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Zahner Case Heard By Federal Appeals Court – Await Impact On Medicaid Approved Annuities

Zahner vs Commonwealth of PennsylvaniaIn January of this year, the Western District Court of Pennsylvania issued a summary judgment decision in the case of Zahner, et al. v. Commonwealth of Pennsylvania.

The primary issue in this case was whether “shorter” term annuities are valid under the Medicaid rules, or whether the purchase of one of these annuities constitutes a gift which will result in a period of ineligibility for the Medicaid applicant.  Unfortunately, the district court ruled that the “shorter” term annuities were a gift.

This case was appealed to the Third Circuit Court of Appeals by counsel for the Medicaid applicants, and it was argued before the court on November 19, 2014.  We must now await the court’s decision.

The use of “shorter” term annuities is an affective planning tool to help families protect a portion of their “nest egg” when a loved one is admitted to a nursing home and applies for Medicaid benefits.  Without the use of these annuities, in many situations, families would have to exhaust their entire savings to pay for the nursing home before their loved one could qualify for Medicaid benefits.

Pennsylvania’s New Power of Attorney Law

On July 2, 2014, Pennsylvania Gov. Tom Corbett signed into law Act 95 of 2014 which makes substantial changes to Pennsylvania’s power of attorney law.

A power of attorney (POA) is a document which gives you the authority to appoint an agent to make both financial and health care decisions on your behalf if you become disabled or incapacitated.  It is a very important legal document.

Under the new law, when you prepare your POA, it must be witnessed by two individuals and notarized.

Additionally, there are changes to the current notice and acknowledgment pages.  As the person making the POA, you sign the notice page. The notice page informs you of the broad powers you are giving to your agent.  The acknowledgment page must be signed by your agent before he or she uses the power of attorney. By signing, your agent agrees to act in your best interests, in good faith, and only within the scope of authority given the agent in the POA.

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