LTC Bullet: Takacs Tackles LTC Anomalies

Wednesday, April 21, 2004


LTC Comment: No one will accuse "LTC Bullets" of being too kind to elder law attorneys who practice Medicaid estate planning. But neither let it be said that we fail to give credit where credit is due. Three excellent short articles by an elder law attorney follow with our comments after the ***news.***

*** WHERE HAVE YOU HEARD THIS BEFORE? From a New York Times editorial titled "The Perils of Cutting Medicaid," Saturday, April 17, 2004: "The most obvious potential spot for additional savings is long-term care, which consumes some 40 percent of the nation's Medicaid budget. One overdue reform is to plug loopholes that allow many middle-class people to qualify for Medicaid's nursing home coverage by transferring assets to other family members. Medicaid exists to provide health coverage for people who couldn't otherwise afford it, not to protect the assets of wealthier people so they can be passed on to heirs." Hear, hear! ***

*** GET YOUR "CSA" AND HELP THE CENTER: The Certified Senior Advisor organization makes a contribution to the Center for Long-Term Care Financing for every new enrollee to their program who mentions the Center and cites the "source code" number 8196. Although the Center does not endorse any companies or professional designations, we've heard a lot of good things about CSA and we've met many capable professionals who have attended their training and received that designation. For information on the CSA course and certification, go to . If you enroll in the CSA program, please mention the Center for Long-Term Care Financing in your application and reference source code 8196. Drop us an email to and let us know you've enrolled. Then send us your evaluation of the program when you've completed it. CSA classes are coming up May 5-8 in Boston, MA; May 19-22 in St. Louis, MO; June 9-12 in Seattle, WA; and June 23-26 in Philadelphia, PA. ***

*** LATEST DONOR-ONLY ZONE CONTENT: Here's the latest Zone content followed by instructions on how to subscribe so you can receive these critical epistles daily by email.

The LTC Reader #4-014--Caregiver Crisis Cries Out for More LTCi (Hard numbers on the devastating financial and emotional impact of long-term caregiving.)

The LTC Reader #4-015--How the Courts Undercut Medicaid and LTCi (Well-intentioned but misguided judicial decisions often hurt public and private LTC financing.)

LTC E-Alert #4-023--Q&A on Medicaid Estate Recovery from Spouses (Phyllis Shelton's question and Steve Moses's answer elucidate the issue.)

The LTC Data Update #4-018--Medicare: The More they Spend, The Worse the Care (Could there be a better reason to pay privately for long-term care?)

Don't miss our "virtual visits" to major LTC industry conferences in The Zone. You'll find our comparison of the conferences, session summaries, interviews and pictures at .

Individual donors of $150 or more and corporate donors to the Center for Long-Term Care Financing receive our daily email LTC Bullets, LTC E-Alerts, LTC Readers, and LTC Data Updates for a full year. You'll also get access to the donor-only zone where these publications are archived along with other donor-only features. If you already qualify for The Zone, you can click the following link, enter your user name and password, and go directly to the latest donor zone content and archives: . If you do not already qualify for The Zone, mail your tax-deductible contribution of $150 or more to the Center for Long-Term Care Financing, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109. Then email your preferred user name and password (up to 10 characters each). You can also contribute online by credit card or direct withdrawal at . ***


LTC Comment: Following are three brief articles from the electronic pen of Tim Takacs, a Certified Elder Law Attorney (CELA) and member of the National Academy of Elder Law Attorneys (NAELA). Mr. Takacs practices in Hendersonville, Tennessee. He publishes a free email newsletter titled "Elder Law FAX." His weekly epistles are frequently newsworthy and relevant to critical issues in the field of long-term care financing. Although we often disagree with the publication's editorial comments, "Elder Law FAX" hit the nail on the head in the following three recent editions.

Article number one explains how a family jettisoned over $600,000 in assets overnight to qualify for Medicaid, how a court approved, and how the Continuing Care Retirement Community (CCRC) and taxpayers got left holding the bag.

Article number two describes how states in fiscal crisis are cutting their Medicaid programs by whacking services like dental benefits for poor people.

Article number three elucidates a recent court case in Nevada that supports Medicaid estate recovery from spousal estates.

What you cannot get from these three thoughtful, well-written articles is an explanation of the bizarre relationship between the facts and conditions they describe. That's our job. So, here goes:

Medicaid eligibility rules are so generous and elastic that people with hundreds of thousands of dollars can qualify for the program's long-term care benefits easily without spending down privately for care first, especially if they obtain the help of Medicaid planning specialists.

Devastated by recent fiscal crises that are driven largely by Medicaid, especially LTC costs, states are taking a meat axe to the benefits desperately needed by poor women and children while routinely allowing well-to-do seniors unimpaired access to the program's most expensive benefit--LTC.

Simultaneously, few states bother to pursue Medicaid estate recoveries aggressively, and three states (Michigan, Georgia and Texas) eschew estate recoveries altogether. Only one state we know of, Oregon, routinely pursues recoveries from the estates of surviving spouses who are predeceased by Medicaid spouses.

Put these three facts together and what you find is a set of perverse public policy incentives that (1) encourage excessive reliance on Medicaid for long-term care, (2) chill the market for LTC insurance and home equity conversion which might otherwise pay for long-term care, (3) contribute to the desperate financial and quality problems faced by LTC providers who are heavily dependent on low Medicaid reimbursements, and (4) divert scarce and desperately needed Medicaid funds away from poor women and children and into the pockets of baby-boomer heirs who consequently ignore the risk of long-term care for their parents and for themselves.

The only good news in this bleak picture is that these problems are self-inflicted by mindlessly counterproductive public policy. Stop doing what we've always done and we will quickly get different, better results. Target Medicaid to the needy, require the affluent to meet more realistic eligibility requirements, and use the savings to incent LTC insurance and home equity conversion. Do these things, and in a few years, America's LTC service delivery and financing system will revive and flourish.

Now, here are the three articles referenced above, republished with permission from the author.


ELDER LAW FAX -- March 8, 2004

A free weekly newsletter by Tim Takacs, Certified Elder Law Attorney

This issue: Court Rejects Nursing Home's Key Money Argument


A continuing care retirement community (CCRC), Oak Crest Village in Parkville, Maryland, operates three distinct, but integrated, levels of housing and health care: apartment units, where residents may live largely independent lives; assisted living units, in which residents receive greater attention to their health care needs; and a nursing home, Renaissance Gardens, in which residents receive continuous nursing care.

In June, 2001, Ruth and Sherwood Murphy filed a residency application with Oak Crest. On their application, they supplied detailed financial information, which revealed that the couple had about $ 450,000 in jointly owned assets, Sherwood had $19,000 in personal savings in his own name, Ruth had $126,000 in personal savings in her own name, and Ruth had an additional $68,000 in savings held jointly with her daughter.

The Executive Director at Oak Crest reviewed the information, concluded that the Murphys had sufficient assets to pay the requisite fees based on actuarial projections of their life expectancy, and accepted the application.

In November 2001, the Murphys moved into Oak Crest. Ruth, then 81, moved to an independent living apartment. Sherwood, then 94, was admitted directly into Renaissance Gardens.

As a condition to their acceptance into the CCRC, the Murphys were required to sign Residence and Care Agreements. Section 8.11 of those agreements contained a covenant that, unless they had the prior written consent of Oak Crest, Ruth and Sherwood would not divest themselves of, or sell or transfer, any of their assets or property interests if the sale or transfer would result in their respective net worth falling below the minimum necessary to become an Oak Crest resident.

Shortly after their move, Ruth transferred $356,000 of the couple's money into a joint account with her and her daughter and then purchased $280,000 in immediate annuities from that account. Sherwood then applied for Medicaid benefits and was approved effective June 1, 2002.

When Oak Crest learned that Sherwood had been approved for Medicaid, it sued the Murphys, alleging a violation of 8.11 of Sherwood's Residence and Care Agreement. Oak Crest sought to have the transfer of Sherwood's assets annulled or to have him expelled from the nursing home.

Agreements such as Sherwood Murphy made are not uncommon in some states. A nursing home will admit a resident but only on assurances that the resident will pay privately for a certain period of time before applying for Medicaid. (The reserved funds needed to pay privately even have a name: elder law attorneys call it "key money.")

There's a small problem with this arrangement, however: it is illegal. A nursing home that accepts Medicaid is prohibited from extracting a promise from a resident not to apply for Medicaid. That is called a "condition of participation" that the facility agrees to in order to participate in the program.

In Sherwood Murphy's case, the Maryland Court of Appeals held that the state 's Nursing Home Residents' Bill of Rights applied to him: it is a statute that prevents a nursing facility from requiring that any resident pay at the private-pay rate for any period of time prior to making a Medicaid application.

The law prohibiting Medicaid-certified nursing homes from imposing a private-pay requirement is intended in part to prevent wealthier people from buying their way into better nursing homes, and consigning the less affluent to bad nursing homes.

In states such as Tennessee where the law is enforced, a resident is admitted to a Medicaid-certified facility either through a waiting list or from a skilled nursing facility, not by promising "key money."

Oak Crest Village, Inc., v. Murphy, February 9, 2004.


ELDER LAW FAX -- March 29, 2004

A free weekly newsletter by Tim Takacs, Certified Elder Law Attorney

This issue: Cuts in Medicaid Dental Care Services Threaten Good Health


Looking to save some $12 million in the 2004 budget, the state of Michigan on October 1, 2003, stopped paying for routine dental care for 600,000 adults on Medicaid, the state-federal health insurance plan for persons with few assets and low incomes.

Among those no longer receiving Medicaid dental care are low-income mothers, nursing home residents, and developmentally disabled and mentally ill people. Care for children is not affected, and adults in pain or those suffering from infections can still receive Medicaid-paid treatment.

In the Missouri legislature, the House of Representatives passed a bill earlier this month that would slice $110 million from the state's $4.2 billion Medicaid budget, which covers almost one million poor, elderly and disabled Missourians. The legislation would authorize the elimination of some Medicaid services not required by the federal government, such as dental and optical care for low-income adults.

Facing a $127.7 million shortfall in the state's budget, the governor of Maine has proposed to eliminate more than a dozen health-care services for adults paid for by the state's Medicaid program, including dental care.

Beginning April 1, 2002, the state of Idaho eliminated all non-emergency adult dental coverage under the Medicaid program. In a memo to the state's nursing home administrators, the Idaho Department of Health and Welfare said that some nursing home residents who need dentures will likely not be able to get them due to the recent Medicaid cuts; but in those cases, nursing homes should grind, puree or blend residents' food so they can eat.

In an effort to cut costs, states are cutting back on such services that Medicaid will pay for. Every state but one is required by state constitution to balance their budgets, and Medicaid, which in most states is exceeded only by education as the single largest budget item, is a convenient -- and, many would say, overdue -- target for cuts.

Proponents argue that cuts are necessary to slow the growth of the states' Medicaid programs. Besides reducing or eliminating covered services, the cuts usually make it more difficult for some people to qualify for Medicaid and impose new co-payments on participants each time they visit a doctor or hospital.

Nonetheless, some public officials have come out strongly against cutting health services to the poor and disabled. In a speech last Wednesday to a crowded room of supporters, Missouri Governor Bob Holden called the state legislature's proposed cuts to the state's Medicaid program "penny-wise and pound-foolish." Holden said, "The cuts go too far."

Dental care is one optional service that budget-cutters are eyeing. Advocates for the elderly and disabled have come out harshly against cuts in dental services, saying that poor dental health inevitably leads to greater health problems.

Health officials say poor dental health can result in premature births, increases in heart disease, arteriosclerosis and uncontrolled diabetes. People suffering from those and other dental-related health problems eventually will show up using other Medicaid health services or in hospital emergency rooms, health officials say.

For just those reasons, "we're not saving anything by not covering adult dental," said Republican State Senator Tom George, a physician who sits on the Michigan Senate Appropriations subcommittee on community health.

Four years ago, the U. S. Surgeon General released a report on "Oral Health in America," stating, "Nursing homes and other long-term care institutions have limited capacity to deliver needed oral health services to their residents, most of whom are at increased risk for oral diseases."

"Oral health is essential to general health and well-being," concluded the Surgeon General.


ELDER LAW FAX -- April 5, 2004

A free weekly newsletter by Tim Takacs, Certified Elder Law Attorney

This issue: Law Does Not Prohibit Medicaid Liens Against Surviving Spouses


In 1993, as a part of the Omnibus Budget Reconciliation Act, the United States Congress passed a law that requires the states to establish an estate recovery program in order to receive federal Medicaid funding. Not only does the law condition receipt of federal funds on estate recovery programs, the OBRA 1993 law allows the states to "expand" the definition of "probate estate" to include property held in joint tenancy and various other ownership interests at the time of the death of the Medicaid recipient.

States' reaction to the Medicaid estate recovery mandate in the OBRA law has been mixed. Most of the states seem to have resigned themselves to complying with the law. Some of them have done so with gusto, apparently, collecting millions from the estates of deceased Medicaid recipients.

Other states have implemented their estate recovery programs with indifference. In Tennessee, for instance, estate recovery was low profile until two years ago, when the General Assembly declared that it really means business now (even though the State's recovery statute predates the 1993 federal law).

One state, West Virginia, disagrees with the estate recovery program as a matter of state public policy. It lost a lawsuit against the federal government over the matter, contending that the feds were forcing the states to do dirty work for them (see Elder Law FAX, April 8, 2002). Now, the West Virginia Attorney General posts on his Web site tips on how state residents can avoid estate recovery.

Until recently, three states -- Texas, Georgia, and Michigan -- simply have refused to implement recovery programs. Last year Texas enacted legislation to put a program in place, and Georgia is in the process of doing so. Michigan will be the last state to comply with the "fiscally sound, politically yucky" law, which is "so politically sensitive" that Gov. Jennifer Granholm (D) cannot find a lawmaker to sponsor legislation to address it, according to the Kaiser Daily Health Policy Report.

Last week the Nevada Supreme Court overturned a state trial court order that enjoined that state from imposing, on a statewide basis, liens against the homes of surviving spouses of deceased Medicaid recipients.

Agnes Ullmer's late husband Harold died in a Nevada nursing home. The State of Nevada's Medicaid program had paid for his nursing home care for several years. After his death, the State filed a lien against his home, that was now owned by his widow Agnes as surviving spouse.

Mrs. Ullmer contested the State's action, contending that the federal government's prohibition against "recovery" as long as the deceased Medicaid recipient left behind a surviving spouse also prohibited the State from filing a lien against the home that she and her husband owned.

Although federal law says unequivocally that the State may not recover Medicaid benefits paid from the estate of a deceased Medicaid recipient as long as there is a surviving spouse, the Nevada Supreme Court held that "recovery" does not mean the same thing as "imposing" a lien, which the State does have a right to do.

However, the State's right to impose a lien does not mean that the State will always get its money. The 1988 Medicaid law on "spousal impoverishment" takes precedent over the State's right to recoupment of Medicaid benefits.

In order to prevent or avoid spousal impoverishment, the State must release its lien against the property upon demand by Mrs. Ullmer and other surviving spouses who want to make a bona fide sale or other financial transaction involving the home.

Not all states file liens. The Tennessee estate recovery law specifically prohibits the filing of liens to secure repayment of Medicaid benefits correctly paid.

State of Nevada Department of Human Resources v. Estate of Ullmer, April

1, 2004.