Beyond Structured Settlements

NAELA Journal - Recent ACA Articles

With last week's Supreme Court decision in King v. Burwell, upholding tax credits for individuals purchasing health insurance through the federal insurance exchange in addition to state insurance exchanges, the Patient Protection and Affordable Care Act (ACA) further imbedded its sweeping changes into America's health care system.

If they have not done so already, structured settlement consultants and other personal injury settlement planners should now be thinking strategically about how the ACA impacts their clients as well as their own work product and professional services. S2KM has previously reported on ACA analysis by speakers at conferences attended by S2KM as well as ACA analysis by authors reviewed by S2KM.

Among settlement planning professionals, special needs attorneys within the Academy of Special Needs Attorneys (ASNP) and the National Academy of Elder Law Attorneys (NAELA) have been notably proactive in analyzing the ACA. Not coincidentally, San Francisco attorney Kevin Urbatsch serves as both National Director for ASNP and as Editor in Chief of the NAELA Journal.

ASNP has featured ACA speaker presentations at each of its annual conferences beginning in 2011 (Cynthia Barrett); 2012 (David Lillisand); 2013 ( Scott Solkoff); 2014 (Lillesand, Ann Koerner, Scott McDonald, and Bradley Frigon); and 2015 (Solkoff and Koerner).

The "NAELA Journal", which featured a comprehensive ACA review in its Spring 2011 issue plus an additional Medicare article detailing various cost-saving components of the ACA in its Spring 2013 issue, has added two additional ACA articles in its most recent Spring 2015 issue.

Although written for special needs and elder law attorneys (and available only to NAELA members), the two most recent "NAELA Journal" articles raise important issues and offer valuable insights about the ACA which are applicable to all settlement planning professionals. This blog post summarizes those articles and considers their analyses from a structured settlement and settlement planning perspective.

Scott Solkoff's NAELA Journal Report

In his Spring 2015 NAELA Journal article titled "Report on the Patient Protection and Affordable Care Act: Its Impact on the Special Needs and Elder Law Practice", Scott Solkoff discusses the consumer provisions of the ACA, as opposed to the industry and regulatory provisions.

Solkoff characterizes the ACA as "a big new law that includes a mass of new statutes, state and federal regulations, court decisions, and variances that differ from state to state and county to county." He maintains that trained professionals (presumably including structured settlement consultants and settlement planners), as well as consumers (presumably including personal injury claimants), will be challenged to understand and navigate this new system.

How has the ACA changed health insurance? Quoting attorney David Lillesand, Solkoff emphasizes: the ACA "creates a whole new definition of ‘health insurance.’” Solkoff explains this "new ACA definition" by highlighting some of the deficiencies of the "old definition" of health insurance:

"policies with annual and lifetime limits, policies with no “medical loss ratio” to control excess administrative expenses and profits, policies that could limit or deny coverage to people with disabilities or pre-existing conditions, parental policies that would not accept children beyond a certain age or status, policies with less preventive care coverage, and policies that could be more restrictive or punitive on doctor choice or emergency room access."

ACA health insurance policies now must include all these features.

Solkoff's article discusses the ACA's impact on: Medicaid; Special Needs Trusts (SNTs); Medicare; personal injury settlements; tax and financial planning - all of which are significant for structured settlements and settlement planning.

Medicaid and SNTs

The ACA's elimination of pre-existing condition restrictions in health insurance policies profoundly impacts persons with disabilities who formerly relied on Medicaid as their only health insurance option. It also complicates the insurance decision making process, as well as "needs analysis" (a structured settlement and settlement planning priority) as Solkoff illustrates with a suggested list of post-ACA client information questions.

For many clients, Solkoff points out, SNTs and Medicaid are now options and no longer necessities. Although SNTs continue to serve the same purpose, the ACA has changed the determination of whether creation of a SNT is appropriate. For some clients, Solkoff concludes, the best solution may require the creation of a SNT as well as the purchase of an ACA health insurance policy.

Solkoff summarizes the ACA provisions which expand Medicaid eligibility to permit individuals who lack the resources to purchase private insurance through the exchanges, even with credits and subsidies, to gain access to health care. This Medicaid expansion, however, was restricted by the U.S Supreme Court. In the same 2012 decision in which it upheld Congress' power to enact most of the ACA's provisions, the Supreme Court ruled the federal government cannot mandate states to expand the Medicaid eligibility pool. To date, 22 states have refused to expand Medicaid leaving 4.3 million Americans uninsured.

Another important Medicaid feature Solkoff discusses: the ACA does away with asset cap eligibility tests and substitutes a new uniform eligibility measure, the Modified Adjusted Gross Income (MAGI) standard. Certain Medicaid applicants, however, such as SSI beneficiaries who automatically qualify for Medicaid, are exempt from the MAGI calculation.

Medicare

Many people mistakenly believe the ACA does not affect Medicare, perhaps Solkoff suggests, because the health insurance exchanges do not affect Medicare. To the contrary, according to Solkoff, changes to Medicare are among the most significant ACA reforms to affect the elderly and people with disabilities. Although Medicare remains a single-payer system run by the federal government, Solkoff highlights several important Medicare-related changes resulting from the ACA:

• Increased coverage for prescription medications and preventive care;
• Rewards for health care providers for enhancing services;
• Gradually closing of the gap in drug coverage (known as the “donut hole”);
• Rewards for Accountable Care Organizations (ACOs) that save money through the Medicare Shared Savings Program (MSSP);
• Creation of the Independent Payment Advisory Board (IPAB) to oversee Medicare costs with authority to make changes to the Medicare program.

Tax and Financial Planning

Solkoff identifies several ACA-created tax and financial planning provisions that could impact structured settlement and settlement planning calculations: 1) tax credits for premium payments and subsidies using the new MAGI calculations; 2) increased thresholds for taxpayers to deduct unreimbursed medical expenses from 7.5% to 10% of Adjusted Gross Income (AGI); and 3) a new Net Investment Income Tax of 3.8% on certain net investment income of individuals, estates and trusts with AGI above statutory thresholds.

Personal Injury Settlements

In addition to the ACA-related changes summarized above, structured settlement consultants, settlement planners and their clients will need to consider the ACA's impact on the size of individual personal injury settlements - and, more specifically, on the calculation of future medical expenses. S2KM has addressed this issue in a series of prior blog posts beginning with this review of an article by plaintiff attorney Seth Cardeli featured in the May 2014 issue of the AAJ's "Trial Magazine".

Similar to Cardeli, Solkoff anticipates defendants will now argue their exposure for annual future medical expenses, before considering inflation and present value discounting, "should be no greater than the predictable cost of premium payments, deductibles, and copays that are capped by the total [out of pocket] expense limits imposed by the ACA for the plaintiff’s actuarial life expectancy. In 2014, this cap was $6,350."

Like Cardeli, Solkoff also recognizes potential counter-balancing legal issues created by state-specific collateral source rules and subrogation clauses. Perhaps most significantly, Solkoff points out, quoting Professor Victor Matheson: "[t]he most expensive component of most big life care plans is either home nursing care or institutional care, neither of which is covered by ACA compliant insurance plans."

Strategic Impact?

Solkoff's article highlights how the ACA fundamentally changes the health care system for persons with disabilities - individuals who represent clients for special needs attorneys as well as structured settlement consultants and personal injury settlement planners.

What strategic impact will the ACA have on these professionals - individually and/or collectively?

Solkoff's article does not confront this existential issue directly or in depth. His analysis, however, encourages readers to reach their own conclusions. For S2KM, these include: 1) disabled persons now have more health insurance options and potential benefits; 2) the ACA creates new knowledge requirements, business opportunities and anticipated competitive challenges, for professionals who advise, and/or negotiate benefits and/or provide products for, disabled persons and their families; 3) the new, overlapping health insurance/settlement planning market can be expected to expand in scope and complexity and also to attract and develop new professionals, products and business models.

E. Spencer Ghazey-Bates NAELA Journal Warning

In a second article appearing in the Spring 2015 issue of the NAELA Journal, titled "The Affordable Care Act and the Continued Commoditization of Elder Law", E. Spencer Ghazey-Bates warns that key provisions of the ACA, when combined with the anticipated addition of predictive technology "will either enable nonattorneys to compete with [elder law] attorneys for clients or result in clients simply self-educating to the point of no longer needing attorney guidance."

The ACA provision which most concerns Ghazey-Bates is the new Modified Adjusted Gross Income (MAGI) test which streamlines Medicaid enrollment by replacing all state-defined Medicaid eligibility criteria - regardless of whether a state opts to expand Medicaid. At least for elder law attorneys, he views the new MAGI test as "[t]he single largest change resulting from the ACA" because it "effectively unified 50 separate eligibility methodologies into a single system."

This new unified Medicaid enrollment process, according to Ghazey-Bates, will facilitate nonattorney services to enter the Elder law market by combining new (anticipated) Internet technologies with the ACA's Certified Application Counselor, Navigator, and In-Person Assister consumer assistance programs.

Ghazey-Bates frames his Medicaid analysis in the context of of Richard Susskind's more general transitional theory of the legal profession. Susskind postulates "The End of Lawyers" resulting from an inevitable continuum beginning with unique, customized advice ("bespoke" model) transitioning next to service that draws upon precedents ("standardized" model) and finally to a "systematized" or "packaged" model resulting in the loss of perceived attorney value whereby legal service becomes a commodity differentiated solely by price.

Ghazey-Bates is not alone in predicting some negative consequences for traditional elder law (and special needs law) practice as a result of the ACA. David Lillesand, for example, observed during the ASNP 2012 annual conference : "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."

Ghazey-Bates' article does end with an optimistic observation for elder law attorneys ("demographic shift toward an older population makes Elder Law a growth industry") and this advice: "perhaps the best counterpunch to the forces of commoditization: educating consumers about the value an Elder Law professional brings beyond simple statutory knowledge."

Lessons To Be Learned

What lessons, if any, can structured settlement and settlement planning participants learn from Ghazey-Bates' warnings about potential industry obsolescence and/or professional commoditization as a result of the ACA?

To paraphrase President Obama's words to Republicans in 2009: "Legislation has consequences." Although not yet fully determined, the significant consequences of the ACA for persons with disabilities, combined with advancing Internet technologies, will almost certainly transform the personal injury settlement planning market resulting in new products, new competitors and new business models. In S2KM's opinion, however, special needs attorneys (as knowledge resources) and structured settlements (as strategic products) should both generally benefit from the ACA.

What about individual structured settlement brokers? Their post-ACA success may depend upon whether and how they address the following strategic questions: 1) has your product-specific knowledge become a commodity? 2) what new, unique "value added" knowledge, if any, will you provide to your clients, customers and other settlement planning professionals? 3) what new marketing initiatives, if any, are needed to grow your business? 4) how does the ACA impact your educational priorities? 5) your business model?

For all of S2KM's blog posts about the Affordable Care Act, see the structured settlement wiki.

To read Patrick Hindert's article "How the Affordable Care Act Impacts Life Care Planners", see the 2014 Winter Issue of the Nurse Life Care Planning Journal.

ACA and Future Medical Expenses - 2

The Affordable Care Act (ACA) refers to two controversial laws enacted in March 2010, the Patient Protection and Affordable Care Act and the Health Care Education and Reconciliation Act, which restructure the fundamental relationship among government, health care providers and health care recipients and profoundly impact persons with disabilities.

Although legal challenges, political debate and disputes about future insurance premiums and health care costs continue, the Supreme Court upheld almost all of the ACA's provisions in June 2012, including the individual mandate and elimination of pre-existing condition restrictions, which became effective nationally on January 1, 2014.

With the ACA's primary constitutional framework now largely operational, various "experts"  increasingly are discussing and debating what impact the ACA will have upon future medical expenses in personal injury cases - as well as its related impact on structured settlements.

In a prior blog post, S2KM re-introduced these issues by summarizing an article written by Seth Cardeli, titled "Thwart the Assault on Future Medical Expenses", which appeared in the May 2014 issue of the American Association for Justice (AAJ) Trial Magazine.

The new and evolving legal construct for future medical expenses in personal injury cases created by the ACA is complicated, controversial and important. Continuing discussions and analysis should not proceed within an intellectual vacuum. In additional to the ACA, related laws and legal developments such as Medicaid (including the Bipartisan Budget Act of 2013), Medicare (including WCMSAs , liability MSAs and MMSEA) and/or state specific collateral source and subrogation rules must be considered.

This blog post summarizes ACA-related analysis by speakers at professional conferences S2KM has previously attended and includes excerpts from prior S2KM reviews of those conferences. The purpose is to provide a point of reference for future S2KM reporting about the legal interplay involving the ACA, personal injury cases and structured settlements. A subsequent blog post (ACA and Future Medical Expenses - 3) will summarize similar ACA analysis from articles and papers previously reviewed by S2KM.

Conference Speakers Addressing ACA Issues

Academy of Special Needs Planners (ASNP) - Among the professional association conferences S2KM has attended since 2010, the ASNP has provided the most consistent and comprehensive ACA reporting.

Cynthia Barrett - During the 2011 ASNP Annual Conference, Cynthia Barrett highlighted the following questions she anticipated plaintiff attorneys would most likely ask about health care reform and the ACA on behalf of their personal injury clients:

• 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?
• 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.

David Lillesand - Based upon his experience in Florida, where the Affordable Care Act (ACA) prohibition against pre-existing exclusions already existed in 2010, David Lillesand offered the following preliminary observations during the ASNP 2012 Annual Conference:

• 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.

ASNP 2013 Annual Conference

Scott Solkoff - Continuing its analysis of the ACA, the ASNP 2013 Annual Conference featured Scott Solkoff who predicted:

• Reduced personal injury verdicts and settlements.
• A different calculus for determining future medical damages based upon health insurance costs.
• Fewer first party special needs trusts (SNTs).
• Reduced demand for Medicare and Medicaid for persons with disabilities under age 65.
• New opportunities for special needs attorneys because of the complexity of the ACA.

Social Security Administration Representatives - During a subsequent question and answer session at the ASNP 2013 Annual Conference, moderated by Kevin Urbatsch and featuring representatives of the Social Security Administration, the following exchange occurred:

• Question: will the SSA allow early termination of SNTs to comply with ACA?
• SSA Answer: right now, any early termination of a SNT will require payment of reversionary interest.

ASNP 2014 Annual Conference

The ASNP 2014 Annual Conference expanded previous ASNP educational programs about the ACA and coincided with news the ACA had exceeded enrollment expectations and achieved its primary objective of substantially expanding healthcare in America.

ASNP's 2014 conference featured two ACA presentations:

• A multi-professional "ACA Panel" consisting of: David Lillesand (attorney); Ann Koerner (life care planner); and Scott McDonald (investment adviser).
• "Special Needs Trust (SNT) Taxation" discussion by Bradley Frigon - focusing on strategies for maximizing health care coverage and minimizing costs.

Both of ASNP's 2014 ACA presentations highlighted the importance of health insurance education and the need for health insurance expertise as part of the settlement planning and/or special needs planning team. Some of the ACA resources and issues addressed:

• ACA's definition of "health insurance" - 10 key requirements.
• The ACA's definition of "modified adjusted gross income" (MAGI) - to determine eligibility for ACA premium tax credits and Medicaid expansion.
• Calulating MAGI - and whether structured settlements are included or excluded.
• ACA assessment questions - and how they expand "needs analysis".
• ACA flowchart - for determining the proper plan under the ACA.
• When to use a SNT vs. purchasing ACA insurance - four alternative strategies.
• Defining the settlement planning process.
• ACA's financial impact on settlement planning.
• Lump sums vs. structured settlements under the ACA.
• Coverage comparisons - based upon types of provider networks, services and authorization requirements.
• Coverage gaps - in states that do not adopt Medicaid expansion.

NAELA and SSP 2014 Annual Conferences

With permission from ASNP and acknowledgments to David Lillesand, Kevin Urbatsch, National Director of ASNP and 2014 Editor-in-Chief of the "NAELA Journal' repeated for both the National Academy of Elder Law Attorneys (NAELA) 2014 Annual Conference and the Society of Settlement Planners (SSP) 2014 Annual Conference substantial portions of ASNP's 2014 ACA Panel summarized above.

In addition, NAELA awarded its 2014 John Regan Writing Award, honoring the authors of the best article published in the "NAELA Journal" during the past year to Alfred Chiplin, Jr. and Bethany Lilly, for their article titled "Medicare’s Future: Letting the Affordable Care Act Work, While Learning From the Past" analyzing various ACA cost-saving components on Medicare.

NAMSAP 2014 Conferences

Roy Franco, a featured speaker at the National Alliance of Medicare Set-Aside Professionals (NAMSAP) 2014 Regional Conference, addressed the settlement planning changes likely to result from the Bipartisan Budget Act of 2013, implementation of the ACA and anticipated CMS rules for liability MSAs.

Franco predicted "workers' compensation, liability and no-fault insurers will all become primary payers vis a vis Medicare, Medicaid and ACA health providers" as part of integrated settlement planning models similar to WCMSAs. He added, however, that different state-specific models may develop as state Medicaid agencies begin responding October 1, 2014 to the new Medicaid reimbursement rules promulgated by the Budget Act of 2013.

Medicare Set-Aside Arrangements (MSAs) represent one strategic link between Medicare cost savings and future medical costs in both workers compensation and personal injury cases as well as the primary defining topic of every NAMSAP educational conference including NAMSAP's 2014 Annual Meeting.

The Center for Medicare & Medicaid Services (CMS) has calculated WCMSA amounts totaling approximately $1.8 billion in FY 2013. CMS published a WCMSA Reference Guide (WCRG) on March 29, 2013 plus a WCRG Version 2.0 on November 7, 2013. The WCRG's intended purpose: to help WCMSA professionals, beneficiaries and other stakeholders "understand CMS' [WCMSA] amount approval process and to serve as a reference for those electing to submit such proposals to CMS for approval."

Both the CMS policy memoranda and the WCRG address structured settlement issues and provide guidelines for their utilization in funding WCMSAs. WCMSAs represent one of the few submarkets where structured settlements sales have increased since 2008 - in large part because the method CMS requires for calculating WCMSA present values provides an inherent cost advantage for annuities compared with lump sum alternatives.

CMS has not yet published definitive rules for using MSAs in liability cases (LMSAs). CMS did publish an Advanced Notice for Proposed Rule Making (ANPRM) on June 14, 2012 in the Federal Register which included seven different option to satisfy obligations for future medicals in liability cases. CMS also published RIN: 0938-AR43 in Spring of 2013 outlining a timetable for the proposed rule. No such LMSA rule, however, has yet been published.

For S2KM's complete reporting about the ACA and structured settlements, see the structured settlement wiki.

NAELA 2014 Annual Conference

"Avanti sempre avanti" - forward always forward!

Michael Amoruso, provided this impromtu theme for the National Academy of Elder Law Attorneys (NAELA) 2014 Annual Conference while accepting NAELA's Theresa Award in recognition of his advocacy and support of individuals with disabilities. Other 2014 NAELA award winners:

• Powley Award: Marielle Hazen - in recognition of her commitment to promote a greater understanding of the rights and needs of the elderly and people with special needs and of how Elder Law attorneys advocate for those rights.
• John Regan Writing Award: Alfred Chiplin, Jr. and Bethany Lilly - honoring the author(s) of the best article published in the NAELA Journal during the past year. S2KM reviewed their article about the impact of the Affordable Care Act (ACA) on Medicare in a prior blog post.

Amoruso's conference theme seemed appropriate as NAELA quickly celebrated its accomplishments, then focused the majority of its May 21-24 Scottsdale, Arizona educational program addressing multiple strategic challenges.

Accomplishments and Resources

NAELA was the first and remains the largest U.S. professional association focused on the needs of elder and special needs law attorneys. NAELA was founded in 1986 and now consists of more than 4300 attorney members. 250 members attended NAELA's 2014 Annual Conference which also featured 22 exhibitors.

In their respective speeches, outgoing NAELA President Howard Krooks and incoming President Bradley Frigon highlighted NAELA's most recent accomplishments: historically strong financial financial surplus including a well-funded NAELA Foundation; re-vamped educational programs including new online tools and interactive learning; a public policy advocacy program more focused and linked with member practices; two NAELA sponsored congressional bills: the Special Needs Trust Fairness Act (H.R. 2123 and S. 1672) and Disabled Military Child Protection Act (H.R. 2249 and S. 1076).

NAELA's resources are extensive and provide exceptional membership value. In addition to the NAELA Foundation, they include: the NAELA Journal plus additional publications; Aspirational Professional Standards modeled on the ABA Model Rules of Professional Conduct; a website featuring a comprehensive library and hosting NAELA's active online community; seven practice sections; 23 committees; state chapters; multiple educational conferences and certification programs; frequent webinars; multiple annual awards, plus a large and efficient staff.

Strategic Challenges

Despite its historic success, NAELA and its members face several strategic challenges.

• Although NAELA's client communities continue to grow, so does competition from non-NAELA member elder law and special needs attorneys as well as non-attorneys and websites offering legal forms. Most state bar associations have formed "elder law" sections which also compete with NAELA.
• NAELA was slow to embrace special needs as a separate strategic market. As a result, NAELA members formed the Special Needs Alliance (SNA) and the Academy of Special Needs Planners (ASNP). Many ASNP and SNA members, however, remain NAELA members.
• Additional challenges and changes: 1) the still uncertain impact of the ACA; 2) a permanent increase in the federal estate tax exemption to $5.34 million reducing the need for estate-tax related planning; 3) continuing decreases in traditional non-ACA government benefit (funding) resources; and 4) "commoditization" of several traditional elder law practice areas.

NAELA 2014 Annual Conference Educational Program

Responding to these strategic challenges, NAELA organized its 2014 Annual Conference to address two primary issues: 1) the future needs of persons with disabilities; and 2) the future of elder law. Both issues were featured is general sessions and supported with multiple break out sessions.

Two articles featured in the most recent issues of the NAELA Journal also addressed these issues:

• "The Future of Planning for Persons with Disabilities" - by Kevin Urbatsch and Michele Fuller.
• "NAELA Report and Recommendations: Preparing the Academy for a Rapidly Changing Future" - co-authored by several NAELA Board members and past Presidents.

General Sessions - Topics and Speakers

• Kruse Ethics Lecture - Ethics of Ancillary Practices - Margaret Lodis
• Alzheimer's Research Findings - William J. Burke, MD
• Future Needs of People with Disabilities - Michele Fuller and Kevin Urbatsch
• The Future of Elder Law - Thomas Begley, Jr. and Colleen Caruso
• An Outsider's (Sponsors') Perspective - Chad Fotheringham and Bridget O'Brien Swartz
• Case Law Update - Professor Rebecca Morgan, Edwin Boyer, Craig Reaves, Howard Krooks, William Browning
• Multiple Sclerosis and other Neurological Disorders - Stephen Dale and Bonnie Danowski

Breakout Sessions - Topics and Speakers

• Middle Class Estate Planning - Bernard Krooks
• Fiduciary Litigation - Sharon M. Rivenson Mark
• Medicaid Fair Hearings, Federal Court Proceedings and Appeals - William J. Browning, Shirley Berger Whitenack, Patricia E. Kefalas Dudek
• Trust Review Process - Michele Fuller
• ACA and Special Needs Planning - Kevin Urbatsch
• Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act - Catherine Anne Seal and David M. English
• Incorporating Financial Planning and Services into Elder Law Practice - Andrew Hooks and Mark Munson
• Acting as a Fiduciary - Robert Fleming and Robert Fechtman
• Special Needs Planning - Mary Schmitt Smith and Theresa Varnet
• The Future of Estate Planning - Jonathan Blattmachr
• Life Care Planning - Jerold E. Rothkoff, Esq., Beth A. Prather
• Domestic Asset Protection - Jonathan Blattmachr

Structured Settlements

With few exceptions (e.g. S2KM blog author Patrick Hindert's presentation at the NAELA 2013 Annual Conference) neither structured settlements nor personal injury settlement planning receive much attention at NAELA conferences.

The words "structured settlement" were mentioned one time during NAELA's 2014 conference presentations - by Thomas Begley Jr. in reference to changes resulting from the ACA.

Unfortunately, many NAELA members view structured settlements negatively despite familiarity with the concept and a general affinity for annuities. More specific reasons:

• Many NAELA members
  • Believe defense brokers "over-structure" settlements before actual settlement planning can occur.
  • View Qualified Settlement Funds (QSFs) as positive and under utilized as a result of defense broker resistance.
• Many NAELA members view structured settlement brokers generally as:
  • Product and transaction focused instead of planning and client focused.
  • Annuity sales persons rather than professionals interested in understanding issues and solving problems.
  • Failing to adhere to professional standards such as full disclosure, product suitability and informed consent.
• For many NAELA members, the secondary market contributes to their negative view of structured settlements.

Special Needs Planning

When NAELA members discuss special needs planning, many tend to think about developmental (as opposed to personal injury) disabilities. Examples: 2014 NAELA conference presentations discussed Alzheimer's Research, Multiple Sclerosis and Autism statistics - without discussing serious tort-related injuries such as spinal chord or brain damage injuries.

Part of the reason: many first generation special needs attorneys entered this field because of their own child's developmental disability. Life insurers have contributed to this special needs dichotomy (developmental vs. personal injury) by creating completely separate departments for: 1) special needs; and 2) structured settlements.

Conclusion

NAELA has performed an important member service by incorporating its strategic planning into its educational programs and publications. Structured settlement and settlement planning professional associations would benefit their own members by following NAELA's example.

For S2KM summaries of other 2014 professional conferences, see the structured settlement wiki.

ASNP 2014 Annual Conference

Personal injury settlement planning and special needs planning represent two overlapping professions undergoing transformation and expansion as complex new legislation, regulations and case law interact to redefine their legal environment.

In addition to studying these new laws, settlement planners and special needs planners must address their impact on fundamental issues such as "know your client", "needs analysis", "best practices", "industry standards" and "product suitability", as well as "professional responsibility, qualifications and liability".

For the past eight years, the Academy of Special Needs Planners (ASNP) has sponsored some of the best educational programs addressing these laws and issues. The ASNP 2014 Annual Conference, which took place March 27-29 in Denver, was no exception.

Among other topics, the ASNP 2014 Conference expanded previous ASNP educational programs about the Patient Protection and Affordable Care Act (ACA aka "Obamacare"). ASNP's conference coincided with news the ACA has exceeded enrollment expectations and achieved its primary objective of substantially expanding healthcare in America:

• More than 7.1 million previously uninsured Americans purchased health insurance prior to the March 31, 2014 enrollment deadline; and
• Three million additional Americans enrolled in the ACA's expanded Medicaid coverage between October 1, 2013 (the start of the ACA's open enrollment period) and February 28, 2014 (the most recent figures available).

Although ACA political debate will continue, it is past time for settlement planners, including structured settlement professionals, and special needs planners to analyze how the ACA impacts their clients, their work product and their business model.

ASNP's 2014 conference featured two ACA presentations:

• A multi-professional "ACA Panel" consisting of: David Lillesand (attorney); Ann Koerner (life care planner); and Scott McDonald (investment adviser).
• "Special Needs Trust (SNT) Taxation" discussion by Bradley Frigon - focusing on strategies for maximizing health care coverage and minimizing costs.

Both ACA presentations highlighted the importance of health insurance education and the need for health insurance expertise as part of the settlement planning and/or special needs planning team. Some of the ACA resources and issues addressed:

• ACA's definition of "health insurance" - 10 key requirements.
• The ACA's definition of "modified adjusted gross income" (MAGI) - to determine eligibility for ACA premium tax credits and Medicaid expansion.
• Calulating MAGI - and whether structured settlements are included or excluded.
• ACA assessment questions - and how they expand "needs analysis".
• ACA flowchart - for determining the proper plan under the ACA.
• When to use a SNT vs. purchasing ACA insurance - four alternative strategies.
• Defining the settlement planning process.
• ACA's financial impact on settlement planning.
• Lump sums vs. structured settlements under the ACA.
• Coverage comparisons - based upon types of provider networks, services and authorization requirements.
• Coverage gaps - in states that do not adopt Medicaid expansion.

David Lillesand also provided a comprehensive overview of "Supplemental Security Income (SSI) Regional Chief Counsel (RCC) Opinions" for first and third party SNTs, non-SNT asset transfers and resources exclusions. Lillesand's handouts included his own 714 page guide with every RCC opinion by state through March 3, 2014 organized by subject matter with a table of contents, index, one paragraph opinion summaries and hyperlinks to the actual text. Nine of these RCC opinions address structured settlement issues including problems involving minors and re-assignment of payment rights.

In leading a discussion about "SSI/POMS Changes", Theresa Varnet announced the formation of a new SSI Advocacy Committee, consisting primarily of special needs attorneys, which has begun meeting with Social Security Administration (SSA) representatives to identify and address various problematic SSI and SNT issues. As part of this project, the SSA is seeking input from a broad spectrum of disability advocates including members of the Arc, ASNP, NAELA, SNT, the Consortium of Citizens with Disabilities and representatives of pooled income SNTs.

Blaine Brockman and Patricia Kefalas Dudek spoke about "Housing, Food Assistance, Employment Benefits" - critical topics for many people with disabilities which are rarely addressed at structured settlement and settlement planning educational conferences. Their presentation and handout materials summarized "the complicated labyrinth of federal code, federal regulations, state regulations and local administrative decision making" which comprise affordable housing law and create "programs that are shamefully underfunded, dramatically understaffed, and obviously needed by many more people than they serve." Additional topics:

• The Supplemental Nutrition Assistance Program (SNAP) - formerly known as the "Food Stamp" program.
• Medicaid expansion and buy-in programs - which allow disabled persons to work and receive Medicaid.
• Vocational rehabilitation services and work incentives.

Sharon Pope (who also chaired this year's ASNP Conference with ASNP National Director Kevin Urbatsch) and Michele Fuller, provided complementary discussions about "SNT Administration" issues. Pope's presentation addressed "Law Firm Trust Departments" - with attorneys acting as trustees. Her handouts included example outlines for SNT "needs analysis" checklists and "personal care plans". Fuller spoke about the "Expanding Duty of Attorneys to Non-Clients". Her presentation highlighted recent cases and her handouts included numerous related articles.

Cynthia Barrett discussed "Post-Windsor Issues for LGBT Couples & Children" from a special needs perspective. Her presentation and handouts addressed such issues as:

• Review of Windsor and related marriage litigation.
• Same sex couple Special Needs Practice Checklist - emphasizing, similar to health care, the importance of state specific analysis.
• Medicaid planning techniques where marriage/parentage status must be established.
• SSA analysis for minor/disabled children of gay couples.
• Practice guide for same sex couples facing a Medicaid crisis.
• Veterans aid and surviving spouse benefits for same sex couples.

In addition to featured speakers and their presentation handouts, the following ASNP sponsors and exhibitors added to the educational value of ASNP's 2014 Conference:

• MassMutual
• Morgan Stanley
• MetLife
• Guardian Trust
• Elder Counsel
• National Care Advisors
• Krause Financial Services
• Elder Law Answers
• Evolve Bank and Trust
• Midland States Bank
• Stewart Home & School

For S2KM reporting about prior ASNP conferences, as well as other structured settlement and settlement planning conferences, see the structured settlement wiki.