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Current Legal Issues Facing Alternative Financing Projects

AFP Program Directors MeetingMay 7, 2013

Susan Tachau, DirectorPennsylvania AFPPhiladelphia, PAstachau@patf.us

James R. Sheldon, Jr., Supervising AttorneyNational AT Advocacy Project (a Catalyst Partner)

Neighborhood Legal Services, Inc.Buffalo, N.Y.

jsheldon@nls.org

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Purpose of this Session

• Indentify key legal issues sent by AFPs

• Address these issues from perspective of attorney and director of a large AFP

• Create ongoing dialogue on these issues.

Caution: Analysis may very depending on individual facts and state-specific laws.

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Will Focus Primarily on Issues Presented by AFP Staff

Presenters will answer• Based on our experience, expertise• Providing references for more information• If outside our expertise, attempt to provide referral for

good information

What do you think about issue?• How have you resolved the issue in your state?

“Legal Capacity”

Individual said to have legal capacity:• If he/she has cognitive ability to make decisions• In AFP context – Does individual understand “nature and

consequences” of taking out a loan?

No legal capacity:• Does not understand “nature and consequences” of taking out

loan

Limited legal capacity:• Not responsible to take out $20,000 loan. Can make decisions

about need for items funded by loan.4

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Substitute Decision Makers- Governed by State Law

Legal Guardian (usually by court order)• Full or total guardianship – guardian can make any decision

that the individual could have made

• Limited guardianship – guardian’s powers specifically limited by the guardian papers/court order

• “Of the person” – e.g., guardian can decide matters relating to medical care, where person resides

• “Of the estate” – decisions on matters related to money, buying/selling property

Guardian’s Liability for Loan

A guardian may have authority to sign loan documents.• Depends on terms of guardianship

Does guardian assume legal obligation for loan?• What does state law say about this?• Guardian can probably avoid liability by insisting on non-

liability language in loan agreement.

What is the goal of the AFP?• If looking to make guardian legally liable should have a

candid discussion with guardian.6

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Substitute Decision Makers- Governed by State Law

Power of Attorney• Person with legal capacity appoints another to take actions of

their behalf

• Example: Individual appoints family member to deposit and withdraw money.

• General power: can do anything individual could do.

• Limited power: defined by a list or checked boxes on form.

Since this is voluntary it can be withdrawn.

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Substitute Decision Makers- Representative Payee for SSI/SSDI

Social Security Administration (SSA) appoints:• When beneficiary not capable of handling benefit payments.• Payee entrusted with paying bills, providing spending money to

beneficiary, conserving unspent money• Payee periodically reports how funds have been managed.

Powers payee does not have:• Responsible for Social Security/SSI only.• No power over other money, like wages from a job.• Limited ability to contract with vendors.• Probably no authority to take out loan. • Would have power to use SSI/SSDI to make loan payments, if

primary needs (food and shelter) are met.

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Can AFP Accept Fundsfrom Loan Vendors?

Referral fees:• Always start with your grant terms. What do they say about

accepting this kind of revenue?

• Hard to think of a good justification for referral fee.

Charitable contributions, support of AFP events: • Again, look at grant terms.

• Sending vendor direct solicitation? Or are they showing up at annual agency gala advertised in newsletter?

Goal: Avoid even appearance of impropriety.

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Individual Defaults, Gets Behind on Payments

Right to contact individual or guardian:• Assume good AFP practice is to communicate when

loan appears to be in trouble.• Contact is legal unless specific law (state or federal) or

terms of contract would disallow.

Fair Debt Collection Practices Act• This federal law applies to “third party” collectors.• Places many limits on collection activity; probably will not

apply to any AFPs.

When to Look to Traditional Medicaid vs Medicaid Waiver

Looking to make bathroom accessible:• Will be challenge through traditional Medicaid.

• Argue it meets state durable medical equipment definition and medical necessity tests.

Will every state have a Medicaid waiver?• Every state has one or more home and community based

service waivers.

• See AT Advocate newsletter on issue - www.nls.org/Disability/NationalAssistiveTechnologyProject/ATAdvocateNewsletters/ATAdvocateFall2007

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Will HCBS Waiver FundBathroom Modification?

Illinois “Persons with Physical Disabilities Waiver”• http://www2.illinois.gov/hfs/MedicalPrograms/HCBS/Pages/

disablities.aspx

• “Environmental accessibility adaptations” covered

Ohio “Individual Options Waiver”• “Environmental accessibility adaptations” specifically include

“modifying bathrooms to be wheelchair-accessible”

• See “Individual Options Waiver Handbook” at https://doddportal.dodd.ohio.gov/INF/finditfast/publications/Documents/IO%20Waiver%20Handbook,%20New%20Rev.%207-15-11.pdf

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Educate Yourself on HCBSWaivers in Your State

• Who qualifies?

– Often targeted to a specific population (e.g., developmentally disabled, traumatically brain injured)

• What AT is covered?

– Examples: home and vehicle modifications, environmental adaptations, blind/visual disability aids

• Unlike traditional Medicaid, waiver can set dollar limits

– Limits may be by service category or include all services

– May be dollar limits for the year or lifetime limits

– Waiver policy may allow exceptions to dollar limits

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Identifying the HCBS Waivers in Your State

Go to State Medicaid Website:• Look for waivers in menus or use search function

Kaiser Family Foundation Website (www.kff.org)• Go to www.statehealthfacts.org

• Select state from map

• From menu, select “Medicaid and CHIP”

• From new menu, select “Home and Community-Based Services”

• Should give you detailed information on HCBS waivers.

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Loans for Person on SSI

Will loan proceeds count as “unearned income”?• No! SSI regulations make this clear.

Will loan proceeds count against $2,000 asset limit?• If still in account as of first of next month, yes!

Avoiding $2,000 asset limit:• AFP hold money in escrow, pay vendor(s) directly.

• Other lender pay vendor(s) directly.

• If there is approved Plan for Achieving Self Support (PASS), deposit in the separate PASS account.

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Key Exempt Assets in SSI Program

• Full/partial ownership of home beneficiary resides in.

• Vehicle, of any value, if used by beneficiary or household member for transportation.

• All household goods and personal effects. Up until 2004, there was $1,500 limit.

• Tools needed in trade or business

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SSI’s Plan for Achieving Self Support (PASS)

Karl’s need for van and modifications:• Karl is disabled, uses a wheelchair, and receives $620 in

Social Security, $97 in SSI.

• He needs a modified van to travel to and from work after college graduation in 4 years.

• The van will cost $24,000 and the modifications will cost $28,000.

• Assume the state vocational rehabilitation agency will fund the modifications but not the van purchase.

• Is there a way for Karl to use the PASS to pay for the van?

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Karl’s Use of the PASS

Karl proposes a PASS:• He will place $600 per month into a special bank account to

save toward the van purchase.

• His goal is to become an elementary teacher.

• With 40 months of savings he will have enough to purchase the van (40 x $600).

• He will purchase the van during the spring of his last year of college, having saved the full $24,000.

• Social Security approves the PASS.

How can Karl purchase the van much earlier to drive to internships or summer jobs?

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Using a PASS in Combinationwith an AFP Loan

Karl goes to the state AFP after saving $9,000.• Karl qualifies for a $15,000 loan to purchase the van.

• Will no combine the PASS savings and the proceeds of the loan to purchase the van after only 15 months of savings.

The need for a revised PASS:• Karl must submit a revised PASS proposal.

• He proposes to use the AFP loans and PASS savings to obtain the van earlier.

• He proposes to use PASS savings to pay off the loan.

• The VR agency will pay for the van modifications.

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The PASS and Other Benefits

• Medicaid – If person not on SSI before PASS approved, Medicaid now automatic for SSI recipient in 39 states.

• Food stamps, section 8 housing – money set aside in PASS account will not be counted by either program.– So $600 in Social Security that goes into PASS account is

invisible for both programs.

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SSI’s PASS – What if BeneficiaryDefaults on Loan Payments?

Consider practical solution:

• This would be benefits counselor’s job if available.*

• If individual has hit a bump in the road, PASS terms can be altered to make PASS more realistic.

Can AFP work with individual and benefits counselor?

• Renegotiate payment schedule?

• Rescue payments?

*Effective 8/1/13, Social Security once again funding Work Incentives Planning and Assistance (WIPA) projects.

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