Sad End for Penn Treaty Insurance — Reblog

Jeff Marshall, a highly-respected colleague in Williamsport, Pennsylvania, documented the failure of Penn Treaty Insurance’s long-term care insurance products in “Sad End for Penn Treaty Insurance.”  The column is interesting and informative in describing the problems of the LTCI industry as the costs of long-term care steeply increased, while interest rates plunged and customers held on to their policies at much higher rates than expected.  Jeff’s column is also an excellent backgrounder to my post, “Long-Term Care Insurance — Smart Buy or Not?

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

©2017 John B. Payne, Attorney

 

 

Justice for the Rich; Slapdown for the Rest of Us

In a September 30, 2016 decision, Price v. Medicaid Director, 838 F.3d 739 (6th Cir. 2016), The U.S. Sixth Circuit Court showed its lack of compassion and understanding of those who have limited income and modest net worth. The court held that while nursing home residents may have their eligibility for care paid by the state backdated up to three months before they apply for Medicaid, assisted-living residents, whose benefits are generally much lower, may not. The court took pains to resolve ambiguities against the impoverished assisted-living residents in contrast to the court’s willingness to find loopholes that favor wealthy taxpayers in a very recent tax case.

The key ruling in Price is that federal law prohibits the state from extending eligibility for Medicaid assisted-living services under the Home and Community-Based Services Waiver, or simply “Waiver,” that are rendered before a beneficiary’s “service plan” is approved. The Medicaid application for nursing home residents is effectively a one-step process because they are determined eligible for the services when admitted. Application for Waiver benefits has two steps – financial eligibility determined by the Medicaid agency and physical need evaluated by a “Waiver Agent,” typically the Area Agency on Aging, which develops the service plan. Depending on the region, applicants might wait six months or more on a waiting list for the Waiver Agent to get around to evaluating them.

While nursing home applications can languish for months on a Medicaid worker’s desk, on approval the eligibility begins with the application date if the applicant was then factually eligible. It is even possible to apply for three months of benefits preceding the original application. Waiver applicants get no such treatment. According to the Price decision, eligibility for benefits begins, if at all, when the Waiver Agent signs the service plan.

Price and the other plaintiffs sued the Ohio Medicaid director, complaining that Waiver beneficiaries should be eligible for retroactive benefits the same as nursing home Medicaid beneficiaries. The operant provision in the Social Security Act reads, in part, as follows:

[S]tates must offer Medicaid assistance to all beneficiaries for care and services included under the [Medicaid] plan and furnished in or after the third month before the month in which [the beneficiary] made application … for such assistance if such [beneficiary] was (or upon application would have been) eligible for such assistance at the time such care and services were furnished. 42 U.S.C.A. § 1396a(a)(34).

According to the court’s rationale, the plaintiffs would have been entitled to Waiver reimbursement during the three months prior to their applications only if those services were provided, under 42 U.S.C.A. § 1396n(c)(1), “pursuant to a written plan of care.” “Pursuant” means “after,” in the court’s view. Thus, a prospective Medicaid beneficiary is eligible only after the service plan is signed. Price v. Medicaid Dir., 838 F.3d 739, 747-49 (6th Cir. 2016).

The court could have reached the opposite result if it had based its rationale on “or upon application would have been” eligible, which would relate backward, rather than its dubious reliance on the temporal aspect of “pursuant to.”

To buttress its holding, the court observed that a prospective applicant could request an evaluation and service plan in advance of applying for Medicaid. This is asinine. There would seldom be such an opportunity.

In the first place, the family would have no way of knowing that it would be necessary to ask for an evaluation that early unless they have an elder-law attorney on retainer and consult him or her almost constantly. Secondly, the need to apply for Waiver services generally comes close on the heels of the need for care.

Comparing this decision to a tax decision, Summa Holdings v. Commissioner, No. 16-1712, Slip Op. at 5 (6th Cir. Feb. 16, 2017), it is clear that the court cares deeply about preserving rich families’ millions and not a all about preserving poor families’ pittances.

The tax attorneys for the Benensons, a wealthy family near Cleveland, Ohio, concocted an ingenious tax strategy involving a “domestic international sales corporation” (DISC) and Roth IRAs. According to the decision:

Summa Holdings is the parent corporation of a group of companies that manufacture a variety of industrial products. Its two largest shareholders are James Benenson, Jr. (who owned 23.18% of the company in 2008) and the James Benenson III and Clement Benenson Trust (which owned 76.05% of the company in 2008). James Benenson, Jr. and his wife serve as the trustees, and their children, James III and Clement, are the beneficiaries of the Trust.

In 2001, James III and Clement each established a Roth IRA and contributed $3,500 apiece. Just weeks after the Benensons set up their accounts, each Roth IRA paid $1,500 for 1,500 shares of stock in JC Export, a newly formed DISC. The Commissioner did not challenge the valuation of these shares then and has not challenged them since. To prevent the Roth IRAs from incurring any tax-reporting or shareholder obligations by owning JC Export directly, the Benensons formed another corporation, JC Holding, which purchased the shares of JC Export from the Roth IRAs. From January 31, 2002 to December 31, 2008, each Roth IRA owned a 50% share of JC Holding, which was the sole owner of JC Export.

With this chain of ownership in place, the family, trust, and company were a few clicks away from the possibility of considerable future tax savings. Summa Holdings paid commissions to JC Export, which distributed the money as a dividend to JC Holding, its sole shareholder. JC Holding paid a 33% income tax on the dividends, then distributed the balance as a dividend to its shareholders, the Benensons’ two Roth IRAs. From 2002 to 2008, the Benensons transferred $5,182,314 from Summa Holdings to the Roth IRAs in this way, including $1,477,028 in 2008. By 2008, each Roth IRA had accumulated over $3 million.  Summa Holdings, Slip Op. at 5 (Feb. 16, 2017).

Each of these cases turned on subtle legal principles that could have been resolved either for or against the appellants. It is not coincidence or simple luck that the wealthy litigants won and the poor ones lost.

This is not to say that federal courts never issue decisions that disadvantage the rich or help the poor. However, studies clearly show that the courts have a marked proclivity to favor wealthy litigants over poor ones. Michele Benedetto Neitz, “Socioeconomic Bias in the Judiciary,” 61 Cleveland State L. Rev. 137 (2013); see also Ga. Supreme Court Comm’n on Racial & Ethnic Bias in the Court Sys., “Let Justice be Done: Equally, Fairly, and Impartially,” 42 Ga. St. U. L. Rev. 687 (1996).

Occasionally, a jurist is perceptive enough to comment on the disparity. Dissenting from the court’s decision in United States v. Pineda-Moreno, 591 F.3d 1120 (9th Cir. 2010), Chief Judge Alex Kosinski stated,“No truly poor people are appointed as federal judges, or as state judges for that matter. Judges, regardless of race, ethnicity, or sex, are selected from the class of people who don’t live in trailers or urban ghettos.” He termed this “unselfconscious cultural elitism” and observed that for him and his colleagues “the everyday problems of people who live in poverty are not close to our hearts and minds because that’s not how we and our friends live.” Pineda-Moreno at 1123.

There was a time when lawyers and judges were socially and economically closer to their clients and litigants. Abraham Lincoln, who attended school for less than a year was a case in point. In 50 years, the law has changed from a reasonable career choice for those on the lower rungs of the economic latter to all but unreachable even for the lower middle class. Prior to World War II, legal education in the United States was more haphazard. In Michigan, only two years of college were required before law school. By the 1970s, admission to law school in Michigan and most other states required a bachelor’s degree. Law school tuition was relatively affordable up until the 1990s. Since then, tuition has skyrocketed. The legal profession has become the province of the affluent.

We in the elder law and disability rights community cannot reverse decades of elitist self-selection in our profession. However, we must become aware of the “unselfconscious cultural elitism” in ourselves and the hearing officers and judges we practice before.

We can relate socially with most of the judiciary because we speak their language. Our kids go to school with their kids. We see them at PTSA meetings and civic events. What we must do is learn to relate to those who live in trailer parks and ghettos and truly accept their humanity. Then, perhaps, we can communicate what we have learned to the hearing officers and judges making crucial decisions about their liberty and property.

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

Autism is a Controversial Issue – People Fighting Online

This is both uplifting and horrendous at the same time.

Anonymously Autistic

I left Facebook a while ago because I kept getting sucked into the arguments between parents and Autistic people, Autistic people and the anti-VAX movement, and medical professionals and Autistic people. Today I logged back in and was quickly reminded why I left.

The first thing thing that upsets me is that all of these people think they know more about Autism than Autistic people, as if our first hand experiences are of little or no value. This is often parents but can also be medical professionals and organic health nuts (I eat organic but these people are extreme).

Cure culture fanatics telling us we are sick for wanting to stay Autistic – sick for wanting to stay the way we were born. Parents telling us we don’t understand because we are not like their child (some of us WERE at one point and have worked hard to improve as…

View original post 424 more words

Congress Does Something Good

After many years of advocacy by the National Academy of Elder Law Attorneys and other advocacy groups for persons with disabilities, such as the Special Needs Alliance, the Special Needs Fairness Act of 2015, S. 349, was signed by President Obama on December 13, 2016. The Act allows persons with disabilities to create their own special needs trusts under 42 USCA 1391p(d)(4)(a) if they have the capacity to do so. The pending legislation was previously discussed in this blog.

The Special Needs Fairness Act addresses a problem for many persons with disabilities. Special needs trusts allow a person with a disability to set aside assets to supplement daily living expenses and provide additional care when government benefits are not sufficient. Prior to the enactment, such trusts could only be settled by a parent, grandparent, guardian, or the court, even when the person was not legally incapacitated. When there was no family member or guardian to act as settlor, filing a petition to have the court act as settlor was a purposeless formality that added considerable expense to the process and burdened overworked courts unnecessarily.track-star-mod

It is significant that no court action was necessary when a parent or grandparent acted as settlor of the Special Needs Trust. Requiring a court to establish the trust solely due to the unavailability of a parent or grandparent was an unfair restriction for a person with a disability in the exercise of his or her rights. The Special Needs Alliance supported the legislation, stating, in part, as follows:

Often, our members are called upon to assist persons with disabilities in creating special needs trusts, as provided in 42 U.S.C. §1396p(d)(4)(A). Unfortunately, this section does not permit a capable person with special needs to create his or her own trust, limiting the class of trustors to the person’s parents, grandparents, a guardian or the Court. Since adults often outlive their parents and grandparents, many persons with disabilities have no alternative but to expend unnecessary time and money to go to a Court to ask a judge to create the trust for them. This restriction fails to recognize that persons with disabilities should have rights equal to nondisabled citizens where possible, and it continues the traditional denigration of persons with disabilities.

The Act should have been a slam dunk. It relieves persons with disabilities of a major expense. The initial court action to establish a special needs trust typically costs $2,500 or more in legal fees and court costs. After the trust is established, many courts require annual accounts to be filed, costing another $1,500 to $2,500 per year. This was a prohibitive expense because special needs trusts are often created to preserve small amounts. Although benefitting many deserving persons, none of whom would be undocumented aliens, the Act costs the government nothing. That such a logical, fair, nondiscriminatory, beneficial law made it out of Congress provides a tiny glimmer of hope for more sanity in government.

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

©2017 John B. Payne, Attorney

Vital Information about Medicaid and Long-Term Care

Please read this crucial explanation of the importance of Medicaid to long-term care residents and their families from the Long Term Community Coalition:  ltccc-medicaid-middle-class

Michigan Designated Funeral Representative

A new law, 2016 Publ. Act 57, effective June 27, 2016, authorizes a person identified as the declarant, to designate a funeral representative to make decisions about postmortem funeral arrangements and the handling, cremation, disposition, or disinterment of the declarant’s body. MCLA 700.3206(2)(a).  The Act includes authority for cremation and determination of the right to possess the cremains, which is an important change. Under prior law, all persons with equal priority as next of kin had to approve cremation.

The Act revises the priority of persons who may decide on final arrangements and inserts a “designated funeral representative” ahead of spouses, family members and others. MCLA 700.3206(3). The only authority with higher priority is a person designated to direct the disposition of a service member’s remains under federal law or Department of Defense regulation, when the decedent was a service member at the time of death. Id

Historic reenactor Les Scott, dressed as the town mortician at the door of his funeral parlor at South Park City Museum, a collection of historic buildings in Fairplay, Colorado

Historic reenactor Les Scott, dressed as the town mortician at the door of his funeral parlor at South Park City Museum, a collection of historic buildings in Fairplay, Colorado

 

A funeral representative designation may be included in another estate-planning document, such as a will or designation of patient advocate, but it must be executed with two witnesses or be notarized. MCLA 700.3206(2)(b). Like a designation of patient advocate, a funeral representative designation may not appoint or be witnessed by a person associated with a declarant’s medical provider, and persons associated with a funeral establishment, cemetery, or crematory that would provide services for the declarant are also excluded. MCLA 700.3206(2)(c).

A funeral representative designation may be revoked by the declarant, or by the representative’s resignation, absence despite reasonable efforts to locate, or refusal act within 48 hours of receiving notice of the decedent’s death. Revocation by the declarant must be in writing and signed with the formalities of the original designation. MCLA 700.3206b.

The declarant may appoint a contingent representative. MCLA 700.3206a(1). The represtentative accepts the appointment by signing an acceptance or by acting as the funeral representative. MCLA 700.3206a(2).

mortuaryCircumstances that would bar an individual from inheriting from the declarant, such as divorce or annulment of marriage to the declarant, desertion disqualify the individual. MCLA 700.2801(2).  Being convicted of abuse or killing of the declarant, disqualifies the individual, MCLA 700.2802(2)(c), and being charged with the abuse or killing of the declarante bars the individual from acting as the designated funeral representative while the charges are pending. MCLA 700.3206(12).

A major concern for an individual nominated to act as designated funeral representative is personal liability for the declarant’s final arrangements. Unless he or she is a special fiduciary, the medical examiner, or the director of corrections in the case of a prisoner, a person who acts as designated funeral representative is personally liable for the costs of disposition to the extent that payment is not covered under a trust, prepaid funeral contract, or other “effective and binding means.” MCLA 700.3206(13). This is alarming because the statute includes no requirement for the funeral director or other provider of funeral or burial services to advise the nominated funeral representative that if he or she accepts the appointment and makes the necessary dispositions that there could be personal liability. The representative is not even required to sign an acceptance of appointment, if he or she accepts by performance.

Adapted with editorial changes from John B. Payne, “Michigan Probate, 2016-17 ed.,” Chapter 13, 125-27 (Thomson Reuters 2016).

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

©2017 John B. Payne, Attorney

Repealing the Affordable Care Act

Without spin or editorializing on the issue, here are some facts from The Center for Medicare Advocacy, medicareadvocacy.org, about the program Congress plans to repeal:

  • The uninsured percentage of Americans under 65 is the currently the lowest in decades. Beginning in 2014, the rate dropped from 16.6% to 10.5%.
  • As of March 31, 2016, 11.1 million people have coverage through the ACA Marketplace.
  • As of 2015, 11 million people in 31 states and the District of Columbia had coverage through Medicaid expansion under ACA, out of a total of 81 million on Medicaid.
  • There are 19 states that did not expand Medicaid: Alabama, Florida, Georgia, Kansas, Idaho, Maine, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, Texas, Tennessee, Utah, Virginia, Wisconsin and Wyoming.
  • However, the ACA resulted in 16,748,000 people becoming eligible for Medicaid as of September 2016.

Congress says it will replace the ACA with something better. Dare we hope?

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

©2017 John B. Payne, Attorney