§ 208.215.9 RSMo. Six Factors (1) The amount of the charge sought to be enforced against the recovery when expressed as a percentage of the gross amount of the recovery; the amount of the charge sought to be enforced against the recovery when expressed as a percentage of the amount obtained by subtracting from the gross amount of the recovery the total attorney’s fees and other costs incurred by the participant incident to the recovery; and whether the department should, as a matter of fairness and equity, bear its proportionate share of the fees and costs incurred to generate the recovery from which the charge is sought to be satisfied; The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 16
§ 208.215.9 RSMo. Six Factors (2) The amount, if any, of the attorney’s fees and other costs incurred by the participant incident to the recovery and paid by the participant up to the time of recovery, and the amount of such fees and costs remaining unpaid at the time of recovery; The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 17
§ 208.215.9 RSMo. Six Factors (3) The total hospital, doctor and other medical expenses incurred for care and treatment of the injury to the date of recovery therefor, the portion of such expenses theretofore paid by the participant, by insurance provided by the participant, and by the department, and the amount of such previously incurred expenses which remain unpaid at the time of recovery and by whom such incurred, unpaid expenses are to be paid; The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 18
§ 208.215.9 RSMo. Six Factors (4) Whether the recovery represents less than substantially full recompense for the injury and the hospital, doctor and other medical expenses incurred to the date of recovery for the care and treatment of the injury, so that reduction of the charge sought to be enforced against the recovery would not likely result in a double recovery or unjust enrichment to the participant; The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 19
§ 208.215.9 RSMo. Six Factors (5) The age of the participant and of persons dependent for support upon the participant, the nature and permanency of the participant’s injuries as they afgect not only the future employability and education of the participant but also the reasonably necessary and foreseeable future material, maintenance, medical rehabilitative and training needs of the participant, the cost of such reasonably necessary and foreseeable future needs, and the resources available to meet such needs and pay such costs; The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 20
§ 208.215.9 RSMo. Six Factors (6) The realistic ability of the participant to repay in whole or in part the charge sought to be enforced against the recovery when judged in light of the factors enumerated above. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 21
Not Required to Address All Six Factors The Medicaid recipient requesting reduction of the lien under § 208.215.9 is not required to prove each statutory factor , nor does the trial court have to enter findings on each statutory factor. Gravier v. Missouri Dept. of Social Services, Div. of Medical Services , 986 S.W. 2d 149 (Mo.App. 1998). The recipient must only provide sufgicient evidence to support exercise of the trial court’s discretion . Id. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 22
§ 208.215.10 RSMo. Burden of Proof The burden of producing evidence sufgicient to support the exercise by the court of its discretion to reduce the amount of a proven charge sought to be enforced against the recovery shall rest with the party seeking such reduction . The computerized records of the MO HealthNet Division, certified by the director or his or her designee, shall be prima facie evidence of proof of moneys expended and the amount of the debt due the state. § 208.215.10 RSMo. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 23
§ 208.215.11 RSMo. Reduction of Lien by Court • The court may reduce and apportion the Department’s or MO HealthNet Division’s lien proportionate to the recovery of the claimant . • The court may consider the nature and extent of the injury, economic and noneconomic loss, settlement ofgers, comparative negligence as it applies to the case at hand, hospital costs, physician costs, and all other appropriate costs . • The Department or MO HealthNet Division shall pay its pro rata share of the attorney’s fees based on the Department’s or MO HealthNet Division’s lien as it compares to the total settlement agreed upon. § 208.215.11 RSMo. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 24
§ 208.215.12 RSMo. • Whenever the department of social services or MO HealthNet division has a statutory charge under this section against a recovery for damages incurred by a participant because of its advancement of any assistance, such charge shall not be satisfied out of any recovery until the attorney’s claim for fees is satisfied, regardless of whether an action based on participant’s claim has been filed in court. • Nothing herein shall prohibit the director from entering into a compromise agreement with any participant, afuer consideration of the factors in subsections 9 to 13 of this section. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 25
Attorney’s Fees Claim Expenses § 208.215.14 RSMo. The debt due the state provided by this section is subordinate to the lien provided by section 484.130 or section 484.140, relating to an attorney’s lien and to the participant’s expenses of the claim against the third-party. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 26
Service Brian Kinkade, Director Department of Social Services Broadway State Ofgice Building P.O. Box 1527 221 W. High Street Jefgerson City, MO 65102-1527 Telephone: (573) 751-4815 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 27
Service Dr. Joseph John Parks III, Director MO HealthNet Division P.O. Box 6500 615 Howerton Court Jefgerson City, MO 65102-6500 Telephone: (573) 751-3425 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 28
Recovery Limited to Medical The United States Supreme Court has repeatedly held that a Medicaid agency cannot be reimbursed from a plaintifg’s settlement in excess of the portion of the settlement that is compensation for past medical care paid by the state. Arkansas Dept. of Health & Human Services v. Ahlborn , 547 U.S. 268 (2006); Wos v. E.M.A., 133 S. Ct. 1391 (2013). This allowed many plaintifgs to obtain significant lien reductions by arguing only a small portion of his or her recovery was actually compensation for past medical care . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 29
Validity of § 208.215 RSMo.? Wilhoite case (unreported) held that 208.215 could not stand in light of Ahlborn because the statute failed to limit MO HealthNet’s recovery to the amount of damages recovered for medical . Lien reduction portion of 208.215 protects due process rights of plaintifg. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 30
Bipartisan Budget Act of 2013 • Section 202 of the Bipartisan Budget Act’s obscure amendments to the Social Security Act allow a Medicaid agency to demand full reimbursement from any settlement even if medical expenses were not actually pled or recovered for and, regardless of any contributory negligence or other issues with recovery, preventing the client from being made whole. • Would overturn Ahlborn & Wos cases. • Was to be efgective October 2014, but later amended to delay efgective date to October 1, 2017 . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 31
Needs-Based v. Entitlement Needs-Based Programs • SSI - Title XVI • MO HealthNet - Title XIX • KANCARE - Title XIX • ABE-Illinois Medicaid - (Title XIX) • HUD - housing assistance • Food stamps Entitlement Programs • RIB, DIB, SIB - Title II • Medicare - Title XVIII The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 32
Available Resources For a disabled person to qualify for MO HealthNet benefits, he or she must have less than $1,000 in “available resources” (a.k.a. “countable resources”). To qualify for Supplemental Security Income (“SSI”) benefits, the maximum is $2,000 in available resources. Other “needs-based” programs have difgering eligibility requirements, some are based on amount of income, some are based on amount of available resources, some have elements of both income and resources. The HUD Section 8 Housing program, for example, has elements of both. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 33
Practice Tip You should screen for the following benefits: Federal • Social Security Disability Insurance (SSDI) • Supplemental Security Income (SSI)* • Social Security Retirement Income • Medicare (medical insurance) • HUD housing, Section 8* • Food Stamps* • Veteran’s benefits The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 34
Practice Tip You should screen for the following benefits: State • Medicaid (Title XIX) medical insurance* • Subsidized housing* • Energy Assistance* • Cash Assistance* * These are all needs-based government benefits, meaning there is either an asset limit or an income limit (or both). Some of these benefits are financed jointly by the federal and state governments. Most are administered at the state level. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 35
Obtain Verification of Benefits • Always get written verification of the benefits involved. Clients ofuen don’t really understand which benefits they are receiving. Sometimes their lawyers don’t either. • Most programs send out a letter, order or some other form to provide notice of eligibility and the efgective date of coverage. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 36
Medicare Secondary Payer Act (MSP) • Medicare was created in 1965 • Medicare Secondary Payer Act was created in 1980 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 37
The Law • 42 U.S.C. §1395y • 42 C.F.R. §§ 411.20 et.seq. • Medicare is a secondary payer The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 38
Section 1862(b)(2)(A)(ii) 42 U.S.C. §1395y • Precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance (as defined in 42 CFR 411.50) The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 39
Three Compliance Parts - Present, Past & Future In every liability settlement involving a Medicare beneficiary, the parties, including any group health plan or liability insurer, now has three distinct obligations : 1) report the settlement to CMS (the present); 2) resolve any conditional payments (the past)and 3) provide for payment of future medical expenses as a term of the settlement, taking into consideration Medicare’s interests (the future). Each obligation carries its own penalty for failure to fulfill it. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 40
Medicare, Medicaid and SCHIP Extension Act of 2007 • Enforces Medicare’s basic right of recovery and to ensure that Medicare serves as a secondary payer , whenever possible. • Section 111: reporting requirements • Only Non-Group Health Plan ( NGHP ) Plan insurers “are obligated to notify Medicare about ‘settlements, judgments, awards or other payment from liability insurers (including self insurers), no fault insurers and workers’ compensation’ received by or on behalf of Medicare beneficiaries,” MMSEA Section 111 Mandatory Insurer Reporting, Quick Reference Guide, Version 1, January 19, 2012. • The insurers are identified as “ responsible reporting entities ” ( RREs ), as are self insureds. • The RRE’s are to report information when the insurer assumes an ongoing responsibility for medicals ( ORM ) or afuer paying the total payment obligation to the claimant ( TPOC ) in the form of a settlement, judgment, award or other payment. • Simply stated, the trigger for reporting is the issuance of payment to the claimant or satisfaction of medical expense . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 41
Conditional Payments • Medicare has the right to recover any conditional payment made against the settlement proceeds of a workers’ compensation or third-party liability case • Sometimes referred to as a “ super lien ” because of the broad power of CMS • From the date of incident to the date of settlement The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 42
Procurement Costs • Medicare reduces its recovery automatically to take into account the cost of procuring the judgment or settlement. • The costs include attorney’s fees , expert witness fees and court costs . In order to properly calculate this reduction, the claimant’s attorney must provide a copy of the fee agreement along with documentation of costs incurred during litigation. 42 C.F.R. 411.37. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 43
Medicare and Wrongful Death Cases • Bradley v. Sebelius , 621 F.3d 1330 (11th Cir. 2010): A child’s loss of parental companionship claim is a property right belonging to the child , not Medicare . • Benson v. Sebelius , 2011 WL 1087254 (D.D.C. 2011): Plaintifg factored his mother’s medical claims into the settlement calculation. The conditional payments were recoverable by CMS . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 44
Medicare Advantage Plans (Part C) and the MSPA Parra v. PacifiCare of Arizona , No. 11-16069, holding that a private insurer operating as a Medicare Advantage Organization Plan is not permitted to bring an action in federal court seeking reimbursement for $136,630.90 from a tort settlement secured by survivors of the deceased in a wrongful death action . The Court holds that the federal statute, 42 U.S.C. § 1395y(b) (3)(A), “was intended to allow private parties to vindicate wrongs occasioned by the failure of primary plans to make payments .” This statute does not authorize a suit for reimbursement against its insured (or survivors ) for reimbursement . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 45
Medicare Advantage Plans • Medicare Part A is hospital insurance • Medicare Part B is medical insurance • Medicare Part C covers Medicare Advantage Plans • Medicare Part D covers prescription drug coverage • Medicare Advantage Plans are also known as Medicare Advantage Organizations, MAP’s, MAO’s or Part C The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 46
Medicare Advantage Plans • Medicare beneficiaries can enroll in a Medicare Advantage Plan and get all Part A and B Medicare services ( except hospice ) plus additional coverage (i.e., vision, dental and sometimes Prescription drug coverage) through private companies . • Beneficiaries pay more for a Medicare Advantage Plan than for regular Medicare . • Medicare pays companies a fixed amount for each beneficiary in the plan. • The Medicare Advantage Plan Companies must follow Medicare’s rules regarding payments for services, but can set charges for out-of-pocket costs and rules for how and where to receive services. • Rules can change each year . Currently, 31% of the Medicare population is enrolled in Medicare Advantage Plans. • This number has more than tripled since 2004 . • There are various plans out there , including plans issued by BlueShield, Humana and Oxford. The plans typically have a third-party administrator , such as Rawlings or Trover. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 47
Medicare Advantage Plans • There is no way to get information about Medicare Advantage Plan, except from the plaintifg . • Inquiries to Medicare/CMS/RCBC will not reveal a Medicare Advantage Plan lien. • You can receive a letter from CMS/RCBS indicating no Medicare lien and/or not a Medicare beneficiary and still have an existing Medicare Advantage Plan lien. • In re: Avandia , 685 F.3d 353 (3d Cir. 2012), cert. denied, is the seminal case which recognized that a MAP is granted the right to a private cause of action under the Medicare Secondary Payer Act ( MSPA ) for reimbursement of the conditional payments it has made. (Under the MSPA, Medicare refers its cases to the Dept. of Treasury). The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 48
Medicare Advantage Plans In the last couple of years, four federal cases have discussed the right of a Medical Advantage Plan to obtain double damages when it has not been reimbursed for conditional payments: • Amie Collins v. Wellcare Plans, Inc., 73 F.Supp.3d 653 (E.D.La. December 2014) . Plaintifg in a motor vehicle accident settled with the tortfeasor and held in trust monies claimed by the MAP. She files a DJ action and the MAP counterclaimed. The Court held that the MAP had the right to a private cause of action to recover the conditional payment amount. The judge found that double damages were not warranted , as the money claimed by the MAP was held in escrow . The Court also found that the plaintifg’s failure to respond to correspondence from the MAP tolled the 3 year statute of limitations , since MAP’s only information comes from the plaintifg beneficiary . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 49
Medicare Advantage Plans • Humana Medical Plan v. Western Heritage Insurance Company (2015 WL 1191208 (S.D.Fl. 2015) . Case involved a slip and fall accident. Plaintifg settled the case for $115,000. Plaintifg represented there was no Medicare lien , but the insurance company learned that plaintifg had a MAP . It wrote the settlement check to plaintifg , plaintifg’s attorney and Humana . • Plaintifg objected, resulting in a hearing and a ruling by the state court for the carrier to turn the proceeds over to plaintifg’s attorney, who was to keep some of it in escrow. Humana filed suit to recover payment. • The Court followed in re: Avandia and granted the Medicare Advantage Plan the right to proceed with private cause of action for double damages under the MSPA. Currently on Appeal to 11th. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 50
Medicare Advantage Plans • MSP Claims 1, LLC v. Liberty Mutual Ins., 2015 US Dist. LEXIS 99188, (S.D.Fl. 2015) . Plaintifg, a Medicare beneficiary through a MAP, was involved in a car accident. Liberty Mutual denied PIP coverage and plaintifg’s bills were paid by the MAP , which sought recovery of the conditional payment amount and double damages . The Court held that since the Florida PIP statute recognizes that the PIP carrier can assert that the claim was unrelated , not medically necessary or unreasonable, Liberty Mutual should not face double damages for contesting the payment of claims. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 51
Medicare Advantage Plans • Humana Ins. Co. v. Paris Blank LLR, LEXIS No 618146E.D. VA May 10, 2016) . Both Plaintifg’s attorney and Plaintifg’s firm were sued by Humana under a private cause of action for the recovery of double charges. Humana was listed on the settlement check, had a lien, but the Plaintifg’s firm ignored it. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 52
Medicare Advantage Plans • Cariten Health Plan, Inc. v. Mid-Century Insurance Company, 2015 WL 5449221 (E.D.Tenn. 2015) . Cariten, a Medicare Advantage Plan (MAP), was granted the right to proceed with private cause of action for double damages against a no-fault carrier which refused to repay conditional payments made by Cariten. The Court found that under the Medicare Secondary Payer Act, a MAP is a secondary payer, and is entitled to a private right of action for failure to reimburse conditional payments made by the MAP. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 53
SMART Act History • Known as the Strengthening Medicare And Repaying Taxpayers (SMART) Act • One of the co-sponsors, Rep. Tim Murphy (R-Pa.) indicated the bill stemmed from a constituent who was in a car accident and had to wait years for a settlement on medical bills covered by Medicare • The bill’s lead Democratic sponsor was Rep. Ron Kind (D-Wis.) • The SMART Act was signed by President Obama on January 10, 2013 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 54
SMART Act Purpose • The SMART Act was passed as part of H.R. 1845 and attached onto a Medicare IVIG Access Bill; • It reforms several aspects of the conditional payment and MMSEA Section 111 processes • The Amends Section 1862(b)(2)(B) of the Social Security Act (42 U.S.C. 1395y(b)(2)(B)) The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 55
Efgective Date • This process was supposed to go into efgect nine (9) months afuer H.R. 1845 goes into efgect – or on October 10, 2013 (efgective date of H.R. 1845 is January 10, 2013). • This section also provides that the Secretary create an appeals process for conditional payments . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 56
Medicare Secondary Payer Statute Medicare Set-Aside Arrangements • Section 1862(b)(2)(A)(ii) of the Social Security, Act [42 USC 1395 y(b)(2)], precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance . • Medicare has the right to scrutinize any settlement of workers’ compensation case or third-party liability case to determine if its right must be protected against a shifu to Medicare of any third-party’s liability as it relates to future medical care . • Unless funds are set aside that will meet the participant’s future medical bills, Medicare will not assume liability for future medical treatment when a third - party is responsible . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 57
Medicare Set-Aside • The law does not require them ; it’s merely a device to use to comply with the law. • No definition of “ MSA ” is in the MSP, its regulations or other law. • MSA is an allocation of settlement proceeds among the various damage components of a settled claim . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 58
Reference Guide for WCMSA • Issued January, 2015 • CMS will review a proposed WCMSA amount when the following workload review thresholds are met: m The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00 ; or m The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00 . m This is not a safe harbor . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 59
CMS Reference Guide for WCMSA • A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply: m The claimant has applied for Social Security Disability Benefits m The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision m The claimant is in the process of appealing and/or re-filing for Social Security Disability benefits m The claimant is 62 years and 6 months old m The claimant has an End Stage Renal Disease ( ESRD ) condition but does not yet qualify for Medicare based upon ESRD. • If the threshold is met , a WCMSA can be submitted to CMS for approval . • These thresholds are created based on CMS’ workload , and are not intended to indicate that claimants may settle below the threshold with impunity . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 60
Sally Stalcup Memo - 5/25/11 • Stalcup is the MSP Regional Coordinator-Dallas, Texas (pertains to AR, OK, TX, NM, LA). • “The Law requires that the Medicare Trust Funds be protected from payment for future services whether it’s a Worker’s Compensation or liability case. There is no distinction in the law.” • There is no formal process for review of liability cases . Attorneys must decide based upon the facts of their case whether the Trust Fund must be protected . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 61
Sally Stalcup Memo - 5/25/11 • “The fact that a settlement/judgment/award does not specify payment for future medical services does not mean that they are not funded .” • “The fact that the agreement designates the entire amount for pain and sufgering does not mean that future medicals are not funded .” • “Set-aside is our method of choice and the agency feels it provides the best protection for the program and Medicare beneficiary .” The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 62
Charlotte Benson Guidance Memo – 9/30/11 • Benson is the Acting Director of the Financial Services Group of the Ofgice of Financial Management in Baltimore, Maryland • Where the beneficiary’s treating physician certifies in writing that treatment for the alleged injury related to the liability “settlement” has been completed as of the date of the “ settlement ,” and future medical services for injury will not be required , Medicare considers its interest, with respect to future medicals for that particular “ settlement ” satisfied . • When there is such a certification, there is no need for the beneficiary to submit the certification or a proposed LMSA for review . CMS will not provide the settling parties with confirmation that Medicare’s interest with respect to future medicals for that “ settlement ” has been satisfied . • The beneficiary and/or their representative are encouraged to maintain the physician’s certification . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 63
Medicare Secondary Payer and ‘Future Medicals’ Proposed Rule Making • On May 3 of 2012, CMS submitted to the Ofgice of Management and Budget advanced notice of proposed rulemaking (ANPRM) entitled “Medicare Secondary Payer and ‘Future Medicals’ (CMS-6047-ANPRM). • Solicits comment on options to “clarify how beneficiaries can meet their obligations to protect Medicare’s interest with respect to Medicare Secondary Payer (MSP) claims involving automobile and liability insurance (including self-insurance), no-fault insurance and workers’ compensation when future medical care is claimed or the settlement, judgment, award or other payment releases (or has the efgect of releasing) claims for future medical care.” The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 64
Proposed Rule Making The CMS proposed general rule states if an “individual or Medicare beneficiary” anticipates receiving Medicare covered services afuer the date of the settlement, then such person is required to satisfy Medicare’s interest with respect to “future medicals” using any one of several options. • Option 1 : The Medicare beneficiary pays for all future injury related expenses out of the settlement proceeds until exhausted . • Option 2 : No MSA is required if individual is not expected to become a Medicare beneficiary within 30 months of the settlement and the injury is not “ chronic ” as defined and the settlement amount is below a certain amount. Comments were solicited on what the threshold amount should be. This would be similar to the procedure employed in workers compensation cases. • Option 3 . No MSA is required if the treating physician certifies there are no future injury related expenses to be incurred. • Option 4 . A proposed MSA is submitted to CMS for approval . • Option 5 . The Medicare beneficiary participates in one of the CMS recovery options . This option to cover the smaller settlements . • Option 6 . The Medicare beneficiary makes an upfront payment . • Option 7 . The individual receives a compromise or waiver from CMS at the time of the settlement. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 65
Proposed Rule Making • The public comment period ended on August 14, 2012 • CMS initiated the MSA rulemaking on their own; no funding by Congress • This issue has taken a back-seat to the SMART Act implementation requirements . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 66
Allocations Medicare is not bound by the parties’ allocation of settlement funds. The court can determine whether future medical expenses are likely and the amount of the allocation necessary for a MSA. See, Big R Towing v. Benoit , No. 6:2010cv00538 (W.D. La 2010); 2011 WL 43219; Finke v. Hunter’s View , 2009 WL 6326944 (D.Minn.); Schexnayder v. Scottsdale , No. 6:2009cv01390, (W.D. La); 2011 WL 3273547 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 67
Sipler v. Trans Am Trucking, Inc., US District Court – New Jersey Plaintifg involved in PI case and receives Medicare Court concludes that no Medicare allocation is necessary. The settlement in this case did not arise in the worker’s compensation context and it does not indicate a particular amount to compensate Mr. Sipler for future medical expenses arising out of the accident. Tort cases involve non-economic damages and not determined by a specific formula To require personal injury settlements to specifically apportion future medical expenses would prove burdensome to the settlement process and, in turn, discourage personal injury settlements. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 68
MSAs and Settlement Agreements The settling parties asked the Court to determine whether a liability Medicare Set-aside Arrangement (“LMSA”) was required as part of settling the claim. The Court concluded, afuer reviewing the evidence, that the parties, in fact, did not have a settlement agreement as they did not agree to every essential term . Early v. Carnival Corporation , No. 12-20478-CIV-Goodman, (S.D. Fla. February 7, 2013) The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 69
Why Use a SNT? • A Special Needs Trust (SNT) is a legal tool that can be used in many cases to preserve the client’s eligibility for needs- based public benefits . • Another benefit of using a SNT is that the state will routinely defer its Medicaid lien until that client’s death . • Will protect benefits with MSA sub-trust . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 70
What is a Special Needs Trust? Generally, we are talking about a trust agreement that will, if properly drafued , render the trust assets legally unavailable to the beneficiary for public benefit purposes . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 71
What is the purpose of a Special Needs Trust? Establish a trust which allows assets to be held and used for the benefit of a disabled person without those assets being counted as “ available resources ” (a.k.a. “countable resources”) of the disabled person. The SNT can also help protect the beneficiary from exploitation and poor decision making . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 72
What is the purpose of a Special Needs Trust? Special needs trusts, even of modest amounts, can greatly enhance the quality of life for beneficiaries with disabilities. SNTs provide not only for medical expenses and therapies not otherwise covered by public benefit programs , but also for recreational items and entertainment that increases the enjoyment of life . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 73
SNT Expenditures General Rule: • no food or shelter • no cash or cash equivalent These expenditures are treated as income to the beneficiary, so public benefits are afgected. • See list – intended to be illustrative, not exhaustive. • Make payments directly to vendors whenever possible. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 74
Two General Categories of SNTs 1) Self-settled (created with assets of the beneficiary ) 2) Third-party trusts ( created and funded by someone with no duty of support to the beneficiary ) Today’s discussion will focus on self-settled SNTs . If someone other than the beneficiary wants to put assets into trust for benefit of beneficiary, that person should use a third-party SNT. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 75
Three Types of Self-Settled SNTs 1) Medicaid Payback Trust (“ d4A ”) 2) Qualified Income Trust (“ Miller ” trust) ofuen used in “ income cap ” states (“ d4B ”) 3) Pooled Trust (“ d4C ”) The terminology (d4A, etc.) comes from the federal enabling statute – 42 U.S.C. § 1396p(d)(4). The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 76
Payback Trusts Codified in Federal Law The Omnibus Budget Reconciliation Act of 1993 (OBRA ‘93) codified the use of self-settled SNTs, including the Medicaid “payback” trust, the income only trust, and the pooled trust for individuals with disabilities. 42 U.S.C. § 1396p(d)(4) governs self-settled trusts and created new planning opportunities for beneficiaries under age 65 . Thus, the d4A, d4B and d4C references. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 77
General Rule - Trust Assets Available The general rule is that assets transferred to a trust are deemed available to the settlor/beneficiary for Medicaid and SSI eligibility purposes up to the amount the trustee could distribute for the benefit of the settlor/beneficiary if the trustee exercised maximum discretion in settlor’s favor. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 78
SNT Exception The exception to this rule is that assets in a self-settled special needs trust are NOT “ available resources ” to the beneficiary IF the trust complies with OBRA-93 . In Missouri, in a personal injury context, this almost always means that we are talking about either a d4A Trust or a Pooled Trust ( d4C ). The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 79
Requirements of a d4A SNT (also known as a “Payback” Trust) 1. The trust beneficiary must be disabled ; 2. The trust must be irrevocable ; 3. The trust must be established by the beneficiary’s A. Parent ; B. Grandparent ; C. Guardian ; D. a Court ; or E. an Individual with capacity (as of 2016) 4. The beneficiary must be under age 65 • When trust established and funded 5. Must include provision that the assets remaining when beneficiary dies will first be used to “ payback ” the state up to an amount equal to the total amount of medical assistance paid . • Same requirement applies if trust terminates while beneficiary living . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 80
Requirements of a d4C Pooled Trust 1) Some advantages over the d4A payback SNT 2) No age 65 limitation 3) Can be established by the beneficiary as well as a parent , grandparent , guardian or court 4) Professional trustee management 5) Must include “ payback ” provision to the State to the extent assets remaining at death of the beneficiary are not retained by the pooled trust The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 81
Disabled The trust beneficiary must meet the definition of “disabled” under the Social Security law – if receiving SSI or SSDI , this threshold has been met , but this requirement can be met without being eligible for SSI or SSDI (if ineligible for other reasons ). The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 82
Irrevocable The trust must be irrevocable. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 83
Who Can Establish the SNT? The trust must be established by the beneficiary’s A. Parent ; B. Grandparent ; C. Guardian ; D. a Court ; or E. an Individual with capacity (as of 2016) The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 84
What does it mean to “establish” a d4A Trust? 1. Must be one of the four authorized (parent, grandparent, guardian or court) a. Draper fiasco 2. Must have: a. Legal authority to act on behalf of beneficiary so beneficiary’s money is first into the trust; OR b. Settlor must put own money into trust first — “ Seed Trust ” The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 85
Guardian and Special Conservator 1. Guardian needs court authority to establish a d4A Trust 2. Special Conservator • Authorized by § 475.092 RSMo. • Use when do not need a guardian and do not have a parent or grandparent • Is a one-time transaction to establish and fund d4A Trust The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 86
Court Missouri’s statutory authority for court approval of a pay-back trust is in Section 475.092.2 RSMo. • The trial division has same authority as probate division , without appointing a conservator, as probate division under Section 511.030 RSMo. POMS SI 01120.203B.1.f • Requires that court must order establishment of d4A Trust • If court-established, Judge must establish , not merely approve, a trust established by someone else The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 87
Under the Age of 65 The beneficiary must be under age 65 when the trust is established and funded . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 88
Remaining Trust Assets The assets remaining in SNT when beneficiary dies will first repay Medicaid . Also required if trust terminates while beneficiary living . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 89
Only One Trust Beneficiary Trust cannot benefit anyone other than the beneficiary “Sole benefit” of beneficiary • Added by Transmittal 64 POMS elaborates on sole benefit • §SI 01120.203B.1.e and • §S1 01120.201F.2 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 90
Payback Medicaid When... A. On death of beneficiary; and B. If trust terminates during beneficiary’s life What... A. All remaining assets , up to amount state spent on beneficiary B. All states that provided Medicaid benefits must be repaid C. If not enough trust assets, states are reimbursed proportionately The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 91
Payback Upon Termination of Trust Upon termination of the trust, all other expenses prohibited until afuer payback 1) Taxes due from beneficiary’s estate other than from assets in the trust 2) Inheritance taxes 3) Debts owed to third-parties 4) Funeral expenses 5) Residual beneficiaries (other than pooled trust) The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 92
Choosing a Trustee • In short, there is no perfect choice . • The beneficiary cannot be the trustee . • The beneficiary cannot have the power to remove or appoint the trustee . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 93
Choosing a Trustee When choosing a trustee, key factors to consider include the cost of the available parties, relative investment experience , and flexibility and bureaucracy . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 94
Choosing a Trustee Another key consideration should be the trustee’s knowledge of public benefits programs and their regulations , as well as the beneficiary’s special needs and circumstances . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 95
Choosing a Trustee It ofuen makes sense to split the necessary trustee roles , with a bank or trust company handling investments and accounting , a family member or social worker taking care of planning for the beneficiary and disbursements and an elder law attorney advising on public benefits issues . This can be done through multiple trustees or a single trustee advised by individuals with the necessary knowledge and experience . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 96
When to Use a Pooled Trust If the person who has a disability is 65 or older. • Age 65 or older can create and fund a pooled trust, but transfer penalties may apply. If there is no person or financial institution appropriate or willing to act as trustee. • Perhaps there is not an appropriate person. • Perhaps the amount of the trust estate is too small to interest a corporate trustee. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 97
When to Use a Pooled Trust When there is no parent or grandparent willing or able to establish the trust and it is not appropriate or feasible to go to court to accomplish this, the person who has a disability can establish his or her own pooled trust . When the cost of establishing a “ stand-alone ” d4A trust is excessive in light of the amount to be transferred to the trust . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 98
Pooled Trust Disadvantages The choice of trustee is made solely by the nonprofit association administering the pooled trust. Some allow co- trustees . If the trustee is not doing a good job or is not responding to the beneficiary’s needs, there is usually no way to remove the trustee and replace with a more responsive trustee. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 99
Pooled Trust Disadvantages The nonprofit association normally retains at least some of the funds remaining in the pooled trust account upon the death of the beneficiary, so there may be a conflict of interest that is unacceptable . The remainder of the pooled trust account might not be paid to family members or others of the beneficiary’s choice, even if it exceeds the amount that would have been paid back to MO HealthNet -- some pooled trusts keep only a portion and distribute the “ afuer-payback ” balance to those beneficiaries ; some keep it all . Good to know up front. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 100
Recommend
More recommend
