Beyond Structured Settlements

S2P2J Release 63

The United States structured settlement market has been in existence for approximately 40 years and continues to expand its scope, complexity and importance within the context of personal injury settlement planning. When structured settlements were first introduced in the United States in the late 1970s, they were viewed primarily as a defense claim management concept which was binary in nature. A settlement was either “cash” or “structure”. A “failed” structured settlement was a “cash out”. Defense brokers sold a single product – a structured settlement annuity which could be, and almost always was, combined with up front cash. Rarely, however, from a defense perspective, was a structured settlement annuity integrated with other financial products or government benefits. In fact, a fundamental public policy justification for structured settlements claimed that “structured settlements enable injury victims to live free of reliance on government assistance.”
As the U.S. structured settlement market evolved, however, a shift in control has occurred as plaintiffs and their attorneys now retain their own structured settlement advisors. From the plaintiff perspective, a structured settlement annuity looks less like an all or nothing settlement proposition and more like a strategic product that can be combined with other financial products, government benefits and trusts into comprehensive settlement plans. National associations of plaintiff structured settlement brokers (SSP), special needs attorneys (SN Alliance and ASNP), and other professionals, as well as traditional structured settlement participants (NSSTA) increasingly recognize a much larger and more complex market (personal injury settlement planning) within which structured settlement annuities represent a core strategic product.
Since it was first published in 1986, "Structured Settlements and Periodic Payment Judgments" (S2P2J), has provided structured settlement stakeholders and settlement planning professionals with an authoritative reference guide, consisting of 16 chapters with extensive footnotes and Appendix documents, to help them understand issues and fashion settlements and judgments utilizing periodic payments. Both the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP) have utilized S2P2J as an educational resource for their certification programs.

Co-authored and updated semi-annually by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert, S2P2J now features an online version as well as the traditional hardcopy. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes. In addition to contributing authors recognized below, the book authors acknowledge and thank the NSSTA and SSP Legal Committees for sharing case and industry updates.

Publisher Law Journal Press anticipates a March 2018 distribution date for hardcopy supplements for S2P2J Release 63 with online S2P2J subscribers receiving their update simultaneously with no additional subscription charge. Competent professionals confronted by structured settlement issues should have access to an up-to-date copy (or the online version) of this indispensable source book.

Release 63 Highlights - Release 63 will feature new, updated and/or expanded sections addressing the following structured settlement topics:

• Historical Analysis - To help structured settlement stakeholders analyze the comprehensive changes impacting their industry, Release 63 adds three new subsections to Chapter 1 expanding its historical analysis of the U.S. structured settlement market including: "Historical Trends and Transitions"; "Legislative History"; and "Significant Historical Developments."
• ABLE Accounts - The "Achieving a Better Life Experience Act of 2014" (ABLE Act) created an important new option (ABLE accounts) for qualifying individuals (disabled prior to age 26) to save and accumulate money while preserving eligibility to receive means-tested government benefits. In the personal-injury context, ABLE accounts cannot be funded directly with a structured settlement, but can be funded indirectly using a special needs trust. Contributing author David Lillesand, a nationally recognized special needs legal expert, highlights Release 63 with a comprehensive introduction to ABLE accounts for structured settlement and settlement planning professionals. Among the topics attorney Lillesand addresses: 1) Federal laws and regulations - including Congressional improvements in 2017; 2) State ABLE programs; 3) ABLE accounts in practice; and 4) a comparison of special needs trusts and ABLE accounts.
• Market-based Programs - One result of settlement planning has been the development of an increasing number of products and financial vehicles directly and indirectly related to structured settlements. Contributing author Serena Fitchard introduces and explains "market-based programs" which provide periodic payments linked to the performance of an underlying investment portfolio. At one time, most industry participants assumed market-based programs did not meet IRC 130's "fixed and determinable" test. In multiple PLRs, however, the IRS has concluded that the variable nature of a payment does not preclude it from being fixed and determinable if the payment obligation is fixed at the time of settlement and the amount can be calculated pursuant to an objective formula.
• Rating Agencies - Contributing author Michael Cohen, former head of A.M. Best's U.S. Life Insurance Industry rating division, provides an extensive update in Release 63 to S2P2J's summary and analysis of financial rating agencies relevant to structured settlements. Mr. Cohen's commentary: 1) introduces new companies that provide ratings for insurers; 2) discusses the quantitative and qualitative factors rating agencies utilize when they apply their rating methodologies; and 3) emphasizes the importance of risk based capital in life insurer evaluations. He further explains why A.M. Best has two rating scales (Financial Strength Rating and Issuer Strength Rating) and how those rating scales interact.
• Non-Qualified Assignments - Release 63 continues to track developments in the non-qualified structured settlement market which features an increasing number of non-traditional product providers as well as funding options where non-U.S. companies serve as obligors. S2P2J's analysis highlights many of tax and non-tax issues that these "off-shore" products raise which structured settlement professionals should evaluate and be able to explain to clients.
• Guaranty Association Model Act - As one result of the ELNY liquidation, the NAIC updated its "Model Life and Health Insurance Association Model Act" in 2017. Release 63 addresses the sections specifically impacting structured settlements including a clarification that Guaranty Association coverage under this newest version of the Model Act does not extend to "persons" who acquire rights to receive structured settlement annuity benefits via factoring transactions or to the "rights" so acquired. Louisiana became the first state to enact the new Model Act provision specifically excluding factored benefits.
• Lanclos v. United States - To its extensive coverage of the ELNY insolvency and liquidation, Release 63 provides a summary of Lanclos v. United States, a case decided by the U.S. Court of Federal Claims in 2017, in which an ELNY shortfall victim successfully argued that the U.S. government should be held liable for the shortfall because it "guaranteed" the structured settlement payments. To support her position, the plaintiff relied on Massie v. United States, where a Federal Circuit Court relied on a plain reading of the contract terms which stated the payments were “guaranteed” and “shall be paid.” Because of this language, the Court in Massie rejected the government’s argument that it had discharged its duty under the settlement agreement by “purchasing an annuity.”
• Privacy Issues - Professional structured structured practitioners must be aware of various federal and state privacy laws that may impact the gathering and/or sharing of medical or other personal information belonging to a claimant during the course of a personal injury settlement negotiation. Release 63 continues S2P2J's coverage of these privacy laws which can include not only HIPAA and the Gramm-Leach-Bliley Act but also state legislation similar to the NAIC's Model Act entitled "Privacy of Consumer Protection and Health Information Regulation" which may apply to all entities licensed by the State Department of Insurance.
• Deferred Attorney Fees - Plaintiff attorneys who wish to defer part or all of their fees in a contingent fee case have multiple product options depending upon whether the underlying case involves non-taxable personal physical injuries. For non-taxable injury cases, most structured settlement annuity providers allow attorney fees to be structured using an IRC 130 qualified assignment even on a "stand alone" basis. Release 63 updates S2P2J's analysis of qualified assignment applications to deferred attorney fees and questions whether the Childs case on its own represents appropriate tax authority.
• Settlement Planning Practice Standards - More recent S2P2J updates have recognized the evolution of personal injury settlement planning and its strategic relationship with structured settlements. Originally composed primarily of plaintiff structured settlement brokers, the Society of Settlement Planners (SSP) has played a leading role in defining this new profession. Release 63 highlights SSP's most recent contribution, their "Settlement Planning Practice Standards," and also includes a copy of these Standards in S2P2J's Appendix.
• CMS WCMSA Reference Guide - Medicare Set-Asides (MSAs) have become an important sub-market for structured settlements. Release 63 summarizes sections applicable to structured settlements within the most recent (2017) update of the CMS Workers Compensation (WC) MSA Reference Guide. Significantly, this newest version of the Reference Guide continues to incorporate the October 15, 2004 CMS Memo that provides structured settlement annuities with an inherent cost advantage compared with lump sums for funding most WCMSAs. Every structured settlement professional should be aware of this cost advantage and be able to explain it to their clients.
• Secondary Market Business Practices - Successful cooperation between NSSTA and the National Association of Settlement Purchasers (NASP) has resulted in greater consumer protections within the Model Act and multiple state structured settlement protection statutes. Unfortunately, the conduct of some secondary market participants continues to result not only in negative national publicity but also government actions against certain factoring companies alleging fraud and other deceptive business practices. Among other additions, Release 63 summarizes two recent criminal cases involving forgeries of protection act transfer orders to S2P2J's already extensive chapter addressing "Transfers of Structured Settlement Payment Rights."

For additional coverage of historical structured settlement issues and developments, see the structured settlement wiki.

ASNP 2017 Annual Conference

For the past 11 years, the Academy of Special Needs Planners (ASNP) annual conferences have consistently improved the educational scope and standards for an expanding professional landscape which, in addition to, and overlapping with, special needs planning, also encompasses personal injury settlement planning, including various types of settlement trusts as well as structured settlements, Medicare set-aside arrangements and life care planning.

ASNP's 2017 Annual Conference, which occurred March 23-25 in New Orleans, maintained its deserved reputation and also highlighted an increasing number of opportunities, issues and challenges for both the traditional structured settlement industry and the "emerging" personal injury settlement planning industry - relatively few of whose combined members have historically attended this, or other, national special needs conferences.

ASNP 2017 TOPICS AND SPEAKERS

PRE-SESSION

• Drafting the World's Best Special Needs Trusts - Kevin Urbatch; Nancy Chudacoff; Ray Falcon; Travis Finchum; Michele Fuller; Robert Mescali
• Online Marketing for Attorneys Intensive Workshop - Conrad Saam

MAIN PROGRAM

• Developments and Updates on Special Needs Topics - Blaine Brockman
• Ethically Representing Persons with Disabilities and their Families - Dr. Roberta Flowers and Sheila Moragas
• To SNT or not SNT: How to Systematically Review a Client's Situation to Provide the Best Advice - Travis Finchum and David Lillesand
• Understanding the Issues that Arise When Persons with Disabilities Interact in Family Law Situations - Emily Kile and Jennifer Kupiszewski
• Taxation Issues that Arise for Persons with Special Needs - Vincent Russo
• SSI Update - David Lillesand
• Ask the Experts Panel - Moderated by Kevin Urbatsch
• The Arc - Robin Shaffert

CONFERENCE HIGHLIGHTS - A STRUCTURED SETTLEMENT / SETTLEMENT PLANNING PERSPECTIVE

Legislative Developments - Multiple legislative developments addressed at the ASNP conference represent expanding business opportunities for structured settlement and settlement planning professionals.

• Affordable Care Act - The political future of the Patient Protection and Affordable Care Act (ACA) and Medicaid remain uncertain. In fact, House Speaker Paul Ryan pulled the Republican ACA replacement bill concurrent with the ASNP conference. At present, however, both the ACA and Medicaid continue to represent critical health care alternatives for disabled individuals as David Lillesand and Travis Finchurm discussed in their presentation "To SNT or not SNT". In discussing these options, Lillesand highlighted the need for a "cost benefit analysis" to determine whether advisors should recommend private health insurance or a special needs trust (SNT). Both d(4)(A) (self-settled) SNTs and ACA premium payments continue to represent excellent funding opportunities for structured settlements as well as important settlement planning considerations.
• Special Needs Trust Fairness Act - Blaine Brockman summarized Section 5007 of the 21st Century Cures Act - a section referred to as the "Special Needs Trust Fairness Act" (SNTFA), which was signed into law by President Obama on December 13, 2016. The SNTFA adds “the individual” to the list of persons/entities who can establish a special needs trust pursuant to 42 U.S.C. 1396p(d)(4)(A) and thereby corrected a long -standing oversight in the OBRA 1993 legislation that created SNTs. Among the anticipated results of the SNTFA: more self-settled special needs trusts with more opportunities for structured settlements.
• The Achieving a Better Life Experience (ABLE) Act - Since the Federal ABLE Act became law in December 2014, 18 states have opened ABLE programs. ABLE Accounts "seemed pretty simple at first", according to Brockman. However, "as programs have developed, accounts have opened, and people with disabilities have begun using ABLE funds," Brockman added "what seemed like simple financial accounts have given way to more nuanced issues about the best use of the ABLE Act." Brockman's presentation addressed many of these ABLE issues and confirmed that, in appropriate cases, ABLE accounts provide a valuable new tool for special needs and personal injury settlement planners. Although Brockman did not specifically address structured settlements, special needs attorney Stephen Dale will be speaking about ABLE Accounts (and presumably structured settlements) later this week at the National Structured Settlement Trade Association (NSSTA) Annual Conference.

Collaboration Opportunities

• Structured settlement annuities represent a strategic product within the larger and more complex personal injury settlement planning (settlement planning) market. From a legal perspective, special needs planning and settlement planning increasingly overlap. Settlement planning is now viewed as a growth opportunity by many special needs and elder law attorneys.
• Although their signature products are special needs trusts (SNTs), special needs attorneys play a variety of settlement planning roles (legal advisor; guardian; conservator; trustee; QSF administrator) and provide a variety of settlement planning products and services. Their expertise encompasses government benefits including: Social Security; Medicare; Medicaid; the ACA; ABLE Act; Veterans benefits; and public housing.
• ASNP's commitment to settlement planning has included a 12-part settlement planning webinar series (including a section on structured settlements) as well as its joint 2016 Annual Conference with the Society of Settlement Planners (SSP)
• Noticeable by their general absence from the ASNP conference, as speakers, attendees, exhibitors and/or sponsors, were members of NSSTA and SSP - which might be explained, in part, by the calendar proximity of their own annual conferences. In S2KM's experience, however, NSSTA and SSP members are also general "no-shows" at other national special needs conferences such as those sponsored by Stetson Law School and the University of Texas.
• By comparison: among the 17 exhibitors at the 2017 ASNP Annual Conference, there were at least: seven settlement trustees, one life care planner, one MSA administrator, and one seller of Medicaid annuities. The Platinum Sponsor of the ASNP Annual Conference was MassMutual, a life insurance company which exited the structured settlement market in 2007. MassMutual now appears to be the leading national special needs life insurance provider - focusing on developmentally disabled individuals and their families rather than personal injury victims. MassMutual acquired Metlife's retail advisory force in 2016 including its special needs division.
• Why should members of NSSTA and SSP attend national special needs conferences? For NSSTA (and its "Growth Initiative") and SSP (and its "Emerging Professionalism"), attendance and participation at national special needs conferences is important, of course, for education and marketing. Beyond those objectives, however, It is also about:
  • Understanding special needs and special needs planning - and how they impact structured settlements and settlement planning;
  • Identifying special needs knowledge leaders and collaboration partners;
  • Establishing (or re-establishing and improving) professional and association identities within the special needs community;
  • Recruiting "next generation" structured settlement and settlement planning professionals;
  • Improving multi-professional work product and building better business models.
  • Becoming part of the local, state and national special needs community - as described during the ASNP conference by Robin Shaffert, Senior Executive Officer of the Arc.

Standards, Practices and Certification - In addition to developments noted above, some progress is being made toward improving professional standards, practices and certification within both the special needs and settlement planning (including structured settlement) markets.

• MassMutual, which sponsors the American College of Financial Services Center for Special Needs , announced during the ASNP conference that the American College now offers a new Chartered Special Needs Consultant (ChSNC™) program. The Mission of the Center is "to elevate the knowledge of financial service professionals in the area of special needs planning." However, its new certification program does not appear to encompass structured settlements or settlement planning.
• In her ASNP discussion titled "Ethically Representing Persons with Disabilities and their Families", Professor Roberta Flowers referenced the proposed and newly revised "Aspirational Standards for Professionalism and Ethical Behavior for Elder and Special Needs Law" published by the National Academy of Elder Law Attorneys (NAELA) which NAELA will introduce to its members later this summer.
• During its 2017 Annual Conference, SSP announced a four-step plan to elevate settlement planning to professional status: 1) re-focusing SSP on professionalism; 2) updating SSP's Standards of Professional Conduct; 3) renewing and upgrading the RSP Designation program; 4) adopting and embracing new proposed SSP Practice Standards.
• NSSTA, as an association, has been slow to embrace "settlement planning" and to investigate "special needs planning." NSSTA, however, has recently formed a "Special Needs Attorney Task Force" and its 2017 Annual Educational Conference will feature an unprecedented (for NSSTA) three special needs attorneys as speakers. NSSTA is a major contributor to the American Association for People with Disabilities (AAPD) for which Eric Vaughn, NSSTA's Executive Director, currently serves as Vice Chairman. Ringler, a founding NSSTA member and historically the largest structured settlement broker, recently re-branded itself as "Objective Settlement Advisors" and now claims to be "the largest settlement planning company in the nation." NSSTA currently is updating its CSSC certification program and is expected to increase emphasis on government benefit issues.
• Important, but often overlooked, in discussions about special needs planning and settlement planning are life care planners. The two most prominent U.S. based life care planning professional associations are the International Association of Life Care Planners (IALCP) and the American Association of Nurse Life Care Planners (AANLCP). Both offer or promote certification programs.

CONCLUSION - For S2KM, the ASNP Conference continues to be a "must attend" annual event providing "top tier" analysis of special needs and settlement planning developments, valuable perspectives on structured settlements plus the opportunity to converse with industry icons and next generation leaders. For S2KM reports on past ASNP conferences, as well as other structured settlement and settlement planning national conferences, see the structured settlement wiki.

Stetson 2015 SNT Conference

Sponsored by Stetson University College of Law, the 17th Annual Special Needs Trust (SNT) National Conference, held October 14-16, 2015 in St. Petersburg, Florida, fulfilled its promised objective of providing "an in-depth review of major issues presented in the creation, administration and monitoring of special needs trusts."

The three-day conference included an optional one day "Pre-Conference" featuring two alternative curriculum choices - "Tax Intensive" and "Pooled Trust Intensive" - plus a one day "Basics of SNTs" as well as the "SNT National Conference" itself.

Except for the Tax Intensive Pre-Conference, the other three programs each included multiple breakout sessions - for a total of 45 SNT-related presentations delivered during three days. Befitting this highly regarded program, the speakers represented a "who's who" of nationally-recognized SNT experts. In addition to power point presentations, almost every speaker also provided an original supporting handout paper.

More than 500 professionals attended the conference - many of whom are themselves recognized national SNT experts. Twenty-five (25) companies exhibited.

In addition to the outstanding speakers, the diversity of topics, the exceptional networking opportunities, the organizational acumen as well as the attractive conference setting and amenities, S2KM found the following conference issues to be noteworthy from a structured settlement and personal injury settlement planning perspective.

SNT Advocacy

• Working through their national associations [especially the National Academy of Elder Law Attorneys (NAELA) and the Special Needs Alliance (Alliance)] as well as less formal groups such as the SSI Advocacy Committee, special needs attorneys have become increasingly involved in legislative and regulatory lobbying. The SNT Fairness Act, which, if enacted, would allow persons with disabilities to create their own SNTs, represents one important current example.
• Among the highlights of the Stetson SNT Conference were two interactive video conferences featuring national and regional Social Security Administration (SSA) representatives. This dialogue followed, and may have resulted from, a series of meetings between individual SNT attorneys (the SSI Advocacy Committee) and SSA senior staff members which began in 2013 to address problems identified by, and complaints from, SNT stakeholders with the SSA's SNT approval process.
• The SSA representatives addressed numerous questions from the Stetson attendees in addition to outlining their internal processes and challenges. They also announced their intention to "retire" the controversial SSA Trust Training Guide (released April 23, 2014) which unfortunately conflicts with the POMS, SSA's primary technical resource, in several important respects. Among its problems, the SSA Trust Training Guide states that additions to a (d)(4)(A) SNT after age 65 results in disqualification with no mention of the exception that exists in the POMS (SI 01120-203b.1.C) for structured settlements.
• Additional legislative and regulatory issues exist that impact both structured settlements and special needs trusts and provide a growing rationale for collaborative lobbying to benefit their shared client communities. For examples, both professional groups would benefit from regulatory authority confirming that 1) the Deficit Reduction Act annuity rules do not apply to structured settlements; and 2) the mere existence of a secondary market does not disqualify SNTs funded with structured settlements.

Affordable Care Act

• From S2KM's perspective, Stetson's 2015 SNT conference allocated insufficient time to the Affordable Care Act (ACA). Presentations included one Pre-Conference Tax Intensive session titled "The Role of MAGI in Special Needs Planning" plus a two-part Basic's session titled "The Planner's Evolving Tool Box" during which the ACA shared conference time with SNTs, ABLE Accounts and other public benefits such as SSI, SSDI, Veteran's Pensions, the Disability Military Child Protection Act, CHIP, Section 8 Housing, and SNAP (formerly Food Stamps). By comparison, three separate, additional one hour sessions were devoted to ABLE Accounts during the three days of presentations.
• In fairness, Janet Lauder, who was allocated only 20 minutes to discuss the ACA, provided a valuable written analysis of the ACA as part of her conference handout materials.
• The ACA, however, is clearly a "game changer" for special needs planning and may prove a "career changer" for many special needs attorneys. Scott Solkoff points out the reasons in his excellent 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", (reviewed here by S2KM).
• SNTs and Medicaid are now options and no longer necessities for many special needs clients. The ACA's elimination of pre-existing condition restrictions in health insurance policies complicates the insurance decision making process, as well as fundamental "needs and/or cost analysis", for special needs clients - as Solkoff illustrates with a suggested and valuable list of post-ACA client information questions.
• As ACA experts such as attorney David Lillesand have pointed out, ACA private health insurance offers special needs clients several potential advantages compared with SNTs. These advantages include: 1) ability to select your own insurer and insurance plan - and change annually if not satisfied; 2) a wider range of doctors; 3) no ongoing re-certification or sole benefit rule; 4) no estate repayment requirements; plus 5) reduced costs by eliminating SNT attorney, trustee and annual tax preparation fees.
• Given the many complicated ACA issues, continuing ACA developments and their profound impact on special needs individuals and special needs attorneys, Stetson conference attendees would have benefited from more time allocated to detailed ACA analysis and practice recommendations.

Structured Settlements

• Structured settlement brokers and special needs attorneys frequently play important and complementary roles in personal injury settlement planning. Historically, SNTs have represented a strategic submarket for structured settlements. Arguably, both the ACA and the ABLE Act provide additional opportunities for these two professional groups to collaborate. As suggested above, multiple legislative and/or regulatory issues exist involving both structured settlements and SNTs. Clearly, an important strategic relationship exists between these two professional communities.
• Somewhat surprisingly, therefore, the 2015 Stetson conference exhibited virtually no indication of this strategic relationship. For example, by S2KM's count, only one National Structured Settlement Trade Association (NSSTA) broker and zero NSSTA annuity provider representatives attended the conference. No NSSTA brokers or NSSTA annuity providers exhibited or spoke at the conference. This lack of attendance and participation by structured settlement participants at a prestigious SNT conference constitutes a notable missed opportunity - for learning, networking and improving the image of structured settlement brokers.
• For examples of why NSSTA and its members might want to improve their image with at least some special needs attorneys, see S2KM's 2012 blog review of the legal treatise "Special Needs Trusts: Planning, Drafting and Administration", edited by Kevin Urbatsch. In this two volume SNT treatise, structured settlements are the only SNT "funding product" that receives detailed coverage. Chapter 8 authors Donna Bradshaw and Leslie Ann Barnett justify devoting 12 subsections to "structured settlements" by stating: "special needs planners need to understand how structured settlements work with first party SNTs to best advise personal injury attorneys, persons with disabilities, and their families." Rather than endorse structured settlements, however, they provide several warning and cautionary notes.
• Although it was impossible for S2KM to attend every Stetson conference presentation, not one presentation S2KM did attend mentioned structured settlements. Significantly, during her presentation titled "Marketing Your Special Needs Planning Skills to Others; Expanding Your Practice Focus", Shirley Whitenack, current President of NAELA, emphasized a team-oriented special needs practice and recommended networking with other allied professionals "who can be an excellent source for referrals." Among allied professionals she identified: other attorneys; accountants; financial planners; financial advisors; insurance agents; trust officers; life care planners; care managers; teachers; family members; and medical providers - but did not mention structured settlement consultants.
• Both the structured settlement and the special needs attorney professional communities appear to be undergoing generational transitions at the same time the ACA is transforming both of their traditional practices. Now is an appropriate time for both professions to re-examine collaborative opportunities as they re-think their own future direction and growth.

Settlement Planning

• 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", (also reviewed here by S2KM) 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 and special needs] attorneys for clients or result in clients simply self-educating to the point of no longer needing attorney guidance."
• Ghazey-Bates is not alone in predicting some negative consequences for traditional special needs law practice as a result of the ACA. Attorney Lillesand, for example, observed during the Academy of Special Needs Planners (ASNP) 2012 Annual Conference and continues to opine that: "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."
• Assuming the ACA restricts their traditional SNT practice, special needs attorneys presumably will be forced to expand and/or redirect their practice by providing new services to new and/or existing clients. Both the Stetson conference two-part panel discussion titled "The Planner's Evolving Tool Box" and Whitenack's "Expanding Your Practice Focus" presentation highlighted, at least indirectly, this new reality. Indeed, the broad knowledge and skill sets associated with special needs law as a practice field should permit many special needs attorneys to successfully transition their practice.
• One expanding opportunity for special needs attorneys, actually a strategic component of special needs practice that deserves and requires greater independent market and product analysis, is personal injury settlement planning. Rather than restrict settlement planning opportunities for special needs attorneys, the ACA and other continuing legislative and regulatory developments actually increase those opportunities in S2KM's opinion.
• ASNP, an association of special needs attorneys, appears to support S2KM's opinion. ASNP recently sponsored a 12-part webinar series about "Settlement Planning" as distinct from "Special Needs Planning". And the distinctions are important - from both a marketing and work product perspective. S2KM highlighted some of the differences between these two related professional disciplines in this recent blog post.
• Although multiple speakers at Stetson's 2015 conference made references to personal injury settlement planning, future Stetson conferences could benefit from greater attention to both the settlement planning market itself as well as post-ACA settlement planning specific analytic and work product opportunities for special needs attorneys.

For prior S2KM reporting about the ACA as well as professional association conferences addressing structured settlement and settlement planning issues, see the structured settlement wiki.

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.

Structured Settlements 2014 - Settlement Planning

During the late 1970s, and throughout the 1980s, when defendants retained exclusive control of structured settlements, many brokers and their liability insurance company clients referred to unsuccessful sales as "cash outs". Their professional interests and curiosity were narrowly defined and focused upon their own product to the exclusion of other settlement related products and services.

With the advent of plaintiff structured settlement brokers, continuing legislative and regulatory developments, plus an expanding array of settlement planning professionals, products and product providers, structured settlements are now viewed by most stakeholders as a subset of the larger and more complex personal injury settlement planning market.

For future success, a new generation of structured settlement leaders must look beyond structured settlements and learn to re-position their product as a fundamental and catalytic settlement planning component. This strategic adjustment requires a more comprehensive understanding of, and interaction with, other professional associations whose members also provide settlement planning products and services.

During 2014, S2KM attended 13 national educational conferences sponsored by such professional associations. What follows are 2014 summaries, from a settlement planning perspective, of the educational programs offered by these professional associations plus links to related S2KM reporting. Prior S2KM blog posts provide 2014 summaries of the primary and secondary structured settlement markets. A subsequent S2KM blog post will summarize continuing 2014 developments related to ELNY and Reliance.

American Association for Justice (AAJ)

The role of personal injury attorneys historically has encompassed settlement planning and negotiation as well as litigation. As settlement planning has become increasingly complex, however, personal injury attorneys now require the services of other settlement planning professionals including: tax attorneys, special needs attorneys, settlement trustees, financial planners, structured settlement specialists, life care planners, case managers, economists, Medicare set-aside (MSA) specialists and damage allocators.

Regardless of case complexity, plaintiff attorneys continue to perform the following essential settlement planning roles:

• Recognizing settlement planning issues which impact their clients;
• Recommending appropriate settlement planning professional resources to their clients; and
• Retaining ultimate responsibility for effectuating settlements.

As one result, plaintiff attorneys represent the primary marketing target for for companies and professionals offering settlement planning services. Seven primary market brokers, one structured settlement annuity provider and one factoring company were among the 141 sponsors and exhibitors at the AAJ 2014 Annual Conference which also included companies offering lien resolution, MSA compliance, life care planning, legal finance and economic consulting services.

Notable features of the 2014 AAJ conferences:

• AAJ's educational programs focused on litigation issues with no structured settlement, no Affordable Care Act (ACA) and almost no settlement planning presentations.
• Exhibiting structured settlement brokers shared one distinguishing characteristic - their product and service offerings extended far beyond traditional structured settlements.

Related Resources:

• AAJ 2014 Winter Meeting
• AAJ 2014 Annual Meeting

Society of Settlement Planners (SSP)

SSP is a professional association most of whose members are plaintiff structured settlement brokers. SSP's 2014 Annual Conference provided three important contributions to settlement planning.

First, SSP President Neil Johnson's SSP keynote speech, which he repeated at NSSTA's Fall Conference, highlighted continuing polarization among structured settlement professionals and proposed the following solutions: 1) recognizing and accepting product diversity; 2) focusing on client and customer service; 3) identifying and pursuing permanent shared interests without necessarily agreeing on all issues; 4) engaging all perspectives to discuss industry problems and issues; 5) improving relationships among stakeholder groups; 6) promoting and practicing settlement planning not settlement selling.

Second, consistent with Johnson's proposed unification solutions, SSP's Secondary Market Panel featured two leading structured settlement transfer experts whose clients typically oppose each other in secondary market cases: NASP Executive Director Earl Nesbitt and Stephen Harris, former co-Chairman of NSSTA's legal committee.

Third, SSP speaker Michele Fuller identified her list of 2014 settlement planning "game changers" as a baseline for industry discussion:

1. Affordable Care Act.
2. Lien resolution statutory and regulatory developments.
3. Federal recognition of same-sex marriages.
4. Wrongful death caps determined unconstitutional.
5. State and federal tax reform.
6. Potential reductions in social security benefits.
7. MSAs in liability cases.
8. Settlement planning goes cyber.
9. Increasing need for Qualified Settlement Funds.
10. Increasing number of persons with disabilities.

Related Resources - SSP 2014 Annual Conference

• Part 1 - Secondary market panel.
• Part 2 - Conference summary.

National Structured Settlement Trade Association (NSSTA)

By inviting NASP President Patricia LaBorde and SSP President Neil Johnson to speak at its members-only 2014 Fall Educational Conference, NSSTA took a symbolic step toward restoring its original vision as articulated by David Ringler, NSSTA's first president: "a place where everyone and anyone can sit down with each other and discuss the issues and viewpoints regardless of beliefs is the most important reason for NSSTA."

For the past several years, NSSTA's leadership has superimposed a political litmus test for membership, as well as for topics and speakers at its educational conferences. NSSTA's near-sighted strategy has limited the potential growth of structured settlements within the larger and more complex settlement planning market and created multiple challenges for the next generation of structured settlement leaders.

Structured settlements, however, represent a core settlement planning product with emerging product improvements and nontraditional products demonstrating the potential for settlement planning market expansion. In addition, NSSTA's Fall conference underscored, and re-enforced, NSSTA's and NSSTA members' strategic settlement planning relationship knowledge about and with: 1) plaintiff attorneys; 2) insurance associations; 3) insurance claims adjustors; 4) national consumer associations; 5) U.S. Congressional members; and 6) MSA administrators - as well as with SSP and NASP.

Related Resources:

• NSSTA 2014 Fall Educational Conference
• Potential "Game Changing" Structured Settlement PLR
• Structured Settlements 2014 - Primary Market

National Association of Settlement Purchasers (NASP)

Assuming settlement planning includes adjustments during an injury victim's lifetime, structured settlement transfer (factoring) companies should be included among settlement planning participants. Like NSSTA, its primary market counterpart, NASP and its members face serious challenges which NASP president Patricia LaBorde acknowledged during NASP's 2014 Annual Conference.

"There are some forces working against us right now" Laborde stated, "and we need to remain diligent so our customers (structured settlement recipients who sell payment rights to NASP member companies) continue to have access to liquidity." These "negative" forces include predicted secondary market "chaos" resulting from the Washington Square v. RSL case as well as market restrictions resulting from anti-assignment lawsuits.

Shared educational dialogue among representatives of NASP, NSSTA and SSP during 2014 appear to support the possibility of increasing primary and secondary market integration as predicted by Peter Arnold during his NASP conference presentation.

Related Resources:

• NASP 2014 Annual Conference
• Structured Settlements 2014 - Secondary Market

Academy of Special Needs Planners (ASNP)

ASNP is one of three national associations of attorneys whose members practice special needs (SN) planning. SN planning encompasses individuals with congenital and developmental defects, as well as personal injury victims, and therefore represents a parallel market which overlaps with personal injury settlement planning.

For the past eight years, ASNP has sponsored some of the best educational programs addressing settlement planning topics including such fundamental issues as: "know your client", "needs analysis", "best practices", "industry standards" and "product suitability", as well as "professional responsibility, qualifications and liability".

Among other topics, the ASNP 2014 Conference expanded previous ASNP educational programs about the Patient Protection and Affordable Care Act (ACA aka "Obamacare") including a multi-professional "ACA Panel" consisting of: David Lillesand (attorney); Ann Koerner (life care planner); and Scott MacDonald (investment adviser).

Other settlement planning topics addressed during ASNP's 2014 Annual Conference:

• 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.
• Cynthia Barrett discussed "Post-Windsor Issues for LGBT Couples & Children" - another settlement planning subject other settlement planning conferences failed to encompass.

Expanding its settlement planning educational programs, ASNP is currently sponsoring a 12-part settlement planning webinar series which demonstrates both the growing importance of settlement planning for SN attorneys as well as the broad scope of settlement planning topics.

Related Resources:

• ASNP 2014 Annual Conference
• ASNP Settlement Planning Webinar Series
• ACA and Future Medical Expenses

National Alliance of Medicare Set-Aside Professionals (NAMSAP)

NAMSAP is the only national professional association whose singular focus is Medicare Set-Aside (MSA) arrangements. NAMSAP's growth has paralleled the expansion of workers compensation MSAs (WCMSAs) to satisfy the requirements of the Medicare Secondary Payer (MSP) Act. Enacted in 1980, the MSP Act requires certain insurers, including liability, automobile, no-fault and workers compensation insurers, to make payment first for services to Medicare beneficiaries regarding claimed injuries, with Medicare responsible only as a “secondary payer.”

The Center for Medicare & Medicaid Services (CMS) published a WCMSA Reference Guide (WCRG) on March 29, 2013 plus a WCRG Version 2.0 on November 7, 2013. Both address structured settlement issues and provide guidelines for their utilization. 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 withdrew its Notice of Proposed Rulemaking (NPRM) related to liability MSAs in October 2014 because it failed to gain approval from the Office of Management and Budget (OMB). Therefore, settlement planners must continue to analyze each liability case individually to determine whether and how to protect Medicare's interests.

During NAMSAP's 2014 Regional Conference, Roy Franco predicted the following settlement planning changes likely to result from the Bipartisan Budget Act of 2013, implementation of the ACA and the still anticipated CMS rules for liability MSAs: "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." Franco added, however, that different state models are likely to develop as a result of both state-specific collateral source rules and the new Medicaid reimbursement rules promulgated by the Bipartisan Budget Act of 2013.

Related Resources

• NAMSAP 2014 Regional Conference
  • Part 1
  • Part 2
• NAMSAP 2014 Annual Meeting
• Bipartisan Budget Act of 2013

Evolve Qualified Settlement Fund (QSF) Symposium

Organized "to provide a forum for open dialogue that helps shape industry developments", the 2014 Evolve QSF Symposium avoided the single claimant controversy and focused instead on other important QSF and settlement planning issues including:

• How QSFs reconfigure the traditional settlement planning process.
• QSF-related compensation issues for administrators and structured settlement brokers.
• The increasingly important settlement planning roles for life care planners and case managers.
• QSF-related tax issues such as state taxation, foreign structured settlement assignment companies and structured attorney fees.

Related Resources

• Evolve 2014 QSF Symposium
• Single Claimant QSFs Revisited
• "How the ACA Affects Nurse Life Care Planners"
• Wendie Howland Interview

National Academy of Elder Law Attorneys (NAELA)

NAELA was the first and remains the largest U.S. professional association focused on the needs of elder and special needs law attorneys. Responding to its own strategic challenges, NAELA organized its 2014 Annual Conference to address what it perceives to be its two primary strategic issues: 1) the future needs of persons with disabilities; and 2) the future of elder law.

Compared with ASNP, however, NAELA's educational programs rarely address settlement planning or structured settlements. When NAELA members discuss special needs planning, many tend to think about developmental (as opposed to personal injury) disabilities. Unfortunately, many NAELA members view structured settlements negatively despite familiarity with the concept and a general affinity for annuities.

Related Resources

• NAELA 2014 Annual Conference
• Person-Centered Planning
• Cornell Disability Studies, Research, Statistics

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.

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.

Defense of Marriage Act

The United States v. Windsor case, decided June 26, 2013 by the United States Supreme Court, held Section 3 of the Defense of Marriage Act (DOMA) to be unconstitutional under the Due Process Clause and the Fifth Amendment. Among its many consequences, the Windsor decision will impact settlement planning for cases involving same-gender couples.

Although not specifically about settlement planning, a recent webinar sponsored by the National Academy of Elder Law Attorneys (NAELA) and titled "The DOMA Decision and What It Means to Your Clients" identified some of the settlement planning issues the Windsor decision could impact. Although S2KM did not attend the NAELA webinar, S2KM did receive and review the webinar handout materials which are summarized in this blog post.

Featured NAELA webinar speakers and topics:

• Cynthia Barrett - Estate Planning
• David Lillesand - Social Security
• Victoria Collier - Veterans' Benefits
• Rene Reixach, Jr. - Medicaid

Background

• As enacted in 1996, DOMA Section 3 (Definition of Marriage) provided:

"In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word 'marriage' means only a legal union between one man and one woman as husband and wife, and the word 'spouse' refers only to a person of the opposite sex who is a husband or a wife."

• As a result of this definition, same-gender couples had been excluded from many federal benefits available to heterosexual couples.
• In its Windsor decision, however, the Supreme Court did not address DOMA Section 2 (Powers Reserved to the States) which provides:

"No State, territory, or possession of the United States, or Indian tribe, shall be required to give effect to any public act, record, or judicial proceeding of any other State, territory, possession, or tribe respecting a relationship between persons of the same sex that is treated as a marriage under the laws of such other State, territory, possession, or tribe, or a right or claim arising from such relationship."

• In other words, DOMA Section 2, which remains operable, says no state can be forced to recognize a same‐gender marriage from another state.

General Impact

• By defining "spouse" and its related terms to signify a heterosexual couple in a recognized marriage, DOMA Section 3 previously codified non-recognition of same-gender marriages for all federal purposes.
• The Windsor decision could impact the rights of “lawfully married” same-gender couples under as many as 1100 different federal laws and regulations.
• Historically, states have had the right to determine family relationship issues.
• Only thirteen states and the District of Columbia currently permit same-gender marriages and nine states offer some other form of recognition.
• Only eleven states and the District of Columbia currently recognize common-law marriages with one state (New Hampshire) limiting recognition to probate and another state (Utah) requiring validation by a court or administrative order.
• One overriding post-Windsor issue is whether a lawfully married same-gender couple will qualify the couple for federal recognition regardless of where they live.
• Or, alternatively, will a lawfully married same-gender couple be denied certain federal benefits, or escape spousal responsibilities, if they live in a state that does not permit or recognize same-gender marriages?
• The Social Security Administration, the IRS and the Veterans Administration, generally determine marital status based upon “Place of Domicile” rather than “Place of Celebration”.
• The Department of Justice currently is consulting with various state agencies to develop a uniform policy for determining whether lawfully married same-gender couples can be denied federal benefits, or escape spousal responsibilities, if they live in "non-marriage" states.

Social Security

• Although the Social Security Act (SSA) contains many titles, only Title II ["Old Age, Survivors and Disability Insurance" (OASDI)] and Title XVI ["Supplemental Security Income" (SSI)] are administered by the Social Security Administration (SSA).
• SSA Title II (OASDI) provides monthly payments to elderly retired and non‐elderly disabled persons, and their dependents and survivors based on the wage‐earner’s past contributions of a wage earner into the retirement and disability trust funds.
• SSA Title XVI provides welfare benefits to the elderly and disabled who have not paid sufficient sums to qualify for Title II benefits, and are either age 65 and above, or who are medically disabled and have low income and few assets.
• Depending upon subsequent legal developments, the Windsor decision could have a significant impact on both Title II and Title XVI programs for same gender couples seeking qualification for some national programs which are dependent on state of residence.
• Immediately following the Windsor decision, the SSA issued an Emergency Message ordering its 66,000 employees to stop processing claims involving “same‐sex married couples” and their children until the related issues are resolved.

Medicaid

• Unlike Social Security, which is a federal program, Medicaid is a dual federal-state program which the states are primarily responsible for administering. 
• Pre-Windsor, states that did not recognize same-gender marriages generally did not apply deeming to deny community Medicaid (health insurance to pay doctors, hospitals, drugs, etc.) to same-gender couples. However, these states also did not grant the favorable aspects of Medicaid nursing home benefits to same-gender couples.  
• Medicaid experts anticipate further litigation to determine whether states that do not honor same-gender marriages will lose their federal cost sharing if they continue to deny Medicaid benefits for same-gender couples or whether state Medicaid officials must continue to obey state laws forbidding such marriages.

Veterans' Benefits

• The Windsor decision, which follows repeal of "Don't Ask Don't Tell", appears to allow military members and their same-gender spouses to receive almost all of the same benefits (including health care and housing) as married heterosexuals regardless of where the couple lives so long as their marriage took place in a state that recognizes same-gender marriages.
• Although the Department of Defense administers laws and regulations affecting active duty military, the Department of Veterans Affairs administers laws and regulations affecting veterans.
• Because VA regulations determine the validity of a marriage based upon state law, same-gender married veterans may still not receive post-Windsor all benefits available to other married veterans.
• These potential inequities may result in equal protection and due process violations and are therefore likely to be litigated.

Estate Planning - Issues impacted by Windsor decision

• Federal employees and retirees health coverage and pension do-overs
• Income tax refunds
• Disclaimer and QTip trusts; marital deductions
• Private and non-federal public survivor pensions
• IRA and qualified plan beneficiaries
• Social security retirement and LGBTQ spousal benefits
• Long term care Medicaid income and asset protections for married LGBTQ couples in marriage states
• Public needs-based benefits where marriage may disqualify individuals
• Affordable Care Act premium support and subsidy
• Joint spousal income for tax credits
• Married couples filing joint tax returns
• Will and/or trust documents should mention any marriage or registration

For additional information about the rights of same gender couples following the Windsor decision as well as continuing updates on related litigation, see the GLAD website.

 

Affordable Care Act - 1

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 some Republicans in Congress still threaten to repeal the ACA, the Supreme Court upheld almost all of the ACA's provisions in 2012, including the individual mandate and elimination of pre-existing condition restrictions, which will become effective nationally on January 1, 2014.

How will the ACA impact personal injury damage awards, settlement planning and structured settlements?

Professional associations whose members engage in settlement planning have already begun to address these issues:

• Speakers at recent Academy of Special Needs Planners (ASNP) annual educational conferences (Cynthia Barrett in 2011, David Lillesand in 2012 and Scott Solkoff in 2013) explored these issues in the context of special needs planning.
• The National Academy of Elder Law Attorneys (NAELA) devoted the Spring 2011 issue of its NAELA Journal to the impact of the ACA on Elder and Special Needs Law attorneys and their clients.
• The Society of Settlement Planners (SSP) will feature a presentation by Thomas Begley titled "The Impact of the ACA on Personal Injury Settlements, Structured Settlements and Special Needs Trusts", plus a related panel discussion, during its 2013 Annual Meeting.

Recent research papers and law review articles have further expanded analysis of these strategic ACA issues. One such research paper, titled "Potential Effects of the Affordable Care Act on the Award of Life Care Expenses" and written by Joshua Congdon-Hohman and Victor A. Matheson, was published September 2012 as part of the College of the Holy Cross, Department of Economics, Faculty Research Series (Paper No. 12-01).

Their paper argues: "the ACA may well have indirectly resulted in a great deal of tort reform" and, as a result, "awards in personal injury cases could be dramatically impacted" because:

• Future medical expenses represent a significant element of damages in many personal injury cases.
• When the ACA is fully implemented in 2014, all individuals will be required to purchase health insurance or pay a penalty.
• The ACA provides insurance premium subsidies for low income individuals who do not receive health insurance through the government or from a family member’s employer.
• The ACA prevents price discrimination based on health status and bans annual and lifetime expenditure limits.
• Most individuals will pay the same cost for health insurance before and after an accident.
• The legal maximum out-of-pocket expenses allowable under the ACA is $5,950 per year.
• The goal of tort law is to make the plaintiff "whole".
• Funding of health care through private insurance is a valid methodology for accomplishing this goal now that the ACA makes those markets available to injury victims.
• Therefore, the ACA:
  • Should simplify and reduce calculations of future medical damages;
  • By limiting those costs to "[health insurance] premiums and out-of-pocket limits less any pre-injury expected medical costs and penalties if uninsured."

What about the "collateral source rule"?

Congdon-Hohman and Matheson, who are economics professors, acknowledge a collateral source issue is "at play" and "remains of significant importance". They argue, however, "there is reason to believe the ACA changes the underlying reason of excluding collateral source compensation from inclusion in tort cases."

More specifically, the authors maintain: "removing existing health insurance coverage from exclusion under the collateral source rule would not significantly affect health insurance coverage rates reducing the economic rationale for having a collateral source rule in place for health insurance."

In their paper, Congdon-Hohman and Matheson highlight additional provisions of the ACA which they believe will impact many life care plans:

• ACA provisions limiting growth of premiums and medical costs:
  
  • Limits on insurers' non-care based expenses.
  • Formal requirements to justify rate increases.
  • New standards to lower administrative costs.
  • Funding for new wellness and prevention strategies.
• ACA provisions reducing the tax deductibility of medical costs:
  • Reductions in eligible expenditures and nominal limits for flexible spending accounts.
  • An increase in the deductible medical expense threshold from 7.5 percent of adjusted gross income to ten percent.
  • An an excise tax on “taxable medical devices.”

As a related result of the ACA, Congdon-Hohman and Matheson believe life care planners will play an increasingly important role in personal injury damage analysis. Prior to the ACA, life care planners were tasked with identifying medical and living expenses not otherwise required "but for" the accident.

Under the ACA, the authors maintain life care planners must also identify which health care and living expenses will, and will not, be covered by the ACA's minimum insurance requirements. And, despite certain minimum federal standards, these requirements may differ by state.

Cogdon-Hohman and Matheson's research paper provides a valuable educational resource for all personal injury stakeholders. For settlement planning professionals who are attempting to understand how the ACA impacts personal injury damage analysis, negotiation strategy, work product, and funding options, this paper should encourage expanded industry discussion and analysis.

For S2KM's complete reporting and continuing commentary about the ACA, see the structured settlement wiki. For a comprehensive analysis about structured settlements and government benefits, see Chapter 15 of "Structured Settlements and Periodic Payment Judgments"(S2P2J).

Health Care Law Upheld

Today, in a 5-4 decision, the Supreme Court ruled the Patient Protection and Affordable Care Act (Affordable Care Act) is constitutional including its individual mandate requiring virtually all Americans to buy health insurance. Chief Justice Roberts provided the deciding vote in the case titled National Federation of Independent Business v. Sebelius.

Rejecting the argument that Congress can use its power to regulate commerce between the states to require everyone to buy health insurance, the majority agreed instead that the penalty required if someone refuses to buy insurance is a type of tax that Congress can impose using its taxing power.

“In this case", Chief Justice Roberts opined, "it is reasonable to con­strue what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance. Such legislation is within Con­gress’s power to tax.”

Surprisingly and paradoxically, the Obama Administration had defended the constitutionality of the individual mandate as a constitutional exercise of congressional power to regulate interstate commerce rather than arguing that the individual mandate was a tax. Although four Justices would have upheld the individual mandate under the Commerce Clause, their agreement does not control because Chief Justice Roberts did not agree with this interpretation.

Because the individual mandate survives, the Court did not need to decide whether other parts of the Affordable Care Act are constitutional, except for a provision that requires states to comply with new Medicaid eligibility requirements or risk losing their Federal Medicaid funding. On that issue, the Court held the provision to be constitutional so long as states would only lose new funds if they did not comply with the new Medicaid requirements, rather than all of their federal Medicaid funding.

Chief Justice Roberts stated: "Nothing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding."

How will the Affordable Care Act impact settlement planning - and what resources are available for settlement planners to better understand the 2,700-page health-care law?

To date, there has been a glaring lack of educational inquiry at national structured settlement and settlement planning conferences about how the Affordable Care Act impacts their customers, their products and their traditional business models. Arguably the justification for this educational omission has been the constitutional uncertainty which no longer exists.

Fortunately for settlement planners, neither Academy of Special Needs Planners (ASNP) nor the National Academy of Elder Law Attorneys (NAELA) has been similarly paralyzed educationally and/or intellectually 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. Also in 2011, the NAELA Journal devoted its Spring issue to the Affordable Care Act. S2KM summarized Barrett's analysis and listed the NAELA Journal articles in a prior blog post titled "Health Care Reform".

At the ASNP 2012 Annual Meeting, David Lillesand discussed how the prohibition against "pre-existing condition" exclusions mandated by the Affordable Care Act (already in effect in 22 states) impact special needs legal practice generally and self-settled (first party) special needs trusts specifically.

In summary, based upon his experience in Florida, where the Affordable Care Act (ACA) 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.

Although the Affordable Care Act is controversial and complex, the necessary Federal and State administrative rules to implement the new health care law promise to be even more so. For a helpful and definitive resource, see "Health Care Rule Making Guide" edited by Professor James T. O'Reilly.

For additional information about settlement planning and government benefits, see the structured settlement wiki.