Don’t Make the Mistake of Not Signing up for Medicare Supplemental Coverage

You are turning 65 and enrolling in Medicare, but as a healthy senior do you really need to also sign up for Medicare’s supplemental coverage? Not signing up initially can be very costly down the road.

Medicare pays for only about half of all medical costs. To augment Medicare’s coverage, you can purchase a supplemental or “Medigap” insurance policy from a private insurer. There are 10 Medigap plans that each offers a different combination of benefits, allowing purchasers to choose the combination that is right for them. In addition, Medicare offers a federally subsidized prescription drug program, in which private health insurers provide limited insurance coverage of prescription drugs to elderly and disabled Medicare recipients.

Purchasing the supplemental coverage means paying more premiums. If you don’t go to the doctor very often or have any regular prescriptions, you may not want to sign up for the additional coverage. However, if you get sick, what Medicare doesn’t cover can be a lot more costly than the extra premiums. And buying coverage after you get sick can be difficult and expensive.

You cannot be denied a Medigap policy for pre-existing conditions if you apply within six months of enrolling in Medicare Part B. If you don’t buy a policy right away, the plan can use medical underwriting to decide whether to accept your application. The plan will look at your age, gender, and pre-existing conditions and can charge you higher premiums, restrict coverage, or even reject your application.

Beneficiaries who enroll in Medicare Advantage plans can’t also buy a Medigap policy. But if they chose Medicare Advantage as their first form of insurance and later decide to return to original Medicare, they must select a Medigap policy within the first year of their initial Medicare enrollment or risk being shut out of a policy. (For more on when a Medigap insurer must sell to you, click here.)

Medicare beneficiaries are also subject to significant financial penalties for late enrollment in the Medicare drug benefit (Medicare Part D). For every month you delay enrollment past the Initial Enrollment Period, the Medicare Part D premium will increase at least 1 percent. For example, if the premium is $40 a month, and you delay enrollment for 15 months, your premium penalty would be $6 (1 percent x 15 x $40 = $6), meaning that you would pay $46 a month, not $40, for coverage that year and an extra $6 a month each succeeding year.

There are some exceptions built in to both Medigap and Medicare Part D if you did not enroll right away because you had other coverage. But if you choose not to enroll because you think you won’t need the plan, it is not easy to change your mind later on.

For First Time, Median Cost of Private Nursing Home Room Hits Six Figures in Annual Survey

The median cost of a private nursing home room in the United States increased to $100,375 a year in 2018, up 3 percent from 2017, according to Genworth’s Cost of Care survey, which the insurer conducts annually

At the same time, Genworth reports that the median cost of a semi-private room in a nursing home is $89,297, up 4 percent from 2017. While significant, the rise in prices is not quite as steep as the 5.5 percent and 4.4 percent gains, respectively, in 2017.

But the median cost of assisted living facilities jumped 6.7 percent, to $4,000 a month. The national median rate for the services of a home health aide is $22 an hour, and the cost of adult day care, which provides support services in a protective setting during part of the day, rose from $70 to $72 a day.

Alaska continues to be the costliest state for nursing home care by far, with the median annual cost of a private nursing home room totaling $330,873. Oklahoma again was found to be the most affordable state, with a median annual cost of a private room of $63,510.

The 2018 survey, conducted by CareScout for the fifteenth straight year, was based on responses from more than 15,500 nursing homes, assisted living facilities, adult day health facilities and home care providers.  Survey respondents were contacted by phone during May and June 2018.

As the survey indicates, nursing home care is growing ever more expensive. Contact your elder law attorney to learn how you can protect some or all of your family’s assets.

For more on Genworth’s 2018 Cost of Care Survey, including costs for your state, click here.

Be Careful About Putting Only One Spouse’s Name on a Reverse Mortgage

A recent case involving basketball star Caldwell Jones demonstrates the danger in having only one spouse’s name on a reverse mortgage. A federal appeals court has ruled that an insurance company may foreclose on a reverse mortgage after the death of the borrower, Mr. Jones, even though Mr. Jones’ widow is still living in the house. While there are protections in place for non-borrowing spouses, many spouses are still facing foreclosure and eviction.

A reverse mortgage allows homeowners to use the equity in their home to take out a loan, but borrowers must be 62 years or older to qualify for this type of mortgage. If one spouse is under age 62, the younger spouse has to be left off the loan in order for the couple to qualify for a reverse mortgage. Some lenders have actually encouraged couples to put only the older spouse on the mortgage because the couple could borrow more money that way. But couples often did this without realizing the potentially catastrophic implications. If only one spouse’s name was on the mortgage and that spouse died, the surviving spouse would be required to either repay the loan in full or face eviction.

In order to protect non-borrowing spouses, the federal government revised its guidelines for reverse mortgages taken out after August 4, 2014 to allow spouses to stay in the house as long as they meet certain criteria, including proving ownership within 90 days of the borrowers death. In 2015, the federal government allowed lenders to defer foreclosure on a widow or widower and assign the mortgage to the federal government. Advocacy groups looking at reverse mortgage foreclosures have found that despite these new regulations, lenders are still foreclosing on non-borrowing spouses. Of the 591 non-borrowing spouses who have sought help to avoid foreclosure, only 317 received assistance.

These regulations did not help Mr. Jones’ wife, Vanessa. Mr. Jones, who blocked more than 2,200 shots during his 17-year professional basketball career, obtained a reverse mortgage in 2014 on the Georgia home he lived in with his wife. The contract defined the “borrower” to be “Caldwell Jones, Jr., a married man.” Ms. Jones did not put her name on the reverse mortgage because she was under age 62 at the time of the mortgage. Mr. Jones died later that year, and when Ms. Jones did not repay the loan, the insurer began foreclosure proceedings.

Ms. Jones sued the insurer in federal court to prevent the foreclosure, arguing that federal law prohibited the insurer from foreclosing on the house while she lived in it. Under a provision in federal law, the federal government “may not insure” a reverse mortgage unless the “homeowner” does not have to repay the loan until the homeowner either dies or sells the mortgaged property and defines “homeowner” to include the borrower’s spouse.

On appeal, the 11th Circuit Court of Appeals (Estate of Caldwell Jones, Jr. v. Live Well Financial (U.S. Ct. App., 11th Cir., No. 17-14677, Sept. 5, 2018)) ruled that the federal law in question only covers what the federal government can insure and does not govern the insurer’s right to foreclose. The court agrees with Ms. Jones that the law is intended to safeguard widows and implies that the federal government should not have insured the loan in the first place, but finds that federal law does not cover the insurer’s private right to demand immediate payment and pursue foreclosure.

When purchasing a reverse mortgage, it is always safer to put both spouse’s names on the mortgage. If one spouse is underage when the mortgage is originally taken out, that spouse can be added to the mortgage when he or she reaches age 65. If you have a reverse mortgage with only one spouse on it, contact an elder law attorney to find out the best way to protect the non-borrowing spouse.

It’s Open Enrollment Season: Is Your Medicare Plan Still Working For You?

Do you have the right Medicare plan? It is fall, which means it is time to think about whether your current plan is still giving you the best coverage or whether a new plan could save you money or offer better coverage. Medicare’s Open Enrollment Period, during which you can freely enroll in or switch plans, runs from October 15 to December 7.

During this period you may enroll in a Medicare Part D (prescription drug) plan or, if you currently have a plan, you may change plans. In addition, during the seven-week period you can return to traditional Medicare (Parts A and B) from a Medicare Advantage (Part C, managed care) plan, enroll in a Medicare Advantage plan, or change Advantage plans. Beneficiaries can go to www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227) to make changes in their Medicare prescription drug and health plan coverage.

Even beneficiaries who have been satisfied with their plans in 2018 should review their choices for 2019, as both premiums and plan coverage can fluctuate from year to year. Are the doctors you use still part of your Medicare Advantage plan’s provider network? Have any of the prescriptions you take been dropped from your prescription plan’s list of covered drugs (the “formulary”)? Could you save money with the same coverage by switching to a different plan?

For answers to questions like these, carefully look over the plan’s “Annual Notice of Change” letter to you. Prescription drug plans can change their premiums, deductibles, the list of drugs they cover, and their plan rules for covered drugs, exceptions, and appeals. Medicare Advantage plans can change their benefit packages, as well as their provider networks. For information about entering and leaving Medicare Advantage plans, click here.

Remember that fraud perpetrators will inevitably use the Open Enrollment Period to try to gain access to individuals’ personal financial information. Medicare beneficiaries should never give their personal information out to anyone making unsolicited phone calls selling Medicare-related products or services or showing up on their doorstep uninvited. If you think you’ve been a victim of fraud or identity theft, contact Medicare. For more information on Medicare fraud, click here.

Here are more resources for navigating the Open Enrollment Period:

2019 Will Bring Social Security Beneficiaries the Biggest Increase in Eight Years

The Social Security Administration has announced a 2.8 percent increase in benefits in 2019, the largest increase since 2012.

Cost of living increases are tied to the consumer price index, and an upturn in inflation rates and gas prices means recipients get a boost in 2019. The 2.8 percent increase is higher than last year’s 2 percent rise and the .3 percent increase in 2017. The cost of living change also affects the maximum amount of earnings subject to the Social Security tax, which will grow from $128,700 to $132,900.

And there is more good news: Unlike last year’s increase, the additional income should not be entirely eaten up by higher Medicare Part B premiums. The standard monthly premium for Medicare Part B enrollees will increase only $1.50 to $135.50.

For 2019, the monthly federal Supplemental Security Income (SSI) payment standard will be $771 for an individual and $1,157 for a couple.

Most beneficiaries will be able to find out their cost of living adjustment online by logging on to my Social Security in December 2018. While you will still receive your increase notice by mail, in the future you will be able to choose whether to receive your notice online instead of on paper.

For more on the 2019 Social Security benefit levels, click here.

Medicare Premium to Edge Up in 2019

After staying the same last year, Medicare’s Part B premium will increase slightly in 2019. The premium will increase $1.50 from $134 a month to $135.50.

Some Medicare recipients have been paying a lower premium because they are protected by something called the “hold harmless” rule from any increase in premiums when Social Security benefits don’t rise. Due to increases in Social Security in 2018 and 2019, recipients who were previously shielded by this provision and paying lower premiums may see their premiums increase to the full $135.50 amount. In 2019, only an estimated 2 million Medicare beneficiaries (about 3.5 percent) will pay less than the full Part B standard monthly premium amount.

The Part B deductible will increase from $183 to $185 in 2019, while the Part A deductible will go up by $24, to $1,364. For beneficiaries receiving skilled care in a nursing home, Medicare’s coinsurance for days 21-100 will inch up from $167.50 to $170.50. Medicare coverage ends after day 100. (For more on Medicare’s nursing home coverage, click here.)

Here are all the new Medicare payment figures:

  • Part B premium: $135.50 (was $134)
  • Part B deductible: $185 (was $183)
  • Part A deductible: $1,364 (was $1,340)
  • Co-payment for hospital stay days 61-90: $341/day (was $335)
  • Co-payment for hospital stay days 91 and beyond: $682/day (was $670)
  • Skilled nursing facility co-payment, days 21-100: $170.50/day (was $167.50)

So-called “Medigap” policies can cover some of these costs. For more on these policies, click here.

Premiums for higher-income beneficiaries ($85,000 and above) are as follows:

  • Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $189.60.
  • Individuals with annual incomes between $107,000 and $133,500 and married couples with annual incomes between $214,000 and $267,000 will pay a monthly premium of $270.90.
  • Individuals with annual incomes between $133,500 and $160,000 and married couples with annual incomes between $267,000 and $320,000 will pay a monthly premium of $352.20.
  • Individuals with annual incomes above $160,000 and less than $500,000 and married couples with annual incomes above $320,000 and less than $750,000 will pay a monthly premium of $433.40.
  • Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $460.50

Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $85,000 and less than $415,000 will pay a monthly premium of $433.40. Those with incomes greater than $415,000 will pay a monthly premium of $460.50.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premiums. So the income reported on a beneficiary’s 2016 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2018. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will decrease by 6 percent in 2019, from an average of $30 in 2018 to $28 in 2019.

For Medicare’s press release announcing the new premium and deductible amounts, click here.

For more about Medicare, click here.

Conservator Owed Duty to Nursing Home to Timely Apply for Medicaid

Reversing a lower court, a Connecticut appeals court holds that a nursing home resident’s conservator owed a duty of care to the nursing home to timely apply for Medicaid on behalf of the resident. Bloomfield Health Care Center of Connecticut, LLC v. Doyon (Conn. App. Ct., No. AC 40281, Oct. 9, 2018).

A nursing home petitioned the court to appoint a conservator for one of its residents, Samuel Johnson, to assist him with his Medicaid application. The court appointed Jason Doyon as conservator in April 2014. Mr. Doyon waited nine months to file a Medicaid application on Mr. Johnson’s behalf. The state denied Mr. Johnson’s first Medicaid application due to lack of information. Mr. Doyon filed a second application, which the state approved, but Mr. Johnson did not receive any Medicaid benefits before May 2015.

The nursing home sued Mr. Doyon for negligence in failing to apply for and obtain Medicaid benefits on behalf of Mr. Johnson in a timely manner. Mr. Doyon asked for summary judgment, arguing that he did not owe a duty of care to the nursing home. The trial court granted Mr. Doyon summary judgment, and the nursing home appealed.

The Connecticut Court of Appeals reverses, holding that Mr. Doyon owed the nursing home a duty of care. The court rules that it was “readily foreseeable that, if [Mr. Doyon] failed to timely obtain Medicaid benefits for [Mr.] Johnson, the [nursing home] would suffer harm as a result because it would not be reimbursed for the cost of [Mr.] Johnson’s care.” The court also concludes that “the benefits of encouraging conservators to carry out their duties with care and preventing financial harm outweigh any corresponding minimal increase in litigation.”

For the full text of this decision, go to: https://www.jud.ct.gov//external/supapp/Cases/AROap/AP185/185AP462.pdf

More States Asking to Eliminate Retroactive Medicaid Benefits

Arizona and Florida are the latest states to request a waiver from the requirement that states provide three months of retroactive Medicaid coverage to eligible Medicaid recipients.

Medicaid law allows a Medicaid applicant to be eligible for benefits for up to three months before the month of the application if the applicant met eligibility requirements at the earlier time. This helps people who are unexpectedly admitted to a nursing home and can’t file — or are unaware that they should file — a Medicaid application right away. Preparing an application for Medicaid nursing home coverage may take many weeks; the retroactive coverage gives families a window of opportunity to apply and get coverage dating back to when their loved one first entered the nursing home.  “Retroactive coverage is one of the long-standing safeguards built into the program for low-income Medicaid beneficiaries and their healthcare providers,” says the Kaiser Family Foundation.

Now Arizona and Florida are joining a growing list of states that are asking the federal Centers for Medicare and Medicaid Services (CMS) to eliminate the retroactive benefits. CMS has already approved similar requests by Iowa, Kentucky, Indiana, and New Hampshire to waive retroactive coverage. A lawsuit is challenging Kentucky’s waiver, which also imposes work requirements for Medicaid recipients.

Advocates argue that if Medicaid applicants cannot get coverage before the month of application, they may be saddled with uncovered medical bills or fail to receive needed health care because they cannot afford it. According to Justice in Aging, which filed a brief in the Kentucky lawsuit, Medicaid applicants often do not file an application right away because of the complexity of the Medicaid application process or a false belief that Medicare would cover nursing home care.

For more information about the implications of the elimination of retroactive benefits, click here.

If you need to file a Medicaid application, contact your attorney.

When Can an Adult Child Be Liable for a Parent’s Nursing Home Bill?

Although a nursing home cannot require a child to be personally liable for their parent’s nursing home bill, there are circumstances in which children can end up having to pay. This is a major reason why it is important to read any admission agreements carefully before signing.

Federal regulations prevent a nursing home from requiring a third party to be personally liable as a condition of admission. However, children of nursing home residents often sign the nursing home admission agreement as the “responsible party.” This is a confusing term and it isn’t always clear from the contract what it means.

Typically, the responsible party is agreeing to do everything in his or her power to make sure that the resident pays the nursing home from the resident’s funds. If the resident runs out of funds, the responsible party may be required to apply for Medicaid on the resident’s behalf. If the responsible party doesn’t follow through on applying for Medicaid or provide the state with all the information needed to determine Medicaid eligibility, the nursing home may sue the responsible party for breach of contract. In addition, if a responsible party misuses a resident’s funds instead of paying the resident’s bill, the nursing home may also sue the responsible party. In both these circumstances, the responsible party may end up having to pay the nursing home out of his or her own funds.

In a case in New York, a son signed an admission agreement for his mother as the responsible party. After the mother died, the nursing home sued the son for breach of contract, arguing that he failed to apply for Medicaid or use his mother’s money to pay the nursing home and that he fraudulently transferred her money to himself. The court ruled that the son could be liable for breach of contract even though the admission agreement did not require the son to use his own funds to pay the nursing home. (Jewish Home Lifecare v. Ast, N.Y. Sup. Ct., New York Cty., No. 161001/14, July 17,2015).

Although it is against the law to require a child to sign an admission agreement as the person who guarantees payment, it is important to read the contract carefully because some nursing homes still have language in their contracts that violates the regulations. If possible, consult with your attorney before signing an admission agreement.

Another way children may be liable for a nursing home bill is through filial responsibility laws. These laws obligate adult children to provide necessities like food, clothing, housing, and medical attention for their indigent parents. Filial responsibility laws have been rarely enforced, but as it has become more difficult to qualify for Medicaid, states are more likely to use them. Pennsylvania is one state that has used filial responsibility laws aggressively.

Fear of Losing Home to Medicaid Contributed to Elder Abuse Case

A California daughter and granddaughter’s fear of losing their home to Medicaid may have contributed to a severe case of elder abuse. If the pair had consulted with an elder law attorney, they might have figured out a way to get their mother the care she needed and also protect their house.

Amanda Havens was sentenced to 17 years in prison for elder abuse after her grandmother, Dorothy Havens, was found neglected, with bedsores and open wounds, in the home they shared.  The grandmother died the day after being discovered by authorities.  Amanda’s mother, Kathryn Havens, who also lived with Dorothy, is awaiting trial for second-degree murder. According to an article in the Record Searchlight, a local publication, Amanda and Kathryn knew Dorothy needed full-time care, but they did not apply for Medicaid on her behalf due to a fear that Medicaid would “take” the house.

It is a common misconception that the state will immediately take a Medicaid recipient’s home. Nursing home residents do not automatically have to sell their homes in order to qualify for Medicaid. In some states, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home; in other states, the nursing home resident must prove a likelihood of returning home. The state may place a lien on the home, which means that if the home is sold, the Medicaid recipient would have to pay back the state for the amount of the lien.

After a Medicaid recipient dies, the state may attempt to recover Medicaid payments from the recipient’s estate, which means the house would likely need to be sold. But there are things Medicaid recipients and their families can do to protect the home.

A Medicaid applicant can transfer the house to the following individuals and still be eligible for Medicaid:

  • The applicant’s spouse
  • A child who is under age 21 or who is blind or disabled
  • Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)
  • A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home
  • A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

In addition, with a little advance planning, there are other ways to protect a house. A life estate can let a Medicaid applicant continue to live in the home, but allows the property to pass outside of probate to the applicant’s beneficiaries. Certain trusts can also protect a house from estate recovery.

The moral is: Don’t let a fear of Medicaid prevent you from getting your loved one the care they need. While the thought of losing a home is scary, there are things you can do to protect the house. To find out the best solution for you, consult with your attorney. 

To read the Record Searchlight article about the case, click here.