Faculty Patricia E. Kefalas Dudek Patricia E. Kefalas Dudek & Associates 30445 Northwestern Hwy,...
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Estate Planning for People with Disabilities Faculty Patricia E. Kefalas Dudek Patricia E. Kefalas Dudek & Associates 30445 Northwestern Hwy, Suite 250 Farmington Hills, MI 48334 (248) 254-3462 Email: [email protected]Website: www.pekdadvocacy.com
Faculty Patricia E. Kefalas Dudek Patricia E. Kefalas Dudek & Associates 30445 Northwestern Hwy, Suite 250 Farmington Hills, MI 48334 (248) 254-3462 Email:
Faculty Patricia E. Kefalas Dudek Patricia E. Kefalas Dudek
& Associates 30445 Northwestern Hwy, Suite 250 Farmington
Hills, MI 48334 (248) 254-3462 Email:
[email protected]@pekdadvocacy.com Website:
www.pekdadvocacy.comwww.pekdadvocacy.com
Slide 2
Why Planning for People with Disabilities is a Great Area of
Practice Growing Need: More individuals with disabilities of all
ages tie in with elder law Better medical care/ Long-term support
Longevity Tie to elder law Make a real difference in clients lives
and their Quality of Life: Public benefits Asset protection &
private resources Structure for care and financial management
Relieving burden on siblings Create public/private partnership
2
Slide 3
Effect of Affordable Care Act Fewer people will need Medicaid
because there is no more pre-existing condition exclusion Fewer
people will need to maintain SSI eligibility in order to get
Medicaid 3
Slide 4
Public Benefits Some of the Available Programs: Medicaid
Medicare Supplemental Security Income (SSI) Social Security
Disability Income (SSDI) Housing Veteran Benefits Other:
http://www.pekdadvocacy.com/wp-
content/uploads/2014/09/Benefits-Checklist.pdfhttp://www.pekdadvocacy.com/wp-
content/uploads/2014/09/Benefits-Checklist.pdf 4
Slide 5
Public Benefits Medicaid Vital Coverage is more extensive than
Medicare or private insurance Often provides supplemental benefits,
such as personal care attendants Eligibility and benefits differ
among states and even counties In many states tied to SSI including
South Dakota 5
Slide 6
Public Benefits Medicare No asset restrictions Eligible after
receiving SSDI for 2 years (or with certain exceptions) Not as
comprehensive as Medicaid for long term support But more doctors
accept reimbursement Co-payments and deductibles 6
Slide 7
Basic Eligibility Criteria - Medicare A person is eligible for
Medicare if that person (or that persons spouse): Is 65 years or
older, a citizen or permanent resident of the United States, and
has worked for at least 10 years in Medicare-covered employment. Is
65 but not eligible for Social Security retirement benefits. If the
person is not yet 65, s/he might also qualify for coverage if the
person: Has been receiving either Social Security Disability Income
or Railroad Retirement Board disability benefits for at least 24
months from date of entitlement (first disability payment). Suffers
form and receives treatment for End-Stage Renal Disease (ESRD -
permanent kidney failure requiring dialysis or transplant). 7
Slide 8
Medicare Medicare Part A (Hospital Insurance) Medicare Part A
helps pay for: inpatient hospital care, critical access hospitals
(small facilities that give limited outpatient and inpatient
services to people in rural areas), and skilled nursing facilities
(not custodial or long-term care), hospice care, and some home
health care. A person is automatically eligible for Part A at age
65 WITHOUT having to pay premiums if s/he: Is eligible to receive
SSA or Railroad benefits but has not yet filed for them or already
receives retirement benefits from SSA or the Railroad Retirement
Board. Had Medicare-covered government employment (includes
spouse). If a person does not automatically receive premium-free
Part A, s/he might be able to purchase it if: That person is age 65
and was not entitled to SSA benefits because s/he did not work or
did not pay enough Medicare taxes while working. Or the person was
previous on SSDI but no longer receives premium-free Part A because
s/he has returned to work. 8
Slide 9
Medicare Medicare Part B (Medical Insurance) Medicare Part B
helps pay for: Doctors services, outpatient hospital care, and some
medical services that Part A does not cover (such as physical and
occupational therapist services, and some home health. Part B helps
pay for these covered services and supplies if they are medically
necessary). Hospital observation stay days. Generally covers 80% of
Medicare-approved amount for covered services. Medicare Part B is
optional and requires payment of a monthly premium. The standard
monthly Part B premium for 2014 is $104.90. Part B premiums are
higher for singles with income of $85K or more (single) or $170K or
more (joint filers). For additional details, go to:
http://www.medicare.gov/your-medicare-costs/part-
b-costs/part-b-costs.html and
http://questions.medicare.gov/app/answers/detail/a_id/2310.http://www.medicare.gov/your-medicare-costs/part-
b-costs/part-b-costs.htmlhttp://questions.medicare.gov/app/answers/detail/a_id/2310
Higher-income beneficiaries will pay $104.90 PLUS an additional
amount, based on the income related monthly adjustment amount
(IRMAA). 9
Slide 10
Medicare Medicare Part C (Medical Advantage Plans) Medicare
Part C plans are alternatives to Traditional Medicare (Parts
A&B). Part C plans are managed by private insurance companies
approved by and under contract with the Centers for Medicare and
Medicaid Services (CMS). Plans function like managed care (i.e.,
HMO or PPO). Plans are required to include coverage that is
virtually equivalent to Traditional Medicare. In some cases Part C
plans offer benefits not available under Traditional Medicare. Many
Part C plans include prescription drug coverage. Some Part C plans
are labeled Special Needs Plans. These are special because of the
nature of the benefits offered and otherwise unrelated to special
needs planning. 10
Slide 11
Medicare Medicare Part D (Prescription Drug Plans) Medicare
Part D plans are managed by private insurance companies approved by
CMS and are offered by either in conjunction with a Part C plan or
as a stand-alone plan. Helps cover the cost of prescription drugs.
Plans vary in cost and list of formulary drugs that are covered.
Medigap Coverage (Medical Supplemental Insurance) Medigap coverage
is purchased through private insurance companies and are designed
to fill the co-pay gaps. 11
Slide 12
Medicare Traditional Medicare Appeals Process begins when a
beneficiary receives a Medicare Summary Notice (MSN) denying a
claim. There is no appeal right unless a MSN is received. If a
beneficiary receives a denial notice from a health care provider,
the beneficiary must request that the provider submit the claim to
Medicare (1) The first level of appeal is the redetermination. Must
be filed within 120 days of the receipt of the MSN. The
redetermination is filed with the Medicare contractor, as listed on
the MSN. (42 CFR 405.944. Standard of promptness for a decision is
60 days. (2) The second level of appeal is reconsideration by a
Qualified Independent Contractor (QIC) Must be filed within 180
days from the date of the receipt of the redetermination decision
Standard of promptness for a decision is 60 days. 12
Slide 13
Cont.. (3) The third level is an appeal to an Administrative
Law Judge. Must be filed within 60 days from the date of the
receipt of the reconsideration notice. May also be requested when a
QIC fails to make a reconsideration decision within 60 days. This
is known as an escalation. Standard of promptness for a decision is
90 days. If appeal is a result of an escalation, the standard of
promptness is 180 days. (4) The fourth level is a review by the
Medicare Appeals Council. Must be filed within 60 days from date of
receipt of ALJ decision. Standard of promptness for a decision is
90 days. (5) The final level is Federal Court. 13
Slide 14
Medicare Hospital Discharge Appeal Rights Written notice of
discharge must meet the following requirements to be proper: (1)
Provide name, address and phone number of the Quality Improvement
Organization (QIO) serving hospital and instructions for appealing
decision [42 CFR 412.42 412.48]. (2) The hospital notifies the
beneficiary in writing that: (a) In the hospitals opinion, and with
the attending physician or QIOs concurrence, s/he no longer
requires inpatient care. (b) Customary charges will be made for
continued hospital care beyond the second day following the date of
the notice. (c) The QIO will make a formal determination on the
validity of the hospitals finding if the beneficiary remains in the
hospital after they are liable for charges. (d) The determination
of the QIO will be appealable by the hospital, the attending
physician, or by the beneficiary under the QIO Medicare Part A
appeals procedures. 14
Slide 15
Medicare Hospital Discharge Appeal Rights Cont., The
beneficiary must file a timely request for reconsideration of an
initial denial determination to the QIO. The appeal must be filed
by noon the next calendar day. During the appeal, the patient will
remain in the hospital. If discharge is determined to be
inappropriate by the QIO, it will be delayed. If it is determined
to be appropriate, the patient will need to leave or pay privately.
If the patient remains an inpatient, the QIO must complete its
reconsideration within 3 working days after the QIO receives the
request for reconsideration. If discharge is not safe and
appropriate or if more time is needed to arrange for proper after
care, the advocate should request a discharge planning meeting. The
QIOs determination will be appealable by the hospital, attending
physician, or by the beneficiary under the QIO Medicare Part A
appeals procedures. 15
Slide 16
Medicare Medicare Beneficiary Rights Advocacy in the Nursing
Home The most common reasons given for termination of
skilled/rehabilitation services is that the resident has plateaued
or is not making progress/improving. The Centers for Medicare &
Medicaid Services (CMS) has issued manual guidance (Change Request
8458) related to the Jimmo v. Sebelius No. 5:11-CV-17 settlement.
Guidance states that No Improvement Standard is to be applied by
Medicare contractors in determining Medicare coverage for
maintenance claims that require skilled care. The proper standard
to justify continuation of Medicare coverage includes prevention of
deterioration. [42 CFR 409.32(c)]. In addition, skilled
rehabilitation services may continue even for maintenance purposes.
[42 CFR 409.33(c)]. 16
Slide 17
Medicare Medicare Beneficiary Rights Advocacy in the Nursing
Home Cont., If the SNF determines the patient is no longer eligible
for Medicare payment for skilled care, the SNF must give the
patient a written Notice of Non-Coverage. The SNF is required to
submit a demand bill or no-payment bill to Medicare at the request
of a resident or residents representative. The resident may be
eligible for an expedited review process, under the following
conditions: (a) The SNF gives notice two days before the loss of
services. (b) The resident files an expedited appeal to the QIO by
noon on the day that they receive notice. The QIO must inform the
SNF of the appeal and the SNF must provide the resident with a more
detailed notice of non-coverage. The QIO has 72 hours to make a
determination. 17
Slide 18
Medicare What Practitioners Need to Know About Medicare There
is a broad range of differences between the Medicare plans. Many
beneficiaries have been disappointed with Medicare Advantage (C)
plans. Therefore, Traditional Medicare is often the best choice.
Beneficiaries are required to pay premiums for Parts B, C and D.
Practitioners should become familiar with Medicare options and
State Health Insurance Assistance Program (SHIP) or identify
someone who is to work with to help clients select the best plan(s)
to provide for the clients specific conditions and needs. Dual
eligible (Medicare & Medicaid) beneficiaries have added
benefits. 18
Slide 19
Public Benefits Supplemental Security Income Restrictive, must
be poor, no SGA, & disabled $2,000 limit on countable assets
Federal benefit level ($721 a month in 2014) plus state supplement
Dollar-for-dollar income offset (after $20 disregard) In-kind
income ruler In kind support and maintenance (ISM) 1/3 of $721 plus
$20 - $260 (in 2014) 19
Slide 20
Supplemental Security Income (SSI) Background Nixon
nationalized state welfare Administered by SSA Financing federal
general revenue funds Relationship to Medicaid - $1 of SSI =
Medicaid Section 1634 of SS Act State Enabling Statutes Categorical
Eligibility + Poverty both are required Either Aged 65+ or Disabled
Countable Assets less than $2,000 plus low income 20
Slide 21
Sequential Evaluation Process (Substantive Law - see Appendix
2) Methodology to determine if someone is disabled under SS Act: 1.
Engaging in Substantial Gainful Activity? 2. Has a non-severe
impairment? 3. Meets federal Listing of Impairments? 4. Can perform
Prior Relevant Work? 5. Can perform new occupation? Given the
claimants RFC + Age + Education 21
Slide 22
SSA Claims and Appeals Procedure Mostly the same for T2 and T16
(Procedural Law - see Appendix 3) 1. Initial application 2.
Reconsideration 3. Administrative Law Judge Hearing 4. Appeals
Council Washington, D.C. 5. U.S. District Court 6. U.S. Circuit
Court of Appeals 7. U.S. Supreme Court 22
Slide 23
SSI non-financial requirements Citizen or lawful resident Not
be a fugitive felon, in prison, violating parole Not be outside the
U.S. for more than one month Must apply for all other benefits for
which you are eligible Accept medical treatment And other
requirements (see written materials) If an alien, meet special
requirements 23
Slide 24
SSI financial eligibility - principles Two tests income and
resources (assets) Measured on a month-by-month basis Amount paid
has nothing to do with calculated need it is Federal Benefit Rate
(FBR 2014 is $721) less all countable income Income is not IRS
income but public benefits income 24
Slide 25
SSI financial eligibility principles, continued Claimants
responsibility to report income and assets Retrospective monthly
accounting Income in the month received becomes resource (asset) if
retained on first of following month For cessations, Goldberg vs.
Kelly rules apply No liens at death to repay SSI 25
Slide 26
SSI financial eligibility principles, continued Countable
Income is anything that comes in that is not counted nor excluded
by law Things that are not income by law Proceeds of a loan Tax
refunds Payments made to third parties for goods or services that
are not ISM 26
Slide 27
SSI financial eligibility principles, continued Exclusions of
income Ten Earned Income exclusions applied in strict order
Twenty-Two Unearned Income exclusions Deemors (healthy parent or
spouse) entitled to exclusions before deeming applies to SSI
claimant 27
Slide 28
SSI Income Four Types The four types of income are treated
differently in terms of how much is subtracted from the SSI monthly
check. The four types are: Earned income Unearned income In-kind
Support and Maintenance (ISM) Deemed income parent to child,
spouse-to spouse 28
Slide 29
SSI Earned Income Earned (vs. Unearned) is highly favored by
the law Subtract $20 general income disregard, then take $65 off
the top, then subtract 50%, and the remainder is countable income.
Example: Joes part time work pays $400 that month Earned Income$400
Less general income disregard ($20) Less earned income exclusion
($65) Remainder$315 Less 1/2 of earned income ($315 - $157.50)
($157.50) TOTAL COUNTABLE INCOME $157.50 SSI Federal Benefit
Rate$721.00 Less Countable Income($157.50) TOTAL SSI CHECK
AMOUNT$563.50 29
Slide 30
SSI Unearned Income Gifts are countable unearned income SSDI,
pensions, etc., are unearned income Everything is unearned unless
it is earned All unearned income, except $20, counts unless on the
specifically excluded list examples of exclusions: One third of
child support WWII war reparation payments Interest on excluded
burial space purchase 30
Slide 31
SSI Income In-kind Support and Maintenance (ISM) ISM consists
of ten food and shelter items ISM is payments made to third parties
that give the SSI claimant one or more of the ten food and shelter
items No matter how much is paid, the Presumed Maximum Value of the
food and shelter is $260.33 that month $721 FBR minus $260.33 = SSI
check of $460 31
Slide 32
SSI and ISM, continued: The ten food and shelter items are: 1.
Food 2. Mortgage (including property ins. required by lender) 3.
Real property taxes (less any tax rebate/credit) 4. Rent 5. Heating
fuel 6. Gas 7. Electricity 8. Water 9. Sewer 10. Garbage removal
ONLY THOSE TEN TRIGGER THE PMV REDUCTION FOR ISM !!! 32
Slide 33
The Second Financial Eligibility Test: Few Resources (assets) -
Principles Measured on the first moment of the first day of each
month X is income in the month received, and if retained becomes a
resource on the first of the next month Resource is anything owned
by the claimant that can be converted to cash, unless excluded by
law It is a resource if the claimant has the right, authority, or
power to liquidate the property Resources of deemor may count
33
Slide 34
SSI Resources - exclusions The first $2,000 ($3,000 if married
couple) Home of any value Car of any value Household goods and
personal effects used by claimant SNT investments (my millionaires
on welfare) Retroactive SSI or SSDI payments for 9 months And
others (see list in written materials) 34
Slide 35
SSI Deeming of Income and Resources - Principles Deeming
applies in ONLY THREE situations 1. parent to minor child (stops on
childs 18th Birthday) 2. Spouse to spouse 3. Sponsor to alien For
parent and spouse deeming, only applies if deemor lives with SSI
claimant Certain things not deemed e.g., deemors IRAs and pension
funds 35
Slide 36
SSI Deeming cont. No deeming upstream nor laterally Childs
income not deemed to SSI sick parent Siblings incomes not deemed to
SSI sick child Remember: Parental deeming stops at age 18 36
Slide 37
The Following Deeming Eligibility Chart for Children does not
apply when: The parent(s) receives both earned income (for example,
wages or net earnings from self-employment) and unearned income
(for example, Social Security benefits, pensions, unemployment
compensation, interest income, and State disability). The parent(s)
receives a public income maintenance payment such as Temporary
Assistance for Needy Families (TANF), or a needsbased pension from
the Department of Veterans Affairs. The parent pays court-ordered
support payments. The child has income of his or her own Any
ineligible (healthy child not on SSI) child has income of his or
her own, marries, or leaves the home. There is more than one
disabled child applying for or receiving SSI Benefits. 37
Slide 38
SSI Penalty for Transfers Look back period is 36 months Penalty
is amount transferred divided by FBR in the month transferred
(Example: $10,000 divided by $721 yields a penalty of 13 months
from the past date of transfer) Result is the number of months of
ineligibility for SSI 38
Slide 39
SSI Transfer Penalty (cont.) Exceptions to Transfer Penalty
Transfers to SNTs Transfer of home under certain conditions
Non-home transfer exceptions Resource returned, then claimant seeks
conditional benefits pending sale Transfers for purposes other than
to qualify for SSI Undue hardship 39
Slide 40
Fees in Social Security Claims Highly regulated Failure to
follow = civil and criminal penalties and disbarment from appearing
before SSA * I SAY BRING IT ON!! Fees cannot be paid unless
approved by SSA in most cases 40
Slide 41
Public Benefits Social Security Disability Income Not based on
financial eligibility Benefit based on beneficiarys work record or
that of parent If based on parents work record, child must have
been disabled before age 22, and parent must either be receiving SS
benefits or be deceased Benefit may be more or less than SSI
benefit Can change from SSI to SSDI when parent retires Easier to
manage than SSI 41
Slide 42
Social Security Disability Insurance (SSDI) Basic Eligibility
Criteria 40 SSA work credits, 20 of which must have been earned in
the last 10 years ending with the year that the individual became
disabled. Number of credits required is based on age, and when the
individual becomes disabled. In 2014, an individual gains 1 credit
for each $1,200 of wages. Therefore, earnings of $4,800 equal 4
credits (no matter when earned in the year). Paid Social Security
taxes on earnings. Total Disability - inability to perform any
Substantial Gain Activity (SGA.) 5 question step-by-step process to
determine disability. SSDI Income/Medical Eligibility Issues SSDI
is an entitlement and there is no asset limit for eligibility.
There is no deeming under SSDI, except for possible earned income.
SSDI benefits are not affected by unearned income (unlike SSI).
Trial Work Program (TWP) - Individual on SSDI can test ability to
work. After 24 months of SSDI eligibility, eligible for Medicare.
42
Slide 43
Eligibility for Children, Disabled Adult Child Benefits Adult
child can receive SSDI benefits on parents work record, if: A
parent/s who is disabled or retired and entitled to Social Security
benefits. A parent who died with qualifying work record. In some
cases a child could be eligible based on the work record of his/her
grandparent. SSA relies on the same criteria to evaluate an adult
childs disability as is used to determine disability for workers.
Benefits are available to an adult child who received dependents
benefits on a parents Social Security earnings record prior to age
18, if s/he is disabled at age 18 and is unable to engage in SGA.
Adult child receiving SSI benefits automatically switches to SSDI
when working parent becomes disabled, dies or retires. If adult
child receives SSDI benefits based on his/her own work record, and
if the child was disabled prior to age 22, s/he retains insured
status but is entitled to receive benefits on a parents work record
(if benefit rate is higher). If child is under the age of 18, with
or without a disability, the child will receive the Childs Benefit
provided his or her parent is retired, disabled or deceased. Social
Security Disability Insurance (SSDI) 43
Slide 44
Social Security Disability Insurance (SSDI) Social Security
Benefits Eligibility for Spouses and Ex-Spouses A spouse and an
ex-spouse may qualify for benefits based on a workers record. The
money paid to a divorced ex-spouse does not reduce the workers
benefit or any benefits due to the workers current spouse or
children. Ex-spouse must be unmarried and must have been married to
worker at least 10 years prior to divorce. Disability Benefits for
Widows and Ex-spouses To qualify for disability benefits, a
widow/er (ex-spouse) must be found to be disabled within a
prescribed time frame. The widow(er) must have become disabled
either: Before the death of the insured spouse, or Before his/her
entitlement to fathers or mothers benefits has ceased, or Within
seven years after either of these events, or Within seven years
after a previous entitlement to disabled surviving spouses benefits
terminated because disability had ceased. To be eligible, a
widow/er must have attained age 50, but not attained age 60, and be
under a disability which began the prescribed period ends. 44
Slide 45
Social Security Disability Insurance (SSDI) SSDI Notice of
Overpayment or Reduction Waiver There are 2 ways to challenge an
overpayment claim by SSA: Reconsideration (SSA-561-U2), if: The
individual is over paid and does not agree with the amount. Can be
done in conjunction with request for Waiver. Must be requested
within 60 days of receipt of denial letter. Waiver (SSA-632-BK),
if: The individual concedes the overpayment but seeks relief from
recoupment. Individual must be without fault. Enforcement of
overpayment would either be: Against equity and good conscience
(beneficiary relied to their detriment on benefits paid and changed
financial position, eg., sent child to college, bought home, etc.)
or, Would defeat the purposes of the Act (beneficiary cant afford
to repay overpayment.) Watch out for Administrative attempts to
charge an overpayment after statute of limitations (4 years) has
passed even though there is no fraud. Make sure Administration
shows the math for their calculations. 45
Slide 46
Social Security Disability Insurance (SSDI) Appeals Process
Appeal must be submitted within 60 days of date denial or negative
action letter is received. SSA assumes the letter is received 5
days after date of the letter, unless there is evidence showing it
was received later. A request to keep benefits from being cut off
must be received within 10 days of receipt of the letter. If
benefits do continue and the appeal is unsuccessful, the claimant
may have to pay back any money s/he was not eligible to receive.
There are four levels of appeals: Reconsideration / Waiver. Hearing
by an Administrative Law Judge. Review by the Appeals Council.
Federal Court review (District, Court of Appeals, Supreme Court).
46
Slide 47
Social Security Disability Insurance (SSDI) What Practitioners
Need to Know About SSDI Approximately 60% of initial applications
for SSDI are denied. Denials often due to insufficient evidence of
the severity of the medical conditions. Packaging the claim will
improve results. Practitioners should decide whether to assist with
applications as part of the practice or to outsource the benefits
application process to a local expert. Same with appeals. Attorney
fees are regulated by SSA. 47
Slide 48
Social Security Disability Insurance (SSDI) Additional SSDI
Resources Sanford J. Mall and Patricia E. Kefalas Dudek. After Your
Client has SSDI, What About Medicare?- SSDI Eligibility Challenges,
NAELA Advanced Elder Law Institute Presentation, (October 23-26,
2008). The Basics of Social Security Disability Insurance (SSDI) -
9/2/10 Available to members of the Academy of Special Need Planners
at: http://www.specialneedsplanners.com/resources/ Ticket to Work:
A Way to Ease Into the Workforce Without Losing SSDI Benefits -
1/6/2009 Available to members of the Academy of Special Need
Planners at:
http://www.specialneedsplanners.com/resources/.http://www.specialneedsplanners.com/resources/
Social Security Website www.ssa.gov/disability/.
www.ssa.gov/disability/ Social Security Disability Practice, Thomas
E. Bush (James Publishing.) The Wilborn Method Social Security
Disability: A Step-by-Step Guide to Getting Your Benefits, Ralph
Wilborn, Tim Wilborn, Etta L. Wilborn (Disability Key Books, LLC.)
48
Slide 49
Public Benefits Housing Section 8 most prominent but 811 &
others are growing Other state and federal programs, so ask Section
8 has tough rules on treating recurring payments as income But
applied differently by different agencies 49
Slide 50
Veteran Benefits Veterans with disabilities may receive
benefits for: Service Connected Disabilities Non-Service Connected
Disabilities Income and Resource limitations apply SNTs (d) (4) (A)
and (C) not currently recognized by the Veterans Administration,
but no transfer penalty (for the moment) 50
Slide 51
What is Traditional Medicaid? A jointly funded, Federal-State
health insurance program for low-income, needy people, and persons
with disabilities. The law establishing Medicaid can be found in
Title XIX of the federal social security statute; sometimes
Medicaid is referred to as, Title XIX. Each state then has its own
statutes and regulations as the program is administered by the
states. Each state has a department that administers the program,
typically the Department of Human or Social Services. These
departments likewise have program manuals which state the policies
and procedures the Department uses to administer the Medicaid
programs. 51
Slide 52
Medicaid Services (States do vary in the services offered)
Inpatient and Outpatient Hospital and Clinics Physicians, Nurses,
Dentists, Vision care Pediatrics Laboratory and X-Rays Dialysis
Long Term Care (Nursing Homes) Prescription Medications Medical
supplies, equipment, and appliances (wheelchairs, etc.)
Non-Emergency medical transportation Hearing aids/prosthetic eyes
52
Slide 53
Who is Eligible for Medicaid? 53
Slide 54
Who is Eligible for Medicaid? US citizens Permanent residents
Pregnant Women (without regard to citizenship or legal status)
Immigrants who entered the US illegally (only in case of medical
emergency) Must be a resident of the State in which Medicaid is
sought!! HUGE ISSUE 54
Slide 55
Who is Eligible for Medicaid? Supplemental Security Income
(SSI) Recipients Persons who are blind, disabled, or aged (defined
as 65 years or better) and who meet certain income and resource
limitations; these income and resource limits will be discussed in
greater detail Pregnant women with family income less than 200% of
the Federal Poverty Level Children under age 6 with family incomes
less than 133% of the Federal Poverty Level Children ages 6 19 with
family income up to 100% of the Federal Poverty Level 55
Slide 56
Who is Eligible for Medicaid? Definition of Blind or Disabled
Under 18: The individual must have a medically determinable
physical or mental impairment which results in marked and severe
functional limitations and can be expected to result in death or
last for a continuous period of not less than 12 months 18 and
Over: The individual must have a medically determinable physical or
mental impairment which results in the inability to engage in any
substantial gainful activity and can be expected to result in death
or can be expected to last for a continuous period of not less than
12 months Blindness defined: see www.ssa.gov 56
Slide 57
Who is Eligible for Medicaid? Substantial Gainful Activity
(SGA) Substantial Gainful Activity is measured by level of work
activity and earnings. Work is substantial if it involves doing
significant physical or mental activities, or a combination of
both. Gainful work activity is either of the following: Work
performed for pay or profit; Work of a nature generally performed
for pay or profit; or Work intended for profit, whether or not a
profit is realized. 2014 income level for SGA Blind:$1,800 per
month Disabled:$1,070 per month 57
Slide 58
Medicaid Counted Resources Cash Bank Accounts Stocks U.S.
savings bond Land Life insurance Personal property Automobiles
Resources also sometimes referred to as assets are things an
individual owns such as: and anything else which could be changed
to cash and used for food or shelter, subject to certain
exclusions. The resource limit for most of these programs is
$2,000.00 for a single individual. 58
Slide 59
Examples of Excluded Resources Home in which the beneficiary
resides One automobile, there may be an equity limit Household
goods Personal effects Burial Space Irrevocable Prepaid Burial
Contract- may be limits on the amount Life Insurance (face value
and the face value of any other life insurance policies total
$1,500 or less) Joint Ownership in Residence Real Property Unable
to be Sold Food Stamps School Lunch Programs Child Nutrition
Programs Grants, Scholarships, Fellowships, or Gifts Set Aside to
Pay Educational Expenses Resources and income in a special needs
trust 59
Slide 60
Medicaid Counted Income Income is any item an individual
receives in cash or in-kind that can be used to meet his or her
need for food or shelter, including the receipt of anything which
can be applied, either directly or by sale or conversion, to meet
basic needs of food or shelter, subject to certain exclusions.
60
Slide 61
Examples of Excluded Income First $20 per Month. However state
may vary in these rules if the recipient is not also an SSI
recipient. Infrequent or irregular income: $60 per quarter of
infrequent or irregular unearned income and $30 per quarter of
infrequent or irregular earned income Other items if not food or
shelter and cannot be used to obtain food or shelter Certain
Medical and Social Services Food and shelter received during
medical confinement Personal services performed for an individual
Income Tax refunds Rebates and Refunds or other return of money he
or she has already paid Loan proceeds CAUTION: an item may not be
countable income, but if held past the months end, it could become
a countable resource!! 61
Slide 62
Pathways to Medicaid Pathway Income Eligibility Asset Limit
Medicaid (Individual/Couple) Benefits SSI < 74% of poverty
$2,000 Y $3,000 MedicaidCriteria are essentially the same as SSI in
most states, except applicant does not wish to receive SSI payments
Medically Spend-down $2,000+Y Needy income $3,000+ 62
Slide 63
Pathways to Medicaid Pathway Income Eligibility Asset Limit
Medicaid Medicare Premiums (Individual/Couple) Benefits &
Cost-Sharing NH Res. < 300% of SSI level $2,000 Y $3,000
Home-Based < 300% of SSI level* $2,163 Y Waivers QMB < 100%
of poverty $4,000 N Y** $6,000 *Will vary among states **Qualified
Medicare Beneficiary; eligibility will vary among states. 63
Slide 64
Transfer of Asset Rules For long term care Medicaid programs,
such as skilled nursing home placement or long term home and
community-based services, there are transfer of asset rules in
addition to the resource and income rules. This is known as the 5
year look-back. If the applicant has given away assets, there may
be a period of ineligibility. 64
Slide 65
Medicaid Services Some Other State Options Home and Community
Based Waiver Programs (HCBW) Must meet regular Medicaid
requirements Programs vary from State to State States can use
federal Medicaid funds for Medicaid services to persons needing
institutional levels of care which can be provided at home or in
the community Katie Beckett Option (children with special needs)
Home care for the child must be appropriate Estimated cost of
community services may not exceed the cost of institutional care
The child must require the level of care normally provided in an
institution 65
Slide 66
Medicaid Services Some Other State Options Ticket to Work Meets
the increased income and resource requirements established by the
State (for example, CT allows an individual to earn up to $75,000
per year and have up to $10,000 in resources under CTs Employed
Disabled Program) Must be disabled and otherwise (SSI) but for his
or her earnings A person is not required to be receiving SSI in
order to be eligible under the Medicaid provision The fact that the
individual is working will not be considered when making the
disability decision for this law Some modest co-payments may be
required 66
Slide 67
Medicaid in South Dakota What Programs Are Available To Assist
People With Disabilities in South Dakota? Is there a Medicaid
waiver program in South Dakota? South Dakota has several waivers
including: CHOICES; Family Support 360; Assistive Daily Living
Services; Elderly 67
Slide 68
Medicaid in South Dakota What state department handles the
Medicaid waiver program in South Dakota? The CHOICES and Family
Support waivers are both operated by the Department of Human
Services (DHS), Division of Developmental Disabilities (DDD); the
Assistive Daily Living Services (ADLS) waiver by the DHS, Division
of Rehabilitation Services; and the Elderly waiver by the
Department of Social Services (DSS), Division of Adult Services and
Aging. Each waiver is administered by the DSS, Division of Medical
Services, which is the Single State Medicaid Agency. What programs
assist people who have developmental disabilities? The CHOICES
Medicaid waiver program assists persons with
intellectual/developmental disabilities in South Dakota. The Family
Support 360 Medicaid waiver program also supports persons with
intellectual and developmental disabilities. What is the best
number to call to get started?For services available for adults,
call 605-773-3438. For services available for children, contact
John New at [email protected]. Is there a website?
http://dhs.sd.gov/http://dhs.sd.gov/ 68
Slide 69
Medicaid in South Dakota Are there income limits to receive
waiver services in South Dakota? You may qualify for Medicaid
waiver services if you earn 300% of the SSI Federal Benefit Rate
(FBR) or below. How old do you have to be to start receiving waiver
services? There is no age requirement to receive services under the
CHOICES waiver or the Family Support 360 waivers. The ADLS waiver
requires a person to be 18 years of age or older. The Elderly
waiver requires a person to be age 65 and older or age 18 and older
with a qualifying disability. 69
Slide 70
Health Care Reform 1/1/14 Patient Protection and Affordable
Care Act (P.L. 111-148) There is no resource test for the expanded
Medicaid program. Medicaid will expand to include most persons with
income up to 133% of the federal poverty level plus a 5% disregard.
Those individuals currently covered by traditional Medicaid will
not be able to qualify for the ACA, Affordable Care Act coverage.
ACA does not cover individuals age 65 + ACA does not cover long
term care in a nursing home or in the home Requires States to
expand Medicaid to include childless adults Federal Government pays
100 percent of costs for covering newly eligible individuals
through 2016 Expansion of States ability to use HCBW funds 70
Slide 71
The Affordable Care Act (ACA) The Affordable Care Act (ACA) is
the most important legislation affecting special needs planning
since 1993 when Congress enacted 42 USC 1396p(d) that authorized
special needs trusts (SNTs). Much of the ACA is focused on
protecting the rights of people with chronic, long-term physical or
cognitive conditions. In this article, we will discuss the
important features of the ACA to allow the special needs
practitioner to provide proper advice to their clients and how the
ACA will affect existing special needs plans. Excerpt from: How the
Affordable Care Act Affects Special Needs PlanningHow the
Affordable Care Act Affects Special Needs Planning By: Kevin
Urbatsch, Esq. & Michelle Fuller, Esq *Available with NAELA
membership 71
Slide 72
Access to Health Care Under the provisions of the ACA, many of
the barriers to private health care for persons with disabilities
will disappear. The biggest change is that a pre-existing condition
will no longer deny an individual access to private health care.
The ACA also makes private health care more attractive because it
removes the lifetime limits on health insurance that made private
plans unattractive to many persons with profound disabilities. An
added benefit of the ACA is that it requires private health care
coverage for children (up to age 26) on a parents plan even if that
child has moved away, is disabled, gone to school, or married.
Also, the ACA caps the amount of money that a person will have to
pay out-of- pocket each year on premiums and deductibles. For
example, if the person in California earns less than $17,235 a
year, the annual out-of- pocket limit he or she has to pay is
$2,250. Otherwise, the general ACA annual out-of-pocket limit for
an individual is $6,250 per year. Excerpt from: How the Affordable
Care Act Affects Special Needs PlanningHow the Affordable Care Act
Affects Special Needs Planning By: Kevin Urbatsch, Esq. &
Michelle Fuller, Esq *Available with NAELA membership 72
Slide 73
Access to Health Care There is a mandate that all persons in
the United States be covered by health care. Because so many
persons with disabilities have limited income, the ACA provides
ways to pay premiums at a reduced cost. If the person with a
disability has income, he or she can pay a reduced premium even if
they earn up to 400 percent of the federal poverty limit (FPL)
($45,960 for individual in 2013). For example, for the year 2014 in
California, a person earning less than $17,235 a year will pay
between $19 to $57 a month for a premium based on their actual
income. Excerpt from: How the Affordable Care Act Affects Special
Needs PlanningHow the Affordable Care Act Affects Special Needs
Planning By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq
*Available with NAELA membership 73
Slide 74
Expanded Access to Medicaid For those persons with disabilities
who have little to no income, access to Medicaid (for people
between the ages of 19 to 65) will be expanded to include
individuals with incomes up to 133 percent of the FPL (plus an
automatic 5 percent income disregard) ($15,586 for individual in
2013). There is no resource limitation for this new expanded
Medicaid program. Thus, for new people qualifying for Medicaid,
they can have more than the $2,000 in resources and still qualify
for Medicaid if their income is below 138 percent of the FPL. It is
important to note that this new expanded program does not apply to
persons currently receiving Medicaid, for those over age 65
applying for long-term care nursing home care, and some other
restrictions. Further, not every state has agreed to participate in
Medicaid expansion, so it is important to see if your state has
agreed to implement expanded Medicaid. Excerpt from: How the
Affordable Care Act Affects Special Needs PlanningHow the
Affordable Care Act Affects Special Needs Planning By: Kevin
Urbatsch, Esq. & Michelle Fuller, Esq *Available with NAELA
membership 74
Slide 75
Expanded Access to Medicaid There are several important health
care benefits generally not covered by the ACA and private health
care that are important to persons with disabilities. Two of the
most important (and expensive) benefits that the ACA will not cover
include payment for long-term skilled nursing care and payments for
in-home care giving services. Thus, for clients with disabilities
who require nursing home level care or who require caregivers in
order to remain independent in the community will likely still need
Medicaid to assist them with their ongoing care. In some states,
Medicaid provides unique services for the developmentally disabled
that specialize in support for independent living and other related
services. Thus, it is important for the practitioner to determine
what health care-related services for persons with disabilities are
covered by Medicaid (but not through private health care) in
determining whether a client should give up his or her
government-paid-for health care. Excerpt from: How the Affordable
Care Act Affects Special Needs PlanningHow the Affordable Care Act
Affects Special Needs Planning By: Kevin Urbatsch, Esq. &
Michelle Fuller, Esq *Available with NAELA membership 75
Slide 76
Key Provisions in ACA The Affordable Care Act has set new
standards, called essential health benefits, outlining what health
insurance companies must now cover. But there's a catch: Insurance
firms can still pick and choose to some degree which specific
therapies they'll cover within some categories of benefit. And the
way insurers interpret the rules could turn out to be a big deal
for people with disabilities who need ongoing therapy to improve
their day-to-day lives. The new rules for what health insurance
companies have to cover may still change. Federal regulators plan
to review them as the health law rolls out and could make changes
in 2016. Excerpt from: Obamacare Presents Complex Choices For
People with DisabilitiesObamacare Presents Complex Choices For
People with Disabilities 76
Slide 77
Essential Benefit Package The ACA links the essential health
benefits package to limits on cost- sharing. So health plans that
are required to provide essential health benefits will also be
required to limit the amount consumers will have to pay
out-of-pocket. Specifically, health plans will be prohibited from
requiring consumers to pay annual cost-sharing that is greater than
the limits for high deductible plans linked to health savings
accounts. Currently, those limits are $5,950 per year for
individuals and $11,900 per year for families. In addition, small
group plans must limit deductibles to $2,000 for individual
coverage and $4,000 for family coverage. As with all health plans
under the ACA, there is no cost-sharing for certain preventive
health services recommended by the United States Preventive
Services Task Force.high deductible plans linked to health savings
accountssmall group plansdeductibles 77
Slide 78
Essential Benefit Covered Under the ACA Ambulatory patient
services Emergency services Hospitalization Maternity and newborn
care Mental health and substance use disorder services *
Prescription drugs * Rehabilitative and habilitative services and
devices * Laboratory services Preventive and wellness services
Chronic disease management Pediatric services, including oral and
vision care 78
Slide 79
Mental Health Parity In 2008, Congress passed the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction
Equity Act taking a great step forward in the decade-plus fight to
end insurance discrimination against those seeking treatment for
mental health and substance use disorders. This law requires health
insurance to cover both mental and physical health equally. Under
this law, insurance companies can no longer arbitrarily limit the
number of hospital days or outpatient treatment sessions, or assign
higher co-payments or deductibles for those in need of
psychological services. 79
Slide 80
Mental Health Parity The 2008 act closes several of the
loopholes left by the 1996 Mental Health Parity Act and extends
equal coverage to all aspects of health insurance plans, including
day and visit limits, dollar limits, coinsurance, co-payments,
deductibles and out-of-pocket maximums. It preserves existing state
parity and consumer protection laws while extending protection of
mental health services to 82 million Americans not protected by
state laws. The bill also ensures mental health coverage for both
in network and out-of-network services. 80
Slide 81
Could a Trustee of SNT Determine to go Without Insurance? What
happens if I dont sign up for Obamacare? You wont have health
insurance. Youll be responsible for every from the flu shots to
major surgery. I thought I could just sign up when I need it? Not
exactly. The law requires insurance companies to cover people with
pre-existing conditions, but you still have to sign up during the
enrollment period. That will be from October 1, 2013 to March 31,
2014. Serious problems in Michigan with delayed Medicaid Expansion
and states with no Medicaid expansion 81
Slide 82
Could a Trustee of SNT Determine to go Without Insurance?
(cont.) So what if I get sick after March 31, 2013? Youll have to
wait until the next enrolment period, which begins October 1, 2014.
Until your new coverage kicks in January 1, 2015, youll have to pay
for any medical costs. What if I lose my insurance during the year?
You can sign up them. Outside of the regular enrollment period,
people can sign up for insurance when they have a major life-
changing event (i.e. getting married, changing jobs, having a baby,
or moving to a new state) 82
Slide 83
Could a Trustee of SNT Determine to go Without Insurance?
(cont.) Are there any penalties for not signing up? Yes, if you
dont sign up for insurance, youll pay a fine when you do you taxes
in 2015. The fine will be $95.00 or 1% of your annual income,
whichever is higher. And in future years, it will be even higher.
What if I refuse to pay the fine? The IRS will take the money out
of any refund you would receive on your federal income tax. It is
not allowed to put you in jail or seize your property for failing
to pay the fine, however. 83
Slide 84
Could a Trustee of SNT Determine to go Without Insurance?
(cont.) When do I have to sign up? Technically speaking, you need
to have insurance on January 1, 2014. However, the enrollment
period lasts until March 31, 2013 and you may be able to sign up
later in the year if you have a major life event. What if I am
uninsured for part of the year? You wont pay the full fine. The
amount is prorated, so you would just pay for the number of months
you were uninsured. Also, gaps of less than three (3) months in a
given year arent counted. 84
Slide 85
Could a Trustee of SNT Determine to go Without Insurance?
(cont.) Are there any other exceptions? Yes, but they are limited.
Certain religious groups, such as the Amish, and federally
recognized Indian tribes dont have to sign up. You can also get
exemption if you have a lower income, especially if your state
rejected the Medicaid expansion. Medicare or Medicaid is enough!
(Either only Part A Or Parts A & B) 85
Slide 86
What if I have Medicare? Medicare isnt part of the Health
Insurance Marketplace, so you dont need to do anything. If you have
Medicare, you are considered covered. The Marketplace wont affect
your Medicare choices, and your benefits wont be changing. No
matter how you get Medicare, whether through Original Medicare or a
Medicare Advantage Plan, youll still have the same benefits and
security you have now. You wont have to make any changes. Medicares
Open Enrollment Period (October 15-December 7) hasnt changed.
86
Slide 87
ACA Provisions (cont.) Expanded Medicare benefits for
preventive care, drug coverage Medicare benefits have expanded
under the health care law things like free preventive benefits,
cancer screenings, and an annual wellness visit.free preventive
benefits, cancer screenings, and an annual wellness visit You can
also save money if youre in the prescription drug donut hole with
discounts on brand-name prescription drugs.discounts on brand-name
prescription drugs 87
Slide 88
Closing the Donut Hole The Patient Protection and Affordable
Care Act and accompanying health care reform legislation added
important improvements to Medicare prescription drug coverage. The
health reform law helps cover expenses for people falling into the
"donut hole" coverage gap beginning in 2010, and the hole in
coverage is eliminated altogether by 2020. The law also provides
for additional assistance for low-income beneficiaries. To view
full article: Closing the Donut HoleClosing the Donut Hole 88
Slide 89
Closing the Donut Hole The new law provides assistance to help
seniors bridge this donut hole. 50 percent rebate on brand-name
drugs in 2012. A 50 percent rebate will be applied at the pharmacy
for brand name medications. 14 percent rebate on generic drugs in
2012. A 14 percent rebate will be applied at the pharmacy for
generic medications. Closure of the donut hole by 2020 for
brand-name and generic drugs. The co-payments required for
brand-name and generic drugs will be phased down to the standard 25
percent by 2020, eliminating the donut hole. For brand-name drugs,
manufacturers will increase their discounts each year to negate the
coverage gap. Beginning in 2011, co-payments required by Part D law
for generic drugs will be reduced by seven percentage points each
year until the coverage gap is eliminated for these drugs as well.
Immediate assistance for seniors. A typical senior that fell into
the donut hole saved $250 in 2010, over $600 in 2011, and will save
over $3,000 by 2020. Provides catastrophic coverage sooner to
protect seniors. The legislation will help seniors get out of the
donut hole sooner beginning in 2014. The dollar amount of the
catastrophic threshold, where seniors' co-payments are dropped to 5
percent of drug costs, will be more slowly increased from year to
year at this point. To view full article: Closing the Donut
HoleClosing the Donut Hole 89
Slide 90
Closing the Donut Hole Assistance for Low-Income People The
health reform legislation also provides improves eligibility and
coverage for low-income Medicare beneficiaries: Co-payments are
eliminated for many beneficiaries receiving home- and
community-based services who are eligible for both Medicare and
Medicaid. The new law will reduce the number of low-income
beneficiaries that are required to change plans each year to
maintain zero premiums. It allows widows and widowers to more
easily retain their low- income eligibility. Outreach programs are
enhanced to ensure that more beneficiaries who are eligible for a
Low-Income Subsidy are able to enroll. To view full article:
Closing the Donut HoleClosing the Donut Hole 90
Slide 91
Other ACA Provisions to Watch 1. Medicaid Managed Long Term
Services and Supports 2. State Demonstrations to Integrate Care for
Dual Eligible Individuals and other Medicare-Medicaid Coordination
Initiatives 3. Other Long Term Services and Support Include A.
Balancing Incentive Program B. Medicaid State Plan Amendments under
1915(i) C. Community First Choice Option under 1915 (k) D. Medicaid
Health Homes Click here for full sitehere 91
Slide 92
Other ACA Provisions to Watch (cont.) Medicaid Managed Long
Term Services and Supports Refers to the delivery of long term
services and supports through capitated Medicaid managed care
programs. Increasing numbers of States are using MLTSS as a
strategy for expanding home- and community-based services,
promoting community inclusion, ensuring quality and increasing
efficiency. MLTSS offers States a broad and flexible set of program
design options, and may be used as an overarching structure to
promote initiatives such as Money Follows the Person,
participant-directed services, the Balancing Incentive Program,
etc. Do you know what your state is doing? Click here for full
sitehere 92
Slide 93
Other ACA Provisions to Watch (cont.) State Demonstrations to
Integrate Care for Dual Eligible Individuals and other
Medicare-Medicaid Coordination Initiatives Under the State
Demonstrations to Integrate Care for Dual Eligible Individuals,
fifteen states across the country have been selected to design new
approaches to better coordinate care for dual eligible individuals.
CMS will provide funding and technical assistance to states to
develop person-centered approaches to coordinate care across
primary, acute, behavioral health and long-term supports and
services for dual eligible individuals. The goal is to identify and
validate delivery system and payment coordination models that can
be tested and replicated in other states. CMS is also making
technical assistance available to all states interested in
improving services for dual eligible individuals. 93
Slide 94
Other ACA Provisions to Watch (cont.) Other Long Term Services
and Support Include Balancing Incentive Program Authorizes grants
to States to increase access to non-institutional long-term
services and supports (LTSS) as of October 1, 2011. This program
will help States transform their long- term care systems by:
Lowering costs through improved systems performance &
efficiency Creating tools to help consumers with care planning
& assessment Improving quality measurement & oversight
94
Slide 95
Other ACA Provisions to Watch (cont.) States with approved
applications New Hampshire, Maryland, Iowa, Mississippi, Missouri,
Georgia, Texas, Indiana, Connecticut, Arkansas, New York, New
Jersey, Louisiana, Ohio, Maine, Illinois States with structural
change work plans New Hampshire, Maryland, Missouri, Georgia,
Texas, Mississippi, Indiana, Iowa 95
Slide 96
Other ACA Provisions to Watch (cont.) Other Long Term Services
and Support Include Expanded Medicaid State Plan Amendments under
1915(i) Allows states to offer HCBS under a Medicaid state plan to
individuals who are Medicaid-eligible It limits eligibility to
individuals with incomes up to 150 percent of poverty who, but for
the program services, would need an institutional level of care
Click here for full site here 96
Slide 97
Other ACA Provisions to Watch (cont.) Other Long Term Services
and Support Include Community First Choice Option under 1915 (k)
Lets States provide home and community-based attendant services to
Medicaid enrollees with disabilities under their State Plan This
option became available on October 1, 2011 and provides a 6 %
increase in Federal matching payments to States for expenditures
related to this option Community First Choice was established under
the Affordable Care Act of 2010 97
Slide 98
Other ACA Provisions to Watch (cont.) Other Long Term Services
and Support Include Medicaid Health Homes Benefit for states to
establish Health Homes to coordinate care for people with Medicaid
who have chronic conditions by adding Section 1945 of the Social
Security Act. Health Homes are for people with Medicaid who: Have 2
or more chronic conditions Have one chronic condition and are at
risk for a second Have one serious and persistent mental health
condition States can target health home services geographically
States can not exclude people with both Medicaid and Medicare from
health home services Anyone have a client in this program? Appears
very, very limited!! 98
Slide 99
State Insurance Exchanges as Asset Protectors 99
Slide 100
State Implementation of Health Insurance Exchanges According to
the Center on Budget and Policy Priorities as of June 14, 2013
States choosing to establish a State-based Exchange (SBE) were
required to submit their exchange proposals to HHS by December 14,
2012 while those considering a Partnership Exchange had until
February 15, 2013. As of December 17, 2012, seventeen states and
the District of Columbia have declared their intention to establish
a State-based Exchange (SBE), and an additional six states are
pursuing a State Partnership Exchange. All twenty- four State-based
and Partnership Exchanges have been conditionally approved by HHS.
Twenty-seven states have declined the opportunity to operate an SBE
or State Partnership Exchange, and instead will default to a
Federally-facilitated Exchange (FFE) (Figure 1). 100
Slide 101
Figure 1 Status of 2014 Exchange Implementation 101
Slide 102
Medicaid Liens If Medicaid pays for injury-related expenses for
a person injured as the result of a tort, Medicaid is entitled to
recover all or some portion of the monies it spent on
injury-related medical expenses from the settlement or judgment. 42
U.S.C. 1396k However, Medicaid can only collect from that portion
of the settlement or award that compensates for injury-related
medical expenses. Arkansas Department of Health and Human Services
et al. v. Ahlborn, 547 U. S. 268 (2006) But... Tristani V. Richman,
609 F. Supp. 2d 423, (W.D., Pa., 2009) 102
Slide 103
Medicaid Liens Source of FundsMedicaid Payback InheritanceNo
GiftsNo WindfallsNo Personal Injury DamagesYes 103
Slide 104
Estate Recovery States must pursue recovering costs for medical
assistance consisting of: Nursing home or other long-term
institutional services; Home- and community-based services;
Hospital and prescription drug services provided while the
recipient was receiving nursing facility or home- and
community-based services; and At State option, any other items
covered by the Medicaid State Plan. 104
Slide 105
Estate Recovery Estates from which recovery can be made:
Estates of deceased Medicaid recipients who were 55 or older (65
for some States) when they received benefits Estates of Medicaid
recipients who were permanently institutionalized, regardless of
age States may exempt recipients whose only Medicaid benefit is
payment of Medicare cost sharing (Medicare Part B premiums)
105
Slide 106
What is a Special Need or Amenity? Special needs refers to
things which are not considered basic needs, but assist in
supporting the person when such items uncovered are not being
provided by any public agency. Special needs can include (but are
not limited to): 1. Automobile/Van 2. Accounting services 3.
Acupuncture/ Acupressure 4. Alterations or mending to clothing
(i.e. shoe repair) 5. Appliances (i.e. TV, DVD, stereo, microwave,
stove, refrigerator, washer/dryer, etc. For full list of:
Permissible DistributionsPermissible Distributions **Please notify
us if you think of some common examples not on this list** 106
Slide 107
Third-Party Trusts By parents and grandparents Discretionary
vs. more limited Trend towards more discretionary, less limited
Intent language Revocable vs. Irrevocable 107
Slide 108
Third-Party Trust Funding Usually at death May include
contributions from others (grandparents, aunts, uncles) Life
insurance Retirement plans Urgh!! How much? Revocable or
Irrevocable? 108
Slide 109
Drafting and Funding the Third Party SNT Statement of Intent --
why the trust was created Sample Language: It is my primary concern
in drafting this Trust that it continue in existence as a fund to
supplement public assistance for Mary, the beneficiary throughout
her life. Continued access to basic living needs which are not
provided for by public assistance programs is required in order to
provide Mary with a continued level of humane dignity and for Mary
to receive humane care. I recognize that in view of the vast costs
involved in caring for a person with a disability, a direct
distribution to Mary would be rapidly dissipated. In addition, if
this Trust were to be invaded by creditors, subjected to any liens
or encumbrances, or cause public benefits to be terminated, it is
likely that the Trust corpus would be depleted prior to Marys
death. In this event, there would be no coverage for emergencies or
supplementation of basic needs. I further intend that Mary receive
all government entitlements to which Mary would otherwise be
entitled, but for the distributions hereunder. 109
Slide 110
Drafting and Funding the Third Party SNT Use of trust assets
Assets shall only be used to supplement and not supplant government
benefits!! Typical directive language: The purpose of the Trust is
to permit the use of Trust Funds to supplement, and not to
supplant, impair or diminish any benefits or assistance of any
federal, state or local governmental agency, office or department,
including, but not limited to Medicaid and Supplemental Security
Income, and any other needs-based benefits, eligibility for which
is dependent on income or assets, from any other public or private
source, to which benefits Mary may be eligible or which Mary may be
receiving (such benefits collectively referred to hereafter as
Public Assistance Benefits). 110
Slide 111
Drafting and Funding the Third Party SNT Include some specific
direction and limitation on use: Beneficiary cannot direct
distribution Regular contact with beneficiary Evaluation Retain
professionals: Care Manager; government benefits advisor; attorney;
CPA 111
Slide 112
Drafting and Funding the Third Party SNT Use of trust assets DO
NOT PUT A MEDICAID PAYBACK PROVISION IN A THIRD-PARTY SNT!! Do Not
Comingle Money! 112
Slide 113
Drafting and Funding the Third Party SNT Origin of trust assets
Funds come from third parties -- parents, grandparents, other
relatives, friends. Funds must NOT come from the special needs
beneficiary! * Examples Are Important! 113
Slide 114
Drafting and Funding the Third Party SNT Source of Assets
Testamentary bequest(s) Lifetime gift(s) Beneficiary-designated
property Life insurance Deferred comp plans / IRAs TOD/POD accounts
114
Slide 115
Drafting and Funding the Third Party SNT Timing of funding
During lifetime -- SNT should be standalone and irrevocable if
gifts from other than grantors At death from parents -- SNT can be
standalone (revocable or irrevocable) or testamentary At death,
from third parties other than parents -- SNT should be standalone
and irrevocable 115
Slide 116
Drafting and Funding the Third Party SNT Issues respecting IRAs
: Timing of Payout -- inherited IRA Based on life expectancy of
oldest beneficiary Charitable contingent beneficiary = faster
payout Do not use conduit provisions in the SNT, but. Conduit third
party SNT pouring into accumulation d4A? Minimize income tax
effect? Other options PEKD has used 116
Slide 117
Drafting and Funding the Third Party SNT Life insurance : Death
benefit can pour into SNT SNT generally should not own life
insurance ---can consider doubling as ILIT but no Crummey power to
primary beneficiary Use separate ILIT to hold life insurance, with
SNT as beneficiary of ILIT 117
Slide 118
Drafting and Funding the Third Party SNT Real Estate : SNT can
own a residence or LLC shares Primary beneficiary can occupy the
residence Consider ISM, but also PMV for SSI or Not! Provide
funding for cost of maintenance 118
Slide 119
Drafting and Funding the Third Party SNT Multigenerational
drafting issues : inform other family members of the SNT
multigenerational input into contingent beneficiaries when drafting
SNT exempt transfer for Medicaid! 119
Slide 120
Drafting and Funding the Third Party SNT A Few Final Drafting
Tips Beneficiary and beneficiarys spouse cannot serve as Trustee
Trustee does not have to provide for Beneficiary's basic support
and maintenance Beneficiary cannot compel a distribution from the
SNT for support and maintenance 120
Slide 121
Drafting and Funding the Third Party SNT A Few Final Drafting
Tips Do not prohibit the Trustee from providing for food and
shelter so long as Trustee considers the effect on means-tested
benefits Provide a list of permissible expenditures to give Trustee
more guidance but Be Careful!! Can be for more than one Beneficiary
121
Slide 122
Testamentary 3 rd Party Special Needs Trust Established at the
death of the person establishing the trust pursuant to their trust
or will Are not immediately accessible until the share belonging to
the special needs trust is transferred into the special needs
trust; Is a sub trust created within the scope of the broader
revocable living trust or will Works for spouses in a nursing home
122
Slide 123
Stand-Alone Third-Party Special Needs Trust Established while
the stand-alone Grantor is alive Can receive assets from multiple
persons wishing to provide for the well-being of the person with
special needs (parents, grandparents, siblings, etc.) When the
Grantor dies, or perhaps becomes disabled, the assets remain
immediately accessible to assist the person with disabilities from
the date the trust is established Is a single purpose trust Can
remain empty until funded for Medicaid planning or upon death of
Grantor 123
Slide 124
Third Party Special Needs Trust A Within Pooled Trust Third
party Special Needs Trust can be created within a pooled trust as
well In order to protect vulnerable family members, counsel will
properly suggest a custom drafted third-party special needs trust
as part of a complete estate plan. Most third party trusts are
created either by execution of a custom drafted document, or
through use of a third party joinder agreement with a pooled trust
Works really well for families with multiple generations of
Medicaid long- term support users or with genetic disabilities
(Huntingtons; Fragile X, etc.) Full article: The Third-Party Pooled
Trust: an alternative planning tool to help avoid the biggest
mistakes in special needs planningThe Third-Party Pooled Trust: an
alternative planning tool to help avoid the biggest mistakes in
special needs planning 124
Slide 125
Funding a Special Needs Trust: How Much is Enough? The
Grantor(s) will want to ensure that the person with special needs
will remain financially secure even when you are no longer there to
provide financial back up. Given the significant, ongoing expenses
involved in the loved ones long-term support and uncertainty about
what needs may arise or what public benefits may be available,
determining how much a special needs trust (SNT) should hold is no
small feat. 125
Slide 126
Funding a Special Needs Trust: How Much is Enough? Fortunately,
help in calculating a special needs goal is available from special
needs calculators, which are accessible free of charge on the
Internet. Here are two such calculators: MetDesk Special Needs
Calculator: http://www.metlifeiseasier.com/metdesk
http://www.metlifeiseasier.com/metdesk Merrill Lynch Special Needs
Calculator: www.totalmerrill.com/specialneeds. (Click Special Needs
Calculator under "Tools and Resources".)
www.totalmerrill.com/specialneeds 126
Slide 127
Funding a Special Needs Trust: How Much is Enough? The first
step in determining the amount to protect in an SNT is considering
your goals and expectations for the beneficiaries. If parents
haven't yet created a Memorandum of Intent, also called a Letter of
Intent or a Life Plan, this is the time to draft such a document.
It should address factors such as your child's medical condition,
legal advocacy needs, ability to work and desired living
arrangements, all of which will drive the special needs
calculations.Memorandum of Intent This really allows for details on
how to coordinate public benefits with the private resources Look
at samples: important to address private health insurance,
uncovered Medicaid, dental specifically. 127
Slide 128
Letter of Intent A Letter of Intent is one of the most
important documents a parent can complete for the childs future
care-givers This is not a stand-alone document; it should be
incorporated into an estate planning process Can be used when
caring for parents or grandparents as well The Letter of Intent
should provide the trustee with guidance as to what special needs
the beneficiary has or will have and define the quality of life as
quality means different things to different people The Letter of
Intent should be frequently updated as the beneficiarys needs
change 128
Slide 129
Letter of Intent Guides trustees Provides in depth information
about beneficiary likes and dislikes, medical information, parents
hopes for child Updating necessary Often seems to fall by the
wayside 129
Letter Of Intent Be Specific! Housing with Person Directed
Supports Education Transportation Medical Care and Equipment
Quality of Life Social, travel, recreation, etc. Real Employment
131
Slide 132
SNT Trustee Instruction Letter http://www.pekdadvocacy.com/wp-
content/uploads/2010/10/Duties_as_Trustee_to_SNT1- 23-13-2.pdf
132
Slide 133
Choice of Trustee: The Family The Bad: Poor investments Poor
reporting Difficulty following SSI rules Slow Response Time
133
Slide 134
Choice of Trustee: The Family The Good: Knows the beneficiarys
needs Knows service providers Care Continuity 134
Slide 135
Choice of Trustee: Professional Trustees The Bad: Dont know
beneficiary Dont know benefit rules Arbitrary Lack of control Trust
officers changing Banks changing / very impersonal 135
Slide 136
Choice of Trustee: Professional Trustee The Good: Investment
acumen Ability to say no Proper accounting Proper tax reporting No
conflict of interest Ability to set up accounts properly Staffed so
response time is sometimes better 136
Slide 137
Traps for the Unwary Distributing more than $20 directly to the
beneficiary in a calendar month Commingling the beneficiarys funds
with the trust funds, with the trustees own money or between trusts
Poor record-keeping Leaving disabled individual as beneficiary of
IRAs and life insurance policies Savings bonds Failure to notify
state and federal agencies 137
Slide 138
First-Party Trust First party = the trust beneficiary. Assets
in a first-party special-needs trust are assets to which the trust
beneficiary is entitled: From a personal injury case. From an
inheritance. From the beneficiarys savings, including retirement
accounts. Contrast assets in a third-party trust which are assets
that belonged to the grantor and to which the trust beneficiary was
not entitled. 138
Slide 139
A Payback Trust The term payback is sometimes used to describe
a first-party trust because one of the cardinal rules applicable to
first-party trusts is that when the trust beneficiary dies (or the
trust is terminated during the beneficiarys lifetime), any state
that has provided Medicaid for the beneficiary must be reimbursed
from remaining trust assets for Medicaid provided. Contrast a
third-party trust from which no reimbursement is required. 139
Slide 140
(d)(4)(A) Trust Refers to the subsection of the federal statute
which governs first-party, special-needs trusts. Contrast a
third-party trust which is not a statutory creation, usually
created by common law. 140
Slide 141
Federal Medicaid Statute The governing statute for first-party,
special-needs trusts is 42 U.S.C. 1396p(d)(4)(A), as amended by the
Omnibus Budget Reconciliation Act of 1993 (OBRA), Pub. L. No.
103-66. This statute is sometimes referred to simply as (d)(4)(A)
and the enacting law as OBRA 93. 141
Slide 142
Federal Medicaid Regulations In November 1994, the year after
OBRA 93 became effective, the Health Care Financing Administration
(HCFA), the government agency that then administered the federal
Medicaid program (now the Center for Medicare and Medicaid Services
[CMS]), issued Transmittal No. 64. This transmittal interprets
Section 1396p(d)(4)(A) but is considered outdated and does not
provide much guidance. Although can be helpful at times defines
sole benefit off 142
Slide 143
Social Security Statute Until 2000, individuals who gave away
assets (except to special-needs trusts that met the requirements of
Section 1396p[d][4][A]) could be disqualified only for Medicaid,
but not for SSI; the SSI rules contained no penalties for giving
away assets. In 1999, transfer penalties were added to the SSI
rules. 42 U.S.C. 1382b, as amended by the Foster Care Independence
Act of 1999, Pub. L. No. 106-169. The Foster Care Independence Act
of 1999 incorporated the Medicaid transfer rules and Medicaid rules
regarding special-needs trusts into the SSI statute. 143
Slide 144
Social Security Rules (POMS) Social Security rules regarding
special-needs trusts are contained in the Program Operations Manual
System (POMS). Although the POMS rules are not technically
regulations or rules, they set forth the Social Security
Administrations positions on Social Security matters somewhat like
private letter rulings in the tax area. Since most Medicaid
recipients also receive SSI, the POMS provides important guidance
on special-needs trusts. A special-needs trust that complies with
the POMS rules will, in most states, comply with state law
applicable to special-needs trust although some states have even
more stringent restrictions. POMS provisions regarding
special-needs trusts apply only to trust beneficiaries who receive
Supplemental Security Income (SSI). If the beneficiary does not
receive SSI, some of the POMS provisions applicable to first-party
special-needs trusts may not need to be included in the trust.
144
Slide 145
Four Cardinal Requirements for a (d)(4)(A) Trust 1. The trust
must be established by a parent, grandparent, court, or guardian.
2. The trust must be for the benefit of the disabled person. 3.
Beneficiary must be disabled and under 65. 4. The trust must
provide for reimbursement upon the beneficiarys death to all states
that have provided Medicaid for the beneficiary. These four
requirements for first-party, special-needs trusts are in a single
paragraph, 42 U.S.C. 1396p(d)(4)(A), and are restated and, in some
cases amplified, in the HCFA transmittal, the POMS, and in state
law. 145
Slide 146
Establishment of the Trust The trust must be established by a
parent, grandparent, court, or guardian. A competent, disabled
beneficiary cannot establish first-party trust for himself or
herself, although a competent, disabled beneficiary can establish a
first-party pooled special-needs trust for himself or herself, 42
U.S.C. 1396p(d)(4)(C). Note: As of the writing of this presentation
legislation was pending in Congress that would allow a competent,
disabled person to establish a first-party special-needs trust.
Depending upon your states law and practice, if a guardian is
establishing the trust, the probate court should authorize the
guardian to do so. If a court is establishing the trust, the court
order should specifically state that the trust is being established
by the court, not simply that the court approves establishment of
the trust or authorizes establishment of the trust. POMS SI
01120.203B.1.f. An agent acting under a power of attorney for a
disabled beneficiary cannot establish the trust. POMS SI
01120.203B.1.g.; see also, Draper v. Colvin (U.S. Dist. Ct., D.
S.D., No. 12-4091-KES, July 10, 2013). 146
Slide 147
What Court is a Court? Although it is not clear from federal
Medicaid statutes or regulations or POMS, it appears that the court
that can establish a first-party trust must be a court of competent
jurisdiction a court that has statutory authority or equitable
powers to establish a trust. At least in New England, a probate
court cannot establish a special-needs trust as part of probate of
a decedents estate. In a 1995 letter to a Boston-area elder-law
attorney, the associate regional director of the New England
regional office of HCFA, now CMS, stated that a probate court does
not have jurisdiction to establish a special-needs trust as part of
probate of a decedents estate. Letter dated July 24, 1995, from
Ronald Preston to Donald N. Freedman, published in Elder and
Disability Law Conference (MCLE, Inc. 1999). 147
Slide 148
The Sole Benefit Rule The federal statute itself provides only
that the trust must be for the benefit of the disabled beneficiary.
The HCFA transmittal added the word sole before benefit. POMS also
emphasizes sole benefit. (SI 01120.201F.2.) 148
Slide 149
Beneficiary Must Be Disabled And Under 65 The trust can be
established only for a beneficiary who is under 65. No assets can
be added to the trust after the beneficiary is 65. Assets that a
beneficiary may not be entitled to receive until after he or she is
65 can be irrevocably assigned to the trust before the beneficiary
is 65. 149
Slide 150
Reimbursement The trust must provide for reimbursement upon the
beneficiarys death to all states that have provided Medicaid for
the beneficiary. There are no exceptions to the reimbursement rule,
except if there are no funds remaining. POMS provisions prohibit
certain payments before reimbursement. POMS SI 01120.203B.3.b.
Language in the trust document should not contravene the POMS
prohibited payments. 150
Slide 151
Funding a First-Party Trust Competent Beneficiary If the trust
beneficiary is competent and the trust is established by the
beneficiarys parent or grandparent, the POMS contains a very
convoluted requirement: The parent or grandparent must establish a
seed trustmust fund the trust with a small amount of his or her own
money. Then the disabled beneficiary can transfer his or her own
assets to the trust. POMS SI 01120.203B.1.f. An agent acting under
a power of attorney for a disabled beneficiary can transfer the
beneficiarys assets to the trust. 151
Slide 152
Funding a First-Party Trust Incompetent Beneficiary If the
trust beneficiary is not competent by reason of age or disability,
a guardian who establishes a first-party, special-needs trust
should get probate court authorization to transfer assets to the
trust. If the trust is being established by a court, the court
could order transfer of the beneficiarys assets to the trust. See,
POMS SI 01120.203B.1.g. If a trust for an incompetent beneficiary
is established by the beneficiarys parent or grandparent, a
guardian must be appointed and the guardian must obtain court
permission to transfer the beneficiarys assets to the trust.
152
Slide 153
Look To The POMS A first-party, special-needs trust usually
must include provisions that comply with POMS and must exclude
provisions contrary to POMS. In certain cases, however, for a
beneficiary who does not receive SSI, compliance with some POMS
provisions may not be necessary. Refer to POMS SI 01120.203B.1 and
POMS SI 01120.200D.1.a and b and make sure that the trust document
complies with those provisions. 153
Slide 154
Mandatory Provisions A first-party (d)(4)(A) trust must provide
that the beneficiary does not have legal authority to revoke or
terminate the trust. cannot direct use of trust principal for his
or her support and maintenance. The trust must be completely
discretionary and not require mandatory distributions to the
beneficiary. The trust must prohibit payment of certain expenses,
such as funeral expenses, upon the beneficiarys death, prior to
Medicaid reimbursement. POMS SI 01120.203B.3.b. The trust must be
irrevocable. POMS SI 01120.200D.2&3. 154
Slide 155
Irrevocability POMS takes the position that a (d)(4)(A) trust
may be revocable if it does not contain named remainder
beneficiaries. POMS SI 01120.200D.2&3. This position is based
upon the doctrine of worthier title which has been specifically
revoked in some states. In a state that has not revoked the
doctrine of worthier title, the trust document should designate
remainder beneficiaries by name or by class (my children, for
example) and not provide for a remainder to the beneficiarys
heirs-at-law. 155
Slide 156
Less Is More First-party special-needs trusts, like third-party
special- needs trusts, often contain a list of ways the trustee
could spend trust funds for the beneficiarys benefit. Some of these
common items, such as paying friends and relatives to visit, are
now restricted by POMS provisions. Since the trustee of a
special-needs trust has complete discretion, current wisdom is not
to include such a list because some items listed may become
unacceptable. The drafting attorney can provide the trustee with a
list of permissible expenditures. Parents of a disabled beneficiary
should provide a memorandum to the trustees of suggested
expenditures. 156
Slide 157
Eschew Forms Dont use a form for any trust unless you know that
the form is up to date and in accordance with recent POMS. FOR
EXAMPLE: 157
S S A P R O G R A M C I R C U L A R Supplemental Security
Income Regional Program Circular 01-06 dated April 5, 2001 provided
detailed instructions on evaluating trusts for SSI resource
purposes. A general rule of trust law, and one that is followed by
all Region V states, is that any trust can be revoked with the
mutual consent of the grantor and all beneficiaries. If the grantor
and the beneficiary are the same person and there are no other
beneficiaries, the trust is revocable. If there are residual
beneficiaries, the trust may be irrevocable. In addition, if the
trust names other beneficiaries who may benefit from the trust
during the SSI claimants lifetime, this also may make the trust
irrevocable. However, in that, case, even if the trust is not a
resource, we need to consider whether there has been a transfer for
less than fair market value. [This rule is true even if it is
stated in the body of the trust that the trust is irrevocable.] For
states in the Region, other than Michigan, language such as heirs
at law, heirs survivors, relatives, next of kin, family,
distributees, or similar language does not create a residual
beneficiary. Such language creates an inference that the grantor
does not intend to create a trust interest in the persons who may
become his/her heirs or next of kin. Such trusts should be viewed
as revocable. Full Article:
http://www.pekdadvocacy.com/documents/estateplanning/MichiganTrustLawChangeProgram-11-8-
01.pdf
http://www.pekdadvocacy.com/documents/estateplanning/MichiganTrustLawChangeProgram-11-8-
01.pdf 159
Slide 160
A Trust Is A Trust Is A Trust A first-party, special-needs
trust is really just a completely discretionary trust with bells
and whistles included to accomplish its goal. Because a
special-needs trust is a trust, the drafter must be knowledgeable
about trust law as well as about special-needs law. 160
Slide 161
Pooled Trust What is a Pooled Trust? A pooled trust is a trust
established and administered by a non- profit organization. A
separate account is established for each beneficiary of the trust,
but for the purposes of investment and management of funds, the
trust pools these accounts. For self-settled, or (d)(4)(C) pooled
trusts, each subaccount is established by the pers