Protecting the Community Spouse’s Financial Security in Pennsylvania

The Pennsylvania Department of Public Welfare has finally been forced to conform to federal law regarding annuities. Administrative law judges had been rubber-stamping the local office’s decisions denying Medicaid where the spouses of nursing home residents had purchased annuities. Until recently, it was necessary to bring a court case to overturn the administrative decision. Now the tide has turned. In at least two recent decisions by administrative law judges, DPW was ordered to approve Medicaid despite the Community Spouses’ annuities. The Commonwealth’s hearing officers are now enforcing federal regulations.

Since 1989, federal law has been protective of the “Community Spouse” of a person in a nursing home. Special resource protections allow the Community Spouse to retain half of the “total joint resources” on the day the other spouse enters long-term care–the “snapshot”–up to a maximum of $113,640. 42 USCA § 1396r-5(c). Once eligibility has been achieved, the Community Spouse’s assets are no longer counted. 42 USCA § 1396r-5(c)(4).

The federal regulations also permit the Community Spouse to protect additional assets by converting them to irrevocable annuities. These qualifying annuities must be commercially available, irrevocable and unassignable. They must have no cash value and have been purchased at fair market value. All required payments must be paid within annuitant’s actuarial life expectancy and the Commonwealth must be named as beneficiary on death of annuitant in the amount of Medicaid payments.

There are two prongs of these spousal protection regulations:

An individual shall not be ineligible for medical assistance . . . to the extent that . . . assets were transferred to the individual’s spouse or to another for the sole benefit of the individual’s spouse, [or] were transferred from the individual’s spouse to another for the sole benefit of the individual’s spouse. 42 USCA § 1396p(c)(2)(B).

No income of the community spouse shall be deemed available to the institutionalized spouse. § 1396r-5(b)(1).

Transmittal 64 of federal regulations contains the sole-benefit test. It says that annuities are “usually purchased to provide a source of income for retirement.” It goes on to explain that “to avoid penalizing annuities purchased as part of a retirement plan . . . . If the expected return on the annuity is commensurate with a reasonable estimate for the life expectancy of the beneficiary, the annuity can be deemed actuarially sound.” State Medicaid Manual § 3258.9(B). http://www.cms.hhs.gov/Manuals/PBM/list.asp?listpage=2

Pennsylvania has been trying to curb use of this legal planning devise for many years despite clear federal precedent allowing annuities for this purpose. Department of Public Welfare treated irrevocable, unassignable annuities as “countable,” based on spurious reasoning, flagrantly disregarding legal precedent.

The U.S. Third Circuit Court held that an annuity which has been used to turn an asset into an income stream is not countable and the Community Spouse is neither obligated to share the distributions nor to offer the income stream for sale on a secondary market. James v. Richman, 547 F.3d 214 (3rd Cir. 2008). The Commonwealth Court of Pennsylvania had reached a similar result in a case where I represented the appellant. Ross v. Dept. of Public Welfare, 936 A.2d 552 (Pa. Commw. Ct.2007). The court held that the “DPW improperly considered Leonard’s income stream from an irrevocable and non-assignable annuity as an available resource based on the existence of a secondary market for such income streams.” Id. at 555.

In the wake of the series of losses that culminated with James, the Pennsylvania Department of Public Welfare concocted an argument that in the Deficit Reduction Act of 2005, Congress amended the Medicaid Act by explicitly permitting states to ‘deny[ ] eligibility for medical assistance for an individual based on the income or resources derived from an annuity.’ 42 U.S.C. § 1396p(e)(4). According to the Commonwealth, the DRA overruled the cases in which it lost its countability argument.

The sentence on which DPW relied did not overrule any case. The portion of the statute cited was artfully edited to support the Department’s position. The full sentence reads, “Nothing in this subsection shall be construed as preventing a State from denying eligibility for medical assistance for an individual based on the income or resources derived from an annuity described in paragraph (1).” 42 U.S.C. § 1396p(e)(4) (emphasis added). The U.S. District Court drove a stake through the heart of this rationale in Weatherbee v. Richman, — F. Supp. 2d —-, 2009 WL 161624 (W.D. Pa. Jan. 22, 2009). Still, the Department of Public Welfare continued to deny Medicaid where Community Spouses had purchased Medicaid-compliant annuities.

It now appears that DPW will conform to federal law regarding annuities. Until recently, administrative law judges rubber-stamped the local office’s Medicaid decisions concerning annuities. It was necessary to bring a court case to overturn the administrative decision. Now the tide has turned. In at least two decisions by administrative law judges, DPW was ordered to approve Medicaid despite the Community Spouses’ annuities. The Commonwealth’s hearing officers have gotten the message that federal law and precedent must be respected.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2012 John B. Payne, Attorney
 
 

On Furlough from the Nursing Home

Nursing home residents and rehabilitation patients are not imprisoned. They have the right to come and go, with proper safeguards. With Memorial Day and the Fourth of July coming up, families should make plans to take their elderly and disabled family members to holiday get-togethers. Often, it only takes enough forethought to make sure someone drives a big enough vehicle to accommodate a wheelchair or other assistive equipment.

Who wants to be stuck in a nursing home when the family is at the beach scarfing down Ballpark wienies? If your family does not have someone in a nursing home, go pick up an honorary great-grandparent to take to the family picnic. The person will be thrilled and you can tell your siblings that you just found out you all were adopted and this is your real grandparent.

Many nursing home residents are spending down to get on Medicaid. Use some of that money to hire a medi-van or ambulance, if necessary. Paying for such services is permissible under Medicaid rules.

The Center for Medicare Advocacy has an excellent article by Toby Edelman that explains the nursing home resident’s right to leave temporarily. It is called “Home for the Holidays: Leaving the Nursing Home During a Medicare-Covered Stay.” Please read it and consider taking your family member out of the nursing home for family outings.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2012 John B. Payne, Attorney
 
 

Clark Durant: Loser, not Career Politician

Clark Durant is running for Debbie Stabenow’s U.S. Senate seat, representing Michigan. Durant, who ran unsuccessfully for the Senate in 1990 and has held lesser appointive and elective political offices beginning in 1984, says voters should choose him instead of a “career politician.”

If he had gained a Senate seat in 1991, what would that make him? A career politician! So, his message really is, “Vote for me, I’m a loser, not a career politician.”

Incidentally, Stabenow was in the House of Representatives from 1997 to 2001, when she became a senator, for a total of 15 years in Congress. Durant would have been in the Senate for 21 years by now, if he had won. I guess that makes him a career loser.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2012 John B. Payne, Attorney
 
 

When and Who on Desperate Housewives Jumped the Shark?

The season finale of Desperate Housewives was a bigger bomb than Newt Gingrich’s and Rick Sanctorum’s campaigns, combined. The honey and syrup made my teeth ache and the way all the loose ends were tied up with pretty bows became boring half way through the first hour. The only question left to be answered is, “Which of the housewives jumped the shark, and when?”

Your comments and analysis are humbly requested. A jump-the-shark moment cannot come in the final episodes, so Gabrielle Solis finding her vocation as a personal shopper or Karen McClusky taking the rap for the murder would not count as jumping the shark. Mike Delfino’s murder would not count because it was not the action of a major character.

This is a question of vital importance to western civilization. Think back over the series. There is no doubt that the last few seasons lacked the sardonic wit and satiric irreverence of the seasons preceding the five-year hiatus in the plot. At what point did the show start its decline and what stunt did the writers insert into the story to try to recapture the show’s originality. The prize for best suggestion is to be a guest blogger on Off the Top o’ My Head.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2012 John B. Payne, Attorney
 
 

The Weight of the Nation

“The Weight of the Nation” is a four-part documentary on the national obesity epidemic that starts May 14, 2012 on HBO. In a May 10, 2012 video editorial, “The Tax Code Diet: The Institute for Medicine gets political on obesity,” Dan Henninger and Joe Rago, of the The Wall Street Journal, mock the documentary and the Institute of Medicine report on which it is based. WSJ Article. Their neo-Con “all government is evil” attitude should be seen as an unqualified endorsement of companies that push unhealthy eating habits to maximize profits with no regard for the health of their consumers.

Henninger and Rago, neither of whom are obese, do not deny that the nation has a problem. However, they ridicule the idea that the government might have a role in encouraging healthy eating. They claim that what one eats is a matter of individual choice and that the government should not attempt to regulate food packaging and advertising. They further argue that unhealthy products like carbonated soft drinks loaded with high-fructose corn syrup and caffeine should not be taxed to subsidize anti-obesity and healthy diet programs and other health costs attributable to those products.

Do the neo-Cons oppose food-safety inspections and regulation to protect us from pathogens like salmonella or mad-cow disease? Some social Darwinists would place all responsibility for food safety on processors and vendors. They would say, “Let the market sort out which manufacturers poison us and should go out of business, but even most neo-Cons would agree that we rely on the government to enforce food safety rules. When we buy beef or carrots at Piggly Wiggly we have confidence that the products are not drenched in E. coli because of government oversight.

Our food supply may be free of disease-causing pathogens, but what about high-fructose corn syrup, salt, and aspartame? What about the absurd mounds of fat, sugar, cheap meat, carbohydrates, and salt that Applebees, Burger King, Cheesecake Factory and other restaurants call “meals.” People tend to be gullible and when the restaurant calls something a “meal,” many customers will assume that what they will be served is a reasonable portion for one person to eat at one sitting. The restaurant is playing on customer’s credulity when it serves an “appetizer” with 1,500 calories or delivers a mass of food that exceeds 2,300 calories and calls it a meal. At the very least, calorie counts should be displayed on the menu or bill of fare.

In the supermarket, trusting consumers are fooled by advertising and packaging into thinking that candy is a healthy breakfast and cookies are nutritious snacks. The frozen-food aisle is crammed with pre-prepared entrees labeled “heart-healthy” or “lean” that barely qualify as “food.” Judging by the ingredient lists, which are often barely legible, a product might be lasagna or animal shampoo. Few shoppers have the time or the ability to really decipher what they are buying. They do not realize that “organic” and “natural” and “fresh” and “heart-healthy” are just advertising gimmicks that have no meaning. Shoppers assume that the government keeps food processors, distributors and retailers honest. That is far from the case, with some reasonable reforms shoppers could have the protection they deserve.

Watch “The Weight of the Nation” with an open mind. There is a crisis of obesity in the United States and we must curb our eating – particularly with regard to children. By allowing our children to overeat we are condemning them to a lifetime of obesity and all of the health problems caused by excess weight. We as a nation must address the problem and the government has an important role to play.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2012 John B. Payne, Attorney