ElderLaw Answers Blog

We are sad to report that Gail Koff, one of the leaders of the consumer law firm, Jacoby & Meyers, has passed away from complications in her treatment for leukemia.

Gail joined Jacoby & Meyers when it expanded from its California base, ultimately helping it expand to 150 offices in six states.  It’s purpose was to provide low-cost legal representation to consumers who could not afford standard legal fees.

When the partnership broke up, Gail who continued to lead the New York office, downsized and changed the focus of the firm to personal injury law.  However, she never gave up her dream of a nationwide firm for middle-income clients that would provide quality representation and reasonable fees.

We at ElderLawAnswers got to know Gail as she pursued this dream and had a number of discussions about how we might work together to help bring her dream to reality.  Unfortunately, we never found a financial model that worked. 

It would be a fitting legacy to Gail if her dream of a national consumer law firm could be realized — perhaps through the use of on-line systems that are now available or are being developed.

Click here to read Gail’s obituary on The Wall Street Journal website.

The recently-announced settlement of Smith v. Colmars in Maryland, provides that nursing home residents who are covered by Medicaid may use their income to pay past due medical bills. 

With some allowances for spouses and dependent children living at home, Medicaid-covered nursing home residents must pay most of their monthly income — usually Social Security and pensions — to the nursing home as their contribution to their cost of care.  Advocates have long argued that under federal law, such income could be used to pay for past medical debts, whether owed to the nursing home or to other providers.

The settlement acknowledges this right, while limiting payments to such debts incurred up to three months prior to the application for benefits.

While many states have not acknowledged this right as to monthly income, Maryland appears to have gone further in not permitting Medicaid asset spend downs for past medical debts.  In most states, Medicaid applicants must spend down their resources to $2,000 before the state will pick up the cost of their medical care.  However, they will accept the payment of past medical debt to establish eligibility.

An example should help explain how this works.  Let’s assume that a nursing home resident on August 1st had $7,000 in countable assets but owed $5,001 in various medical bills.  In most states, she would be permitted to pay off the medical bills later in the month and still have Medicaid coverage as of August 1st.  My reading of the commentary on the Maryland case indicates that this was no the case there.  If the nursing home resident paid her medical bills on August 15th, she would become eligible on the date, but would still owe the nursing home for the care provided from August 1 to 14.

Because of this, the settlement of the Maryland case includes payment of $16 million in past due bills to nursing homes.

To read more about the case and the settlement, click here.

Remember the “death panels” in the health reform bill? A provision in the House bill would have allowed Medicare to pay for discussions about end-of-life care with a doctor, offering recipients a chance to learn about things like advance directives, palliative care and hospice care. The benefit would have been purely voluntary, but thanks to outrageous and politically motivated distortions by Rush Limbaugh, Sarah Palin and others that the provision was a secret plan to euthanize elderly Americans, it never made it into the final health care legislation.

Now a study published last week in the New England Journal of Medicine makes clear just how unfortunate that decision was. Confirming what palliative care specialists have long suspected, the study found that terminally ill patients who begin receiving palliative care immediately upon diagnosis live longer and have a far better quality of life than those who receive only standard medical care.

“Palliative care typically begins with a long conversation about what the patient with a terminal diagnosis wants out of his remaining life,” explains the New York Times in its article on the study. “It includes the options any oncologist addresses: surgery, chemotherapy and radiation and their side effects. But it also includes how much suffering a patient wishes to bear, effects on the family, and legal, insurance and religious issues. Teams focus on controlling pain, nausea, swelling, shortness of breath and other side effects; they also address patients’ worries and make sure they have help with making meals, dressing and bathing when not hospitalized.”

Palliative care has typically been applied only in the last weeks of life, but in the three-year study the researchers randomly assigned patients with fast-growing lung cancer to receive either regular cancer care or cancer care plus palliative care. Not only were the patients who received palliative care from the start happier and less depressed, but they lived an average of three months longer than the cancer-care-only group, even though many chose not to have aggressive chemotherapy.

The results, said Dr. Diane E. Meier, director of the Center to Advance Palliative Care at Mount Sinai School of Medicine, show “that palliative care is the opposite of all that rhetoric about ‘death panels.’ It’s not about killing Granny; it’s about keeping Granny alive as long as possible — with the best quality of life.”

The next hurdle is getting Medicare to pay for palliative care in a way that encourages doctors to employ it. As it stands, many doctors don’t consider it because the billing is so complicated.

The New York Times recently reported that Alzheimer’s researchers have devised a spinal fluid test that is 100 percent accurate in identifying patients who are on their way to developing Alzheimer’s disease — long before memory loss symptoms arise. The article also suggests that the disease will soon be diagnosable using brain imaging scans.

But although we can now accurately diagnose the relentless brain disease, Alzheimer’s is not curable and drugs have proven ineffective in slowing it. The news raised two questions in my mind. First, would I want to know I had the disease, since nothing can be done about it at this point? And second, what does the government’s single-minded focus on finding a cure do for the millions of spouses and other family members who are now struggling to care for a loved one with Alzheimer’s?

In the early 1980s there was similar optimism that a cure for Alzheimer’s could be found, and in 1983 a panel of experts led by the late Dr. Robert Butler called on Congress to devote research funds to the cause. At subsequent hearings in 1985, witnesses said that Medicare could not afford to cover the care of those afflicted with dementia, that it would “bankrupt” the system. Congress continued to increase funding for a cure while giving nothing to assist caregivers.

Twenty-five years later, we still don’t know whether a cure for Alzheimer’s will be possible, but we do know that the millions caring for the estimated 2.4 million to 5.1 million Americans with the disease are in desperate need of help with the day-to-day supervision that the vast majority of Alzheimer’s sufferers require. Still, we continue to chase the cure while ignoring the ongoing plight of families devastated by the disease.

Increasingly, attorneys are venturing into related business fields, including financial planning and selling insurance.  Doing so raises both the perception and the reality of conflicts of interest.  The question is whether those conflicts can be dealt with in a way that both protects the client and that does not undermine the attorney’s role as trusted advisor.

While some attorneys are venturing into comprehensive financial planning, more or simply offering insurance products where appropriate.  This will be the subject of this blogpost.

Insurance products can take many forms, including annuities, long-term care insurance and life insurance.  Attorneys may act as the agent or simply refer clients to a cooperating agent and receive a share of the insurance premiums. 

In the normal course of estate and elder law planning, attorneys recommend that clients purchase insurance products to help solve estate planning challenges, whether paying for long-term care, protecting assets from estate taxes, or qualifying a spouse for Medicaid coverage of nursing home care.  Often they receive less compensation for their advice and document drafting than insurance agents receive in commissions for the sale of the resulting products — thus the interest of attorneys in receiving a share of this extra income.

Problems can arise, however, if either the attorney is motivated to recommend insurance products by the possibility of receiving a commission instead of its use as a solution for the client or where the attorney is perceived as motivated by the potential commission.  In the latter case, not only would the attorney’s credibility as a trusted advisor be undercut, but the client may be less likely to purchase insurance when it may provide an important benefit.

The easiest solution to these potential or actual conflicts of interest is for attorney to refrain from getting involved in insurance all together.  But this leaves considerable income on the table.  Another solution is to follow strict procedures and to offer products that eliminate or minimize potential conflict.  Attorneys who receive insurance commissions should follow these procedures:

• Provide full written disclosure of their receipt of commissions.
• Offer to work with the client’s choice of broker, even if this means the attorney receives no commission.
• Follow any requirements of the attorney’s state bar.
• Don’t change legal fees based on whether or not the client buys insurance through you.

In terms of products, attorneys can choose to offer only those that have a lower possibility of conflict of interest.  Insurance products may be ranked as follows in ascending order of concern:

• Policy review.  For the attorney to offer to have clients’ existing policies reviewed by a qualified insurance professional adds value to the client with no conflict of interest.  If it turns out that the client due to a change in health, financial circumstances or the changing insurance market can trade in her policy for a better one, the client benefits.  If no better option exists, at least the client has the benefit of receiving this assurance.
• Immediate annuities are often used to shelter assets of spouses of nursing home residents.  This is a relatively straightforward process that is generally managed by the elder law attorney even if purchased through an outside broker.  As long as the client is provided with all available options, it is hard to see where a conflict exists even if no outside broker is used.  In fact, this can mean less work for the attorney who doesn’t have to work through someone unfamiliar with what is needed.
• Long-term care insurance.  While whether to purchase long-term care insurance and which policy to purchase can be a difficult judgment call, there is a large swath of clients who should at least consider the products.  Estate planning attorneys should be recommending this to such clients whether or not they receive a commission.  Since most attorneys will not want to become experts in this field, they are probably better off working out a fee-splitting arrangement with a qualified insurance professional.
• Life insurance can be an important estate and financial planning solution in a number of circumstances, including providing for young children or a non-working spouse, estate tax planning, and funding special needs trusts.  Like long-term care insurance, a potential conflict exists because whether or not to purchase  and the size of the policies can be a judgment call.  In addition, the commissions paid on these policies can be quite substantial, meaning that there is more motivation for the attorney to push the policies.  Attorneys should tread very carefully when venturing into this last potential product area.

The line between estate planning and financial planning is already somewhat porous.  Moving in one direction, financial planners and investment companies already offer estate planning services.  Many attorneys are moving in the opposite direction, beginning to provide financial planning and insurance services.  I believe they can do so without compromising their ethics if they follow the procedures described above and limit themselves to those insurance products that are less conflict-ridden.

A recently released General Accountability Office study discusses the risks seniors face in moving to Continuing Care Retirement Communities (“CCRCs”).

CCRCs provide a continuum care for residents from completely independent living through assisted living and finally nursing home care, if needed.  Almost 2,000 exist throughout the United States, many of which are operated by not-for-profit organizations.

The operate under a variety of financial models, many requiring a substantial entrance fee with monthly payments that stay the same no matter what level of care the resident requires.  Generally all or most of the entrance fee is refundable when the resident moves out or passes away, though some facilities only return the fee if they can fill the resident’s spot.

Other CCRCs simply charge rent, with the fees increasing as the level of care increases.  Finally, many have a hybrid of the two approaches with some sort of buy in at the beginning and fees reflecting the cost of care to some extent.

The GAO report, Continuing Care Retirement Communities Provide Benefits, But Not Without Some Risks, explains that CCRCs are regulated by states and the level and type of regulation around the country varies considerably.

While CCRCs permit seniors to age in place with a pretty fair sense of their future costs, in most instances they are at risk if the facility runs into financial difficulty.  They can lose their entrance deposit, face increasing monthly fees or see a decline in the quality of services provided.  For these reasons, it is very important that before moving to a CCRC that the resident fully investigate its financial stability and history.  A large or increasing vacancy rate can be signs of trouble, since the most CCRCs’ finances depend heavily on a high occupance rate.

To read the GAO report, click here.

Dr. Thomas Perls

I just did the age calculator on Eons.com developed by Dr. Thomas Perls of the New England Centenarian Study at Boston Medical Center.  It says I’ll live to 100, and then gives me a bunch of tips for living to 111, which seems rather unlikely.

But I think it got it wrong on a couple of counts.  First, it asked about the lifespan of my immediate family members and I checked off the box saying that I had at least one family member, my grandmother, who lived past 100.  However, there was no way to indicate that she was an outlier with my other grandparents and my father dying in their 50s, 60s and 70s. 

According to Dr. Perls’ study as reported in The Boston Globe, exceptional longevity has to do with having the right genes, in other words, choosing your parents well.  Exercise, diet and environmental factors can have a significant effect both in how long you will live and how you will enjoy your later years, but they won’t put you in the centenarian clique if you’re not born into.

In my case, I don’t know if I’m a born centenarian because of my mixed heritage in that regard.

In terms of how I could lengthen my life, according to my results, the most important step I could take would be to lower my weight.  The calculator determined that I am overweight, which would surprise anyone who met me.  While it asked my weight, it did not ask for my height, which I would think to be an important related factor.

While the Centenarian study is learning what factors play into living a long, healthy life, my guess is that most people want a combination of long and healthy.  Most of us don’t want to live to 100 if it means many years of ill health or dementia.  But if we can be healthy and aware and enjoy life, we’d love to keep going as long as possible.  We’ll keep looking for the fountain of youth.

We were saddened to read of the death of Dr. Robert N. Butler at age 83 last week.  A fierce advocate for seniors and the founding director of the National Institute on Aging, Dr. Butler coined the term “ageism.” 

In his Pulitzer Prize-winning book, Why Survive? Being Old in America, Dr. Butler argued against putting anyone over age 65 out to pasture.  Practicing what he preached, Dr. Butler was at work until three days before his death.  At his death, Dr. Butler was director of the International Longevity Center – USA.  Unfortunately, his own old age was much too short.

Last year, I interviewed Dr. Butler for ElderLaw Radio and was struck by two points he made.  The first is not news, that we have too few geriatric medicine specialists for today’s seniors, much less for the vast number of baby boomers who will soon be passing the age 65 threshold.  Medical schools need to revamp to meet the needs to the population as it gets older.

Dr. Butler’s second point was more surprising.  I asked him how baby boomers were going to function as seniors, expecting him to say that they would be healthier than their parents and grandparents due to modern medicine and modern lifestyles. 

Instead, Dr. Butler predicted the opposite result.  Due in large part to obesity in America, he predicted a geriatric health crisis in the next couple of decades.  Coupled with low savings rates, he foresaw a gloomy old age for many baby boomers.

Fortunately, he also saw the possibility of change through exercise, better diets, and continued work and other activities.  Each inidvidual American taking control of his or her own future health, he said, could have huge repercussions on the future financial and physical health of the nation as a whole.

Getting this message out would be a fitting legacy for Dr. Butler and his career.

To read more about Dr. Butler, click here.

To read Dr. Butler’s obituary, click here.

Texas billionaire Dan Duncan died in March saving his family billions of dollars in estate taxes by passing away this year, the first year since 1917 when there has been no federal estate tax.

Almost 10 years ago, Congress passed a phase out of the estate tax setting this year as tax free.  While the Republican majority at the time wanted to eliminate the estate tax entirely, it did not have the 60 votes it needed for a permanent repeal.  As a result, the law “sunsets” this year and next year a federal estate tax will apply to all those with taxable estates over $1 million (though there are exceptions, for instance for estates passing to spouses or to charity).

No one believes that there’s any logic to this situation — billionaires die tax free this year, while those who are merely affluent pay rates of up to 55 percent next year.  Everyone thought that long before now Congress would come to agreement on a plan that would re-impose the estate tax for this year and come to a compromise for next year, with most prognosticators predicting a $3.5 million threshold, which was the amount in 2009. 

Unfortunately, there’s seems to be no middle ground on this issue.  There are those — often with large amounts to contribute to political campaign funds – who characterized the estate tax as a “death” tax and have tried to eliminate it entirely.  On the other side are those who feel that the government needs to raise money for its vital functions and that if not from a tax on the estates of those who have most benefited from our system, then it will have to be a higher tax on the income of those struggling to accumulate some savings.  Those on this side also feel that it vital to a democracy to limit the accumulation of vast fortunes, that we need a more level playing field for all.

Personally, I’ve always argued for a middle road — a $2 million threshold, but more graduated rates.  The tax should not start at 45% and then rise quickly to 55%.  It should start lower and rise more gradually, but perhaps ultimately to a higher rate on billion dollar estates.

Senator Sanders of Vermont has proposed a billionaire’s surtax, which goes part way towards what I have in mind.  Click here to read move about his proposal and here to read about Dan Duncan, the Texas billionaire whose heirs seem to have hit the jackpot.

Lawyers in California have brought a class action suit against LegalZoom on behalf of the thousands of California residents who have used LegalZoom to create trust documents.  The name plaintiff in the case had used the on-line service to create a living will in order to avoid probate, but was unable to fund the trust before she died, resulting in considerable estate administration fees.

This case reflects a number of challenges facing the delivery and availability of legal services in the United States.  On the one hand, lawyers are expensive or are perceived to be expensive and out of reach by most consumers.  This is because most lawyering is done on a one-to-one basis by highly-trained individuals, rather than being mass-produced.

Do-it-yourself forms systems, such as LegalZoom, are inexpensive because they are mass-produced, but they do not provide the hands-on assistance many, if not most, consumers of legal services need.  Attorneys, especially those doing estate planning, may be seen as simply producing document from forms, but such documents are simply the finished product of a process that involves the consideration of the client’s situation, needs and goals.  The process generally includes a lot of explaining of the available options and of the functions of each instrument that results.

Until the legal profession develops a lower-cost delivery system for consumers, that still compensates attorneys for their training, experience and expertise, this tension and these lawsuits will continue.

Click here to read an article on the LegalZoom case.