May 2007


Wow, where has the time gone?  This year is already four months old.  Summer will be here soon.  This newsletter will update you with some developments affecting Elder Law and Life Care Planning.  If you find this information helpful, please feel free to copy and share this newsletter.


Texas Applies DRA 2006 to Medicaid Eligibility


In the last newsletter I described the Deficit Reduction Act of 2005 (DRA 2005) and the publishing by the Texas Health and Human Services Commission of proposed rules to implement the changes required by DRA 2005.  Those rules, with some revisions proposed by the Texas Chapter of the National Academy of Elder Law Attorneys, became effective as of October 1, 2006.  We have prepared and filed some applications for Medicaid eligibility under the new rules and have encountered few problems. 


However, the implications of DRA 2005 are still potentially dramatic for those who have not planned properly.  For a description of and my comments on the potentially draconian effects of DRA 2005, please review our May newsletter at http://www.ensignlaw.com/May%202006.html


One issue we faced with two applications for Medicaid eligibility was whether charitable donations made within 5 years of the date of the application would result in a penalty period that would delay Medicaid qualification.  Under DRA 2005, such donations are considered as transfers for no value and a penalty could result.  If one or a few large charitable donations were made shortly before the application date, we could understand this rule because someone might give to a charity in order to get the government to pay for all their future long-term care in a skilled nursing facility.  But how would frequent, consistent donations to a church (sometimes known as tithing) be treated by the Texas Health and Human Services Commission (HHSC) in determining eligibility?  That was the big question we had.


In both cases we handled there had been a long history of consistent, weekly or monthly, donations to the applicant’s church.  We obtained copies of the donation records from each church to which donations were made.  In the Medicaid application we explained this pattern of giving and included these documents.  We also cited the provisions of the DRA 2005 and the rules of the HHSC that exclude transfers not made for the purpose of qualifying for Medicaid from the penalty otherwise imposed because of transfers without value.  We argued that the consistent history of donations to the churches over five years demonstrated they were clearly not made for the purpose of qualifying for Medicaid but were motivated by religious belief and obligation to give back to God.  We were pleased when the HHSC eligibility workers agreed without objection and our clients were determined to be eligible for Medicaid without any penalty being imposed.

While we are gratified by the results, we are cautious about advising clients to make charitable donations.  There is no assurance that HHSC will continue to exclude such gifts from the rules that impose the penalty period for transfers without value.  Also, other states may not agree with Texas in applying this rule.  So there is no assurance we will be successful in future cases with substantial charitable donations. 


Implications for Elder Planning


As we counsel elders and their families about the possibility of qualifying for Medicaid, the changes made by DRA 2005 are coming into play as we counsel two types of clients.  First are elders receiving or needing long-term care in a skilled nursing facility and possibly nearing the end of their financial resources.  Second are elders who are just starting to decline and/or still have substantial resources to provide for their long-term care of a substantial period of time, probably over five years.


For the first category, we must carefully examine not only the current financial situation, the amount and types of resources, but also the financial history particularly as to the transfers made.  In this process we will review the financial records for documentation about such transfers to determine what effect they may have on future eligibility.  The major concern is the imposition of the penalty period, the length of which is determined by the value of such transfers.  This penalty period will run from the time the applicant is otherwise qualified for Medicaid but for these transfers.  If the financial resources have been reduced to the level required to qualify for Medicaid, usually less than $2,000, how will she pay for her care in the skilled nursing facility?  If she can’t pay, who will?  To avoid this situation, we must consider options that will remove the penalty, hopefully before the application is filed. 


For the second category, the current financial situation must be reviewed with the goal of anticipating future long-term care needs and projecting how long the resources might last.  Taking into account all the factors that may impact the elder’s situation, we try to sketch a path through the unknown future until the elder passes on.  Then we can consider options for planning toward Medicaid eligibility while avoiding the penalty period taking into account the DRA 2005 and the current HHSC rules and discuss appropriate and complete recordkeeping and documentation. 


In some limited circumstances for this category of client, it may be possible to structure the resources in order to maximize the elder’s quality of care and quality of life while allowing for transfers of resources to loved ones prior to qualification or death.  However, such projections and plans cannot be locked into concrete because the federal and state laws governing Medicaid are always subject to change.  As with the DRA 2005, such future changes could have significant impact on the eventual outcome of the planning and the meeting of the elder’s needs.  And further, as with DRA 2005, these future changes could have an impact based on decisions made years before the eventual need for Medicaid could be anticipated or planned for.  Thus the planning now might be negated in the future.  So focusing on meeting the long-term care needs of the elder until death needs to be the primary concern.


Elders in the second category still need to exercise caution when considering making gifts to anyone.  Currently the HHSC rules applicable in Texas permit small gifts totaling less than $200 in any month.  But if the gifts made in any month, such as in December for Christmas, total more than $200, the total value of those gifts in that month would result in a penalty being imposed when the elder would otherwise be eligible for Medicaid.  So beware of being too generous with loved ones.

A few folk might suppose they could just fail to keep records of gifts or make gifts in cash in an attempt to avoid the imposition of the penalty period from such transfers without value.  Of course I must counsel that such a thought pass right out of their minds and no such actions be taken.  Failure to report all gifts made in excess of the limit above to HHSC when a Medicaid application is filed is fraud and subject to criminal liabilities.  Furthermore, the information on the application is subject to the penalties for perjury if it is not true.  Should we discover in the course of our legal representation that the client or their family intends to or has taken actions to defraud the State of Texas in any way, we will terminate that representation immediately as we cannot be involved in any way with such intent or actions. 


Just as gifting is not a viable strategy in planning for Medicaid eligibility in most case, so too are annuities still a trap for the unwary.  Unless there is proper planning with appropriate legal and financial counsel, the purchase of an annuity for a Medicaid applicant or the community spouse can produce problems, including the possibility of a penalty period being imposed and the State of Texas recovering from the annuity at death the cost of Medicaid benefits paid for the elder’s benefit.


In the final analysis, providing the elder with high quality care that improves their quality of life is the primary issue to be addressed in all realistic elder planning – not the financial resources nor qualifying for Medicaid.  This explains the emphasis the Ensign Law Firm, PC places on Life Care Planning for elders and their families. 


Medicaid Estate Recovery Program


As previously reported, the Texas Medicaid Estate Recovery Program (MERP) is fully implemented and administered by The Recovery Unit of the Public Consulting Group, Inc. (PCG), the contractor hired by HHSC to send the notices and file the claims.  As we expected, the net collections have not contributed much to the Texas treasury, only a tiny percentage of the Medicaid benefits paid.


However, MERP will have ever increasing implications for all Medicaid recipients who qualified on applications filed after March 1, 2005.  So if you or your family members or clients receive a MERP notice, please be aware that some response is needed in a timely fashion.  The notice should not be treated like an IRS notice.  It may be accurate and the claim valid – but then it may not be.  So consider seeking qualified legal counsel to preserve any rights against such MERP claims. 


HHSC Call Centers Out of Business


In the last newsletter I described how the Texas Health and Human Services Commission contracted with a private company, Accenture, to handle all the application process for the various benefit programs HHSC administered.  It expected to save great sums of tax dollars by eliminating the jobs of many experienced state employees who handled the review of the applications.  But Accenture totally failed to perform and to properly handle the applications.  As a result, many qualified applications were denied benefits essential to their wellbeing or experienced long delays that were as bad as denial. 


After being pressured by elder law attorneys and concerned legislators, HHSC put its pilot program on hold.  Then it finally terminated the Accenture contract.  Many are rejoicing in this decision.  But so many experience caseworkers have left HHSC that it will take time to rectify the problems and get the system function normally once again.  And this ill-conceived idea of privatizing this important public service is not totally dead.  It may be resurrected in another form.  Keep watch. 


The Future of Medicare and Medicaid


In the previous newsletters I reported Federal Reserve Chairman Ben Bernanke’s warning that delay in making sure that Social Security and Medicare are fiscally sound will increase the burden on future generations of such programs.  Since then I’ve prepared a paper entitled The Future of Medicare and Medicaid for Seniors that I’ve presented and will present soon to several professional groups.  This paper is posted on our website at  http://ensignlaw.com/Looking%20Ahead.html  


If you have concerns about whether Medicare and Medicaid will be available to help you or others you are concerned about or what you might need to consider in planning to care for yourself and others in the future, I suggest you take time to read and ponder this paper.  I’d be interested in your response.  You may email it to me at mrensign@ensignlaw.com 


Miller Trust Truth


If you’ve had any conversations about planning for Medicaid qualification, you may have heard about a so-called “Miller Trust.”  Regrettably, much of the information about such trusts is partially correct at best, but false at worse.  We frequently get calls with questions about whether a Miller Trust will allow them or their loved one to qualify for Medicaid.  Some callers think the Miller Trust is where one puts all their assets to get immediate qualification.  So what is the truth?


We need to first understand the problem.  HHSC has determined the average nursing home cost is $117.08 per day (over $3,500 per month).  But HHSC denies nursing home Medicaid benefits to anyone with more than $1,869 per month in income.  Some people needing nursing home care have too much income (more than $1,869) to qualify for Medicaid but too little to afford the needed nursing home care.  Though they need this care but can’t afford it, Medicaid will not help.  What can they do?


The Qualified Income Trust (the correct name for this trust abbreviated as QIT) comes to the rescue.  It is the result of a Colorado federal court decision that has been accepted by the Medicaid authorities.  The court authorized the establishment of these special irrevocable trusts to allow more people to qualify for Medicaid who would otherwise be caught in this dilemma.  To accomplish this, the amount of income deposited each month to the QIT is deducted from the monthly income of the applicant thereby reducing the “countable income” sufficiently to allow Medicaid qualification.  But the applicant must also be otherwise qualified in every respect. 


Note that all the income placed into the QIT must be paid to the nursing home, less some authorized deductions for (1) the personal allowance of $60 per month, (2) payment to a spouse (if any) of a sum sufficient to provide a “minimum monthly maintenance needs allowance,” and (3) generally, the premiums for a Medicare supplement policy and the Medicare Part D prescription drug plan premiums.  Nothing is retained in the trust at the end of the month.  Any amounts in the QIT on the date of death of the Medicaid beneficiary must be paid to HHSC.


Note also that any transfer of "resources" to the trust will make the trust “invalid.”  So the QIT does not permit an elder to protect any of their resources.  They will still have to reduce their resources to below $2,000 before they can qualify.


The QIT is a legal document with significant legal consequences so it must be drafted by an attorney knowledgeable about both trusts and Medicaid qualification.  Financial advisors, social workers at a nursing home, HHSC caseworkers and other non-attorneys are not permitted to do so.  If the requirements of the law are not complied with in (1) the preparation of the trust agreement (2) the initial formation of the trust and (3) the monthly operation of the trust, the Medicaid qualification will be denied at the time of application or will be revoked when there has been a failure to comply with the terms of the QIT.


Texas Legislature in Session


There are about four weeks left in the current legislative session in Austin.  Many of us are happy our founding fathers only allowed them to convene for five months every two years.  If they were in Austin longer and more frequently we might have the kind of legal system that California, New York and other big states have with full-time legislators who must justify their pay with “work.”


The primary bill our Texas Chapter of the National Academy of Elder Law is watching and supporting is HB 75 and its Senate companion, SB 851.  It has passed the House. If passed by the Senate and signed by the Governor, it would finally bring Texas into conformity with all other states by giving Medicaid applicants an essential right.  Currently, if the application for Medicaid is denied after exhausting administrative appeals within HHSC, there is no one to whom the applicant can appeal.  There is no right to go to a court to seek a review of the adverse decision.


HB 75 would remedy this situation by allowing an appeal to a Texas district court by an elder whose application was denied.  This independent judge will review the records and all information already supplied to HHSC without requiring a court hearing for witness testimony.  This should speed up the process.  And a speedy decision is needed in these cases because an elder is waiting to see if Medicaid is going to pay for their care in the nursing home. 


A similar bill has been introduced in several previous legislatives sessions without passage.  At this time HB 75 seems likely to pass.  We’ll report the result in the next newsletter. 


Do-Not-Resuscitate Orders


Some folk are aware of and may have put into place for themselves a Medical Power of Attorney and a Directive to Physicians and Family or Surrogates (commonly called a living will).  These forms were updated by the Texas Legislature in the Advance Directives Act passed in 1999.  If you have old healthcare documents, they should be reviewed and updated to enhance the likelihood that these documents will be effective in an emergency. 


Few people are aware of the third advance directive created in 1999 – the Do-Not-Resuscitate Order – and very few have put one in place.  This Order (abbreviated DNR) allows a patient to decide that she does not want to be resuscitated if she stops breathing and her heart stops beating.  With a DNR she declares that certain resuscitative measures will not be used on them in such a case.  The most common document is the “Out-of-Hospital DNR” used in nursing homes, assisted living facilities, hospices and in the home. 


With a Do-Not-Resuscitate Order, the patient is saying, “Don’t bring me back.”  With a Directive to Physicians she is saying, “Don’t keep me here.”  These important legal documents allow a patient, particularly an elder, to express their wishes for end of life decisions.  We recommend our elder clients consider both and discuss the implications of having these in their later years. 


Help for Veterans and Surviving Spouses

Seniors and their families know that the costs of long-term care add up quickly.  Help may be available to some veterans and some surviving spouses of veterans who need care in their homes or in a nursing home.  “Aid and Attendance” is the Veterans Administration pension program that may provide much-needed help to those qualified. 

Aid and Attendance pays money to those who need professional assistance to perform everyday tasks, the Activities of Daily Living (ADL’s) such as bathing, eating, dressing, or going to the bathroom.  This includes individuals who are bedridden, blind, or residing in a nursing home.

To be eligible, the veteran must have served at least 90 days in the armed forces with at least one day during war time.  Service-related disabilities are not necessary to qualify.  

To qualify the veteran or spouse must have less than $80,000 in assets, excluding their home and automobile.  The veteran's income (but not welfare benefits and Supplemental Security Income) must be less than the Maximum Annual Pension Rate (MAPR) which are as follows for 2007:

Single veteran


Veteran with one dependent


Single surviving spouse


Surviving spouse with one dependent


Even veterans whose income is above the usual limit for a VA pension may qualify for Aid and Attendance if they have large medical expenses they actually pay for which they do not receive reimbursement such as from insurance and are recurring from month to month.  These expenses may include premiums paid for Medicare, Medigap, and long-term care insurance; costs of long-term care like in a nursing home; costs for in-home caregivers who provide certain medical and nursing services; the cost of an assisted living facility; and over-the-counter medications taken at a doctor's recommendation.  These expenses are deducted from the veteran’s total income to determine his countable income.

How much Aid and Attendance is paid to a qualified veteran or a surviving spouse depends on their monthly income.  The amount is the difference between the countable income and the Maximum Annual Pension Rate above.  As you can see, if the veteran’s income is being spent on unreimbursed medical expenses he may receive a substantial Aid and Attendance payment.

If you are a veteran or a surviving spouse of a veteran, you can find out more about Aid and Attendance by contacting a Veterans Administration office near you listed on the Internet at  http://www.vba.va.gov/BENEFITS/ROcontacts.htm or at http://www.veteranaid.org/index.php  


Problems With Older Drivers


An issue of great concern to seniors and their loved ones – the effect of aging on the ability to drive – has now attracted the attention of Congress.  The Government Accountability Office (GAO) has just issued a report that reflects the concern of both Congressmen and the families of elder drivers. 

Entitled OLDER DRIVER SAFETY: Knowledge Sharing Should Help States Prepare for Increase in Older Driver Population, the 60-page report is posted at http://www.gao.gov/new.items/d07413.pdf  It makes for interesting reading and details a number of reasons for concern including the following:


Older drivers are less likely than their younger counterparts to be involved in fatal automobile accidents.  But if this apparently favorable finding is recalculated by factoring in the number of miles actually driven by older driver versus those driven by younger drivers, older drivers perform much more poorly.  The fatal accident rate for those aged 75 or older is higher than the next-highest category, the youngest drivers aged 16-24. Both groups experience more than double the fatal accident rate of any other age group.


As the population ages, of course the number of older drivers on the road is increasing more quickly than other age groups.  As that trend continues, problems associated with more elderly drivers on the road are expected to increase steadily.  While this trend is expected by most of us, surely prevention efforts must increase accordingly.


Intersections cause special problems for older drivers as indicated by their higher accident rate in intersections.  More than half of all fatal accidents involving drivers over age 85 occur in intersections.  Drivers over age 65 are involved in 37% of all the fatal accidents at intersections but drivers aged 26 to 64 are involved in only 18%.

Regarding the last finding, the report notes, “Navigating through intersections requires the ability to make rapid decisions, react quickly, and accurately judge speed and distance.”  As elders age the ability to function in these three factors is diminished.  The report describes some design ideas that might be implemented to lower the intersection challenges for the elderly.  These include placing signs well in advance of intersections, using larger street name and stop signs, adding black signal backplates to traffic signals to make them more visible, and to offset turn lanes making it easier to see and avoid oncoming traffic.

Some regulatory steps have been taken by a few states to ease drivers off the roads when they become impaired by their aging.  Sixteen states require older drivers to renew their licenses more frequently.  Ten states require older drivers to pass vision tests.  And five states require older drivers to renew their licenses in person, rather than by mail.

Watch for more actions to be taken by States and cities in the design and construction of highways and streets, particularly intersections to make them more elder-friendly.  Congress may help to fund some of these initiatives.  With the coming imposition by Congress of uniform driver license requirements, states may also imposed increasing restrictions on elders.  And families will have to help their elders make the hard decision to give up the keys to their cars in order to avoid personal tragedies caused by accidents and personal injury to them as drivers. 

Continuing Education and Speaking

Since our last newsletter there have been a number of educational opportunities affecting our practice and more will be coming soon.  I just attended the two-day Institute on Estate Planning presented by the Amarillo Area Estate Planning Council.  In August I will attend the annual two-day Tax Institute presented by the Panhandle Chapter of CPAs. 


Recently Bonnie and I have been privileged to teach professional and family elder caregivers.  We presented two sessions at the outstanding educational series, Understanding Geriatric Needs Course II: Advanced Principles of Eldercare at Amarillo College.  We also taught the Amarillo Branch of the Texas Chapter of the National Association of Social Workers for three hours on Ethics of Geriatric Caregivers.  And I taught a similar three-hour course to a variety of caregiving professionals in the Amarillo College Professional Development Series. 

I will present my article The Future of Medicare and Medicaid for Seniors to a day-long seminar presented by the Senior Ambassadors Coalition – Trends and Needs of Senior Adults – on June 8th in conjunction with Amarillo College at its West Campus.  The audience will be varied including professional geriatric caregivers and elders and their families.  I urge you to consider attending because the information will be excellent and the cost is only $20 including lunch.  For a brochure or more information, please call Lisa Hancock at (806) 331-2227 Ext. 3305.  CEU’s will be awarded to healthcare and related professionals attending.


Another outstanding educational opportunity is the Alzheimer’s Conference offered by the Panhandle Geriatric Education Program and the Alzheimer’s Association on Friday, October 19th at the Amarillo College West Campus Lecture Hall.  Living with Change: Caring for Someone with Memory Loss is the title of this day-long presentation.  Call Karen Russell at 356-3691 for more information.  CEU’s will be awarded to those completing the conference.  There will be small fee. 


And please mark your calendar to attend the Senior Fall Festival on October 11th at the Civic Center.  Sponsored by the Senior Ambassadors Coalition, it will be a great opportunity to learn about many of the services available to elders from care providers in this community.  It will also be an opportunity to  have some basic health testing like blood pressure, cholesterol, basis blood tests, etc.  Please check our webpage http://ensignlaw.com/Senior%20Calendar%20of%20Events.html


In September, Bonnie McMillan, our Geriatric Care Manager, Joy Ensign, my wife and our Firm Administrator, and I are planning to attend the first seminar of the newly created Life Care Planning Law Firms Association in Kansas City.  We are looking forward to this opportunity to meet with other attorneys who have worked diligently over about six months to form this Association of law firms that practice Life Care Planning.  And the ladies will be learning from others who are involved in firms who help seniors and their families like we do. 



I’m almost out of room in this long newsletter.  I trust you have found the information interesting and helpful to you or those you deal with.  Please feel free to copy it for others or refer them to the firm’s web page http://ensignlaw.com/Newsletters.htm to read it and prior newsletters online. 


The Ensign Law Firm, PC team members are so pleased to be able to serve our community and the elder population with appropriate services to meet their needs.  Whenever we may be of assistance to anyone you know with Life Care Planning, estate planning, probates of wills and estates, or related legal matters, please contact us.  We would appreciate the opportunity to serve them.  And thank you for your referrals. 


May your summer be warm and wet with plenty of beneficial rain at appropriate times to refill our reservoirs and aquifer for our future and that of our children.