Establishes the New York state compact for long term care and providing certain tax credits

Summary of provisions

The bill adds a new Title 4 to Article 2 of the elder law, the Compact for Long Term Care.

The Compact-which requires a federal waiver to be implemented-provides for an agreement between an individual and the State (thus a "compact") under which an individual voluntarily makes a pledge to pay a certain defined amount, based on resources, for long term care services; in return for which the State agrees to pay the major costs of long term care services the individual needs after the pledge is fulfilled, an amount which works out to just over 90% of the charges for care.

Unlike Medicaid, when an individual fulfills the pledge, there are no claims on resources or income, liens on homes, restrictions on the choice of service providers, or community spouse requirements, and the services menu is broader than under Medicaid. Unlike long term care insurance, an individual who fulfills a pledge cannot be turned down for coverage.

Key provisions of the bill are as follows:

§ 264. Implementation: Requires federal financial participation; further requires that the state provide assurances of quality of services in designing the waiver

§ 265. Selection of Program Management Entity: Establishes a transparent method to select a program manager, which cannot be a state entity or an insurance company offering insurance under the Compact. The program management entity coordinates and manages all aspects of the program and liaises with the Department of Health, individuals, insurance companies, and others to assure appropriate collection and verification of data, collection of payments, verification of assessments, claims tracking, and other similar administrative responsibilities.

§ 266. Participation and Pledge: Establishes the following:

* Compact Participant is an individual who: a) applies for membership in the Compact, b) is a NYS resident, who has resided in the state for at least two years prior to application, c) is assessed as a chronically ill person (HIPAA standards), and d) has voluntarily agreed to fulfill a pledge to pay for qualified long term care services. The pledge amount is either:

- Maximum Pledge Amount, equal to 36 months of payment at the Regional Rate for nursing home services in the region in which the Participant resides at the time of application to the compact; or - Dollar Pledge Amount, which is 50% of countable assets. For a Participant with less than $40,000 in assets, the pledge amount is the amount in excess of $20,000.

In formulating the amount of the contributions, countable Asset and countable income mean the same as under Medicaid, except that spending for Medicare Supplement Insurance policies, and the Medicare drug plan are excluded.

A Participant who fulfills a pledge becomes a "Compact Beneficiary" and is eligible for the compact subsidy. A Participant who fails to fulfill the pledge cannot become a Compact Beneficiary, but doesn't surrender eligibility to apply for Medicaid or eligibility to apply for the Compact subsidy if they later become eligible.

§ 267. Benefits of Participation: A Beneficiary who fulfills the pledge amount:

* RETAINS ASSETS: preserves all remaining resources and receives the compact subsidy for services.

* RETAINS INCOME: retains 75% (protected amount) of income while receiving the compact subsidy.

* PAYS AN ANNUAL PARTICIPATION FEE: of 25% of countable income.

* PAYS 10% CAPPED CO-PAY FOR SERVICES: receives services at a rate no greater than the compact rate, and is not responsible for payment of any amount greater than the difference between the compact rate and the compact subsidy (10%).

* RECEIVES A PUBLIC SUBSIDY FOR SERVICES: is eligible to receive the compact subsidy annually for qualified long term care services from any willing provider selected by the Beneficiary. The total annual amount of the subsidy is capped at the average nursing home institutional rate for the region.

* SURRENDERS NOTHING ELSE: is not required to submit to Medicaid-type resource requirements or limitations, or to recovery of payments made, or imposition of liens on homes.

* BENEFICIARY RECEIVED SERVICES PER PLAN OF CARE: receives quality care services as required through the plan of care.

§ 268. Protected Income.

This section establishes a hardship requirement, allowing the commissioner to waive all or part of the participation fee and the co-pay amounts if the Beneficiary's countable income in any month, after deduction of these items is less than the following protected income amounts:

Beneficiary Amount not less than

Unmarried Beneficiary and Institutional protected amount of Receiving care in an $100, indexed to inflation institutional setting

Receiving care at home Minimum monthly maintenance needs allowance (MMNA: $2,378 per month)

Married and One Institutional protected amount for Beneficiary receiving care Beneficiary, and the MMNA for the in an institutional spouse setting

One is a Beneficiary Twice the MMNA receiving care at home

Both are beneficiaries Institutional protected amount of receiving care in an $100, indexed to inflation for each institutional setting

Both are beneficiaries receiving care at home Twice the MMNA

The hardship cannot last longer than 12 months in any 36 month period.

§ 269. Imposition of lien in certain cases: Nothing prevents imposition of a lien or recovery against property on account of expenses incorrectly paid under the Compact Subsidy.

§ 270. Prohibited Acts: This lays out a series of consumer protections, including prohibiting individuals engaged in the development, marketing, advertising or sale of insurance plans designed to satisfy the pledge amount from giving legal advice, or otherwise engaging in the practice of law, or using or advertising the title of lawyer or attorney at law or accredited representative of the department of health that could cause an individual to believe that the person possesses special professional skills or is authorized to provide advice on matter related to the compact. The purpose of this section is to keep the selling of insurance and legal estate planning and counseling separate.

§ 271. Fraudulent practices:

* Participants: A Participant who engages in fraudulent practices in claiming to have fulfilled a pledge is disqualified from the compact. In addition, making false statements, or helping someone qualify who is not entitled to is a class A misdemeanor.

* Vendors: Submitting false claims or false information in order to obtain greater compensation is a class A misdemeanor.

* The department can impose a lien or recovery against the property of an individual who has committed an act or acts in violation of this section.

§ 271a. Payments and Defaults:

Establishes which entity pays which portion of the payments. In the Beneficiary period, for example, the compact rate is paid to the service provider by the program management entity, and the Beneficiary pays the program management entity the 10% co-pay. A Beneficiary who knowingly defaults on a pledge or a co-payment is disenrolled from the program, and in the case of the co-payment, is liable to the program management entity for the amount of the co-pay. Failure to pay bills due within 90 days results in disenrollment.

§ 272. Appeals: Appeals during the private portion of the program would be handled like other insurance appeals outside the Compact, with Fair Hearing during the subsidy portion.

§ 273. Treatment of assets: The program imposes a five year look back rule on most assets. Of note:

* Homestead. The homestead is treated as in the NYS Partnership Program for long term care run through the State Health Department. However, a homestead purchased within five years period is a countable asset, unless it is a replacement for a homestead sold within a year prior. The difference between the sale price of the old homestead and the purchase price of the new homestead is a countable asset.

* Additional exemptions. The Commissioner, acting on recommendation of the advisory committee, may exempt certain income and resources of an individual and of the individual's spouse from inclusion as a countable asset.

* Additional provisions.

- Annuities: The principal of an annuity is a countable asset if it was purchased within three years of application to the compact; however, the principle is not deemed a countable asset if a level payment schedule has been in force for three years or more prior to the date of application, as long as it has been in permanent payout status for three years prior to that date. - Transfers to Trusts: The value of an asset transferred into an irrevocable trust for less than full consideration within three years prior to enrollment in the Compact program shall be deemed a countable asset. - Pre-Paid Funerals: purchased for self, spouse or children with disabilities are not included as countable assets, if made prior to the date on which the Participant fulfills the Pledge Amount. - Debts: including but not limited to outstanding debt on credit cards, auto payments, mortgages, home equity loans, reverse mortgages, and any other such similar debt instruments are deducted when calculating the total value of countable assets.

§ 274. Special Provisions Regarding Couples: Special rules apply to assets of couples affected by pre- and post-nuptial agreements, or situations in which one spouse is enrolled and the other is not.

§ 275. Advisory Committee:

The Commissioner is required to convene an 11-person advisory committee including: two persons (2) from the Elder Law section of the State Bar Association, including the Chair who shall serve ex officio; two (2) from statewide advocacy groups concerned with senior issues; four (4) from providers of services, including two representing institutional providers of services and two representing non-institutional providers; two (2) from insurers selling long term care insurance in New York State who shall be persons with at least five years experience in the development of long term care insurance products and who are or who shall have been, so far as shall be practicable, in executive positions; and (1) one with at least five (5) years actuarial experience in long term care insurance matters.

§ 277. Requirement for confidentiality: Requires the commissioner to promulgate rules for confidentiality.

§ 278. Education and information: The program management entity, with the Superintendent of Insurance and the Commissioner, will establish an education and outreach program, or coordinate a program with any similar publicly sponsored program.

Justification

Long-term care is so costly that for most people who remain in the system for any length of time impoverishment is inevitable. This result is ruinous to individuals, irrational public policy, and counter-productive: The threat of losing a lifetime's worth of resources leads some individuals to take advantage of such legal devices as Medicaid trusts or the rule of halves, which artificially impoverish them and require the public sector to pay their health :are costs. The irony in this situation is that the state's refusal to address the care costs of individuals prior to impoverishment is resulting in increased reliance on the state to pay for care. In place of this unsustainable situation, the compact offers something new: shared responsibility. The compact is a voluntary agreement between the State and an individual under which the individual pledges to pay a certain amount for long term care, and when the pledge is met, the state pays 90% of the individual's long term care needs, with the individual paying the rest, plus a participation fee.

The state gets a partner in paying for long term care. It pays nothing until the pledge is met--that is, until its partner has met his or her responsibilities. In return, the individual gets to preserve assets and income, gains control of his or her health care, using providers that he or she chooses from a broader menu of services. than under traditional Medicaid. Moreover, an individual who meets a pledge and other criteria cannot be turned down; participation is guaranteed. This measure is a win-win for everyone.

Legislative history

S.116A of 2008 - Referred to Aging, Reported and Committed to Finance S.3530 of 2005 - Referred to Aging, 2006, Passed Senate

Fiscal implications

Millman Actuaries determined that the state will save money under every scenario, from $21 million to $500 million annually.

Effective date

This act shall take effect on the ninetieth day after it shall have become a law.