HIAA Guide to Long Term Healthcare

ELDER LAW NEWS Issue No. 7 Spring 2002 PUBLISHED QUARTERLY BY: Margaret Madison Phelan P.S. 502 E McLoughlin Blvd Vancouver, Washington 98663-3357 360-696-2069 and 503-243-7810 IN THIS ISSUE... Durable Powers of Attorney Improved By Washington Legislature 1 More Prescription Options 2 What to Keep for How Long 2 What is Community Property? 3 Tips 4 Nursing Home Dilemma 4 New Help in Nursing Home Hunt 4 Wit and Wisdom of "Never" 5 Medical Deduction 5 Joke 5 DURABLE POWERS OF ATTORNEY IMPROVED BY WASHINGTON LEGISLATURE By: Preston Johnson Having trouble with your bank accepting your power of attorney? Relief is now available. On July 22, 2001, technical amendments enacted by the Washington State Legislature enhanced the use of Durable Powers of Attorney while, hopefully, making it easier to control abuses. More changes can be expected over the next few years. Many attorneys and abuse investigators have been concerned about the exploitation situations that sometimes occur when Durable Powers of Attorney are used. The primary advantages of economy, simplicity, and privacy derive from the fact that Durable Powers of Attorney are straightforward documents which are executed and used without court involvement. These characteristics are also the source of the greatest disadvantages: the lack of any supervision or checks and balances. The primary change that affects an agent (attorney-in-fact) acting for a disabled person is an expedited and fairly economical way of requiring banks and financial institutions to honor a Durable Power of Attorney. If an agent signs a properly prepared Affidavit, together with the Power of Attorney, the financial institution is relieved of liability, and must honor the Power of Attorney unless it has reason to believe that the Affidavit is not true or that the individual did not, in fact, sign the Durable Power of Attorney. If the financial institution still refuses to honor the Durable Power of Attorney, the agent can petition the Court to determine if the document is valid and to compel the financial institution to accept it. The Court may also require the bank to pay for the hearing. On the other hand, the financial institution may also bring a suit for instructions as to the validity of a Durable Power of Attorney. Another change allows the maker of a Durable Power of Attorney to nominate in the document someone to act as a reviewer of the agent's acts. While it has been true since our current power of attorney law was passed in the 1970's that the agent has a fiduciary duty to the maker, the changes give some latitude to those who feel harmed by the acts of the agent to obtain redress before more serious harm is done. This summary of the changes in the law is brief and should not be considered legal advice, but is intended to alert you to the changes. We would be glad to consult with you on specific problems relating to your Durable Power of Attorney and to prepare the Affidavit if one is needed.  MORE PRESCRIPTION OPTIONS By: Margaret Madison Phelan In our last newsletter we provided some tips on lowering the costs of prescriptions. Recently Pfizer announced that it is offering some of its most widely used prescriptions for $15 per month. Included are drugs for lowering cholesterol and blood pressure and for treating depression. Seniors enrolled in the program will have access to drugs like Aricept, Zoloft, Viagra and Lipitor. The program begins March 1 and is expected to reach as many as seven million Americans. To qualify, seniors must be enrolled in Medicare and have an annual gross income of less than $18,000 for singles or less than $24,000 for married couples. Recipients can have no other prescription drug coverage. There is no enrollment fee and no limit on the number of drugs a patient can receive. Walmart and CVS have agreed to participate in the program. WHAT TO KEEP FOR HOW LONG By: Margaret Madison Phelan The New Year and Spring often remind us that it's time to get rid of all that clutter. Most of us have piles or boxes filled with "important" papers that we are afraid to throw away. Here are the things to save and suggestions about how long to save them: '¢ Bank statements/canceled checks: Three years if they back up your tax claims. '¢ Birth certificates: Forever. Ditto for marriage certificates, divorce decrees, custody and adoption papers. '¢ Car purchase and maintenance: Keep the purchase order and title; toss other papers. Toss expired warranties and loan papers after payoff. Keep maintenance records '“ you may get a better price for your vehicle if you can show the buyer how well you maintained it. '¢ Contracts: Keep until expired or updated. '¢ Credit cards: Keep statements for three years to back up tax deductions, warranty purchases or buyer protection guarantees. '¢ Frequent-flier programs: Keep only the most recent mileage statement and coupons. '¢ Home purchase and improvement records: Keep until you sell in order to prove how much you have invested in your home. But don't keep receipts for paint jobs or repairs '“ they aren't regarded as improvements for tax purposes. '¢ Insurance papers: Keep life and current home and car policies. Throw out  canceled policies, amendments, bills for premiums paid more than a year ago. '¢ Investment records: Keep confirmations of stock, fund and bond purchases for as long as you own the investment. When you sell, keep the papers with your tax records for at least three years. Save yourself future taxes by keeping a list of dividends you've reinvested each year. Keep latest-month report and year-end statement for funds, brokerage accounts, and money market accounts. '¢ Medical and dental records: Save expense records that back up tax deductions; otherwise, toss after one year. Save vaccination certificates and illness history for children and pets. '¢ Military service: Forever. '¢ Pay stubs: If cumulative totals are shown, keep only the latest stub and the year-ender. '¢ Receipts: For large purchases, save until you sell or discard the item. Toss utility bills more than a year old, unless you're claiming them for taxes. Save charitable contribution receipts with your tax records. '¢ Social Security card: Forever. '¢ Tax returns: Seven years or forever. Toss back-up documents after three years, the normal period for which the IRS may audit returns. But the IRS has six years to challenge a return if it thinks gross income was under-reported by at least 25 percent. There is no time limit for the IRS to challenge a taxpayer for filing a fraudulent return or for not filing. '¢ Wills/trust documents: Keep up-to-date versions after they have been properly revoked. If you have questions, consult your attorney. This article was gleaned from an article written by Julie Tripp, Staff Writer for the Oregonian who compiled the above information from the Internal Revenue Service Publication 552; Teacher's Insurance and Annuity Association/College Retirement Equities Fund. WHAT IS COMMUNITY PROPERTY? By: Preston Johnson In 1869, the Washington Territory established a community property system that is substantially unchanged today. Nine other states have embraced all or parts of this system for designating property ownership. The principal characteristic of community property in the United States is that it arises between married persons by operation of law rather than by their agreement. Separate property is property owned at the time of marriage, inherited by one of the spouses, or gifted to a married individual. Separate property often becomes so co-mingled with community property that it may make it impossible to trace the source. In such instances, all co-mingled funds are treated as community property. Property acquired during marriage is presumed to be community property. The fact that title has been taken in the name of only one of the spouses is usually of little significance. What matters is the source of the funds used to pay the purchase price. In addition, money acquired during marriage is presumed to be community property, including a spouse's earnings. However, if the origin of the money can be shown to be separate property, that presumption is overcome. Spouses who are permanent residents of Washington State can contract between themselves as to the status of property. For over 130 years, these contracts have been used to transfer ownership on the death of one of the spouses without the necessity of probate. In the last 15 years, more creative and complete Community Property Agreements have been used by Washington residents to transfer assets and to save taxes and court costs. There are many options used in creating a Community Property Agreement. Whether you need one, or whether your current one needs to be amended or updated, is a matter that requires careful review and consideration. It should be noted that a federal law, the Employees Retirement Income Security Act (ERISA), preempts the application of community property law with regard to employee benefits, such as 401(k) plans. Rights in government plans are also not determined by state law, but by the specific provisions of the federal laws establishing them. NURSING HOME DILEMMA By: Margaret Madison Phelan Q. The nursing home wants to put side rails on my father's bed because he has fallen several times at night when he uses the bathroom after no one responds to his call button. Does he have to accept the side rails? A. A side rail is a physical constraint and nursing homes cannot use physical constraints for purposes of discipline or convenience. Physical restraints may be used only as a last resort to ensure his physical safety and then only under a physician's order. It sounds like the nursing home may be choosing to use side rails instead of making sure staff responds to call buttons. In other words they are using a physical restraint for the nursing home's convenience and that is not permitted. Q. Is the same true for adult family homes? A. Yes.  TIP: Do you have a living trust? If you do, this is a good time to check the titling of your investments and assets to confirm that they are properly titled in the name of your trust. To do so review the 1099s that you receive. The 1099 should reflect trust ownership. If it does not you should investigate why it has not been retitled and take the necessary steps to retitle ownership. NEW HELP IN NURSING HOME HUNT By: William Hickman Beginning in April, Washington will be one of the first five states in the nation to provide more information to help consumers compare nursing home quality. It was selected as one of the first states to participate in a national pilot project because of its good history of tracking nursing home quality-of-care issues. Families will be able to go online for information such as prevalence of physical restraints, bedsores, weight loss, infections, pain management, declines in daily activity and use of anti-psychotic drugs. Also available will be information on the way a nursing home manages delirium and pain, how it helps patients improve walking skills, and the number of patients who must re-enter a hospital. The information will be available at a federal website where some nursing home inspection data is already available under the heading "Nursing Home Compare" at www.medicare.gov, or from its toll-free telephone number, 1-800-633-4227. Currently consumers must look at a whole lot of information on the federal website and deduce what it means. Under the new system, nursing homes will be rated on 11 performance measures, including staffing ratios, which are not now available. Washington began automating reports on the quality of nursing home care in 1992. It is one of the few states nationally that has three ways of checking on care: (1) annual formal inspections, (2) complaint investigators who check out problems, and (3) quality assurance nurses who go into the care facility between inspections to help identify potential issues. For this reason, as a group, nursing homes in Washington have a higher number of citations than most other states. WIT AND WISDOM OF "NEVER" Never say "Oops" in the operating room. '” Dr. Leo Troy Never kick a fresh cow pie on a hot day. '” Harry S. Truman Never drive through a small Southern town at 100 mph with the local sheriff's 16-year-old daughter on your lap. '” Anonymous member of a chain gang Never ruin an apology with an excuse. '” Kimberly Johnson Never criticize a man until you've walked a mile in his shoes. If he doesn't like what you have to say, it will be OK because you'll be a mile away and have his shoes. Never attribute to malice that which is adequately explained by stupidity. Never let your sense of morals prevent you from doing what is right. '” Salvor Hardin Never try to out-stubborn a cat. '” Lazarus Long Never argue with a fool. He may be doing the same thing. '” From The Anglican Digest MEDICAL DEDUCTIONS By Preston Johnson Medical expenses for qualified long term care are tax deductible. IRC § 213. Qualified long term care is defined in IRC § 7702B as "necessary diagnostic, preventive, therapeutic, curing, treating, mitigating and rehabilitative services, and maintenance and personal care services, which - (A) are required by a chronically-ill individual, and (B) are provided pursuant to a plan of care prescribed by a licensed health care practitioner." A chronically ill individual is a person certified by a licensed health-care provider as being unable to perform two activities of daily living (ADLs) for a period of at least 90 days. ADLs are defined to mean "eating, toileting, transferring, bathing, dressing and continence." The Conference Report notes "It is intended that an individual who is physically able, but has a cognitive impairment such as Alzheimer's disease, or other form of irreversible loss of mental capacity, be treated similarly to a person who is unable to perform at least two activities of daily living." Unreimbursed medical expenses must exceed 7.5 percent of a taxpayer's adjusted gross income before they can be itemized. Qualified long term care services, insurance premiums, and other eligible medical expenses may be aggregated. Except for insulin, expenditures for medicine and drugs are deductible only if prescribed by a physician.  PHELAN LAW OFFICES Who's who: LAW OFFICE PERSONNEL Margaret Madison Phelan Attorney Melinda Spitzer Legal Assistant Teresa Tweed Legal Assistant Cherie Halvorson Legal Secretary Brooke Butigan File Clerk You realize you're getting old when you notice a nice-looking, gray-haired man and realize that he's probably young enough to be your son. NEXT SEMINAR: MAY 16, 2002 5 WAYS TO PAY FOR A LONG TERM CARE NEED Paying for a long term care need in a nursing home or at home can be devastating. Generally it involves much more than simply submitting a claim to Medicare or purchasing a long term care insurance policy. At our seminar we will discuss: 1. What you can expect Medicare to pay for if you have a long term care need; 2. Whether the Veteran's Administration will assist in paying for your long term care need; 3. Considerations as to whether you should buy long term care insurance; and 4. The pros and cons of getting assistance under the Medicaid program if you qualify. Payment issues are important, but not all that must be considered. The seminar will also discuss the basic planning documents that should be in place before a long term care crisis arises.