Blog Posts

Key Benefits of Delaware’s New Uniform Health-Care Decisions Act

Fri, 13 Dec 2024 16:58:03 +0000

This is the next installment in our series on Delaware’s new Uniform Health-Care Decisions Act, which was signed into law on September 30, 2024 and goes into effect in one year on September 20, 2025. Delaware is the first State to fully enact the Uniform Act (and made some Delaware-specific additions), and other states have legislation pending. The new Act completely replaces our existing Act of the same name. The new Act has a new Optional Form that completely replaces our old form.

The Act’s intricate limitations and processes will require significant training of and implementation by all involved in the health care community – individuals, hospitals, care facilities, attorneys, and families. As stakeholders roll up their sleeves to study, understand, train their staff on, and otherwise implement the Act, amendment and/or regulations may become appropriate as the one-year effective date approaches. I will be presenting on the Act this December to attorneys and financial professionals and will continue the conversation up to and through the effective date.

With any new and completely replacing legislation, there is

To be sure, the Act is an improvement to existing law in many ways, generated by feedback since 1993 from the national health care community culminating in the magnum opus of the Uniform Law Commission’s promulgation of the Uniform Act in 2023. Chief benefits are ease of creation and documenting preferences and goals (rather than inapplicable treatments) in a plain language form.

After close study of the new Delaware Act, following are some of the key benefits:

 To increase the creation of health-care directives, it simplifies signing and witness requirements and allows electronic signing and remote witnessing in certain circumstances.

 It authorizes a new kind of health-care directive, an Advance Directive for Mental Health-Care, which is a growing trend in the United States and includes a Ulysses clause that allows a principal to require that certain instructions be carried out later even if they object.

 It clarifies when agents may act and outlines their powers in ways intended to clear up possible ambiguities in the former Act.

 It states certain powers that must be expressly stated in the Health-Care Power of Attorney or else such powers do not exist. These powers relate to the highly important topics of: mental health facility admission, nursing home placement, obtaining and sharing health care information, and giving an agent flexibility in following instructions. These limitations are not necessarily a good thing as currently drafted. But many will call these limitations a benefit and so they are included as such here.

 It modernizes the definition of capacity to require what is called a “functional standard,” meaning it recognizes a person may have capacity for this but not for that. The capacity needed to appoint an agent is a lower standard than the capacity to approve a complex medical treatment.

 It modernizes approaches to capacity determinations in several ways. It expands the list of who can assess and find a lack of capacity to a long list that goes past a physician. It outlines a process for a person to object if he disagrees with a finding of his lack of capacity, and a process to overcome that objection. It is a series of if-then statements. While there is much room for improvement, it is true that a clearly defined process has value.

 It updates default surrogate provisions to mirror more family structures. These come into play when a person loses capacity and has not designated an agent beforehand. The law provides a default list of classes of surrogates, in descending order of priority. The new Act expands that list to include cohabitants and domestic partners, for example.

 It provides a process for decision-making when default surrogates do not agree.

 It includes a new Optional Form in plain language designed to make it easier for laypersons to appoint agents and share their preferences and goals.

 It answers a growing call from the medical community for the principal to express their preferences about how they want to live, rather than give specific treatment directions that might or might not correspond to their ailment. It is more helpful to the decisionmaker faced with a medical decision on someone else’s behalf to know the person’s goals and preferences, and the priority of those goals and preferences, about how that person wants to live. The Optional Form therefore includes questions to elicit and document this information.

 For Advance Mental Health-Care Directives, it establishes a process – similar to 1990s law enacted to promote the use of health-care directives – for mental health facilities to ask patients if they have a Mental Health-Care Directive and to prompt them to review or create one, to make resources available to patients about mental health directives, and even to assist in preparing the Mental Health-Care Directive in limited circumstances authorized by the Act.

For a good summary of the Uniform Act (on which Delaware’s full enactment was based), see: The New Uniform Health Care Decisions Act: An Overview

https://www.americanbar.org/groups/law_aging/publications/bifocal/vol45/vol45issue1/new-health-care-decisions-act By Nina A. Kohn Bifocal Volume 45, Issue 1, September 2023, American Bar Association

ALERT: Delaware’s New Uniform Health-Care Decisions Act:

Thu, 21 Nov 2024 21:16:00 +0000

First Major Overhaul to Delaware Health Care Statutes in 30 Years

The first major overhaul to Delaware’s Health Care statutes was signed by the Governor on September 30, 2024, to go into effect in one year on September 30, 2025.

The law is a complete replacement to all of Title 16 Chapter 25, which is Delaware’s current Health Care Decisions Act, and modifies other health care provisions in the Code.

SB 309 was introduced in May 2024, amended in June 2024, passed the House and Senate in June 2024, and was signed by the Governor recently on September 30, 2024.

The new statute follows national precedent. A Uniform Health-Care Decisions Act was recently adopted by the Uniform Law Commission and is being enacted around the country.

“Uniform” in this context does not mean exactly the same. States may change or skip parts of the Uniform act in adoption.

Delaware’s current Health Care Decisions Act was enacted almost 30 years ago in 1996, and was modeled on the uniform act of 1993.

You are almost certain to see changes in health care documents and practices once the health care industry digests and incorporates the new law.

We are following this closely.

In December 2024 I will be presenting on the new Health-Care Decisions Act to estate planning attorneys and financial professionals and will share some of my research with you in future blogs.

In the meantime, we wanted to get out the word that the bill has become law.

The synopsis of the bill provides (broken into paragraphs for this Blog for easier reading):

“This Act adopts the Uniform Health-Care Decisions Act of 2023 (UHCDA 2023) to supersede the Uniform Health-Care Decisions Act of 1993, which Delaware enacted in 1996. The UHCDA 2023 was authored by the Uniform Law Commission (ULC) and was developed in a multiyear collaborative and non-partisan process to modernize and expand on the 1993 version of the act. The UHCDA 2023 maintains processes to address how health-care decisions can be made by or on behalf of individuals who lack capacity, including: (1) Allowing individuals to appoint agents to make health-care decisions for them should they become unable to make those decisions for themselves. (2) Allowing individuals to provide their health-care professionals and agents with instructions about their values and priorities regarding their health care and to indicate medical treatment they do or do not wish to receive. (3) Authorizing certain people to make health-care decisions for individuals incapable of making their own decisions, but who have not appointed agents. (4) Setting forth agent, default surrogate, and health-care professional rights and duties.

The UHCDA 2023 reflects substantial changes in how health care is delivered, increases in non-traditional familial relationships and living arrangements, the proliferation of the use of electronic documents, the growing use of separate advance directives exclusively for mental health care, and other recent developments.

Some updates to the Act include:

(1) Removal of administrative barriers that make the creation of an advance health-care directive more difficult.

(2) Addition of provisions to guide determinations of incapacity, which is important because an agent’s or default surrogate’s (surrogate’s) authority to make health-care decisions for a patient typically commences when the patient lacks capacity to make decisions. The Act modernizes the definition of capacity so that it accounts for the functional abilities of an individual and clarifies that the individual may lack capacity to make one decision but retains capacity to make other decisions.

(3) Authorizing the use of advance directives exclusively for mental health care.

(4) Modernizing default surrogate provisions that allow family members and certain other people close to a patient to make decisions in the event the patient lacks capacity and has not appointed a health-care agent. The new default surrogate provisions update the priority list in the 1993 Act to reflect a broader array of relationships and family structures. They also provide additional options to address disagreements among default surrogates who have equal priority.

(5) Clarifying the duties and powers of surrogates. For example, to reduce the likelihood that an individual’s health-care needs will go unmet due to financial barriers, the Act authorizes a surrogate to apply for health insurance for a patient who does not have another fiduciary authorized to do so.

(6) Modernizing the optional model form to be readily understandable and accessible to diverse populations. The form gives individuals the opportunity to readily share information about their values and goals for medical care. Thus, it addresses a common concern raised by health-care professionals in the context of advance planning: that instructions included in advance directives often focus exclusively on preferences for particular treatments, and do not provide health-care professionals or surrogates with the type of information about patients’ goals and values that could be used to make value-congruent decisions when novel or unexpected situations arise. The form addresses these concerns by providing options for individuals to indicate goals and values, in addition to specific treatment preferences.

This Act also adopts some of the optional provisions suggested by the ULC, including that an agent or surrogate has limited ability to consent to the long-term placement of an individual in a nursing home without express authorization. Specifically, without express authorization, the agent or surrogate may not consent to the placement for more than 100 days over the individual’s contemporaneous objection unless (1) no alternative living arrangement is reasonably feasible or (2) the individual is terminally ill. The ULC suggested 100 days in recognition that the federal Medicare program covers up to 100 days of nursing home care for qualified beneficiaries.

This Act does not authorize mercy killing, assisted suicide, or euthanasia.

In addition to style changes throughout, this Act makes some modifications to the UHCDA 2023 that are consistent with Act and should not disrupt uniform interpretation. These modifications include:

(1) Revising language to conform to Delaware court practices.

(2) Providing surrogates with the authority to file insurance or benefit claims on behalf of the individual and to appeal such outcomes, in addition to the UHCDA 2023 allowance for a surrogate to apply for insurance or benefits on behalf of the individual. As under the UHCDA 2023, a surrogate does not have the duty to perform these actions and may only do so if no other fiduciary is authorized to do so.

(3) Creating an additional disqualification that disallows a potential surrogate from serving if the individual has a pending Protection From Abuse petition against the potential surrogate, the individual has a Protection From Abuse order against the potential surrogate, or the potential surrogate is the subject of a civil or criminal order prohibiting or limiting contact with the individual.

Section 2 of this Act adds a new Chapter 25B to the Delaware Code. Chapter 25B will contain Delaware-specific supplements to the UHCDA 2023. These Delaware-specific additions are being placed within their own chapter to promote uniform interpretation of the UHCDA 2023.

Chapter 25B includes § 2502B, which relates to health-care institution authorization to petition for guardianship for an individual to whom the institution is providing care. Section 2502B reinforces the work of the Non-Acute Medical Guardianship Task Force, created by Senate Concurrent Resolution No. 30 by the 150th General Assembly. That task force’s work resulted in the current § 2519 of Title 16, which offers a process and timeline whereby health-care institutions can take steps to help obtain a guardianship for patients who no longer require acute care and can be transferred to another type of health-care setting. While § 2502B retains the ability for a health-care institution to address the discharge of long-term stay patients without an authorized decisionmaker, it modifies the powers in the current § 2519 by doing all of the following: (1) Allowing health-care institutions to petition of the appointment of a guardian in instances beyond where an individual no longer needs acute care. (2) Reiterating that the health-care institution may only petition if they believe there is no less restrictive alternative that will meet the individual’s needs. (3) Streamlining notice requirements and changing who must receive these notices so that a health-care institution does not send a notice if there is a reasonably available surrogate. If there is a reasonably available surrogate and there is a dispute between the surrogate and the health-care institution about the treatment or level of care needed by an individual, then the parties should seek judicial relief under § 2526 of the UHCDA 2023 as opposed to using the guardianship process.

The new Chapter 25B also contains a provision to encourage public awareness and use of advance mental health-care directives.

Sections 3 through 11 of this Act update the Delaware Code in light of the adoption of the UHCDA 2023 by updating internal citations, updating terms to match the terms used in the UHCDA 2023, and ensuring a consistent list of default surrogate decisionmakers.

This Act is effective immediately and is to be implemented 1 year from the date of enactment.”

Food No Longer In-Kind Support and Maintenance for SSI Benefits

Wed, 09 Oct 2024 16:28:56 +0000

The new rule we first reported on in our May 2024 Blog became effective September 30, 2024, a blessing to Supplemental Security Income (“SSI”) recipients who are subject to what’s called the In-Kind Support and Maintenance (“ISM”) rules.

The premise of the ISM rules is that an SSI recipient must use her monthly SSI check (only $964 in 2024) to pay for her own food and shelter. If a third party (including a trust) pays the SSI recipient (directly or indirectly) for food or shelter, whether in cash, food, shelter, or something that can be converted to food or shelter, then under the ISM rules the SSI recipient’s monthly SSI check is reduced or eliminated based on the value of the third party payments and an applicable methodology from Social Security.

Until September 30, 2024 food counted in the ISM calculations. Now it does not.

Why does this matter? Not only does it simplify reporting and minimize ISM reductions to only for shelter, but – importantly – it helps to preserve an SSI recipient’s health insurance, Medicaid. In Delaware SSI recipients are categorically eligible for Medicaid. If a person loses her SSI, she loses her Medicaid.

For many of our readers, this issue hits extremely close to home. Our readers for whom this issue matters are our disabled clients and their families.

Many if not most of our disabled clients either: 1) now receive SSI, or 2) did receive SSI before their parent retired or died, at which point the child started receiving Child’s Insurance Benefits on their parent’s Social Security work record if their parent’s work record was sufficient.

Following are links to applicable law:

https://secure.ssa.gov/apps10/reference.nsf/links/09252024015358PM

https://secure.ssa.gov/apps10/reference.nsf/links/09202024102751AM

https://www.govinfo.gov/content/pkg/FR-2024-03-27/pdf/2024-06464.pdf

In summary, from the Social Security Administration:

EM-24048 - Omitting Food from In-Kind Support and Maintenance Calculations

Summary: This emergency message (EM) is to inform Regional and Field Office staff that we are omitting food from our calculations of in-kind support and maintenance (ISM) as of 09/30/2024. This means that food is no longer part of the pro rata share calculation on the household contribution screen located within the SSI Claims System path. We will determine ISM and a claimant’s pro rata share by only calculating a claimant’s shelter expenses and contributions. The definition of in-kind income now notes the exception that we are eliminating food from our calculations of ISM.

For our May 2024 Blog see:

https://www.eaels.com/blog/food-no-longer-to-be-considered-in-kind-support-and-maintenance-for-ssi-benefits.

Your Adult Children Need to Be Prepared For Your Incapacity and Passing

Mon, 23 Sep 2024 17:03:01 +0000

A USA Today article published in the August 18, 2024 edition of the News Journal (linked at the end of this Blog) explained the perils of probate, which we often cover in our Newsletter and Blog.

But the article also highlighted frightening statistics that come as no surprise to us in our practice, and, if you really think about it, should come as no surprise to you:

Baby Boomer Wealth Transfer is Huge.

“With baby boomers reaching retirement and controlling roughly half of the wealth in America, researchers expect an unprecedented generational wealth transfer over the next 20 years. As much as $84 trillion could change hands.”

Fewer Baby Boomers Have Estate Plans Than Past Generations.

“The share of ‘over-70’ households with wills or trusts has been in steady decline, according to the Center for Retirement Research at Boston College. Between 2000 and 2020, that share dropped from 73% to 64%.”

Dying without a Will is called intestate succession. Who gets your property without a Will may surprise you to say the least. Laws vary by state, so what you hear about one state does not necessarily apply in your state.

Avoiding intestate succession and its unintended consequences is essential. Preparing an estate plan is not to be skipped relying on law you do not understand.

Millennials Will Receive the Baby Boomer Wealth.

“Much of the money will go to millennials, who were born between 1981 and 1996. And many of them are unprepared. In a companion report, Trust & Will found that one-third of millennials do not know if their parents have an estate plan. Among other findings:

● Only 58% of millennials have discussed estate planning with older relatives.

● 62% of millennials have no will or trust of their own.”

Only 58% of millennials have discussed estate planning with their parents? That means those 58% families are facing some level of chaos when a parent becomes incapacitated or dies.

Baby Boomers and Millennial Children Are Not Talking About Finances or Death.

“Estate-planning experts cite two big reasons why we don’t know more about the probate process in general, and our own family’s estate plans in particular. …”

“First, many people only experience the full sweep of probate upon the death of their last surviving parent. The death of a first parent in a married couple can be relatively simple, at least from a probate perspective. …”

Second, many adult children find it agonizing to discuss death and inheritance with an aging parent.”

As to the first point, relying on a surviving spouse to carry on the household finances unaided by an informed helper exposes obvious risks, including incapacity of the surviving spouse, the need to move to a long-term care facility, financial exploitation, and so on. Who will help your beloved surviving spouse if you pass? Will your children be prepared for the job?

All of your adult life raising children, you always worked – at great sacrifice (both financial and emotional) - to prepare your children for the next step in their lives. Why would you not prepare them for this next step?

Are Your Children (Millennial or Not) Prepared to Help You If You Become Incapacitated?

Based on the 58% figure above, most likely no. Have you sat down and showed your children how you pay bills each month? Or where you keep important documents? Or where you bank and where your assets are invested? As explained above, relying solely on your spouse to do these things and not educating your children is short-sighted and unfair to your spouse and children: everyone deserves support and to know their jobs.

Are Your Children (Millennial or Not) Prepared to Carry Out Your Estate Plan When You Pass?

I always think of the family checkbook. Think of one checkbook. You hold it tight and don’t show it to your children while you’re alive. Then you pass. Now the children (if they can find the checkbook) open it and start a crisis exploration – because bills still need to be paid – of what is due when, and how to pay it, and what assets you have. Showing them that checkbook – or at least that a checkbook exists and giving them a list of your bills and accounts (even if you exclude balances) – is the best way to help them carry out your estate plan when you pass. It is easy to tell your children you have a big binder of estate plan documents in the fireproof safe. Those documents are just pieces of paper if the children don’t know their jobs under those documents.

Family Meeting as an Important First Step.

We do our part to cure the above by including a Family Meeting on a separate date after all estate plan documents are signed, where children and trustees, and if desired, professionals such as CPAs and investment advisers, attend. We first answer any questions the parents may have had in funding their trust and completing beneficiary designations. Then we take our time and explain to the children: 1) this is what you do if Mom or Dad gets sick, and 2) this is what you do if Mom or Dad passes. We direct the children and parents to discuss how to pay bills, where to find assets, etc. Again – the children don’t need to know amounts if you don’t want. But whichever children are going to help you as named agents/trustees need to be informed while you have capacity about what they need to do their job. We also direct parents to instruct their health care agents of – and discuss in adaptable terms - their wishes so the health care agents can make informed health care decisions if a parent is unable.

Parents routinely report to me the value of the Family Meeting not only in and of itself, but its value in prompting the parent education at home. The peace of mind they share is palpable.

Source: https://wilmingtonnewsjournalde.newsmemory.com/?publink=0b20dbff3_134d3d6

Treasury and IRS Release Final Regulations on Required Minimum Distributions

Wed, 14 Aug 2024 16:24:55 +0000

Since February 2022, when Treasury and the Internal Revenue Service (IRS) issued Proposed Regulations implementing changes to the required minimum distribution (RMD) rules for individual retirement accounts and employer plans under the SECURE Act and the SECURE 2.0 Act, attorneys and financial professionals have awaited Final Regulations.

In general terms, SECURE and SECURE 2.0 created a 10-year rule where most beneficiaries inheriting retirement plans after 2019 must distribute the full account within 10 years after the owner’s death. There is a distinction between if the plan owner died before or after he/she was required to take RMDs (this is called the Required Beginning Date (RBD)). There is a distinction between “designated beneficiaries” (which are most beneficiaries) and “eligible designated beneficiaries” (which are a select group of individuals entitled to special treatment comprised of spouses, minor children, disabled individuals, chronically ill individuals, and individuals not more than 10 years younger than the plan owner).

A significant question post-SECURE has been whether a beneficiary must take annual RMDs within the 10-year period.

Proposed Regulations issued in February 2022 answered yes, which was widely criticized.

On July 19, 2024, Treasury and the IRS issued Final Regulations affirming that answer. The Final Regulations provide that beneficiaries of benefits inherited from a decedent who died after his or her RBD must follow both the 10-year rule and the “at least as rapidly” rule. Therefore, such beneficiaries must take RMDs for the first nine years at the same rate as the participant had adopted before his or her death.

The Final Regulations make only small changes to the Proposed Regulations.

The Final Regulations confirm the 10-year rule applies to four classes of post-2019 beneficiaries (and applies in the following ways):

A designated beneficiary who inherits a retirement account from an owner who died before their RBD. In this case, distributions are optional until the 10th year, when any remaining balance must be fully distributed.

An eligible designated beneficiary who inherits a retirement account from someone who died before their RBD. Here, too, distributions are optional until the 10th year, when the account must be fully distributed. An eligible designated beneficiary may choose between this 10-year rule and the life expectancy rule under which distributions could be taken over the full length of their life expectancy.

A designated beneficiary who inherits a retirement account from a participant who died on or after their RBD. In this case, the designated beneficiary must take annual distributions and empty the account by the 10th year following the year the account owner died.

A successor beneficiary who inherits a retirement account from an eligible designated beneficiary who was taking life expectancy distributions. The successor beneficiary must continue taking distributions at the same rate as the primary beneficiary. In addition, the successor beneficiary must ensure the account is fully distributed by the 10th year following the year the eligible designated beneficiary died.

At the same time as issuing the Final Regulations, Treasury and the IRS issued Proposed Regulations on RMDs from various retirement plans, addressing several issues that were not covered in the Final Regulations. These topics include age determinations, designated Roth account distributions, Code Sec. 4974 excise tax waivers, and spousal elections.

Source:

https://www.wealthmanagement.com/estate-planning/irs-releases-final-regs-required-minimum-distributions

First-Ever Federal Regulations for Adult Protective Services

Thu, 20 Jun 2024 14:33:13 +0000

Until recently, Adult Protective Services (APS) has been funded and administered wholly at the state or local level. As a result, there is wide variation in APS services and practices between, and even within, states.

In May 2024, the U.S. Department of Health and Human Services (HHS), through the Administration for Community Living (ACL), published a final rule to establish the first federal regulations for APS.

The new regulations were developed in response to longstanding requests from the APS community, Congress, and other stakeholders for federal guidance, leadership, stewardship, resources, and support for APS systems and victims of adult maltreatment. Those requests became particularly urgent in 2023, when ACL’s annual appropriation included funding – for the first time – for the state APS formula grant program authorized by the Elder Justice Act.

The APS final rule:

Establishes a set of national minimum standards for the operation of APS programs that all state APS systems must meet – and encourages states to exceed them.
Requires APS systems to ensure that planning and delivery of all services respect the fundamental right of adults to make their own life choices and that services are driven by the person receiving them.
Establishes stronger protections for clients subject to, or at risk of, guardianship.
Requires response within 24 hours of screening to cases that are life-threatening or likely to cause irreparable harm or significant loss of income, assets, or resources.
Requires APS to provide at least two ways – at least one online – to report maltreatment or self-neglect 24 hours per day, seven days per week.
Requires robust conflict of interest policies to support ethical APS practice.
Establishes definitions for key APS terms to improve information sharing, data collection and program standardization.
Promotes coordination and collaboration with state Medicaid agencies, long-term care ombudsmen, law enforcement and other partners.
Requires state APS entities to create state plans at least every five years and to submit annual program performance data.

The new regulations will take effect on June 7, 2024, but regulated entities have until 2028 to fully comply.

The ACL states it plans to work with stakeholders to implement the final rule and provide robust technical assistance and other resources in the coming months.

Additional information, including links to the Final Rule and two-page Fact Sheet, can be found at www.ACL.gov/APSrule.

Source: https://www.hhs.gov/about/news/2024/05/07/final-rule-establish-first-ever-regulations-adult-protective-services.html#:~:text=The%20new%20regulations%20promote%20high,%2C%20maltreatment%20and%20self%2Dneglect

Food No Longer to Be Considered In-Kind Support and Maintenance for SSI Benefits

Mon, 13 May 2024 15:26:24 +0000

In March 2024, the Social Security Administration issued a new rule that favors disabled individuals applying for or receiving Supplemental Security Income (“SSI”). Under the new rule, starting September 30, 2024, food will no longer be considered in-kind support and maintenance (“ISM”) in ISM calculations.

This is a major improvement for SSI recipients: food given to them will no longer count in ISM, reporting and recordkeeping will be simplified, and trustees of special needs trusts will be permitted to disburse trust funds to buy food for trust beneficiaries who receive SSI.

The Social Security Administration is Working on SSI

The rule change is part of a wide-ranging effort by the Social Security Administration to change how it handles nuances of the SSI program. In April 2024, other rule changes modified rent subsidies and how Social Security factors in support from other public assistance programs, both outside the scope of this article.

Changes making it easier to remain eligible for SSI have an added benefit: less risk of losing your Medicaid. This is because, in Delaware and many states, the eligibility requirements for SSI and Medicaid are the same. If you are eligible for SSI, you are automatically eligible for Medicaid.

For purpose of simplicity in this article, we focus only on SSI and the coming change regarding food.

What is SSI?

Let’s start with what SSI is not. SSI is not Social Security Disability Insurance or Disabled Adult Child Social Security benefits, which do not depend on an individual’s income and resources.

SSI does depend on an individual’s resources and income. SSI is a means-based government benefits program. SSI provides monthly payments to disabled individuals, or adults 65 and over, subject to means tests.

SSI benefits are intended to pay for basic needs including shelter, food, clothing, and medicine.

SSI Eligibility

In general terms, to be eligible for SSI, you must:

(1) be disabled (as defined by the Social Security Administration) or 65 or over,

(2) earn less than $1,971 per month, and

(3) have under $2,000 (or $3,000 for a married couple) in available resources.

Many qualifications to these basic rules exist, making SSI eligibility complex.

SSI Reporting

Once you qualify for SSI, you must report your earnings (including wages) to maintain eligibility.

In-Kind Support and Maintenance

You must also report any “in-kind support and maintenance” (“ISM”) you receive. ISM includes support that family and friends give you. “Support” in this context includes shelter and food. For example, if you are living in another’s home for free or reduced rent, that shelter is considered ISM as unearned income and affects your eligibility and may reduce your SSI benefits.

ISM can be difficult to understand. The guiding principle is the government expects you to use your SSI to pay in full for your own shelter and food expenses: if someone else pays any part of shelter or food for you, your SSI should be reduced (says the government).

That’s why if someone pays your rent, mortgage, water, sewer, electricity, or property taxes – that affects your eligibility and payment amount. It is “shelter” and you’re supposed to use your SSI to pay for that yourself.

But if someone buys you a new stove, or pays your cable or internet or cell phone, those payments are not a problem because they are not considered ISM.

Food

Food always has been a problem. If someone takes you out to dinner or buys your groceries, that is ISM – affecting your SSI eligibility, reducing your payment, and requiring reporting.

New Rule on Food

Under the new Rule to take effect on September 30, 2024, the Social Security Administration will no longer include food as ISM. That removes a barrier to eligibility and simplifies recordkeeping and reporting.

The new Rule means family members can take you out to dinner, or buy you groceries. The new Rule also means the trustee of your special needs trust can disburse trust funds to pay for your food – a big change.

One question will remain on the SSI application about receipt of food for the narrow purpose of determining the reduction formula (value of the one third reduction rule or presumptive maximum value rule).

According to the Social Security Administration blog posted March 27, 2024 at ssa.gov:

“Under the final rule, beginning September 30, 2024, the agency will no longer include food in ISM calculations. The new policy removes a critical barrier for SSI eligibility due to an applicant’s or recipient’s receipt of informal food assistance from friends, family, and community networks of support. The new policy further helps in several important ways: the change is easier to understand and use by applicants, recipients, and agency employees; applicants and recipients have less information to report about food assistance received from family and friends, removing a significant source of burden; reducing month-to-month variability in payment amounts will improve payment accuracy; and the agency will see administrative savings because less time will be spent administering food ISM.”

Not Effective Yet

Remember, the change is not effective until September 30, 2024 when the proposed rule becomes final. In the meantime, follow existing SSI rules regarding food, including recordkeeping and reporting.

Can My Lifetime Fiduciary Pay My Final Bills?

Wed, 03 Apr 2024 12:31:32 +0000

A fiduciary is someone who acts for another pursuant to legal authority to do so.

A fiduciary can act for a living individual. The most common sources of legal authority for a fiduciary to act for a living individual are: a power of attorney, a guardianship, and a trust.

But when that living individual dies, the fiduciary’s legal authority dies, too. At that point, a new source of legal authority – whether an estate or trust – dictates who the fiduciary is, what his/her duties are, and to whom he/she owes the duties.

Many don’t understand this. A child serving as agent under a financial power of attorney might believe his/her authority continues after his/her parent’s death to pay final bills. A guardian might believe the same thing. Not so.

A recent opinion from the Court of Chancery of the State of Delaware explains this distinction in the guardianship context and is discussed below. We also show below how the same principles apply to financial powers of attorney and how revocable living trusts provide a built-in solution for the “death” dividing line providing for easier post-mortem administration.

Guardianship.

In In the Matter of P.M., C.M. # 19860-K (Del. Ch. January 31, 2024), the Delaware Chancery Court confirmed existing law that a guardian cannot use guardianship funds to pay the final expenses of the person with a disability who was subject to the guardianship. While this result might surprise some, it is the result of the interplay of Delaware’s guardianship and estate statutes and the sources of each type of fiduciary’s authority to act.

In this matter, co-guardians of the person and property of P.M. filed a petition, after P.M.’s death, to expend guardianship funds to pay for P.M.’s burial expenses, the family luncheon after P.M.’s burial, and a wheelchair pad replacement purchased for P.M. Magistrate in Chancery Selena E. Molina denied the petition, explaining that as recognized by Chancellor Seitz in In re Bohnstedt, 125 A.2d 580, 582 (Del. Ch. 1956), “a guardian appointed by this Court derives their power to act from the living person with a disability; thus, after the death of the [person with a disability] the [guardian], absent statutory authority, has no power to pay existing obligations. The creditors must file their claims in the estate proceedings.” (internal quotations omitted). Id. at 2.

The Court explained that, as recognized most recently by Vice Chancellor Zurn in In re A.N., 2020 WL 7040079, at *11 (Del. Ch. Nov. 30, 2020), “Delaware’s statutory scheme provides no such post-death, pre-estate power for guardians to pay the person with a disability’s unpaid debts and liabilities; the guardian’s responsibilities after death and before termination of the guardianship action are limited to (1) being candid with and responsive to the Court as it works to close the guardianship action, (2) safeguarding the late person with a disability’s assets for transfer to their estate, and (3) accounting for the guardian’s remaining unaccounted for pre-death service.” Id. at 2-3.

The Court denied the petition to expend for final bills. A creditor would have the right to file a claim against the person with disability’s estate for unpaid debts or expenses. The Court ordered the co-guardians to file a petition with the Register of Wills to open the decedent’s estate and, within thirty days, file with the Court a petition to terminate and the final accounting for the period concluding on the date of death of the person with a disability. Id. at 3.

Durable Personal Power of Attorney.

A Delaware Durable Personal Power of Attorney terminates when the principal dies. 12 Del. C. § 49A-110(a)(1). Likewise, the agent’s authority terminates when the personal power of attorney terminates. 12 Del. C. § 49A-110(b)(4).

Therefore, as in the guardianship context, upon the death of the principal: (1) the agent appointed by the personal power of attorney lacks authority under that document to pay final expenses, and (2) Delaware’s post-mortem statutory scheme applies: if the assets of the deceased individual require the opening of a probate estate as determined by statute and court rule, the proposed personal representative must file a petition with the Register of Wills to open an estate, be appointed personal representative, and then complete the probate process under Title 12 of the Delaware Code and Court of Chancery Rules Subpart XIX.

Revocable Living Trust.

Revocable Living Trusts resolve the “death” dividing line. In the trust agreement, the trustmaker appoints one or more trustees to serve at each of the relevant times: upon initial trust creation, upon the trustmaker’s incapacity, and upon the trustmaker’s death. Usually the trustmaker is his/her own trustee initially, and names a different or co-trustee to serve upon incapacity, and then upon death, of the trustmaker. Assets properly titled in trust name before the trustmaker’s death are part of the trust after the trustmaker’s death and do not pass through probate. The successor trustee to serve upon death of the trustmaker takes office via the terms of the trust agreement which is his/her source of legal authority. The transition is smooth and requires no court involvement. Final bills are paid with trust assets by that successor trustee.

Conclusion.

Revocable living trusts are known for providing ease of post-mortem administration. Many probably think of that benefit mainly in terms of distributing the trust estate to the beneficiaries. But in the short term, long before the beneficiaries are to receive their distributions, the final bills must be ascertained and paid, assets marshaled, and the trust estate wound up. This includes selling the home, determining assets and balances, etc. The trust becomes an administrative trust for the purpose of winding up and receives its own Employer Identification Number, and a Certification of Trust is issued to the successor trustee as authority to act. Post-mortem tasks are significantly easier to complete as trustee of a trust, rather than as personal representative of a probate estate.

Government Overreach or Necessary Law? Corporate Transparency Act Struck Down

Tue, 12 Mar 2024 16:43:22 +0000

A U.S. District Court in Alabama declared the Corporate Transparency Act (CTA) unconstitutional in the battle between privacy rights and organized crime. In National Small Business Association v. Yellen (Case No. 5:22-cv-01448), the issue is the CTA's authority over small businesses to disclose the so-called beneficial owners to the government through the Financial Crimes Enforcement Network (FinCEN).

The Yellen court ruled that the CTA "transcends the limits imposed by the Constitution on the legislative branch and lacks a strong connection to any enumerated power to serve as a necessary or appropriate means to achieve Congress' policy objectives." The Court found that the CTA exceeds Congress' authority under the Constitution.

The decision suspended the CTA's enforcement. The case may affect the CTA's required reporting mandates against small businesses and other entities.

Yellen held that the CTA lacked a substantive connection to any enumerated power in the Constitution, rendering it an inadequate or justifiable method of fighting crime.

The CTA unfairly burdens small businesses by forcing owners and others connected to business formation to join the Financial Crimes Enforcement Network (FinCEN). This requirement should be an unconstitutional activity forced upon persons not suspected of criminal activity. It has been asserted that compliance can cost an average of $8,000 in the initial year.

The CTA is supposed to reduce and defeat money laundering and terrorist financing. By requiring entities, primarily small businesses and trust-like entities, to disclose their beneficial owners, the CTA is supposed to anonymously reduce or render transparent criminals using the U.S. financial system.

The CTA allegedly enhances transparency and accountability in business. But do we need such forced governmental oversight of small businesses? FinCEN has the ability to expand its regulatory reach by promulgating regulations, for example.

In RIN 1506-AB54, to be published in the Federal Register (Feb. 16, 2024). (FinCEN) proposes, as part of its efforts to combat money laundering. These regulations require filing a report for nearly every non-financed transfer of residential real estate to a trust, partnership, LLC, or other entity. This requirement would apply to transfers to revocable or irrevocable trusts and transfers to limited liability companies, corporations, and partnerships. The attorney or other professional would need to file the report for specific closing or settlement functions. The report would include information about:

Beneficial ownership information for the transferee entity.
The individuals representing the transferee entity.
The business filing the report.
The residential real property being transferred.
The transferor.
Any payments made.

Every non-financed transfer of residences? Into a revocable trust? Will nothing be kept private? There is a balance between legitimate crime fighting and privacy. But how can the government justify demanding private information such as estate planning and gifts to family members?

The Yellen case will be appealed.

Assisted Living in the News

Thu, 20 Jun 2024 14:30:24 +0000

Assisted Living has been in the news for at least the past year, both locally and nationally. For our clients this is a prime issue.

Assisted Living is Different

Assisted living facilities are a different kind of long-term care entity. The main reason is that most assisted living facilities are private pay only: they do not accept Medicaid. Only a 1/5 of assisted living facilities nationwide accept Medicaid. This is a key difference.

Assisted Living Is Less Regulated Than Skilled Nursing Facilities

In the most basic of terms, because the federal government is not giving money to a private-pay-only facility via Medicaid reimbursement, the federal government’s “purse power” is not there. The federal government has no Medicaid funds to withhold from the facility as a “stick” to punish the facility for poor care.

States regulate assisted living facilities. Quality and enforcement vary by state.

For assisted living facilities that do accept Medicaid, the federal government does have the “purse power”, but 1) federal quality regulations are much weaker for assisted living facilities than for skilled nursing, and 2) federal enforcement mechanisms are lacking, relying instead on states. The reasons for this are complex and based in arcane federal regulations.

In short: the federal regulatory scheme is designed for skilled nursing, not assisted living.

People are Paying More Attention to Assisted Living

News outlets have been covering this.

And Congress has started to listen.

On January 25, 2024 the U.S. Senate launched an examination of assisted living. The Senate Special Committee on Aging, chaired by Sen. Bob Casey (D-Pa.), held a hearing, the first on this topic in two decades.

Both Republican and Democrat leaders of the committee stated they aim to examine 1) the financial practices and 2) quality levels in assisted living facilities, so consumers would be better able to choose facilities.

Note this stops short of better regulating assisted living facilities. The lawmakers expressed little appetite for Congress to take a more direct role in regulating the sector, such as by setting federal standards for staffing levels and training.

But it’s a start.

Dying Broke Series

Senator Casey was prompted by a New York Times – KFF Health News Series called “Dying Broke” published in November 2023 linked here: https://www.kff.org/health-costs/press-release/dying-broke-a-new-jointly-reported-series-on-americas-long-term-care-crisis-from-kff-health-news-and-the-new-york-times. It is well worth reading.

That series outlines multiple problems with assisted living both cost-wise and care-wise.

One of the cost issues is the facilities tacking on exorbitant fees for the most basic of care needs: $50 for injections, $12 for a single blood pressure check, $93 a month to order medications from a pharmacy.

This means many residents are private paying thousands (extensive needs can run $10,000 or more) a month for room, board, and care – especially for memory care – and then many facilities tack on these add-on charges.

And resident incomes to pay these charges are not keeping up with inflation. The charges are going up due to 1) inflation and 2) just because the facilities can. But residents’ incomes to pay it are not.

Congressional Reaction is Limited

Prompted by this reporting, Senator Casey put out a call for residents and their families to submit their bills for the panel to assess the industry’s business practices.

Here again, however, the goal is limited to gathering information, not greater regulating: he stated “We want to hear from you about the true cost of assisted living and understand whether families have the information – the information that they need – to make this difficult financial and health care decision for a family member and for the family.” The ranking Republican on the committee, Sen. Mike Braun of Indiana, supported the inquiry while cautioning creating new financial burdens on the federal budget.

Assisted Living Facilities are Very Profitable

The assisted living industry is very profitable, running median operating margins around 20%.

The quality problems in assisted living have been widely exposed by national and state news outlets.

The director of the Gerontology Institute at Georgia State University testified at the hearing that the crux of the problem is that assisted living “is marketed to those who can afford it with a hospitality mindset”. They advertise and compete on the basis of amenities, sometimes called the “chandelier effect”.

Escalating Demand for Federal Involvement

The Executive Director of the Long Term Care Community Coalition, a nonprofit advocacy group, testified there is “an escalating demand for federal involvement.”

On January 24 Casey and other Democratic senators, citing the Times-KFF Health News Series, sent a letter to the Government Accountability Office requesting it study how much Medicaid and other federal agencies pay for assisted living. Indeed, a GAO Report in 2018 called for improved federal oversight of Medicaid dollars in assisted living facilities.

The U.S. System for Funding Long-Term Care is Broken

Even an industry trade group, the National Center for Assisted Living, acknowledges the U.S. method of funding long-term care is “broken” and that assisted living “is out of reach for many seniors.”

We are Paying Attention

We see this brokenness every day in our practice. We use every tool available to get access to care for our clients. Further, we are creative and progressive in finding solutions. As part of our ongoing mission, we are paying attention to assisted living and long-term care and continue to follow and create developments.

Source: https://kffhealthnews.org/news/article/senate-aging-committee-hearing-assisted-living-facilities-costs/?utm_campaign=KFF-The-Latest&utm_medium=email&_hsmi=291625245&_hsenc=p2ANqtz--eGYitU0qNKYDm6-poD0fDftj3T6URE7XXMoTQ9iVLbdMuQuCIm5j_qZet7hV5WQfUFXWouCWeAEo0Optw3IpN_NEBFQ&utm_content=291625245&utm_source=hs_email

Ohio Court Finds that an Agent using a Power of Attorney is not Personally Liable for cost of a Nursing Home

Tue, 09 Jan 2024 19:26:05 +0000

Thanks to Professor Katherine Pearson of Dickinson Law School for bringing this case to our attention.

On May 1, 2023, an appellate court in Ohio found that the daughter's role as agent acting under a power of attorney prevented her from becoming personally liable for her mother's costs of care. The daughter appears to have properly cooperated or assisted in the original Medicaid application.

The daughter gave authority to the nursing home to debit the bank account where her mother's Social Security checks were deposited every month, in order to pay itself the "patient pay" of her monthly income for the cost of care. This is the income a resident of a nursing home who is receiving Medicaid has to contribute to be otherwise eligible for Medicaid. However, the Social Security deposits made into the mother’s bank account eventually exceeded the $2,000 limit and the state Medicaid office terminated benefit to the mother without giving notice of the reason. Thus the nursing home appears to have had at least the same ability as the daughter to avoid accumulation of a sum greater than $2,000. The court pointed to the failure of the state agency to give effective notice to interested parties about when and why it was terminating Medicaid. See National Church Residences First Community Village v. Kessler, 2023 WL 3162188 (Ohio Ct. App. 2023).

The nursing home sued the daughter-agent for $42,000.00. The court ruled that the daughter acting as agent had no personal liability for the deficiency. Additionally, there was no evidence that the daughter as agent breached any agreement with the nursing home.

The court also noted that the Nursing Home Reform Act is Congress’s intended scheme to protect nursing home resident and their families. Feder law bars nursing homes which accept either Medicaid or Medicare from compelling guarantees from third parties such as family members. National Church Residences at p. 20.

Bottom line? Family members attempting to help an elder or disabled person get proper care are well-advised to consult with an experienced elder law attorney early in the process about how to qualify and protect eligibility for Medicaid.

States with the Best (and Worse) Elder-Abuse Protections 2024

Tue, 09 Jan 2024 19:24:39 +0000

A recent article compared all 51 states and D.C. for reporting, investigating and acting upon abuse of the elderly. That article is found below. Several experts provide insight on Elder Abuse and reporting.

Where does Delaware stand? Forty-six out of the fifty-one. At the bottom? California, which recently made all its residents eligible for Medicaid without regard to the amount of resources one might have.

https://wallethub.com/edu/states-with-best-elder-abuse-protection/28754

Your Estate Plan is More Than Your Will: The Importance of the Annual Review Your Estate Plan is More Than Your Will

Tue, 26 Dec 2023 16:26:11 +0000

Ask anyone the first word that comes to mind when they hear the term “estate plan.” The answer is likely “Will.” But your estate plan is much more than your Will. Your assets dictate what your estate plan documents are or should be.

Trusts and powers of attorney are vital parts of our estate plans.

But don’t forget, your beneficiary-designated assets – and the beneficiary designation forms that control them - are also part of your estate plan and need review and updating. So too with joint property and other types of property. Consider, for example:

401(k)/IRA: Ask anyone what most of their liquid money is invested in. The answer for many if not most is “my 401(k)” or “my IRA.” A Will does not control a 401(k)/IRA absent a failure of beneficiaries. A 401(k)/IRA is a contract between the owner and the financial institution. Death distributions are controlled by beneficiary designation form obtained from the financial institution.

Life Insurance: Most people are aware life insurance pays on your death to the persons or entities you name on the beneficiary designation form. Only if there is a failure of beneficiaries, and the estate becomes the default beneficiary, does the Will control.

Transfer on Death/Pay on Death /Other Beneficiary Designated-Assets: As we’ve discussed multiple times in our blogs and newsletters, TOD/POD/beneficiary-designated assets are fraught with peril due to their lack of incapacity management, unintended disinheritance, lack of supplemental needs planning, and the list goes on. With these type of assets, the beneficiary designation form or TOD/POD designation governs death distributions.

Joint property: Jointly titled property passes on the first death according to the deed or account title. Financial account contracts govern account titling. Only with certain titling of a deed does a Will govern death distributions. With joint property, the devil is in the details: is the deed or account titled according to your intent?

“Buckets” of Property

Accordingly, most clients have at least the following “buckets” of property to plan for: 1) assets that pass by Will or Trust, 2) beneficiary-designated assets, and 3) joint property.

With clients we review all of these buckets.

Clients must ensure a cohesive plan across all the buckets.

Often it makes sense for all buckets to have the same dispositive scheme.

But sometimes it makes sense for the buckets to have different dispositive schemes – so long as the differences are intentional and thoroughly considered.

For example, recently at least two sets of clients have developed an intentional, different scheme across buckets:

One married couple has charitable intent. They drafted their trusts to divide equally among their three children. But they agreed that on the wife’s IRA beneficiary designation form, in addition to the children, wife will designate several charities as beneficiaries, reducing the children’s shares of her IRA instead of the thirds they are receiving via trusts. This deviation was intentional because providing for charities via IRA beneficiary designation instead of via trust: (1) is more tax efficient (a charity receives a full $1 from an IRA, whereas an individual receives $1 minus income taxes), and (2) affords the IRA owner the flexibility to change designations as often as she likes without having to amend her Will and Trust.

Another married couple has one spouse who wants to leave a little more to the daughter than to the son. The couple prepared their trusts to divide equally among their two children. The couple agreed that on the wife’s IRA beneficiary designation form she will designate a higher percentage than 50% for the daughter she wants to leave more to. The wife has flexibility to change that daughter’s designation as facts change over time. The difference between the trust scheme and the IRA distribution scheme is intentional and planned by both spouses.

These two couples will need to review and update their beneficiary designations regularly over time as their finances, needs, family situation, and charitable intent change, as will all clients, even those who have the same dispositive scheme across all of their buckets.

Another frequently arising reason to review assets regularly is joint property. Examples: A couple has perfectly good trusts but forgets to use them in taking title to that wonderful new beach property. Or a husband and wife are tenants by the entireties on a deed but husband passes. Now wife holds title in her individual name, requiring probate on her death. Wife should consider transferring title to her trust. Examples of the need for updates are as limitless as the changes life provides us.

The Importance of the Annual Review

People think of their “estate plan” as the documents the attorney prepared, placed in their safe deposit box or fireproof safe as a “set it and forget it” item. Not so. The documents in an estate plan – including beneficiary designations, joint property titling, and asset titling – all should be reviewed regularly (annually at least) and updated to reflect new conditions.

We established our Protected Partners Program to help clients with this. At least once a year you should review your asset titling, beneficiary designations, circumstances, agents, and plan, to ensure they all are still appropriate for your circumstances at that new time – since we all know how different life and finances can be one year to the next.

Financial advisors have annual reviews with their clients. This year, when your financial advisor calls you to schedule his or her annual review, make that appointment.

But also set aside time for your own independent review of your assets and estate plan, because often you have assets spread across multiple buckets that the financial advisor only knows part of. Consider joining our Protected Partners Program to make scheduling your annual review automatic and to have us help you conduct that review.

How Medicaid Penalizes Gifts: The Rules

Tue, 05 Dec 2023 17:43:46 +0000

Prior gifts harm Medicaid applicants by delaying when Medicaid starts. The delay is directly linked to the total gift value over a five-year period. This delay significantly harms persons needing care now. We see this time and again. Below we explain the basic rules on how Medicaid penalizes gifts.

How Do Gifts Arise?

A parent gives money to her child. The gift might be large or small, one time or repeated. Medicaid counts even gifts of a few hundred dollars.

A parent might have thought Medicaid permitted a gift because the gift had tax benefits. Not so. Tax planning is different than Medicaid planning. A gift for less than the annual gift tax exclusion (in 2023, $17,000) does not require a gift tax return and does not count against a person’s lifetime gift and estate tax exemption (in 2023, $12.92 million). But this is still a gift for Medicaid purposes.

Gifting is The Foundation of the Medicaid Rules

Asset transfer rules are the foundation of the Medicaid rules. The three key concepts are: gift/transfer, lookback period, penalty. Each is interrelated: a gift that occurs during the lookback period is penalized. When a client in need of long-term care Medicaid has transferred assets, our task is to analyze the transfer for these elements. If we can demonstrate to Medicaid that an asset transfer is not within these elements, penalty might be avoided. But the elements are unbending. Below are the main elements.

First, a gift, also called an uncompensated transfer. A gift is a transfer of assets for less than fair market value. It is the first line of attack to have a transfer not be considered a gift. Full fair market value must be given in exchange for the transfer.

Second, a gift is penalizable if it occurs during the lookback period. The lookback period is the 60 months (5 years) before one applies for Medicaid.

Third, how is a gift during the lookback period bad? The penalty. The penalty is the number of months the Medicaid applicant is ineligible for Medicaid because of the total gifts made during the lookback period.

How does Medicaid calculate the penalty period? Medicaid takes the total of the gifts made during the lookback period and divides it by the penalty period divisor as determined annually by the State. In 2023 the penalty period divisor in the State of Delaware is $10,953.

Here is an example of how to calculate the penalty period using easy numbers: Father gifts $50,000 to his son. 2 years later the father enters a nursing home and applies for Medicaid. Medicaid looks back 5 years and sees the gift made 2 years prior. At the time of application the penalty period divisor is $10,000. $50,000 divided by $10,000 is 5 months.

When does the penalty period start? When the applicant is determined “otherwise eligible” for Medicaid but for the penalty period. This means:

Financially eligible: the applicant’s assets are below the permitted resource amount, as determined by Medicaid. In 2023, 1) the resource limit for a single individual is $2,000; 2) for a married couple, the maximum resource limit for the spouse residing in the community is $148,620 (called the Community Spouse Resource Allowance) and the institutionalized spouse’s resource limit is $2,000.

AND

Medically eligible: This means being determined to require an institutional level of care. The individual need not reside in a nursing home: it could mean nursing home services, services equivalent to nursing home but in another setting, or home and community based services under a waiver program. Nursing facility care, assisted living, and in-home care are covered.

If there is going to be a penalty, it is important to get the penalty period started as soon as possible. How? File the application once below the resource limits and get the penalty assessed. An applicant may have to file a second application once the penalty period has expired.

The Deficit Reduction Act of 2005

The Deficit Reduction Act of 2005 (the “DRA”) became effective February 8, 2006. It is still key legislation.

The DRA greatly changed Medicaid in at least two ways:

First, it changed the lookback period to 60 months (5 years). For gifts made prior to the effective date of the DRA, the lookback period was 36 months.

Second, under the DRA the penalty period starts NOT at the date of the transfer of the assets, but the date the Medicaid Applicant is otherwise eligible.

Are some transfers permitted?

By very narrow restriction Medicaid law exempts certain transfers of assets, to certain persons, on public policy grounds. These are defined by Medicaid law as “exempt transfers” and exceed the scope of this article. These exempt transfers typically are made proactively with elder law attorney advice in a Medicaid qualification plan, not by the layperson, or by the attorney not expert in Medicaid law. Do not make a transfer thinking it may be exempt. There are very strict requirements to quality for an exempt transfer.

Is it possible to cure a gift?

Delaware permits full or partial return to cure or partially cure a gift. The person returning the funds to the applicant need not be the person who first received the gift. Consult with a knowledgeable elder law attorney regarding the return or partial return of any gift as requirements must be satisfied.

Planning Strategies: The RULES and the TOOLS

Above are some of the key RULES that form the foundation of Medicaid law. But there are TOOLS that Federal and State law permit individuals to use to protect their assets and qualify to receive Medicaid. One of our roles as Certified Elder Law Attorneys is to know these RULES and apply the TOOLS to serve our clients in need. Once gifts are made, circumstances and law can make it impossible to fix them. Consult with an experienced elder law attorney about your options before taking action.

Social Security overpayments: Tips to prevent them

Tue, 07 Nov 2023 20:55:51 +0000

Source: CBS News

This week on 60 Minutes, correspondent Anderson Cooper reports on what happens when Social Security overpays people who receive benefits. Beneficiaries may find out years later that they owe tens of thousands of dollars—even if it was not their fault

During the 2021 fiscal year alone, the agency estimates it made approximately $6 billion in overpayments, according to a report by the Social Security Administration's inspector general.

While researching the story, the 60 Minutes team, including producer Andy Court and associate producer Annabelle Hanflig, asked experienced professionals in the field: What can people do to reduce the chances of getting an unexpected bill from Social Security? Here are some of those tips.

Retirement benefits

If you receive Social Security retirement benefits, one of the best ways to prevent overpayments is to check the earnings history Social Security has on record for you. You can do this before you retire.

How much Social Security should pay when you retire is determined by how much you contribute in payroll taxes while you're working. If the agency has the wrong information, you may face problems years later. You can find the information on your annual Social Security statements or on your My Social Security account on the Social Security Administration's website.

If you are nearing retirement or have already retired, there are products that can help you figure out how much you should be getting. A program called Maximize My Social Security lets you analyze complex scenarios, like when you and your spouse should claim retirement benefits, since who claims first and when can make a big difference. The program costs $39 a year.

AARP also has a free basic Social Security calculator to determine how much you should be getting.

Specialists 60 Minutes spoke with advised that all recipients should figure out what they should be receiving because it can take the Social Security Administration years to catch mistakes.

Non-covered pension plan

If you work in the public sector—for example, as a teacher or a firefighter—it's important to know whether you're part of a non-covered pension plan.

If you are, instead of paying into the Social Security system, you are paying into a pension plan run by a state or local government. When you retire, you must tell Social Security about this non-covered pension money. If you don't and you receive Social Security from another job you had, you may end up being overpaid.

Social Security disability benefits

If you're receiving Social Security disability benefits and decide to go back to work, you need to be extra careful. After an initial trial work period is over, you cannot make more than a set amount per month, or you will no longer be eligible for disability benefits. That monthly income limit is called Substantial Gainful Activity. The monthly limit for 2023 is $1,470 for non-blind recipients, but the amount changes each year.

If you are receiving both Social Security disability benefits and worker's comp, you must report the worker's comp. If you don't, you may end up owing Social Security a lot of money.

Supplemental Security Income

One of the largest sources of overpayments comes from Supplemental Security Income (SSI), a program for people with low incomes who are elderly or disabled. Because the eligibility guidelines have not been updated for inflation in many years, the threshold for eligibility is becoming more stringent. if your individual assets go above $2,000, you no longer qualify for benefits.

The rules for SSI can be complex. For example, if you're homeless and you sleep on a friend's couch, you must declare the value of that couch.

If you qualify for a full subsidy of your Medicare Part D premiums, then you also qualify for a $10 per month repayment program. That means Social Security won't charge you more than $10 a month to recoup your overpayment. But you must contact Social Security and ask them for it. If you ignore the overpayment notice, the agency might stop your checks entirely.

Underpayment

Just as some people are overpaid, Social Security also underpays recipients. According to a report by the agency's inspector general, Social Security underpaid recipients by $1.4 billion during the 2021 fiscal year.

When this happens, Social Security is supposed to alert people and pay the remainder of the money. But your chances of getting that money are greater if you figure out that you should be receiving more and initiate the correction process with Social Security.

When you notice a mistake

If you notice a mistake—whether it is with the earnings history Social Security has for you, or with the payments Social Security is sending—you must let the agency know about it as soon as possible. Experts told 60 Minutes that you must be persistent and continue alerting the agency until you know they have fixed the error.

They also advised that you keep records of all your communications with the agency, including everything you send and everything you receive. Keep detailed notes on who you talked to, when you talked to them, what they said, and how you can get in touch with them again.

According to legal experts, if you can prove that you alerted Social Security about a mistake and someone at the agency assured you it was fine, then they have given you misinformation. According to the agency's rules, this can be grounds for you to challenge the overpayment and possibly get the repayment waived.

You can contact Social Security by calling or visiting your local field office or by calling the national hotline: 1-800-772-1213.

Finding legal aid

It is often hard for people with overpayment problems to find lawyers to represent them because there is little financial incentive for attorneys to take on these cases. The National Organization of Social Security Claimant Representatives is an organization for attorneys who handle Social Security cases

People on SSI often have incomes that qualify them for free legal aid lawyers, some of whom will take on overpayment cases. Additionally, people who are disabled may qualify for free legal help from federally financed protection and advocacy programs throughout the country.

Source: https://www.cbsnews.com/news/preventing-social-security-overpayments-60-minutes/

Social Security Ramps Up Disability Overpayment Efforts

Wed, 04 Oct 2023 16:04:52 +0000

The Social Security Administration (SSA) is trying to reclaim billions of dollars from many of the nation’s poorest and most vulnerable — payments it sent them but now says they never should have received. During the 2022 fiscal year, the agency clawed back $4.7 billion of overpayments, while another $21.6 billion remained outstanding, according to a report by SSA’s inspector general. One consequence is a costly collection effort for the government and a potentially devastating ordeal for the beneficiary. “We have an overpayment crisis on our hands,” said Rebecca Vallas, a senior fellow at the Century Foundation think tank. “Overpayments push already struggling beneficiaries even deeper into poverty and hardship, which is directly counterproductive to the goals” of safety-net programs. The Social Security Administration declined an interview request from KFF Health News and Cox Media Group and would field questions only submitted by email.

Source/More: KFF Health News

Big Win for Disability Advocates in Health Equity Research

Mon, 02 Oct 2023 14:16:06 +0000

One of our core missions is to provide legal services to persons with disabilities and their families in estate and long-term care planning. A great many of our clients have special needs or have a loved one who does.

The Washington Post recently reported a big win for disability advocates who succeeded in having the National Institute of Health (the “NIH”) include persons with disabilities in their list of “health disparity populations” who have barriers to health care.

A “health disparity population” is a term used to describe a disadvantaged group that experiences preventable differences in health. Existing groups include race, gender, and other underserved communities.

The NIH is the largest single public funder of biomedical research in the world.

The designation is a big win because it is expected to dramatically increase research and resources to improve health care for persons with disabilities.

Refuting the Counter-Recommendation

The win comes against a recommendation from the National Advisory Council on Minority Health and Health Disparities against the designation, citing a lack of a standardized definition of disability and the broad nature of the disability population, and arguing that these issues could overwhelm existing NIH staff and budgeting.

Immediate reply from hundreds of disability organizations, advocates, researchers, and health care professionals followed, and the Council which had recommended against the designation backed down, excluding its recommendation from its final report and taking no position on the designation.

Disability researchers pointed out other designated groups have their own complexities as well, for example, race and gender identity, and that complexity is not a good reason to ignore those populations. Stated Jae Kennedy, professor of health policy and administration at Washington State University, “If we want to be a healthier country and a more inclusive country we need to understand and develop policies to support this frequently ignored minority population.”

The Ripple Effect

Professor Kennedy added that not only will the new designation increase funding and research at the NIH, but also an important ripple effect is expected: universities and organizations that compete for NIH funding will be encouraged to make their own workplaces and research projects inclusive of diversity.

Disadvantages Persons With Disabilities Face in Accessing Health Care

Too Little Research on Barriers to Accessing Health Care. Disability advocates point to too little research on the challenges persons with disabilities face in accessing health care. The NIH on Minority and Health Disparities reported only about 3% of disability-related research grants across all NIH Institutes from 2018 to 2022 also addressed health disparities, despite significant data showing persons with disabilities have poorer health outcomes than those without disabilities, including higher mortality rates, chronic pain and emotional distress.

Socioeconomic Factors. A disability alone can negatively impact health, but a number of socioeconomic factors also contribute. Researchers point to higher rates of poverty, incarceration, and homelessness, along with lower rates of employment – each of which can be a barrier to obtaining good health insurance or health care itself.

Physical Barriers. Researchers report other factors that lead to worse health for persons with disabilities include: limited transportation access, physical barriers to entering health care facilities, and a lack of accessible equipment. One example is the need for scales that weigh someone who uses a wheelchair.

COVID-19. Researchers report COVID-19 disproportionately affected persons with disabilities. Groups with intellectual disabilities were at higher risk of contracting the virus and were more likely to die from it. Other persons with disabilities could not access COVID-19 testing tools. Others suffered from shortages in medication and supplies they needed to survive. In this way, COVID-19 outcomes helped to bring to the forefront the health care disparities of persons with disabilities and the urgency to research and address those disparities.

Shifting Focus from “Fixing” Disability to Improving Health Outcomes

The designation is part of a greater push to improve health outcomes for persons with disabilities and change the way medical institutions treat disability.

Rather than “fix” or cure disabilities, which had been the focus of doctors and researchers, the focus is moving toward improving overall well-being.

Indeed, NIH is undertaking an effort to change its mission statement, one goal of which is to “reduce illness and disability” to “optimize health and prevent or reduce illness for all people.”

Including Persons with Disabilities in Health Care Industry

Disability advocates also seek greater representation of researchers and health care professionals with disabilities in the industry, better medical school training on how to treat persons with disabilities, and more accessible medical equipment in hospitals and health care facilities.

Source: https://www.washingtonpost.com/wellness/2023/09/26/disability-groups-win-fight-be-included-health-equity-research/

IRS Delays SECURE 2.0 Roth Requirement for Catch-Up Contributions For High Earners Until 2026

Fri, 01 Sep 2023 13:17:24 +0000

This article describes another step in our country’s laborious task of implementing the SECURE 2.0 Act of 2022, which, together with its predecessor SECURE Act of 2019, is making major changes regarding retirement accounts such as 401(k) plans, Individual Retirement Accounts, and governmental 457(b) plans.

Proposed Treasury regulations issued in February 2022 to implement SECURE (not even SECURE 2.0 yet) differed vastly from what many practitioners expected. Final regulations have yet to be issued. The content of those final regulations is unknown to say the least.

SECURE is rocking the retirement account world. The law in this area is in flux.

The latest installment relates to catch-up contributions by individuals 50 or over who are considered “high earners” in this context.

What is a catch-up contribution?

As you probably know, every year the Internal Revenue Service (“IRS”) sets limits on how much an individual may contribute to his or her retirement account. The limit is different depending on the type of account. Individuals may “max out” their contribution each year by contributing that amount. They may contribute no more for that year after reaching that limit.

But for individuals age 50 or over, Internal Revenue Code Section 414(v) permits a “catch-up contribution”, on top of the annual contribution, to save more towards retirement. When a catch-up contribution is made by an individual age 50 or older, the total contribution will be larger than the standard contribution limit. Every year the IRS sets limits on catch-up contributions as well, by type of account.

How did SECURE 2.0 affect catch-up contributions?

Section 603 of SECURE 2.0 required that, for tax years beginning after December 31, 2023, catch-up contributions made to 401(k), 403(b), and governmental 457(b) plans by employees whose FICA (Federal Insurance Contributions Act) wages in the prior year exceeded $145,000 (as adjusted in future years) must be made as Roth contributions, meaning on a post-tax basis. This requirement in Section 603 of SECURE 2.0 is a change to the current rules which allow the employee to designate whether the catch-up contribution is to be made on a pre-tax or post-tax basis.

Note the above change applies only to individuals 50 or over who are considered “high earners” in this context: FICA wages in prior year exceeding (as adjusted in future years) $145,000.

What’s the problem with requiring these “high earners” to make catch-up contributions on a post-tax basis?

The problem is employers as plan sponsors need to be set up to allow Roth contributions, and not all are. Plus implementation of this regulation is a more complex matter than it may seem, when reconciling it with other aspects of IRC Section 404 concerning both high- and non-high earners.

Factors include: (i) the short timeframe from the passage of SECURE 2.0 on December 29, 2022 to January 1, 2024 (which is the effective date of this designated Roth requirement), and (2) lack of IRS guidance to help employers, plus the third-party administrators who administer the plans, to implement the requirement.

The problem is such that over 200 employer organizations wrote to Congress, the Department of Treasury, and the IRS requesting “transition relief” to allow a more orderly implementation of the requirement.

The IRS answered with a YES. IRS Notice 2023-62 issued on Friday, August 25, 2023, announces a two-year reprieve for employers on the implementation of the Roth catch-up contribution requirement for high earners. The administrative transition period delays the effective date of the requirement to January 1, 2026, and clarifies and confirms other aspects of the regulation.

The Notice also confirms more guidance is to come. The IRS has requested written comments regarding the Notice and any other aspect of Section 603 of SECURE 2.0 by October 24, 2023. In addition, the Notice asks for comments about whether the intended guidance should address a plan that permits eligible participants to make catch-up contributions under Section 414(v) but does not include a qualified Roth contribution program. In particular, should a plan be permitted to prohibit higher-income participants from making catch-up contributions, but allow others to make pre-tax catch-up contributions, or should IRC Section 404(v)(4) continue to require plans to allow all eligible participants to make the same catch-up contribution election?

As a result of this Notice, a plan sponsor now gets 2 years (and a few months) to consider and determine whether to add a Roth contribution feature to its plan (if it does not already have one) and (ii) implement the requirement that a high earner’s catch-up contribution must be made on an after-tax basis.

Source:

https://www.jdsupra.com/legalnews/irs-delays-secure-2-0-roth-requirement-2007468/

A Dream Come True: I Am a Certified Elder Law Attorney!*

Thu, 03 Aug 2023 15:07:59 +0000

*Certified as an Elder Law Attorney (which may be abbreviated “CELA” or “CELA®”) by the National Elder Law Foundation.

I am thrilled to share that I have earned the designation of Certified Elder Law Attorney from the National Elder Law Foundation! This a major accomplishment requiring Herculean study over the course of six months, taking me away from my family, a grueling day-long exam in March that felt more painful (is that possible?) than the State of Delaware Bar Exam I took 23 years ago, waiting months to learn if I passed the exam, finding out I passed (hooray!), and then completing and submitting a daunting application in early July, which required me to show I completed at least 60 elder law matters across 12 substantive areas in the last three years, 45 hours of continuing legal education, and more than 5 peer references from esteemed elder law and other attorneys familiar with my work. The last week of July I received the word: I made it! I am now a Certified Elder Law Attorney!

To those who lived and worked with me for the last year, or for that matter, for the last six years, you KNOW what this process took and how important it was to me - and to my law firm team – not only that I study for and take the test – but that I pass.

In recent years the pass rate has hovered below 50%.

Ever since I first met Bill Erhart, I knew that becoming a CELA was what I wanted to do.

The story of how I came to work with Bill is special to me. For 15 years I practiced and/or taught Delaware corporate law at several major, well respected Delaware law firms with attorneys who set the standards for Delaware corporate excellence. I was so lucky to be a part of that. And I taught corporate and business law to undergraduate students at Wilmington University, Goldey-Beacom College, and Widener University, which I enjoyed tremendously. But I also was a member of a close family, losing someone dearer than words, in that time frame, all the while having young children of my own. I learned firsthand, as we all do, what families go through when their loved ones age or have difficulties. After taking a short time off to help with family matters, I decided to change paths completely and dedicate myself to learning and practicing elder law. This is where Bill comes in. I approached Bill, asking to volunteer to learn the field while I went back to school. Instead of taking me on as a volunteer, Bill hired me, taking a chance, and teaching me every day since then.

Bill is and has been the only CELA in Delaware.

I am now the second.

We are the only CELAs in Delaware.

With Bill’s tutelage and my dedication, the CELA designation represents what we have been working towards – together – for these years.

But more importantly, I wanted to engage in deep study of the 12 subjects needed for the CELA exam – and pass the exam and meet all of the grueling practice requirements – to achieve the level of competence I knew I needed to serve our clients well. When you choose a doctor, you need to KNOW he or she is competent. One cannot help if one is not competent. All those months of study and pain were a tried and true process for me to achieve that level of competence, and to be recognized as having that level of competence by the proper governing body, the National Elder Law Foundation (“NELF”) who is accredited by the American Bar Association, as one of the over 500 CELAs in the entire country.

Those who know me, know, I am committed to the populations we serve. I care deeply about the elderly, the aging, and their families – and all they are going through. I care about persons with special needs, whether young or aging, and their families, and all they are going through, too. I know that families do not know where to go, or what they need. I am grateful to fill that gap. Families need a competent, experienced, relevant professional to identify what they need and provide it.

I am lucky to spend my days working to help families. By earning this credential, I now have more abilities to share with families than I did before. And those higher abilities compound over time, like interest.

If you would like to learn more about the CELA credential, see the NELF website at: https://nelf.org/page/WhyyouneedaCertifiedElderLawAttorney.

Why You Need a Medigap Policy and How To Find One

Fri, 30 Jun 2023 16:11:15 +0000

A common mistake among Medicare recipients is to believe that Medicare is the only the health insurance they need. This belief is false and dangerous. For most expenses, Medicare only pays a portion. This creates “gaps” in medical coverage where the Medicare beneficiary must pay the other portion of their expenses. These gaps add up quickly, and can cripple the finances of a senior citizen who is struggling to make ends meet or, as is often the case, has the money to pay, but is saving that money in case other big expenses arise in the future, such as long-term care in a nursing home, assisted living facility, or the home. The senior and his or her family is left scratching their heads as to how the senior could be hit with such a big medical bill, for example, after a rehabilitation facility stay following hospitalization, when they thought the senior was fully covered by Medicare.

Medicare Supplement Insurance, also called Medigap, can help cover the gaps. A Medigap policy is private health insurance that is designed to supplement Medicare, by helping to pay gaps such as copayments, coinsurance, and deductibles, which can be substantial. The Delaware Department of Insurance regulates Medigap policies. Here is a link to the Delaware Department of Insurance: https://insurance.delaware.gov/.

A Medigap policy differs from a Medicare Advantage Plan, which is a way to get Medicare benefits, while a Medigap policy supplements Medicare.

Timing is key on buying a Medigap policy.

The best time to buy a Medigap policy is during your Medigap open enrollment period, which is a 6-month period beginning on the first day of the month in which you are 65 or older and enrolled in Medicare Part B. The important benefit of this 6-month window is that during that time you are protected in how the insurance company treats you. Specifically, in that window, the insurance company can’t do the following because of your health problems:

Refuse to sell you any Medigap policy it offers
Charge you more for a Medigap policy than they charge someone with no health problems
Make you wait for coverage to start except for certain conditions.

The terms are technical in this area and often overwhelming for a consumer.

The longer you wait to apply for Medigap after you turn 65 and start receiving Medicare, the more difficult it is for you to obtain coverage, and if you do obtain coverage, the more you might have to pay for it. If you apply for Medigap coverage after your open enrollment period, there is no guarantee that an insurance company will sell you a Medigap policy if you do not meet their medical underwriting requirements, unless you are eligible for select protections not listed here, and they can charge you more premium.

This article is intended to alert you and your loved ones to the importance and timeliness aspect of Medigap, not to describe the many complicated intricacies, including that persons under 65 can receive Medigap policies if they are receiving Medicare due to a disability.

If you or a loved one do not have a Medigap policy and are receiving Medicare, please, promptly, take advantage of free resources to learn your options. Following are easy places to turn to, with trained volunteers and experts whose job it is to educate you on your options:

Delaware Medicare Assistance Bureau (DMAB): https://insurance.delaware.gov/divisions/dmab/. Per the DMAB website, the DMAB provides free health insurance counseling for people with Medicare, including those under 65 years of age. Call DMAB at 1-800-336-9500 or (302) 674-7364 to set up a free counseling session with a trained volunteer at a convenient site. DMAB’s stated goal is to empower people with Medicare to better understand their options and enable them to make the best health insurance decisions for themselves. Per the DMAB website, Counselors provide in-person and telephone assistance in the following general areas:

Medicare Prescription Drug Coverage Program (Medicare Part D)
Medicare supplement insurance (Medigap Plans)
Assistance for disabled Medicare beneficiaries (under age 65)
Medicare Advantage Plans (HMOs, preferred provider organizations)
Long Term Care Insurance
Medical Assistance programs
Assistance for low-income beneficiaries
Billing problems
Volunteer counselor opportunities
Prescription Savings for those who qualify
Free community presentations and more

For a very informative Medigap resource published by the Delaware Department of Insurance, titled The Delaware Medicare Supplement Insurance Guide 2023, scroll down on the DMAB webpage, see the section on Medicare Supplement Insurance, and see this link:

https://www.dhss.delaware.gov/dhss/dsaapd/files/The_Medicare_Supplement_Insurance_Shoppers_Guide_2023.pdf

www.Medicare.gov has a section and search engine to find Medigap policies. Of note is a link to an informative resource published by the Centers for Medicare and Medicaid Services, 2023 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare, which is an official government guide about Medigap:

Reading the above guides and scheduling a free counseling session with a DMAB representative are quick and easy ways to begin vetting your or your loved one’s options about Medigap, before unexpected substantial charges start piling up after, for example, a hospital or rehabilitation stay. Learn your options early and take action to protect yourself.

When Does Medicare Pay for In-Home Care?

Mon, 05 Jun 2023 16:06:50 +0000

We’ve all seen it.

Neighbor A suffers a medical event, spends multiple days in the hospital and gets discharged to home. Medicare pays for a team of professionals to come out and care for Neighbor A in the home, including, for example, a licensed practical nurse, a physical therapist, a speech therapist, and an occupational therapist. Medicare also pays for home health aides who help with daily activities in the home including bathing and dressing.

Neighbor B, on the other hand, is simply getting older and more frail and needs more help with daily activities in the home. His children have jobs and can’t be with him all day. Neighbor B privately pays in full for home health aides to come out each day and help him in the home. Medicare pays for nothing toward the home health aides. Neighbor B’s assets are depleting rapidly. The family fears it might be time for Neighbor B move to an assisted living facility, at its exorbitant cost in independence, emotion, and money. Neighbor B and his family are distraught.

Why does Medicare pay for Neighbor A’s home care but not Neighbor B’s? It seems so unfair.

The Law: When and What Medicare Covers in the Home, and For How Long

When Medicare Covers In-Home Care:

Under the Medicare Act, Medicare covers home health services under both Parts A and B of Medicare when:

1.The services are medically “reasonable and necessary”, which is a specialized definition linked to the service in question. For example, per 42 C.F.R. § 409.42(c)(1)(i): “In the home health setting, management and evaluation of a patient care plan is considered a reasonable and necessary skilled service when underlying conditions or complications are such that only a registered nurse can ensure that essential non-skilled care is achieving its purpose.”; and

2.The following 4 criteria are met:

a.Plan of Care. The physician or authorized provider must: (i) prescribe a plan of care for furnishing the services, and (ii) periodically review that plan of care to continue or discontinue the services. 42 C.F.R. § 409.43.

b.Homebound. The person is confined to home, commonly referred to as “homebound”. This does not mean the individual is unable to ever leave the home. The requirement is generally met if non-medical absences from home are infrequent, and leaving home requires a considerable and taxing effort. This can be shown by the patient needing personal assistance or the help of an assistive device such as a wheelchair or walker. The following should not bar a “homebound” finding: walks around the block, or attendance at an adult day care center, religious services, or a special occasion. 42 C.F.R. § 409.42.

c.Skilled Services Needed on Intermittent Basis.

The person must need care that is defined by Medicare as “skilled” (meaning (i) skilled nursing care, or (ii) physical or speech-language therapy) on an intermittent basis.

These “hooks” of skilled services are first required before occupational therapy and home health aides are available. Skilled nursing, physical therapy, and speech-language pathology services are defined as “qualifying skilled” services for the purpose of establishing eligibility for Medicare home health coverage. A person must initially require and receive one of these skilled services, in order to receive Medicare for “dependent services” (meaning dependent upon a skilled service being in place) which include: (i) home health aide, (ii) medical social worker, (iii) occupational therapy, and (iv) medical supplies.

For example, while occupational therapy is not considered a skilled service to begin Medicare home health coverage, if in addition to occupational therapy the person was receiving skilled nursing, or physical or speech therapy, but those skilled services end, Medicare will continue paying for the occupational therapy. 42 C.F.R. §§ 409.42, 409.44, 409.45.

d. The term “intermittent or part-time” means furnished any number of days per week, so long as they are provided: (i) less than 8 combined hours each day and (ii) 28 or fewer hours each week (or, subject to review on a case-by-case basis based on need, less than 8 hours each day and 35 or fewer hours per week).

e.Medicare-certified home health agency. The services must be furnished by, or under arrangement with, a Medicare-certified home health agency.

42 U.S.C. § 1395f(a)(2)(C) ; 42 C.F.R. §§409.42 et seq.

What Medicare Covers in the Home:

If the qualifying conditions above are satisfied, Medicare covers the following home health services:

1.Part-time or intermittent nursing care provided by or under the supervision of a registered professional nurse;

2.Physical therapy, speech-language pathology, and occupational therapy;

3.Part-time or intermittent services of a home health aide (personal hands-on care), which include:

a.Bathing

b.Dressing

c.Grooming

d.Feeding

e.Toileting

42 C.F.R. § 409.45(b)(1)(i)-(v).

4.Medical social services; and

5.Medical supplies.

42 C.F.R. §§ 409.42, 409.44, 409.45, Medicare Beneficiary Policy Manual, Ch. 7, § 30.4.

How Long Medicare Covers In-Home Care

As stated in the Issue Brief of the Center for Medicare Advocacy titled” Medicare Home Health Coverage: Reality Conflicts with the Law”, dated April 7, 2021, found at: https://medicareadvocacy.org/issue-brief-medicare-home-health-coverage-reality-conflicts-with-the-law/ :

“Importantly, and contrary to what is often stated, Medicare home health coverage is not just a short-term, acute care benefit. 42 C.F.R. §§ 409.48(a),(b); Medicare Beneficiary Policy Manual, Ch. 7, §§ 40,1.1 and 70.1. There is no duration of time limit for Medicare Home Health Coverage. So long as the law’s qualifying criteria are met, coverage can continue for an unlimited number of visits: ‘to the extent that all coverage requirements specified in this subpart are met, payment may be made on behalf of eligible beneficiaries … for an unlimited number of covered visits.’ 42 C.F.R. §§ 409.48(a)-(b); Medicare Benefit Policy Manual, Chapter 7, § 70.1.”

The Reality: Misinformation; Evidence of Limited Access

Access to good information is the key to everything. What we do not know about, we do not know to investigate or request.

Misinformation. The Issue Brief from the Centers for Medicare Advocacy (“CMA”) states it hears regularly from people who meet Medicare coverage criteria for home health services, but are denied, or not given the appropriate amount of care. Examples include: patients have been told Medicare will only cover one to five hours per week of home health aide services, or for only one bath per week, or that they aren’t homebound (because they roam outside due to dementia); or that their condition must first decline before therapy can commence or recommence. CMA reports one person being told he could not receive home health aide coverage under Medicare because he was “over income” even though Medicare has no income limit. See the Issue Brief: https://medicareadvocacy.org/issue-brief-medicare-home-health-coverage-reality-conflicts-with-the-law/.

Evidence of Limited Access. CMA reports in its Issue Brief that the full level of home health aide coverage (not only bathing, but also dressing, grooming, feeding, toileting, and other key services to help an individual remain healthy and safe at home):

“[I]s almost never obtainable. Data demonstrate this dramatic change in coverage. In 2019 the Medicare Payment Advisory Commission (MedPAC) reported that home health aide visits per 60-day episode of home care declined by 88% from 1998 to 2017, from an average of 13.4 visits per episode to 1.6 visits. AS a percentage of total visits from 1997 to 2017, home health aides declined from 48% of total services to 9%.” See Issue Brief (citations therein).

According to CMA in the Issue Brief, Medicare-certified home health agencies “have all but stopped providing necessary, legally-authorized home health aide services, even when patients are homebound and are receiving the requisite skilled nursing or therapy to trigger coverage.” Indeed, per the Issue Brief, the Centers for Medicare and Medicaid Services (“CMS”), the government agency responsible for monitoring and punishing agencies who do not comply with Medicare law, “does not monitor or rebuke agencies for failure to provide this mandated and necessary care.” See Issue Brief.

Conclusion

Medicare should cover in-home care when, and only when, stringent statutory requirements are met. But once these criteria are satisfied, Medicare should cover home health aides at an amount of hours that makes a real difference for families, not the small amount in terms of type or hours to which misinformation and other external criteria lead.

For more on this topic, see the CMA Issue Brief: https://medicareadvocacy.org/issue-brief-medicare-home-health-coverage-reality-conflicts-with-the-law/.

Latest Announcement From The IRS On Free Online Filing

Fri, 26 May 2023 15:21:54 +0000

Many of us use professionals to help us file our tax returns. But many of our clients do not need that expertise as we are recently retired, disability income is modest or our children are students with modest income. Online tax filing services charge fees. They may entice us with “free” federal tax filings, but then switch to charging for the state or local tax return.

The IRS is on the cusp of implementing a true free filing service for taxpayers called “Direct File.” Below is the notice from the IRS setting forth the report made to Congress with links to the actual report>

IR-2023-103, May 16, 2023

WASHINGTON — The Internal Revenue Service submitted a report today to CongressPDF evaluating a Direct File option for taxpayers and is taking steps to begin a pilot project for the 2024 filing season following a directive from the Treasury Department.

The report to Congress, required by the Inflation Reduction Act, evaluated the feasibility of providing taxpayers with the option of a free, voluntary, IRS-run electronic filing system, commonly referred to as "Direct File."

The report finds that many taxpayers are interested in using a free IRS-provided tool to prepare and file taxes, and that the agency is technically capable of delivering a Direct File program. It also concludes that effective execution of a Direct File program would require sustained budget investment and careful management of the potential program's operational complexity.

The report focuses on three areas: taxpayer opinions, cost and feasibility. The report also includes an analysis conducted by an independent third party, as required by the statute. The report also lays out the potential benefits and challenges associated with the IRS implementing a Direct File program.

"The IRS is committed to delivering significantly improved services by providing taxpayers with tools, information and assistance to make it easier to comply with their tax filing obligations. Direct File – used by numerous tax jurisdictions around the world – has long been discussed as an option for improving the customer experience for taxpayers in the U.S.," said IRS Commissioner Danny Werfel. "The IRS review looked at the potential operational and administrative requirements of such a system. Ultimately, the results show there is taxpayer interest in an optional Direct file program and such a program is technically feasible. Any path forward should start with a limited pilot to assess operational factors described in this study."

As directed by Treasury, the IRS will move to gather further information through the implementation of a scaled Direct File pilot in the 2024 filing season to further assess customer support and technology needs and the ability to overcome the potential operational challenges identified in the report. Additional details on the Direct File pilot will be available in coming months.

The IRS report relied on information from the agency's Taxpayer Experience Survey (TES), which surveyed thousands of taxpayers on these topics. The IRS also reviewed and incorporated findings from an independently conducted survey by the MITRE Corporation.

The IRS supplemented data from these taxpayer surveys with user research and usability testing that was conducted using a basic internal prototype to better understand first-hand taxpayer perspectives.

The IRS report also includes a separate, independent analysis done by New America and Professor Ariel Jurow Kleiman on the Direct File concept.

The IRS looks forward to engaging with stakeholders around this important topic in the months ahead.

IRS Commissioner Danny Werfel's letter to Treasury Secretary Janet Yellen to accompany the Direct File reportPDF.

Page Last Reviewed or Updated: 16-May-2023

Pass-Through Taxation: What You Need to Know

Fri, 26 May 2023 15:19:22 +0000

Most US businesses have a pass-through taxation structure: they are not subject to corporate tax. Instead, they have their income “pass through” to their owners to be taxed on their individual income tax returns.

Pass-through businesses have simpler filing and a lower tax rate than C corporations because they avoid double taxation. Pass-through business owners must pay self-employment taxes, however, in addition to state and local taxes. C corporations are eligible for some tax breaks that pass-throughs do not qualify for, although pass-through entities may qualify for a special deduction under a tax law that took effect in 2018.

Taxation is not the only factor to consider when selecting a business structure. Not all pass-through businesses enjoy limited liability protection, and unincorporated businesses may face limitations with growth and financing.

Types of Pass-Through Business Entities

According to the Internal Revenue Service (IRS), a pass-through entity is a business that passes its income, loss, deductions, or credits to its owners. It does not typically have an entity-level tax liability.^{^[1]} Many entities offer options to enjoy pass-through taxation; however, how an entity accesses this option varies depending upon the type of business.

A sole proprietorship is the default structure of a business owned by a single taxpayer, such as a freelancer or independent contractor. Sole proprietorships are the most common type of pass-through entity. The owner of a sole proprietorship reports business income on Schedule C of a 1040 tax return.
A partnership has multiple owners. The owners can be individuals or other businesses. Partnerships make up around 11 percent of all pass-through business entities. They file an entity-level tax return, but each partner’s business income, which is distributed according to the partnership agreement, is reported separately using Form 1065.
A limited liability company (LLC) has a flexible structure that allows it to be taxed as different pass-through entities, as well as a C corporation. An LLC with one member/owner is taxed as a sole proprietorship by default, while an LLC with more than one member/owner is taxed like a partnership. An LLC can also elect to be taxed as a corporation by filing Form 8832.
A corporation, sometimes referred to as a C corporation, is subject to double taxation as a default. That is, corporate income is taxed once at the corporate level through the corporate income tax and a second time at the individual level through the individual income tax on capital gains and dividends.^{^[2]} However, C corporations may elect to receive a special pass-through designation as an S corporation.

About the S Corporation Tax Election

An S corporation is a tax election limited to US citizens and businesses with up to 100 shareholders. S corporations file federal income taxes using Form 1120-S. Each shareholder reports their business profits and losses. About 13 percent of pass-through businesses are S corporations. LLCs and corporations may elect to be taxed as pass-through entities by filing Form 2553.

Avoiding double taxation is a major incentive for businesses to organize as pass-through entities and explains why about 95 percent of US businesses are pass-throughs.^{^[3]} These types of companies employ more than half of all private-sector workers and account for around 40 percent of all private-sector payroll.^{^[4]}

High-income taxpayers earn the majority of pass-through business income. About 45 percent of pass-through income is earned by taxpayers who make $500,000 and over. Pass-through status lets these taxpayers avoid double taxation, but their business income could place them in a higher tax bracket.

To take the sting out of pass-through business income taxes, owners may be able to exclude up to 20 percent of qualified business income (QBI) from federal income tax using the Qualified Business Income Deduction. The pass-through deduction was added through the Tax Cuts and Jobs Act (TCJA) of 2017. The law’s details are complex, though—not all businesses qualify for the QBI deduction, and determining eligibility requires a multistep approach.^{^[5]}

Disadvantages of Pass-Through Status

Not having to pay taxes twice on business income is a major benefit of pass-through entities, but the tax picture is more complex than double taxation versus single taxation.

C corporations do not have to pay taxes on retained earnings or profits that are reinvested in the business. Flow-through entities, on the other hand, typically must pay taxes on all earnings, whether they are retained. As a result, flow-through businesses may have more of an incentive to distribute profits as dividends to owners, rather than use them to build the business.
C corporations can deduct fringe benefits—things like health insurance, paid time off, and commuter benefits—from their taxable income. Flow-through entity owners, however, may not write off fringe benefits.
C corporations might be able to write off more charitable deductions than pass-through businesses. C corporations can generally make tax-deductible charitable contributions up to 10 percent of their taxable income. Pass-throughs can deduct charitable contributions as well, but only if they itemize their deductions.
C corporations can issue an unlimited amount of stock, making them much more attractive to investors. Among pass-through entities, only S corporations can issue stock, but only up to 100 shareholders, and only one class of stock.
Not every type of pass-through entity offers limited liability. Starting a pass-through entity, especially a sole proprietorship or general partnership, is relatively simple. These types of businesses are created by default, without their owners having to file any paperwork with the state. Yet unlike a corporation or LLC, an unincorporated business is not a legal entity separate from the owners. Unincorporated businesses have unlimited liability. In the event of a bankruptcy or lawsuit, creditors can go after the personal assets of the owners.

Which Structure Is Right for Your Business?

Choosing the proper business entity structure involves balancing several factors. Owners are in business to make money. Most want to earn—and keep—as much income as possible. Federal taxes are just one piece of the taxation puzzle. State and local business taxes must also be considered to get a complete picture of a business’s tax rate. In addition, the tax breaks that you qualify for may change as your business grows and becomes more complex.

A simple business structure can make sense early on when you are effectively self-employed, have no employees, and face little exposure to liability. But at some point, it could make sense to transition a sole proprietorship or general partnership into an LLC, elect to have your LLC taxed as a corporation, or change your S corporation to a C corporation. There can be many different reasons to change an existing business structure, including not only tax considerations, but also limited liability protection, raising money from outside investors, succession planning, and hiring employees.

Before selecting a business entity, you should discuss the issues with an attorney. Once we learn more about your business, financials, and goals, we can explain your options from every angle so you can make an informed, confident decision. Contact our office to set up an appointment today.

[1] Procedures and Authorities, IRM 8.19.1 (Apr. 19, 2016), https://www.irs.gov/irm/part8/irm_08-019-001.

[2] Double Taxation, Tax Foundation, https://taxfoundation.org/tax-basics/double-taxation/ (last visited May 17, 2023).

[3] Aaron Krupkin and Adam Looney, 9 facts about pass-through businesses, The Brookings Inst. (May 15, 2017), https://www.brookings.edu/research/9-facts-about-pass-through-businesses/#fact5/.

[4] Kyle Pomerleau, Some Pass-Through Businesses are Significant Employers, Tax Foundation (Feb. 9, 2015), https://taxfoundation.org/some-pass-through-businesses-are-significant-employers/.

[5] I.R.S. News Release FS-2019-8, Facts About the Qualified Business Income Deduction (Apr. 2019), https://www.irs.gov/newsroom/facts-about-the-qualified-business-income-deduction.

Recent Congressional Developments on Improving Access to Home- and Community-Based Services:

Fri, 26 May 2023 15:19:14 +0000

Home and Community Based Services (HCBS) Access Act

The caregiver crisis in America is multifaceted and deep. While under federal and state law, older adults and people with disabilities who meet medical and financial criteria are eligible for Medicaid long-term care services and supports (Long-Term Care Medicaid (“LTSS”)), states, and even regions within states, vary as to the settings in which these vulnerable persons receive LTSS.

Nursing home care is often immediate and available, but care in the home or in an assisted living facility often is unavailable as a practical matter due to long wait lists, even when the state has requested and received permission from the federal government via waiver to use Medicaid funds for that care.

As a result, as outlined in a 2021 report from Justice in Aging (https://justiceinaging.org/wp-content/uploads/2021/04/HCBS-Primer.pdf?eType=EmailBlastContent&eId=51cbe48b-01ed-469f-8983-b9c191c5c371), home or assisted living care paid by Medicaid is simply not an option for many people in America who need immediate care and cannot wait for their spot on the waiting list to become available - despite what legally is supposed to be available – and must instead enter nursing home care.

And of those who remain in home waiting to receive in-home LTSS, most care is provided by unpaid family caregivers. Earlier this year, the Better Care Better Jobs Act (https://www.casey.senate.gov/news/releases/casey-dingell-introduce-bill-to-provide-historic-permanent-investment-in-home-care-for-seniors-and-people-with-disabilities), was introduced to address this.

A recent bill in Congress seeks to address all of the above, by increasing access to HCBS and addressing the attendant consequences of wait lists and other barriers to home- and community- based care, awareness of all of which has been heightened due to the COVID-19 pandemic.

The bipartisan bill, the Home and Community Based Services Act (the “HCBS Act”), was originally introduced to Congress in 2021, and in March 2023 was reintroduced. The bill, which in the Senate is cosponsored by 16 U.S. Senators, and is endorsed by numerous advocacy organizations, seeks to provide seniors and persons with disabilities with a real choice as to where they receive LTCSS.

Senator Casey introduced the Senate bill while he, as Chairman of the U.S. Senate Special Committee on Aging, held a hearing “Uplifting Families, Workers, and Older Adults: Supporting Communities of Care” (https://www.aging.senate.gov/hearings/uplifting-families-workers-and-older-adults-supporting-communities-of-care), examining the economic benefits of investing in Medicaid home- and community-based services.

Per the PDF one-page summary of the bill provided by U.S. Senator Bob Casey, Chairman of the U.S. Senate Special Committee on Aging, available at https://www.aging.senate.gov/imo/media/doc/hcbs_access_act_one_pager1.pdf, the HCBS Act outlines six specific goals of the proposed legislation:

1.“Increase Medicaid funding for home- and community- based services;

2.Provide grant funding for states to expand their capacity to meet the needs of people who prefer HCBS;

3.Make steps to improve the stability, availability, and quality of direct care providers to help address the decades-long workforce shortage crisis;

4.Provide states with resources so that caregiving workers – who are disproportionately women of color – have stable, quality jobs and a living wage;

5.Provide training and support for family caregivers; and

6.Create better evaluation measures to assess the quality of HCBS being provided.”

Among other things, the bill is aimed to eliminate HCBS waiting lists and the need for states to repeatedly apply for HCBS waivers to provide HCBS services. Increasing access to HCBS makes economic sense too: according to the 2021 report from Justice in Aging, 25 of the 50 states spend twice as much on institutional care as on HCBS (https://justiceinaging.org/wp-content/uploads/2021/04/HCBS-Primer.pdf?eType=EmailBlastContent&eId=51cbe48b-01ed-469f-8983-b9c191c5c371).

Improving access to HCBS is a common theme in Washington, D.C. right now. Indeed, in April 2023 President Biden signed an Executive Order including more than 50 directives to federal agencies to increase care access and to support care workers and family caregivers, as outlined in https://www.whitehouse.gov/briefing-room/statements-releases/2023/04/18/fact-sheet-biden-harris-administration-announces-most-sweeping-set-of-executive-actions-to-improve-care-in-history/ and https://acl.gov/news-and-events/announcements/executive-order-expands-access-community-living-services-supports.

We are monitoring these developments as they relate to our State of Delaware and the nation as a whole.

Credit: https://www.elderlawanswers.com/bill-advocates-for-seniors-who-seek-at-home-medicaid-care-19667; https://www.homecaremag.com/news/new-legislation-would-boost-medicaid-funds-hcbs.

Change in Nursing Homes Population and Economics

Fri, 26 May 2023 15:19:04 +0000

It is well known and as set forth in a recent article from the Center for Medicare Advocacy that nursing homes have significantly reduced populations. Before the pandemic, nursing home populations were declining. Plante Moran, an accounting and business consulting firm, reports a 32% decline in utilization of nursing homes from 2015 to 2022.[1] It writes that it does “not expect utilization [of nursing homes] to recover to pre-pandemic levels.” Plante Moran suggests that “nursing home rightsizing” is occurring and describes older people choosing independent living, assisted living, memory care, continuing care retirement communities, and affordable senior housing instead of nursing homes.

Medicaid has paid more for home and community-based care than for nursing home care since fiscal year 2013.[2] Support for those who wish to remain in the home or home like settings has increased dramatically.

Nursing facilities have been understaffed for decades. COVID-19 did not help, but the trend was established well before. Employment at nursing homes is tough. Relative low wages for nurse aides, perceived poor working conditions and lack of support does not encourage people looking for employment.

According to Plante Moran, nursing homes lose more than $38 per Medicaid resident per day as the daily average underpayment. No business can withstand such daily losses.

Even with the increasing availability of alternatives to nursing homes, however, there will always be some people who need a skilled nursing in a group setting. There will always be a need for facilities to provide high quality care.

[1] Plante Moran, 2023 Senior Living Industry Pulse, https://go.plantemoran.com/rs/946-CTY-601/images/PMLF-2023-Senior_Living_Industry_Pulse.pdf

[2] CMS, Medicaid Long Term Services and Supports Annual Expenditures Report, Federal Fiscal Year 2019, p. 13(Dec. 9, 2021), https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltssexpenditures2019.pdf