Important Medicare Change: Patients No Longer Need to Show Progress to Receive Nursing Coverage

Posted on Oct 26, 2012Written by Evan Farr

Medicare coverage of short-term rehabilitation in a nursing home is about to undergo a major policy change, resulting in beneficiaries with chronic conditions such as Alzheimer’s disease, Parkinson’s disease, ALS (Lou Gehrig’s disease), diabetes, multiple sclerosis, hypertension, arthritis, heart disease, and stroke no longer need to show ongoing improvement to maintain Medicare coverage.

For decades, when short-term rehabilitation patients in nursing homes failed to show improvement but still needed skilled nursing in the form of custodial care or therapy, Medicare would routinely terminate their Medicare coverage, forcing these patients prematurely into private pay or, if they could financially qualify, Medicaid. This need for ongoing “improvement” was a pervasive, though unwritten ”rule of thumb” followed by Medicare and by Medicare contractors when doing Medicare evaluations in nursing homes. However, nothing in the Medicare statute or its regulations has ever stated that “improvement” is required for continued skilled care.

A class action lawsuit, Jimmo v. Sebelius, was filed against the Obama administration in January 2011 in federal court. This case and a similar case in Pennsylvania aimed at ending the government’s use of the “improvement standard” were both settled by the Government. This settlement should result in Medicare no longer focusing on “the presence or absence of an individual’s potential for improvement.” Rather, Medicare must continue to provide short-term care whether or not the patient is improving, provided the patient needs skilled care.

It must be understood that Medicare coverage for nursing home care is still a very limited type of short-term benefit, as it only covers a maximum of 100 days per benefit period, and only if the patient requires skilled nursing care. However, under the new settlement, Medicare coverage should no longer be terminated just because the patient’s medical condition is no longer improving. On the contrary, coverage should remain available for services that are needed to maintain the person’s condition or to prevent further deterioration.

In summary, Medicare coverage in the past has often been erroneously denied for individuals with chronic conditions, for people who are not improving, or who are in need of services to maintain their condition. With this new government settlement, it should no longer be necessary for an individual’s underlying condition to be improving in order to continue to get Medicare coverage! I emphasize the word should because the people who implement these policies may not conform to the new settlement as quickly as they should, so coverage appeals may be necessary in the short run until the local workers on the ground all get educated about this new shift in governmental policy.

Luckily, the Medicare program has an appeal system to contest improper termination of coverage. Beneficiaries and their advocates should use this system to appeal Medicare determinations that unfairly deny or limit coverage.

For more information about this settlement, see: http://www.medicareadvocacy.org/hidden/highlight-improvment-standard

To appeal what you believe is an improper Medicare termination in a nursing home, please download this self-help packet:

MEDICARE SKILLED NURSING FACILITY SELF HELP PACKET

To appeal what you believe is an improper Medicare termination of home health care, please download this self-help packet:

MEDICARE HOME HEALTH SELF HELP PACKET

Planning for Long-Term Care (Part 1)

Posted on Oct 9, 2012Written by Evan Farr

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Are you one of the millions of Americans over age 50 who has not yet started planning for long-term care?

As financially responsible adults, most of us are prepared for some unexpected disasters – we pay for health and property damage insurance, and many of us have taken some steps toward funding for our retirement. But very few of us have prepared for one of the most devastating of unexpected events – the need for long-term care. According to most estimates, more than 60% of us will need long-term care at some point in our lives. If you are a member of the “sandwich generation” – responsible for an older parent – the odds that either you or your aging parent will need such care are even higher, and the costs to your lifestyle, finances, and security can be catastrophic. Consider the following long-term care statistics:

• About 70% of Americans who live to age 65 will need long-term care at some time in their lives, over 40 percent in a nursing home.
• As of 2011, the average cost of a nursing home in Northern Virginia was over $100,000 per year.
• A recent insurance company study found that 46 percent of its group long-term care claimants were under the age of 65 at the time of disability.

Contrast the above long-term care statistics with statistics for automobile accident claims and homeowner’s insurance claims:

• An average of only 7.2% of people per year file an automobile insurance claim.
• An average of only 6.15% of people per year file a claim on their homeowner’s insurance.

The need for long-term care drastically alters or completely eliminates the four principal retirement dreams of elderly Americans:

1. Remaining independent in the home without intervention from others
2. Maintaining good health and receiving adequate health care
3. Having enough money for everyday needs
4. Not outliving assets and income

Unfortunately, the reality is that the majority of Americans make no plans for long-term care. Not only does this lack of planning affect older Americans, but it also often has an adverse effect on the older person’s family, with sacrifices made in time, money, and family lifestyles. The stresses of being a caregiver for an older parent often result in a deterioration of the caregiver’s own physical and emotional health. Because of changing demographics and improved health care, the current generation — more than ever — needs to actively plan for long-term care.

So what are basics of a good Long-Term Care Plan? First and foremost are two critical documents that need to be prepared by an experienced and knowledgeable Elder Law Attorney. These two essential documents are:

• A Financial Durable Power of Attorney containing Asset Protection Powers; and
• An Advance Medical Directive containing a Long-Term Care Directive.

The third essential document, which you can prepare on your own, is a Lifestyle Care Plan.

Part 2 of this article will explain and explore these three critical documents to give you a greater understanding of the need for and importance of these vital long-term care planning instruments.

These essential legal documents, however, are only part of the requirements for a good Long-Term Care Plan. The other important component is a sound financial plan for how to pay for good long-term care. There are three primary ways to plan in advance for how to pay for long-term care: (1) build up your income and life savings in order to be able to self-fund your future care needs; (2) protect your assets by purchasing long-term care insurance; or (3) protect your assets by using an asset protection trust designed to legally protect your assets and allow you to qualify for Medicaid, the governmental program that pays for about 70% of people living in nursing homes. For some families, a fourth way to pay for long-term care is a type of Veteran’s pension benefit called “Aid & Attendance.”

Unfortunately, option 1 (building up your income and life savings to self-fund future care) is not feasible for most Americans, especially in these troubled economic times. Accordingly, Parts 3 through 5 of this series will explain and explore these three methods of paying for long-term care. Part 3 will focus primarily on using long-term care insurance to protect your assets; Part 4 will explore the use of a special type of asset protection trust to protect assets and gain early access to Medicaid; and Part 5 will explain the Veteran’s Aid & Attendance benefit.

There are many things that you can do now to begin to put together a good Long-Term Care Plan. The most important thing you can do is to act now! You may have limited resources in the future or health problems that will prevent you from taking care of the things you can easily take care of today. The Farr Law Firm specializes in long-term care planning and we would be happy to assist you in your preparations. Please visit us at www.virginiaelderlaw.com or call 703-691-1888.

Budgeting for Seniors

Posted on Sep 27, 2011Written by Evan Farr

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Budgeting is part of any effective Life Care Plan and becomes even more important when seniors experience a big life change, such as moving into an assisted living facility, losing a spouse or having a drastic change in health. It begins with an assessment of your resources and your needs. The purpose of Life Care Planning is to improve the quality of life for the person for whom we are planning. Budgeting helps us understand what tools and resources we have to work in accomplishing that goal.

As you prepare your budget, there are several basic concepts you should consider. First, you should determine your needs, broken down on a monthly basis if possible. Consider everything from daily living expenses (rent, food, utilities) to recurring monthly fees (car payments, Netflix subscriptions) and other miscellaneous expenses (charitable donations, gifts, recreational activities). Don’t forget to include extraordinary emergency expenses that could catch you off guard (replacing a roof, unexpected healthcare expenses, etc) as well.

Then think: Is your monthly income sufficient to meet your needs and, if not, how will you supplement or enhance your income to meet your needs? Be realistic. Where possible, consider limiting certain risks by purchasing insurance. If you need professional help, speak with a Certified Financial Planner or someone else who has the skills to help you establish a budget.

Armed with this, we can help you move forward in drafting a Life Care Plan (and the appropriate Medicaid planning) that will give you the best life possible, without depleting your life savings or going into debt.

To Refresh:

Create a budget by:
1. Naming categories that describe your expenses.
2. Estimate expenditures for each category. Use last year’s expenses as a guide.
3. Find areas where you can cut back.
4. Implement your budget, and stick to it.
5. Review and modify your budget at regular intervals.
Helpful Budgeting Links:

BetterBudgeting

Kiplinger Household Budgeting Worksheet

MoneyHelp Budget Planner

Key Dollar Amounts for Elder Law

Using a Reverse Mortgage to Pay for Home Care

Posted on Jan 30, 2010Written by Evan Farr

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Many of my clients ask me how I feel about reverse mortgages, and even more so this past week because of a favorable story that appeared in last week’s Washington Post entitled “Reverse Mortgages are Not the Next Subprime.” This excellent article was written by the ”Mortgage Professor,” a Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania (incidentally, my Alma Mater), and clears up much of the confusion and myths and fears surrounding the reverse mortgage. I encourage all of you to read it. Another good source of information about reverse mortgages is the Federal Trade Commission Fact Sheet.

As a Certified Elder Law attorney, one of my primary goals is to help preserve the dignity and enhance the lives of my elderly clients. For many of my clients, remaining in their homes as long as possible is one of their highest priorities. I have been a long-time fan of reverse mortgages because they help my clients do exactly that — remain in their homes as long as possible.

Why? Because in order to remain in your home as long as possible, you will most likely at some point need some home care. “Home Care” can be health care and/or supportive care provided formally in your home by health care professionals (typically referred to as home health aides) or by paid or unpaid family members or friends (typically referred to as caregivers). Often, the term “home care” is used to mean non-medical care, or custodial care, which may be provided by persons who are not nurses, doctors, or other licensed medical personnel. The term “home health care” typically refers to care that is provided by a licensed health care professional — most often a Certified Nurse Assistant (CNA). However, the terms are often used interchangeably, and for simplicity in this article I will use the term “home care” to refer to both types of care.

The goal of home care is typically to to allow you to remain at home and age in place, rather than being forced to move to an assisted living facility or nursing home. Home Care providers render services in your own home. These services typically include a combination of health care services and life assistance services.

Health care services may include services such as wound care, administration of medication, physical therapy, speech therapy, and occupational therapy. Life assistance services typically include help with daily tasks such as meal preparation, medication reminders, laundry, light housekeeping, errands, shopping, transportation, companionship, and help with the activities of daily living (ADLs), which typically refers to six activities (bathing, dressing, transferring, using the toilet, eating, and walking).

Although some home care is provided by family members for free, most family caregivers need to be paid, and these payment arrangements should always be made pursuant to a written caregiver contract (prepared by an Elder Law Attorney) between the caregiver and the care recipient. Because home care is quite expensive, having the proceeds from a reverse mortgage is often one of the only ways that elders can afford to pay for appropriate home care. According to The 2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs, the 2009 national average hourly rate for home health aides increased by 5.0% from $20 in 2008 to $21 in 2009. The national average hourly rate for homemaker/companions increased by 5.6% from $18 in 2008 to $19 in 2009.

Most of my clients, when they start out needing home care, will typically start with receiving 4 hours of care 3 days a week, which costs about $1,000 per month and is easily affordable for many people. But over time, most of my clients progress to the point of needing upwards of 12 hours per day of home care, costing over $7,000 per month, and very few people can afford to pay for this type of care without eventually tapping into their home equity via a reverse mortgage.

The most common type of reverse mortgage is the Home Equity Conversion Mortgage (HECM), which completely protects your ability to remain in your home. So long as you pay your property taxes and homeowners insurance, and maintain your property, you can remain in your home forever. If the reverse mortgage lender fails, any unmet payment obligation to the borrower will be assumed by FHA.

According to the Mortgage Professor’s article mentioned in my first paragraph, in 2009 about 130,000 HECMs were written, and feedback from borrowers has been mostly positive. In a 2006 survey of borrowers by AARP, 93% said that their reverse mortgage had a mostly positive effect on their lives.

For many of my clients, a reverse mortgage is the best way, and often the only way, for them to be able to afford to remain at home, despite the fact that reverse mortgages are expensive to obtain. However, reverse mortgages are not for everyone, as there are other programs that may be able to help you remain in your home. For instance, many of my clients are eligible for the Veterans Aid and Attendance benefit or for home-based Medicaid, or can be made eligible for these benefits through our process of Asset Protection.

Whether you own your home outright or in a Revocable Living Trust or in my proprietary Living Trust Plus^TM Asset Protection Trust, if you think a reverse mortgage might be the solution you need, please contact me for a free consultation so I can evaluate your specific situation and advise you as to whether a reverse mortgage is your best option for allowing you to live comfortably in your home.

Did you see last Sunday’s Washington Post article?

Posted on Nov 6, 2009Written by Evan Farr

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Did you catch last Sunday’s Washington Post article by David Hilzenrath, about the October bankruptcy filing of Erickson Retirement Communities? My phone has been ringing all week with people concerned about this news, because Erickson is a major developer and manager of Continuing Care Retirement Communities (CCRCs) for senior citizens.

In the Washington area, Erickson communities include: Greenspring in Springfield, Virginia; Ashby Ponds in Ashburn, Virginia; and Riderwood in Silver Spring, Maryland. I spoke with the author prior to the article and gave him some of the information that he referenced in the article. As he explained, the recession and the real estate crisis have raised concerns for people who paid significant money — often hundreds of thousands of dollars — to enter CCRCs such as these.

It’s important to understand that the deposits that senior pay are simply for the privilege of moving in; at most CCRCs, the deposits generally do not confer any ownership in the real estate, and the deposits are in addition to the regular monthly fees for the facility, which increase as the level of care increases — from independent living up to assisted living and eventually nursing home care. Here’s a link for the article in case you missed it: http://tinyurl.com/EricksonBankruptcy.

In a companion article (http://tinyurl.com/ScrutinizeContracts), headlined Scrutinize any contract to avoid nasty surprises at continuing care community, the author points out that the entrance agreements for these facilities should always be reviewed by an attorney. “If you are considering moving to a continuing care retirement community,” the author says, “you would do well to consult a lawyer and read the fine print of any contract to determine whether the potential benefits outweigh the risks.” I have recommended this to my clients for years, and encourage everyone in the Northern Virginia area moving into a CCRC to have me review the contract. But please note — it is very important to have me review the contract prior to signing the contract. For many of the people calling me this week who read the article and are concerned, there’s nothing I can do because they already signed their contract. These folks I referred to a real estate litigation attorney to discuss the possible results of what might happen if they fail to go through with their contract. Those results could include being sued for breach of contract by the owner of the facility, and possibly being forced to pay significant monetary damages.

One risk in connection with the entrance contract is that most CCRC contracts require you to agree not to give away any assets that would bring your net worth below a minimum requirement (in order to help assure management that you have the ability to pay their ongoing charges). The author quotes me in article, saying “Evan H. Farr, a Fairfax lawyer who specializes in issues facing the elderly, recommends putting any extra assets in an asset protection trust before you move in.”

I’m very glad that the author included this quote in his article, because far too many people move into these types of facilities without giving asset protection a second thought. If you are considering moving into a CCRC, it behooves you to not just have me review the contract, but to also have me create the proper type of asset protection trust for you to put your extra assets in before you move in to the community. What is the proper type of asset protection trust? It’s my proprietary Living Trust PlusTM Asset Protection Trust — the trust that protects your assets from the expenses of probate PLUS lawsuits PLUS the catastrophic expenses of nursing home care.

As the creator of the Living Trust PlusTM and the leading expert on this type of trust in the country, I’ve taught thousands of attorney across the country about the benefits of these trusts, and I’m actually teaching another course on this subject to attorneys tomorrow at an annual conference of the National Academy of Elder Law Attorneys. If you want to find out more about the Living Trust PlusTM, please come to a free class I’m teaching for members of the public on Saturday, November 14, 2009 at 10:00:00 AM, at the Tysons Corner Mariott, 1960-A Chain Bridge Road, McLean, VA 22012.

By coming to this FREE class, you’ll learn what thousands of attorneys and clients already know . . .

- That a Will puts your assets through probate, and is a very poor estate planning document.
- That a regular living trust protects your assets from probate, but offers you no asset protection.
- That my Living Trust PlusTM Asset Protection Trust protects your assets from the expenses of probate PLUS lawsuits PLUS the catastrophic expenses of nursing home care.

To register, just go to http://evanfarr.com/seminars.html.

I hope to see you soon!