Is the Compact for Long Term Care Right for Florida?

The New York State Bar Association Elder Law Section has proffered an alternative means

of financing long term care that other states are watching very closely as it moves through

the New York State legislature. Last year, Senate Bill S. 3530-C passed the Senate

unanimously. Although the bill died at the end of the legislative session in June 2006, it has

been reintroduced as S. 116 this year. A companion bill is expected to be introduced into

the Assembly and, if a joint bill is approved, it would go to New York's newly elected

Democratic Governor Elliot Spitzer for signature.

The New York State Compact for Long Term Care (the "Compact") is a partnership between

private citizens and the government whereby private citizens pledge a stated amount of

assets to be used for qualified long-term care costs in exchange for a government subsidy

that will cover ongoing long-term care expenses. It attempts to present a fair deal to seniors

and persons with disabilities confronted with the dilemma of how to pay for long term care

costs by allowing them to avoid forced impoverishment (a requirement of the current

Medicaid program). After the pledged amount has been spent, the individual can retain a

certain amount of "protected assets" and a significant portion of his/her income. Individuals

who are found to be "chronically ill" as defined by the Health Insurance Portability and

Accountability Act would be eligible to become participants in the Compact. Medical

eligibility is determined by an independent agency that contracts with an insurer or is

approved by the state.

One of the primary benefits of the Compact is the flexibility it provides in allowing an

individual to use pledged assets and subsidy dollars to pay for any level of care, depending

upon need. Therefore, the individual will be able to choose whether to receive home care,

assisted living or nursing home care, a choice not currently available under the Medicaid

program in most states. In Florida, most people shy away from the home care program

under Medicaid due to financial restrictions and limits on the number of hours of home care

services that one can realistically hope to receive. This forces many people into assisted

living facilities, assuming they can qualify for the Assisted Living Waiver or Diversion Program.

If not, they may be forced into a skilled nursing facility even though their care needs can properly

be met in the home setting.

In order to determine the pledge amount, an independent assessment is performed by a

third party administrator. All assets must be included in determining the pledge amount

unless the asset is specifically excluded. For example, the home is not a countable

resource for purposes of determining an individual's pledge amount. Furthermore, no

recovery is permitted against the home at a later point in time. While this is already true for

Florida residents applying for Medicaid, this is not the case in most other jurisdictions. The

pledge amount is determined by multiplying 36 times the state divisor. In Florida, the

maximum pledge amount would be 36 x $5,000, or $180,000. If an individual possess more

than twice this amount, or more than $360,000, then the maximum pledge would be

$180,000. If the individual had less than $360,000, the amount of the pledge would be one-half

of the countable assets. For example, an individual with $250,000 would be required to

pledge $125,000. An individual can satisfy the pledge amount by purchasing an equivalent

amount of long term happinesslifetime.com care insurance.

Once the pledge amount has been spent on qualified long term care expenses, the

government subsidy covers the ongoing long term care expenses. At that point, the

individual would be responsible for 1) a 10% co-pay (equal to 10% of the cost for such

services), and b) 25% of his/her income. The ability to keep up to 75% of one's income

should allow many individuals to remain in their homes by freeing up income otherwise

payable to the state under the Medicaid program.

The individual benefits from this type of program by guaranteeing preservation of assets

and enhancing the available choice of services and providers. Certain individuals who

could not qualify for long term happinesslifetime.com care insurance would be able to become Compact

participants, filling an important gap in today's long term care system. The government

benefits by shifting the financial burden of the up-front costs for long term care onto the

state resident, receiving income from the participant and a co-pay, both of which will defray

costs once the subsidy begins, and allow providers to receive the Compact rate instead of

the Medicaid rate, an amount equal to up to 10% more than the Medicaid rate.

Since this is a pilot program which has not been implemented as a vehicle for those in

need, we cannot anticipate each and every challenge that may arise when this program is

put into practical use. For now, the Compact seems to offer many advantages over the

Medicaid program as outlined above while simultaneously allowing participants to take

personal responsibility for their long term care costs.. The Florida Bar Elder Law Section

and the Academy of Florida Elder Law Attorneys are taking a close look at the Compact to

determine whether it could represent a viable alternative to financing long term care in

Florida.

Howard S. Krooks, J.D., CELA, is a partner in Elder Law Associates PA, with offices located in Boca Raton, Aventura, West Palm Beach and Weston, Florida. Mr. Krooks is a certified elder law attorney by the National Elder Law Foundation as accredited by the American Bar Association. For more visit them at elderlawassociates.com elderlawassociates.com