This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017. The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.) The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system. The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care. The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month. The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust. Today’s installment will discuss the need to empty the Miller Trust account every month.
The Ohio Department of Medicaid has finalized its new rule on Miller Trusts (aka Qualified Income Trusts or QITs.) A copy of the final rule is available here. Because the rule calls them QITs and today’s installment makes a number of references to the new rule, for this installment, I’ll usually call them QITs.
The final version of the rule, consistent with the original draft version and proposed versions of the rule, requires that the trustee spend all of the money contained in the trust each month, month in and month out. Unfortunately for the trustees, the rule doesn’t state this requirement in English but instead states it in Bureaucrat-ese. Section M of the final rule provides “When income placed into the QIT exceeds the amount paid out of the QIT . . ., the excess income may be subject to penalties . . . .”
Translating into English (to the extent possible):
First, one must understand that, in Medicaid’s rules, money is “income” only during the month in which it arrives in the account or in the hands of the Medicaid-covered person. If the money is still in the person’s account or in the person’s possession at the end of the month, that money is now considered as part of “assets” (often called “resources”) belonging to that person. (Assets/Resources are controlled by a different set of Medicaid rules. Assets/Resources are just as important as Income for the person’s Medicaid eligibility. They just have different rules that apply to them. During this change of Medicaid rules, the Asset/Resource rules are not changing significantly except for an increase in the amount of Assets/Resources that a Medicaid-covered person can keep from $1,500 to $2,000.) So, because the QIT can accept only “income,” money must be placed into the QIT during the month that the money arrived and only during that month.
Second, section H of the new rule requires that “excess income” (meaning the amount above $2,199 per month (Note: That amount will be adjusted for inflation from time to time.)) must be placed into the QIT. Section J of the new rule provides that income that should have placed into the QIT but was not “will be considered available for purposes of determining the individual’s medicaid eligibility for that month.” When money is “available” to a person, it is counted as that person’s money. When a person has income “available” to him or her that exceeds $2,199, that person is not eligible for Medicaid for long term care. The purpose of the QIT is to make the income above $2,199 “unavailable” to the person. (I know, your starting to think that I’m talking gibberish. I warned you in the last installment that this Miller Trust (aka QIT) requirement isn’t logical in the real world. It’s not even close. “Them’s the rules” is the only explanation I can provide.) So, putting sections H and J together means that a person whose income over $2,199 doesn’t go into the QIT is not eligible for long term care Medicaid.
This leads us to section M’s language “when income placed into the QIT exceeds the amount paid out of the QIT . . ., the excess income may be subject to penalties . . . .” The language “income placed into the QIT exceeds the amount paid out” means that more money went into the trust that came out of the trust in a particular month. The “excess income” is the amount of money that went into the QIT account during the month but didn’t come out or, in other words, the amount left in the QIT at the end of the month. This amount left at the end of the month “may be subject to penalties.”
The “subject to penalties” clause in section M refers to a separate Medicaid rule that controls how Medicaid penalizes people for giving away resources in order to become poor enough for Medicaid eligibility (aka “improper transfers.”) Medicaid penalizes such “improper transfer” by refusing to pay for the person’s care for the amount of time that the “improperly transferred” money would have covered. So, if there is money not spent out of a QIT during the month, the person will be off Medicaid coverage for a time.
So, compliance seems easy, right? Every QIT trustee must just empty the trust every month. That may not be so easy.
I realize that we all try to be conscientious, but aren’t there some months when you just don’t get your bills paid on time? Maybe you get really busy. Maybe you go on vacation. Maybe you get sick. It doesn’t happen every month, but it happens sometimes.
In addition, during some months, it may be really tricky to pay out of the QIT because there may not be enough bills to pay. Section E of the QIT rule gives only 4 ways to spend money out of the QIT: the Medicaid-covered person’s monthly allowance, the spouse or dependent child’s income share, the person’s care incurred medical expenses, and administrative fees. The monthly allowance, the spouse/dependent income share, and the administrative fees will probably occur each month. The medical expenses may not occur each month. If a person on long term care Medicaid gets injured or becomes sick, the person may go onto Medicare covered rehab. When Medicare is paying for rehab, it (along with the person’s additional insurance) often pays for ALL care costs. The person may not have any medical costs that month. In such months, the QIT deposit that would normally go to medical expenses may not have anywhere to go and become “trapped” in the QIT. The person still needs to meet the Medicaid requirements during months when Medicare is paying the bills, so this “trapped” money is a failure to comply with the rules.
If you’re late on a bill, you get a late fee. It costs a little money, but it isn’t a tragedy. If a trustee doesn’t empty the QIT every month, the person in long term care loses Medicaid coverage. That person doesn’t have money stored away to pay for care during that time. (Remember, the person had to be poor to get on Medicaid in the first place.)
For some people, losing Medicaid even temporarily can mean a really long time. Some Medicaid programs have waiting lists (especially some of the waiver programs.) A person who loses Medicaid eligibility because of a QIT violation may not get back onto coverage without having to go back onto the waiting list.
Even if one can get past the illogic of the requirement for a Miller Trust (discussed in the last installment) and set up such a trust, the requirement to spend all of the money out of the trust will make month-to-month compliance difficult.