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June 16, 2005
LEGISLATION AFFECTING SENIORS
This week as I write my article, I am also preparing written testimony for a June 22, 2005 public hearing by the Health Care Finance Committee on Long Term Care Insurance. If my schedule permits, I am also planning on testifying at the hearing.
Just to back up a minute, lets take a look at what laws are pending in the Legislature that affects seniors. First, the House and Senate came up with a budget last month. There were differences between the budgets and those differences are now being hammered out in the Conference Committee who will then make recommendations to the House and Senate for a vote on the final budget. There are two items favorable to seniors in the Conference Committee. They are:
ü COMMUNITY SPOUSE RESOURCE ALLOWANCE – I wrote about this 2 weeks ago. This budget item would restore the allowance for a spouse at home, if their spouse needed nursing home care, to what was allowed prior to the change on January 1, 2003. The current law (effective 01/01/2003) says that a spouse is allowed to keep one half of their assets up to $95,100. The old rule would have let her keep the 1st $95,100.
Example: Mom and Pop have $40,000. Pop goes to the nursing home. Under the old rule (what we are trying to go back to!) Mom to keep all of the $40,000. Under our present rule, mom would be allowed to keep $20,000. This is one-half of her assets.
Reason For Requesting The Change – Leaving Mom with only $20,000 isn’t fair! With Pop in the nursing home she is down to one income to pay 100% of the expenses of living at home plus other expenses for things such as cutting the lawn, snow removal and maintenance that Pop had always done. Mom will not have sufficient assets to stay at home. What do you think?
ü TRANSFER OF ASSET PENALTIES - Last week I wrote about this topic. In a nutshell, the Governor has requested from the Federal Government that he be exempt from certain Federal Laws and that he be allowed to make up his own rules for MassHealth (Medicaid) eligibility. The essence of the Governor’s plan is to extend the lookback period from 3 years to 5 years and to say; If you need nursing home care, any gifts made within the last 5 years must be returned or you will be denied health care. He is a very compassionate Governor.
What if you can’t get the money back? Problem areas will arise if you make payments for your child or grandchild’s benefit and need nursing home care within 5 years. Grandparents will have to think twice before making a mortgage payment or helping with college tuition, that is if they are even aware of this law.
The Conference Committee is now considering whether to pass this portion of the budget that would eliminate the Governor’s authority to request such a waiver from the Federal Government.
OK, that was the budget information. Over on the House side, Bills have been filed to help seniors. To make matters more confusing, Representative Frank Smizik has filed Bill #H1500 that is identical to the Community Spouse Resource Allowance that is currently in the Conference Committee. The two other Bills that are in the House are:
Bill #H1493 – Filed by Representative Ruth Balser – This is a very complicated bill to explain and deals primarily with women who stayed home and raised their children and subsequently have a very small retirement income. The regulations allow this class of individuals a slightly larger asset allowance. The Commonwealth has been trying to limit the increase in the allowance by imputing income from the assets that the spouse at home is allowed to keep at an unrealistic rate.
Bill #H3100 – Filed by Representative Kathleen Teahan – This Bill is really a mystery to me. I can’t believe that it was not in the budget. Passage of this Bill would make Long Term Care Insurance something that every person in the state would have to take a look at.
Long-term care insurance provides benefits for home care, care while at an assisted living facility, as well as nursing home care. Long-term care insurance provides two major benefits for those who are healthy enough to acquire it. The first benefit is that the policy will pay for care you receive in your home. I think everyone would agree that they would prefer to stay home rather than being placed in a nursing home. The other benefit is that if you purchase a long-term care insurance policy, your home may be protected in the event that you need nursing home placement.
LONG TERM CARE INSURANCE BASICS - In Massachusetts the policy must have a minimum of a $125/day benefit to be a qualified policy. Further, the policy must have benefits available sufficient to cover at least 730 days in a nursing facility. This is a trap for the unwary. If you buy a 2-year policy and use 1 day of home care benefits this would leave you only 729 days left for the nursing home, one short of the required minimum. The Division of Medical Assistance has decided to use the date you enter the nursing home as the measuring date for the evaluation of the benefits remaining on your long-term care insurance policy. This means that your home will not be protected anymore.
Many people have purchased long-term care insurance based upon representations from insurance salesmen that the purchase of the long-term care insurance policy will make their home an exempt asset. The Massachusetts Division of Insurance thought that this was enough of a problem that on March 12, 2004 they issued Bulletin 2004-03 that requires anyone purchasing a long term care insurance policy to sign a “warning” notifying current and prospective insureds that their home will only be protected if on the day the person enters the nursing home their policy meets the minimum standards.
THE PROPOSED CHANGE – The Bill that has been filed is a very simple bill. It only asks that a long-term care insurance policy be evaluated on the date of purchase and not some time “down the road” when the person has entered a nursing home.
Many people have purchased long-term care insurance thinking that they will qualify to have their home protected because their policies meet the standards. However, this is only true if you did not use any of your days for home care.
WHAT CAN YOU DO TO HELP – Assuming that you feel strongly about any of the items to be voted on that appear above, you should call your Representative and Senator and ask them to help. For the matters in the Conference Committee, they should as their legislator to contact their members of the Conference Committee. For the three Bills that are in the House, you should ask your Representative to support them.
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds masters in accounting and a masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org