October 6, 2004


Please forgive me for not sending this newsletter sooner.  However, I was waiting to report the latest developments on the estate recovery front … and we are still waiting!  I can wait no longer to send you all the information in this newsletter.  Even though we don’t have much to report about estate recovery there is a lot to be shared with you.


Estate Recovery


We fully expected the new estate recovery rules to be in place and effective by September 1.  However, this date appears to have been pushed back to January 1, 2005, because of the slow process of review by the federal government.  Apparently there has been some disagreement over the final rules between Austin and Washington.  Rumor has it that the final rules will be released in a few more weeks.  The final rules are expected to retain most of the proposed rules we described in our previous newsletter. 


For most Medicaid applicants, the most valuable property owned is usually their homestead.  The proposed rules permit only a $50,000 homestead exemption (and this is not a blanket exemption but must be applied for in every case).  So Medicaid recipients and their families are concerned about what will happen to their homestead after the new rules become effective. 


At this time, it appears that those already receiving Medicaid and those who apply prior to the new effective date (probably January 1st) will be “grandfathered” so their homesteads and other estate property will be protected.  After the effective date, those who want to plan for Medicaid should discuss various options for estate protection with their qualified legal adviser.  But we must not forget that additional changes could be made in the future to these rules.


When the final estate recovery rules are promulgated, we will update our commentary on our estate recovery web page http://www.ensignlaw.com/estate_recovery.htm and provide a link to the new rules. 


DHS is now DADS


Effective September 1st, Texas restructured many of its service agencies under the umbrella of the Health and Human Services Commission (HHSC).   In the process, the Department of Human Services (DHS) was transformed into the Texas Department of Aging and Disability Services (DADS).   DADS now has an expanded mission that incorporates (1) community care, nursing facility, and long-term care regulatory services, (2) mental retardation services and state school programs, and (3) aging services and programs.


Clearly this is a major restructuring of the bureaucracy but at this time the direct effect on Medicaid recipients or applicants is still unknown.  You may learn more about the new structure of HHSC at  http://www.hhsc.state.tx.us/about_hhsc/index.html


An anticipated change in the Medicaid application process will use three telephone call centers in Texas. These call centers will replace personal, face-to-face contact with helpful Medicaid caseworkers for applications and annual reviews as well as notifications to HHSC and problem resolution.  We understand that applications from across the state will be sent to these call centers and all subsequent contact with Medicaid applicants, recipients, and family members or representatives will be by telephone.  In addition, many DADS Medicaid caseworkers expect to lose their jobs.  We anticipate these changes will have substantial and far-reaching impact upon those who are currently served in the Medicaid program and those who will be applying for eligibility.  Probably a great deal of frustration will result, particularly in those who are attempting to apply on behalf of their loved ones.  Professional assistance is more likely to be needed to work through the system, despite the overly optimistic opinions of DADS and HHSC administrators. 


Income First and Annuity Rules Adopted by DHS


The last acts of the lame-duck Texas Department of Human Services Board changed two important rules that will dramatically impact the lives and family fortunes of those who apply for Medicaid coverage.


The new Income First Rule changes the way the Protected Resource Amount is calculated. The result for most applicants will be a substantial reduction in the amount of resources that the spouse who lives at home (the “community spouse”) can retain. 


Prior to the adoption of this rule, Texas was a “resource first” state.  This meant that if the community spouse had non-countable resource income ((i.e. Social Security, pension, etc.) less than the minimum monthly maintenance needs allowance of $2,319, that spouse could often keep countable resources substantially in excess of the maximum Protected Resource Amount of $92,760, or beyond what their Protected Resource Amount would have been otherwise.  Because the formula for expanding the Protected Resource Amount is tied to the interest rates and interest rates have been very low, the amount of countable resources that could be protected and retained by the community spouse could be quite high.


Now that has all changed and it will be much more difficult to protect substantial amounts of countable resources for the community spouse.  Now the total of the non-countable resource incomes of both spouses must be below the minimum monthly maintenance needs allowance before there can be any expansion of the Protected Resource Amount.  The community spouse is thus more likely to experience a large drop of income and have fewer resources to live on when the institutionalized spouse dies.  To prevent this, community spouses may consider severe measures (maybe even divorce although it is not recommended) to protect their own resources and to obtain Medicaid eligibility for their institutionalized spouse.


The old Annuity Rule was substantially tightened by the DHS Board to restrict the use of abusive annuity schemes to obtain Medicaid eligibility.  The details are complex and more than can be easily summarized in this newsletter.  But elders who are considering making investments in annuities and who are likely to seek Medicaid eligibility in the future should become fully informed of the potential adverse consequences before purchasing any annuities.  Most annuities being sold in Texas will NOT qualify the owner for Medicaid, despite the false representations of unscrupulous annuity sales persons.  In fact, most annuities are likely to prevent one from qualifying if the owner and prospective Medicaid recipient is single.  And if the annuity is for the community spouse, extra scrutiny will be placed on the annuities when the Medicaid application is filed. 


Elder Abuse and Mandatory Reporting


Just like children, elders are subject to abuse, neglect and exploitation.  These are against the law in Texas.  Surely it is a sad commentary on our society that as our population has aged, the incidence of abuse, neglect and exploitation of elders, as well as children, has escalated, particularly perpetrated by children, grandchildren or other relatives.


To protect the most vulnerable of our society, young and old, the State of Texas has established the Department of Family and Protective Services (DFPS).  Its two primary divisions are Child Protective Services (CPS) and Adult Protective Services (APS).  The mission of APS is to protect older adults and persons with disabilities from abuse, neglect and exploitation by investigating and providing or arranging for services as necessary to alleviate or prevent further maltreatment.  For more information about DFPS, go to http://www.dfps.state.tx.us  From there you can learn more about the structure and mission of DFPS by following the various links.


Failure to report abuse, neglect and exploitation is also a crime in Texas.  If you have cause to believe a child or a person 65 years or older or an adult with disabilities has been abused or mistreated, you are required to report it to the Texas Department of Family and Protective Services or to a law enforcement agency.  You may also file a report of abuse by using a special secure website at https://www.txabusehotline.org  A person making a report is immune from civil or criminal liability, and the name of the person making the report is kept confidential.


There are no exemptions for any persons from these reporting requirements because of their profession or relationship.  Family members, clergy, doctors, nurses, accountants, and even lawyers are required to report abuse to the DFPS and there is no professional or family privilege under this law.  The governing law is the Human Resources Code Sections 48.051 to 48.054 that can be read at http://www.tdprs.state.tx.us/Adult_Protection/Other_Information/Ch48scB.asp 


Continuing Education, Speaking and Teaching


Last month I attended the Annual Meeting and Conference of the Texas Chapter of the National Academy of Elder Law Attorneys in Fort Worth to be updated on changes in the laws (such as those discussed above) and the upcoming legislative session from some of the top Elder Law attorneys across the state.  I renewed acquaintances with my colleagues and made new ones.  Both will be helpful in our expansion of assistance to our aging population. 


The wonderful staff at BSA Hospice and Home Care invited me to speak to a Seniors Seminar held at the Canyon Senior Citizens Center on June 24th and another held at the Amarillo Senior Citizens Center on August 19th.  The topic was Advance Directives including Medical Powers of Attorney, Directives to Physicians, Do Not Resuscitate Orders and HIPAA. 


The Senior Ambassadors Coalition associated with the Area Agency on Aging brings together professionals who are actively involved with the senior community and rendering services to seniors.  I accepted the invitation to join the Senior Advisor Coalition and look forward to an active involvement with other professionals for the improvement of our community.   


The Volunteer Benefits Counselor Education program of the Area Agency on Aging has asked me to teach these volunteers.  On October 11, I will be teaching about Advanced Directives as described above.  On October 21, I will teach about Medicaid qualification in relationship to living trusts, Miller trusts, and annuity schemes and scams. 


The Amarillo Chapter of the National Association of Legal Secretaries has invited me to speak on November 9 about Elder Law and Medicaid.


Finally, the free Senior Fall Festival will be held on October 14, from 9:00 until 2:00 p.m. at the Civic Center Exhibit Hall.  A wealth of information will be available about issues facing seniors, particularly their health.  Free health screenings will be offered for a number of important factors such as cholesterol, blood-pressure and many more.  I urge all seniors or family members of seniors to attend this free festival to learn all they can. 


Speaking of speaking.  If you are a member of a group that would be interested in a presentation on any topic regarding Estate Planning or Elder Law, please call or ask your Program Chairman to call me. 


Web Site and E-mail Address


Please visit our web site at http://www.ensignlaw.com for more information about estate planning and Elder Law.  We will be adding more useful information in the future and we welcome your suggestions too.  And please add my e-mail address mrensign@ensignlaw.com to your e-mail address book for easy access. 


Whenever we may be of service with any legal matter pertaining to you, your family, your friends or clients, please don’t hesitate to call to discuss it.  We really do appreciate your referrals and will do our best to serve well those you refer.


I closed my last letter with, “Best wishes for a cool summer.  And let’s pray for God to bless us all with plenty of rain.”  God certainly has blessed us with a cool summer and lots of wonderful rain.  We give thanks to Him. 




Mark R. Ensign, JD, CPA
Copyright © 2004 Ensign Law Firm, P.C. All rights reserved.
Revised: 10/06/04

           Not Certified by Texas State Board of Legal Specialization