Hawaii Estate Planning Blog

Update # 2 on Queens v. Koga

The Honolulu Star-Advertiser has featured several stories about Karen Okada, a 95-year-old woman who signed a “Death with Dignity Declaration” and a “Durable Power of Attorney for Health Care Instructions” back in 1998.  Both documents purport to control “in all circumstances.” 

In mid-2012, shortly after Karen was admitted to The Queen’s Medical Center for treatment for pneumonia, the doctors at Queen’s determined that Karen was essentially brain dead, or, in any event, had “permanently” lost the ability to participate in medical treatment decisions.  Accordingly, Queen’s wanted to enforce the provisions of her Death with Dignity Declaration and withdraw the feeding tube that had been surgically placed in Karen’s side more than six months before she was admitted to Queen’s.

On the other hand, Karen’s health-care agent (her brother), in consultation with doctors who are not associated with Queen’s, disagreed with the conclusions reached by the Queen’s physicians.  What Karen’s agent knew, and the Queen’s physicians did not find relevant, was that shortly before she came down with pneumonia, Karen was conscious and able to interact meaningfully with her family and caregivers.  During the time she was at Queen’s, Karen was unresponsive when doctors examined her, but she reportedly smiled at least twice at her adult grandchildren and nodded to her grandson when he asked her whether she was able to breathe freely. 

Although Karen breathes on her own, she has to do so through a tube that was inserted into her windpipe.  At some point in time, her family hopes the tube can be removed, which will enable Karen to eat normally.  In the meantime, Karen has to be fed through a tube that goes through her side and into her stomach.

Because Queen’s policy is to give precedence to an advance health-care directive over a durable power of attorney in all events, and because Queen’s believed that the terms of the directive required removal of Karen’s feeding tube, Queen’s sued Karen’s brother in order to get a court to order that Karen’s feeding tube be removed.

Delays in the court process ultimately caused Queen’s to relent and to allow Karen to be placed in another facility with her feeding tube intact.  As subsequently reported in the Star-Advertiser, Karen’s condition has improved to the point where she can once again interact meaningfully with her family members and caregivers.

In the meantime, Karen and her family experienced a drama that no one would want to repeat.  So what are some steps that you can take to spare yourself and your family from being the characters in a similar story?

If you do not have an advance health-care directive in place, get one.  Make sure your loved ones—including your children over the age of 18—have advance health-care directives too.

Learn all you can about the options that can be written into your advance health-care directive.  These are not “one size fits all” documents.  Your wishes may differ greatly from those of your friends and family members, and the document you sign should express your particular desires.

If you have an advance health-care directive that is more than 5 years old, there is a good chance that it will not accomplish what you think it will.  Review it right away with your legal counsel.  Make any appropriate changes and updates.

If you want to give a trusted family member or friend the power to make health-care decisions for you, make sure the power of attorney meshes well with any other instructions you may want to provide.

Be sure to give your health-care providers your permission to give your medical information to your family members or other trusted decision makers.  Federal and State privacy laws can restrict your doctor from talking with your health-care agent unless you specifically grant that permission.

Review your advance health-care directive periodically—at least once per year—to make sure it accurately states your current wishes.

Make sure you have a mechanism in place for giving you access to your advance health-care directive.  You never know when or where an emergency might occur.  Not all health problems happen in the home, and if you have a crisis situation while you are travelling, you will need a way to make your health-care documents accessible to your caregivers.

Talk with your family about your wishes BEFORE a crisis arises.  Make sure everybody is on the same page.  If your chosen decision makers indicate hesitation about carrying out your wishes, think about naming someone else who will.  Your assurance to your loved ones of how seriously you intend your instructions to be taken will give them the courage to carry them out.

Knowledge is power.  The more you know about advance health-care directives, and the sooner you act on that knowledge, the more likely it will be that your wishes will be carried out in the future.

Is it wrong to plan for Medicaid qualification?

Our law allows qualified individuals to seek governmental assistance in paying for long-term care, and it provides opportunities for individuals to plan ahead and take appropriate steps to meet those qualifications.  Some people are understandably squeamish when it comes to planning for possible qualification for what is often regarded as a “welfare” benefit.  In fact, there was a time when the Medicaid laws prohibited people from planning for Medicaid qualification (the so-called “Granny Goes to Jail” law).  The Medicaid laws also prohibited people from advising others about how to qualify for Medicaid (the so-called “Granny’s Lawyer Goes to Jail” law).  It turns out that nobody went to jail under these laws. 

The U.S. Attorney General declined to prosecute forward-thinking Grannies, and the Federal courts moved quickly to determine that banning lawyers from advising their clients about Medicaid qualification violates the First Amendment to the U.S. Constitution, which guarantees freedom of speech.  These decisions make a great deal of sense, especially in light of how we, as taxpayers and citizens, interact with our government in other contexts. 

For example, everyone knows that it is immoral and illegal to cheat on your income taxes.  But does that mean that any of us has an obligation to pay more taxes than the law requires?  Of course not.  The Internal Revenue Code allows us to take various kinds of deductions when we file our annual income tax returns.  As long as we deduct no more than the law allows, we are engaging in the noble practice of tax avoidance.  However, if someone knowingly takes a tax deduction in an amount or of a kind that the person is not entitled to take, the terminology changes to tax evasion.  For tax avoidance, a person is praised, for tax evasion, a person can be imprisoned. 

In the 1916 U.S. Supreme Court case of Bullen v. Wisconsin, reported at 240 U.S. 625, Justice Oliver Wendell Holmes wrote that “when the law draws a line, a case is on one side of it or the other, and if on the safe side is none the worse legally that a party has availed himself to the full of what the law permits.  When an act is condemned as an evasion, what is meant is that it is on the wrong side of the line.”  Taking economic advantage of what our law allows—staying on the “safe” side of the line—is both legal and moral. 

Justice Louis Brandeis, whose tenure on the U.S. Supreme Court overlapped that of Justice Holmes, famously stated this same principle another way:

I live in Alexandria, Virginia.  Near the Supreme Court chambers is a toll bridge across the Potomac.  When in a rush, I pay the dollar toll and get home early.  However, I usually drive outside the downtown section of the city and cross the Potomac on a free bridge.  If I went over the toll bridge and through the barrier without paying the toll, I would be committing tax evasion.  If, however, I drive the extra mile and drive outside the city of Washington to the free bridge, I am using a legitimate, logical and suitable method of tax avoidance.  For my tax evasion, I should be punished.  For my tax avoidance, I should be commended.  The tragedy of life today is that so few people know that the free bridge even exists.

Knowing the alternatives that are available to you is the essence of wise planning.  You cannot make a choice that you do not know you have.

The rules that govern Medicaid qualification are fairly clear-cut, but they allow for planning opportunities that are not all that obvious.  For some of us, learning about what those opportunities are can make the difference between leaving a modest inheritance to your children and leaving them with nothing.  As long as you follow the Medicaid rules, you can ethically, morally, and legally make a significant difference in your children’s financial future by leaving them what the law allows.  So if paying for long-term care is an issue for your family, learn all you can about Medicaid qualification so you can plan your and family’s financial future wisely.

Tax Breaks Available for Supporting Elderly Parents

It’s that time again – Uncle Sam is knocking on your door and ready to collect taxes. If you have been caring for an elderly parent, you may find that Uncle Sam can actually help with some of those care costs through favorable tax treatment. Depending upon your circumstances, you may be able to claim your parent as a dependent, take a dependency care tax credit, deduct a portion of their medical expenses, or get some combination of these tax breaks.

Forbes offers guidance on whether you might qualify in a recent article “How To Claim Tax Breaks For Supporting Your Parents." If you think you may qualify, consult your accountant or tax professional to maximize your tax savings.

Sadly, caregiving frequently also means managing end-of-life care . . . and the attendant expenses. While it may be difficult to focus on financial matters during these stressful times, tax breaks can help extend available resources. Of course, the first step is to determine which expenses qualify and to what extent. Expenses that frequently apply to people with advanced illness include health insurance premiums not paid through work, deductibles, co-pays, medication, alternative care, medical supplies such as bandages, dental care, Medicare B premiums, lodging while traveling for care, and transportation costs. The IRS has a very detailed list of what is and isn’t deductible in Publication 502. You can refer to this publication for details, as well as to another excellent Forbes article, “Save Money On Taxes At The End Of Life -- How And Why It Matters.”

Taxes can be tricky, so make sure you ask your accountant for tax assistance if you think you may have qualifying expenses. The tax savings will be well worth your time.

Fiscal Cliff Deal’s Effect on Long-Term Care

Congress has averted the “fiscal cliff” for now, but there was one law that fell over the cliff anyway. The Community Living Assistance Services and Supports (CLASS) Act, which was intended to deal with the issue of long-term care for seniors, has been repealed. What did politicians do to address this issue? Not surprisingly, a “commission” was formed.

The CLASS Act and the new commission formed to study the delivery (and financing) of long-term care was the subject of a recent Forbes article titled “Fiscal Cliff Deal Repeals CLASS Act, Creates Long-Term Care Commission.” As summarized in the title of this Forbes article, The American Taxpayer Relief Act or ATRA – does two things in the field of long-term care: first, it officially ends the CLASS Act, and second, it forms a new bipartisan commission to “tackle” the matter.

Is it a good trade-off? For starters, the CLASS Act had already been abandoned by the administration and Congress alike. On the other hand, this new commission might not find an alternative new solution. As the Forbes article notes, the commission is a “political commission” rather than a panel of subject matter experts. The commission has been given a window of six months to conduct its business.

The crisis of long-term care in America is still an important issue, and it’s hard to tell what the future holds for this matter. Now is the time for individuals to take responsibility for their long-term care.  We suggest that you consult your trusted advisors to examine your options.

Update on Queen's v. Koga

The national press has picked up several reports in the Honolulu Star-Advertiser about the plight of Karen Okada.  Karen is a 95-year-old woman who signed a “Death with Dignity Declaration” and a “Durable Power of Attorney for Health Care Instructions” back in 1998.  Both documents purport to control “in all circumstances.” 

The Queen’s Medical Center, where Karen was hospitalized for pneumonia, determined that Karen was essentially brain dead, or, in any event, had “permanently” lost the ability to participate in medical treatment decisions, and that the provisions of her Death with Dignity Declaration required that her feeding tube be withdrawn.

On the other hand, Karen’s health-care agent, in consultation with doctors who are not associated with Queen’s, disagreed with the conclusions reached by the Queen’s physicians.  What the agent knew, and the Queen’s physicians discounted, was that just before she was hospitalized at Queen’s, Karen was conscious and able to interact meaningfully with her family and caregivers.  During the time she was at Queen’s, on the other hand, Karen was for the most part unresponsive when doctors examined her, but her family reported that she smiled at least twice at her adult grandchildren and nodded to her grandson in response to his question of whether she was able to breathe freely.

The policy of Queen’s was to give precedence to an advance health-care directive over a durable power of attorney in all events, and without inquiring into why a person may have signed apparently contradictory documents.  Accordingly, Queen’s took the unusual step of suing Karen’s health-care agent in order to get a court order forcing him to direct Karen’s physicians to remove her feeding tube.

Of course, no one would want to be part of this kind of drama.  So what can you do to make your wishes clearly known so there will be no questions about how to carry them out?

1. If you do not have an advance-health care directive in place, get one.  Make sure your loved ones—including your children over the age of 18—have advance health-care directives too.
2. Learn all you can about the options that can be written into your advance health-care directive.  These are not “one size fits all” documents.  Your wishes may differ greatly from those of your friends and family members, and the document you sign should express your particular desires.
3. If you have an advance health-care directive that is more than 5 years old, there is a good chance that it will not accomplish what you think it will.  Review it right away with your legal counsel.  Make any appropriate changes and updates.
4. If you want to give a trusted family member or friend the power to make health-care decisions for you, make sure the power of attorney meshes well with any other instructions you may want to provide.
5. Be sure to give your health-care providers your permission to give your medical information to your family members or other trusted decision makers.  Federal and State privacy laws can restrict your doctor from talking with your health-care agent unless you specifically grant that permission.
6. Review your advance health-care directive periodically to make sure it accurately states your current wishes.  Once per year is not too often.
7. Make sure you have a mechanism in place for giving you access to your advance health-care directive, no matter when or where an emergency might occur.  Not all health problems happen in the home, and if you have a crisis situation while you are travelling, you will need a way to make your health-care documents accessible to your caregivers.
8. Talk with your family about your wishes BEFORE a crisis arises.  Make sure everybody is on the same page.  If your chosen decision makers indicate hesitation about carrying out your wishes, think about naming someone who will.  Your assurance to your loved ones of how seriously you intend your instructions to be taken will give them the courage to carry them out. 

Knowledge is power.  The more you know about advance health-care directives, and the sooner you act on that knowledge, the more likely it will be that your wishes will be carried out.

In case you were curious about what happened to Karen, her family was successful in gaining her release from Queen’s and placing her in a care home.  Since then, Karen has gained 20 pounds and has regained her ability to interact meaningfully with her family.

Time to Shop Around for Medicare Rx Plans

Hunting season is open! Unfortunately, there’s little sport in this hunt: in Medicare enrollment season, maybe it’s time to hunt down and switch plans.

You may need to draw on your survival skills for this hunt, too. All evidence points to some serious rate increases in Medicare prescription drug plans.

As you likely are aware, October 15 marks the first day of the enrollment period that extends until December 7. Nevertheless, if you haven’t read about the prescription drug increases elsewhere, a recent article in Reuters has reported that the potential increases may affect as many as 80% of all beneficiaries and even generate double digit rate increases for as many as 5.9 million beneficiaries, or 29% of all beneficiaries. Check out the article titled “As Medicare drug premiums soar, it's time to shop around.”

So, what’s the take away? “Shop around,” indeed! Be sure to look beyond the standard big 10 plans, because eight of the top 10 are showing such increases. For instance, under the Humana Wal-Mart Preferred Rx increases will be somewhere between 10%-23% for various beneficiaries.

What you don't know about Medicare can cost you

A recent piece by Amanda Gengler in Money Magazine, which was picked up at the CNNMoney website, illustrates the importance of knowing your status as "inpatient" or "under observation" when you are admitted to a hospital.  It is critical to know your status before you are released because it can make a big difference in how your Medicaid benefits work.

The Money Magazine article chronicles how Laraine Sickels, a retired teacher from Whidbey Island, Washington, who broke her pelvis in three places, and then hospitalized, after she fell at outside friend's home.  She spent four days and five nights in the hospital, where she was classified as "under observation."  She was then released to a nursing home for 10 days of rehabilitation.  Laraine's bill for the rehab was $7,027, none of which was picked up by Medicare.

Had Laraine been classified as "inpatient" while she was in the hospital, Medicare would have paid for up to 20 days in a skilled nursing facility.  However, because of Laraine's "under observation" status, Medicaid paid $0.  The reason Medicare would prefer to see you as under "under observation" is two-fold: the reimbursements to the hospital are lower than for "inpatients," and Medicare is off the hook for any post-hospital nursing home stays.  How can you avoid Laraine's fate?

Be sure to confirm your status while you are still in the hospital.  If you believe you should be considered "inpatient" rather than "under observation," appeal to the hospital's review board to see about changing your status.  This will impact the cost of both post-hospital care and the portion of your hospital stay covered by Medicare.  If you are considered "under observation" while you are in the hospital, Medicare treats your stay similarly to how it treats a doctor's office visit.  In other words, you will have a 20% co-pay (after a $140 deductible).  This can put a nice dent in your wallet if you cannot be reclassified and if you do not have co-insurance. 

Medicare coverage presents a growing minefield of problems for seniors, and it pays to know your rights.  For more information, check here.

 

4 Steps to Prevent Back Pain

Here is some simple, commonsense advice from Focus on the Family:

Do you or a family member suffer from back pain? Four out of five people will be affected by lower back pain at some point in their life. The spectrum of lower back pain can run from the occasional annoying twinge all the way to chronic, devastating and disabling.

The good news is that there are some simple things you can do to reduce your risk of being sidelined with a bad back.

1.	Stay in shape. Exercise, when done properly, can help prevent some of the stiffness, aches and pains that many people accept as normal parts of aging. Some basic exercises for the back muscles can help maintain strength and flexibility. Stretching before beginning a repetitive activity such as raking or shoveling may be helpful as well.
2.	Maintain proper posture.
3.	If you are overweight, lose it. The extra load can put considerable stress on back muscles, day in and day out.
4.	Use proper form and motion when lifting. Place your feet shoulder-width apart, for proper balance. Lift with your legs, never your back, and bend at the knees and hips, not the waist. Avoid twisting your body while lifting, and position the load close to your body.

For more tips on personal health, visit FocusOnTheFamily.com.

Who's on First?

            The humor behind that classic comedy routine comes from the fact that the speakers are using identical terms to mean different things.  Yet they both pretend not to recognize the problem.  The language of estate planning can raise problems for the uninitiated, and the problems may not be funny at all.  The vocabulary of estate planning is very precise, and a seemingly innocuous slip of the tongue can make a world of difference. 

A good example is the term “estate.”  What does it mean?  Does it mean land, as in “real estate,” or what passes by way of my Will, as in “probate estate,” or does it mean what is subjected to “estate” tax after I am gone?  It can mean a wide variety of things, depending on the context and the adjectives that surround it.

Because the word “estate” is central to estate planning, here is a brief glossary of the most common uses of the term.

An “estate” can be land, or just an interest in land.  An example of an interest in land is a life estate.  A life estate gives the owner the right to use the land for the life tenant’s lifetime, but then the estate terminates and the land goes to the remaindermen.

 My probate estate is whatever I own at my death that will pass by way of my Last Will and Testament.  It might include such things as land, bank accounts, cars, and jewelry. 

But wait!  How come an estate tax return covers not only a person’s probate estate, but also things that have nothing to do with the person’s probate estate—like life insurance policies, retirement accounts, jointly-owned assets, and trust assets?  That is because your estate for estate tax purposes includes just about everything you own or control at the moment of your death.  However, with the right estate planning, you can have a lot of control over assets that are NOT included in your estate for estate tax purposes.

For example, assets (sometimes called a trust estate) that you own and control as the trustee of a trust may or may not be part of your taxable estate, just depending on the words in the trust agreement that say what you can do with the trust estate.  Choosing the right words is critical.

You can see how proper estate planning requires careful attention to detail and precise use of language.  For more information about estate planning, check out www.est8planning.com.  You can also gather a variety of helpful legal information at www.hawaiilaw.tv.  You can find a wealth of elder care information at www.generations808.com.

Whistleblower Lawsuit Alleges that Hospice Fraudulently Used as Profit Center

Healthcare lawsuits involving Medicare fraud in connection with elder care are appearing in the news almost daily.  Awareness of these cases is important to each of us as citizens and taxpayers (who usually get left holding the bag), but even more so as family members and loved ones of potential pawns in a dirty financial game.

Kaiser Health News is reporting that a large company called AseraCare, which operates across several states, is accused in a whistleblower lawsuit of actively recruiting and cycling patients through nursing home and hospice services in order to maximize Medicare payouts.

According to allegations in the lawsuit, AseraCare is owned by a company called Golden Living, which provides skilled nursing and other services in addition to hospice care.  Government attorneys claim that AseraCare employees were pressured into recruiting patients eligible for skilled nursing care (provided by Golden Living) for 20 days, during which time Medicare picked up the entire tab.  After 20 days, when the patients would be required to chip in for their care, AseraCare employees would enroll the patients in hospice, where AseraCare continued to be paid in full by Medicare.  AseraCare allegedly referred and re-referred the patients through skilled nursing care, rehabilitative therapy, home health care, and hospice care for as long as Medicare would continue to pay.

Here’s the rub: If you cycle between nursing home regimens and then jump into hospice care as early as possible (but not too early), Medicare will pick up the entire tab and for the maximum amounts.  However, it is alleged that between 48 and 79 percent (depending on the location) of AseraCare hospice patients were being discharged alive.  If this is true, it seems implausible that all of those patients were legitimate candidates for hospice care.  If Medicare determines that services were improperly charged, it will deny payment, leaving the patients and their families to deal with the bills.

For the record, AseraCare denies the allegations and claims that it has at all times adhered to applicable rules for admitting hospice patients.

Check here for more information about estate planning and elder care.