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New Policy undermines LTC Partnership Insurance Benefits

Foolish me. I got excited about the implementation of a long term care insurance partnership program in Michigan, and have written about it here several times.

As previously discussed, the law, which was finally implemented just this spring, provided two benefits to those who purchased and used a LTC partnership policy: (1) an increased asset protection at the time of application, and (2) an equivalent protection of those assets at death from Michigan’s estate recovery program. For a simple example, if a single person purchased a partnership policy which paid out $300,000 in benefits to that individual, that individual could apply for Medicaid and be eligible when they had countable assets of less than $302,000 ($2,000 as the usual asset limit, plus $300,000 as a benefit of having purchased the insurance).  Likewise, at death, this individual would have an “asset disregard” of $300,000 from the estate recovery program.  The concept is to incentivize people to buy LTC insurance and in return the State would provide them with greater asset protections if they exhaust their resources and turn to Medicaid for assistance.

Seemed reasonable and even creative. But apparently state policy-makers thought the deal was too sweet for the consumer.  Hence they are changing in the definition of “estate” as it appears in the State Medicaid Plan so that the asset disregard related to estate recovery is essentially negated.  Specifically the new policy will change the definition of an “estate” to be as follows:

… If a decedent received (or is entitled to receive) benefits under a long-term care insurance policy and had assets or resources disregarded, pursuant to 42 USC 1396p(b)(4)(B) “estate” includes all real and personal property and other assets in which the decedent had any legal tittle or interest immediately before or at the time of death to the extent of that interest, including but not limited to, assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, transfer-on-death deed, payable on death contact, promissory note or other arrangement.

This means that the exempt assets, including one’s house, would be considered as part of the asset disregard for estate recovery, and that the value of the home would be counted even if it passed to others at death by ladybird deed or otherwise in a manner which would avoid estate recovery under current rules.

The long term care Medicaid application now includes matching language. It says:

If you have received an asset disregard due to a long-term care partnership policy, Estate Recovery applies to all assets whether they are subject to probate administration or not.

After all is said and done it looks like the energy that so many put into making the concept of a long term care insurance partnership meaningful in Michigan will not be realized thanks to the efforts of the state bureaucrats who seem obsessed with the perception that the people of Michigan, and especially their planners and counselors, are all part of a conspiracy to rip off their system.

Thanks much to my colleague David Shaltz for ferreting out this development.

Nothing New: DCH Wins Again

The Court of Appeals has issued yet another published opinion re Michigan’s Medicaid Estate Recovery Program.  Click here to read In Re Estate of Catherine Klein.  The case repeats the factual circumstances of prior estate recovery cases – and the result, not surprisingly, is the same.  Hard to understand why this opinion is published – but estate recovery ophites may choose to read it.

What I’ve Learned from Susie – So Far

This client was only in her mid-sixties. Her husband had advanced early-onset dementia. She was burned out but unwilling to acknowledge it.  A friend had dragged her to the office to get advice about long term care.  I looked at her questionnaire.  No problem here getting qualified for Medicaid benefits.  The issue was whether she was ready to put her spouse of decades in institutional care (his condition was beyond community based, PACE or Waiver, options).  I called her out.  Pleasantly but directly.  It was one of those conversations.

As regular readers of this blog know, my youngest child became a lawyer several months ago and joined our firm. She has started where I started, Medicaid applications, long term care.  She regularly sits in with me on initial meetings, and, when appropriate, I hand the case off to her after we’ve come up with a plan.

In this time with Susie I’ve developed a new understanding of the maturation process of an elder law/estate planning attorney. It hinges on the distinction between a lawyer who knows their stuff (the “technician”) and a lawyer who can explain the law but also guide the client to the solutions that fit (the “counselor”).  To be good – really good – you have to be both.

Susie is rapidly becoming a competent technician – smart kid. But I think we both realize now that the counseling part is a ways off.  For one thing, it is hard to be taken seriously when you are 20-something by clients who are at a more advanced stage in life.  But more importantly I think, compassion grows out of empathy and empathy comes from life’s experiences, the mistakes, challenges, wins, losses and regrets.  The roads taken and the roads not taken.  To genuinely feel someone’s pain, and to be able to speak directly to them, comes from the heart – and any attempt to fake it will come off as condescension – the last thing you need in delicate situations like this.

So I think now about our young lawyers in this way – Help them become technicians through traditional education processes. That’s the first step.  Help them become counselors by putting them in the room with the senior attorneys in the firm as they counsel clients, but recognize that, to a larger extent, that process must occur outside the confines of the law office environment.

Ombudsman Finds New Home

As of October 1, 2016, the State Long Term Care Ombudsman office will move from being within State government to a nonprofit wholly outside State government. That’s a good thing, and a long time coming.

The Michigan Long Term Care Ombudsman Program has been housed within the Aging and Adult Services Department of the Michigan Department of Health and Human Services; formerly known as the Office of Services to the Aging. In the future, the program will be run by the Michigan Advocacy Program, an organization that operates various legal services and advocacy organizations in Michigan, including the Michigan Elder Justice Initiative; and which already houses two local LTC Ombudsman programs.

For obvious reasons, in most states, the State LTC ombudsman is housed outside state government: to maintain independence and avoid conflicts of interest. Michigan’s State LTC ombudsman was outside state government until 2004.  At that time the organization which held the State LTC ombudsman contract was in disarray, and the program was ineffective.  Accordingly, the decision was made to bring the program into the State. But even then it was recognized that this arrangement was less than ideal, and that the objective would be to remove the program to an independent organization when possible.  That time has finally come.

The State Ombudsman administers and supports the local Long Term Care Ombudsmen, which are people who actually visit long term care facilities, support residents of those facilities, and investigate, report and resolve problems with quality of care. Currently these local ombudsmen are housed in various organizations throughout the State. The change in the arrangement with the State office will not change the situation with the local ombudsmen, at least not immediately.  However, it is possible, probably desirable, that over time the new State office will consolidate management of the local ombudsmen under one entity.

The contract is for three years, and funding will remain the same.

The person that most of us know as the State Long Term Care Ombudsman is Sarah Slocum. She has been serving in that capacity since the program first moved within State government.  Ms. Slocum is a state employee, and may remain with the State in another capacity, or may look for something else.   One would hope that if Ms. Slocum is interested in continuing as the State Ombudsman, that she would be given serious consideration by the Michigan Advocacy Program as it looks to fill that position. Ms. Slocum is very well respected and highly experienced and knowledgeable.