Long-Term Care Insurance – Smart Buy or Not?

In another blog, a man in his late 60s was complaining that long-term care insurance (LTCI) he bought at age 65 was costing him $3,600 per year. He bemoaned not buying it younger so it would cost less.

It would have cost less because he would have paid premiums longer. Very few find themselves in nursing homes before age 85 — less than 4%. That is a 96% chance that if you buy LTCI at age 65 you will pay on it for 20 years – assuming that you do not get priced out of the market in that time.

Some agents selling LTCI promise that there will be no “rate” increase. However, that does not mean that the premium cannot go up. The company is still free to increase the cost of insurance for a class of customers. Insurance companies intend to make a profit. The executives would rather tarred and feathered than absorb increased claims costs without commensurate premium increases.

As a result of the run-up in claims in the last decade, longstanding customers have been subjected to large hikes in the premiums they pay. Many octogenarian insureds have been faced with the choice of absorbing a 100% increase in premiums or accepting a 50% decrease in promised benefits. A 65-year-old LTCI customer may be able to afford the premiums initially, but there is no guarantee he or she will not lose the coverage due to increased cost at the age it would likely be needed.

If invested, $3,600 per year would grow to almost $90,000, even at a measly 2% rate of return. Granted, the same policy might only cost $2,160 per year if purchased at age 55, but by age 85 the total paid in would be the same.

Compare the LTCI market 20 years ago to today’s. Many insurers no longer carry LTC policies and those that are still in that market charge much higher premiums. Do you think that LTCI will not change over the next 20 years? Consider investing an amount equal to the LTCI premium regularly instead of buying LTCI. For examples and further discussion, see “FAQ – Long-Term Care Insurance” at http://law-business.com/long-term-care-insurance/.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney

Vicious House Bill

A particularly curmudgeonly Medicaid “reform” has been introduced in Congress. Medicaid receives heaps and mounds of criticism, particularly related to nursing-home coverage. The coverage is expensive, both on an individual basis and as a program. However, individuals in nursing homes need that care and Medicaid is the last resort if they lack the ability to pay for it. The new bill is an unwarranted and unfair swipe at the “truly needy” that conservatives claim they want to protect.

“Medicaid planning,” advising potential or current nursing home residents and their families about legal financial plans to qualify for Medicaid while preserving income and assets, is particularly a target of derision of the long-term care insurance industry, conservative commentators and legislators, and welfare administrators. For example, in a Fordham Law Review article Milan Markovic strains to demonstrate that Medicaid planning is unethical. Milan Markovic, “Lawyers and the `Secret Welfare State,’” 84 Fordham L. Rev. 1845 (2016).

Timothy Takacs and David McGuffey, however, argue that Medicaid planning is a fair and reasonable response when dealing with a prohibitively expensive segment of the health care industry that is bound only by the rules of supply and demand and loosely-enforced regulations. Timothy L. Takacs & David L. McGuffey, “Medicaid Planning: Can It Be Justified?: Legal and Ethical Implications of Medicaid Planning,” 29 Wm. Mitchell L. Rev. 111, 131 (2002).

In my paper, the public-policy arguments that Medicaid should be reserved for the “truly needy” and that it is unethical to exploit loopholes in Medicaid law are addressed. John B. Payne, Ethical and Public Policy Considerations Related to Medicaid Planning, Pennsylvania Bar Association Quarterly, p. 139, October 2013, I urge that the citizen is as entitled to receive the benefit of favorable statutes in public benefits law as in tax law. I also argue that judges must apply the law as written, not according to their perception of public policy.

Congress has made many changes to Medicaid long-term care benefit eligibility over the last three decades. In 1988, the asset rules were changed to protect the financial security of non-institutionalized spouses of nursing home residents. The utility of asset-protection trusts was severely curtailed in 1993 and 2006. Furthermore, the divestment penalty rules were greatly toughened in the Deficit-Reduction Act of 2005, which was enacted in 2006. Congress knows how to find and revise Medicaid law. If opportunities for planning remain, the citizen should be able to rely on the law as written.brett guthrie

A House bill has been introduced that is presumably intended to curtail Medicaid planning. However, it is as related to Medicaid planning as a pitch pipe is to a pitchfork. The only effect of this bill would be to hurt citizens who need and qualify for Medicaid. The bill, HR-5626, introduced by Rep. Markwayne Mullin (R-OK) and Vice-Chair of the Energy and Commerce Subcommittee on Health, Brett Guthrie (R-KY), would eliminate the three-month retroactive eligibility period preceding the month of application for Medicaid.

Presumably, Mullin and markwayne mullinGuthrie believe that the three-month retroactive eligibility period represents a Medicaid-planning opportunity. While some states allow applicants to create asset eligibility retroactively by purchasing a funeral contract or paying medical bills, most others close the book on prior months. In those states, the applicant can only be approved for Medicaid benefits in the retroactive benefit period if he or she was below the income and asset limitations in each month for which Medicaid is requested. The applicant cannot go back and cure an asset problem. Therefore, the retroactive benefit period is only useful for applicants who were already eligible for the months in question.

The three-month retroactive eligibility period is far from a planning opportunity. It is a partial failsafe to go back and pick up lost eligibility due to honest mistakes or omissions when applications are submitted. It is also a way to recover from bureaucratic delays and Medicaid worker incompetence or obstructionism.

The 45-day standard of promptness is a joke in many Medicaid offices. Even within a state the typical processing time for a Medicaid application can vary from two weeks to 20 or more weeks. In some Michigan and Pennsylvania counties Medicaid applications lie dormant for upwards of two months before a worker takes a first look at a case. Colleagues in other states make similar complaints. Retroactive eligibility is a vital facet of the Medicaid program because it is a way for applicants to recover from ill treatment by the local offices.

Many provisions in Medicaid policy manuals intended to require fair treatment for applicants are ignored in practice. Further, the deck is often stacked heavily in favor of the Medicaid agency if the applicant requests a “fair hearing.” It is not unusual for a perfectly eligible Medicaid applicant to re-file two or more times before the case is approved. The applicant may lose far more than three months of eligibility due to worker error.

One particular applicant filed for Medicaid in September, but the worker did not process the case until April. The worker improperly denied the case because she did not deduct the current month’s income from the asset total. The family requested a hearing, which was scheduled for August. Shortly before the hearing, the family hired me. At the hearing, I demonstrated the worker’s mistake and Medicaid was approved based on the original application date. It was fortunate that the worker had made a mistake and doubly fortunate that the administrative law judge was fair. Otherwise, there could have been a year of nursing care that Medicaid would not cover.

Another case took three applications, two administrative hearings and three trips to court over ten months before the State admitted its mistake and approved coverage back to the first application date. Each of these applications should have been open-and-shut approvals.

The three-month retroactive Medicaid eligibility period provides crucial protection against mistakes and worker intransigence. It would be shameful for Congress to pass the bill introduced by Reps. Mullin and Guthrie. It would not address medicaid planning. It would only hurt those most in need. Let your member of Congress know that punishing the innocent serves no good purpose.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney

Whitman’s Sampler — with Tartrazine

whitman 3

A few days ago, the family member’s face and tongue mysteriously swelled up to an alarming degree. We knew it was tartrazine, but could not figure out what she ate that had yellow dye in it. After exhaustive examination of everything she had eaten, we looked on the Whitman’s Sampler box I had bought. There it was; along with Red 40, Yellow 6 and Blue 1!

Talk about existential disappointment! What is more quintessentially American than the Whitman’s Sampler? Hopeful beaux have been showing up for dates with bouquets and Whitman’s Samplers since the days of rumble seats and straw boaters. It was like finding out that there was no Norman Rockwell and all those charming pictures were produced in Chinese sweatshops.

whitman 2What is the point of putting all these artificial colors in chocolates? Apart from the white version, chocolates are all brown, anyway. Chocolate is the essence of brownness. It does not need artificial dye to make it brown, so why sneak it into products that would not be expected to contain dye? Adding food dyes to chocolate is like bleaching milk to make it white or adding bootblack to licorice whips. Estimates of tartrazine sensitivity range from one in 10,000 to one in 100,000, but unnecessary inclusion of tartrazine in foods and pharmaceuticals puts that small minority at risk despite the lack of any benefit.

There are many products that include tartrazine, although the color is irrelevant. For example, Sucrets honey-lemon throat, cough and dry mouth lozenges contain tartrazine. They are packaged in a metal tin and the lozenges are wrapped in foil. What is the point of adding tartrazine? The color of the lozenge has no effect on the sale of the product. After buying the product, opening the tin and unwrapping the lozenge, will the customer be concerned about the color? It is an unremarkable off-white, anyway!

Many prescriptions are colored with tartrazine. The drug manufacturers obviously have little regard for product safety, since the labeling of prescriptions as dispensed is unlikely to list dyes. Furthermore, patients will be concerned about the efficacy of the medication, not its appearance.whitman 1
Although it some sense to use artificial food coloring in candies and pastries, tartrazine and other food dyes are common in too many prepared foods that do not depend on attractive coloration. Even for jelly beans and frosting, natural color can be substituted for artificial dyes at only minor additional cost and labeling the products as free of artificial color would increase sales and profit.

Come on, Whitman’s, leave out the tartrazine. It will not cost you anything and may help your market penetration. It seems that you and other food and drug producers are using food dyes without considering the benefits of natural alternatives or whether food dyes are even useful in selling the products.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney

Surviving Spouse as Medicaid Victim

Estate recovery has been mentioned in this blog several times, most recently “Heavy-Handed Estate-Recovery.”  The following excerpt from Payne, Michigan Probate discusses the special case of the spouse of a nursing home resident who dies while on Medicaid, leaving an estate that must be probated:

The estates of deceased Medicaid recipients who are survived by their spouses present a special problem. Federal Medicaid law states that estate recovery “may be made only after the death of the individual’s surviving spouse, if any, and only at a time when he has no surviving child who is under age 21, or . . . is blind or permanently and totally disabled.” 42 USCA § 1396p(b)(2). Michigan Medicaid policy similarly states that recovery “will be made only after the death of the individual’s surviving spouse, and only when the individual has no surviving child who is either under age 21, blind, or disabled.” BAM 120, p 8 (January 1, 2016).

One would expect this limitation to poleax estate recovery where there is a surviving spouse. It is difficult to see how an estate-recovery claim would survive closure of the probate estate of the deceased Medicaid recipient after the residue is distributed, but that circumstance is not deterring the assistant attorneys-general representing DHHS Medical Services Administration from filing civil complaints for estate recovery.

While the State may impose a lien on, for example, the marital home before the surviving spouse’s death, the lien must provide for release on the surviving spouse’s demand for a sale or mortgage. The lien must provide clear and unequivocal notice that it is limited to the government’s interest in the property and must include mandatory release provisions. Dept. of Human Resources v. Estate of Ullmer, 120 Nev. 108, 87 P.3d 1045 (2004). These limitations would severely hamper the enforceability and utility of such a lien on real estate. Pursuing recovery from a financial account would be far more difficult.

As of this writing, the estate-recovery program is such a recent development that it was not possible to locate any case where this type of claim has been resolved in the probate court, let alone tested in the court of appeals. If the state develops a viable mechanism for enforcing estate recovery claims against the estates of surviving spouses, the potential reach is quite broad.

In addition to Nevada, courts in Minnesota and Ohio have ruled that federal Medicaid law authorizes recovery from the surviving spouse’s estate of assets in which the deceased Medicaid recipient had a legal interest at the time of death. In re Estate of Barg, 752 N.W.2d 52 (Minn., 2008). This includes the value of assets that were marital or jointly owned property at any time during the marriage. In re Estate of Jobe 590 N.W.2d 162, 164 (Minn. App.,1999). See also Ohio Dept. of Job & Family Serv. v. Tultz 152 Ohio App.3d 405 N.E.2d 1262 (Ohio App. 9 Dist., 2003). However, the Illinois Supreme Court reached the opposite conclusion, holding that estate recovery is prohibited by federal law when there is a surviving spouse and the state may not file a claim for estate recovery from the estate of the deceased surviving spouse. Hines v. Department of Public Aid, 221 Ill.2d 222, 850 N.E.2d 148 (2006). Accord, In re: Estate of Bruce, 260 S.W.3d 398 (Mo. App. 2008).

The evolution of Michigan’s estate recovery program will be a challenging adventure for the personal representatives of deceased Medicaid recipients and their attorneys, as well as AAGs representing MSA. Where the decedent is survived by a spouse, the issues are likely to be particularly thorny.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney and Thomson Reuters

Windows 10 Catastrophe?

Is Microsoft trying to push you into Windows 10, whether you want to go there or not? They have a new trick, starting the upgrade when your back is turned. You sit down at your computer and you find that the upgrade to Windows 10 is in full swing, with a message that says, “Do not unplug or turn off your computer or it go off like a pressure-cooker bomb,” or words to that effect.

Alternatively, if you catch it before it starts the upgrade, Microsoft gives you a choice of “upgrade now” or “upgrade later.” Upgrade later means you can set a date for the upgrade up to four days in the future. If you choose “upgrade later,” Microsoft starts installing Windows 10 when the time comes with no further warning!

After you choose “upgrade later,” go to Ultimate Outsider.comnowindows10 and download GWX Control Panel. It is easy to install and lets you avoid Windows 10 forever.

If you blow your chance and Windows 10 is busily installing itself, do not give up hope. You can abrogate the upgrade when it completes by refusing to accept the end-user license agreement or terms of service. Declining to accept forces Windows 10 to skulk back into its dank hole for the time being. You then have an opportunity to install GWX Control Panel.

Windows 10 is not inevitable. Sure, you might want to upgrade in a year or two when all of your applications are Windows 10 compatible. In the meanwhile, why move into the Windows 10 world when you are not sure about all those important programs you depend on.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney

Peanuts Cause Alzheimer’s Disease

Roland Hedley of Fox News reported today that researchers in the Department of Human Medicine at Michigan State University School of Animal Husbandry and Veterinary Sciences have determined that Alzheimer’s Disease is caused by eating peanuts. In a rigorous analysis of the dietary habits of more than 3,500 patients with Alzheimer’s Disease, they found that peanut consumption is inversely related to age of onset of Alzheimer’s. The higher the consumption of peanuts, the earlier the subjects in the study developed the disease. Those who never ate peanuts did not develop Alzheimer’s at all!Peanut Consumption

The cause of Alzheimer’s, it appears, is a fungus that grows inside the shell of all peanuts called trichophyton rubrum. Coincidentally, this is the same fungus that grows under toenails, causing dermatophytic onychomycosis or tinea unguium. Patients who chewed their toenails were at much higher risk of early-onset Alzheimer’s. Some toenail chewers developed Alzheimer’s as early as 16 to 18 years of age.

Peanuts in groundThe U.S. Food and Drug Administration has issued a controversial preliminary ruling that peanuts are a toxic substance that will be banned for human consumption. People for the Ethical Treatment of Animals has objected to the rule, demanding that it also ban animal consumption of peanuts.

The governor of Georgia, which is the nation’s number one producer of peanuts, also condemned the FDA’s action. The governor’s office released a statement that the 75-year-old governor had eaten massive quantities of peanuts all his life and had suffered no ill effects. “I’m no scientist,” Gov. John Deal proclaimed, “But I’ve eaten – What do you call those little beans that come in shells? – all my life and no government official is going to take my gun away from me. Georgia will secede from the union before it gives up its peaches.”

Pres. Barack Obama, who is known for serving peanut butter and jelly sandwiches at White House luncheons, stated that he is switching to Nutella to protect official guests. Ted Cruz, Republican candidate for president, said, “I’m no scientist, but if old people stopped eating peanuts there would be no problem.” Donald Trump, also a Republican candidate for president, stated, “I’m no scientist, but we need stop allowing diseased, criminal Mexican peanuts into this country.”

Contributed by Guest Blogger Moon Mullins

No Power of Attorney? Go for Guardianship

Clients sometimes balk at signing powers of attorney. They say that they don’t need to appoint an agent because their kids are already on their bank accounts. I explain that writing a check does not resolve everything that comes up. Care and placement issues are also important. Without a POA, an incompetent person is adrift on the tide of the chaotic and dysfunctional healthcare industry (calling it a “system” would be paying what we have in this country an unwarranted compliment).

Disputes with facilities and other care providers arise often. Unless someone other than the facility administrator has authority to make decisions for the person who is incapacitated, the healthcare provider has carte blanche to do what it wants with the patient or resident. Absent a power of attorney, the family will have to initiate a much more expensive proceeding to appoint a guardian to assert control over care and end-of-life issues.

For the myriad decisions that must be made for any incapacitated person, an agent or guardian is absolutely necessary. If no family member or friend is authorized to act for the person, the facility is likely to file for guardianship. Of course, it will ask for the appointment of a guardian it feels comfortable working with. That translates into someone who will not interfere too much in the resident’s care.

Judges tend to give facilities what they request. Family members who object to a facility’s nomination for guardian face an uphill battle. Even if the judge does not appoint the professional or guardianship company the facility nominates, “professional” or “neutral” guardians are usually appointed in contested guardianships, not family members.

Where the facility does not file for guardianship, waiting until a guardian is needed is shortsighted. When the lack of a guardian becomes a problem, the need is imminent. Getting an immediate appointment is a problem in most courts. In addition, family members often disagree about who should be appointed. That can delay things for months. The problems associated with guardianship filings should be addressed before there is an urgent need for the appointment.

A power of attorney is a very cost-effective way to address the need to make decisions for a person whose competence is in question. If there is no power of attorney and the person has become incapacitated, guardianship must be sought as soon as possible.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney