By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
Trim, neatly dressed and alert, 72-year-old Casey is babysitting one of her granddaughters, who is in the other room watching television. Casey is not destitute, but she's on a financial slippery slope, having spent close to $33,000 in the previous 23 months on nursing home care for her 80-year-old husband, Cole Casey.
When she talks about what has happened to her husband and to her during that time, she doesn't sound bitter or depressed, just at a bit of a loss as to what to do next.
Neva and Cole Casey retired with a good income, lived a comfortable life, had their home and car paid for, and didn't really owe anybody anything. "We went six years thataway," Neva said.
He had his garden, his tractor. Whatever he grew in the garden, I'd put up. We had a good life for six years."
Then Cole started becoming forgetful and developed a lot of peculiar habits. One day he came home from the barber shop two hours late. "He sat down and said, "I forgot how to get home.'"
It went from bad to worse. He didn't want to go anywhere, and she couldn't go anywhere. He slept a lot during the day and would wander at night. Sitters were hard to find and expensive.
One night Neva woke up and smelled something cooking. She went to the kitchen and found Cole standing at the stove frying dry cat food in a skillet. "I tried to be kind to him as long as I could, but I'd get so vexed with him sometimes," says Neva.
Cole was in and out of hospitals and was variously diagnosed as having Alzheimer's Disease or a related dementia. Either way, there was no apparent cure, and no need for long hospital stays.
Finally, Neva realized he needed to be in a nursing home.
"I just hit a brick wall. I couldn't go forwards or backwards. I called my sons in Trinity [Texas]. I had heard that nursing homes cost so much it was almost impossible, but we did it."
Eventually they sold 18 acres in Trinity and some other lots they owned. Now she's down to what's in her checkbook, her home in Crosby, and a small house in Trinity appraised at $14,000.
"When I saw that my checking account kept going down, down, down.... I just wasn't going to make it if he lived much longer."
The two receive monthly Social Security payments of $646 and $1,350, and he has a pension from Brown & Root for $491 a month. That's a total of $2,400 for the couple. Nursing homes -- and he's been in several -- cost about $2,000 a month.
Since the government goes by the "name-on-the-check" rule, $1,841 is counted toward Cole and $646 is considered Neva's.
That is too much income to qualify Cole for Medicaid assistance for nursing-home care, but Neva will try to qualify if the proposed exempt trust option is approved by federal officials. If trusts are accepted, she could funnel a portion of Cole's income into the trust, lowering his income to below $1,302 to qualify. Upon the death of the covered party, funds in the trust go to the state.
"If we continue this way and can't get on Medicaid or some kind of assistance, which I know he and I both hated, to depend on anybody else or any other source of income, I'd have to sell the house. When that's gone, that's it."
She has toyed with the idea of putting up a tall fence around the back yard and bringing Cole back home if she runs out of money. That way if he wanders, he can't leave the yard. Whatever happens, Neva is accustomed to making adjustments.
"I certainly wasn't prepared. I never thought this is how we'd end up. He worked constantly. There wasn't a lazy bone in his body. And it takes two to run a house, and I was behind him all the way. I put the money where it would do the most good. We didn't have a great deal, but we had a house, and land, a lot here and there.
"Rather than spending money as fast as you get it, we were trying to save it for our old age and not have to worry about anything. Then he starts getting sick."
Her voice trails off. She isn't looking for sympathy, she's just describing what happened. For now, she's unsure that the trust fund will enable her husband to stay in the nursing home where he receives the attention he needs. The trust fund for Medicaid confuses her, even after her lawyer explained it.
"He told me the steps I had to go through. I don't understand any of it," Neva says. "We turned in the income [figures] and are waiting for the approval.
"Again, I'm scared. I don't know if it's going to work or not. But it's our only hope."
2. Catch $31.88
Dorothy Pate, a 71-year-old widow with Parkinson's disease, makes too much money to qualify for Medicaid assistance in Texas. Exactly $31.88 a month too much.
Pate entered a nursing home, Pasadena Care Center, last week. But Texas won't allow her to receive Medicaid help because she makes $1,333.88 per month, a grand total of $31.88 over the income cap of $1,302 per month.
Texas has said no to people like 71-year-old Dorothy Pate for years. It doesn't matter whether itÕs a nickel or a thousand bucks, any amount over the state's income cap of $1,302 per month disqualifies an applicant.
What is particularly cruel in Pate's case is that she never sees the $31.88 that disqualifies her for Medicaid. She receives a Social Security check for $891, after $36.60 is deducted for her Medicare premium. She receives a check from her deceased husband's pension fund for $401.28, after $5 is deducted for withholding tax. Her net income is $1,292.28, which falls below the salary cap.
But it's the gross income Austin looks at, and her gross income is $31.88 over the infernal income cap, even though her net income is $4.72 under the cap. So she misses out on any state or federal assistance to pay for nursing-home care, an expense that easily costs $2,000 per month, not counting prescription drugs.
Pate receives enough income to exceed the cap, but falls far short of earning enough to pay the going private rate at a nursing home.
Other states, including California and New York -- but not Texas -- use a "spend down" approach, assisting with nursing-home payments to varying amounts depending on each citizen's monthly income. But Texas is one of 13 states that have rigid income caps -- applicants who are over the cap don't qualify, end of story.
For Pate, Parkinson's disease has limited the choices for her and her family. The speech problems and physical trembling common to the disease began about a year ago, and from there it has been downhill. Her 52-year-old daughter, Sandra, has severe rheumatoid arthritis and has to walk with a cane. Sandra's husband, 58-year-old Tom Farris, has heart problems and has had bypass surgery. The Pasadena couple both qualify for disabled status for their license plates. They are limited in how much they can help Pate, both physically and financially.
Pate can walk to the bathroom and back, but any greater distance requires a wheelchair. She is mentally aware but often unable to communicate by speaking. When her son-in-law kiddingly said to her "she doesn't look bad for 96," Pate turned to him, smiled and managed to reply, "Silly boy." Sandra says that she understands many of the phrases her mother tries to say, but that it's doubtful a stranger would.
Pate has a healthy appetite, but since she recently fell on the way to the bathroom, she needs regular assistance. She has trouble eating with a knife and fork. She can't use a telephone. With the disabilities her daughter and her son-in-law have, a nursing home was the reasonable route.
Sandra says simply, "I have a handicap and she needs to be taken care of," and adds that it was not an easy choice. More bad news came when she found out she couldn't qualify for Medicaid because of her surplus $31.88.
The Farrises couldn't wait, though, so they placed Pate in a nursing home last week. They say they have enough money for two months or so, but after that it will be a scramble.
A glimmer of good news surfaced when Sandra and Tom were told to talk to Piyi Mayo, a Baytown lawyer who specializes in legal matters related to the elderly -- a new legal field called "elder law." Mayo said there might be a way around the income cap.
"So we called him," Tom Farris said. "And he said, "You're in luck -- something wonderful has just happened.'"
3. Same song, same verse
That "something wonderful" has proven less than wonderful, as a legal attempt to escape the income cap has been lost in the midst of congressional intent, federal bureaucratic inertia and Austin indecision.
Back in August, Congress passed the Omnibus Budget Reconciliation Act. Some of that bill tightened the screws on Medicaid qualification, attempting to save dollars on the federal-state program, but one section seemed to provide an escape from the income cap.
That section, titled "Exempt Trust," seemed to set up an apparatus whereby the elderly could funnel pensions, Social Security and other income into an exempt trust and then qualify for Medicaid assistance for nursing-home care. Upon the death of the individual, the state would receive all amounts remaining in the trust up to an amount equal to the total medical assistance the state had paid for the individual.
The move seemed to be patterned after a Colorado law, which in turn was based on Colorado's Miller v. Ibarra state court decision, which allowed such trusts for elderly persons under guardianship care. The exempt trust mentioned in the federal legislation seemed designed to retrieve those unfortunates who had fallen through the cracks in the 13 states with income caps.
Mayo, the Baytown lawyer known for his work in elder law, thought the same thing. He even drafted a prototype exempt trust proposal and sent it to the Department of Human Services in Austin. Help seemed to be on the way.
What was actually on the way, though, was inertia and indecision.
"They passed the law, but we in Texas are just waiting here," Mayo says. He sees no good reason to mistake Congress's intent.
"That's pretty simplistic. You would think that everybody would know what that was, an attempt to codify or make part of the federal law, this Miller v. Ibarra case, because that's exactly what they did."
Whatever Congress's intent, it appears that the federal Health Care Financing Administration and state Medicaid officials are bogged down in an interpretive quagmire.
Mayo and others anxious to use an exempt trust to get someone under the income gap have been told, more or less, that Austin is waiting for HCFA to come up with regulations before trust funds can be set up. Congress proposes, HCFA disposes.
As for being told to wait for a decision, Mayo has heard that tune played before.
"The last time I heard them say something like that, it took six months to hear from them," Mayo says. "I'd say there's an indefinite delay."
Representatives of the Texas Department of Human Services met with HCFA officials in Washington, D.C. two weeks ago and discussed possible regulations affecting Medicaid eligibility. Mayo and others are worried that HCFA may scotch the deal and virtually prohibit using exempt trusts to slide in under the cap.
So far, HCFA has not sent out any regulations, given the state any guidance or set up a timetable to do so. Dee Church, the person in charge of Medicaid eligibility for long-term care in Texas, refrained from predicting what would happen.
"There were no specifics. They just said they were in the process of reviewing the information," Church says of the meeting in Washington. "We can look at the law and say what it says, and explain what the law says, but as to how they are going to interpret it, that's what we waiting on for their direction on."
Trying to guess what restrictions will be put on the trust - or even whether trusts will be allowed - appears to be all that people outside Washington can do.
Church hedged when discussing what the eventual outcome will be, but admitted that at least one of the HCFA folks "seemed to think congressional intent was to look at these exactly like the Miller trusts are." That would mean the trusts could be used to divert income, come in under the cap and qualify for Medicaid. Church made it clear that in her eyes, Austin is waiting for marching orders from Washington.
Those orders will have to deal with several obstacles. One of them is the federal prohibition against assigning Social Security checks to anyone other than the intended recipient, a rule designed in part to prevent creditors from getting Social Security checks. If HCFA decides that putting the Social Security check in an exempt trust fund is giving it to someone or somewhere else, they could rule it a violation.
Sam Perlin, president of Texans for the Improvement of Nursing Homes, is also concerned about people who retire from large corporations and receive pensions that are protected by the Employment Retirement Income Security Act (ERISA), part of which prohibits pensioners from declining to receive any part of the pension. Strictly interpreted, those two rules could prevent checks from Social Security and large corporate pensions from being used in the proposed trust funds.
Church says that which income is allowed to go where may have a lot to do with how - or whether - the trust proposal works.
Preliminary speculation -- and the preliminary nature of this speculation needs to be emphasized -- is that the federal legislation addresses only the treatment of the exempt trust. It does not address the income before it is actually within the trust.
Says Church, "It gets a little complicated to try to explain, but an example was given to us when [HCFA officials] were trying to explain it to us."
Here goes: Federal benefits (i.e. Social Security) cannot be assigned to someone else, so they would be considered countable income toward the cap. Other forms of income, such as private pension benefits, that are "irrecoverably assigned" to the trust would then fall under the provision for income transfer of assets and would result in a "potential penalty for payment of vendor services."
That means, in English, that if a retiree diverts $400 of her pension so she can get under the income cap, Medicaid would not pay for $400 of the nursing-home bill.
Church says, "A transfer of asset penalty... means we would not pay for the nursing facility services, up to the amount that would be considered as transferred.ÉThere is a potential that if her pension is $400, whatever the facility rate is, we would not pay $400 of that facility rate. She would probably be billed by the facility for that," Church says.
Perlin sees it as a Catch-22 for people who have enough problems already: "They're not ready with the trust fund. They won't let you reduce your income, so where the hell are you?"
4. Get the hell out of Texas, Granny
As bad as it is now and has been lately for financially strapped families in Texas to deal with nursing-home costs, it was much worse not long ago.
Just four years ago, the income cap was $780. Anyone whose income exceeded $780 per month did not qualify for Medicaid.
Perlin remembers his advice during that time to one man who received just over $800: Move to Florida, where the cap was slightly higher. The man did, and has been living ever since in a Florida nursing home.
"Is that what we're going to tell the citizens of Texas, [that] if you need to go to a nursing home, you need to go to another state?" Perlin asked.
Mayo vividly recalls an incident in which he talked to a woman in the Heights some years ago. Her husband had Alzheimer's disease and was in a nursing home.
"She was about $30 over the cap and she asked me what I could do for them," Mayo says. "I said, 'Ma'am, what you can do is take this wonderful house you've lived in and raised your kids in and sell it and pick your husband up and move to a non-income-cap state and you can get him on Medicaid. You'll have money left to buy you a place to live and then you can survive. Otherwise there's nothing that can be done.'
"That's a hell of a thing to have to tell a 68-year-old woman. Paid her taxes all her life, worked hard, raised her damn kids and did everything she was supposed to do, and just because her husband becomes ill with something as horrible as Alzheimer's, we in turn come in and say, 'Sorry, you're going to get screwed, everything you have left in the world is gone.'"
One problem with moving out of Texas is that adjacent states such as Oklahoma and Louisiana have income caps too -- so people must move farther away.
Wherever the destination, there is little quarrel over why Texas had the $780 income cap and why it now limits coverage to those below the federal level of $1,302 per month.
"Texas doesn't want to spend any money," Perlin says. The acceptance of an exempt trust "would make a lot more people eligible and they don't want to spend the money," he says.
That impression is pretty much confirmed by DeAnn Friedholm, Texas's Medicaid director. Staying with that income cap, even though it's now at the federal maximum, says Friedholm, saved Texas money that would have gone to assist medically needy elderly people with their nursing-home expenses.
"Let me tell you, that program, this year, yeah it saves money," she says. "We are spending $1.2 billion for 68,000 people, for nursing-home care. If you wanted to compare that to our welfare program, our AFDC [Aid to Families with Dependent Children], it's $585 million for 800,000 people."
For both programs, 64 percent of the money is federal and 36 percent comes from the state. Because there is no alternative, Medicaid has become the only way that many middle-class people are able to afford nursing-home care.
Friedholm doesn't argue the point that states like New York and California use the medically needy provision and spend much more for Medicaid coverage of nursing-home care.
"Yes, I'm sure New York spends more than us. New York spends more than us on everything. Everything they do is a lot more expensive than what we do," Friedholm said.
Friedholm does stress that however Texas compares to other states, the requirements are more lenient now than years ago.
"Not only have we never had the medically needy (provision), it's only been in the last few years that we've reached the highest level we can. This makes a lot more people eligible for coverage with us by going to the maximum federal cap," Friedholm says.
Mayo doesn't understand the budget considerations, particularly since this exempt trust provision is part of a national budget reconciliation act that, on balance, cut back on Medicaid eligibility.
"This would only pertain to the income cap states. The impact overall to Medicaid might be negligible. I don't know. It wouldn't help people in New York or California, those people are already on Medicaid," Mayo says. "It would help people here."
That motivation seems clear.
"Everybody knew how horrible this was, but not only was it horrible for people in Texas, the elderly ladies I'm talking about, it just wasn't fair. It really depended on what state you lived in whether you ate dog food or not. It just wasn't fair and everybody knew it."
Mayo mentions dog food several times while discussing the ill effects of the income cap rule in Texas. He maintains he has known elderly people who are so broke from paying a spouse's nursing home bill, they eat dog food. Mayo obviously knows his elder law, but he becomes quickly nonspecific when asked for the names of people who actually ate dog food. Hyperbole or no, reasonable people would not doubt that many elderly people cut dietary corners and rely on programs such as Meals on Wheels to provide nutritional support when cash is scarce.
5. Congress writes it in English
If HCFA stalls, one course the state's Dee Church suggests as a possibility is the submission of an exempt trust on an individual basis.
"For the interim purposes if somebody sets up such a trust, we will work with our legal staff and handle them on an individual basis trying to deal with HCFA and get clarification. But generally speaking we don't preapprove trust plans," Church says.
"If someone has a pre-existing instrument, we can tell them how it affects Medicaid, but as to telling people how to set them up, that is generally not something we get into."
Mayo is at the head of the line if that option develops, since thus far he is the only lawyer in the state that has submitted a prototype trust to the Department of Human Services. He said he might go ahead and do the trust and file the medicaid applicaiton.
"Now they'll turn me down and I'll file a request for a fair hearing and 30 days later we'll go do that. That means the state of Texas has one setting there they need to make a decision on, one way or the other."
His plan is force the state to make a decision on a specific case.
ne of the problems at this initial phase is that people don't know their eligibility rights and that even many lawyers aren't clear on what options the elderly have.
"This lady called me yesterday practically crying because she doesn't have any money. All her damn money is going to keep her husband in the nursing home and it's horrible," Mayo says "It's a terrible situation, especially when it looks to me like and to most people who can read English, that Congress, who makes these damn laws, said this is what you can do because we know how horrible this is and we want to fix it."
6. The view from Limbo County
As with most issues that involve money and people, politics may be the determining factor.
HCFA may come out with regulations and Austin may or may not hide behind them, but the U.S. Congress is not out of the picture. The federal rulemeisters at least pay lip service to congressional intent, and if enough elected officials with enough steam apply it in the right places, exempt trusts in income cap states could achieve what Mayo, Perlin and potential beneficiaries hope.
Mayo says, "I'm telling people the best time and money they can spend is to call their congressman, tell their congressmen what a wonderful job they did in passing this law ....but now the Health Care Financing Administration has saw fit...to draw an 'X' across the law they just passed."
"The bottom line is if we get enough people calling HCFA, whether they're going to get the regs out or not, they can make a reversal in midstream and say "Wait a minute, we're getting heat. The congressmen who passed this sucker are calling wanting us to do something about it.'" Mayo says. "I'm hoping if enough phone calls get made, they're going to say, 'Hey, wait we better rethink this thing.'"
Pate's son-in-law, Tom Farris, is irritated because the help he thought was on the way now seems distant or lost.
"As far as we know, it's in a state of limbo. It appears to me, course I'm just a poor country boy, but it looks to me like Congress has said 'Hey, we want to protect these people and here's what we're going to do.' But some agency head...looks at it and says no, we're not going to release the funds. '"
If the trust proposal fails to provide relief for the elderly in the 13 income cap states, the National Academy of Elder Law Attorneys, based in Phoenix, is preparing technical amendments that could be used by Congress to clarify the meaning and intent of the exempt trusts.
"If enough congressmen hear about this crap and realize they made their best shot and HCFA's not going to cooperate with the effort, then it's very easy for them to pass those technical amendments and fix some of these problems," Mayo says.
"I have to be optimistic. You have to realize if this doesn't work, the eight or nine people on my list, and I had another one call me this morning, they die. I can't fix it, it's not like we're going to Plan B."
7. Do nothing, mumble loudly
Perlin has fought the good fight since 1983 when he joined Texans for the Improvement of Nursing Homes, Inc. Now he's the president and mainstay of the group which he operates from his southwest Houston apartment. He isn't about to give up the struggle to help the elderly in need.
Perlin is blunt and quick with a response as to why Texas handles its elderly affairs in such a miserly manner. It's all about money.
The state, where it suits their purpose, says "we're waiting for HCFA." Where it doesn't suit their purpose, they go ahead and make a rule.
The state really doesn't have to wait for HCFA to make the rule, they understand the law and they could make the rule if they wanted to take care of people.
Perlin believes some of this might be a hangover from the Reagan-Bush era, when "HCFA was given specific instructions not to do anything, so everything was dragging."
The heralded arrival of Richard Ladd as chairman of the Department of Health and Human Services hasn't helped.
"The question to Mr. Ladd should be, if these people can't get in a nursing home, where are they going to go?"
Perlin thinks the bean counters have taken over and forgotten about the real lives affected by income caps and eligibility requirements.
"So she's $31 under the cap. The other guy is $44. Another guy is $20 over the cap. Another guy might be $100 over the cap. The point is, if a person is over the cap, what are they supposed to do? We have to talk about people.
"If you're going to talk about 'human services,' then let's talk about people and let's talk about humanity. Let's not talk about damn money all the time. It's bullshit.