Month: June 2016

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.  Today’s installment will start a series of discussions of difficulties with the Miller Trust.

The first difficulty that we will have with the Miller Trust is the difficulty in helping clients understand the Miller Trust.  Someone will have to sign a Miller Trust agreement.  (Ohio Medicaid is calling this document a Qualified Income Trust Declaration.)  The person who will sign the declaration/agreement is (I would hope) going to ask what he/she is signing and to understand why he/she is signing it.  Helping someone to understand the logic of a Miller Trust may well be impossible.

Someone who “makes too much money” in income will not qualify for Medicaid’s support for long term care costs.  (Since the last inflation adjustment, anyone who makes more than $2,199 per month gross has too much income to qualify for long term care Medicaid.)  When nursing homes cost more than $7,000 per month, and assisted living facilities cost more than $4,000 per month, it’s hard to explain why $2,199.01 is “too much income” for Medicaid.  There still a significant shortfall in the ability to pay for long term care.

Our cure for “too much income” is to move the excess income (the amount over $2,100) to the Miller Trust.  Under the coming Ohio Medicaid rules, the money that goes into the trust isn’t “income” once it goes into the Miller Trust.  After the money is placed into the trust, it has to go back out of the trust to pay monthly costs for which the Medicaid recipient is responsible.  The flow of income out to pay the Medicaid recipients cure sounds like the way that income acts.  But, money that goes into the Miller Trust isn’t “income” any longer (in the eyes of Medicaid.)

In the real world, the Miller Trust makes no sense.  What looks like “income” isn’t income any longer after going into the Miller Trust.  It looks like income.  It acts like “income.”  It arrives each month like income.  Yet, somehow, it’s not “income” anymore.

A Miller Trust is sort of like watching one of the “Harry Potter” movies.  We know that people can’t ride on flying brooms or cast a spell that makes an animal materialize out of smoke.  Still, for purposes of enjoying the movie, we suspend our disbelief in magic.  To accept a Miller Trust, we need not suspend our disbelief.  Instead, we must suspend our intolerance for the nonsensical.

Someone signing a Qualified Income Trust Declaration must accept the trust with no better explanation for it than “Those are the rules,” or, using the reasoning of our wise parents, “because I said so.  That’s why.”

It doesn’t matter whether the person signing the trust declaration ever comes to understand the Miller Trust or the Medicaid rules.  Because Medicaid coverage worth thousands of dollars each month it at stake, the person must sign it.  It doesn’t matter if the signer must hold his/her nose to block the stink of illogical nonsense, the trust declaration must get signed.

Getting someone to the point at which he/she has the necessary faith in the Medicaid system to sign the trust declaration is the first difficulty in dealing with Miller Trusts.

Friends,

I’m sorry that I’ve not posted a blog the last four weeks.  My office internet was down the first of those weeks, preventing me from having enough time online to get my blog and newsletter written.  (With the limited internet access available to me, I posted an interesting article in place of my blog.)  Then, I skipped two weeks because I was on a family trip to Alaska.  (I didn’t give you advance notice because I didn’t want to advertise that my house would be empty.)  Then, I skipped the first week back because I was busily trying to pick up the pieces of my work after two weeks away.  Now, I’ll pick up where I left off.

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program for people who need long term care 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 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.  Today’s installment will discuss the Ohio rules that describe how to use the Miller Trust each month.

Background information:  The April 15, 2016 version of the Ohio rules for Miller Trusts can be found here.  The first version (the first one that I’ve seen anyway) of a form Miller Trust for Ohio can be found here.  These rules and the form Miller Trust might change before full implementation of the new eligibility system.  (Of course, if these documents change, my discussion below is, at least in part, obsolete.  On the other hand, if these documents change, I have a topic for a future blog installment without having to wrack my brain for a new idea.)

Warning:  Don’t look too hard for logic here.  Very little of the Medicaid program for long term care is logical, but this Qualified Income Trust  takes the lack of logic to a whole new level.  While I know that it’s called a Miller Trust because some person named Miller won a court case that made these trusts okay, these things are so illogical that I can’t help but think (as I mentioned last time) that this idea came to someone who was drinking way too many Miller beers at the time.  To the whole world of people who don’t deal with long term care costs on a daily basis, as well as to a good number of people who do, this thing must look absolutely nuts!

A Qualified Income Trust is, essentially, a washing machine for money.  No, it doesn’t launder money in the way that drug dealers and arms dealers launder money.  Income goes into a Qualified Income Trust and, when it comes back out of the trust, isn’t “income” any more.  Essentially, the trust washes the “stink” of income off of that money.  In the real world, the money is still “income,” but, according to the Medicaid rules, it’s not “income.”  (I repeat, this is not logical.  I don’t think I can repeat that point enough.)

The operation of the Miller Trust sounds easy.  The person’s income above $2,199 (gross) must be placed in the trust before the end of the month in which the money arrived.  The rules allow income below $2,199 to be placed in the trust as well, if the person and his/her trustee finds that more convenient.  (Income that doesn’t arrive, such as withheld taxes and the premium for Medicare, obviously can’t be placed into the trust.  The income that doesn’t actually arrive must still be counted as part of the gross income, though.)

The proposed rule would require the income above $2,199 to go into the trust automatically each month from the account in which the income arrives.  A bank’s automatic transfer function should probably be used to make sure the income gets into the Miller Trust each month.

The money in the trust can be used for only four things:
– The person’s Personal Needs Allowance ($50 each month,)
– The income (if any) that must be given to the person’s spouse according to the Medicaid rules for spousal income,
– Incurred health care costs, and
– A “reasonable” amount for legal, accounting, and bank fees each month, not to exceed $15.
The money that goes into the trust must be paid out in the same month in which it arrives.  The rest of the person’s obligations (such as separate health insurance and the rest of the person’s payment for care) must be paid out of the money that doesn’t go into the trust.

The trustee for the Miller Trust can’t be the person who is covered by Medicaid.  (That person is probably not handling his/her own affairs anyway.)  Whomever is handling the person’s money has to make sure that the money gets into the trust and is paid out of the trust each month.