How to Appeal a Medicare Prescription Drug Denial

If your Medicare drug plan denies coverage for a drug you need, you don't have to simply accept it. There are several steps you can take to fight the decision.

The insurers offering Medicare drug plans choose the medicines -- both brand-name and generic -- that they will include in a plan's "formulary," the roster of drugs the plan covers and will pay for that changes year-to-year. If a drug you need is not in the plan's formulary or has been dropped from the formulary, the plan can deny coverage. Plans may also charge more for a drug than you think you should have to pay or deny you coverage for a drug in the formulary because it doesn't believe you need the drug. If any of these things happens, you can appeal the decision.

Be on the Lookout for New Medicare Cards (and New Card-Related Scams)

The federal government is issuing new Medicare cards to all Medicare beneficiaries. To prevent fraud and fight identity theft, the new cards will no longer have beneficiaries' Social Security numbers on them.

The Centers for Medicare and Medicaid Services (CMS) is replacing each beneficiary's Social Security number with a unique identification number, called a Medicare Beneficiary Identifier (MBI). Each MBI will consist of a combination of 11 randomly generated numbers and upper case letters. The characters are "non-intelligent," which means they don't have any hidden or special meaning. The MBI is confidential like the Social Security number and should be kept similarly private.

The CMS will begin mailing the cards in April 2018 in phases based on the state the beneficiary lives in. The new cards should be completely distributed by April 2019. If your mailing address is not up to date, call 800-772-1213, visit www.ssa.gov, or go to a local Social Security office to update it.

The changeover is attracting scammers who are using the introduction of the new cards as a fresh opportunity to separate Medicare beneficiaries from their money. According to Kaiser Health News, the scams to look out for include phone calls with callers:

• claiming to be from Medicare looking for your direct deposit number and using the new cards as an excuse,
• asking for your Social Security number to verify information,
• claiming Medicare recipients need to pay money to receive a temporary card, or
• threatening to cancel your insurance if you don't give out your card number.

There is no cost for the new cards. It is important to know that Medicare will never call, email or visit you unless you ask them to, nor will they ask you for money or for your Medicare number. If you receive any calls that seem suspicious, don't give out any personal information and hang up. You should call 1-800-MEDICARE to report the activity or you can contact your local Senior Medicare Patrol (SMP). To contact your SMP, call 877-808-2468 or visit www.smpresource.org.

Proving That a Transfer Was Not Made in Order to Qualify for Medi-Cal

Medi-Cal law imposes a penalty period if you transferred assets within five years of applying, but what if the transfers had nothing to do with Medi-Cal? It is difficult to do, but if you can prove you made the transfers for a purpose other than to qualify for Medi-Cal, you can avoid a penalty.

You are not supposed to move into a nursing home on Monday, give all your money away on Tuesday, and qualify for Medi-Cal on Wednesday. So the government looks back five years for any asset transfers, and levies a penalty on people who transferred assets without receiving fair value in return. This penalty is a period of time during which the person transferring the assets will be ineligible for Medi-Cal. The penalty period is determined by dividing the amount transferred by what Medi-Cal determines to be the average private pay cost of a nursing home in your state.

The penalty period can seem very unfair to someone who made gifts without thinking about the potential for needing Medi-Cal. For example, what if you made a gift to your daughter to help her through a hard time? If you unexpectedly fall ill and need Medi-Cal to pay for long-term care, the state will likely impose a penalty period based on the transfer to your daughter.

To avoid a penalty period, you will need to prove that you made the transfer for a reason other than qualifying for Medi-Cal. The burden of proof is on the Medi-Cal applicant and it can be difficult to prove. The following evidence can be used to prove the transfer was not for Medi-Cal planning purposes:

The Medi-Cal applicant was in good health at the time of the transfer. It is important to show that the applicant did not anticipate needing long-term care at the time of the gift.

The applicant has a pattern of giving. For example, the applicant has a history of helping his or her children when they are in need or giving annual gifts to family or charity.

The applicant had plenty of other assets at the time of the gift. An applicant giving away all of his or her money would be evidence that the applicant was anticipating the need for Medi-cal.

The transfer was made for estate planning purposes or on the advice of an accountant.

Proving that a transfer was made for a purpose other than to qualify for Medi-cal is difficult.

New Federal Law Puts Focus on Preventing Elder Abuse

A new federal law is designed to address the growing problem of elder abuse. The law supports efforts to better understand, prevent, and combat both financial and physical elder abuse.

The prevalence of elder abuse is hard to calculate because it is underreported, but according to the National Council on Aging, approximately 1 in 10 Americans age 60 or older have experienced some form of elder abuse. In 2011, a MetLife studyestimated that older Americans are losing $2.9 billion annually to elder financial abuse.

The bipartisan Elder Abuse Prevention and Prosecution Act of 2017 authorizes the Department of Justice (DOJ) to take steps to combat elder abuse. Under the new law, the federal government must do the following:

• Create an elder justice coordinator position in federal judicial districts, at the DOJ, and at the Federal Trade Commission
• Implement comprehensive training on elder abuse for Federal Bureau of Investigation agents
• Operate a resource group to assist prosecutors in pursuing elder abuse cases

The law requires the DOJ to collect data on elder abuse and investigations as well as provide training and support to states to fight elder abuse. The law specifically targets email fraud by expanding the definition of telemarketing fraud to include email fraud. Prohibited actions include email solicitations for investment for financial profit, participation in a business opportunity, or commitment to a loan.

The law also addresses flaws in the guardianship system that have led to elder abuse. The law enables the government to provide demonstration grants to states' highest courts to assess adult guardianship and conservatorship proceedings and implement changes.

“Exploiting and defrauding seniors is cowardly, and these crimes should be addressed as the reprehensible acts they are,” said Senator Chuck Grassley (R-Iowa), a co-sponsor of the legislation, adding that the legislation “sends a clear signal from Congress that combating elder abuse and exploitation should be top priority for law enforcement.”

Choosing Retirement Account Beneficiaries Requires Some Thought

While the execution of wills requires formalities like witnesses and a notary, the reality is that most property passes to heirs through other, less formal means.

Many bank and investments accounts, as well as real estate, have joint owners who take ownership automatically at the death of the primary owner. Other banks and investment companies offer payable on death accounts that permit owners to name the person or people who will receive them when the owners die. Life insurance, of course, permits the owner to name beneficiaries.


All of these types of ownership and beneficiary designations permit these accounts and types of property to avoid probate, meaning that they will not be governed by the terms of a will. When taking advantage of these simplified procedures, owners need to be sure that the decisions they make are consistent with their overall estate planning. It's not unusual for a will to direct that an estate be equally divided among the decedent's children, but to find that because of joint accounts or beneficiary designations the estate is distributed totally unequally, or even to non-family members, such as new boyfriends and girlfriends.

It's also important to review beneficiary designations every few years to make sure that they are still correct. An out-of-date designation may leave property to an ex-spouse, to ex-girlfriends or -boyfriends, and to people who died before the owner. All of these can thoroughly undermine an estate plan and leave a legacy of resentment that most people would prefer to avoid.

These concerns are heightened when dealing with retirement plans, whether IRAs, SEPs or 401(k) plans, because the choice of beneficiary can have significant tax implications. These types of retirement plans benefit from deferred taxation in that the income deposited into them as well as the earnings on the investments are not taxed until the funds are withdrawn. In addition, owners may withdraw funds based more or less on their life expectancy, so the younger the owner the smaller the annual required distribution.  Further, in most cases, withdrawals do not have to begin until after the owner reaches age 70 1/2. However, this is not always the case for inherited IRAs.

Following are some of the rules and concerns when designating retirement account beneficiaries:

Name your spouse, usually. Surviving husbands and wives may roll over retirement plans inherited from their spouses into their own plans. This means that they can defer withdrawals until after they reach age 70 1/2 and take minimum distributions based on their age. Non-spouses of retirement plans must begin taking distributions immediately, but they can base them on their own presumably younger ages.

But not always. There are a few reasons you might not want to name your spouse, including the following:
He or she is incapacitated and can't manage the account
Doing so would add to his or her taxable estate

You are in a second marriage and want the investments to benefit your first family

Your children need the money more than your spouse
Consider a trust. In a number of the above circumstances, a trust can solve the problem, providing for management in the case of an incapacitated spouse, permitting assets to benefit a surviving spouse while being preserved for the next generation, and providing estate tax planning opportunities. Those in first marriages may want to name their spouse as the primary beneficiary and a trust as the secondary, or contingent, beneficiary. This permits the surviving spouse, or spouse's agent if the spouse is incapacitated, to refuse some or all of the inheritance through a "disclaimer" so it will pass to the trust. Known as "post mortem" estate planning, this approach permits flexibility to respond to "facts on the ground" after the death of the first spouse.

But check the trust. Most trusts are not designed to accept retirement fund assets. If they are missing key provisions, they might not be treated as "designated beneficiaries" for retirement plan purposes. In such cases, rather than being able to stretch out distributions during the beneficiary's lifetime, the IRA or 401(k) will have to be liquidated within five years of the decedent's death, resulting in accelerated taxation.

Be careful with charities. While there are some tax benefits to naming charities as beneficiaries of retirement plans, if a charity is a partial beneficiary of an account or of a trust, the other beneficiaries may not be able to stretch the distributions during their life expectancies and will have to withdraw the funds and pay the taxes within five years of the owner's death. One solution is to dedicate some retirement plans exclusively to charities and others to family members.

Consider special needs planning. It can be unfortunate if retirement plans pass to individuals with special needs who cannot manage the accounts or who may lose vital public benefits as a result of receiving the funds. This can be resolved by naming a special needs trust as the beneficiary of the funds, although this gets a bit more complicated than most trusts designed to receive retirement funds. Another alternative is not to name the individual with special needs or his trust as beneficiary, but to make up the difference with other assets of the estate or through life insurance.

Keep copies of your beneficiary designation forms. Don't count on your retirement plan administrator to maintain records of your beneficiary designations, especially if the plan is connected with a company you worked for in the past, which may or may not still exist upon your death. Keep copies of all of your forms and provide your estate planning attorney with a copy to keep with your estate plan.

But name beneficiaries! The biggest mistake many people make is not to name beneficiaries at all, or they end up in this position by not updating their plan after the originally-named beneficiary passes away. This means that the plan will have to go through probate at some expense and delay and that the funds will have to be withdrawn and taxes paid within five years of the owner’s death.

In short, while wills are important, in large part because they name a personal representative to take charge of your estate and they name guardians for minor children, they are only a small part of the picture. A comprehensive plan needs to include consideration of beneficiary designations, especially those for retirement plans.