Beyond Structured Settlements

ASNP 2012 Annual Meeting

The Academy of Special Needs Planners (ASNP) hosted its Sixth Annual Conference March 8-10, 2012 in Memphis, Tennessee. Consistent with its prior conferences, ASNP and Conference Chairperson Michele Fuller provided an exceptional educational experience featuring preeminent speakers, valuable topics, quality handout materials, plus effective interaction with sponsors and exhibitors.

ASNP is one of three national associations of attorneys, the others being the Special Needs Alliance (SNA) and the National Academy of Elder Law Attorneys (NAELA), whose members engage in special needs planning. The primary difference between special needs planning and settlement planning is that special needs planning includes clients whose disabilities result from many causes including but not limited to personal injury or workers compensation accidents.

One of the highlights of the ASNP conference was a special introductory program titled "Basics of Special Needs Planning" presented by Fuller and two other nationally renowned special needs attorneys, Kevin Urbatsch and David Lillesand. This program addressed the core components of special needs planning (including the role of structured settlements), explained public benefits, and discussed the basics of special need trust (SNT) administration.

Structured settlements were also addressed by other ASNP presenters:

• Rene Reixach - During his presentation titled "Impact Litigation", Reixach highlighted continuing litigation whereby state Medicaid agencies are attempting to disqualify SNTs funded with structured settlements arguing the existence of the secondary market makes structured settlement annuities "saleable" and therefore "countable" as an "available resource".
• Eric Skidmore - Skidmore, a Supervisor in the Office of SSI and Representative Payee Policy at the Social Security Administration (SSA), provided a "Social Security Update" during which he reconfirmed an unpublished SSA position supporting what Reixach reported - i.e. the SSA believes the existence of the secondary market renders structured settlement annuities "available resources" that potentially disqualify special needs trusts beneficiaries from receiving Medicaid.
• Jason Lazarus - Speaking about "Liability MSAs", Lazarus reconfirmed the current cost advantages of funding Medicare Set-Aside arrangements (MSAs) with structured settlement annuities as opposed to cash. His presentation included structured settlement case examples that underscored this cost advantage.

One glaring omission that characterizes most national structured settlement and settlement planning conferences is the surprising lack of attention paid to real life problems and issues experienced by persons with disabilities and their families. The 2012 ASNP conference emphasized these real life problems and issues with three valuable presentations:

• Annette Hines and Linda Brown - Hines and Brown, both special needs attorneys whose families include persons with disabilities, spoke about "Transition Planning" - the change in status for disabled persons from behaving as a student to assuming emergent adult roles in the community. Subtopics discussed: a "Day in My Life" from a parents' perspective; myths about special needs planning; transition agencies; disability support systems; selecting trustees and guardians; role of guardians; personal budgets; housing options including Section 8 qualification and the rent vs.buy decisions; plus group home issues including expense sharing.
• Vincent Russo and Michael Amoruso - Russo and Amoruso presented a series of video vignette interviews of families with disabled persons in their discussion titled "Creating the Right Plan for the Right Situation." Each of the interviews originally appeared on the television show "Family Comes First" for which Russo serves as a host. After the ASNP audience watched each interview, Russo and Amoruso asked questions and offered observations to help ASNP conference attendees learn to differentiate individuals and families on the basis of such issues as: independence; information needs and overloads; life visions; and legal capacity. They emphasized the need to make special needs trusts responsive to specific family situations.
• Harry Margolis and Jerry Hulick - Margolis and Hulick discussed a special needs case study from a financial perspective that emphasized the role of life insurance.  Note: although life insurance companies feature prominently in both the special needs and structured settlement markets, there appears to be almost no overlap among agents distributing their products even though both markets focus on disabled individuals and their families.

Another glaring omission to date at national structured settlement and settlement planning conferences has been the lack of educational inquiry about how the Patient Protection and Affordable Care Act [Affordable Care Act (ACA) - aka Health Care Reform] impacts their customers, their products and their traditional business models. The justification for this educational omission may be the uncertainty resulting from the current constitutional review of the ACA by the United States Supreme Court.

Fortunately, the ASNP has not been paralyzed educationally by this constitutional uncertainty. At the ASNP 2011 Annual Meeting, Cynthia Barrett offered her introductory analysis of how Health Care Reform impacts persons with disabilities. At the ASNP 2012 Annual Meeting, David Lillesand discussed how the prohibition against "pre-existing condition" exclusions mandated by the ACA (already in effect in 22 states) impacts special needs legal practice generally and self-settled (first party) special needs trusts specifically.

In summary, based upon his experience in Florida, where the ACA's prohibition against pre-existing exclusions currently exists, Lillesand believes:

• The need for self-settled (first party) special needs trusts has decreased (except when a beneficiary requires long term institutional care) because the ACA provides better insurance options than Medicaid for many persons with pre-existing medical conditions including personal injury victims.
• Existing self-settled (first party) special needs trusts should be reviewed, in the context of the ACA's prohibition against pre-existing condition exclusions and available medical insurance options, and in many cases terminated.
• Damages for future medical costs in personal injury lawsuits could be reduced assuming the premium costs of newly available insurance premiums become admissible in proving and/or defending damages.

Apropos to transition planning for persons with disabilities and terminating special needs trusts, Travis Finchum, Fuller and Urbatsch spoke about "Trust Transitions" - what to do when your bank trustee doesn't want you anymore or you don't want them? Their subtopics included: "the dark side of pooled trusts"; security of funds managed by individual trustees and pooled trusts; trust protectors; questions to ask potential private professional trustees; fiduciary certification and standards; plus discussion and analysis of trust provisions and revision issues.

To help ASNP attendees improve their legal practice, Steve Riley addressed "Key Strategies for Growing Your Practice and One Sure Fire Way to Kill It". The killer, according to Riley: "Inertia - which is easy; but change is hard" - which is also a good lesson for structured settlement and settlement planning stakeholders.

Congratulations to Chairperson Michele Fuller, the speakers and exhibitors for another outstanding ASNP educational conference. For S2KM's reporting about prior ASNP educational conferences, see the structured settlement wiki.

Health Care Reform

Health care reform consists of two laws enacted in March of 2010 (the Patient Protection and Affordable Care Act and the Health Care Education and Reconciliation Act of 2010) which will have a profound impact on people with disabilities.

While the Academy of Special Needs Planners (ASNP) and the National Academy of Elder Law Attorneys (NAELA) are providing their members with detailed analyses of health care reform, the structured settlement industry has not yet addressed this historic legislation in their educational programs.

Among the featured speakers at the ASNP 2011 Annual Meeting, Cynthia Barrett discussed how health care reform impacts people with disabilities. Barrett's presentation, accompanied by a detailed written analysis, summarized the new Federal health care legislation and advised ASNP attendees how to adjust their professional practice.

Of special interest to structured settlement and settlement planning professionals, Barrett highlighted and discussed the following questions plaintiff attorneys are most likely to ask about health care reform:

• Will my disabled client be able to get health insurance now?
• For settlement purposes, can future medicals be reduced to estimated lifetime insurance premiums until my client becomes eligible for Medicare or Medicaid?
• Do private health plans have “set-aside” or special needs trust requirements?
• If my client can get private health coverage, will he/she still need public benefits?
• If my client can obtain private health insurance, why do I need a special needs attorney or a special needs trust?
• As a plaintiff attorney, is there anything else I need to know about health care reform or related legislation?

In response to the last question, Barrett identified:

• The Medical Tort Claims Alternatives Demonstration Program which will send $50,000,000 in demonstration grant funds to states (up to $500,000 per state) over five years to develop and implement alternatives to the existing civil litigation system. According to Barrett, these demonstration grants:
  • Focus narrowly on disputes over injuries caused by health care providers or health care organizations;
  • Are intended to showcase medical malpractice alternatives;
  • Will be awarded by the Secretary of Health and Human Services; and
  • Plaintiffs may elect whether to participate, but cannot be required to participate.
• President Obama’s 2011 State of the Union address during which the President suggested he might cooperate with Republicans on medical malpractice tort reform.

Barrett also advised special needs attorneys to:

• Exclude from their services health coverage options advice;
• Screen claimants to determine whether needs-based Medicaid will be important.

NAELA will be devoting the entire Spring 2011 edition of the NAELA Journal to health care reform. Available to NAELA members only, this NAELA health care reform analysis will feature a detailed introduction by NAELA Journal Editor-in-Chief William J. Brisk plus eight articles and a supplement of online resources.

Brisk's introduction addresses why health care reform is "too significant to ignore" and highlights its most important features. His analysis identifies what tort reform actually does and does not accomplish. He emphasizes the important roles Medicare, Medicaid, private health insurance companies and health maintenance organizations will play in implementing health care reform.

Additional NAELA Journal topics and authors:

• Health Care Changes: Challenges to Medicare - Vicki Gottlich, Patricia Nemore, and Alfred J. Chiplin Jr.;
• The New CLASS Act - Morris Klein;
• Nursing Home Regulations - Charles Perez Golbert;
• Health Care Reform’s Impact on Small Businesses and Individuals - Ben A. Neiburger;
• Health Care Reform and End-of-Life Issues - Fay Blix;
• The Affordable Care Act’s Changes to Medicaid’s Coverage for Long-Term Services and Supports - Gene Coffey;
• Health Insurance Reforms: Once In a Lifetime Change or Same as It Ever Was? - Lucinda E. Jesson;
• Medicaid Expansion Under the 2010 Health Care Reform Legislation: The Continuing Evolution of Medicaid’s Central Role in American Health Care - Renée M. Landers and Patrick A. Leeman;
• Online Resources Available to Supplement Health Care Reform Discussion - prepared by Claire DeMarco.

If health care reform is "too significant to ignore" and if health care reform greatly impacts disabled people, why has the structured settlement industry ignored health care reform? Possible reasons:

• Product focus instead of customer focus;
• Circumscribed scope of knowledge;
• Limited strategic thinking or analysis;
• Retrospective and inside-the-box orientation;
• Protect and preserve mentality.

ASNP 2011 Annual Meeting

The Academy of Special Needs Planners (ASNP) hosted its Fifth Annual Conference March 11-12, 2011 in San Francisco. Co-chaired by Kevin Urbatsch and Michael Gilfix, the 2011 ASNP conference highlighted a growing knowledge gap between traditional structured settlement consultants (many of whom aspire to be settlement planners) and special needs attorneys (whose professional focus increasing includes settlement planning).

ASNP is one of three national associations of attorneys, the others being the Special Needs Alliance (SNA) and the National Academy of Elder Law Attorneys (NAELA), whose members engage in special needs planning. The primary difference between special needs planning and settlement planning is that special needs planning includes clients whose disabilities result from many causes including but not limited to personal injury or workers compensation accidents.

Beyond the quality of speakers and value of topics, ASNP conferences provide exceptional educational experiences for three additional reasons:

• Handout materials - Whereas most speakers at structured settlement conferences provide attendees with a power point handout or no written handout, most ASNP speakers provide attendees with original, topic-specific professional papers (in addition to outlines and/or power points) captured on a digital thumb drive.
• Sponsors and Exhibitors - Among the several national conferences S2KM attends, ASNP and NAMSAP provide the best interaction among sponsors, exhibitors and attendees. ASNP's interaction includes designated breaks when attendees are encouraged to meet with sponsors and exhibitors as well as designated tables for sponsors and exhibitors during lunch to promote extended and focused discussions.
• Knowledge of Attendees - Because ASNP conference attendees are special needs attorneys who already share a relatively high level of common professional knowledge, ASNP speakers have the freedom to expand the collective knowledge domain of attendees rather than merely reinforce existing shared knowledge.

ASNP's 2011 Speakers and Highlights

• Vincent Russo - Alternatives to Special Needs Trusts - Russo, one of ASNP's founders, highlighted planning uncertainties that justify consideration of alternative special needs strategies. In the context of such uncertainties, including life expectancies plus changes in Medicaid and estate tax laws, Russo utilized videotaped case examples to discuss several alternatives to SNTs.
• Robert Wood - Qualified Settlement Funds - Wood is a frequent speaker at structured settlement and settlement planning events. His ASNP presentation addressed single claimant QSFs and attorney fee QSFs including bad fact patterns, abusive cases and alternative definitions for "multiple claimants". Wood also discussed practical QSF issues such as the termination process, what to do with left-over assets and QSF administrative costs. Except for abusive cases, Wood believes the IRS actually likes QSFs.
• Rafael Gonzales - MSAs and Special Needs Planning - Gonzales' presentation addressed mandatory insurer reporting, conditional payments and Medicare set-aside arrangements. MSA's have become a frequent topic at almost every structured settlement and settlement planning conference - and with good reason given the many and frequent new developments. Gonzales' presentation featured summaries of the most recent case law, regulatory developments and legislative proposals.
• David Lillesand - SSI Update - Lillesand's annual Social Security Income summary for ASNP included detailed analysis of Social Security Regional Chief Counsel precedents for 2009 and 2010 some of which impact structured settlements used to fund SNTs. Lillesand also highlighted three new POMs for SNTs. Based upon his review of recent Social Security rulings, Lillesand identified a potential new issue for attorneys - expanded circumstances when legal fees are subject to Social Security approval.
• Patricia Dudek - Creative Housing Solutions - Although disabled persons historically have had few options for home ownership, home ownership is now a more realistic possibility according to Dudek. Her presentation summarized existing federal housing programs as well as financial and legal strategies for achieving home ownership for persons with disabilities.
• Cynthia Barrett - How Health Care Reform Impacts Persons with Disabilities - Barrett's discussion summarized the new Federal health care legislation and advised ASNP attendees about how to adjust their professional practice. Of special interest to structured settlement and settlement planning professionals, Barrett highlighted and discussed the questions plaintiff attorneys are most likely to ask about health care reform.
• David Foster Koth and Gregory Finn - Selecting Corporate Trustees - Among the many issues discussed during this presentation, the portion addressing structured settlement issues was among the best and most interesting. In the context of allocating trust investments among different financial vehicles, the co-presenters provided a balanced perspective on the advantages and disadvantages of structured settlements as well as the role of the secondary structured settlement market.
• Ruth Phelps - Community Funded SNTs - When a community establishes a special needs trust, several important planning considerations exist. Phelps used a case example to discuss these issues and offer a model planning solution.
• Professor Hank Greely - Diagnostic Genetic Testing - Greely, a leading expert on health law and the biosciences, summarized recent genetic testing developments including the impact of genetic testing for civil litigation (future medical costs) and insurance (age ratings).
• Michelle Ward - IRA Tax Planning - Ward provided a detailed analysis of IRA taxation focusing on distribution options and existing Federal regulations under IRC § 401(A)(9)..

Congratulations to ASNP for another outstanding educational program.

For S2KM reporting about past ASNP conferences and other settlement planning and structured settlement professional associations, see S2KM's structured settlement wiki.