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September 25, 2008, 5:30-7:30 p.m., Doubletree Hotel, Rohnert Park

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Elder Law: High court tightens rule on deducting expenses for trusts

A recent U.S. Supreme Court decision will affect how those with trusts can file their tax deductions next year. In Knight v. Commissioner, the court decided that deductions for investment advisory fees can only be included if they exceed 2 percent of the trust’s adjusted gross income.

Federal tax rules have always said individuals and trusts can claim itemized deductions as long as they are more than 2 percent of adjusted gross income. But it made an exception for trusts if the deducted costs would not have been incurred if the property was held by an individual.

The court ruled that the exception does not apply to advisory fees because it is common for individuals to hire investment advisers.

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The Centers for Medicare & Medicaid Services has plans to discontinue reimbursement to hospitals in cases where the condition was preventable and occurred during the patient’s stay at the facility. The regulation is part of a broader effort to increase the quality of care to Medicare and Medicaid patients.

The agency already last year excluded payments to cover several conditions including: objects inadvertently left in after surgery, air embolism, blood incompatibility, catheter-associated urinary tract infection, pressure ulcer, vascular catheter-associated infection, surgical-site infection and certain types of falls and trauma.

The new rule would add nine other conditions that would defer payment and would go into effect Oct. 1 this year. Staff at the centers will accept input on the proposal until June 13 and respond to the comments in the final rule, which will be issued sometime before Aug. 2.

The new rule also adds 43 new quality measures that hospitals will be measured against in order to receive an annual payment update. Hospital quality information is available at www.hospitalcompare.hhs.gov.

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Deciding if a Medicaid patient is eligible for coverage of in-home care will be left up to the states once a federal rule is implemented later this year.

The Centers for Medicaid & Medicare Services published the regulation April 4, but it will not go into effect until after the comment period ends June 3. Previously, states had to apply for a waiver to receive funding for in-home care to Medicaid beneficiaries.

State officials will no longer have to receive federal approval, but will be required to develop their own criteria for deciding eligibility. The conditions must align with those in place under federal jurisdiction, but after CMS approves a state’s criteria, the state can determine if a patient can receive Medicaid payment for home or community-based care services.

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Submit items for this column to D. Ashley Verrill at 707-579-2900 ext. 215, averrill@busjrnl.com or fax 707-579-8475.

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