Month: October 2016

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Property Essential to Self-Support

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This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled 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.  The July 1, 2016 installment discussed the need to empty the Miller Trust account every month.  The July 7, 2016 installment discussed the need to balance the Miller Trust with the desire to have health insurance.  The July 15, 2016 installment discussed the confusing deposit rules for Miller Trusts.  The July 21, 2016 installment discussed the changes that the Ohio Department of Medicaid made to the form Miller Trust document.  The July 28, 2016 installment discussed whether income is supposed to go directly into the Miller Trust.  The August 4, 2016 installment discussed Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.  The August 11, 2016 installment discussed money that doesn’t actually reach the Medicaid-recipient that, nonetheless, counts as “income” for purposes of using a Miller Trust.  The August 18, 2016 installment discussed  the appearance that a person on long term care Medicaid has an increase in income when he/she stops paying Medicare premiums.  The August 25, 2016 installment discussed the impact of tax withholding on certain income sources and the difficulty that the tax withholding creates for the Miller Trust.  The September 2, 2016 installment discussed the limit placed on monthly costs of the Miller Trust.  The September 9, 2016 installment discussed how Ohio’s Medicaid rules appear to count income tax refunds twice.  The September 15, 2016 installment discussed the Ohio Department of Medicaid’s change in policy regarding real estate (other than the residence.)  The September 22, 2016 installment discussed keeping the house with an intent to return to home.  The September 29, 2016 installment discussed keeping the house while a dependent family member lives there.   The October 6, 2016 installment discussed the home that is co-owned by someone else (other than the spouse.)  Today’s installment will discuss real property that is “essential for self-support.”

Before July 31, 2016, a single person who asked for Medicaid’s help to pay for long term care costs and who owned a home had 13 months after the beginning of Medicaid coverage during which to put the home up for sale.  (If the Medicaid applicant were married and the spouse still lived in the home, there was no obligation to sell.)  That 13-month time period is gone.  As part of the big August 1, 2016 change in rules, Ohio Medicaid rescinded the 13-month rule.  Now, the person must decide to keep the house or to sell the house before applying for Medicaid.

If the person decides to sell, then the rules regarding real estate discussed in the September 15, 2016 installment apply.

If the person decides not to sell, then one of a number of certain conditions must apply.  Under the new rules, if the applicant for Medicaid for long term care owns a parcel of real estate and the parcel is “essential to [the applicant’s] self-support,” the applicant may keep the parcel.  The complicated criteria for “essential to self-support” are set forth in Ohio Administrative Code section 5160:1-3-05.19 (which was amended effective August 1, 2016.)

The first way in which real estate can qualify as “essential to self-support” is to be used as part of the applicant’s employment.  For a person in long term care, however, employment is unlikely.  To qualify for help with long term care costs, a person must need help with activities of daily living (such as bathing and dressing) or be unsafe to stay home alone.  A person who needs help with activities of daily living or who cannot stay home safely is unlikely to be able to work.  Because of the applicant’s likely inability to work, this language in the Medicaid rules seems pointless.

The second way that a parcel of real estate qualifies as “essential to self-support” is to be a “nonbusiness property used to produce goods or services essential to basic daily living needs.”  “Basic daily living needs” is defined as “food, basic clothing, basic housing, and medical care.”  So, for example, a farm produces food, so it can qualify as “essential to self-support.”  For these nonbusiness properties, however, only $6,000 of the equity in the property is excluded from the Medicaid eligibility calculation.  As a result, this exclusion is not very helpful for real property.  (The same exclusion rules apply to personal property used to produce goods or services essential to basic daily living needs.  For personal property (aka the “stuff” that someone owns other than real estate) the $6,000 exclusion can be useful.

Finally, the last type of real property “essential to self-support” is “nonbusiness income-producing property” such as rental property or mineral rights.  Like with properties that help produce goods and services for basic daily living needs, only the first $6,000 of equity is exempted from the Medicaid eligibility calculation.  However, that exclusion applies only if the annual rate of return is 6% (subject to certain limited exceptions on the rate of return target.)  Because of the $6,000 limit, this is not very useful for people trying to shelter resources from the costs of long term care.  In addition, the rate of return target may make even the $6,000 exclusion inapplicable.

All in all, the “essential to self-support” rule only works for people who fall within the “aged blind disabled” program who do NOT need long term care.  Unfortunately, the Ohio Medicaid rules do not explain this limitation.  Applicants are left to realize for themselves that “essential to self-support” isn’t useful for very many people who need long term care.

Medicare Annual Enrollment is here. Choose your insurance plan wisely.

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This week’s blog continues the break from the ongoing discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program.  That series will resume soon.

Medicare’s “Open Enrollment” period has arrived for next year’s coverage.  To have an insurance plan for the upcoming year to help cover the 20% of medical costs that Medicare will not cover, a Medicare-eligible person must enroll in the plan of his or her choice by December 7.  (Open Enrollment is October 15 to December 7 each year.)  The new policy will take effect on January 1.

People who have Medicare available to them have three basic options for medical insurance.  So called “straight Medicare” provides the insured person with Medicare coverage for 80% of medical costs.  The insured person is responsible for the other 20% as a co-pay.  People who do not wish to pay the 20% co-pay can purchase either Advantage Plans or Medicare Supplements.An Advantage Plan is an insurance policy that pays most or all of the 20% of medical costs that Medicare does not cover.  The amount of the insured’s new co-pay depends on the Advantage Plan that the insured chooses.  Generally, the higher the premium, the lower the co-pay.  There are plenty of other options that change the price and co-pay as well.  (An Advantage Plan actually steps into the shoes of Medicare and pays the 80% in addition to whatever costs exceed the insured’s co-pay.  The Advantage Plan insurance company receives both the premium of the individual insured person and a payment from the Medicare program in lieu of Medicare’s usual 80% payment towards the insured’s costs.  The Advantage Program’s coverage of Medicare’s portion of costs is generally not noticed by the insured.)  Because an Advantage Plan is a “replacement” for Medicare, it can have some limitations in covered services or in approved service providers as compared to “straight Medicare.”  In addition, there are many different Advantage Plans, each offering slightly different coverage, from which to choose.

When an insured person has a Medicare Supplement (sometimes called a Medi-Gap policy,) the Medicare program pays its usual 80% pays the insured’s medical costs, and the Supplement pays the 20% not covered by the Medicare office.  Medicare Supplements, because they supplement Medicare rather than replace Medicare, do not generally have any differences from Medicare in covered services or approved service providers.  There are many different Supplements.  The differences among Supplements generally is small, but worth examining.
Please be aware, it isn’t necessary to have Medicare additional insurance.  Someone can choose “straight” Medicare in which he or she must cover the 20% Medicare co-pay by himself or herself.    It costs nothing in a year during which that person has no medical issues.  It can, though, without warning, cost lots of money if that person has an accident or needs an operation, for example.  Each person on “straight” Medicare could pay 20% of $0 or 20% of $200,000, or 20% of any amount depending on what happens during that year.  Before choosing traditional Medicare, you must decide whether you wish to assume the risk of a big surprise in health costs during the coming year.
The monthly premium for an Advantage Plan is generally much lower than the premium for a Medicare Supplements.  (Some Advantage Plans have a $0 premium, in fact.)  An Advantage Plan’s limitations on services and providers is the trade-off for a lower premium.  The most glaring difference, though, between Advantage Plans on the one hand and both straight Medicare and Medicare Supplements on the other hand is the coverage of post-hospitalization rehabilitation services.
With straight Medicare and Medicare Supplements, an insured person who has been admitted to the hospital for three days and then needs post-hospitalization rehab can have 100 days of rehab coverage.  Someone on an Advantage Plan may have rehab coverage end before 100 days have elapsed.  An Advantage Plan (because it has rules slightly different than straight Medicare) can determine that rehab is not helping the insured person and can end coverage.  Sometimes the rehab coverage is stopped as early as day 20.  (Advantage Plans used to base their decisions on ending rehab payments on on day-to-day progress reports.  Now, Advantage Plans must now look at week-to-week comparisons or even bi-weekly comparisons.)  Still, rehab can be very expensive, so Advantage Plans have a strong incentive to end rehab coverage as early as possible.
(“Admission” to the hospital rather than “under observation” in the hospital is a very important distinction in the availability of any insurance coverage for rehab.  That issue is not handled differently by Medicare, Advantage Plans, or Medicare Supplements, though.  Consequently, the “admission” versus “observation status” issue is not important to today’s discussion.  I mention it here as a side note because it is an important issue for all people insured through Medicare.)
Even though we are in an “open” enrollment period, someone covered by any form of Medicare cannot simply switch plans on demand.  Medicare, unlike the Affordable Care Act, allows the insurance company to make underwriting decisions on individual plans.  Trying to move to a plan that provides more coverage may require a medical examination and will certainly require answering medical questions.  Generally, I urge people to move to a Medicare Supplement, if they can (as long as the premium isn’t prohibitive.)
If a Medicare Supplement is not available, an alternative is an Advantage Plan or even straight Medicare with a separate Hospital Indemnity policy.  (The cost of an Advantage Plan plus Hospital Indemnity policy is usually less than a Medicare Supplement.)  A Hospital Indemnity policy is subject to underwriting, though.  Someone who exhibits symptoms that are a concern for the Hospital Indemnity insurance company may not be able to get such a policy.
Without considering the cost of premiums, my preferences for medical insurance is a Medicare Supplement.  My second choice is an Advantage Plan with a Hospital Indemnity policy.  My third choice is straight Medicare.  Finally, my fourth choice is an Advantage Plan.  (Because I provide legal services to people who need long term care or that have special needs, my clients have health concerns.  That possibly causes my preference for the broad coverage that supplements provide.)
No matter your preference, seek out a Medicare insurance agent that represents more than one insurer.  Don’t just assume that the person at the table in your local grocery, pharmacy, or department store can give you all the options.  If the person at that table sells insurance for just one company, please consider whether you want to find more options before deciding.
But, don’t go it alone.  Get help from an insurance broker.  These insurance plans are complicated, and there are many different choices among Advantage Plans and among supplements.  Let someone help you figure out your best options.  Their help doesn’t cost you anything.  They’re paid by the insurer you choose.
Choose your plan wisely.
Acknowledgement:  Thanks to Michael Whitaker of Premier Solutions Group in Brookpark, Ohio for helping me understand Hospital Indemnity insurance.

Election Season 2016 has arrived. PLEASE Vote for Good Judges!

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This week’s blog discussion isn’t focused on seniors or people with special needs.

Election Day is Tuesday, November 8, and in many places (including Ohio) early voting is already available.

I urge you to seek out and consider the bar association rankings of judicial candidates when you vote.

Some bar associations meet with judicial candidates to try to predict fairness as a judge (often called “judicial temperament.)  This is NOT a test on issues or ideology.  It is a judgment of a willingness to listen to both sides and an ability to make tough, sometimes uncomfortable, decisions.  These rankings have nothing to do with Democrat or Republican or third party or Independent affiliations.

The possible rankings are:
Highly Recommended (highest ranking)
Recommended
Acceptable, and
Not recommended (lowest ranking)

Or

Excellent (highest ranking)
Good
Acceptable, and
Not recommended (lowest ranking.)

The reviews may not express a preference between candidates.  Sometimes two or more candidates for the same judgeship will have identical rankings.  (Unfortunately, that occasionally means that only “not recommended” candidates are available for a particular judgeship.)

For my friends in northeast Ohio (where I live,) you can find bar association rankings at:

Ohio Supreme Court:  https://www.ohiobar.org/ForPublic/PressRoom/Pages/OSBA-announces-Supreme-Court-of-Ohio-candidate-ratings-for-the-2016-Election.aspx (by the Ohio State Bar Association)

Ohio Supreme Court and local courts in Cuyahoga County: https://youbethejudgesummitcounty.com/ (by 4 bar associations and two newspapers)

Ohio 9th District Court of Appeals and local courts in Summit County: http://youbethejudgesummitcounty.com/ (by the Akron Bar Association)

I was not able to find bar association ratings for other counties.  Sorry.

I urge you to consider these ratings when you vote.  If you live somewhere other than the counties I’ve listed above, I urge you to see if your local bar association has made ratings available for your judicial candidates.

Then, please get out, and vote.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Co-Owned Residence

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This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled 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.  The July 1, 2016 installment discussed the need to empty the Miller Trust account every month.  The July 7, 2016 installment discussed  the need to balance the Miller Trust with the desire to have health insurance.  The July 15, 2016 installment discussed the confusing deposit rules for Miller Trusts.  The July 21, 2016 installment discussed the changes that the Ohio Department of Medicaid made to the form Miller Trust document.  The July 28, 2016 installment discussed whether income is supposed to go directly into the Miller Trust.  The August 4, 2016 installment discussed Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.  The August 11, 2016 installment discussed money that doesn’t actually reach the Medicaid-recipient that, nonetheless, counts as “income” for purposes of using a Miller Trust.  The August 18, 2016 installment discussed  the appearance that a person on long term care Medicaid has an increase in income when he/she stops paying Medicare premiums.  The August 25, 2016 installment discussed the impact of tax withholding on certain income sources and the difficulty that the tax withholding creates for the Miller Trust.  The September 2, 2016 installment discussed the limit placed on monthly costs of the Miller Trust.  The September 9, 2016 installment discussed how Ohio’s Medicaid rules appear to count income tax refunds twice.  The September 15, 2016 installment discussed the Ohio Department of Medicaid’s change in policy regarding real estate (other than the residence.)  The September 22, 2016 installment discussed keeping the house with an intent to return to home.  The September 29, 2016 installment discussed keeping the house while a dependent family member lives there.  Today’s installment will discuss the home that is co-owned by someone else (other than the spouse.)

Before July 31, 2016, a single person who asked for Medicaid’s help to pay for long term care costs and who owned a home had 13 months after the beginning of Medicaid coverage during which to put the home up for sale.  (If the Medicaid applicant were married and the spouse still lived in the home, there was no obligation to sell.)  That 13-month time period is gone.  As part of the big August 1, 2016 change in rules, Ohio Medicaid rescinded the 13-month rule.  Now, the person must decide to keep the house or to sell the house before applying for Medicaid.

If the person decides to sell, then the rules regarding real estate discussed in the September 15, 2016 installment apply.

If the person decides not to sell, then one of a number of certain conditions must apply.  Under the new rules, if someone else lives in the house and co-owns it, the Medicaid-applicant/recipient may keep it and still receive Medicaid coverage for long term care.

The new rule that describes whether and how to count the house as an asset of the Medicaid applicant/recipient (Ohio Administrative Code section 5160:1-3-05.13) lists the ways that someone can live in a nursing home or assisted living facility AND receive Medicaid’s help with the nursing home/assisted living costs AND to keep his/her home.  Subsection (C)(4)(b) allows the person to keep the home and excludes the value of the home from the count of the person’s assets if someone else owns part of the home.

To allow the home to be excluded from counting as an asset for the Medicaid applicant/recipient, the co-owner must submit a signed statement that the home is (1) his/her principal place of residence, (2) he/she has no other place readily available to use as a principal place of residence, and (3) he/she would have to move out if the property were sold. (These are in a different order in the rule, but this order seemed to make more sense for discussion purposes.)

The first requirement is that the co-owner must use the home as his/her principal place of residence.  As a result, co-ownership with the Medicaid applicant/recipient’s adult child for purposes of avoiding probate (or a weak attempt at avoiding long term care costs) will not protect the home unless the co-owner lives in the home.

The second requirement provides that the home is protected only if the co-owner has no other place readily available where he/she could live.  If the co-owner has a snowbird home in the South, for example, the Ohio home would not be protected.  The co-owner could move to the other house.

The third requirement, that the co-owner would have to move out if the home were sold, seems logical, but I’m not sure how the co-owner wouldn’t be subject to this requirement upon the sale of the home.  The necessity to move out would be a decision of the new owner, but, because we’re trying to document that the house won’t count as an asset for the Medicaid-seeking co-owner and, as a result, won’t have to be sold, the “buyer” is purely hypothetical.  Except for the TV show “Two and a Half Men,” when Walden bought the house from Charlie’s estate and allowed Alan to continue to live there, how often does a buyer allow someone else to continue to live in the property?  The necessity to move out makes sense as a requirement for this rule, but I can’t really foresee events unfolding any other way.

I don’t expect this co-ownership exception to be extremely common, but it will certainly help protect the home of a number of people.  Co-ownership by widowed siblings is relatively common and may be the most likely way that the house is co-owned (among seniors anyway) when someone requires Medicaid for long term care.  Similarly, a number of never-married siblings continue to live in the home left to them by deceased parents and, often, would co-own the home as a result of their parents’ estate plans.

In addition, I suspect that the number of cohabiting unmarried couples will grow in the future (among both same sex couples and opposite sex couples.)  For same sex couples, cohabitation was common before same sex marriage was deemed a right by the U.S. Supreme Court.  Some of these couples may choose not to get married because they became accustomed to their living situation long before their right to marry was recognized, and they simply may not want to bother to change their situation.  Among both opposite sex couples and same sex couples, especially if they come together later in life, they may choose not to marry because their combined finances may be better as single people rather than married people.  As a result, I believe that the co-ownership protection for the house will become more important in the future.