ElderLaw Answers Blog

In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA) in part to protect the privacy of patient records.  As with most laws, the results have been both good and bad.  Medical providers have become more careful about preserving patient confidentiality, but sometimes to the detriment of open communication with family members who may be able to provide important information to doctors and other health care providers.

In response, many estate planners have begun including HIPAA releases in their documents for clients so that medical personnel will communicate and share information with designated individuals.  These might be included in health care proxies or powers of attorney, or be separate documents.

Some, however, have argued that such releases are unnecessary since health care proxies and powers of attorney already provide the appointed agent access to medical records and personnnel.  This is true as is explained on the  Health and Human Services website as follows:

Generally, a covered health care provider or health plan must allow your personal representative to inspect and receive a copy of protected health information about you that the covered health care provider or health plan maintains….
If a person can make health care decisions for you using a health care power of attorney, the person is your personal representative.

Some have argued that to include a HIPAA release in a health care proxy or power of attorney serves to reduce the authority of the appointed agent, making it appear that they only have authority to receive information and undermining the state grant of power to make health care decisions for the incapacitated patient.

In our practice, we haven’t seen this result.  We have more often seen health care providers refusing to communicate openly with family members, in some instances even refusing to receive information they may provide, which was never the purpose of the HIPAA legislation.  The HIPAA release prevents doctors and others from avoiding family members. 

In fact, while we include it in our health care proxies, we also have clients sign a separate release naming the health care agent as well as anyone else the client may wish to be able to communicate with medical providers.  While only the appointed health care agent may make health care decisions, anyone under the HIPAA release may then communicate with doctors, nurses and therapists as appropriate.

The Administration on Aging, along with a number of non-profit organizations, has created a new legal resource web site that is available to consumers, attorneys and advocates alike.  It is a good starting point for anyone researching the legal rights and benefits of older Amercians.  You can reach the new site by clicking here.

Essentially a compilation of information provided by the Center for Medicaid and Medicare Services (CMS) on its Nursing Home Compare site, U.S. News & World Report has released a ranking of nursing homes.  Will the data is based  on data compiled by CMS and state regulatory agencies, the US News web site presents the information in a usable format and accompanies it with useful articles on choosing nursing homes.

It also lists the 11 nursing homes out of more than 15,000 nationwide which received perfect ratings for the past four quarters.  While the ratings may be questioned as the sole measure of the quality of nursing home care, there’s definitely a significant difference between the top-rated and bottom-rated facilities.

Click here to go to the US News nursing home ranking.

In a letter written to Senate Majority Leader Harry Reid, Congressional Budget Office Director Douglas W. Elmendorf estimates that the Community Living Assistance Services and Supports (CLASS) provisions of the health reform bill would save the federal deficit by $72 billion over 10 years.

The CLASS Act, which could be Sen. Ted Kennedy’s final legislative accomplishment, would provide basic long-term care insurance for every American who chose to participate.  While a voluntary program, taxpayers must opt out of it rather than choose to sign up.  Policymakers predict that many more people will participate than would if they had to take an affirmative step to participate.

In a recent column, journalists Steven and Cokie Roberts explain why the CLASS Act deserves support as a first step twoards solving the long-term care crisis facing our nation as the baby boomers age.  While the program will bring in more money than it spends at first, it will eventually cost more than it raises.  “But even if it did,” the Roberts argue, “it would be no worse for taxpayers than what’s happening right now. We are paying about $100 billion a year for long-term care through Medicaid, and that number is going to go geometrically higher if no other provision is made for people who need help. How can forcing people into poverty so the government can pay for them be better than setting up a program where workers pay for themselves?”

In Massachusetts, several accidents earlier this year caused by older drivers has spurred the legislature to consider requiring all drivers to take regular testing after age 75.  While this could make the roads safer, few have discussed what it means for seniors to give up their car keys.

Unfortunately, as a nation we’ve created a transporation infrastructure based on the automobile.  The inability to drive can lead to a loss of independence, isolation and depression.  According to one AARP study, nearly half of adults 50 and over said roads near their homes were unsafe to cross and that they would walk, bicycle or take buses if it were safe to do so.

Other studies have found seniors who give up the licenses to be more depressed, to take part in fewer out-of-home activities, and to be more likely to require long-term care than seniors who keep driving.  The Boston Globe in an article on the topic reports on an innovative program where volunteers drive seniors in their cars.

While helpful, such programs won’t solve the real problem of bad transportation planning.  To keep the roads safe and to permit seniors and others to maintain their independence, we need a massive program to change transportation policy to provide for safe walking and bicycling and to offer all Americans better mass transportation options.

The Illinois Supreme Court in an interesting case, In re Estate of Feinberg, upholds the estate plans of Max and Erla Feinberg who provided bequests to their grandchildren, excluding those who marry “outside the Jewish faith (unless the spouse of such descendant has converted or converts within one year of the marriage to the Jewish faith).” 

At the time of Erla Feinberg’s death, only one of her five grandchildren had married within the faith and two of her other grandchildren challenged this restriction.  They argued that it violated the state’s interest in upholding marriage and the U.S. Constitution’s restrictions on state involvement in religion.

The trial and appellate courts agreed with the grandchildren challenging their grandparents’ estate plan, but the Illinois Supreme Court does not.  In upholding the restriction, it reconciles two state interests in conflict in this case:  marriage and the right of testators to determine who will receive their property.

The Court threads the needle in this case by distinguishing between conditions “precedent” and conditions “subsequent,” upholding the former and disallowing the latter.  It approves the Feinbergs’ plan since it simply defines the class of people who may receive a bequest — those who happen to married to spouses of the Jewish faith at the time the survivor of them passes away. 

There may well have been a different result if the plan had also offered a bequest to those grandchildren who divorced their non-Jewish spouses within a year of the death of the survivor of Mr. and Mrs. Feinberg.  That would have been an “attempt to control the future conduct of the potential beneficiaries” as opposed to a reward for “those grandchildren whose lives most closely embraced the values [Erla] and Max cherished.”

In terms of the free exercize of religion clause of the U.S. Constitution, the Court finds that it does not apply since the Feinbergs are not government actors.  It finds that it “does not require a grandparent to treat grandchildren who reject his religions beliefs and customs in the same manner as he treats those who conform to his traditions.”

In short, testators can use any criteria they choose in deciding who will benefit from their estates.  Limits, however, may be placed on steps they may take to to control their beneficiaries’ actions after they (the testators) have passed away.

According to Broker World Magazine’s Eleventh Annual Individual Long Term Care Survey, the sale of individual long-term care insurance policies dropped 6.7% from 2007 to 2008 in premiums and 8.5 percent in covered individuals. This follows a long-term trend, probably reflecting the increasing cost of premiums as sturdier, more reputable companies have entered the market and weaker companies that offered under-priced policies have left the field.

While overall sales are falling, policies sold through employers or other groups are growing. Interestingly, three companies — Genworth, John Hancock and MetLife — dwarf all others in the the dollar value of sales, accounting for 57% of the market containing 31 companies. They are followed by Bankers Life, New York Life, Prudential, MassMutual and Allianz.

The average premium of new policies in 2008 was $2,200 with 80% of purchasers being under age 65, and almost half between 55 and 64.

In all, the 21 insurance companies that participated in Broker World’s survey, covered a bit more than 3.3 million participants. In 2008, they paid out $1.9 billion in benefits.

While LTCI, is a substantial industry, it only scratches the surface in terms of meeting the needs of today’s and tomorrow’s seniors for long-term care.  There are currently more than 37 million Amercians over age 65 and this number is expected to reach more than 70 million by 2030 when the Baby Boomers all reach this age.

On Thursday, December 3rd, the House of Representatives voted 225 to 200 to fix the estate tax at this year’s level with a $3.5 million exemption and a 45 percent maximum rate. This is far from becoming law, but it’s the strongest indication that we have so far of where Congress is heading.

As readers of this blog undoubtedly know, if Congress fails to act, under current law the estates of those dying in 2010 will not be subject to tax no matter their size and then the exemption will ratchet back to $1 million for those dying on or after January 1, 2011.

Since this law was enacted early in the Bush administration, everyone has expected Congress to act long before now to enact a permanent policy, whether repeal of the estate tax or fixing the exemption somewhere between $1 million and $5 million. (I’ve long predicted a $2 million exemption.) One theory as to why Congress has not acted is that members have collected 100s of millions of dollars they’ve collected in campaign contributions over the years, primarily from the very rich families hoping for an outright repeal.

In any event, the House bill is a long way from becoming law. The Senate has to vote as well and if its bill doesn’t match the House bill, both houses of Congress will have to vote on a compromise bill.

So why do I think the House bill needs to be fixed? Primarily because the exemption is too high. Fewer than 1 percent of estates exceed $3.5 million, which works out to $7 million for a married couple who do basic estate tax planning. The federal government is running an unsustainable deficit.

While estate tax revenues are not a large part of the federal revenue, they’re not insignificant. If they are reduced they will have to be made up by increasing income taxes or increased borrowing to be paid by future generations. Neither approach is equitable.

To argue that those who accumulate more than $2 million during their lives ($4 million for a married couple) should not contribute to the nation that provided the environment in which they could be so succesful is difficult to countenance. But politics can bring strange results.

We’ll have to wait and see what Congress decides. While one would expect an answer before January 1st, when even the largest estates can avoid all taxes, there has been some talk recently that Congress will not act until sometime in 2010, but make the law apply retroactively to all estates of those dying on or after January 1st.

My friend and law school classmate Ray D. Madoff (that’s with a short “a”, not the long “a” pronunciation of the Ponzi schemer), now a professor at Boston College Law School, recently proposed in an op-ed article in The New York Times that Congress adopt a higher estate tax in general, but exemp t small, family-owned businesses.

Prof. Madoff explains that the difference in revenue over the next 10 years between a $1 million exemption and a $3.5 million exemption would be more than $230 billion, money necessary to help reduce current and future budget deficits. Further, she argues that “[t]here is a big difference between wealth acquired through hard work and creativity and wealth bestowed as an accident of birth, and Congress should not be afraid to make this distinction.” And, she points out, while those who earn their wealth have to pay income and capital gains taxes on it, those who inherit their wealth do not. We have an interest in using the estate tax to level the playing field to some extent.

Therefore, she proposes that the exemption be set somewhere between $1 and $2 million and that the maximum rate be 55 percent, higher than the current 45 percent, but lower than 77 percent rate once in effect.

On the other hand, Prof. Madoff recognizes a national interest in permitting family-owned farms and small businesses to be passed from generation to generation. While experts debate the effect of the estate tax on such transfers, she recommends that if such businesses stay in the family that they be exempt from tax if their value is below $10 million.

The federal estate tax is scheduled to disappear for one year for those who die between January 1 and December 31, 2010, and then to ratchet back to apply to all estates over $1 million beginning in 2011. Four out of five of the respondents to our survey (at www.elderlawanswers.com) expect Congress to act before this happens, but the number of days left in the year is dwindling.

This strange estate tax situation results from a compromise between President Bush and Congress. President Bush and his supporters wanted to repeal the estate tax, which they called the “death” tax entirely, but a majority of Congress did not. So, they phased out the threshold at which the tax would apply from $1 million, to $2 million, to $3.5 million for those dying this year, to one tax free year in 2011.

During this time, according to the IRS, the number of estates filing returns dropped from 108,000 in 2001 when the threshold was $675,000 to 38,000 last year when the threshold was $2 million. But the number of those who would have had to file returns under the current $3.5 million limit rose from 9,500 to more than 14,000 during the same time period. Both are small numbers given the number of people in the United States.

Just about all commentators have expected Congress to act to change the law before now, and certainly before 2011 when the threshold drops back to $1 million. Most commentators now expect Congress to fix the limit at $3.5 million. I have long predicted a $2 million limit. What do you think Congress will do? What should it do?