Archive for the ‘Medicare’ Category

As an elder law and special needs attorney I get a track-side seat for a pile of planning train wrecks: Here are the best ones . . .

This is a column for the contrarians among us who will insist, against mounds of advice, on creating maximum legal havoc. Here are ten great ways to insure a successful train wreck!

Great Idea One: Do not have a will. Let state law determine how assets will be divided (they won’t all go to a spouse if there are any children). Without a will many valuable planning opportunities are missed, thus insuring maximum havoc.

Great Idea Two: Do not have an effective power of attorney. Without a power of attorney, a guardianship may be the only option, which will be expensive and subject the guardian to court supervision and bonding.

Great Idea Three: Sign over all property to the kids if bad results are the goal. Mom may believe she is protecting her property, but she is subjecting the property to the liabilities and risks of the kids (divorce, anyone?), not to mention that some of the kids may be thinking of moving to Rio. Giving the property to the kids can also insure they pay maximum capital gains taxes when they sell the property. Certain types of trusts are a much better alternative, but not as much fun if creating maximum damage is the goal!

Great Idea Four: Skip the health care advance directives. Let everyone argue among themselves to decide who gets to make health care decisions.

Great Idea Five: Do not do any long term care planning. Buying long term care insurance is way too responsible. Also, it is better to wait until there is a crisis (Dad has gone into the nursing home) because at that time there are fewer options and any course of action will likely be more expensive.

Great Idea Six: If there is a disabled child, duck parental responsibilities and avoid taking advantage of the many planning opportunities available for a special needs child. Disinherit the child and leave everything to the siblings. Maybe “they’ll do the right thing.”

Great Idea Seven: Carry inadequate insurance. This is a real winner! Do not carry a good Medicare supplemental policy so that there will be maximum exposure to whatever Medicare does not cover (which is plenty).

Great Idea Eight: Do not do any planning after a “late” second marriage, especially if there are children from the previous marriages. In this manner a perfect storm of battling families can be hoped for. Also, treasured family assets can be used to pay for the nursing home expenses of old Whatsisname instead of going to the kids.

Great Idea Nine: Do not, under any circumstances, update an old estate plan. Laws may change, but the dedicated Train Wrecker knows that he need never change!

Great Idea Ten: Never, ever seek good professional advice. With good professional assistance things may go too smoothly. If you absolutely must have some help, limit expenses to less than $100 and buy something online. Or better yet, seek the advice of a neighbor.

Bonus: Do not do anything.

Someone told me not to write this because it would be bad for business (because guess who gets to clean up the wreck?).  “Nope,” I said, “people will do it anyway!”

 

What does cashing in an IRA, or perhaps converting to a Roth IRA, have to do with Medicare premiums? Maybe a lot . . . a lot of your money.

Occasionally a person going into a nursing home may have to cash in an IRA. In other situations converting a traditional IRA into a Roth IRA may make financial sense. At the right time and with the right advice these may be smart moves. But there can be a hidden cost that many advisors never think of.

Medicare Premiums and Income

First a bit of background on Medicare Part B premiums. Medicare is a federal health insurance program. Part B covers visits to and services by various providers. The insured pay for coverage with premiums, usually by deductions from monthly Social Security checks.

Most Medicare enrollees (72%) have been paying $96.40 monthly Medicare premiums the past few years and may be surprised to learn that the 2011 premiums are actually $115.40 a month. But federal law provides a “hold-harmless” provision that says that for most people the premiums will not go up more than any Social Security cost of living adjustment for the year. As we all know, Social Security has not gone up the past few years, so neither have the Medicare premiums. Had there been a Social Security adjustment for 2011, the monthly premiums could have been as high as $115.40.

The other 27% are not so lucky. For people who do not have premiums deducted from their Social Security checks and for new enrollees the 2011 $115.40 a month applies.

For those pulling in a bit more than average the premiums get even steeper. Individuals with annual income of between $85,000 and $107,000, and married couples with income between $170,000 and $214,000 will pay monthly premiums of $161.50. An individual with income between $107,000 and $160,000 ($214,000 and $320,000 for a couple) will pay $230.70 monthly premiums. There are a number of other brackets that scale upwards until premiums hit $369.10 monthly. You may review the 2011 Medicare premiums, co-pays and deductibles here on this website.

The Social Security Administration looks at income reported two years ago to determine Medicare premiums. In other words, 2009 income is used to determine 2011 premiums.

The Rub: Converting IRAs to Roth IRAs

When someone cashes in an IRA – for whatever reason – the cash-in will probably be a taxable distribution. In other words, if Granddaddy converts a $100,000 IRA to a Roth IRA, he will likely have an extra $100,000 gross income for tax purposes.

The result:  If Granddaddy had other income of $40,000, with his IRA conversion he will have reportable income of $140,000. That means in two years, he will be paying $230.70 in monthly Medicare premiums (using 2011 figures). That amounts to $1,611.60 extra that year.

I am not saying converting to a Roth IRA does not make sense. It may be a great move. Do be aware of the extra costs.

A reader asked me if that was a “hidden tax” and I disagreed with him. There is nothing hidden about it!

I could retire if I had a dollar (better make it five dollars) for every client who had been told she would not qualify for further Medicare nursing home coverage because she was no longer improving or had “plateaued”.

Nonsense. Time to bust a myth!

Medicare Nursing Home Basics

Medicare pays a limited amount of nursing home care, but the care that is paid can be critical to the patient. In order to qualify, however, the patient must meet specific requirements.

First, the patient must have been hospitalized for at least three days. Second, the patient must be admitted to the nursing home for at least one of the underlying conditions treated in the hospital.

Third, the nursing home resident must receive skilled level of care on a daily basis. “Skilled services” actually cover a broad array of services. A common reason given for cutting off Medicare coverage is that “skilled services” are longer needed when, in fact, the patient indeed requires skilled services as broadly defined under the Medicare regulations.

What is “Skilled”?

Skilled services require technical or professional personnel such as registered nurses, licensed practical nurses, physical, occupational or speech therapists. In order for a service to qualify as “skilled”, it must be so inherently complex that it can only be safely and effectively performed by, or under the supervision of, professional or technical personnel.

Importantly, skilled services can include “observation and assessment of a changing condition” as well as “overall management and evaluation of a care plan”. So, for example, monitoring of fluid and nutrient intake might be necessary to prevent dehydration.

The Level Truth About Plateaus

Often nursing homes may mistakenly require a resident to be improving or showing progress in order to continue skilled services and maintain her Medicare coverage. If a resident “plateaus”, or the nursing facility says the resident no longer has rehabilitation potential, the facility may deny her further coverage. Denying Medicare coverage for this reason is improper.

The Medicare regulations are clear that “restoration potential” is not a valid reason for Medicare coverage denial. Other regulations provide coverage for “maintenance programs based on initial evaluations and periodic assessments”. A number of court cases prohibit the use of “rules of thumb” and require individual assessment of an individual’s needs.

Unfortunately, the “improvement standard” has wriggled its way into the system and is improperly applied at all levels, from nursing homes to the appeals level. One reason may be that there are so few advocates who are aware of the rules and who have the skills to appeal a coverage denial.

There may be some help on the way from the courts. Two recent federal court decisions in the past few months agree with my position. Both courts, relying on the regulations discussed above, held that Medicare can pay for skilled care if it is needed simply to preserve a patient’s current functioning or prevent further decline.

Papciak v. Sebelius

In September the US District Court for the Western District of Pennsylvania found in favor of Wanda Papciak, an 81 year old who had Medicare covered services denied by a nursing home on the basis that she was unlikely to improve.

Ms. Papciak sued the Obama administration claiming that Medicare should have considered whether she required skilled nursing care to maintain her current level of functioning.

The court held that “[t]he restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.”

Anderson v. Sebelius

Sandra Anderson, a 60-year-old buy percocet online woman who had been receiving home health care covered by Medicare following a second stroke, sued when Medicare cut off her benefits.

In October , the US District Court in Vermont ruled in Anderson’s favor holding that “[a] patient’s chronic or stable condition does not provide a basis for automatically denying coverage for skilled services.”

The Pols Weigh In

Recently a group of House Democrats wrote the administration on the issue. “Beneficiaries are frequently told that Medicare will not cover skilled services if their underlying condition will not improve. . . . For example, as people with multiple sclerosis are often not likely to improve, skilled services such as physical, occupational and speech therapies that are necessary to slow the progression of the disease, or maintain current function, are denied. As a result, these individuals’ conditions deteriorate –frequently leading to more intense, more expensive services, hospital or nursing home care.”

Unfortunately, the administration has so far been unwilling to correct its guidelines. That leaves the courts as the last resort. While the recent court opinions add fuel to the growing clamor to enforce the law as written, as district court decisions they have little more than persuasive relevance outside of western Pennsylvania or Vermont.

Fortunately, the nonprofit Center for Medicare Advocacy recently announced an effort to combat this myth. The first approach is to prod the federal regulators to issue clear guidance. If that does not work, litigation will follow.

Wish them luck! Improper denials often harm those most in need of help. These include not only older patients, but also those with disabilities such as Multiple Sclerosis, Alzheimer’s, Lou Gehrig’s, spinal cord injuries, diabetes, and others.

Stay tuned.