Aging in America: What Clients and Caregivers Need to Know

Aging in America: What Clients and Caregivers Need to Know Presented at the EmblemHealth Family Caregiving Summit Wednesday, April 30, 2014 PETER J. STRAUSS, ESQ. Epstein Becker & Green, P.C. Distinguished Adjunct Professor of Law 250 Park Avenue New York Law School New York, NY 10177 185 W Broadway (212) 351-4746 New York, NY 10013 pstrauss@ebglaw.comPeter.Strauss@nyls.edu 24843152

THE U.S. – MORE INCAPACITATED OLDER PERSONS and PERSONS WITH DISABILITIES 24843152

THE FAILURE OF MEDICARE MEDICARE is America’s health care program for persons over 65 younger persons with disabilities who are not covered by an employer health insurance plan. When Medicare was enacted in 1965, President Lyndon B. Johnson stated the following prediction of Medicare's benefits for the elderly: "Every citizen will be able, in his productive years when he is earning, to insure himself against the ravages of illness in his old age. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years." 24843152

President Johnson Was Wrong! Because Medicare only pays for acute care and skilled care, persons who suffer from long term, chronic illness do not have their needs met. There is little in current health reform that helps in any meaningful way with respect to financing long term care. It is important to consider purchasing long term care insurance. 24843152

PLANNING AHEAD: TAKE CONTROL! CONSEQUENCES OF FAILURE TO PLAN: COURT IMPOSED SYSTEMS The absence of advance planning results in court intervention and control. The appointment of a guardian will be necessary. This often results in a significant loss of independence and autonomy. Guardianship is an unsatisfactory system of financial and personal management in most cases. The person who may be appointed guardian may not be the person the incapacitated person would choose. This is particularly true with persons who are living together in a loving life partnership. Set up your own property management system to take over in the event you become incapacitated. Execute advance directives for health care decisions. 24843152

POWER OF ATTORNEY The typical power of attorney form is usually very basic. The basic advance planning tool. Durable. Under the common law, powers of attorney were ineffective if the principal became incapacitated. All states now authorize “durable” powers of attorney – powers that are effective even when the maker is incapacitated. Presently Effective. Most powers of attorney are effective and the powers exercisable by the agent at the time of execution. Springing. A “springing” power of attorney becomes effective only when the make becomes incapacitated. New York law default rule is now durable. 24843152

2010: A NEW POWER OF ATTORNEY LAW The new law includes provisions pertaining to: Compensation of an agent. Minimizing fraud and abuse. Allowing principal to name a monitor. General Obligations Law title 15. 24843152

TRUSTS: WHEN and WHY Not just to “avoid probate.” A property management device. May also be used to help dispose of a person’s assets upon death. Can be revocable or irrevocable. Is the most effective asset management device for senior citizens and persons with disabilities. There is greater efficiency and acceptability of a trust within the financial community than a power of attorney. There is greater possibility of avoidance of judicial intervention and control. 24843152

BENEFITS OF A TRUST The trust can be funded at time of creation. The trust becomes the owner of the assets. The trust is most useful when the grantor is ill, lacks expertise, desires to travel or simply wishes to be relieved of administrative tasks. Trust assets are managed, paid and distributed in accordance with the terms of the trust agreement. Important - title of assets must be registered in the name of the trustee, attaching a “schedule” of trust assets is not sufficient. 24843152

THE STANDBY TRUST Ideal for persons who wish to plan for the possibility of future illness or incapacity, but have no present need or desire to relinquish control. The standby trust is created, executed and funded with only a nominal sum. A client simultaneously executes a durable power of attorney containing the power to transfer the client's assets to the standby trust in the event of illness or incapacity. 24843152

MAKING DECISIONS AT THE END OF LIFE The doctrine of informed consent was established by the case of Schloendorff v. Society of New York Hospital, 211 N.Y. 1 25 (1914) where Justice Benjamin Cardozo, then on the New York Court of appeals, wrote: “Every human being of adult years and sound mind has a right to determine what shall be done with his own body; and a surgeon who performs an operation without his patient’s consent commits an assault, for which he is liable in damages.” 24843152

See also Cruzan v. Director, Mo. Dept. of Health, 497 U.S. 261 (1990) “The common-law doctrine of informed consent is viewed as generally encompassing the right of a competent individual to refuse medical treatment” “...the principle that a competent person has a constitutionally protected liberty interest in refusing unwanted medical treatment may be viewed from our prior decisions” This right exists even where the decision to decline treatment will result in death. 24843152

Does the Liberty Interest Right to Refuse Extend to Incapacitated Persons? In general, yes. Matter of Quinlan, 70 N.J. 10 (1976) But, states have the right to limit how that right may be exercised. Cruzan v. Director, Mo. Dept. of Health,supra. Historically, New York has adopted a conservative approach to the right to refuse by requiring clear and convincing evidence of the patient’s wishes before life-sustaining treatment can be withheld or withdrawn. Matter of Storar, 52 N.Y.2d 363 (1980) Eichnerv. Dillon, 73 A.D.2d 431 (1980), modified sub. nom. Matter of Storar, 52 N.Y.2d 363 (1980) Matter of Westchester County Medical Center (O’Connor), 72 N.Y.2d 517 (1988) 24843152

THE LIVING WILL Perhaps better called a “Health Care Declaration.” A document whereby you express your wishes as to the type of care and treatment you would want or refuse. New York does not have a living will statute, but living wills are recognized by case law. Matter of O’Connor, supra Do not believe it if hospital personnel say a living will is not legal in New York! 24843152

Drafting Suggestions My suggestion for health care agents and others: “I emphasize that this directive to forego or discontinue treatment is to be applied when there is no reasonable prospect of recovery to a cognitive life where I can recognize and interact with my loved ones, but that I wish the medical treatments described above to be attempted if there is a reasonable possibility of such recovery in the opinion of my treating physicians. I understand that in such case, treatments may be instituted although later withdrawn if such recovery does not occur.” Avoid using terms such as “terminal condition,” terminal illness,” “death is imminent” or “heroic measures.” 24843152

The Health Care Proxy Public Health Law Article 29CEffective January 18, 1991. Allows a person to designate a surrogate - the health care agent - by executing a health care proxy. A competent adult may appoint a health care agent. (Note the use of the word “competency” rather than “capacity” the more appropriate term used in Article 81 of the Mental Hygiene Law). Every adult is presumed competent “unless …adjudged incompetent or otherwise adjudged not competent to appoint a health care agent, or unless a committee or guardian of the person has been appointed….” (PHL Section 2981). 24843152

The Health Care Proxy (cont…) The agent’s authority to act begins when the attending physician determines that the patient lacks capacity to make health care decisions. (PHL Section 2983). “For a decision to withdraw or withhold life-sustaining treatment, the attending physician who make the determination that a principal lacks capacity to make health care decisions must consult with another physician to confirm such determination” (PHL Section 2983). A health care provider shall comply with health care decisions made by an agent in good faith under a health care proxy to the same extent as if such decisions had been made by the principal, subject to any limitations in the health care proxy and pursuant to the provisions of subdivision five of Section 2983(5) . PHL §2984. 24843152

WHAT IS THE LEVEL OF CAPACITY REQUIRED TO EXECUTE A HEALTH CARE PROXY? Public Health Law Section 2981: “…every adult shall be presumed competent to appoint a health care agent unless such person has been adjudged incompetent….” Do not assume a family member who has been diagnosed with dementia or who has had a stroke cannot sign a Health Care Proxy! “The Health Care Proxy” by Peter J. Strauss, Newsletter of the Alzheimer’s Association, New York Chapter, April 2006 (See supplemental course materials) 24843152

SHOULD YOU SIGN BOTH A LIVING WILL AND A HEALTH CARE PROXY? Yes! The Living Will is clear and convincing evidence of the patient’s wishes. Guides the agent’s decisions Helps the agent deal with guilt. If there is no Health Care Proxy or the agents have died the Living Will stands alone and the patient’s wishes must be followed. 24843152

FHCDA – FAMILY HEALTH CARE DECISIONS ACT On March 16, 2010, Governor Paterson signed Chapter 8 of the Laws of 2010 which was passed by the legislature after 17 years of debate. The Governor said “After nearly twenty years of negotiations, New Yorkers now have the right to make health care decisions on behalf of family members who cannot direct their own care.” Well, almost… The Family Health Care Decisions Act adopts the concept of substituted judgment decision making - existing in all other states - in New York for patients who lack capacity to give informed consent who did not leave clear and convincing instructions or evidence of their wishes or did not execute a health care proxy. 24843152

Key Purposes The FHCDA establishes a system for decisions making in order to provide consent to medical treatment. Allows for decision making at the end of life for withholding or withdrawal of treatment. 24843152

Applicability of FHCDA The law applies to decisions for adult patients who are in general hospitals, residential health care facilities (skilled nursing homes) or hospice. Note: the statute uses the term “hospital” to refer to both types of facilities. FHCDAdoes not apply to persons who have appointed a health care agent who have a guardians appointed under SCPA 1750-b with powers to make life-sustaining treatment or family members who have such powers under 1750-b for whom treatment decisions can be made pursuant to OMH or OMRDD regulations (PHL section 2994-b(3)(c)) 24843152

Who Can Make the Decision -The Surrogate FHCDAsets forth a list of persons, in order of priority, who may act as the surrogate to make decisions for an incapacitated patient. “A guardian authorized to decide about health care pursuant to article 81 of the mental hygiene law” PHL 2994-(d) Note: although not clear, it appears that the guardian should be designated as the surrogate in the order of appointment (see section 25 of Chapter 8, laws of 2010, amending MHL section 81.22). The spouse or domestic partner (as defined in FHCDA) An adult child A parent A brother or sister, or A close friend 24843152

Decisions to Withhold or Withdraw Life-Sustaining Treatment There are two provisions that authorize the surrogate to make decisions about life-sustaining treatment: Life-sustaining treatment can be withdrawn if the treatment “would be an extraordinary burden to the patient” and the attending physician and another physician determine that the patient is terminally ill, i.e., is suffering from an illness or injury that can be expected to cause death within six months whether or not treatment is provided or is permanently unconscious. Life-sustaining treatment can be withdrawn if “the provision of treatment would involve such pain, suffering or other burden that it would reasonably be deemed inhumane or excessively burdensome under the circumstances and the patient has an irreversible or incurable condition, as determined by an attending physician with the independent concurrence of another physician to a reasonable degree of medical certainty and in accordance with accepted medical standards.” PHL2994-d (5) 24843152

ISSUE FOR THE 21ST CENTURY - CAN WE HAVE ALL THE TREATMENT WE WANT? “MEDICAL FUTILITY” While most of us, if asked, would state that we do not want all treatment available if there is no quality of life, others may seek all treatment available because of religious or ethical reasons or a belief that “the cure is around the corner.” Having shifted the focus of power to the patient and establishing the principle that the patient’s wishes are paramount (patient choice), does the patient also have the right to everything medicine and science can offer? Can a physician or hospital refuse to furnish treatment that is considered as “futile?” Is patient choice unlimited? 24843152

New York’s Position on the “MEDICAL FUTILITY” Issue The Surrogate trumps the physician Public Health Law Section 2994 (f)(3) provides: Notwithstanding the provisions of this section or subdivision one of section twenty-nine hundred ninety-four-q of this article, if a surrogate directs the provision of life-sustaining treatment, the denial of which in reasonable medical judgment would be likely to result in the death of the patient, a hospital or individual health care provider that does not wish to provide such treatment shall nonetheless comply with the surrogate's decision pending either transfer of the patient to a willing hospital or individual health care provider, or judicial review in accordance with section twenty-nine hundred ninety-four-r of this article. 24843152

The Texas Approach The physician trumps the family 48 hours' notice must be given to the family and they can participate in the ethics committee consultation process. Family members may consult their own medical experts and lawyer The ethics committee must provide a written report to the family of its decision If the ethics consultation process fails to resolve the dispute, the hospital must try to transfer to another provider physician and institution who are willing to give the treatment requested by the family If after 10 days, no such provider can be found the hospital and physician may unilaterally withhold or withdraw the treatment that has been determined to be futile. The family may appeal to court and ask the judge to grant an extension of time before treatment is withdrawn. An extension is granted if the judge determines that there is a reasonable likelihood of finding a willing provider. If either the family does not seek an extension or the judge fails to grant one, futile treatment may be unilaterally withdrawn by the treatment team with immunity from civil or criminal prosecution. Note: the law was signed into law while George W. Bush was Governor of Texas. There are some pending amendments to the Texas law to provide more rights to the family. Ch. 166, Texas Health & Safety Case, Sec. 166046 24843152

HONORING PATIENT CHOICE Compliance with patient advance directives is an issue Matter of Zornow, 31 Misc. 3d 450, 919 N.Y.S.2d 273 (Sup. Ct. Monroe Co. 2012) “Compliance with Advance Directives: Wrongful Living and Tort Incentives,” Lynch, Fernandez and Sawicki, 8:8 Am. J. Bioethics 33 (2008) “A New Life for Wrongful Living,” by Nadia Sawicki: New York Law School Law Journal,http://nylslawreview.com/201314-volume-58-number-2/ “Dispute Resolution Mechanisms for Intractable Medical Futility Disputes,” by Thaddeus Mason Pope: New York Law School Law Journal http://nylslawreview.com/201314-volume-58-number-2/ 24843152

THE ULTIMATE DILEMMA When Is It Time For The Agent To Implement The Patient’s Wishes? 24843152

Aid in Dying The right to have a physician prescribe terminal medication is not protected by the 14th Amendment to the U.S. Constitution as a liberty interest/privacy right or under the equal protection clause. Washington v. Glucksberg, 521 U.S. 702 (1997) Vacco v. Quill, 521 U.S. 793 (1997) The Montana Supreme Court held in Baxter v. Montana, 224 P.3d 1211 (2009) that it is not criminal for a physician to prescribe terminal medications under the Montana Constitution. 24843152

Aid in Dying Not Considered Suicide “…The mental health community recognizes a clear difference between the act of “suicide” and the choice of a terminally ill patient to bring about a peaceful death.” • Kathryn L. Tucker, “Give me Liberty at My Death: Expanding End of Life Choices in Massachusetts” New York Law School Law Review,http://nylslawreview.com/201314-volume-58-number-2/ “Assisted Suicide” is being replaced by the term “Aid in Dying.” Advocates are moving the debate surrounding the aid in dying options from a legal issue to a professional practice standard discussion. See Tucker article, supra. 24843152

The “Slippery Slope” Debunked “No One Rushing in Oregon To Use a New Suicide Law,” The New York Times, March 15, 1998 Report of Oregon Public Health Division for 2013 Since 1997 1,173 prescriptions written and 752 patients have died from ingesting medication. See: http://public.health.oregon.gov/ProviderPartnerResources/Evaluation Research/DeathwithDignityAct/Documents/year16.pdf 24843152

VSED Voluntary Stopping Eating and Drinking “Exploring the Option of Voluntary Stopping Eating and Drinking within the context of a Suffering Patient’s Request for a Hastened Death,” Judith Schwarz, Ph.D., R.N., Journal of Palliative Medicine, Vol. 10, No. 6 (See supplemental course materials) TERMINAL SEDATION 24843152

Elder Abuse • Physical Abuse • Financial Abuse “The Met Life Study of Elder Financial Abuse: Comes of Occasion, Desperation, and Predation Against America’s Elders” http://metlife.com/mmi/research/elder-financial-abuse.html “Report of the New York State White Collar Crime Task Force,” July 2013 24843152

Medicare 47 Million Americans are enrolled in Medicare 39 million 65 and older 8 million non-elderly with a permanent disability or end stage renal disease Part A – Hospital Coverage (2014) Days 1 – 60 $1,216 deductible no co-insurance Days 61 – 90 $304 per day co-insurance Days 91 – 150 $608 per day co-insurance (lifetime reserve days) Part B – Physician Services (2014) • $147 deductible (2013 was $140) • Higher premiums • Skilled Nursing Home co-insurance (Days 21-100) $152 24843152

2014 MEDICARE PART B PREMIUMS MONTHLY MEDICARE PREMIUMS FOR 2014 The standard Part B premium for 2014 is $104.90. If you are single and filed an individual tax return, or married and filed a joint tax return, the following chart applies to you: 24843152

2014 Medicare Payroll Tax, Part B Premiums, Itemized Deduction Medicare payroll tax will be increased for individuals earning more than $200,000 or married couples earring more than $250,000 from 1.45% to 2.35%. “High income” taxpayers will pay a new tax on unearned income, such as interest income, dividends, annuities, royalties, rent and capital gains. The current medical expense deduction “floor,” was increased to 10% in 2013, but this increase is postponed for taxpayers 65 or older until 2017. 24843152

LIMITED MEDICARE NURSING HOME COVERAGE Provided a beneficiary is admitted to a nursing home within 30 days following a three day hospital stay, beneficiary is allowed a maximum of 100 days of skilled care. The first 20 days of skilled care are fully covered. Days 21 through 100 have a co-insurance payment of $152 (2014) for skilled care. Home care beneficiaries are entitled to by law to up to 35 hours a week for “part time and intermittent” skilled care but in reality get only a few hours a week. GOOD NEWS! Settlement in Jimmo v. Sibelius class action will result in increased benefits by eliminating the Medicare “Improvement Standard.” BAD NEWS: The “observation status” problem 24843152

Medicare Supplemental (“MEDIGAP”) Policies Most Medicare Supplemental Policies will cover only the Medicare deductibles and the co-insurance portion of the Medicare determined reasonable and customary charge. Consider Medicare Supplemental policies that will pay more than the Medicare reasonable charge when your physician does not “accept assignment.” 24843152

Medicare Supplemental (“MEDIGAP”) Policies COMPARISON OF MONTHLY PREMIUMS FOR MEDICARE SUPPLEMENT POLICIES (NEW YORK) 24843152

LONG TERM CARE INSURANCE Long-term care insurance for those who can afford it and for those who can meet medical underwriting criteria may offer a viable option for financing long-term home care and nursing home costs. Long-term care insurance may also be used as an integral part of an overall financial plan which can protect the assets of an impaired senior citizen by financing the costs of nursing home care during the Medicaid period of ineligibility after asset transfers either outright or in trust are made. If you have long-term care insurance you may not need to prematurely divest yourself of your assets and can keep your ownership of assets until it appears that institutionalization is necessary. 24843152

“LIVING BENEFITS” RIDERS “LIFE SETTLEMENTS” (“VIATICAL SETTLEMENTS”) USING YOUR LIFE INSURANCE TO PAY FOR LONG TERM CARE COSTS 24843152

LIVING BENEFITS RIDERS - ALSO KNOWN AS “ACCELERATED BENEFITS” RIDERS You may be able to draw down the face value of your life insurance policy on a discounted basis to pay for long term care. Many insurance companies provide riders allowing for withdrawal of the face value of a policy in the event you: Are terminally ill • Need permanent institutionalization or • Need ongoing care at home 24843152

LIFE SETTLEMENTS (Viatical Settlements ) It may be possible for you to sell your life insurance policy to a private company which will buy the death benefit on a discounted basis The discount will depend on the life expectancy and health of the insured The funds you receive will not be counted as income if you take the benefits because you are a “qualified taxpayer” – meaning you are unable to perform at least 2 “activities of daily living” 24843152

REVERSE MORTGAGES If you are over age 62 you may be able to borrow on the equity in your home without having to repay the loan until you sell your home or die. Interest accumulates. The older you are the more you can borrow. Leading program is HUD’s Home Equity Conversion Program (“HECM”). Loan can be obtained based home values capped at $675,000. The borrower can obtain a loan based on a percentage of the home’s value (no more that $675,000). Private bank “jumbo” reverse mortgages are presently not available. It had been possible to get a reverse mortgage on a cooperative apartment in New York for “jumbo” loans, but HUD does not yet permit this for HECMloans. The FHA recently advised that its policy will not be changed. Recent FHA rules will limit the number of persons eligible for reverse mortgages and the amount of “up front” cash withdrawals. 24843152

LIMITATIONS Former products (“Saver” and “Standard”) have been combined by FHA – borrowers will receive about 15% less • Upfront cash limited to 60% of loan proceeds (some exceptions) • Expensive upfront charges: • 0.5% mortgage insurance premium • 2.5% premium if more than 60% of loan taken in 1st year • Financial assessment – will the borrower be able to pay real estate taxes and insurance • Escrow “set aside” from proceeds may be required 24843152

Certain congregate care facilities may provide long term health care benefits for residents at reasonable costs. CONGREGATE CARE COMMUNITIES 24843152

MEDICAID - THE PAYOR OF LAST RESORT The Medical Assistance program, commonly known as “Medicaid,” was created in 1965 by the same legislation that created the Medicare program. Medicaid is a health insurance program for the poor, providing benefits to persons of limited financial means. To be eligible • You can own no more than $14,550 of “countable’ assets (In most states only $2,000) • Be a resident • Be “medically needy” Certain property is exempt (not countable) in determining an individual's eligibility including • Your home – subject to new caps of the value of equity (up to $814,000) Your home remains exempt so long as you, your spouse, or a minor, blind or disabled child resides there • An automobile • Essential personal property • Funds in qualified deferred compensation plans if you are in payout status 24843152

BASIC ESTATE TAX PLANNING The Federal Lifetime “Exemption” - $5.34 Million in 2014. Annual Exclusion Gifts: $14,000 Gifts for Educational and Medical Purposes. Charitable Gifts. Benefits of Lifetime Gifting. Life Insurance and Life Insurance Trusts: • Three year rule • Irrevocable • Crummey Notices Split Interest Trusts: • QPRT – Qualified Personal Residence Trust • GRAT – Grantor Retained Annuity Trust • GRUT – Grantor Retained Unitrust Power of Discounting: Think LLC! Proceed with care when the client or the client’s spouse is ill! 24843152

REVISION OF NEW YORK ESTATE TAX The New York Legislature at the urging of Governor Cuomo is considering several provisions as part of the budget debate to reform the estate tax Bills being debated propose increasing the N.Y. estate tax exemption to either $3 million or $5 million The Assembly proposal would add-back gifts to the gross estate There is a proposal to impose the estate tax on the entire estate if the taxable estate exceeds 105% of the exclusion (Status as of March 20, 2014) 24843152

Aging in America: What Clients and Caregivers Need to Know