ElderBlog.net

The Medicare Part D Annual Election period is again upon us–from November 15, 2010 to December 31, 2010.  This is the annual opportunity for those enrolled in Part D plans to change their enrollment and those who have not been enrolled to enroll for the first time.  Because of the 2008 Medicare Improvement for Patients and Providers Act (not Health Care reform) some Medicare Private Fee for Service Plans will drop out of the market.

The Health Care Reform law has addressed one of the big drawbacks to Medicare Part D, the infamous Donut Hole–a coverage gap encountered by many Part D participants during the plan year.  This year, all participants will receive a $250 rebate when they enter the donut hole.  In addition, the cost of drugs while in the donut hole will begin to be discounted while the amount credited to close the coverage gap will be the full retail price of the drugs.  This will save money and reduce the actual out of pocket costs to Part D participants.  By 2020 the donut hole will be completely eliminated (assuming that none of the Health Care Reform repeal efforts are successful).

There are many other issues related to selecting a Part D plan.  Also remember that for many Wisconsin Residents, Senior Care may be preferable to Medicare Part D.  Each individual situation is different so they must be carefully reviewed.

Jim Jaeger

One aspect of the Patient Protection and Affordability Act (a/k/a Health Care Reform) is known as the CLASS Act (Community Living Assistance Services and Support Act).  Long promoted by the late Senator Ted Kennedy, this program is designed as an affordable, non subsidized, privately funded long term care insurance program managed by the federal government.  It is, in effect, a long term care insurance program aimed primarily at paying for services and supports in a community  based setting.

The program does not receive any government subsidies (unlike, for example, Medicare Part D which is run by private insurance companies who receive substantial public subsidies).  Rather it is required to be paid for out of premium dollars, calculated for solvency for at least 75 years and with administrative costs not to exceed 3%.

This program will have no medical underwriting and the only requirement is that the participant be “actively employed” or self employed.  (Unfortunately, stay at home spouses with no job can’t participate.)  Employers must opt into the program, although they will have no cost, other than possibly the administrative cost of transmitting premium payments each month.  If the employer opts in, then the employee will be automatically enrolled in the program unless they choose to opt out. (Procedures will be adopted for self-employed individuals and employees of non participating employers to join the program.) There will be some penalties for initially signing up, then dropping out, and then coming back in when the need for long term care is seen. (This is to prevent “adverse selection”–the process whereby only those who need the benefit enroll.

Premiums will be determined by the U.S. Secretary of HHS based on advice of an independent advisory council.  Low income individuals, including students under age 22, will pay a nominal premium of $5.00 per month.

Benefits will not be paid until the participant has paid premiums for 60 months and needs substantial assistance with “2 or 3″ (to be determined by HHS) activities of daily living.  The benefit to be paid must be no less than, on average, $50 per day.  While this is not sufficient to pay the full cost of care, at roughly $1,500 per month (or more) this could certainly put a dent in the costs necessary to remain at home–and it will not affect other benefits, like Medicaid or VA benefits.

At this time, it’s not clear how this will interface with commercial long term care insurance.  While some fear that it may unfairly compete, the real hope is that (1) it will introduce people to the long term care insurance concept and (2) that commercial insurers will devise products to complement CLASS Act benefits.

For many years, critics of Medicaid have argued that it deters folks from buying long term care insurance because they think that they can always rely on Medicaid.  Advocates for Medicaid have responded that while Long Term Care Insurance has a number of benefits, for many cost and medical underwriting have been major deterrents.  Perhaps the CLASS Act, if left alone by the critics, will provide an opportunity to test these theories.  I have often wondered what it would cost, in terms of Medicare taxes imposed on all workers, to provide long term care as an insurance based, rather than as a welfare based, benefit.  Maybe the CLASS act will show us the way.

Jim Jaeger

I apologize for the large number of spam comments we have been getting.  I am working with my Web Guy to see what we can do about them.  Please bear with us.  Jim

In a prior post I mentioned a new policy from the Department of Health Services related to annuities.  Since I wrote that post there have been some additional developments.

First, there have been a number of court cases in Pennsylvania, Ohio and Connecticut that have ruled that a stream of payments from an irrevocable and non assignable annuity cannot be treated as an asset for Medicaid eligibility purposes.  Weatherbee v. Richman, 595 F. Supp.2d 607 (W.D. PA, 2009) affirmed Weatherbee v. Richman, (No. 09-1399, 3d Cir. 2009) and the Ohio Court of Appeals in Vieth v. Ohio Department of Job & Family Services, No. 08AP-635 (Ct. App. Ohio July 30, 2009)

In Wisconsin, we had one administrative hearing decision in Wisconsin,  MED–13/103287, which rejected a similar claim by the State of Wisconsin regarding an annuity.  Unfortunately, this case had some retroactivity issues that made it less clear as to the basis of the decision and the state has not changed the language in the most recent update to the Medicaid Eligibility Handbook.  Thus, in my view, using annuities for Medicaid Planning is still a tenuous proposition.  Other strategies, such as promissory notes might be a better choice.

While much of the health care reform debate focused on the technical (what kinds of changes to medical practice and insurance law were necessary to “bend the cost curve”) to the silly (the “death panel” debate) there were a lot of provisions that will have an immediate impact on the elderly population.  These include:

• A number of provisions to improve community based long term care and increased funding for these kinds of programs to encourage states to provide more funding.
• Expanding Aging and Disability Resource Centers (ARDC’s) to provide more information to clients about services for seniors in the community.
• The CLASS Act, which is a voluntary, single payor, public long term care insurance program to provide long term care benefits to remain in the community.  This will be funded from premiums charged to participants.  All working class adults will be enrolled in the program unless they opt out.
• Improve coordination of medical care for seniors through a variety of demonstration grant programs.
• Provide Bonus payments to Medicare Advantage Programs that promote coordination of care.
• Begin to eliminate the “Doughnut Hole” or coverage gap in Part D drug programs, including a tax free $250 rebate in 2010.
• Restructure payments to Medicare Advantage plans to bring their payments into line with traditional Medicare.
• Enacted the Elder Justice Act to provide more services and support to combat Elder Abuse.
• Finally, the general changes to eliminate pre-existing condition exclusions and provide more universal health insurance coverage will aid the younger elders (those not yet eligible for Medicare) to obtain health insurance in the private market.

The Department’s war on annuities continues.  In light of MEH 16.7.4.1.2, the counties (or at least some of them) are shopping all annuity contracts to JG Wentworth and when Wentworth expresses an “opinion” as to value (not a commitment to purchase mind you) they treat the annuity as have a “value” at the Wentworth “opinion.”  This will make it that much more difficult to use annuities in planning situations. (We are looking at whether Wentworth will really buy the annuity.

In my view, this is wrong headed.  First of all, most annuities are used in spousal situations to help make it possible for the community spouse to remain financially independent for a much longter time.  Second, in many cases, because of the income from the annuity, the cost of care contribution for the institutionalized spouse will increase, thus saving money for the State while both spouses are alive.  In addition, it may delay the time that the community spouse will need Medicaid.

Oh, by the way, the Department is also apparently taking the position that the March 1, 2009 “effective date” doesn’t really mean that (despite the clear wording of the MEH amendment).  Is this any way to run a railroad?

Thursday April 16, 2009 has been designated National Health Care Decisions Day.  All around the country, law schools, bar associations and others are sponsoring events to encourage persons to think about how they want their health care decisions made if they can’t make them for themselves.  At the University of Wisconsin law school, a group of students will be sponsoring an activity.  On May 7, 2009, Attorney Bill Colby, who represented the Nancy Cruzan family in the seminal Supreme Court case of the same name will be a featured speaker at the State Bar Convention in Milwaukee.  Bill offered the following thoughts in a recent piece in the Kansas City Star. http://www.kansascity.com/273/story/1138811.html 

If you haven’t already done so, I encourage you to execute your own health care power of attorney.  For more information, look at http://www.hill-law-firm.com/documents/2008/advance_health_care_planning.pdf

Bill Colby, the lawyer for the family of Nancy Cruzan in the famous Cruzan v. Missouri and author of two books, The Long Goodbye:  The Deaths of Nancy Cruzan and Unplugged: Recovering the Right to Die in America will be speaking in Wisconsin on May 6 and 7, 2009. 

On Wednesday, May 6, 2009 he will speak at the Bolz Auditorium at Meriter Hospital from 6:00-7:30 p.m.  On Thursday, May 7, 2009he will be a “Showcase” speaker at the State Bar of Wisconsin Annual Convention in Milwaukee at the Midwest Express Center.  (You must be a lawyer to attend this latter presentation).

Bill is a knowledgeable and outstanding speaker.  Please join us.

Jim jaeger

Effective January 1, 2009, the Deficit Reduction Act was implemented in Wisconsin. This federal law, enacted in February of 2006, made significant changes to Federal Medicaid law, which became effective in Wisconsin on January 1, 2009.

The most significant changes involve the divestment (asset transfer rules).  They include extending the lookback period to 5 years (instead of 3 for most transfers under the old law), aggregating all transfers in the lookback period instead of those that “touch,” and, most importantly, delaying the start date for the penalty period.  Under the old law, the penalty started to run in the month of the gift.  Under the new law, the penalty now starts to run when the individual is in a nursing home, has less than $2,000 (or the amount of the spousal allowance in the case of a married couple) and an application has been filed.  This change makes asset transfers much more dangerous for persons who might need medical assistance in the future.

Other significant changes involve the use of annuities in medical assistance planning and limitations on the exclusion for home equity.

For more information on these and other changes take a look at:  http://dhs.wisconsin.gov/em/ops-memos/2009/pdf/09-01.pdf

Jim Jaeger

One of the key issues that will be before the Congress this year is Health Care Reform.  Public Policy advocates who have worked on this issue for years seem cautiously optimistic that there will be action in this Congress.  While the outlines of the plans are in the early stages, it appears that some mix of a public-private system is most likely.  A straight Single Payor system seems unlikely.

A major issue will be cost controls.  Given the rising costs of health care, if these cannot be brought under control, then the likelihood of improving access and coverage is less.  However, this is the toughest nut to crack, since this is where the major interest groups will weigh in, since they are likely to pay the biggest price.  Also, the coalitions on this may be interesting and unusual.  For example, the insurance industry has suggested that it will be more forthcoming on issues related to pre-existing conditions and community rating if coverage is universal.  Manufacturing industries may also take a more positive view because of the cost of health care as a part of their overall costs.

We’ll lhave to wait and see.

Jim Jaeger