ALI-ABA/NAELA Video Webcast Elder Law Series. Implications of the Deficit Reduction Act of 2005: The Annuity Trap for Mama

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1 PROGRAM ALI-ABA/NAELA Video Webcast Elder Law Series Implications of the Deficit Reduction Act of 2005: The Annuity Trap for Mama Annuities; White Paper Annuities/DRA Promissory Notes Cosponsored with the National Academy of Elder Law Attorneys, Inc. FACULTY PARTICIPANTS FACULTY BIOGRAPHIES STUDY MATERIAL October 5, 2006 Live Webcast TABLE OF CONTENTS Page ix 1. Deficit Reduction Act of Analysis of Changes to Federal Medicaid Laws Under the Deficit Reduction Act of Sections 6011 and 6016: New Medicaid Transfer of Asset Rules Under the Deficit Reduction Act of DRA Implementation Letter to States on Section 6021 (LTC) of the DRA Qualified Long-Term Care Partnerships Under the Deficit Reduction Act of CMS Takes Steps to Improve Coverage and Sustainablity of Care for Dual-Eligible Beneficiaries: New Policies Announced for Long-Term Care Partnerships, Medicaid Transfer of Assets and Improved Coordination of Care 7. DRA Implementation Letter to States on Sections Cover Memo, RE: CMS Announces Policies for Long-Term Care Partnerships, Medicaid Transfer of Assets and Improved Coordination of Care 9. Public Benefits (Other Than Long-Term Care Medicaid) Throw Mama From the Train: The Deficit Reduction Act of 2005 Abandons our Nation s Elders By Michael Gilfix and Bernard A. Krooks xiii xv vii

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3 ALI-ABA/NAELA Video Webcast Elder Law Series Implications of the Deficit Reduction Act of 2005: The Annuity Trap for Mama Annuities; White Paper Annuities/DRA Promissory Notes Cosponsored with the National Academy of Elder Law Attorneys, Inc. October 5, 2006 Live Webcast PROGRAM Thursday, October 5, :00 p.m. Introductory Remarks Charles P. Sabatino Presentation and discussion of topics with Michael A. Flory, Gregory S. French and Ira S. Wiesner. (includes a 15-minute break at midpoint. See schedule on next page.) Topics Include: Past is Prolouge o Pre-DRA Annuity Treatment Transmittal 64 Annuity Requirements o Planning with Annuities before the DRA Balloon Annuities Spousal Annuities (Level Monthly and Level Annual) Disparate treatment among the states o Growth of Abuse/Use/Misuse of Annuities Leads to Stricter DRA Provisions New Provisions of the DRA Basic treatment of annuities under the DRA Application of the DRA to annuities purchased before February 8, 2006 New annuity disclosure requirement Consequence for violation of the disclosure requirement Requirements of annuity beneficiary arrangements under the DRA Consequences for violation of the required beneficiary arrangement Criteria annuities must meet before the purchase of the annuity is not treated as a transfer for less than fair market value Reconciling the annuity transfer provisions with the annuity beneficiary requirements Treatment of annuities purchased by the community spouse Treatment of annuities purchased for less than fair market value in eligibility determinations Treatment of annuities that meet the transfer requirements, regarding penalties for transfer or income stream Help Mama (and Papa): Practical Application of the New DRA Rules Conventional use of annuity by community spouse Use of annuity by institutional spouse ix

4 Reverse half-a-loaf with annuities What to do with a bad annuity Treatment of qualified annuities and tax considerations Precautions about changes to pre-dra annuities Annuity s Twin Sister: Promissory Notes Promissory notes under Pre-DRA rules DRA Promissory requirements to avoid penalties Practical use of promissory notes in practice Differences between promissory notes and annuities NAELA S Annuity Policy White Paper Overview of NAELA Annuity Policy White Paper Rise in popularity in annuities as population ages Public Policy concerns about annuity sales and suitability Questions and Answers 5:15 p.m. Adjournment x

5 PROGRAM SCHEDULE Eastern Central Mountain Pacific & Arizona Alaska Hawaii Webcast Begins 2:00 p.m. 1:00 p.m. 12:00 noon 11:00 a.m. 10:00 a.m. 8:00 a.m. Intermission 1 (15 mins.) 3:30 p.m. 2:30 p.m. 1:30 p.m. 12:30 p.m. 11:30 a.m. 9:30 a.m. Webcast Resumes 3:45 p.m. 2:45 p.m. 1:45 p.m. 12:45 p.m. 11:45 a.m. 9:45 a.m. Questions & Answers 4:45 p.m. 3:45 p.m. 2:45 p.m. 1:45 p.m. 12:45 p.m. 10:45 a.m. Adjournment 5:15 p.m. 4:15 p.m. 3:15 p.m. 2:15 p.m. 1:15 p.m. 11:15 a.m. If you have questions for the faculty, refer to the instructions in the supplementary materials. 1 Subject to minor adjustment. SCOPE AND PURPOSE The Deficit Reduction Act adds new requirements with respect to the purchase of annuities and promissory notes, as well as certain other transactions involving them. These provisions include the requirement to disclose information regarding an interest in an annuity, the requirement to name the State as a remainder beneficiary in certain annuities, and provision for the treatment of the purchase of certain annuities as a transfer for less than fair market value. This seminar will explore the usefulness of annuities and promissory notes under the DRA as interpreted by the federal agency that administers Medicaid. Alternate interpretations of the DRA will also be presented, along with tips as to when and how to include annuities and promissory notes when planning for long-term care. Suggested Prerequisite: Limited experience in legal practice in subject matter Level of Instruction: Intermediate Educational Objectives: Provision of information on recent legal developments; maintenance of professional competence as a practitioner. Total hours of instruction: 3.0 (60-minute) hours; 3.6 (50-minute) hours xi

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7 ALI-ABA/NAELA Video Webcast Elder Law Series Implications of the Deficit Reduction Act of 2005: The Annuity Trap for Mama Annuities; White Paper Annuities/DRA Promissory Notes Cosponsored with the National Academy of Elder Law Attorneys, Inc. October 5, 2006 Live Webcast PLANNING CHAIR Charles P. Sabatino, Esquire Director ABA Commission on Law and Aging 740 Fifteenth Street, N.W. Washington, DC FACULTY Michael A. Flory, Esquire Flory & Associates, PLLC 2390 Woodlake Dr Ste 380 Okemos, MI Ira S. Wiesner, Esquire Wiesner Law Office nd St Ste 870 Sarasota, FL Gregory S. French, Esquire Law Offices of Gregory S. French 1244 Paddock Hills Ave Cincinnati, OH xiii

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9 Planning Chair FACULTY BIOGRAPHIES Charles P. Sabatino, Washington, DC Director ABA Commission on Law and Aging Director of the American Bar Association s Commission on Law and Aging, where since 1984 he has managed research, policy analysis, project development, and education, focusing primarily on health and long-term care issues. Mr. Sabatino also serves as a part-time adjunct professor at Georgetown University Law Center where he teaches a course in law and aging. In addition, he is a Past-President and a Fellow of the National Academy of Elder Law Attorneys and currently serves as Chair of their Public Policy Committee. Mr. Sabatino received his J.D. from Georgetown University Law Center and is a member of the District of Columbia and Virginia bars. Faculty Michael A. Flory, Okemos, Michigan Flory & Associates, PLLC Flory & Associates, PLLC was founded by East Lansing attorney Michael A. Flory, a Michigan native born and raised in southwest part of the state. At the age of 13, Mike lost his father. In the same year his father s corporation was named number 55 on the Michigan 100 list of fastest growing companies. The estate was sent to the probate court where it stayed for nearly five years, until the company went bankrupt. Mike s long ordeal with the probate system led to a career in the law, helping families avoid what he went through. As the firm developed and grew, it expanded to assist the elderly with the common legal problems faced during retirement and the complicated issues surrounding long-term care and nursing home planning. As a champion for the elderly and the disabled, the elder law advocacy has coupled with estate planning to be a primary focus of the firm. Attorney Flory s work also extends to the public policy arena where he continues to advocate for the elderly. As a political activist for nearly twenty years, he continues to be an elder law advocate speaking out on issues of public importance both locally and nationally. He is a member of the National Academy of Elder Law Attorneys and serves on their Public Policy Committee, which makes policy recommendations to the U.S. Congress and other governmental agencies. Gregory S. French, Cincinnati, Ohio xv

10 Gregory S. French, Cincinnati, Ohio Law Offices of Gregory S. French CELA, has helped older and disabled persons and their families with retirement, estate, disability, and long-term care planning and problem solving for 30 years. He has been designated a Certified Elder Law Attorney (CELA) by the National Elder Law Foundation. He is a NAELA Fellow and served on the National Elder Law Foundation s Board of Certification when it developed its ABA accredited certification program. Mr. French is a member of the NAELA Board. He currently chairs NAELA s Professionalism and Ethics Committee and serves on the Medicaid Strategy Task Force of the Public Policy Committee. Mr. French helped found and chaired the Ohio State Bar Association s Elder Law Committee, served on its Special Committee on Specialization, and is a member of its Council of Delegates. He served on the committee that drafted Ohio s original model advance directives and on the blue ribbon committee to implement the recommendations of the Ohio Legal Needs Study. Mr. French founded the Cincinnati Bar Association s Elder Law Committee and served as its chair for four years. He also has served on the Bar Association s Ethics Committee, the Board of Trustees Community Services Committee, and the Estate Planning and Probate Committee. Through a polling process conducted by Law & Politics, Mr. French has been selected by his peers as an Ohio Super Lawyer. He also has been awarded the Paul Lichterman Award for Outstanding Achievement in Legal Services for Older Americans, presented for enduring contributions to the fields of law and aging. Ira S. Wiesner, Sarasota, Florida Wiesner Law Office CELA, is a nationally recognized elder law attorney and founder of Advocates in Aging, a multidimensional elder law firm in Sarasota, Florida. Ira is Licensed in Florida and New York./ He received his LL.M. Master of Laws in taxation from the University of South Florida. He is former President of the National Academy of Elder Law Attorneys as well as Past Chair of the Elder Law Section of the Florida Bar. Ira is Board Certified as a Specialist in Taxation as well as Elder Law. He is a Fellow of the National Academy of Elder Law Attorneys as well as of the American College of Trust and Estate Counsel. He is a past member of the Florida State Long Term Care Ombudsman and frequent lecturer, consultant and resource on issues of long term care financing and aging. xvi