faculty patricia e. kefalas dudek patricia e. kefalas dudek & associates 30445 northwestern hwy,...

Faculty Patricia E. Kefalas Dudek Patricia E. Kefalas Dudek & Associates 30445 Northwestern Hwy, Suite 250 Farmington Hills, MI 48334 (248) 254-3462 Email: [email protected]@pekdadvocacy.com Website: www.pekdadvocacy.comwww.pekdadvocacy.com

Why Planning for People with Disabilities is a Great Area of Practice Growing Need: More individuals with disabilities of all ages tie in with elder law Better medical care/ Long-term support Longevity Tie to elder law Make a real difference in clients lives and their Quality of Life: Public benefits Asset protection & private resources Structure for care and financial management Relieving burden on siblings Create public/private partnership 2

Effect of Affordable Care Act Fewer people will need Medicaid because there is no more pre-existing condition exclusion Fewer people will need to maintain SSI eligibility in order to get Medicaid 3

Public Benefits Some of the Available Programs: Medicaid Medicare Supplemental Security Income (SSI) Social Security Disability Income (SSDI) Housing Veteran Benefits Other: http://www.pekdadvocacy.com/wp- content/uploads/2014/09/Benefits-Checklist.pdfhttp://www.pekdadvocacy.com/wp- content/uploads/2014/09/Benefits-Checklist.pdf 4

Public Benefits Medicaid Vital Coverage is more extensive than Medicare or private insurance Often provides supplemental benefits, such as personal care attendants Eligibility and benefits differ among states and even counties In many states tied to SSI including South Dakota 5

Public Benefits Medicare No asset restrictions Eligible after receiving SSDI for 2 years (or with certain exceptions) Not as comprehensive as Medicaid for long term support But more doctors accept reimbursement Co-payments and deductibles 6

Basic Eligibility Criteria - Medicare A person is eligible for Medicare if that person (or that persons spouse): Is 65 years or older, a citizen or permanent resident of the United States, and has worked for at least 10 years in Medicare-covered employment. Is 65 but not eligible for Social Security retirement benefits. If the person is not yet 65, s/he might also qualify for coverage if the person: Has been receiving either Social Security Disability Income or Railroad Retirement Board disability benefits for at least 24 months from date of entitlement (first disability payment). Suffers form and receives treatment for End-Stage Renal Disease (ESRD - permanent kidney failure requiring dialysis or transplant). 7

Medicare Medicare Part A (Hospital Insurance) Medicare Part A helps pay for: inpatient hospital care, critical access hospitals (small facilities that give limited outpatient and inpatient services to people in rural areas), and skilled nursing facilities (not custodial or long-term care), hospice care, and some home health care. A person is automatically eligible for Part A at age 65 WITHOUT having to pay premiums if s/he: Is eligible to receive SSA or Railroad benefits but has not yet filed for them or already receives retirement benefits from SSA or the Railroad Retirement Board. Had Medicare-covered government employment (includes spouse). If a person does not automatically receive premium-free Part A, s/he might be able to purchase it if: That person is age 65 and was not entitled to SSA benefits because s/he did not work or did not pay enough Medicare taxes while working. Or the person was previous on SSDI but no longer receives premium-free Part A because s/he has returned to work. 8

Medicare Medicare Part B (Medical Insurance) Medicare Part B helps pay for: Doctors services, outpatient hospital care, and some medical services that Part A does not cover (such as physical and occupational therapist services, and some home health. Part B helps pay for these covered services and supplies if they are medically necessary). Hospital observation stay days. Generally covers 80% of Medicare-approved amount for covered services. Medicare Part B is optional and requires payment of a monthly premium. The standard monthly Part B premium for 2014 is $104.90. Part B premiums are higher for singles with income of $85K or more (single) or $170K or more (joint filers). For additional details, go to: http://www.medicare.gov/your-medicare-costs/part- b-costs/part-b-costs.html and http://questions.medicare.gov/app/answers/detail/a_id/2310.http://www.medicare.gov/your-medicare-costs/part- b-costs/part-b-costs.htmlhttp://questions.medicare.gov/app/answers/detail/a_id/2310 Higher-income beneficiaries will pay $104.90 PLUS an additional amount, based on the income related monthly adjustment amount (IRMAA). 9

Medicare Medicare Part C (Medical Advantage Plans) Medicare Part C plans are alternatives to Traditional Medicare (Parts A&B). Part C plans are managed by private insurance companies approved by and under contract with the Centers for Medicare and Medicaid Services (CMS). Plans function like managed care (i.e., HMO or PPO). Plans are required to include coverage that is virtually equivalent to Traditional Medicare. In some cases Part C plans offer benefits not available under Traditional Medicare. Many Part C plans include prescription drug coverage. Some Part C plans are labeled Special Needs Plans. These are special because of the nature of the benefits offered and otherwise unrelated to special needs planning. 10

Medicare Medicare Part D (Prescription Drug Plans) Medicare Part D plans are managed by private insurance companies approved by CMS and are offered by either in conjunction with a Part C plan or as a stand-alone plan. Helps cover the cost of prescription drugs. Plans vary in cost and list of formulary drugs that are covered. Medigap Coverage (Medical Supplemental Insurance) Medigap coverage is purchased through private insurance companies and are designed to fill the co-pay gaps. 11

Medicare Traditional Medicare Appeals Process begins when a beneficiary receives a Medicare Summary Notice (MSN) denying a claim. There is no appeal right unless a MSN is received. If a beneficiary receives a denial notice from a health care provider, the beneficiary must request that the provider submit the claim to Medicare (1) The first level of appeal is the redetermination. Must be filed within 120 days of the receipt of the MSN. The redetermination is filed with the Medicare contractor, as listed on the MSN. (42 CFR 405.944. Standard of promptness for a decision is 60 days. (2) The second level of appeal is reconsideration by a Qualified Independent Contractor (QIC) Must be filed within 180 days from the date of the receipt of the redetermination decision Standard of promptness for a decision is 60 days. 12

Cont.. (3) The third level is an appeal to an Administrative Law Judge. Must be filed within 60 days from the date of the receipt of the reconsideration notice. May also be requested when a QIC fails to make a reconsideration decision within 60 days. This is known as an escalation. Standard of promptness for a decision is 90 days. If appeal is a result of an escalation, the standard of promptness is 180 days. (4) The fourth level is a review by the Medicare Appeals Council. Must be filed within 60 days from date of receipt of ALJ decision. Standard of promptness for a decision is 90 days. (5) The final level is Federal Court. 13

Medicare Hospital Discharge Appeal Rights Written notice of discharge must meet the following requirements to be proper: (1) Provide name, address and phone number of the Quality Improvement Organization (QIO) serving hospital and instructions for appealing decision [42 CFR 412.42 412.48]. (2) The hospital notifies the beneficiary in writing that: (a) In the hospitals opinion, and with the attending physician or QIOs concurrence, s/he no longer requires inpatient care. (b) Customary charges will be made for continued hospital care beyond the second day following the date of the notice. (c) The QIO will make a formal determination on the validity of the hospitals finding if the beneficiary remains in the hospital after they are liable for charges. (d) The determination of the QIO will be appealable by the hospital, the attending physician, or by the beneficiary under the QIO Medicare Part A appeals procedures. 14

Medicare Hospital Discharge Appeal Rights Cont., The beneficiary must file a timely request for reconsideration of an initial denial determination to the QIO. The appeal must be filed by noon the next calendar day. During the appeal, the patient will remain in the hospital. If discharge is determined to be inappropriate by the QIO, it will be delayed. If it is determined to be appropriate, the patient will need to leave or pay privately. If the patient remains an inpatient, the QIO must complete its reconsideration within 3 working days after the QIO receives the request for reconsideration. If discharge is not safe and appropriate or if more time is needed to arrange for proper after care, the advocate should request a discharge planning meeting. The QIOs determination will be appealable by the hospital, attending physician, or by the beneficiary under the QIO Medicare Part A appeals procedures. 15

Medicare Medicare Beneficiary Rights Advocacy in the Nursing Home The most common reasons given for termination of skilled/rehabilitation services is that the resident has plateaued or is not making progress/improving. The Centers for Medicare & Medicaid Services (CMS) has issued manual guidance (Change Request 8458) related to the Jimmo v. Sebelius No. 5:11-CV-17 settlement. Guidance states that No Improvement Standard is to be applied by Medicare contractors in determining Medicare coverage for maintenance claims that require skilled care. The proper standard to justify continuation of Medicare coverage includes prevention of deterioration. [42 CFR 409.32(c)]. In addition, skilled rehabilitation services may continue even for maintenance purposes. [42 CFR 409.33(c)]. 16

Medicare Medicare Beneficiary Rights Advocacy in the Nursing Home Cont., If the SNF determines the patient is no longer eligible for Medicare payment for skilled care, the SNF must give the patient a written Notice of Non-Coverage. The SNF is required to submit a demand bill or no-payment bill to Medicare at the request of a resident or residents representative. The resident may be eligible for an expedited review process, under the following conditions: (a) The SNF gives notice two days before the loss of services. (b) The resident files an expedited appeal to the QIO by noon on the day that they receive notice. The QIO must inform the SNF of the appeal and the SNF must provide the resident with a more detailed notice of non-coverage. The QIO has 72 hours to make a determination. 17

Medicare What Practitioners Need to Know About Medicare There is a broad range of differences between the Medicare plans. Many beneficiaries have been disappointed with Medicare Advantage (C) plans. Therefore, Traditional Medicare is often the best choice. Beneficiaries are required to pay premiums for Parts B, C and D. Practitioners should become familiar with Medicare options and State Health Insurance Assistance Program (SHIP) or identify someone who is to work with to help clients select the best plan(s) to provide for the clients specific conditions and needs. Dual eligible (Medicare & Medicaid) beneficiaries have added benefits. 18

Public Benefits Supplemental Security Income Restrictive, must be poor, no SGA, & disabled $2,000 limit on countable assets Federal benefit level ($721 a month in 2014) plus state supplement Dollar-for-dollar income offset (after $20 disregard) In-kind income ruler In kind support and maintenance (ISM) 1/3 of $721 plus $20 - $260 (in 2014) 19

Supplemental Security Income (SSI) Background Nixon nationalized state welfare Administered by SSA Financing federal general revenue funds Relationship to Medicaid - $1 of SSI = Medicaid Section 1634 of SS Act State Enabling Statutes Categorical Eligibility + Poverty both are required Either Aged 65+ or Disabled Countable Assets less than $2,000 plus low income 20

Sequential Evaluation Process (Substantive Law - see Appendix 2) Methodology to determine if someone is disabled under SS Act: 1. Engaging in Substantial Gainful Activity? 2. Has a non-severe impairment? 3. Meets federal Listing of Impairments? 4. Can perform Prior Relevant Work? 5. Can perform new occupation? Given the claimants RFC + Age + Education 21

SSA Claims and Appeals Procedure Mostly the same for T2 and T16 (Procedural Law - see Appendix 3) 1. Initial application 2. Reconsideration 3. Administrative Law Judge Hearing 4. Appeals Council Washington, D.C. 5. U.S. District Court 6. U.S. Circuit Court of Appeals 7. U.S. Supreme Court 22

SSI non-financial requirements Citizen or lawful resident Not be a fugitive felon, in prison, violating parole Not be outside the U.S. for more than one month Must apply for all other benefits for which you are eligible Accept medical treatment And other requirements (see written materials) If an alien, meet special requirements 23

SSI financial eligibility - principles Two tests income and resources (assets) Measured on a month-by-month basis Amount paid has nothing to do with calculated need it is Federal Benefit Rate (FBR 2014 is $721) less all countable income Income is not IRS income but public benefits income 24

SSI financial eligibility principles, continued Claimants responsibility to report income and assets Retrospective monthly accounting Income in the month received becomes resource (asset) if retained on first of following month For cessations, Goldberg vs. Kelly rules apply No liens at death to repay SSI 25

SSI financial eligibility principles, continued Countable Income is anything that comes in that is not counted nor excluded by law Things that are not income by law Proceeds of a loan Tax refunds Payments made to third parties for goods or services that are not ISM 26

SSI financial eligibility principles, continued Exclusions of income Ten Earned Income exclusions applied in strict order Twenty-Two Unearned Income exclusions Deemors (healthy parent or spouse) entitled to exclusions before deeming applies to SSI claimant 27

SSI Income Four Types The four types of income are treated differently in terms of how much is subtracted from the SSI monthly check. The four types are: Earned income Unearned income In-kind Support and Maintenance (ISM) Deemed income parent to child, spouse-to spouse 28

SSI Earned Income Earned (vs. Unearned) is highly favored by the law Subtract $20 general income disregard, then take $65 off the top, then subtract 50%, and the remainder is countable income. Example: Joes part time work pays $400 that month Earned Income$400 Less general income disregard ($20) Less earned income exclusion ($65) Remainder$315 Less 1/2 of earned income ($315 - $157.50) ($157.50) TOTAL COUNTABLE INCOME $157.50 SSI Federal Benefit Rate$721.00 Less Countable Income($157.50) TOTAL SSI CHECK AMOUNT$563.50 29

SSI Unearned Income Gifts are countable unearned income SSDI, pensions, etc., are unearned income Everything is unearned unless it is earned All unearned income, except $20, counts unless on the specifically excluded list examples of exclusions: One third of child support WWII war reparation payments Interest on excluded burial space purchase 30

SSI Income In-kind Support and Maintenance (ISM) ISM consists of ten food and shelter items ISM is payments made to third parties that give the SSI claimant one or more of the ten food and shelter items No matter how much is paid, the Presumed Maximum Value of the food and shelter is $260.33 that month $721 FBR minus $260.33 = SSI check of $460 31

SSI and ISM, continued: The ten food and shelter items are: 1. Food 2. Mortgage (including property ins. required by lender) 3. Real property taxes (less any tax rebate/credit) 4. Rent 5. Heating fuel 6. Gas 7. Electricity 8. Water 9. Sewer 10. Garbage removal ONLY THOSE TEN TRIGGER THE PMV REDUCTION FOR ISM !!! 32

The Second Financial Eligibility Test: Few Resources (assets) - Principles Measured on the first moment of the first day of each month X is income in the month received, and if retained becomes a resource on the first of the next month Resource is anything owned by the claimant that can be converted to cash, unless excluded by law It is a resource if the claimant has the right, authority, or power to liquidate the property Resources of deemor may count 33

SSI Resources - exclusions The first $2,000 ($3,000 if married couple) Home of any value Car of any value Household goods and personal effects used by claimant SNT investments (my millionaires on welfare) Retroactive SSI or SSDI payments for 9 months And others (see list in written materials) 34

SSI Deeming of Income and Resources - Principles Deeming applies in ONLY THREE situations 1. parent to minor child (stops on childs 18th Birthday) 2. Spouse to spouse 3. Sponsor to alien For parent and spouse deeming, only applies if deemor lives with SSI claimant Certain things not deemed e.g., deemors IRAs and pension funds 35

SSI Deeming cont. No deeming upstream nor laterally Childs income not deemed to SSI sick parent Siblings incomes not deemed to SSI sick child Remember: Parental deeming stops at age 18 36

The Following Deeming Eligibility Chart for Children does not apply when: The parent(s) receives both earned income (for example, wages or net earnings from self-employment) and unearned income (for example, Social Security benefits, pensions, unemployment compensation, interest income, and State disability). The parent(s) receives a public income maintenance payment such as Temporary Assistance for Needy Families (TANF), or a needsbased pension from the Department of Veterans Affairs. The parent pays court-ordered support payments. The child has income of his or her own Any ineligible (healthy child not on SSI) child has income of his or her own, marries, or leaves the home. There is more than one disabled child applying for or receiving SSI Benefits. 37

SSI Penalty for Transfers Look back period is 36 months Penalty is amount transferred divided by FBR in the month transferred (Example: $10,000 divided by $721 yields a penalty of 13 months from the past date of transfer) Result is the number of months of ineligibility for SSI 38

SSI Transfer Penalty (cont.) Exceptions to Transfer Penalty Transfers to SNTs Transfer of home under certain conditions Non-home transfer exceptions Resource returned, then claimant seeks conditional benefits pending sale Transfers for purposes other than to qualify for SSI Undue hardship 39

Fees in Social Security Claims Highly regulated Failure to follow = civil and criminal penalties and disbarment from appearing before SSA * I SAY BRING IT ON!! Fees cannot be paid unless approved by SSA in most cases 40

Public Benefits Social Security Disability Income Not based on financial eligibility Benefit based on beneficiarys work record or that of parent If based on parents work record, child must have been disabled before age 22, and parent must either be receiving SS benefits or be deceased Benefit may be more or less than SSI benefit Can change from SSI to SSDI when parent retires Easier to manage than SSI 41

Social Security Disability Insurance (SSDI) Basic Eligibility Criteria 40 SSA work credits, 20 of which must have been earned in the last 10 years ending with the year that the individual became disabled. Number of credits required is based on age, and when the individual becomes disabled. In 2014, an individual gains 1 credit for each $1,200 of wages. Therefore, earnings of $4,800 equal 4 credits (no matter when earned in the year). Paid Social Security taxes on earnings. Total Disability - inability to perform any Substantial Gain Activity (SGA.) 5 question step-by-step process to determine disability. SSDI Income/Medical Eligibility Issues SSDI is an entitlement and there is no asset limit for eligibility. There is no deeming under SSDI, except for possible earned income. SSDI benefits are not affected by unearned income (unlike SSI). Trial Work Program (TWP) - Individual on SSDI can test ability to work. After 24 months of SSDI eligibility, eligible for Medicare. 42

Eligibility for Children, Disabled Adult Child Benefits Adult child can receive SSDI benefits on parents work record, if: A parent/s who is disabled or retired and entitled to Social Security benefits. A parent who died with qualifying work record. In some cases a child could be eligible based on the work record of his/her grandparent. SSA relies on the same criteria to evaluate an adult childs disability as is used to determine disability for workers. Benefits are available to an adult child who received dependents benefits on a parents Social Security earnings record prior to age 18, if s/he is disabled at age 18 and is unable to engage in SGA. Adult child receiving SSI benefits automatically switches to SSDI when working parent becomes disabled, dies or retires. If adult child receives SSDI benefits based on his/her own work record, and if the child was disabled prior to age 22, s/he retains insured status but is entitled to receive benefits on a parents work record (if benefit rate is higher). If child is under the age of 18, with or without a disability, the child will receive the Childs Benefit provided his or her parent is retired, disabled or deceased. Social Security Disability Insurance (SSDI) 43

Social Security Disability Insurance (SSDI) Social Security Benefits Eligibility for Spouses and Ex-Spouses A spouse and an ex-spouse may qualify for benefits based on a workers record. The money paid to a divorced ex-spouse does not reduce the workers benefit or any benefits due to the workers current spouse or children. Ex-spouse must be unmarried and must have been married to worker at least 10 years prior to divorce. Disability Benefits for Widows and Ex-spouses To qualify for disability benefits, a widow/er (ex-spouse) must be found to be disabled within a prescribed time frame. The widow(er) must have become disabled either: Before the death of the insured spouse, or Before his/her entitlement to fathers or mothers benefits has ceased, or Within seven years after either of these events, or Within seven years after a previous entitlement to disabled surviving spouses benefits terminated because disability had ceased. To be eligible, a widow/er must have attained age 50, but not attained age 60, and be under a disability which began the prescribed period ends. 44

Social Security Disability Insurance (SSDI) SSDI Notice of Overpayment or Reduction Waiver There are 2 ways to challenge an overpayment claim by SSA: Reconsideration (SSA-561-U2), if: The individual is over paid and does not agree with the amount. Can be done in conjunction with request for Waiver. Must be requested within 60 days of receipt of denial letter. Waiver (SSA-632-BK), if: The individual concedes the overpayment but seeks relief from recoupment. Individual must be without fault. Enforcement of overpayment would either be: Against equity and good conscience (beneficiary relied to their detriment on benefits paid and changed financial position, eg., sent child to college, bought home, etc.) or, Would defeat the purposes of the Act (beneficiary cant afford to repay overpayment.) Watch out for Administrative attempts to charge an overpayment after statute of limitations (4 years) has passed even though there is no fraud. Make sure Administration shows the math for their calculations. 45

Social Security Disability Insurance (SSDI) Appeals Process Appeal must be submitted within 60 days of date denial or negative action letter is received. SSA assumes the letter is received 5 days after date of the letter, unless there is evidence showing it was received later. A request to keep benefits from being cut off must be received within 10 days of receipt of the letter. If benefits do continue and the appeal is unsuccessful, the claimant may have to pay back any money s/he was not eligible to receive. There are four levels of appeals: Reconsideration / Waiver. Hearing by an Administrative Law Judge. Review by the Appeals Council. Federal Court review (District, Court of Appeals, Supreme Court). 46

Social Security Disability Insurance (SSDI) What Practitioners Need to Know About SSDI Approximately 60% of initial applications for SSDI are denied. Denials often due to insufficient evidence of the severity of the medical conditions. Packaging the claim will improve results. Practitioners should decide whether to assist with applications as part of the practice or to outsource the benefits application process to a local expert. Same with appeals. Attorney fees are regulated by SSA. 47

Social Security Disability Insurance (SSDI) Additional SSDI Resources Sanford J. Mall and Patricia E. Kefalas Dudek. After Your Client has SSDI, What About Medicare?- SSDI Eligibility Challenges, NAELA Advanced Elder Law Institute Presentation, (October 23-26, 2008). The Basics of Social Security Disability Insurance (SSDI) - 9/2/10 Available to members of the Academy of Special Need Planners at: http://www.specialneedsplanners.com/resources/ Ticket to Work: A Way to Ease Into the Workforce Without Losing SSDI Benefits - 1/6/2009 Available to members of the Academy of Special Need Planners at: http://www.specialneedsplanners.com/resources/.http://www.specialneedsplanners.com/resources/ Social Security Website www.ssa.gov/disability/. www.ssa.gov/disability/ Social Security Disability Practice, Thomas E. Bush (James Publishing.) The Wilborn Method Social Security Disability: A Step-by-Step Guide to Getting Your Benefits, Ralph Wilborn, Tim Wilborn, Etta L. Wilborn (Disability Key Books, LLC.) 48

Public Benefits Housing Section 8 most prominent but 811 & others are growing Other state and federal programs, so ask Section 8 has tough rules on treating recurring payments as income But applied differently by different agencies 49

Veteran Benefits Veterans with disabilities may receive benefits for: Service Connected Disabilities Non-Service Connected Disabilities Income and Resource limitations apply SNTs (d) (4) (A) and (C) not currently recognized by the Veterans Administration, but no transfer penalty (for the moment) 50

What is Traditional Medicaid? A jointly funded, Federal-State health insurance program for low-income, needy people, and persons with disabilities. The law establishing Medicaid can be found in Title XIX of the federal social security statute; sometimes Medicaid is referred to as, Title XIX. Each state then has its own statutes and regulations as the program is administered by the states. Each state has a department that administers the program, typically the Department of Human or Social Services. These departments likewise have program manuals which state the policies and procedures the Department uses to administer the Medicaid programs. 51

Medicaid Services (States do vary in the services offered) Inpatient and Outpatient Hospital and Clinics Physicians, Nurses, Dentists, Vision care Pediatrics Laboratory and X-Rays Dialysis Long Term Care (Nursing Homes) Prescription Medications Medical supplies, equipment, and appliances (wheelchairs, etc.) Non-Emergency medical transportation Hearing aids/prosthetic eyes 52

Who is Eligible for Medicaid? 53

Who is Eligible for Medicaid? US citizens Permanent residents Pregnant Women (without regard to citizenship or legal status) Immigrants who entered the US illegally (only in case of medical emergency) Must be a resident of the State in which Medicaid is sought!! HUGE ISSUE 54

Who is Eligible for Medicaid? Supplemental Security Income (SSI) Recipients Persons who are blind, disabled, or aged (defined as 65 years or better) and who meet certain income and resource limitations; these income and resource limits will be discussed in greater detail Pregnant women with family income less than 200% of the Federal Poverty Level Children under age 6 with family incomes less than 133% of the Federal Poverty Level Children ages 6 19 with family income up to 100% of the Federal Poverty Level 55

Who is Eligible for Medicaid? Definition of Blind or Disabled Under 18: The individual must have a medically determinable physical or mental impairment which results in marked and severe functional limitations and can be expected to result in death or last for a continuous period of not less than 12 months 18 and Over: The individual must have a medically determinable physical or mental impairment which results in the inability to engage in any substantial gainful activity and can be expected to result in death or can be expected to last for a continuous period of not less than 12 months Blindness defined: see www.ssa.gov 56

Who is Eligible for Medicaid? Substantial Gainful Activity (SGA) Substantial Gainful Activity is measured by level of work activity and earnings. Work is substantial if it involves doing significant physical or mental activities, or a combination of both. Gainful work activity is either of the following: Work performed for pay or profit; Work of a nature generally performed for pay or profit; or Work intended for profit, whether or not a profit is realized. 2014 income level for SGA Blind:$1,800 per month Disabled:$1,070 per month 57

Medicaid Counted Resources Cash Bank Accounts Stocks U.S. savings bond Land Life insurance Personal property Automobiles Resources also sometimes referred to as assets are things an individual owns such as: and anything else which could be changed to cash and used for food or shelter, subject to certain exclusions. The resource limit for most of these programs is $2,000.00 for a single individual. 58

Examples of Excluded Resources Home in which the beneficiary resides One automobile, there may be an equity limit Household goods Personal effects Burial Space Irrevocable Prepaid Burial Contract- may be limits on the amount Life Insurance (face value and the face value of any other life insurance policies total $1,500 or less) Joint Ownership in Residence Real Property Unable to be Sold Food Stamps School Lunch Programs Child Nutrition Programs Grants, Scholarships, Fellowships, or Gifts Set Aside to Pay Educational Expenses Resources and income in a special needs trust 59

Medicaid Counted Income Income is any item an individual receives in cash or in-kind that can be used to meet his or her need for food or shelter, including the receipt of anything which can be applied, either directly or by sale or conversion, to meet basic needs of food or shelter, subject to certain exclusions. 60

Examples of Excluded Income First $20 per Month. However state may vary in these rules if the recipient is not also an SSI recipient. Infrequent or irregular income: $60 per quarter of infrequent or irregular unearned income and $30 per quarter of infrequent or irregular earned income Other items if not food or shelter and cannot be used to obtain food or shelter Certain Medical and Social Services Food and shelter received during medical confinement Personal services performed for an individual Income Tax refunds Rebates and Refunds or other return of money he or she has already paid Loan proceeds CAUTION: an item may not be countable income, but if held past the months end, it could become a countable resource!! 61

Pathways to Medicaid Pathway Income Eligibility Asset Limit Medicaid (Individual/Couple) Benefits SSI < 74% of poverty $2,000 Y $3,000 MedicaidCriteria are essentially the same as SSI in most states, except applicant does not wish to receive SSI payments Medically Spend-down $2,000+Y Needy income $3,000+ 62

Pathways to Medicaid Pathway Income Eligibility Asset Limit Medicaid Medicare Premiums (Individual/Couple) Benefits & Cost-Sharing NH Res. < 300% of SSI level $2,000 Y $3,000 Home-Based < 300% of SSI level* $2,163 Y Waivers QMB < 100% of poverty $4,000 N Y** $6,000 *Will vary among states **Qualified Medicare Beneficiary; eligibility will vary among states. 63

Transfer of Asset Rules For long term care Medicaid programs, such as skilled nursing home placement or long term home and community-based services, there are transfer of asset rules in addition to the resource and income rules. This is known as the 5 year look-back. If the applicant has given away assets, there may be a period of ineligibility. 64

Medicaid Services Some Other State Options Home and Community Based Waiver Programs (HCBW) Must meet regular Medicaid requirements Programs vary from State to State States can use federal Medicaid funds for Medicaid services to persons needing institutional levels of care which can be provided at home or in the community Katie Beckett Option (children with special needs) Home care for the child must be appropriate Estimated cost of community services may not exceed the cost of institutional care The child must require the level of care normally provided in an institution 65

Medicaid Services Some Other State Options Ticket to Work Meets the increased income and resource requirements established by the State (for example, CT allows an individual to earn up to $75,000 per year and have up to $10,000 in resources under CTs Employed Disabled Program) Must be disabled and otherwise (SSI) but for his or her earnings A person is not required to be receiving SSI in order to be eligible under the Medicaid provision The fact that the individual is working will not be considered when making the disability decision for this law Some modest co-payments may be required 66

Medicaid in South Dakota What Programs Are Available To Assist People With Disabilities in South Dakota? Is there a Medicaid waiver program in South Dakota? South Dakota has several waivers including: CHOICES; Family Support 360; Assistive Daily Living Services; Elderly 67

Medicaid in South Dakota What state department handles the Medicaid waiver program in South Dakota? The CHOICES and Family Support waivers are both operated by the Department of Human Services (DHS), Division of Developmental Disabilities (DDD); the Assistive Daily Living Services (ADLS) waiver by the DHS, Division of Rehabilitation Services; and the Elderly waiver by the Department of Social Services (DSS), Division of Adult Services and Aging. Each waiver is administered by the DSS, Division of Medical Services, which is the Single State Medicaid Agency. What programs assist people who have developmental disabilities? The CHOICES Medicaid waiver program assists persons with intellectual/developmental disabilities in South Dakota. The Family Support 360 Medicaid waiver program also supports persons with intellectual and developmental disabilities. What is the best number to call to get started?For services available for adults, call 605-773-3438. For services available for children, contact John New at [email protected]. Is there a website? http://dhs.sd.gov/http://dhs.sd.gov/ 68

Medicaid in South Dakota Are there income limits to receive waiver services in South Dakota? You may qualify for Medicaid waiver services if you earn 300% of the SSI Federal Benefit Rate (FBR) or below. How old do you have to be to start receiving waiver services? There is no age requirement to receive services under the CHOICES waiver or the Family Support 360 waivers. The ADLS waiver requires a person to be 18 years of age or older. The Elderly waiver requires a person to be age 65 and older or age 18 and older with a qualifying disability. 69

Health Care Reform 1/1/14 Patient Protection and Affordable Care Act (P.L. 111-148) There is no resource test for the expanded Medicaid program. Medicaid will expand to include most persons with income up to 133% of the federal poverty level plus a 5% disregard. Those individuals currently covered by traditional Medicaid will not be able to qualify for the ACA, Affordable Care Act coverage. ACA does not cover individuals age 65 + ACA does not cover long term care in a nursing home or in the home Requires States to expand Medicaid to include childless adults Federal Government pays 100 percent of costs for covering newly eligible individuals through 2016 Expansion of States ability to use HCBW funds 70

The Affordable Care Act (ACA) The Affordable Care Act (ACA) is the most important legislation affecting special needs planning since 1993 when Congress enacted 42 USC 1396p(d) that authorized special needs trusts (SNTs). Much of the ACA is focused on protecting the rights of people with chronic, long-term physical or cognitive conditions. In this article, we will discuss the important features of the ACA to allow the special needs practitioner to provide proper advice to their clients and how the ACA will affect existing special needs plans. Excerpt from: How the Affordable Care Act Affects Special Needs PlanningHow the Affordable Care Act Affects Special Needs Planning By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq *Available with NAELA membership 71

Access to Health Care Under the provisions of the ACA, many of the barriers to private health care for persons with disabilities will disappear. The biggest change is that a pre-existing condition will no longer deny an individual access to private health care. The ACA also makes private health care more attractive because it removes the lifetime limits on health insurance that made private plans unattractive to many persons with profound disabilities. An added benefit of the ACA is that it requires private health care coverage for children (up to age 26) on a parents plan even if that child has moved away, is disabled, gone to school, or married. Also, the ACA caps the amount of money that a person will have to pay out-of- pocket each year on premiums and deductibles. For example, if the person in California earns less than $17,235 a year, the annual out-of- pocket limit he or she has to pay is $2,250. Otherwise, the general ACA annual out-of-pocket limit for an individual is $6,250 per year. Excerpt from: How the Affordable Care Act Affects Special Needs PlanningHow the Affordable Care Act Affects Special Needs Planning By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq *Available with NAELA membership 72

Access to Health Care There is a mandate that all persons in the United States be covered by health care. Because so many persons with disabilities have limited income, the ACA provides ways to pay premiums at a reduced cost. If the person with a disability has income, he or she can pay a reduced premium even if they earn up to 400 percent of the federal poverty limit (FPL) ($45,960 for individual in 2013). For example, for the year 2014 in California, a person earning less than $17,235 a year will pay between $19 to $57 a month for a premium based on their actual income. Excerpt from: How the Affordable Care Act Affects Special Needs PlanningHow the Affordable Care Act Affects Special Needs Planning By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq *Available with NAELA membership 73

Expanded Access to Medicaid For those persons with disabilities who have little to no income, access to Medicaid (for people between the ages of 19 to 65) will be expanded to include individuals with incomes up to 133 percent of the FPL (plus an automatic 5 percent income disregard) ($15,586 for individual in 2013). There is no resource limitation for this new expanded Medicaid program. Thus, for new people qualifying for Medicaid, they can have more than the $2,000 in resources and still qualify for Medicaid if their income is below 138 percent of the FPL. It is important to note that this new expanded program does not apply to persons currently receiving Medicaid, for those over age 65 applying for long-term care nursing home care, and some other restrictions. Further, not every state has agreed to participate in Medicaid expansion, so it is important to see if your state has agreed to implement expanded Medicaid. Excerpt from: How the Affordable Care Act Affects Special Needs PlanningHow the Affordable Care Act Affects Special Needs Planning By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq *Available with NAELA membership 74

Expanded Access to Medicaid There are several important health care benefits generally not covered by the ACA and private health care that are important to persons with disabilities. Two of the most important (and expensive) benefits that the ACA will not cover include payment for long-term skilled nursing care and payments for in-home care giving services. Thus, for clients with disabilities who require nursing home level care or who require caregivers in order to remain independent in the community will likely still need Medicaid to assist them with their ongoing care. In some states, Medicaid provides unique services for the developmentally disabled that specialize in support for independent living and other related services. Thus, it is important for the practitioner to determine what health care-related services for persons with disabilities are covered by Medicaid (but not through private health care) in determining whether a client should give up his or her government-paid-for health care. Excerpt from: How the Affordable Care Act Affects Special Needs PlanningHow the Affordable Care Act Affects Special Needs Planning By: Kevin Urbatsch, Esq. & Michelle Fuller, Esq *Available with NAELA membership 75

Key Provisions in ACA The Affordable Care Act has set new standards, called essential health benefits, outlining what health insurance companies must now cover. But there's a catch: Insurance firms can still pick and choose to some degree which specific therapies they'll cover within some categories of benefit. And the way insurers interpret the rules could turn out to be a big deal for people with disabilities who need ongoing therapy to improve their day-to-day lives. The new rules for what health insurance companies have to cover may still change. Federal regulators plan to review them as the health law rolls out and could make changes in 2016. Excerpt from: Obamacare Presents Complex Choices For People with DisabilitiesObamacare Presents Complex Choices For People with Disabilities 76

Essential Benefit Package The ACA links the essential health benefits package to limits on cost- sharing. So health plans that are required to provide essential health benefits will also be required to limit the amount consumers will have to pay out-of-pocket. Specifically, health plans will be prohibited from requiring consumers to pay annual cost-sharing that is greater than the limits for high deductible plans linked to health savings accounts. Currently, those limits are $5,950 per year for individuals and $11,900 per year for families. In addition, small group plans must limit deductibles to $2,000 for individual coverage and $4,000 for family coverage. As with all health plans under the ACA, there is no cost-sharing for certain preventive health services recommended by the United States Preventive Services Task Force.high deductible plans linked to health savings accountssmall group plansdeductibles 77

Essential Benefit Covered Under the ACA Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services * Prescription drugs * Rehabilitative and habilitative services and devices * Laboratory services Preventive and wellness services Chronic disease management Pediatric services, including oral and vision care 78

Mental Health Parity In 2008, Congress passed the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act taking a great step forward in the decade-plus fight to end insurance discrimination against those seeking treatment for mental health and substance use disorders. This law requires health insurance to cover both mental and physical health equally. Under this law, insurance companies can no longer arbitrarily limit the number of hospital days or outpatient treatment sessions, or assign higher co-payments or deductibles for those in need of psychological services. 79

Mental Health Parity The 2008 act closes several of the loopholes left by the 1996 Mental Health Parity Act and extends equal coverage to all aspects of health insurance plans, including day and visit limits, dollar limits, coinsurance, co-payments, deductibles and out-of-pocket maximums. It preserves existing state parity and consumer protection laws while extending protection of mental health services to 82 million Americans not protected by state laws. The bill also ensures mental health coverage for both in network and out-of-network services. 80

Could a Trustee of SNT Determine to go Without Insurance? What happens if I dont sign up for Obamacare? You wont have health insurance. Youll be responsible for every from the flu shots to major surgery. I thought I could just sign up when I need it? Not exactly. The law requires insurance companies to cover people with pre-existing conditions, but you still have to sign up during the enrollment period. That will be from October 1, 2013 to March 31, 2014. Serious problems in Michigan with delayed Medicaid Expansion and states with no Medicaid expansion 81

Could a Trustee of SNT Determine to go Without Insurance? (cont.) So what if I get sick after March 31, 2013? Youll have to wait until the next enrolment period, which begins October 1, 2014. Until your new coverage kicks in January 1, 2015, youll have to pay for any medical costs. What if I lose my insurance during the year? You can sign up them. Outside of the regular enrollment period, people can sign up for insurance when they have a major life- changing event (i.e. getting married, changing jobs, having a baby, or moving to a new state) 82

Could a Trustee of SNT Determine to go Without Insurance? (cont.) Are there any penalties for not signing up? Yes, if you dont sign up for insurance, youll pay a fine when you do you taxes in 2015. The fine will be $95.00 or 1% of your annual income, whichever is higher. And in future years, it will be even higher. What if I refuse to pay the fine? The IRS will take the money out of any refund you would receive on your federal income tax. It is not allowed to put you in jail or seize your property for failing to pay the fine, however. 83

Could a Trustee of SNT Determine to go Without Insurance? (cont.) When do I have to sign up? Technically speaking, you need to have insurance on January 1, 2014. However, the enrollment period lasts until March 31, 2013 and you may be able to sign up later in the year if you have a major life event. What if I am uninsured for part of the year? You wont pay the full fine. The amount is prorated, so you would just pay for the number of months you were uninsured. Also, gaps of less than three (3) months in a given year arent counted. 84

Could a Trustee of SNT Determine to go Without Insurance? (cont.) Are there any other exceptions? Yes, but they are limited. Certain religious groups, such as the Amish, and federally recognized Indian tribes dont have to sign up. You can also get exemption if you have a lower income, especially if your state rejected the Medicaid expansion. Medicare or Medicaid is enough! (Either only Part A Or Parts A & B) 85

What if I have Medicare? Medicare isnt part of the Health Insurance Marketplace, so you dont need to do anything. If you have Medicare, you are considered covered. The Marketplace wont affect your Medicare choices, and your benefits wont be changing. No matter how you get Medicare, whether through Original Medicare or a Medicare Advantage Plan, youll still have the same benefits and security you have now. You wont have to make any changes. Medicares Open Enrollment Period (October 15-December 7) hasnt changed. 86

ACA Provisions (cont.) Expanded Medicare benefits for preventive care, drug coverage Medicare benefits have expanded under the health care law things like free preventive benefits, cancer screenings, and an annual wellness visit.free preventive benefits, cancer screenings, and an annual wellness visit You can also save money if youre in the prescription drug donut hole with discounts on brand-name prescription drugs.discounts on brand-name prescription drugs 87

Closing the Donut Hole The Patient Protection and Affordable Care Act and accompanying health care reform legislation added important improvements to Medicare prescription drug coverage. The health reform law helps cover expenses for people falling into the "donut hole" coverage gap beginning in 2010, and the hole in coverage is eliminated altogether by 2020. The law also provides for additional assistance for low-income beneficiaries. To view full article: Closing the Donut HoleClosing the Donut Hole 88

Closing the Donut Hole The new law provides assistance to help seniors bridge this donut hole. 50 percent rebate on brand-name drugs in 2012. A 50 percent rebate will be applied at the pharmacy for brand name medications. 14 percent rebate on generic drugs in 2012. A 14 percent rebate will be applied at the pharmacy for generic medications. Closure of the donut hole by 2020 for brand-name and generic drugs. The co-payments required for brand-name and generic drugs will be phased down to the standard 25 percent by 2020, eliminating the donut hole. For brand-name drugs, manufacturers will increase their discounts each year to negate the coverage gap. Beginning in 2011, co-payments required by Part D law for generic drugs will be reduced by seven percentage points each year until the coverage gap is eliminated for these drugs as well. Immediate assistance for seniors. A typical senior that fell into the donut hole saved $250 in 2010, over $600 in 2011, and will save over $3,000 by 2020. Provides catastrophic coverage sooner to protect seniors. The legislation will help seniors get out of the donut hole sooner beginning in 2014. The dollar amount of the catastrophic threshold, where seniors' co-payments are dropped to 5 percent of drug costs, will be more slowly increased from year to year at this point. To view full article: Closing the Donut HoleClosing the Donut Hole 89

Closing the Donut Hole Assistance for Low-Income People The health reform legislation also provides improves eligibility and coverage for low-income Medicare beneficiaries: Co-payments are eliminated for many beneficiaries receiving home- and community-based services who are eligible for both Medicare and Medicaid. The new law will reduce the number of low-income beneficiaries that are required to change plans each year to maintain zero premiums. It allows widows and widowers to more easily retain their low- income eligibility. Outreach programs are enhanced to ensure that more beneficiaries who are eligible for a Low-Income Subsidy are able to enroll. To view full article: Closing the Donut HoleClosing the Donut Hole 90

Other ACA Provisions to Watch 1. Medicaid Managed Long Term Services and Supports 2. State Demonstrations to Integrate Care for Dual Eligible Individuals and other Medicare-Medicaid Coordination Initiatives 3. Other Long Term Services and Support Include A. Balancing Incentive Program B. Medicaid State Plan Amendments under 1915(i) C. Community First Choice Option under 1915 (k) D. Medicaid Health Homes Click here for full sitehere 91

Other ACA Provisions to Watch (cont.) Medicaid Managed Long Term Services and Supports Refers to the delivery of long term services and supports through capitated Medicaid managed care programs. Increasing numbers of States are using MLTSS as a strategy for expanding home- and community-based services, promoting community inclusion, ensuring quality and increasing efficiency. MLTSS offers States a broad and flexible set of program design options, and may be used as an overarching structure to promote initiatives such as Money Follows the Person, participant-directed services, the Balancing Incentive Program, etc. Do you know what your state is doing? Click here for full sitehere 92

Other ACA Provisions to Watch (cont.) State Demonstrations to Integrate Care for Dual Eligible Individuals and other Medicare-Medicaid Coordination Initiatives Under the State Demonstrations to Integrate Care for Dual Eligible Individuals, fifteen states across the country have been selected to design new approaches to better coordinate care for dual eligible individuals. CMS will provide funding and technical assistance to states to develop person-centered approaches to coordinate care across primary, acute, behavioral health and long-term supports and services for dual eligible individuals. The goal is to identify and validate delivery system and payment coordination models that can be tested and replicated in other states. CMS is also making technical assistance available to all states interested in improving services for dual eligible individuals. 93

Other ACA Provisions to Watch (cont.) Other Long Term Services and Support Include Balancing Incentive Program Authorizes grants to States to increase access to non-institutional long-term services and supports (LTSS) as of October 1, 2011. This program will help States transform their long- term care systems by: Lowering costs through improved systems performance & efficiency Creating tools to help consumers with care planning & assessment Improving quality measurement & oversight 94

Other ACA Provisions to Watch (cont.) States with approved applications New Hampshire, Maryland, Iowa, Mississippi, Missouri, Georgia, Texas, Indiana, Connecticut, Arkansas, New York, New Jersey, Louisiana, Ohio, Maine, Illinois States with structural change work plans New Hampshire, Maryland, Missouri, Georgia, Texas, Mississippi, Indiana, Iowa 95

Other ACA Provisions to Watch (cont.) Other Long Term Services and Support Include Expanded Medicaid State Plan Amendments under 1915(i) Allows states to offer HCBS under a Medicaid state plan to individuals who are Medicaid-eligible It limits eligibility to individuals with incomes up to 150 percent of poverty who, but for the program services, would need an institutional level of care Click here for full site here 96

Other ACA Provisions to Watch (cont.) Other Long Term Services and Support Include Community First Choice Option under 1915 (k) Lets States provide home and community-based attendant services to Medicaid enrollees with disabilities under their State Plan This option became available on October 1, 2011 and provides a 6 % increase in Federal matching payments to States for expenditures related to this option Community First Choice was established under the Affordable Care Act of 2010 97

Other ACA Provisions to Watch (cont.) Other Long Term Services and Support Include Medicaid Health Homes Benefit for states to establish Health Homes to coordinate care for people with Medicaid who have chronic conditions by adding Section 1945 of the Social Security Act. Health Homes are for people with Medicaid who: Have 2 or more chronic conditions Have one chronic condition and are at risk for a second Have one serious and persistent mental health condition States can target health home services geographically States can not exclude people with both Medicaid and Medicare from health home services Anyone have a client in this program? Appears very, very limited!! 98

State Insurance Exchanges as Asset Protectors 99

State Implementation of Health Insurance Exchanges According to the Center on Budget and Policy Priorities as of June 14, 2013 States choosing to establish a State-based Exchange (SBE) were required to submit their exchange proposals to HHS by December 14, 2012 while those considering a Partnership Exchange had until February 15, 2013. As of December 17, 2012, seventeen states and the District of Columbia have declared their intention to establish a State-based Exchange (SBE), and an additional six states are pursuing a State Partnership Exchange. All twenty- four State-based and Partnership Exchanges have been conditionally approved by HHS. Twenty-seven states have declined the opportunity to operate an SBE or State Partnership Exchange, and instead will default to a Federally-facilitated Exchange (FFE) (Figure 1). 100

Figure 1 Status of 2014 Exchange Implementation 101

Medicaid Liens If Medicaid pays for injury-related expenses for a person injured as the result of a tort, Medicaid is entitled to recover all or some portion of the monies it spent on injury-related medical expenses from the settlement or judgment. 42 U.S.C. 1396k However, Medicaid can only collect from that portion of the settlement or award that compensates for injury-related medical expenses. Arkansas Department of Health and Human Services et al. v. Ahlborn, 547 U. S. 268 (2006) But... Tristani V. Richman, 609 F. Supp. 2d 423, (W.D., Pa., 2009) 102

Medicaid Liens Source of FundsMedicaid Payback InheritanceNo GiftsNo WindfallsNo Personal Injury DamagesYes 103

Estate Recovery States must pursue recovering costs for medical assistance consisting of: Nursing home or other long-term institutional services; Home- and community-based services; Hospital and prescription drug services provided while the recipient was receiving nursing facility or home- and community-based services; and At State option, any other items covered by the Medicaid State Plan. 104

Estate Recovery Estates from which recovery can be made: Estates of deceased Medicaid recipients who were 55 or older (65 for some States) when they received benefits Estates of Medicaid recipients who were permanently institutionalized, regardless of age States may exempt recipients whose only Medicaid benefit is payment of Medicare cost sharing (Medicare Part B premiums) 105

What is a Special Need or Amenity? Special needs refers to things which are not considered basic needs, but assist in supporting the person when such items uncovered are not being provided by any public agency. Special needs can include (but are not limited to): 1. Automobile/Van 2. Accounting services 3. Acupuncture/ Acupressure 4. Alterations or mending to clothing (i.e. shoe repair) 5. Appliances (i.e. TV, DVD, stereo, microwave, stove, refrigerator, washer/dryer, etc. For full list of: Permissible DistributionsPermissible Distributions **Please notify us if you think of some common examples not on this list** 106

Third-Party Trusts By parents and grandparents Discretionary vs. more limited Trend towards more discretionary, less limited Intent language Revocable vs. Irrevocable 107

Third-Party Trust Funding Usually at death May include contributions from others (grandparents, aunts, uncles) Life insurance Retirement plans Urgh!! How much? Revocable or Irrevocable? 108

Drafting and Funding the Third Party SNT Statement of Intent -- why the trust was created Sample Language: It is my primary concern in drafting this Trust that it continue in existence as a fund to supplement public assistance for Mary, the beneficiary throughout her life. Continued access to basic living needs which are not provided for by public assistance programs is required in order to provide Mary with a continued level of humane dignity and for Mary to receive humane care. I recognize that in view of the vast costs involved in caring for a person with a disability, a direct distribution to Mary would be rapidly dissipated. In addition, if this Trust were to be invaded by creditors, subjected to any liens or encumbrances, or cause public benefits to be terminated, it is likely that the Trust corpus would be depleted prior to Marys death. In this event, there would be no coverage for emergencies or supplementation of basic needs. I further intend that Mary receive all government entitlements to which Mary would otherwise be entitled, but for the distributions hereunder. 109

Drafting and Funding the Third Party SNT Use of trust assets Assets shall only be used to supplement and not supplant government benefits!! Typical directive language: The purpose of the Trust is to permit the use of Trust Funds to supplement, and not to supplant, impair or diminish any benefits or assistance of any federal, state or local governmental agency, office or department, including, but not limited to Medicaid and Supplemental Security Income, and any other needs-based benefits, eligibility for which is dependent on income or assets, from any other public or private source, to which benefits Mary may be eligible or which Mary may be receiving (such benefits collectively referred to hereafter as Public Assistance Benefits). 110

Drafting and Funding the Third Party SNT Include some specific direction and limitation on use: Beneficiary cannot direct distribution Regular contact with beneficiary Evaluation Retain professionals: Care Manager; government benefits advisor; attorney; CPA 111

Drafting and Funding the Third Party SNT Use of trust assets DO NOT PUT A MEDICAID PAYBACK PROVISION IN A THIRD-PARTY SNT!! Do Not Comingle Money! 112

Drafting and Funding the Third Party SNT Origin of trust assets Funds come from third parties -- parents, grandparents, other relatives, friends. Funds must NOT come from the special needs beneficiary! * Examples Are Important! 113

Drafting and Funding the Third Party SNT Source of Assets Testamentary bequest(s) Lifetime gift(s) Beneficiary-designated property Life insurance Deferred comp plans / IRAs TOD/POD accounts 114

Drafting and Funding the Third Party SNT Timing of funding During lifetime -- SNT should be standalone and irrevocable if gifts from other than grantors At death from parents -- SNT can be standalone (revocable or irrevocable) or testamentary At death, from third parties other than parents -- SNT should be standalone and irrevocable 115

Drafting and Funding the Third Party SNT Issues respecting IRAs : Timing of Payout -- inherited IRA Based on life expectancy of oldest beneficiary Charitable contingent beneficiary = faster payout Do not use conduit provisions in the SNT, but. Conduit third party SNT pouring into accumulation d4A? Minimize income tax effect? Other options PEKD has used 116

Drafting and Funding the Third Party SNT Life insurance : Death benefit can pour into SNT SNT generally should not own life insurance ---can consider doubling as ILIT but no Crummey power to primary beneficiary Use separate ILIT to hold life insurance, with SNT as beneficiary of ILIT 117

Drafting and Funding the Third Party SNT Real Estate : SNT can own a residence or LLC shares Primary beneficiary can occupy the residence Consider ISM, but also PMV for SSI or Not! Provide funding for cost of maintenance 118

Drafting and Funding the Third Party SNT Multigenerational drafting issues : inform other family members of the SNT multigenerational input into contingent beneficiaries when drafting SNT exempt transfer for Medicaid! 119

Drafting and Funding the Third Party SNT A Few Final Drafting Tips Beneficiary and beneficiarys spouse cannot serve as Trustee Trustee does not have to provide for Beneficiary's basic support and maintenance Beneficiary cannot compel a distribution from the SNT for support and maintenance 120

Drafting and Funding the Third Party SNT A Few Final Drafting Tips Do not prohibit the Trustee from providing for food and shelter so long as Trustee considers the effect on means-tested benefits Provide a list of permissible expenditures to give Trustee more guidance but Be Careful!! Can be for more than one Beneficiary 121

Testamentary 3 rd Party Special Needs Trust Established at the death of the person establishing the trust pursuant to their trust or will Are not immediately accessible until the share belonging to the special needs trust is transferred into the special needs trust; Is a sub trust created within the scope of the broader revocable living trust or will Works for spouses in a nursing home 122

Stand-Alone Third-Party Special Needs Trust Established while the stand-alone Grantor is alive Can receive assets from multiple persons wishing to provide for the well-being of the person with special needs (parents, grandparents, siblings, etc.) When the Grantor dies, or perhaps becomes disabled, the assets remain immediately accessible to assist the person with disabilities from the date the trust is established Is a single purpose trust Can remain empty until funded for Medicaid planning or upon death of Grantor 123

Third Party Special Needs Trust A Within Pooled Trust Third party Special Needs Trust can be created within a pooled trust as well In order to protect vulnerable family members, counsel will properly suggest a custom drafted third-party special needs trust as part of a complete estate plan. Most third party trusts are created either by execution of a custom drafted document, or through use of a third party joinder agreement with a pooled trust Works really well for families with multiple generations of Medicaid long- term support users or with genetic disabilities (Huntingtons; Fragile X, etc.) Full article: The Third-Party Pooled Trust: an alternative planning tool to help avoid the biggest mistakes in special needs planningThe Third-Party Pooled Trust: an alternative planning tool to help avoid the biggest mistakes in special needs planning 124

Funding a Special Needs Trust: How Much is Enough? The Grantor(s) will want to ensure that the person with special needs will remain financially secure even when you are no longer there to provide financial back up. Given the significant, ongoing expenses involved in the loved ones long-term support and uncertainty about what needs may arise or what public benefits may be available, determining how much a special needs trust (SNT) should hold is no small feat. 125

Funding a Special Needs Trust: How Much is Enough? Fortunately, help in calculating a special needs goal is available from special needs calculators, which are accessible free of charge on the Internet. Here are two such calculators: MetDesk Special Needs Calculator: http://www.metlifeiseasier.com/metdesk http://www.metlifeiseasier.com/metdesk Merrill Lynch Special Needs Calculator: www.totalmerrill.com/specialneeds. (Click Special Needs Calculator under "Tools and Resources".) www.totalmerrill.com/specialneeds 126

Funding a Special Needs Trust: How Much is Enough? The first step in determining the amount to protect in an SNT is considering your goals and expectations for the beneficiaries. If parents haven't yet created a Memorandum of Intent, also called a Letter of Intent or a Life Plan, this is the time to draft such a document. It should address factors such as your child's medical condition, legal advocacy needs, ability to work and desired living arrangements, all of which will drive the special needs calculations.Memorandum of Intent This really allows for details on how to coordinate public benefits with the private resources Look at samples: important to address private health insurance, uncovered Medicaid, dental specifically. 127

Letter of Intent A Letter of Intent is one of the most important documents a parent can complete for the childs future care-givers This is not a stand-alone document; it should be incorporated into an estate planning process Can be used when caring for parents or grandparents as well The Letter of Intent should provide the trustee with guidance as to what special needs the beneficiary has or will have and define the quality of life as quality means different things to different people The Letter of Intent should be frequently updated as the beneficiarys needs change 128

Letter of Intent Guides trustees Provides in depth information about beneficiary likes and dislikes, medical information, parents hopes for child Updating necessary Often seems to fall by the wayside 129

Sample Letters of Intent http://www.pekdadvocacy.com/firm-news/client- intake/attachment/letter-of-intent-information- regarding-child/ http://www.pekdadvocacy.com/firm-news/client- intake/attachment/letter-of-intent-information- regarding-child/ http://www.pekdadvocacy.com/documents/pattispublica tions/Representing/Att7.pdf http://www.pekdadvocacy.com/documents/pattispublica tions/Representing/Att7.pdf http://www.pekdadvocacy.com/documents/pattispublica tions/Representing/Att8.pdf http://www.pekdadvocacy.com/documents/pattispublica tions/Representing/Att8.pdf

Letter Of Intent Be Specific! Housing with Person Directed Supports Education Transportation Medical Care and Equipment Quality of Life Social, travel, recreation, etc. Real Employment 131

SNT Trustee Instruction Letter http://www.pekdadvocacy.com/wp- content/uploads/2010/10/Duties_as_Trustee_to_SNT1- 23-13-2.pdf 132

Choice of Trustee: The Family The Bad: Poor investments Poor reporting Difficulty following SSI rules Slow Response Time 133

Choice of Trustee: The Family The Good: Knows the beneficiarys needs Knows service providers Care Continuity 134

Choice of Trustee: Professional Trustees The Bad: Dont know beneficiary Dont know benefit rules Arbitrary Lack of control Trust officers changing Banks changing / very impersonal 135

Choice of Trustee: Professional Trustee The Good: Investment acumen Ability to say no Proper accounting Proper tax reporting No conflict of interest Ability to set up accounts properly Staffed so response time is sometimes better 136

Traps for the Unwary Distributing more than $20 directly to the beneficiary in a calendar month Commingling the beneficiarys funds with the trust funds, with the trustees own money or between trusts Poor record-keeping Leaving disabled individual as beneficiary of IRAs and life insurance policies Savings bonds Failure to notify state and federal agencies 137

First-Party Trust First party = the trust beneficiary. Assets in a first-party special-needs trust are assets to which the trust beneficiary is entitled: From a personal injury case. From an inheritance. From the beneficiarys savings, including retirement accounts. Contrast assets in a third-party trust which are assets that belonged to the grantor and to which the trust beneficiary was not entitled. 138

A Payback Trust The term payback is sometimes used to describe a first-party trust because one of the cardinal rules applicable to first-party trusts is that when the trust beneficiary dies (or the trust is terminated during the beneficiarys lifetime), any state that has provided Medicaid for the beneficiary must be reimbursed from remaining trust assets for Medicaid provided. Contrast a third-party trust from which no reimbursement is required. 139

(d)(4)(A) Trust Refers to the subsection of the federal statute which governs first-party, special-needs trusts. Contrast a third-party trust which is not a statutory creation, usually created by common law. 140

Federal Medicaid Statute The governing statute for first-party, special-needs trusts is 42 U.S.C. 1396p(d)(4)(A), as amended by the Omnibus Budget Reconciliation Act of 1993 (OBRA), Pub. L. No. 103-66. This statute is sometimes referred to simply as (d)(4)(A) and the enacting law as OBRA 93. 141

Federal Medicaid Regulations In November 1994, the year after OBRA 93 became effective, the Health Care Financing Administration (HCFA), the government agency that then administered the federal Medicaid program (now the Center for Medicare and Medicaid Services [CMS]), issued Transmittal No. 64. This transmittal interprets Section 1396p(d)(4)(A) but is considered outdated and does not provide much guidance. Although can be helpful at times defines sole benefit off 142

Social Security Statute Until 2000, individuals who gave away assets (except to special-needs trusts that met the requirements of Section 1396p[d][4][A]) could be disqualified only for Medicaid, but not for SSI; the SSI rules contained no penalties for giving away assets. In 1999, transfer penalties were added to the SSI rules. 42 U.S.C. 1382b, as amended by the Foster Care Independence Act of 1999, Pub. L. No. 106-169. The Foster Care Independence Act of 1999 incorporated the Medicaid transfer rules and Medicaid rules regarding special-needs trusts into the SSI statute. 143

Social Security Rules (POMS) Social Security rules regarding special-needs trusts are contained in the Program Operations Manual System (POMS). Although the POMS rules are not technically regulations or rules, they set forth the Social Security Administrations positions on Social Security matters somewhat like private letter rulings in the tax area. Since most Medicaid recipients also receive SSI, the POMS provides important guidance on special-needs trusts. A special-needs trust that complies with the POMS rules will, in most states, comply with state law applicable to special-needs trust although some states have even more stringent restrictions. POMS provisions regarding special-needs trusts apply only to trust beneficiaries who receive Supplemental Security Income (SSI). If the beneficiary does not receive SSI, some of the POMS provisions applicable to first-party special-needs trusts may not need to be included in the trust. 144

Four Cardinal Requirements for a (d)(4)(A) Trust 1. The trust must be established by a parent, grandparent, court, or guardian. 2. The trust must be for the benefit of the disabled person. 3. Beneficiary must be disabled and under 65. 4. The trust must provide for reimbursement upon the beneficiarys death to all states that have provided Medicaid for the beneficiary. These four requirements for first-party, special-needs trusts are in a single paragraph, 42 U.S.C. 1396p(d)(4)(A), and are restated and, in some cases amplified, in the HCFA transmittal, the POMS, and in state law. 145

Establishment of the Trust The trust must be established by a parent, grandparent, court, or guardian. A competent, disabled beneficiary cannot establish first-party trust for himself or herself, although a competent, disabled beneficiary can establish a first-party pooled special-needs trust for himself or herself, 42 U.S.C. 1396p(d)(4)(C). Note: As of the writing of this presentation legislation was pending in Congress that would allow a competent, disabled person to establish a first-party special-needs trust. Depending upon your states law and practice, if a guardian is establishing the trust, the probate court should authorize the guardian to do so. If a court is establishing the trust, the court order should specifically state that the trust is being established by the court, not simply that the court approves establishment of the trust or authorizes establishment of the trust. POMS SI 01120.203B.1.f. An agent acting under a power of attorney for a disabled beneficiary cannot establish the trust. POMS SI 01120.203B.1.g.; see also, Draper v. Colvin (U.S. Dist. Ct., D. S.D., No. 12-4091-KES, July 10, 2013). 146

What Court is a Court? Although it is not clear from federal Medicaid statutes or regulations or POMS, it appears that the court that can establish a first-party trust must be a court of competent jurisdiction a court that has statutory authority or equitable powers to establish a trust. At least in New England, a probate court cannot establish a special-needs trust as part of probate of a decedents estate. In a 1995 letter to a Boston-area elder-law attorney, the associate regional director of the New England regional office of HCFA, now CMS, stated that a probate court does not have jurisdiction to establish a special-needs trust as part of probate of a decedents estate. Letter dated July 24, 1995, from Ronald Preston to Donald N. Freedman, published in Elder and Disability Law Conference (MCLE, Inc. 1999). 147

The Sole Benefit Rule The federal statute itself provides only that the trust must be for the benefit of the disabled beneficiary. The HCFA transmittal added the word sole before benefit. POMS also emphasizes sole benefit. (SI 01120.201F.2.) 148

Beneficiary Must Be Disabled And Under 65 The trust can be established only for a beneficiary who is under 65. No assets can be added to the trust after the beneficiary is 65. Assets that a beneficiary may not be entitled to receive until after he or she is 65 can be irrevocably assigned to the trust before the beneficiary is 65. 149

Reimbursement The trust must provide for reimbursement upon the beneficiarys death to all states that have provided Medicaid for the beneficiary. There are no exceptions to the reimbursement rule, except if there are no funds remaining. POMS provisions prohibit certain payments before reimbursement. POMS SI 01120.203B.3.b. Language in the trust document should not contravene the POMS prohibited payments. 150

Funding a First-Party Trust Competent Beneficiary If the trust beneficiary is competent and the trust is established by the beneficiarys parent or grandparent, the POMS contains a very convoluted requirement: The parent or grandparent must establish a seed trustmust fund the trust with a small amount of his or her own money. Then the disabled beneficiary can transfer his or her own assets to the trust. POMS SI 01120.203B.1.f. An agent acting under a power of attorney for a disabled beneficiary can transfer the beneficiarys assets to the trust. 151

Funding a First-Party Trust Incompetent Beneficiary If the trust beneficiary is not competent by reason of age or disability, a guardian who establishes a first-party, special-needs trust should get probate court authorization to transfer assets to the trust. If the trust is being established by a court, the court could order transfer of the beneficiarys assets to the trust. See, POMS SI 01120.203B.1.g. If a trust for an incompetent beneficiary is established by the beneficiarys parent or grandparent, a guardian must be appointed and the guardian must obtain court permission to transfer the beneficiarys assets to the trust. 152

Look To The POMS A first-party, special-needs trust usually must include provisions that comply with POMS and must exclude provisions contrary to POMS. In certain cases, however, for a beneficiary who does not receive SSI, compliance with some POMS provisions may not be necessary. Refer to POMS SI 01120.203B.1 and POMS SI 01120.200D.1.a and b and make sure that the trust document complies with those provisions. 153

Mandatory Provisions A first-party (d)(4)(A) trust must provide that the beneficiary does not have legal authority to revoke or terminate the trust. cannot direct use of trust principal for his or her support and maintenance. The trust must be completely discretionary and not require mandatory distributions to the beneficiary. The trust must prohibit payment of certain expenses, such as funeral expenses, upon the beneficiarys death, prior to Medicaid reimbursement. POMS SI 01120.203B.3.b. The trust must be irrevocable. POMS SI 01120.200D.2&3. 154

Irrevocability POMS takes the position that a (d)(4)(A) trust may be revocable if it does not contain named remainder beneficiaries. POMS SI 01120.200D.2&3. This position is based upon the doctrine of worthier title which has been specifically revoked in some states. In a state that has not revoked the doctrine of worthier title, the trust document should designate remainder beneficiaries by name or by class (my children, for example) and not provide for a remainder to the beneficiarys heirs-at-law. 155

Less Is More First-party special-needs trusts, like third-party special- needs trusts, often contain a list of ways the trustee could spend trust funds for the beneficiarys benefit. Some of these common items, such as paying friends and relatives to visit, are now restricted by POMS provisions. Since the trustee of a special-needs trust has complete discretion, current wisdom is not to include such a list because some items listed may become unacceptable. The drafting attorney can provide the trustee with a list of permissible expenditures. Parents of a disabled beneficiary should provide a memorandum to the trustees of suggested expenditures. 156

Eschew Forms Dont use a form for any trust unless you know that the form is up to date and in accordance with recent POMS. FOR EXAMPLE: 157

HOT Issues http://www.pekdadvocacy.com/wp- content/uploads/2010/10/Begley-POMS-changes- box.pdf http://www.pekdadvocacy.com/wp- content/uploads/2010/10/Begley-POMS-changes- box.pdf https://secure.ssa.gov/apps10/reference.nsf/links/0423 2014010832PM https://secure.ssa.gov/apps10/reference.nsf/links/0423 2014010832PM http://attorney.elderlawanswers.com/some-potential- problems-with-ssas-new-trust-guide-14693 http://attorney.elderlawanswers.com/some-potential- problems-with-ssas-new-trust-guide-14693 https://secure.ssa.gov/poms.nsf/lnx/1601825046 158

S S A P R O G R A M C I R C U L A R Supplemental Security Income Regional Program Circular 01-06 dated April 5, 2001 provided detailed instructions on evaluating trusts for SSI resource purposes. A general rule of trust law, and one that is followed by all Region V states, is that any trust can be revoked with the mutual consent of the grantor and all beneficiaries. If the grantor and the beneficiary are the same person and there are no other beneficiaries, the trust is revocable. If there are residual beneficiaries, the trust may be irrevocable. In addition, if the trust names other beneficiaries who may benefit from the trust during the SSI claimants lifetime, this also may make the trust irrevocable. However, in that, case, even if the trust is not a resource, we need to consider whether there has been a transfer for less than fair market value. [This rule is true even if it is stated in the body of the trust that the trust is irrevocable.] For states in the Region, other than Michigan, language such as heirs at law, heirs survivors, relatives, next of kin, family, distributees, or similar language does not create a residual beneficiary. Such language creates an inference that the grantor does not intend to create a trust interest in the persons who may become his/her heirs or next of kin. Such trusts should be viewed as revocable. Full Article: http://www.pekdadvocacy.com/documents/estateplanning/MichiganTrustLawChangeProgram-11-8- 01.pdf http://www.pekdadvocacy.com/documents/estateplanning/MichiganTrustLawChangeProgram-11-8- 01.pdf 159

A Trust Is A Trust Is A Trust A first-party, special-needs trust is really just a completely discretionary trust with bells and whistles included to accomplish its goal. Because a special-needs trust is a trust, the drafter must be knowledgeable about trust law as well as about special-needs law. 160

Pooled Trust What is a Pooled Trust? A pooled trust is a trust established and administered by a non- profit organization. A separate account is established for each beneficiary of the trust, but for the purposes of investment and management of funds, the trust pools these accounts. For self-settled, or (d)(4)(C) pooled trusts, each subaccount is established by the pers

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