Connecticut Bar Journal

Volume 86.

86 CBJ 70.


Connecticut Bar JournalVolume 86, No. 1, Pg. 70March 2012RECENT DEVELOPMENTS IN ELDER LAWBY KATE MCEVOY(fn*)Developments in federal and state policy over 2011 continued to support enhancement of the home and community-based long-term care options that are strongly preferred by older adults and people with disabilities. Notwithstanding, state budget constraints and conservative interpretation of eligibility requirements have made it very difficult to give families, especially those with some but not significant means, meaningful choice along the long-term care continuum.

These counterpoints urge both expert practitioners and those more incidentally involved in counseling clients on elder law matters to keep conscientiously abreast of developments in federal and state law, state regulations and program eligibility requirements. This is especially necessary in light of poor consumer literacy about the limitations of publicly-funded programs of support, and consumers' reduced capacity, by reason of the poor economy and diminution of house values, to self-fund needed services.

Consumer illiteracy about these issues is starkly illustrated by certain of the results of the UConn Long-Term Care Needs Assessment,(fn1) which surveyed thousands of older adults, individuals with disabilities and caregivers. When respondents were asked how they plan to pay for needed services, responses were as follows:* 38% of all respondents indicated Medicare;

* 33% said savings or investments; and

* 32% reported no plans or did not know. The obvious problem with relying on Medicare as the primary payer for long-term care is that its coverage for these services is extremely limited. Care in a nursing facility is only fully covered for the first twenty days, and is then first subject to significant cost per diem sharing and then capped at 100 days. Medicare covers home health care only where an individual has need for a "skilled service," and is home-bound, and this coverage is generally limited to a maximum of eight hours per day and twenty-eight hours per week.

Not only are consumers over relying on Medicare, in many cases they do not have enough information to understand how expensive it can be to pay out of pocket for long-term care. The Connecticut Office of Policy and Management cites the following average costs of care in Connecticut: * average private pay rate for a year in a nursing facility: $134,200 ($368 per day)

* a skilled nursing visit: $136

* an hour of home health aide service: $32

* a full day of medical model adult day care: $80(fn2)

Finally, many Connecticut residents do not have the private savings to pay out-of-pocket for long-term care:* four out of ten respondents indicated they could not afford to pay anything;

* another 25% could pay less than $10,000 per year; and

* less than 20% reported having been able to pay between $10,000 and $25,000 per year, or more than $25,000 per year, for long-term care services.(fn3)

In light of the above-referenced tension between favorable policy and budget constraints, and issues relating to consumers' need for counseling, this article will provide an overview of 2011 federal and state developments in elder law, notably:* liberalization of certain Medicaid eligibility criteria;

* favorable developments with respect to state Medicaid eligibility rules concerning treatment of annuities and undue hardship;

* less favorable contraction of state Medicaid eligibility rules concerning partial returns of assets, and allocation of spousal assets;

* changes in the array of services covered by the Connecticut Medicaid program, including pharmacy;

* so-called "re-balancing" efforts that are designed to shift public resources from institutional settings to home and community-based alternatives;

* state law amendments impacting nursing home residents, including new transfer and discharge protections and reduction of the Personal Needs Allowance (PNA); and

* brief notes on major legislative proposals that were not enacted prior to the close of the legislative session.


    1. Federal Treatment of Income Tax Refunds for Benefits Eligibility

      Generally, if an individual receives cash, it is, for purposes of Medicaid eligibility, considered to be income in the month in which it is received(fn4) and in subsequent months, if not expended, an asset that can implicate both the program's asset cap and transfer of asset rules. in addition to exceptions already identified in the federal law, a 2010 federal law(fn5) helps low-income individuals to qualify for and retain Medicaid coverage by excluding any federal tax refund from counting as income or assets in determining eligibility for any federally-funded public benefit program. This includes state and local programs only partially funded by federal dollars. Tax refunds can include benefits from the Earned Income Credit (EIC), Child Tax Credit (CTC), other tax credits, or refund of a filer's over-withheld income tax. These new rules are effective for 2010 through 2012.

      Note the following additional details from an information bulletin issued by the centers for Medicare and Medicaid services on February 2, 2011:(fn6)* these protections are applicable only to refunds and advance payments that are received after December 31, 2009 and before January 1, 2013;

      * such refunds and advance payments are excluded from eligibility consideration for all federal and federally-assisted programs (including Medicaid) as both income and resources for a period of twelve months after the month in which received;

      * payment of refunds and advance payments is also not counted:

      -when determining the eligibility of the individual's spouse or other family member;

      -as income or resources to individual(s) to whom they are given;

      * amounts received as refunds or advance payments:

      -that are transferred by the recipient cannot be treated as a transfer of assets for less than Fair Market value (FMv);

      -cannot count as available resources if placed in a trust within twelve months of receipt; and

      -are not countable as income for purposes of post-eligibility treatment of income provisions applicable to institutionalized individuals.

      Note that states have the option under Section 1902(r)(2) of the social security Act(fn7) to disregard both state and local tax refunds and advance payments in the same manner as is the case above for federal payments, but this is not required.

    2. Federal Treatment of Same-Sex Couples for Medicaid Eligibility

      Generally, federal Medicaid law treats same-sex individuals who are married under the auspices of state law as single individuals for purposes of the Medicaid spousal asset protections that are enacted by the Medicare Catastrophic Coverage Act of 1988 (MCCA).(fn8) This is because the federal Defense of Marriage Act (DoMA)(fn9) defines marriage as a legal union between one man and one woman. This is the applicable definition for purposes of federal tax law and benefits, including, but not limited to federal income, gift and estate tax; federal Family and Medical Leave Act (FMLA) leave; federal and private pensions; Social Security dependent and survivors' benefits; fringe and survivor benefits for federal employees; and Medicaid MCCA protections for married couples.

      In a letter dated June 10, 2011,(fn10) however, the Centers for Medicare and Medicaid Services (CMS) notified states that they may elect to provide same-sex spouses and domestic partners of long-term care Medicaid beneficiaries certain of the asset protections regarding home ownership that are recognized for opposite sex couples. These include protection from liens, recognition that denial of eligibility for transfer of a home can result in undue hardship, and exemption from estate recovery.

      Federal law currently provides that liens for medical assistance benefits paid may not be imposed on homes in which any of the following reside:

      * the beneficiary's spouse (as defined by DOMA);

      * a child under the age of 21;

      * children who are blind or have permanent disabilities; or

      * siblings who have equity interest in the home and who have been residing in the home for at least one year immediately preceding the date on which the beneficiary was institutionalized.(fn11)

      cms describes these provisions as a "floor of protection," and provides that "States can have a policy or rule not to pursue liens when the same-sex spouse or domestic partner of a Medicaid beneficiary continues to lawfully reside in the house."(fn12)

      Further, CMS references federal law that exempts both transfers of assets to a beneficiary's spouse or to another person for the spouse's sole benefit,(fn13) and transfers of a home to a spouse,(fn14) but states that "the exemptions for transferring assets to a spouse cannot be directly applied to same-sex spouses or domestic partners as a result of DOMA."(fn15) A solution, suggests cms, is that states permissively interpret undue hardship(fn16) to include situations in which denial of benefits based on transfer of a home to a same-sex spouse or domestic partner would deprive the individual of "medical care such that the individual's health of life would be endangered, or the individual would be deprived of food, clothing, shelter or other necessities of life."(fn17)

      Finally, CMS addresses circumstances under which states are required to pursue estate...

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