Have Medical Bills, Game Plan Needed

Unpaid Medical BillsIt’s important to have a game plan for medical bills, and the game plan should probably not involve suing the hospital as a preemptive strike. That is precisely what occurred in Pitell v. King County Public Hospital, No. 767720-8-1 (Court of Appeals of Washington, Div., 1, August 13, 2018).

Steven Pittell had over $50,000 in his bank account but was uninsured and ineligible for Medicare and Medicaid, when he was admitted to the hospital.  He signed a consent form that stated in part:

I agree, whether I sign as a representative or as a patient, that in consideration of the service to be rendered to the patient, I agree to be personally responsible for the balance due after any applicable insurance payments. 

After Mr. Pittell was discharged, he was billed over $32,000 for the medical services provided to him. His application for charity care was denied due to his bank balances. The hospital did reduce the charge by 20% to approximately $25,800, because Pittell was uninsured. A majority of the five largest commercial insurers would have paid a higher rate on the patient’s bill.

Rather than paying the bill, Pittell sued the hospital on behalf of a class of similiarly situated patients, claiming that the consent form was unenforceable because the hospital failed to disclose its chargemaster (i.e., the hospital’s standard price list for hospital services) at the time of treatment.

The trial court rejected this argument, dismissing Pittell’s case and issuing a judgment requiring him to pay the amount of the discounted bill, plus attorney’s fees and costs.  The Court of Appeals of Washington affirmed.

Had Mr. Pittell purchased insurance on the exchange, he would have had coverage. Even if he did not, an attorney could advise him of important options, such as filing for bankruptcy, whether any federal benefits he was receiving (such as Social Security, the Veteran’s Improved pension) or a military or civil service pension or salary are protected against garnishment under federal law. The attorney could also have negotiated a reasonable payment plan.  If for some reason, the bill was already covered to some extent by Medicare, Medicaid or other health insurance, an attorney could help obtain evidence of other payments from the medical provider, review the bill, determine whether the amounts paid were accurate, and require the hospital to reduce the amount outstanding by the amount of any prior payments. If there is some insurance coverage, an attorney can also advise whether your state prohibit balance billing.

For more information about the circumstances under which federal benefits are protected, see my blog, When Are My Federal Benefits Protected?

Questions? Let Jane know.

Jane Fearn-Zimmer is a shareholder in the Elder and Disability LawTaxation, and Trusts and Estates Groups. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.

Financial Support for an Adult Disabled Child

Financial Support for an Adult Disabled ChildEven with child support payments from the non-custodial parent, raising a special needs child on a single parent’s income can be very challenging. N.J.S.A. 2A:17-56.67, a relatively new New Jersey emancipation law, requires termination of child support at age 19 unless otherwise provided in a court order or a judgment. As a practical matter, this means that the parents of adult disabled children who have prior court orders mandating continued child support after age nineteen, must either submit a written request for the continuation of the child support obligation prior to the nineteenth birthday of the child in question, or, if the child’s nineteenth birthday has already passed, the custodial parent must petition the Probate Court, rather than the Family Court, for continued financial support of the adult disabled child, even though the support obligation is already provided for in the court order.

The new law, enacted in 2015, further provides that the obligation to pay child support must terminate by operation of law when the child (who may be a special needs child) reaches the age of twenty-three. The custodial parent of an adult special needs child then bears the burden of seeking a court order for financial maintenance or reimbursement, as authorized by law.

The custodial parent is frequently the economically disadvantaged parent and the new law and the proposed new court rule will likely disproportionately impact these families. Among other things, the custodial parent must learn to navigate an entirely different set of legal rules and will no longer have the enforcement mechanism of the Probation Department.

Recently, I worked together with other elder and family law attorneys to advocate for the disability community on these issues. The Elder and Disability Law Section of the New Jersey State Bar Association presented this letter to the New Jersey State Bar Association, with the goal of making the process of obtaining continued financial support for an adult disabled child after the age of 23 as easy and cost-effective a process as possible.

Questions? Let Jane know.

Jane Fearn-Zimmer is a shareholder in the Elder and Disability LawTaxation, and Trusts and Estates Groups. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.

Gifts and Medicaid: Gifting to Children and Grandchildren

Gifts and Medicaid in New Jersey

Clients often ask me, can they make gifts to their children and grandchildren without a problem concerning Medicaid?  Often, what they have in mind is the $15,000 annual exclusion, which is a federal provision, not a Medicaid regulation. The $15,000 annual exclusion permits a taxpayer to give up to $15,000 away per year without being required to file a gift tax return. Married couples may split gifts and currently give up to $30,000 per person per year if they both agree.

But the federal tax rules and the Medicaid rules are “apples and oranges” in this case. Different rules apply here for Medicaid than for tax purposes. While a gift of less than $15,000 would not require a federal gift tax return, even small gifts, payments of medical and educational expenses of others, and gifts to children and grandchildren and others, of any amount, can jeopardize Medicaid coverage for long-term care for New Jersey residents.  This is because of the rules which apply during the five year Medicaid look back period. If there are any gifts made by the Medicaid applicant within the five years immediately preceding the filing of the applicant’s first Medicaid application, all of the gifts made during that five year period will be totaled and a Medicaid penalty period corresponding to the value of the total gifts will be imposed. Due to the Medicaid penalty period, Medicaid will generally deny coverage for long-term care, for a period of time corresponding to the total amount of all of the gifts made during the five years immediately prior to the filing of the Medicaid application.  Under the current New Jersey policy, even if some of the gifts are returned, the total amount of all of the gifts made during the lookback period can be subject to a Medicaid penalty period. This can have disastrous results on a Medicaid application.

For example, assume that Billy and Sue are husband and wife and they together make $92,000 in gifts to their children between February 1, 2012 and January 31, 2017. If a Medicaid application was filed for Billy in the month of February, 2017, even if $90,000 of the gifts are returned by the children back to Billy and Sue, a Medicaid penalty in the sum of $92,000 can be imposed on Billy and Sue because that was the amount of the total gifts made during the five year Medicaid look back period for Billy.

Fortunately, there are sometimes strategies available to push back against this very harsh result.  When filing any Medicaid application in New Jersey, consulting with an experienced elder law attorney is advised.

Questions? Let Jane know.