§ 10:49-14.4 Recoveries involving a county welfare agency (CWA)

		(a) The purpose of this section is to define areas of responsibility and establish basic principles and procedures in those collection activities in which the Division of Medical Assistance and Health Services (DMAHS), the Division of Family Development (DFD) and/or a county welfare agency (CWA) may be involved. It is intended that maximum conservation of public funds be effected without duplication of effort. It is recognized that certain situations may fall into more than one of the following categories. Any such matter will be processed in accordance with the provisions of the first occurring applicable category.

		(b) The following pertain to incorrectly granted assistance (cash and/or medical assistance):

		1. In instances involving incorrect eligibility for medical assistance, whether or not in combination with cash assistance, the CWA shall determine the period(s) of ineligibility and ascertain from DMAHS the amount of medical assistance incorrectly granted. The CWA shall then attempt recovery of medical assistance incorrectly granted either by administrative collection, or by way of restitution in a criminal or disorderly persons proceeding.

		i. Recoveries or attempts at recoveries can be made from those persons specified in N.J.S.A. 30:4D-7i.

		2. When recovery cannot be obtained by these methods in a case generated by the Internal Revenue Service (IRS) unearned income component of the Income and Eligibility Verification System (IEVS), the case shall be referred by the CWA to DMAHS for possible initiation of recovery proceedings.

		3. When, in any other case not generated by IEVS, recovery cannot be obtained by these methods, the CWA is authorized, after securing DMAHS approval, to initiate recovery proceedings as DMAHS' agent. If the CWA does not initiate such recovery proceedings, it shall refer the case to DMAHS for possible initiation of recovery proceedings.

		4. When collection occurs in a case involving both cash assistance and medical assistance, the CWA shall, in the absence of court instruction to the contrary, apply the proceeds to the repayment of cash assistance and the reimbursement of DMAHS for medical assistance. The reimbursement shall be made payable to the Treasurer, State of New Jersey, which shall then reimburse the CWA in the amount of 25 percent of the gross recovery on a periodic basis to be determined by DMAHS.

		5. When a CWA recovers only for medical assistance improperly granted, the CWA shall remit the proceeds to DMAHS. The reimbursement shall be made payable to the Treasurer, State of New Jersey, who will then reimburse the CWA in the amount of 25 percent of the gross recovery on a periodic basis to be determined by DMAHS.

		6. When any CWA action, whether alone or in combination with DMAHS, results in a recovery of improperly granted medical assistance from a case generated by the Internal Revenue Service (IRS) unearned income component of the IEVS match, all funds recovered shall be remitted to DMAHS payable to the Treasurer, State of New Jersey, which shall then reimburse the CWA in the amount of 25 percent of the gross recovery on a periodic basis to be determined by DMAHS.

		(c) The following pertain to third-party liability claims in tort actions:

		1. Whenever either a CWA or DMAHS learns of a situation in any case in which the other may have a claim, it will notify the other.

		2. Unless the individual case circumstances intervene, the first claim after settlement or judgment is for any payments by New Jersey Medicaid or NJ FamilyCare program arising from the occurrence, notwithstanding any CWA claim for recovery of cash assistance. The next claim is that which the CWA may assert in accordance with an agreement to repay or similar document. The DMAHS and the CWA will, insofar as their controls allow, maintain priority of payment in the above order.

		(d) The following pertain to liquidation of potential resources:

		1. The CWA will participate in the liquidation of potential resources according to the Program requirements under which eligibility has been established, regardless of whether cash assistance is being granted. Notification of the potential resource to be liquidated shall be forwarded to DHSS, enabling it to seek a voluntary contribution. Sale of real property to which title is held by a CWA is subject to DFD approval in all instances regardless of the proposed distribution of the proceeds.

		2. All funds arising from the liquidation of resources and which, by action of law, regulation, or agreement with the owner, fall under the jurisdiction of either a CWA or DHSS for distribution will, insofar as possible, be allocated as follows:

		i. Proceeds will be first applied to the cash costs of liquidation, such as advertising costs and filing fees, but not including costs, such as CWA staff time, supplies, counsel fees or overhead.

		ii. Proceeds will be next applied to any claims superior to that of the CWA (for example, taxes).

		iii. Proceeds will be next applied to any funds owing to and collectible by the CWA.

		iv. Any residue remaining after the above payments are allocated would, in the absence of circumstances to the contrary, be the property of the client and thereby subject to (d)3 below.

		3. All funds properly belonging to a beneficiary free of any agency claim are to be remitted to the beneficiary as promptly as possible or otherwise disbursed at the beneficiary's instruction. The CWA will promptly reevaluate eligibility following such distribution, taking into consideration any voluntary repayment to the New Jersey Medicaid or NJ FamilyCare program.

		(e) The following pertains to recovery from estates of deceased beneficiaries:

		1. The CWA shall normally undertake recovery activity as agent for DMAHS in any case in which the CWA is or will be undertaking activities on its own account. However, in those cases where the recovery of medical assistance is possible and where the entire CWA claim is for burial expenses only, DMAHS shall initiate recovery activity inclusive of CWA burial costs. DMAHS may, in certain cases, assume direct jurisdiction in recovery of its claim concurrent with CWA activity. DMAHS shall make the CWA aware of its activity in such cases.

		2. CWA recoveries and distribution shall be in accord with the following procedures:

		i. From the proceeds of liquidation, the CWA shall first recover the amount necessary to satisfy its own claim, including costs of liquidation and the claims of other New Jersey CWAs. The CWA shall recover funds from the clearing account in the order in which the funds were received in the clearing account. If any part of any remaining surplus has been received from the proceeds of assigned life insurance for which there was a named beneficiary other than the client's estate, that surplus or the policy benefit, whichever is less, is the property of the beneficiary and should be so directed.

		ii. All other surplus funds are part of (or the entire) the client's estate and are payable to the legally designated representative of the estate. If the representative of the estate is unknown or if no representative has been appointed and there are no known next of kin, the CWA shall forward to the DMAHS an amount not to exceed the amount of the proper medical assistance claim as determined by communication with the Administrator, Bureau of Administrative Control, DMAHS. Any remaining funds will escheat to the State of New Jersey.

		iii. When there are known next of kin, the CWA shall request the next of kin to take appropriate legal action to be appointed administrator if the amount to be disbursed is greater than the claim of the New Jersey Medicaid or NJ FamilyCare program. If the claim of the New Jersey Medicaid or NJ FamilyCare program will equal or exceed the estate, the CWA shall request the next of kin to sign a consent to transfer his or her rights to the New Jersey Medicaid or NJ FamilyCare program and, upon receipt of such signed consent, the CWA shall forward the funds to DMAHS.

		iv. When the next of kin will not sign a consent to transfer his or her right to the Medicaid Agent and DMAHS and will not file to become the administrator, the CWA may, at its option, arrange for someone to file to become administrator or the CWA may refer the information to DMAHS for action.

		v. In any questions or dispute among two or more claimants on surplus funds, the CWA shall withhold payment pending resolution by mutual consent of all claimants or by court order.

		3. The Medicaid Agent or DMAHS recoveries and distribution shall be in accordance with the following procedures:

		i. DMAHS shall undertake recovery activity in medical assistance payment cases in which no CWA shall be submitting a claim. However, should information from the CWA be necessary to such DMAHS activity, the CWA shall communicate with DMAHS, supplying such material as may be required.

		ii. In cases in which DMAHS is acting for a CWA in collection of burial expenses, DMAHS shall accord payment of the burial claim priority over its own recovery.

		(f) The CWA may at any time accept an offer of voluntary repayment, either on its own behalf or on behalf of the New Jersey Medicaid or NJ FamilyCare program, up to but not in excess of the amount of assistance granted. To any inquiry as to amount granted, the CWA shall supply the appropriate information, identifying the respective amounts granted by the CWA and the Medicaid Agent or DMAHS. In the absence of instruction from the payer, the CWA will reimburse cash assistance first and then remit any balance to DHSS.

		1. Compromise settlements of medical assistance are subject to DHSS approval.

		(g) Regarding compromise settlements:

		1. Compromise settlements of cash assistance are subject to DFD approval.

		2. Compromise settlements of medical assistance are subject to DMAHS approval.

		(h) This section shall apply to all pending and future recovery cases, except that:

		1. The 25 percent incentive payments provided for in (b)4 and 5 above shall apply to all non-IEVS incorrect payment recoveries received by the CWA on or after July 1, 1993.

		2. Paragraph (b)6 above applies to all IEVS-related recoveries received on or after July 1, 1989 by either DMAHS or the CWA, whichever agency is handling the recovery.

		HISTORY:

		Amended by R.1995, d.105, effective June 19, 1995.

		See: 26 N.J.R. 3348(a), 27 N.J.R. 2466(a).

		Amended by R.1997 d.354, effective September 2, 1997.

		See: 29 N.J.R. 2512(a), 29 N.J.R. 3856(a).

		In (a), amended and deleted Division references and substituted "New Jersey Medicaid program" and "Medicaid Agent" for "DMAHS" throughout; and added (f)1.

		Amended by R.1998 d.154, effective February 27, 1998 (operative March 1, 1998; to expire August 31, 1998).

		See: 30 N.J.R. 1060(a).

		In (c), (d), (e) and (f), inserted references to NJ KidCare throughout; in (e)2iv, inserted a second reference to DMAHS; and in (e)3 and (f), inserted references to DMAHS.

		Adopted concurrent proposal, R.1998 d.487, effective August 28, 1998.

		See: 30 N.J.R. 1060(a), 30 N.J.R. 3519(a).

		Readopted the provisions of R.1998 d.154 with changes, effective September 21, 1998.

		Amended by R.2003 d.82, effective February 18, 2003.

		See: 34 N.J.R. 2650(a), 35 N.J.R. 1118(a).

		Rewrote the section.

		Amended by R.2008 d.230, effective August 4, 2008.

		See: 40 N.J.R. 984(a), 40 N.J.R. 4531(a).

		Section was "Recoveries involving county board of social services (CBOSS)". Substituted "CWA" for "county board of social services (CBOSS)" throughout; in (a), substituted "welfare agency (CWA)" for "board of social services (CBOSS)"; in (b)3, inserted a comma following "When", "authorized" and "approval"; in the introductory paragraph of (c), substituted "third-party" for "third party"; in (c)2, inserted a comma following "occurrence" and substituted "CWA" for "(CBOSS)"; in (d)2i, inserted a comma following the first occurrence of "fees" and the second occurrence of "costs"; in the introductory paragraph of (e)2, substituted "CWA" for "County board of social services (CBOSS)"; and in (e)2i, substituted "CWAs" for "county board of social services (CBOSS)s".

§ 10:49-14.3 Authority to adjust, compromise, settle or waive claims, liens, and certificates of debt

		(a) The Commissioner, Department of Human Services; Director, Division of Medical Assistance and Health Services; Assistant Director, Office of Program Integrity Administration; and the Commissioner or Deputy Commissioner, Department of Health and Senior Services, or anyone serving in an acting capacity in any of those positions shall have the authority to adjust, compromise, settle or waive any claim, lien or certificate of debt arising under this Act (N.J.S.A. 30:4D-1 et seq.), and to execute an appropriate release or document of discharge with respect to that claim, lien or certificate of debt.

		(b) Such authority may be exercised by other officials only in the following limited circumstances:

		1. The Administrator, Bureau of Administrative Control may compromise, settle or waive any claim or lien not arising under N.J.S.A. 30:4D-7(h) within the dollar limits specified by the Director, Division of Medical Assistance and Health Services; and

		2. The Fiscal Agent may compromise, settle or waive claims arising under N.J.S.A. 30:4D-7(h) within the dollar limits specified by the Director, Division of Medical Assistance and Health Services.

		HISTORY:

		Amended by R.1997 d.354, effective September 2, 1997.

		See: 29 New Jersey Register 2512(a), 29 New Jersey Register 3856(a).

		In (a), amended Office reference and added reference to Commissioner and Deputy Commissioner of Department of Health and Senior Services.

		Amended by R.1998 d.154, effective February 27, 1998 (operative March 1, 1998; to expire August 31, 1998).

		See: 30 New Jersey Register 1060(a).

		Substituted a reference to the Office of Program Integrity Administration for a reference to the Office of Quality Management and Program Integrity.

		Adopted concurrent proposal, R.1998 d.487, effective August 28, 1998.

		See: 30 New Jersey Register 1060(a), 30 New Jersey Register 3519(a).

		Readopted the provisions of R.1998 d.154 without change.

		§ 10:49-14.2 Sanctions--Special Status Program

		(a) The "Special Status Program" either restricts the Medicaid or NJ FamilyCare beneficiary(s) listed on the HBID Card to a single provider, except in a medical emergency, or warns providers that the beneficiary's card has been used by an unauthorized person or persons, or for an unauthorized purpose. If a warning letter is issued to a beneficiary, a message will be included in the eligibility message on the REVS/MEVS/eMEVS system alerting the provider to ask the Medicaid or NJ FamilyCare beneficiary for additional identification or to take other appropriate action.

		1. The restriction is issued to Medicaid or NJ FamilyCare beneficiaries determined to have misused, abused or overutilized their Medicaid or NJ FamilyCare benefits. Overutilization occurs when a beneficiary has utilized Medicaid or NJ FamilyCare services or items at a frequency or amount that is not medically necessary. Examples of misuse or abuse include, but are not limited to, medically harmful or inappropriate use of different drugs or provider services, obtaining or attempting to obtain early refills of prescriptions in violation of 10:51-1.19(a)5, at more than one pharmacy, and forgery or alteration of prescriptions. A determination that there has been misuse, abuse or overutilization of benefits obtained by use of an HBID Card shall create a presumption that the beneficiary listed on the HBID Card, or a person responsible for a minor listed on the HBID Card, was responsible for such actions. If this presumption is successfully rebutted by or on behalf of the Medicaid or NJ FamilyCare beneficiary, he or she shall not be enrolled in the Special Status Program.

		i. A beneficiary shall be permitted to change the designated provider upon demonstration of good cause and the Division may grant the request.

		ii. The Division may change the provider to which the beneficiary is restricted if a pattern of continued misuse, abuse or overutilization by the beneficiary is evident, or if it is determined that the provider has engaged in fraud or abuse, or if the Division determines that such a change is in the best interest of the beneficiary and/or the programs it administers in whole or part.

		iii. The beneficiary may request a contested case hearing in the following situations:

		(1) If the beneficiary objects to being included in the special status program;

		(2) If the beneficiary requests a change and the request is denied;

		(3) If the agency causes undue delay in responding to the beneficiary's request for change.

		2. The warning letter is issued to Medicaid or NJ FamilyCare beneficiaries determined to have had their HBID Card used by an unauthorized person or persons, or for an unauthorized purpose. The purpose of the warning is to notify providers that the beneficiary's HBID Card has been used by an unauthorized person or persons, or for an unauthorized purpose. A message will be available on the REVS/MEVS/eMEVS system alerting the provider to ask the Medicaid or NJ FamilyCare beneficiary for additional identification or to take other appropriate action. A determination that an HBID Card has been used by an unauthorized person or for an unauthorized purpose shall create a presumption that the beneficiary listed on the HBID Card, or a person responsible for a minor listed on the HBID Card, was responsible for such actions. If this presumption is successfully rebutted by the beneficiary, the beneficiary shall not be issued a warning letter.

		HISTORY:

		Amended by R.1997 d.354, effective September 2, 1997.

		See: 29 N.J.R. 2512(a), 29 N.J.R. 3856(a).

		Substituted reference to beneficiaries for references to recipients throughout.

		Amended by R.1998 d.154, effective February 27, 1998 (operative March 1, 1998; to expire August 31, 1998).

		See: 30 N.J.R. 1060(a).

		In (a), inserted references to NJ KidCare and substituted references to Eligibility Identification Cards for references to Medicaid Eligibility Identification Cards throughout.

		Adopted concurrent proposal, R.1998 d.487, effective August 28, 1998.

		See: 30 N.J.R. 1060(a), 30 N.J.R. 3519(a).

		Readopted the provisions of R.1998 d.154 without change.

		Amended by R.2003 d.82, effective February 18, 2003.

		See: 34 N.J.R. 2650(a), 35 N.J.R. 1118(a).

		Rewrote (a)1.

		Amended by R.2008 d.230, effective August 4, 2008.

		See: 40 N.J.R. 984(a), 40 N.J.R. 4531(a).

		In the introductory paragraph of (a), substituted "HBID" for "Eligibility Identification (EI)", "letter" for "card" and "included in the eligibility message on the REVS/MEVS/eMEVS system" for "printed on the card", and inserted "to a beneficiary"; in the introductory paragraph of (a)1, substituted "restriction" for "restrictive card", "HBID" for "(EI)" twice, the second occurrence of "beneficiary" for "beneficiaries", and ", or a person responsible for a minor listed on the HBID Card, was" for "were", and inserted "or on behalf of"; and in (a)2, substituted "letter" for "card" twice, "HBID" for "(EI)" four times, "available on the REVS/MEVS/eMEVS system" for "printed on the card", the second occurrence of "beneficiary" for "beneficiaries" and ", or a person responsible for a minor listed on the HBID Card, was" for "were".

		§ 10:49-14.1 Recovery of payments correctly made	[ By Medicaid]

		(a) Correctly paid benefits shall only be recoverable from the estate of an individual who was 65 years of age or older when the individual received medical assistance if:

		1. The individual leaves no surviving spouse;

		2. For estates of individuals who died between February 1, 1984 and October 20, 1992, the individual left no surviving child;

		3. For estates of individuals who died on or after October 21, 1992, the individual leaves no surviving child who is under the age of 21 or any surviving blind or permanently and totally disabled children;

		4. The amount to be recovered is in excess of $ 500.00; and

		5. The gross estate is in excess of $ 3,000.

		(b) Paragraphs (a)4 and 5 above shall apply to recoveries from the estates of individuals who died on or after July 20, 1981, but prior to December 22, 1995.

		(c) For estates of individuals who died on or after April 1, 1995, in addition to the recoveries authorized under (a) and (b) above, any Medicaid payments correctly made on or after October 1, 1993, on behalf of individuals who received services on or after age 55 but prior to age 65, are recoverable from the estates of those individuals, subject to the conditions set forth in (a)1, 3, 4 and 5 and (b) above.

		(d) Effective for estates created on or after October 4, 1999, the Division shall file any claim or lien against an estate under this section within 90 days after receiving actual written notice from the personal representative of the estate or any other interested party of the death of the Medicaid beneficiary.

		(e) For estates of individuals who died on or after December 22, 1995, Medicaid claims under this section shall be deemed preferred claims, with a priority equivalent to that under subsection c. of N.J.S.A. 3B:22-2, that is, debts and taxes with preference under Federal or State law.

		(f) The personal representative of the estate of a deceased Medicaid beneficiary or any other interested party, upon request to the Division, may obtain a "payoff statement" on the amount due under the claim, if that information is available to the Division at the time the request is received.

		(g) Effective for estates pending on or created after October 4, 1999, if a family member of a deceased Medicaid beneficiary has, prior to the beneficiary's death, continuously resided in a home owned by the beneficiary at the time of the beneficiary's death, and that home was the beneficiary's primary residence, and was and remains the family member's primary residence, the Division may record a lien against the property, but will not enforce the lien until the property is voluntarily sold, or the resident family member either dies or vacates the property.

		(h) For estates of individuals who died on or after October 1, 1993, which are subject to a recovery claim under this section which was either pending on or initiated after March 1, 1995, the estate representative may apply to the Division for a waiver or compromise of the claim based upon grounds of undue hardship, subject to the following policies and procedures:

		1. Undue hardship can be demonstrated only if the estate subject to recovery is or would become the sole income-producing asset of the survivors, and pursuit of recovery is likely to result in one or more of those survivors becoming eligible for public assistance and/or Medicaid benefits.

		2. There shall be a rebuttable presumption that no undue hardship exists if the hardship resulted from estate planning methods under which assets were divested in order to avoid estate recovery.

		3. Upon receipt of written notice that the estate is subject to a recovery claim by the Division, the estate representative shall have 20 days from the date of receipt of the notice to file a request for a waiver or compromise of the Division's claim based upon undue hardship, together with evidence in support of the request. If that request is not received by the Division within the time limit specified, the Division shall not grant a waiver or compromise based upon undue hardship. Upon receipt of a timely request, the Division shall evaluate the request and the evidence submitted, and shall notify the applicant in writing of its decision within 45 days from the date that the request was received. If the estate representative wishes to contest the Division's decision, a written request for a hearing shall be submitted to the Division within 20 days from the date of receipt of that decision, in accordance with the provisions of 10:49-10. This request shall be forwarded by the Division to the Office of Administrative Law (OAL), which shall notify the parties of the hearing date and venue, and shall provide a description of the hearing process. Subsequent to the hearing, the formal decision of the OAL shall include a description of the process leading to the final agency decision and the appeal rights available to both parties.

		(i) The Division may elect not to pursue a claim under this section against the estate of an individual who died on or after December 22, 1995, if it determines, in its sole discretion, that to do so would not be cost-effective.

		(j) For all estate recoveries pending on or initiated after October 4, 1999, no lien of any kind, inchoate or otherwise, and no right of recovery can either exist or be pursued until all of the conditions set forth in N.J.S.A. 30:4D-7.2a are met, including the absence of any surviving spouse or of any minor, blind, or permanently and totally disabled children.

		(k) For all estate recoveries pending on or initiated on or after October 4, 1999, even when the statutory conditions for lien filing and recovery are met, recovery shall not be pursued against property held by any bona fide purchaser who has paid fair market value for the property, but shall be sought from the estate.

		(l) For purposes of this section, the term "estate" with respect to a deceased Medicaid beneficiary shall include:

		1. All real and personal property and other assets included within the individual's estate, as defined in N.J.S.A. 3B:1-1; and

		2. For individuals who died on or after April 1, 1995, the term "estate" shall also include any other real and personal property and other assets in which the Medicaid beneficiary had any legal title or interest at the time of death, to the extent of that interest, including assets conveyed to a survivor, heir or assign of the beneficiary through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement, as well as any proceeds from the sale of any such property which remain in the estate of the survivor, heir or assign of the beneficiary, to the extent of the beneficiary's interest;

		i. Effective for future estates or estate recoveries pending on or after October 4, 1999, for purposes of this subsection, the term "life estate" shall mean a life estate created upon the death of a beneficiary;

		ii. Effective for future estates or estate recoveries pending on or after October 4, 1999, for purposes of this subsection, the term "other arrangement" shall include, but not be limited to, any trust or annuity in which the beneficiary had an interest at the time of death, including a trust or annuity established by a third party, subject to the exclusions discussed in (n) below.

		(m) Any lien filed on or after October 4, 1999 against an estate as described in (l)2 above shall describe the extent of the deceased Medicaid beneficiary's interest covered by the lien, if known to the Division at the time the lien is filed. For example, if a deceased Medicaid beneficiary at the time of his death owned real property as a tenant-in-common with another individual, the lien should state that it encumbers only 50 percent of the equity in the real property. If the deceased Medicaid beneficiary held a tenancy-by-the-entirety or joint tenancy with a right of survivorship, then the lien shall state that it encumbers all of the property. If the Division is not aware of the extent of the beneficiary's interest at the time that the lien is filed, the full amount of the Division's claim shall be listed on the lien.

		(n) For purposes of this section, for future estates or estates pending on or after October 4, 1999, the term "estate" shall not include:

		1. A life estate in which the beneficiary held an interest during his or her lifetime, but which expired upon the Medicaid beneficiary's death;

		2. An inter vivos trust established by a third party for the benefit of the now-deceased Medicaid beneficiary, provided that:

		i. The trust is a discretionary trust, constructed in such a way that the Medicaid beneficiary could not compel distributions from the trust; and

		ii. The trust contains no assets in which the Medicaid beneficiary held any interest within either five years prior to applying for Medicaid benefits, or five years prior to the Medicaid beneficiary's death; or

		3. A testamentary trust established by a third party (including the spouse of the now-deceased Medicaid beneficiary) for the benefit of the now-deceased Medicaid beneficiary, provided that:

		i. The trust is a discretionary trust, constructed in such a way that the Medicaid beneficiary could not compel distributions from the trust; and

		ii. The trust contains no assets in which the Medicaid beneficiary held any interest within either five years prior to applying for Medicaid benefits, or five years prior to the beneficiary's death. Assets of the community spouse which formed a part of the community spouse resource allowance shall not be considered assets of the Medicaid beneficiary. Any assets of the community spouse other than those that formed part of the community spouse resource allowance shall be considered assets of the Medicaid beneficiary if acquired from the Medicaid beneficiary within five years prior to the date of application for Medicaid benefits or five years prior to the date of death of the Medicaid beneficiary.

		HISTORY:

		Amended by R.1994 d.524, effective October 17, 1994.

		See: 26 New Jersey Register 2757(a), 26 New Jersey Register 4184(b).

		Amended by R.1999 d.332, effective October 4, 1999.

		See: 31 New Jersey Register 242(a), 31 New Jersey Register 2883(a).

		In (a), in the introductory text, substituted "the individual" for "he or she", in (a)2, substituted "of individuals who died" for "coming into being", inserted "1," following "February", and substituted "left" for "leaving", in (a)3, substituted "of individuals who died" for "coming into being", in (b), substituted "but prior to December 22, 1995" for "the effective date of P.L. 1981, c.217 (N.J.S.A. 30:4D-7.2a)", and added (c) to (n).

ABA American Bar Association GP|Solo Elder Law Committee Newsletter • Summer 2009

Chairs:
Kenneth Vercammen (Edison, NJ)
Jay Foonberg (Beverly Hills, CA)

In this issue:

1. Wrapping Up the Personal Injury Settlement
2. When Do I Need a Self-Settled Special Needs Trust?
3. Elder Law, Estate Planning & Probate Seminar- New Ideas to Expand & Excel Your Practice
4. Voting- House of Delegates ABA
5. Pooled Trusts – Statutory Requirements

1. Wrapping Up the Personal Injury Settlement + Future Medical Insurance Issues
By Thomas D. Begley, Jr., Esquire

Once a personal injury settlement has been achieved or a judgment obtained, the plaintiff begins a new life. There are many considerations that should be addressed prior to or at the time of settlement. These include the following:

Medical Insurance

Does the client have the best medical insurance available? The fact that a client receives Medicare, for example, does not mean that coverage is adequate. According to government studies, Medicare pays only about 50% of a Medicare beneficiary’s actual medical bills. In cases involving a catastrophically injured plaintiff requiring considerable home health assistance, that percentage is sharply lower.

Medicare Supplements, Medicare Advantage Programs, Medicaid, private insurance from high risk pools, COBRA coverage, and continuing Worker’s Comp coverage should all be considered.

Medicaid Waiver Programs

Most medical insurance including Medicare and private insurance are designed to pay for acute care. They do not provide coverage for chronic care. There are many Medicaid Waiver Programs that are designed for chronic care including significant home and community-based services that may be required by personal injury victims.

Non-Medical Public Benefits

In many cases, injured plaintiffs are entitled to SSI, SSDI, Section 8 Housing, Group Homes and other public benefits, but have not considered them or applied for them.

Estate Taxes

Where there is a significant recovery, federal and state estate and inheritance taxes should be considered. Currently the exemption from federal estate tax is $3.5 million. It is likely that before the end of calendar year 2009 Congress will revisit the federal estate tax. Many states, such as New Jersey, have state estate taxes. Currently the exemption from New Jersey estate tax is $675,000, and that exemption is not likely to increase. Other states, such as Pennsylvania, do not have a state estate tax, but do have significant inheritance taxes. In Pennsylvania these taxes can be as high as 15%.

In many cases, even with severely injured persons, life insurance is available to pay all or part of the tax. The availability of this insurance should be explored and discussed with the client.

Estate Planning Documents

Many injured parties have no Will, Living Trust, Living Will, Power of Attorney or other estate planning documents. Some of those plaintiffs do have documents but are outdated, perhaps even because of the personal injury settlement. These documents should be reviewed and modified or replaced, if needed.

Estate Planning Documents – Parents

If the plaintiff is a minor child who is likely to be receiving public benefits, it is important that the parents’ estate planning documents not leave any assets to the child with disabilities, but rather to a third party special needs trust.

Structured Settlement

It is often advantageous to purchase a structured settlement for a portion of the settlement or award. A structured settlement offers a number of advantages to the injured party including creditor protection, tax benefits and often makes it more difficult for the injured party to squander the settlement.

There are also disadvantages to structured settlements. If a structured settlement is to be used, an analysis should be made as to how much should be structured and how much should be retained as a lump sum to pay for immediate cash needs, repayment of debt, emergency funds, and cash for investment in the appropriate equity portion of the injured party’s portfolio. COLAs and commutation riders should be considered.

Investment Advice

The client should be introduced to an investment advisor to assist in investing the settlement proceeds. In some instances, the investment manager can be a professional trustee, if a trust is appropriate.

Special Needs Trust

An analysis should be made as to whether a special needs trust is required. In many instances, such a trust is not necessary. If a special needs trust is required, will it need to be established by a court order? It is important to understand that, except in the case of a pooled trust, a special needs trust cannot be established by the disabled person. The long-term success of a special needs trust often depends on the skill and experience of the trustee. Care should be taken in the selection of an appropriate trustee.

Support Trust

Is a support trust appropriate for a minor or incapacitated beneficiary? The support trust usually results in better money management of the settlement. In the case of a minor, the support trust can be designed to retain the award past age 18. Absent a support trust, a minor can usually access the settlement funds at age 18 when most individuals do not have sufficient maturity to handle significant financial assets.

Medicare Set-Aside Arrangement

An analysis should be made as to whether or not a Medicare Set-Aside Arrangement (MSA) is required. If an MSA is required, a further analysis needs to be made as to whether the MSA can be self-administered, a custodial arrangement, a special needs trust or a pooled trust. Arrangements must be made for an MSA calculation and submission of the calculation to CMS for approval.

Mediation

An elder and disability lawyer is often useful as a participant in mediation. The lawyer is familiar with public benefits, which often are useful in bridging the gap between the plaintiff’s demand and the defendant’s offer.

Qualified Settlement Fund

In many cases, a Qualified Settlement Fund (QSF) is useful. The defendant can “pay and go.” The plaintiff has time to sort out issues such as allocation between the parties, resolution of Medicare, Medicaid, ERISA and other liens, purchase of structured settlements, and other issues that may take time. The defendant gets an immediate tax deduction upon funding the QSF.

Lien Reduction

An elder and disability lawyer can be of assistance in reducing Medicaid and Medicare liens.

Copyright 2009 by Begley & Bookbinder, P.C., an Elder & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and Oxford Valley, Pennsylvania and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania.

Tom Begley Jr. is one of the speakers with Kenneth Vercammen at the NJ State Bar Association's Annual Nuts & Bolts of Elder Law & Estate Administration and co-author with Kenneth Vercammen, Martin Spigner and Kathleen Sheridan of the 500 plus page book on Elder Law.

Begley & Bookbinder, provides services in connection with protecting assets from nursing home costs, Medicaid applications, Estate Planning and Estate Administration, Special Needs Planning and Guardianships. If you have a legal problem in one of these areas of law, contact Begley & Bookbinder at 800-533-7227.

2. When Do I Need a Self-Settled Special Needs Trust?
By Thomas D. Begley, Jr., Esquire

In the settlement of litigation, the plaintiff is often receiving public benefits. The question then arises as to whether a special needs trust is required. There are certain types of public benefits that are means-tested. Others are not. Generally, means-tested public benefits require that the individual have assets of less than $2,000 and have certain limits on income. The following types of public benefits are means-tested and a special needs trust is generally required:

SSI
Medicaid
TBI – A Medicaid Waiver Program for persons suffering from traumatic brain injury
CRPD – A Medicaid Waiver Program providing home care
Section 8 Housing
Veterans Pension
Certain DDD Benefits
Psychiatric Institutionalization
Means-Tested Public Benefits

If the plaintiff is receiving any means-tested benefits or is likely to apply for them, then a self-settled special needs trust should be considered. Assets in the trust are not counted for public benefit eligibility purposes. Distributions from the trust can be made in such a way as not to count for income eligibility for public benefit purposes.

Age

To be eligible for a special needs trust, the plaintiff must be under age 65. If the plaintiff is over age 65, there are Medicaid planning strategies that can be employed, but a self-settled special needs trust will not be a viable option.

Disabled

To be eligible for a self-settled special needs trust, the person must be “disabled.” To be considered disabled, the person must generally have a disability determination by the Social Security Administration (SSA). It is possible, however, to receive a disability determination from a Medicaid physician. If a person has not yet received a disability determination from SSA, the trust can be established pending the disability determination. Good practice is to obtain an opinion letter from a law firm that specializes in Social Security Disability appeals.

Assets of Individual

No assets other than the assets of the disabled plaintiff may be placed in the trust.

Copyright 2009 by Begley & Bookbinder, P.C

3. Elder Law, Estate Planning & Probate- New Ideas to Expand & Excel your Practice

Sat. August 1, 2009 2:00pm – 3:30pm
ABA Annual Meeting Chicago

Speakers: Jay Foonberg, Esq. - Author of Best Sellers "How to
Start and Build a Law Practice" and "How to get and keep good clients', Beverly Hills, CA

Kenneth A. Vercammen, Esq. - co-author "Nuts & Bolts of Elder Law", Edison, NJ

Deborah Cole, Chicago Contributing Author, Your Life, Your Legacy: The Fundamentals of Effective Estate Planning, Publisher's ExpressPress

Elder Law program Primary Sponsors: General Practice Section
Co-sponsors: ABA Commission on Law & Aging, Health Law Section,
YLD, Senior Lawyers Division, Real Probate & Trust Section, Tax Law Section

Topics:
Forms you can use
Email newsletters
"Representing seniors- Doing well by doing good.-Do you know how?
Marketing with written fee agreements
-Ethics and marketing without violating the Rules of Professional Conduct

Elder Law may be the biggest practice area of your career. There are 50,000 baby boomers/ day turning 60 and soon to be on Social Security and will need legal advise. Elder Law is one of the biggest growth fields.

[Contact Kenneth Vercammen, Esq. for program information 732-572-0500]

Contact American Bar Association's CDS/Travel Planners at 800-915-9801 for ABA meeting registration

4. Voting – House of Delegates ABA

The Election will be held at the ABA Annual Meeting in Chicago. All ABA lawyer members who have registered at the Annual Meeting are entitled to vote for Delegates- at-Large. Voting will be at ABA Registration July 30- August 3: (voting across from registration area)

Hyatt Regency Chicago
Riverside Center, Purple Level, East Tower
8am-6pm Thursday, Friday and Saturday
8am-5pm Sunday, Monday, Tuesday

Six Delegates–at–Large are elected at each Annual Meeting to serve a three-year term in the House of Delegates. Any member of the Association is eligible to be a Delegates–at–Large, although of the six elected each year; no two may be accredited to the same state, territory or possession. Nominations for Delegates at Large are made by written petition. At this Annual Meeting, there will also be two Delegates–at–Large elected to fill vacancies. All ABA lawyer members who have registered at the Annual Meeting are entitled to vote for Delegates–at–Large.

Voting will take place in the registration area of the Hyatt Regency. The polls will be open during the same hours as registration, except on the last day the polls will close at 10:00 a.m.

Contact American Bar Association's CDS/Travel Planners at 800-915-9801 for ABA meeting registration.

5. Pooled Trusts – Statutory Requirements
By Thomas D. Begley, Jr., Esquire

A self-settled pooled trust is defined as a trust containing the assets of an individual who is disabled that meets the six conditions discussed in the following sections.

Non-Profit Association

The trust is established and managed by a non-profit association. A non-profit organization is an organization defined in § 501c of the Internal Revenue Code (IRC) and also has tax-exempt status under § 501(a).

Separate Account

Separate accounts must be maintained for each beneficiary of the trust. For purposes of investment and management of funds, the trust may pool the funds in the individual accounts. The trust must be able to provide an individual accounting for the individual. Each individual sub account gets its own EIN number. Each self-settled sub account is taxed to the beneficiary as a grantor trust.

Solely for the Benefit Of

The trust account must be maintained for the sole benefit of the individual with disabilities. The trust account must be established for the sole benefit of the disabled individual. If the account provides a benefit to any other individual, this exception to the trust transfer rules does not apply.

Established By

The trust may be established by a parent, grandparent, or legal guardian of such individual, or by such individual, or by a court. The fact that the individual may establish the trust himself is different from a self-settled special needs trust under (d)(4)(A). If a third party establishes a trust account on behalf of the individual, the third party must have legal authority to act with regard to the assets of the individual. This requirement refers to the individual who physically took action to establish the trust, even though the trust was established with assets of the SSI claimant/recipient. Since the pooled trust has already been established, this provision applies to the sub account within the pooled trust.

A Pooled Trust can also be established by a Representative Payee. The POMS permit the transfer of disability benefits to establish a trust or to fund an existing trust. However, there is an exception for past due benefits, which meet dedicated account requirements. These past due benefits must be held in a savings account or checking account, or a money market account established in a financial institution. Representative Payee may pay a beneficiary’s disability payments to the trust, provided that:

Establishing the trust is in the beneficiary’s best interest.
The trust is established exclusively for the use and benefit of the beneficiary, to meet the beneficiary’s current and reasonably foreseeable needs. Trust expenditures for food, clothing, housing, medical care, recreation, and education are considered expenditures for the use and benefit of the beneficiary and in his or her best interest. A trust with provisions prohibiting trust funds to be used specifically to meet the beneficiary’s current needs for food, clothing, housing, and medical care would not be in compliance.
The trust is for the sole benefit of the disabled person during his or her lifetime.
A provision in a trust directing disability payments to the trust is prohibited as a violation of the assignment of benefits provisions of the Social Security Act.

Payback

To qualify for the pooled trust exception, the trust must contain specific language that provides that, to the extent that amounts remaining in the individual’s account upon death of the individual are not retained by the trust, the trust pays to the state from such remaining amounts in the account an amount equal to the total amount of medical assistance paid on behalf of the individual under the state Medicaid plan. There is no payback required by a third-party pooled trust.

To the extent that the self-settled trust does not retain funds in the account, the state must be listed as a first payee and have priority over payment of other debts and administrative expenses, except as listed below.

The following are allowable administrative expenses:

Death taxes due to federal and state governments
Reasonable fees for the administration of the trust estate
The following expenses are prohibited:

Payments of debts owed to third parties
Funeral expenses
Payment to residual beneficiaries
The restriction on payments from the trust applies upon the death of the beneficiary. Payment of fees and administrative expenses during the life of the beneficiary are allowable as permitted by the trust document and are not affected by the state Medicaid reimbursement requirement.

Copyright – Tom Begley Jr.

We Publish Your Forms & Articles

To help your practice, we feature in this newsletter edition a few forms and articles PLUS tips on marketing and improving service to clients. But your Editor and Chairs can't do it all. Please mail articles, suggestions or ideas you wish to share with others in our Committee. Let us know if you are finding any useful information or anything you can share with the other members. You will receive written credit as the source and thus you can advise your clients and friends you were published in an ABA publication. We will try to meet you needs.

Send Us Your Marketing Tips
We are increasing the frequency of our newsletter. Send us your short tips on your great or new successful marketing techniques. You can become a published ABA author. Enjoy your many ABA benefits.

Send Us Your Articles & Ideas
To help your practice, we feature in this newsletter edition a few articles and tips on marketing and improving service to clients. But your Editor and Chairs can't do it all. Please send articles, suggestions or ideas you wish to share with others.

General Practice, Solo and Small Firm Division:
Elder Law Committee and the ESTATE PLANNING, PROBATE & TRUST COMMITTEE

Who We Are

The Elder Law Committee of the ABA General Practice Division is directed towards general practitioners and more experienced elder law attorneys. The committee consistently sponsors programs at the Annual Meeting, the focus of which is shifting to advanced topics for the more experienced elder lawyer.

This committee also focuses on improving estate planning skills, substantive law knowledge and office procedures for the attorney who practices estate planning, probate and trust law. This committee also serves as a network resource in educating attorneys regarding Elder Law situations.

To help your practice, we feature in this newsletter edition a few articles and tips on marketing and improving service to clients. But your Editor and chairs can't do it all. Please send articles, suggestions or ideas you wish to share with others.

Let us know if you are finding any useful information or anything you can share with the other members. You will receive written credit as the source and thus you can advise your clients and friends you were published in an ABA publication. We will try to meet you needs.

We also seek articles on Elder Law, Probate, Wills, Medicaid and Marketing. Please send your marketing ideas and articles to us. You can become a published ABA author.

Jay Foonberg, Co-Chair, Author of Best Sellers "How to Start and Build a Law Practice" and "How To Get and Keep Good Clients", Beverly Hills, CA JayFoonberg@aol.com

We will also provide tips on how to promote your law office, your practice and Personal Marketing Skills in general. It does not deal with government funded "legal services" for indigent, welfare cases.

Kenneth Vercammen, Esq. Chair
KENNETH VERCAMMEN & ASSOCIATES, PC
ATTORNEY AT LAW
2053 Woodbridge Ave.
Edison, NJ 08817
(Phone) 732-572-0500
(Fax) 732-572-0030
Kenv@njlaws.com
Central Jersey Elder Law Law www.centraljerseyelderlaw.com
NJ Elder Blog http://elder-law.blogspot.com/

Elder Law, Estate Planning & Probate articles available from ABA Seminar
The ABA General Practice Division held its popular program Elder Law, Estate Planning & Probate- New ideas to expand & excel your practice at the American Bar Association Annual Meeting in Chicago on August 1, 2009.
Speakers: Jay Foonberg, Esq. - Author of Best Sellers "How to
Start and Build a Law Practice" and "How to get and keep good clients', Beverly Hills, CA

Kenneth A. Vercammen, Esq. - co-author "Nuts & Bolts of Elder Law", Edison, NJ

Deborah Cole, Chicago, Il

Articles and forms were provided on CD. Below is a list of articles provided. If you want a few of the forms, send an email to kenvnjlaws@verizon.net and indicate which articles/ forms you want and the number of the article or form [max 5]

List of Kenneth Vercammen, Esq. Forms, Documents and Articles on CD
Elder Law, Estate Planning & Probate- New ideas to expand & excel your practice
Sat. August 1, 2009 2:00pm -3:30pm
Hyatt Regency Hotel, Chicago ABA Annual Meeting

1 New Client schedule appointment
2 Confidential Will Questionnaire
3 Will bill
4 WILL DRAFT CO
5. Doctor Cert sign POA, will Dr
6 Thank you for Referral
7 POA DRAFT lt
8 Will Signing Instruction
9 Referral Out Another Atty fax
10 No rep
11 Recommend Will to Client
12 Post WILL
13 Client questionnaire end case.
14 POA Grantor Now
15 Wills article
16 POA Power of Attorney- article
17 LIVING WILLS
18 Gay and Lesbians- Advance Directives
19 Letter of Instruction
20 Remove Executor
21 Alzheimer, POA Guardianship
22 ANSWERS to Questions Probate
23 Estate Planning 10 Ideas
24 Executor Duties
25 Prenuptial Ag
26 Undue Influence article
27 Attorney- Client Confidentiality
28 Pick up Docs
29 Executor to Pay and Notify Creditor
30 NJlaws website & articles
31 Trusts
32 Caveat to Will
33 Central Jersey Elder articles
34 ABA Estate Plan Winter 2008
35 Estate Plan ABA Nov 2007
36 ABA ELDER News Aug 2007 GP
37ABA ELDER LAW COMMITTEE Newsletter July 2007 ABA General Practice
38 Estate Probate ABA news May. 2007
39 Elder Law ABA news February, 2007
40 INTESTACY
41 If no Will
42 Probate Release Refund Bond
43 Lincoln 17- no charge
44 Guardianship bill
45 RETAINER Probate ESTATE
46 WILL - sign front notary
47Confidentiality Lt to Client
48 Elective Share of Spouse
49 Joint Bank Accounts Upon Death
50 ABA ELDER News Spring2008
51 ABA Elder Law Newsletter • April 2008
52 ABA GP Solo ELDER LAW COMMITTEE Newsletter July , 2008
53 ABA ELDER News Fall 2008
54 ABA ELDER News Winter 2009
55 ABA ELDER News Spring 2009
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