Medicaid Recipient Cannot Bring Claim to Require State to Deduct Guardianship Fees

NEW YORK: The U.S. Court of Appeals for the Second Circuit holds that a Medicaid recipient who is under guardianship cannot bring a § 1983 claim to require the state to deduct guardianship fees from her available income. Backer v. Shah (U.S. Ct. App., 2nd Cir., No. 14-1367-cv, June 3, 2015).
Brian Raphan, P.C.
New York resident Mindy Backer lived in a nursing home and received Medicaid benefits. Under state law, she had to contribute all of her monthly income, except for a $50 personal needs allowance, to the nursing home. The court appointed Ms. Backer’s sister as her guardian. The guardianship order stated that Ms. Backer’s income would be considered unavailable for the purposes of calculating her monthly available income. However, in a separate proceeding, the state determined that Ms. Backer could not deduct guardianship fees from her available income.

Ms. Backer sued under 42 U.S.C. § 1983, alleging that the state violated 42 U.S.C. § 1396a(a)(19), which requires the state to ensure eligibility is determined in the best interest of the recipient, and 42 U.S.C. § 1396a(q)(1)(A), which requires the state to deduct a personal needs allowance. The district court dismissed the claim for lack of standing because Ms. Backer’s injury was solely attributable to her own action in paying her guardian instead of the nursing home, and Ms. Backer appealed.

The U.S. Court of Appeals, Second Circuit, affirms, holding that while Ms. Backer had standing to bring the claim, she did not allege a violation of a federal right that could be enforced through § 1983. The court rules that the provision requiring the state to ensure eligibility is determined in the best interest of the recipient could not be enforced through § 1983 because it does not provide a “workable standard for judicial decision making.” In addition, according to the court, the personal needs allowance section does not require the state to allow the deduction of guardianship fees.

For the full text of this decision, go to: http://cases.justia.com/federal/appellate-courts/ca2/14-1367/14-1367-2015-06-03.pdf?ts=1433341806

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To see the Top 8 Medicaid Planning Mistakes click here.

Why You Should Redo Your Estate Plan When You Remarry:

Estate Planning, Raphan

If you are getting remarried, you obviously want to celebrate, but it is also important to focus on less exciting matters like redoing your estate plan. You may have created an estate plan during your first marriage, but this time it will probably be more complicated–especially if you have children from your first marriage or more assets. The following are some pointers for ensuring your interests are taken care of when you remarry:

  • Take an inventory. The first thing you and your partner should do is each take an inventory of your assets and debts and share it with the other person. Don’t forget to include life insurance policies and retirement plans in your inventories. It is important to be open and honest about money if you want to prevent bad feelings in the future.
  • Decide how you want to handle finances. Once you know what you are dealing with, then you need to decide if you want to combine (or not combine) assets when you are married. For example, if one partner is selling a house and moving in with the other partner, will he or she contribute to the cost of the house? If one partner has significant debt, you may not want to combine finances or make any joint purchases. These decisions need to be made upfront so everyone is clear on what to expect.
  • Decide what you want to happen when you die. You and your future spouse need to figure out where each of you wants your assets to go when you die. If you have children from a previous marriage, this can be a complicated discussion. There is no guarantee that if you leave your assets to your new spouse, he or she will provide for your children after you are gone. There are a number of options to ensure your children are provided for, including creating a trust for your children, making your children beneficiaries of life insurance policies, or giving your children joint ownership of property. Even if you don’t have children, there may be family heirlooms or mementos that you want to keep in your family. Again, open discussions can prevent problems in the future.
  • Consult an elder law or estate planning attorney. Even if you don’t have a lot of assets, you should consult an attorney, especially if you have children. You will definitely need to update your will. You may also need to update or create other estate planning documents such as a durable power of attorney and a health care proxy. If you have significant assets, a prenuptial agreement may be appropriate. In addition, the attorney can help you decide if a trust is necessary to protect your children’s interests.
  • Change your beneficiaries. You may want to change the beneficiaries on your life insurance policy, annuity, and/or retirement plan. If you are divorced, however, you may not be able to change some of the beneficiaries. Bring your divorce decree with you to the attorney so he or she can make sure you do not violate the decree. If you can’t change your beneficiaries, you may want to buy additional life insurance or retirement plans that will include your new spouse.
  • Consider a prenuptial agreement. While you are intending to stay married, things happen. Unlike a first marriage, you may be bringing property to this marriage that you spent decades accumulating and you may be merging two families. You need to decide together what your intentions are for the use of funds while you are living together, if you get divorced and when one of you dies before the other. Failure to think and plan ahead can mean severe heartache and financial costs for you and your family.
  • Consider purchasing long-term care insurance.The physical, emotional and financial cost of long-term care can deplete the savings of all but the most wealthy. While you may be willing to spend your lifetime of savings on the care of a spouse with whom you raised a family and accumulated the funds, you may not want to lose this to the care of a relatively new spouse. Long-term care insurance, while expensive, can permit you and your new spouse to get the care you need without impoverishing the other.

The most important thing to remember is to be open and honest with your future spouse and your family members about your wishes.

For more on estate planning, click here.

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Regards, Brian A. Raphan, Esq.

Free Tax Help & Filing for Low- and Middle-Income Taxpayers

The United States Internal Revenue Service (IRS) is sponsoring the largest free tax counseling and preparation program in the country, available through AARP.

As seen in: SeniorLiving.about.com
As seen in: SeniorLiving.about.com

Who Can Use this Free Tax Help and Free Filing Service?

Most people who work need to file a tax return. AARP Tax-Aide is a free tax help service for people who meet the following criteria:

  • Low- or middle-income taxpayers who want tax help and free filing of their U.S. federal income tax returns
  • You must have a simple tax return. People seeking tax help who have more complex returns will be advised to get professional tax assistance.
  • You do not need to be a member of AARP or a senior to receive tax help from Tax-Aide, however special attention is paid to people age 60 and over.

What Are the Details of This Free Tax Help and Filing Service?
Every year, from February 1st through April 15th, about 32,000 trained and certified Tax-Aide volunteers across the country are available to provide tax help for preparing and filing your federal tax return.

  • Many Tax-Aide locations are equipped to file your return electronically, allowing you to receive your tax refund much faster.
  • Some Tax-Aide locations offer bilingual assistance.
  • In most situations, you must visit an AARP Tax-Aide site in person to have your tax returns prepared by Tax-Aide volunteers. However, special arrangements can be made to assist shut-ins and homebound disabled persons by providing tax help at locations including hospitals, nursing homes, assisted living facilities, etc. To make a special tax help request, contact AARP at taxaide@aarp.org[/Email”>.
  • Volunteers are not available to provide tax help by phone, so visit the online tax counseling site for a list of frequently asked questions or to submit your own questions.
  • What Do I Need to Bring When I Receive Free Tax Help?
    • Photo identification
    • Social Security card
    • Wage and earning statements
    • Interest and dividend statements
    • A copy of last year’s federal and state returns if available
    • Your bank account and bank routing numbers so you can arrange for direct deposit of your tax refund
  • Where Can I Find the Closest Tax-Aide Site?

    What If There’s No Tax-Aide Site Near Me?
    If you cannot find a Tax-Aide location near you, the IRS offers other tax help options. For more information:

Some Potential Problems With SSA’s New Trust Guide

Social Security News

As previously reported, the Social Security Administration (SSA) recently instituted a nationally uniform procedure for review of special needs trusts for Supplemental Security Income (SSI) eligibility, routing all applications that feature trusts through Regional Trust Reviewer Teams (RTRTs) staffed with specialists who will review the trusts for compliance with SSI regulations.

The SSA has also released its Trust Training Fact Guide, which will be used by the RTRTs and field offices when they evaluate special needs trusts.  In an article in the July/August 2014 issue of The ElderLaw Report, New Jersey attorney Thomas D. Begley, Jr., and Massachusetts attorney Neal A. Winston, both CELAs, discuss the 31-page guide in detail and caution that while it is a significant step forward in trust review consistency, it contains “a few notable omissions or terminology that might cause review problems.”  Following is the authors’ discussion of the problematic areas:

• Structured Settlements. The guide states that additions/augmentations to a trust at/after age 65 would violate the rule that requires assets to be transferred to the trust prior to the individual attaining age 65. It does not mention that the POMS specifically authorizes such payments after age 65, so long as the structure was in place prior to age 65. [POMS SI 01120.203.B.1.c].

• First-/Third-Party Trust Distinction. Throughout the guide, there are numerous references to first-party trust terms or lack of terms that would make the trust defective and thus countable. These references do not distinguish between the substantial differences in requirements for first-party and third-party trusts.

• Court-Established Trusts/Petitions. This issue is more a reflection of an absurd SSA policy that is reflected accurately as agency policy in the guide, rather than an error or omission in the guide itself. This section, F.1.E.3, is titled “Who can establish the trust?” The guide states that creation of the trust may be required by a court order. This is consistent with the POMS. It would appear from the POMS that the court should simply order the trust to be created based upon a petition from an interested party. The potential pitfall described by the guide highlights is who may or may not petition the court to create a trust for the beneficiary. It states that if an “appointed representative” petitions the court to create a trust for the beneficiary, the trust would be improperly created and, thus, countable. Since the representative would be considered as acting as an agent of the beneficiary, the beneficiary would have improperly established the trust himself.

In order for a court to properly create a trust according to the guide, the court should order creation of a trust totally on its own motion and without request or prompting by any party related to the beneficiary. If so, who else could petition the court for approval? The plaintiff’s personal injury attorney or trustee would be considered an “appointed representative.” Would a guardian ad litem meet the test under the guardian creation authority? How about the attorney for the defendant, or is there any other person? If an unrelated homeless person was offered $100 to petition the court, would that make the homeless person an “appointed representative” and render the trust invalid? The authors have requested clarification from the SSA and are awaiting a response.

Until this issue is resolved, it might be prudent to try to have self-settled special needs trusts established by a parent, grandparent, or guardian whenever possible.

• Medicaid Payback/Administrative Fees and Costs. Another area of omission involves Medicaid reimbursement. The guide states that “the only items that may be paid prior to the Medicaid repayment on the death of the beneficiary of the trust are taxes due from the trust at the time of death and court filing fees associated with the trust. The POMS, [POMS SI 01120.203.B.1.h. and 203B.3.a], specifically states that upon the death of the trust beneficiary, the trust may pay prior to Medicaid reimbursement taxes due from the trust to the state or federal government because of the death of the beneficiary and reasonable fees for administration of the trust estate such as an accounting of the trust to a court, completion and filing of documents, or other required actions associated with the termination and wrapping up of the trust.

While noting that the guide, in coordination with training, “is a marked improvement for program consistency for trust review,” Begley and Winston caution advocates that “the guide should be considered as a summarized desk reference and training manual and not a definitive statement of SSA policy if inconsistent with the POMS.”

Regards,

Brian A. Raphan, Esq.

The Law Offices of Brian A. Raphan, P.C.

www.RaphanLaw.com

Lack of Personal Care Agreement Makes Reimbursements to Relatives an Improper Transfer

Reversing a trial court, a Louisiana appeals court determines that a nursing home resident improperly transferred close to $50,000 to his caregiver nephew and the nephew’s wife because the payments were not made pursuant to a valid personal care agreement.  David v. State of Louisiana Department of Health and Hospitals (La. Ct. App., 1st, No. 2014 CA 0791, Dec. 23, 2014).

Brian Raphan, P.C.

Widley David entered a Louisiana nursing home in 2008.  Between 2008 and 2010, Mr. David wrote six checks to his nephew and his nephew’s wife totaling $49,195.  According to Mr. David, the checks were intended to repay his closest living relatives for the daily care that they provided him in the nursing home.  When Mr. David applied for Medicaid in December 2010, the Louisiana Department of Health and Hospitals (DHH) assessed a nearly 15-month penalty period due to the transfers.

Mr. David did not appeal the initial imposition of a penalty period, but in July 2011 he requested a change in status from private pay to full Medicaid pay.  DHH denied this request, stating that pursuant to the initial denial, Mr. David was ineligible for Medicaid until January 2012.  Mr. David appealed the denial of his change in status, arguing that the payments to his relatives were reimbursement for care provided and not to qualify for Medicaid.  DHH claimed that the payments would be valid only if made pursuant to a written personal care agreement, which Mr. David had never executed.  After a trial court found in favor of Mr. David, the state appealed.

The Louisiana First Circuit Court of Appeal reverses the trial court, finding that the lack of a personal care agreement made the transfers to the relatives improper.  The court states that a “payback arrangement or personal care agreement was necessary to validate this alleged arrangement; however, Mr. David did not offer any type of tangible or documentary evidence of an agreement, contract, or Personal Care Agreement to substantiate and validate his argument. The record is void of any evidence that complied with Medicaid eligibility requirements to validate the resource transfers.”

To read the full text of this decision, click here.

To learn more about Medicaid Planning click here.

Regards, Brian

The 10 Most Overlooked Tax Deductions for Care Givers

Thanks to AgingCare.com &  for contributing these often forgotten tips:

Before filing your taxes, don’t miss out on deductions related to medical expenses and other costs that come out of your wallet as you care for a family member throughout the year.

An estimated one-third of U.S. taxpayers, or about 45 million people, itemize their taxes instead of taking IRS’ standard deduction. An estimated $1.26 trillion worth of deductions are claimed annually, according to experts with TurboTax.

See if you can get a break on your taxes, with these 10 tax deductions.

1. Medical expenses

Nearly 100 medical costs can be deducted, related to the diagnosis, treatment, cure or prevention of disease or costs for treating any part of the body. Those include equipment, services and supplies, ranging from glasses to eye surgery to acupuncture to prescriptions.

“Lots of adults are paying for prescriptions for their elderly parents,” says Melissa Labant, a CPA and technical manager for the American Institute of CPAs.

Even artificial limbs, bandages, hearing aids and wigs are accepted medical expenses (for others, see IRS’ Publication 502). The medical and dental costs must total more than 7.5 percent of your adjusted gross income to be deducted.

2. Long-term health care costs

An often-missed expense is the amount paid for long-term care services and long-term care insurance (that’s a more limited deduction, depending on age). Rehabilitation, therapeutic, preventative and personal care services are among those that qualify as long-term care services, if your family member is chronically ill and if it’s part of a plan set by a health care practitioner.

Someone is considered chronically ill if they can’t perform at least two activities of daily living (such as eating, toileting, bathing and dressing) without substantial assistance from someone else.

3. Mileage

From weekly doctor’s appointments to out-of-town visits with a specialist or for a procedure, the miles you log for your parents’ medical needs can be deducted.

“You can take that if they qualify as your dependent. Keep a log as you’re running around,” says Mary Beth Saylor, a CPA and tax principal with Windham Brannon, an Atlanta-based accounting firm. “I’ve hardly seen anybody really keep up with that.” You can take approximately 19 cents a mile for 2012, for medical mileage.If you’re staying overnight for a medical purpose, deduct $50 per night, for each person, for lodging.

4. Dental expenses

Go ahead and smile – dental expenses are among the costs that some people ignore, including dentures and artificial teeth.

5. Home improvements for aging adults

Investing in ramps for a wheelchair-bound parent, handrails and grab bars in the bathroom or a stepless shower can be part of a deduction. It doesn’t matter if the improvements are in your home or your parents’ home, as long as it doesn’t add value to the house, Saylor says.

The IRS says that the cost of the improvement is reduced by the increase in your property value. Other changes, such as widening doorways and hallways, lowering kitchen cabinets and installing lifts, also typically do not add value to houses.

6. Energy-saving home improvements

Whether or not you did this in the course of being a caregiver, any energy-saving changes are eligible for a credit. For more traditional items such as insulation and windows, it’s 10 percent of the cost (a maximum of $500). For alternative energy equipment, like a solar hot water heater, the credit is up to 30 percent of the cost. Find more details from the federal EnergyStar program.(www.energystar.gov)

7. Mortgage interest

If you are paying interest on your or your parents’ home loans, construction loans or home equity lines of credit, it’s deductible. There are some limitations, though, so you need to discuss with your accountant.

8. State and local sales tax

This is an excellent idea if you live in a state that doesn’t have income tax. If you do, you’ll need to make a choice: Deduct state and local sales taxes, or state and local income taxes. You may find that the best financial benefit, in that case, is to stick with the income tax deduction, according to experts with TurboTax. Take some time to figure out your best option by using the IRS sales tax calculator.

9. Estate tax on an inherited IRA

This is not as easy as deducting medical expenses or charitable contributions, but is worth checking out. If you inherited an IRA from your parents, you could take an deduction for the federal estate tax paid on IRA income.

10. Charitable contributions

Of course, you may know to estimate the value of items you or your parents donate to charity. But you also can include other out-of-pocket costs related to volunteering. If you or your parents bought ingredients to make meals for the homeless or elderly, or if you drove a personal vehicle while volunteering or assisting a charity, those and other costs can be deducted.

Tax planning as well as considering other estate planning methods can help you save money. Visit our website. We offer free initial consultation to seniors.

Regards,

Brian A. Raphan

http://www.RaphanLaw.com