receive a fixed amount of money every year (a “voucher”) to buy coverage either from traditional government-administered Medicare or from private health plans that would compete with Medicare while offering the same basic benefits.  The voucher program would begin when those who are currently 54 years of age and younger become eligible for Medicare. 

The amount of the voucher might cover the full cost of Medicare, especially in the early years, but there's no guarantee that it would.  If the voucher can’t cover the cost of the plan beneficiaries choose, they would have to pay the difference themselves (or reap savings if their plan costs less than the voucher amount).

Analyzing an earlier Ryan proposal very similar to the current one, the nonpartisan Congressional Budget Office (CBO) calculated that a decade into the program, the typical 65-year-old Medicare beneficiary would be spending $12,500 a year out-of-pocket in today's dollars, more than double under the current system.

At the same time, Ryan would gradually raise the eligibility age for Medicare from 65 to 67 by 2034.  Because Ryan would also repeal the new health reform law's coverage provisions, many 65- and 66-year-olds would be uninsured.  

The plan also puts a “hard cap” on Medicare spending that could result in significant benefit cuts. Spending would not be allowed to rise more than half a percentage point higher than the growth rate of the economy, or the gross domestic product.  If it rose higher than this, Medicare’s spending would have to be lowered one way or another, including cutting benefits to seniors.
Critics say that turning Medicare into a voucher program would create a two-tiered system and drive up costs for sicker beneficiaries.  The private plans would lure healthier seniors with perks like gym memberships, while the less healthy would stick with traditional Medicare, in part to keep their own doctors.  This would increase premiums for traditional Medicare and prompt doctors to abandon the program as reimbursement rates are cut, something that would affect current beneficiaries.   

Supporters of Ryan’s proposal contend that with "skin in the game," seniors would shop for the cheapest health care plans, which would spur competition among private health plans and push costs down. But “critics argue that elderly sick people aren't likely to be good comparison shoppers and could easily be misled by complicated insurance programs,” says the Los Angeles Times.

In addition, the Ryan plan would do away with one of the most popular parts of the health reform law – the gradual elimination of the so-called "doughnut hole" in the Medicare prescription drug benefit, which forces beneficiaries pay 100 percent of drug costs.  The doughnut hole would continue under the Ryan plan.  

For Kaiser Health News's answers to frequently asked questions about the Ryan plan, click here.

For a more detailed discussion by the Commonwealth Fund of the plan, which is also called "premium support," click here.

For more about Medicare, click here.

Reprinted with the permission of ElderLawAnswers.

Friday, August 24, 2012

Legal DIY Web Sites Are No Match for a Pro, Consumer Reports Concludes

After road testing three leading Web sites that help you create your own will, power of attorney, and other important legal documents, Consumer Reports has concluded that none of the will-writing products is likely to entirely meet your needs unless those needs are extremely simple.

The independent non-profit testing agency evaluated three online services: LegalZoom, Nolo, and Rocket Lawyer. Using online worksheets or downloads, researchers created a will, a car bill of sale for a seller, a home lease for a small landlord, and a promissory note. They then asked three law professors -- including Gerry W. Beyer of Texas Tech University School of Law, who specializes in estates and trusts -- to review in a blind test the processes and resulting documents.

In his evaluation of the will-making programs, Prof. Beyer said that two of them could create good simple wills but he found deficiencies in all three, including features that could lead a user to add clauses that contradict other parts of the will.

Consumer Reports' verdict?   “Using any of the three services is generally better than drafting the documents yourself without legal training or not having them at all. But unless your needs are simple—say, you want to leave your entire estate to your spouse—none of the will-writing products is likely to entirely meet your needs. And in some cases, the other documents aren’t specific enough or contain language that could lead to 'an unintended result,' in [a professor's] words,"

An article on the study, titled “Legal DIY websites are no match for a pro,” appears in the September 2012 issue issue of Consumer Reports.  To read it, click here.

Consumer Reports’ findings accord with ElderLawAnswers’ own evaluation of online estate planning programs.  For our White Paper on these programs, click here.

Reprinted with the permission of ElderlawAnswers.

Thursday, August 16, 2012

IRS to Crack Down on IRA Tax Rules

If you have an individual retirement account (IRA), now is the time to make sure you have been complying with tax rules. The Internal Revenue Service (IRS) is going to start cracking down on individual retirement accounts in an effort to collect penalties from taxpayers who do not follow rules regarding maximum contributions and minimum distributions. According to an article in the Wall Street Journal, the crackdown is part of an attempt to collect millions of dollars in previously uncollected penalties.

Individuals are only allowed to contribute a certain amount to regular and Roth IRAs each year. For 2012, you can contribute the lesser of $5,000 or your taxable compensation for the year, plus an addition $1,000 if you are over age 50. If you paid more than is allowed, you may have to pay a penalty of 6 percent of the excess amount.

In addition, once you reach age 70½, you are required to start taking distributions from your IRA. If you don't take the required minimum distribution, you can be subject to a 50 percent penalty on the amount you should have withdrawn. The same penalty applies to inherited IRAs. There is no statute of limitations on the penalties, so if errors are made over subsequent years, the penalties can add up quickly.

It is unclear how the IRS will step up enforcement of the penalties. The IRS will report to the Treasury Department on October 15th on its strategies, which could include more paperwork and audits. According to the Wall Street Journal, in 2006 and 2007, the IRS failed to collect $286 million in penalties for missed withdrawals and contributions.

Individuals and financial planners need to look over their IRAs to make sure contributions and withdrawals have been made properly. If you have any errors, you should correct them immediately because delaying further only increases penalty and interest charges.

For more information from the Wall Street Journal, click here.

Reprinted with the permission of ElderLawAnswers.

Friday, August 10, 2012

Medicaid Expansion: What If a State Opts Out?

One of the key provisions of the Affordable Care Act, the new health reform law, gives money to states to expand Medicaid to adults and families with low incomes – a total of about 17 million additional people.

However, the Supreme Court recently ruled that the federal government cannot effectively coerce states into accepting the Medicaid expansion by withdrawing all a state’s Medicaid funds if it refuses.  Although elderly and disabled individuals who currently receive Medicaid aren't affected by the Court's ruling, it could leave millions of others without any options for health coverage -- and possibly cost lives.

The Affordable Care Act expands Medicaid eligibility starting in 2014 to individuals and families with incomes up to 133 percent of the poverty line, which is $14,856 for an individual in 2012. (Most states currently limit Medicaid to certain categories of people at or below the poverty line, including children, pregnant women, parents of eligible children, people with disabilities and elderly needing long-term care.)

The federal government will pay the complete cost for the Medicaid expansion for three years for newly eligible beneficiaries, and 90 percent of a state’s costs thereafter.

Nevertheless, the governors of several states, including Texas, Louisiana, and Florida, have said they will not accept federal money in order to expand coverage.  Although politics is undoubtedly playing a role in these pronouncements, some are worried about the costs associated with expanding Medicaid, despite the federal money.

On the other hand, some analysts predict that expanding Medicaid could actually lead to savings, in part because uninsured individuals already cost states billions of dollars.  Arkansas officials estimated the expansion would save the state $372 million in the first six years.  Another recent study found that when states have expanded their Medicaid programs in the past, fewer people have died.

If a state opts out of the expansion, then adults who earn too much to qualify for Medicaid but too little to qualify for tax subsidies to pay for private health insurance will be left without coverage. People in those states who earn less than 100 percent of the federal poverty limit ($11,170 for an individual) and are not eligible for Medicaid benefits would also not be eligible for tax credits to purchase otherwise unaffordable private insurance. If the state chooses to expand Medicaid, those people would be covered. For more information on this looming coverage gap, click here.

For more information about the debate taking place in states about whether to opt out of the health care expansion, click here and here.

For a Kaiser Commission brief titled "How will the Medicaid Expansion for Adults Impact Eligibility and Coverage?," which includes a state-by-state breakdown of current Medicaid eligibility, click here.   

Reprinted with the permission of ElderLawAnswers.

Saturday, August 4, 2012

Home Care Agencies Hiring Unqualified Caregivers, Study Finds

A new survey has shed light on the hiring practices of private home care agencies, and the news is not good.  In many cases, agencies are sending to the homes of vulnerable elderly patients workers with little or no experience or knowledge, no training, and inadequate background checks.

The study, which was carried out by researchers at Northwestern University, surveyed 180 private home care agencies in Illinois, California, Florida, Colorado, Arizona, Wisconsin, and Indiana.  (The study did not include agencies that are certified by Medicare and are subject to federal regulations.) 

The researchers posed as people calling the agency to obtain assistance for a family member, and they queried the agencies about their hiring and oversight of their caregivers.  The results may surprise families who assume that agencies follow strict hiring guidelines.

For instance, none of the agencies assessed their caregivers' ability to understand medical terminology, and only 15 percent provided their caregivers with any training prior to sending them out to clients.  Although slightly more than half (55.8 percent) of the agencies surveyed ran criminal background checks on their caregivers, none conducted checks outside of their own states, meaning that caregivers with criminal records in other states could still be employed. 

According to a summary of the study in the Senior Journal, more than one agency told the researchers that they used screening tests that don't exist, such as the “National Scantron Test for Inappropriate Behavior” and the “Assessment of Christian Morality Test.”

"People have a false sense of security when they hire a caregiver from an agency," the study’s lead author Lee Lindquist, M.D., said in a statement. "There are good agencies out there, but there are plenty of bad ones and consumers need to be aware that they may not be getting the safe, qualified caregiver they expect. It's dangerous for the elderly patient who may be cognitively impaired."

"Some of the paid caregivers are so unqualified it's scary and really puts the senior at risk" for elder abuse, Lindquist said.

Only a third drug-tested their workers.  "Considering that seniors often take pain medications, including narcotics, this is risky," Lindquist said. "Some of the paid caregivers may be illicit drug users and could easily use or steal the seniors' drugs to support their own habits."

Hiring a caregiver through an agency has a lot of advantages, especially when it comes to the logistics of paying the caregiver and complying with state and federal employment regulations.  But as the Northwestern University study shows, not all agencies are alike.  It's up to the customer to spend the time and effort to vet both the caregiver and the agency, asking questions about how the agency screens and assesses its caregivers.

The study was published in the Journal of the American Geriatrics Society.  To read the study abstract, and find links to the study itself, click here.

To read a detailed analysis of the study in The New York Times’ New Old Age blog, click here.

For questions to ask a potential caregiver, click here.

To learn about questioning a home care agency, click here

Reprinted with the permission of ElderLawAnswers.

Tuesday, July 31, 2012

Supreme Court Asked to Rule on Gay Widow's Estate Tax Refund Case

The surviving spouse of a lesbian couple is asking the U.S. Supreme Court to rule on her case challenging a federal law that defines “marriage” as a union between a man and a woman.  If she wins, the woman, Edith Windsor, will receive a refund of more than $363,000 in estate taxes she was forced to pay because the federal government did not consider her married to her spouse.

As ElderLawAnswers reported, a federal district court judge ruled in June that the Defense of Marriage Act's (DOMA's) denial of equal benefits to same-sex couples violates the Equal Protection Clause of the Fifth Amendment, and the judge awarded Ms. Windsor reimbursement for the tax bill she paid on her wife's estate.  (Heterosexual spouses can leave any amount of property to their spouses free of federal estate tax.)

A congressional legal group authorized by Republicans to defend DOMA quickly filed an appeal of the district court’s ruling with the U.S. Court of Appeals for the Second Circuit.  Ms. Windsor’s lawyers are hoping to speed up the case by jumping to the Supreme Court, which has been asked to hear two other cases challenging the statute.  “The Court will likely decide the constitutionality of DOMA this coming term, using one or more of these cases as vehicles for addressing the issue,” according to a blog post by the American Civil Liberties Union, which is helping to represent Ms. Windsor.

"Edie Windsor, who recently celebrated her 83rd birthday, suffers from a serious heart condition," said Roberta Kaplan, a partner at the firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP and counsel to Ms. Windsor. "Because the District Court's ruling in her favor is entitled to an automatic stay of enforcement, Edie cannot yet receive a refund of the unconstitutional estate tax that she was forced to pay simply for being gay. The constitutional injury inflicted on Edie should be remedied within her lifetime." 

In the meantime, Ms. Windsor will continue to defend her victory before the Second Circuit, which has agreed to hear her case on an expedited basis, with oral argument scheduled for September.

Background of the Case

Edith Windsor and Thea Spyer became engaged in 1967 and were married in Canada in 2007, although they lived in New York City. When Ms. Spyer died in 2009, Ms. Windsor had to pay Ms Spyer's estate tax bill because of DOMA, a 1996 law that denies federal recognition of gay marriages.

Although New York State considered the couple married, the federal government did not and taxed Ms. Syper's estate as though the two were not married. Ms. Windsor sued the U.S. government seeking to have DOMA declared unconstitutional and asking for a refund of the more than $363,000 federal estate tax she was forced to pay.

On June 6, 2012, federal court judge Barbara Jones from the U.S. District Court for the Southern District of New York ruled that there was no rational basis for DOMA's prohibition on recognizing same-sex marriages. Jones stated that it was unclear how DOMA preserves traditional marriage, which is one of the stated purposes of the law.  

As ElderLawAnswers reported last year, President Obama decided to stop defending DOMA, so members of Congress formed an advisory group to defend the law. This was the fifth case to strike down DOMA.

For more on the decision to appeal the case to the Supreme Court, click here and here.

Reprinted with the permission of

Tuesday, July 3, 2012

Federal Court Rules That Gay Widow Is Entitled to Estate Tax Refund

Finding that the Defense of Marriage Act's (DOMA's) denial of equal benefits to same-sex couples violates the Equal Protection Clause of the Fifth Amendment, a federal court judge has awarded the surviving spouse of a lesbian couple reimbursement for the tax bill she paid on her wife's estate.

Edith Windsor and Thea Spyer became engaged in 1967 and were married in Canada in 2007, although they lived in New York City. Ordinarily, spouses can leave any amount of property to their spouses free of federal estate tax. But when Ms. Spyer died in 2009, Ms. Windsor, now 82, had to pay Ms Spyer's estate tax bill because of DOMA, a 1996 law that denies federal recognition of gay marriages.

Although New York State considered the couple married, the federal government did not and taxed Ms. Syper's estate as though the two were not married. Ms. Windsor sued the U.S. government seeking to have DOMA declared unconstitutional and asking for a refund of the more than $350,000 in estate taxes she was forced to pay.

Federal court judge Barbara Jones from the U.S. District Court for the Southern District of New York ruled that there was no rational basis for DOMA's prohibition on recognizing same-sex marriages. Jones stated that it was unclear how DOMA preserves traditional marriage, which is one of the stated purposes of the law.  As ElderLawAnswers reported last year, President Obama decided to stop defending DOMA, so members of Congress formed an advisory group to defend the law. This is the fifth case to strike down DOMA.

To read the court’s decision, click here.

Wednesday, June 27, 2012

Federal Court Rules That Gay Widow Is Entitled to Estate Tax Refund

Finding that the Defense of Marriage Act's (DOMA's) denial of equal benefits to same-sex couples violates the Equal Protection Clause of the Fifth Amendment, a federal court judge has awarded the surviving spouse of a lesbian couple reimbursement for the tax bill she paid on her wife's estate.

Edith Windsor and Thea Spyer became engaged in 1967 and were married in Canada in 2007, although they lived in New York City. Ordinarily, spouses can leave any amount of property to their spouses free of federal estate tax. But when Ms. Spyer died in 2009, Ms. Windsor, now 82, had to pay Ms Spyer's estate tax bill because of DOMA, a 1996 law that denies federal recognition of gay marriages.

Although New York State considered the couple married, the federal government did not and taxed Ms. Syper's estate as though the two were not married. Ms. Windsor sued the U.S. government seeking to have DOMA declared unconstitutional and asking for a refund of the more than $350,000 in estate taxes she was forced to pay.

Federal court judge Barbara Jones from the U.S. District Court for the Southern District of New York ruled that there was no rational basis for DOMA's prohibition on recognizing same-sex marriages. Jones stated that it was unclear how DOMA preserves traditional marriage, which is one of the stated purposes of the law.

As ElderLawAnswers reported last year, President Obama decided to stop defending DOMA, so members of Congress formed an advisory group to defend the law. This is the fifth case to strike down DOMA.

To read the court’s decision, click here.

(Reprinted with the permission of ElderLawAnswers)

Friday, June 22, 2012

$500,000 Found in House Walls Belongs to Estate, Not Homeowners

You buy a dilapidated house and in the course of renovations you find a huge amount of money hidden in the walls.  The cash is yours, right?  Not according to an Arizona appeals court, which recently ruled that $500,000 found in the walls of a house belongs to the heirs of the man who put it there, not to the house’s current owners. 

Robert A. Spann had a habit of hiding cash and other valuables in unusual places in the homes he lived in.  His two daughters knew of his pattern, and for seven years after he died in 2001 they found stocks and bonds, as well as hundreds of military-style green ammunition cans, some of which contained gold or cash, hidden throughout his Paradise Valley, Arizona, home.

In 2008, the daughters sold the rundown house “as is” to a couple.  The couple did some remodeling, in the course of which a worker for the contracting company found two ammunition cans full of cash in the kitchen wall and another two inside the framing of an upstairs bathroom. The cash totaled $500,000.  After the worker reported the find to his boss, the boss took the cans but did not tell the couple who owned the house about them. The worker, however, eventually informed the couple of the discovery and the police ultimately took control of the $500,000.

The couple and the contractor sued each other for the money.  In the meantime, Robert Spann’s daughter Karen Grande, who was the personal representative of his estate, filed a petition in probate court on behalf of the estate to recover the money. The two cases were consolidated in June 2009.

The trial court ruled that the money belonged to the estate and the couple appealed, claiming that Mr. Spann’s family had abandoned the cash by leaving it in the house when it was sold “as is.”  

In a May 31, 2012, ruling, the Court of Appeals of Arizona agrees with the trial court.  The court rules that while “finders keepers” may work on the schoolyard, in Arizona in order to abandon personal property, “one must voluntarily and intentionally give up a known right.” The court finds that because there is no evidence that Mr. Spann’s estate intended to relinquish any valuable items in the house, the money is more properly characterized as “mislaid” and still belongs to the estate.

To read the full text of the Arizona appeals court’s decision in the case, Grande v. Jenningsclick here.

Interestingly, an Oregon appeals court came to a different conclusion in a very similar case four years ago.  For details, click here

(Reprinted with the permission of

Wednesday, June 20, 2012

A Letter of Instruction Can Spare Your Heirs Great Stress

While it is important to have an updated estate plan, there is a lot of information that your heirs should know that doesn't necessarily fit into a will, trust or other components of an estate plan. The solution is a letter of instruction, which can provide your heirs with guidance if you die or become incapacitated.

A letter of instruction is a legally non-binding document that gives your heirs information crucial to helping them tie up your affairs. Without such a letter, it can be easy for heirs to miss important items or become overwhelmed trying to sort through all the documents you left behind.

The following are some items that can be included in a letter:
  • A list of people to contact when you die and a list of beneficiaries of your estate plan
  • The location of important documents, such as your will, insurance policies, financial statements, deeds, and birth certificate
  • A list of assets, such as bank accounts, investment accounts, insurance policies, real estate holdings, and military benefits
  • Passwords and PIN numbers for online accounts
  • The location of any safe deposit boxes
  • A list of contact information for lawyers, financial planners, brokers, tax preparers, and insurance agents
  • A list of credit card accounts and other debts
  • A list of organizations that you belong to that should be notified in the event of your death (for example, professional organizations or boards)
  • Instructions for a funeral or memorial service
  • Instructions for distribution of sentimental personal items
  • A personal message to family members
Once the letter is written, be sure to store it in an easily accessible place and to tell your family about it. You should check it once a year to make sure it stays up-to-date.

(Reprinted with the permission of ElderLawAnswers)

Monday, June 11, 2012

Low Interest Rates Force Long-Term Care Insurance Prices Up

Prices for long-term care insurance policies jumped between 6 and 17 percent in the past year, according to an industry survey.    

A 55-year-old couple purchasing long-term care insurance protection can expect to pay $2,700 a year (combined) for about $340,000 of current benefits, according to the 2012 Long-Term Care Insurance Price Index, an annual report from the American Association for Long-Term Care Insurance.  The same coverage would have cost the couple $2,350 in 2011.

The steep price rise is primarily due to historic low interest rates and yields on fixed-income investments, explained Jesse Slome, the Association’s executive director, in a press release. Between 40 and 60 percent of the dollars an insurer accumulates to pay future claims comes from investment returns, Slome said, noting that for every one-half percent drop in interest rates an insurer needs about a 15 percent premium increase to maintain the projected net profit.

The Association annually analyzes what consumers will pay for the most popular policies offered by ten leading long-term care insurance carriers. The study found that the average cost for a 55-year-old single individual who qualified for preferred health discounts is $1,720 for between $165,000 and $200,000 of current coverage. In 2011, the same coverage would have cost an average of $1,480 annually. 
The policies the Association priced all include a 3 percent compound inflation growth factor, meaning that a 60-year-old couple buying $340,000 of current coverage today would see their benefit pool grow to $610,000 when they reach age 80.  According to the report, the couple could expect to pay about $3,335 a year if both spouses qualified for preferred health discounts.

The study suggests that it’s more important than ever to shop around for coverage because the range between the lowest-cost and the highest-cost policy has increased compared to the prior year. "For the 55-year-old single policy applicant the highest-priced policy cost almost 80 percent more than the lowest-priced policy," Slome noted. "For some categories, the difference was as much as 132 percent and no single company always had the lowest nor the highest rate, which is why we stress the importance of comparison shopping."  Nearly three-quarters of buyers opt for a 3- to 5-year benefit period, the Association reports.

Policyholders can experience rate rises after they purchase, although long-term care insurers are allowed to raise prices only on a class of policyholders, not on individuals ones, and they must receive state approval for the rate hike.

The complete 2012 Price Index will be published in the Association's 2012 Long-Term Care Insurance Sourcebook. For more information, visit the American Association for Long-Term Care Insurance's Web site.

For an article on how to cope with long-term care insurance rate hikes, click here.

For more on how to reduce long-term care insurance costs, click here.

For more on long-term care insurance, click here.

(This article is reprinted with the permission of

Wednesday, May 23, 2012

Son Liable for Mom's $93,000 Nursing Home Bill Under 'Filial Responsibility' Law

Some 30 states currently have laws making adult children responsible for their parents if their parents can't afford to take care of themselves.  These “filial responsibility” laws have rarely been enforced, but six years ago when federal rules made it more difficult to qualify for Medicaid long-term care coverage, some elder law attorneys predicted that nursing homes would start using the laws as a way to get care paid for. 

It looks like this is starting to happen.  This week, a Pennsylvania appeals court found a son liable for his mother's $93,000 nursing home bill under the state's filial responsibility law. Health Care & Retirement Corporation of America v. Pittas (Pa. Super. Ct., No. 536 EDA 2011, May 7, 2012).

Facts of the Case
John Pittas' mother entered a nursing home for rehabilitation following a car crash. She later left the nursing home and moved to Greece, and a large portion of her bill at the nursing home went unpaid. Mr. Pittas' mother applied to Medicaid to cover her care, but that application is still pending.

Meanwhile, the nursing home sued Mr. Pittas for nearly $93,000 under the state's filial responsibility law, which requires a child to provide support for an indigent parent. The trial court ruled in favor of the nursing home, and Mr. Pittas appealed. Mr. Pittas argued in part that the court should have considered alternate forms of payment, such as Medicaid or going after his mother's husband and her two other adult children.

The Pennsylvania Superior Court, an appeals court, agreed with the trial court that Mr. Pittas is liable for his mother's nursing home debt.  The court held that the law does not require it to consider other sources of income or to wait until Mrs. Pittas’s Medicaid claim is resolved.  It also said that the nursing home had every right to choose which family members to pursue for the money owed.

First of a ‘Wave of Lawsuits’?
The Deficit Reduction Act of 2005 made it much more difficult for the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. With enactment of the law, advocates for the elderly said that nursing homes would likely be flooded with residents who need care but have no way to pay for it, and that in states that have filial responsibility laws, the nursing homes might seek reimbursement from the residents' children.

After Pennsylvania re-enacted its filial support law in the mid-2000s, Williamsport ElderLawAnswers member attorney Jeffrey A. Marshall forecast that the new Medicaid law would trigger a wave of lawsuits involving adult children.

"Litigation between nursing homes and children is likely to flourish," Marshall wrote in the January 20, 2006, issue of his firm's Elder Care Law Alert.  (To read Marshall’s recent blog post on the Pittas ruling, click here.)

In 2005, the National Center for Policy Analysis, a conservative policy group, released an issue brief proposing that states begin enforcing filial responsibility laws in order to reduce long-term care costs. 
For the full text of the Pennsylvania court’s decision in the Pittas case, go to:
For more on filial responsibility laws. click here.
For more on the changes to Medicaid's transfer laws, click here.

Reprinted with the permission of

Monday, May 7, 2012

Alzheimer's Facts and Figures

Here is a link to a quick video about the facts and figures of Alzheimer's disease.

Quick facts

  • 5.4 million Americans are living with Alzheimer's disease.
  • One in eight older Americans has Alzheimer's disease.
  • Alzheimer's disease is the sixth-leading cause of death in the United States and the only cause of death among the top 10 in the United States that cannot be prevented, cured or even slowed.
  • More than 15 million Americans provide unpaid care valued at $210 billion for persons with Alzheimer's and other dementias. 
  • Payments for care are estimated to be $200 billion in the United States in 2012.

Thursday, April 26, 2012

What Is Asset Protection Planning?

Asset protection planning is about protecting your assets from creditors -- and it is not just for the super-wealthy. 

Anyone can get sued. Lawsuits can stem from car accidents, credit card debt, bank foreclosures, or unhappy customers, among many other things. If someone wins a monetary judgment against you, your family could become bankrupt trying to pay it off. 

To keep your assets away from creditors, you need to move them somewhere where creditors can't reach them. Asset protection techniques include maximizing contributions to IRAs, moving funds to an irrevocable trust, retitling various assets, or using limited liability companies or family limited partnerships. 

To develop an asset protection plan, you need to talk to your attorney. Your attorney can discuss your short- and long-term financial goals and help you create a plan that will work for you. 

It is important to note that asset protection planning only works if you act before you are sued. Under the law, you may not defraud current creditors. If you are already being sued or if you know you are going to be sued and you transfer assets so that creditors can't reach them, the court will reverse the transfer. That is why it is a good idea to put a plan into place now -- before it is too late. 

For more information on asset protection planning, click here.

Friday, March 9, 2012

When Should You Update Your Estate Plan?

Once you've created an estate plan, it is important to keep it up to date. You will need to revisit your plan after certain key life events.


Whether it is your first or a later marriage, you will need to update your estate plan after you get married. A spouse does not automatically become your heir once you get married. Depending on state law, your spouse may have to share your estate with other relatives. You need a will to spell out how much you wish your spouse to get.

Your estate plan will get more complicated if your marriage is not your first. You and your new spouse need to figure out where each of you wants your assets to go when you die. If you have children from a previous marriage, this can be a difficult discussion. There is no guarantee that if you leave your assets to your new spouse, he or she will provide for your children after you are gone. There are a number of options to ensure your children are provided for, including creating a trust for your children, making your children beneficiaries of life insurance policies, or giving your children joint ownership of property.

Even if you don't have children, there may be family heirlooms or mementos that you want to keep in your family. For more information on estate planning before remarrying, click here.


Once you have children, it is important to name a guardian for your children in your will. If you don't name someone to act as guardian, the court will choose the guardian. Because the court doesn't know your kids like you do, the person they choose may not be ideal. In addition to naming a guardian, you may also want to set up a trust for your children so that your assets are set aside for your children when they get older.
Similarly, when your children reach adulthood, you will want to update your plan to reflect the changes. They will no longer need a guardian, and they may not need a trust. You may even want your children to act as executors or hold a power of attorney.

Divorce or Death of a Spouse

If you get divorced or your spouse dies, you will need to revisit your entire estate plan. It is likely that your spouse is named in some capacity in your estate plan -- for example, as beneficiary, executor, or power of attorney. If you have a trust, you will need to make sure your spouse is no longer a trustee or beneficiary of the trust. You will also need to change the beneficiary on your retirement plans and insurance policies.

Increase or Decrease in Assets

One part of estate planning is estate tax planning. When your estate is small, you don't usually have to worry about estate taxes because only estates over a certain amount, depending on current state and federal law, are subject to estate taxes. For example, the New Jersey estate tax is due on estates as small as $675,000.  As your estate grows, you may want to create a plan that minimizes your estate taxes. If you have a plan that focuses on tax planning, but you experience a decrease in assets, you may want to change your plan to focus on other things. For more information about estate taxes, click here.


Other reasons to have your estate plan updated could include:
  • You move to another state
  • Federal or state estate tax laws have changed
  • A guardian, executor, or trustee is no longer able to serve
  • You wish to change your beneficiaries
  • It has been more than 5 years since the plan has been reviewed by an attorney
Contact your estate planning and elder law attorney to update your plan.

Wednesday, February 29, 2012

Bankers Life Long-Term Care Insurance Policyholders Report Problems Getting Paid

Buying long-term care insurance is supposed to be a good thing--it means you are prepared to meet your long-term care needs.  But the purchase can turn into a nightmare if the insurance company refuses to pay for your care. One long-term care insurance company in particular, Bankers Life and Casualty, is gaining a reputation for not paying claims.

A recent report by CBS News highlighted some of the problems Bankers Life customers have been experiencing. The report recounts the story of 93-year-old Timber Harwood, who paid long-term care insurance premiums for years. When he needed home health care after a serious fall, the insurance company gave his family the runaround, repeatedly claiming for almost a year that hundreds of pages of paperwork were missing.

Consumer complaint message boards such as,, and have lit up with complaints about Bankers Life either denying claims outright or using delaying tactics to wear down policyholders.

This is not news to Massachusetts elder law attorney and ElderLawAnswers president Harry S. Margolis, several of whose clients have experienced problems with Bankers Life. "After paying in premiums for years so that their eventual need for long-term care will be covered, they have received denials for a range of invalid reasons," Margolis reports. When Margolis's firm has gotten involved -- sometimes threatening litigation -- Bankers Life has ultimately paid the claims.  Although that is a great result, customers have to pay out of pocket while they wait for the claim to be paid, which is stressful.

Bankers Life's behavior is nothing new. In 2008, 40 states found Bankers Life's parent company Conseco, Inc. (now called CNO), committed a pattern of consumer harm in the long-term care insurance business. While not admitting any wrongdoing, the company agreed to pay $2.3 million in fines and $30 million for system improvements and restitution. A 2007 New York Times article described how Conseco and Bankers Life employees were prohibited from calling policyholders in order to make things so hard for policyholders that they would either give up or die.

In addition, a long-term care policyholder has initiated a class action lawsuit against Senior Health Insurance Co. of Pennsylvania, which was previously owned by Conseco before it was transferred into an independent trust. The lawsuit alleges the company tried to avoid reimbursing policyholders for long-term care by ignoring or taking an unreasonably long time to respond to claims and requiring unnecessary paperwork and medical examinations. For more information about the lawsuit, click here.

Bankers Life responded to our request for comment with this statement:
Bankers Life and Casualty is committed to the highest standards for ethics, fairness and accountability, and strives to pay all claims in accordance with policy contracts in a timely manner.  We take all complaints seriously, and work with all parties to resolve issues as soon as possible.  We fulfill our obligations to our policyholders based on specific policy language, state requirements and the claim information submitted.  In 2011, Bankers paid in excess of $400 million on long-term care claims and benefits to our more than 300,000 long-term care customers nationwide.

If you experience a problem with your long-term care insurance company, contact an elder law attorney.

This article is reprinted with the permission of Elder Law Answers.

Monday, February 13, 2012

Economists Say That Tightening Medicaid Rules Would Barely Increase Demand for Private Insurance

It is sometimes claimed that reducing the amount of assets an individual can keep while qualifying for Medicaid would increase the purchase of private long-term care insurance coverage.  

Now, two professors of economics have estimated that tightening Medicaid asset rules would do little to encourage the purchase of long-term care insurance policies.  

Although Medicaid recipients may keep only about $2,000 in assets in most states, their spouses may retain between $22,728 and $113,640, depending on their particular state.  The minimum and maximum are determined by federal law but individual states’ limits may set their own limits within these parameters.  

In an article published in the Fall 2011 issue of the Journal of Economic Perspectives, Jeffrey R. Brown of the University of Illinois and Amy Finkelstein of the Massachusetts Institute of Technology estimate that a $10,000 decrease in the level of assets an individual and their spouse can keep while qualifying for Medicaid would increase private long-term care insurance coverage by 1.1 percentage points.

“To put this in perspective,” they write, “if every state in the country moved from their current Medicaid asset eligibility requirements to the most stringent Medicaid eligibility requirements allowed by federal law, this would decrease average household assets protected from Medicaid by about $25,000. This, in turn, would increase the demand for private long-term care insurance by only 2.7 percentage points. While this represents a large increase in insurance coverage relative to the baseline ownership rate, the vast majority of households would still find it unattractive to purchase private insurance.”

Overall, Brown and Finkelstein are pessimistic about the prospects for encouraging more Americans to buy long-term care insurance unless Medicaid is completely restructured or done away with altogether.  They note that long-term care insurance is a poor deal, particularly for men, who get back only about 33 cents on the premium dollar they spend, and that for a 65-year-old man of average wealth, 60 percent of the private insurance benefits would have been paid by Medicaid.   

But the authors say that even if the implicit Medicaid “tax” on long-term care insurance were eliminated, “other factors could still prevent the market for long-term care insurance from developing.”  These factors include the availability of informal insurance provided by family members, the liquid assets in the home serving as a “buffer stock of assets,” and the difficulty many individuals have in “making decisions about long-term, probabilistic outcomes.”

To read the article, “Insuring Long-Term Care in the United States,” click here.
For a commentary on the article in Forbes magazine, click here.
For more on Medicaid's rules, click here.

This article was reprinted with the permission of

Wednesday, January 25, 2012

Giving Your Home to Your Children Can Have Tax Consequences

Many people wonder if it is a good idea to give their home to their children. While it is possible to do this, giving away a house can have major tax consequences, among other results.

When you give anyone property valued at more than $13,000 in any one year, you have to file a gift tax form.

Also, under current law you can gift a total of $5 million over your lifetime without incurring a gift tax. If your residence is worth less than $5 million, you likely won't have to pay any gift taxes, but you will still have to file a gift tax form.  (And Congress may change the gift tax exemption, which is now scheduled to revert to $1 million at the end of 2012 unless Congress acts.)

While you may not have to pay gift taxes on the gift, if your children sell the house right away, they may be facing steep taxes. The reason is that when you give away your property, the tax basis (or the original cost) of the property for the giver becomes the tax basis for the recipient. For example, suppose you bought the house years ago for $150,000 and it is now worth $350,000. If you give your house to your children, the tax basis will be $150,000. If the children sell the house, they will have to pay capital gains taxes on the difference between $150,000 and the selling price. The only way for your children to avoid the taxes is for them to live in the house for at least two years before selling it. In that case, they can exclude up to $250,000 ($500,000 for a couple) of their capital gains from taxes.

Inherited property does not face the same taxes as gifted property. If the children were to inherit the property, the property’s tax basis would be "stepped up," which means the basis would be the current value of the property. However, the home will remain in your estate, which may have estate tax consequences.

Beyond the tax consequences, gifting a house to children can affect your eligibility for Medicaid coverage of long-term care. 

There are other options for giving your house to your children, including putting it in a trust or selling it to them. Before you give away your home, consult an elder law attorney who can advise you on the best method for passing on your home.

This article was reprinted with the permission of

Monday, January 23, 2012

TSA Sets Up Hotline for Air Travelers With Disabilities or Medical Conditions

Concerned about negotiating the airport security checkpoint with a frail elderly or disabled traveler? Now there is a dedicated hotline that travelers with disabilities or medical conditions and their families can call with questions or concerns about the security screening process.

According to the Transportation Security Administration (TSA), the new hotline will provide travelers with information about navigating often arduous airport security checkpoints. Although not spelled out in detail, the TSA's press release seems to offer hope that by calling 72 hours prior to arrival at the airport, travelers with disabilities or medical conditions will somehow be able to notify airport security officers of their trip, with the hope that those officers will be better prepared to handle their needs when they actually reach security.

The hotline, which has been named TSA Cares (presumably because the TSA is trying to counter numerous incidents where elderly or disabled passengers encountered problems at checkpoints), is available Monday through Friday from 9 am to 9 pm EST at 1-855-787-2227.

"TSA Cares provides passengers with disabilities and medical needs another resource to use before they fly, so they know what to expect when going through the screening process,” said TSA Administrator John Pistole. “This additional level of personal communication helps ensure that even those who do not travel often are aware of our screening policies before they arrive at the airport.”

Mobility International, a foreign exchange organization for people with special needs, offers a host of tips for navigating airport security on their Air Travel Tips for People with Disabilities page.

This article reprinted with permission from