Long Term Care Costs

Be careful who helps you with Veterans Benefits

Posted on February 24, 2017 by Jim Koewler — No Comments ↓

The United States Department of Veterans Affairs has created a list of people and organizations that are allowed to help with VA benefits.

(Note: The Department of Veterans Affairs used to be called the Veterans Administration or VA before it was elevated to a Presidential Cabinet level department of the U.S. government. Many people, including me, still often call it the VA for short.)

The people and organizations are “accredited” by the VA to help with VA benefits. A list of VA accredited people is available on the VA’s website. (https://www.va.gov/ogc/apps/accreditation/)

Attorneys can be accredited. The are called accredited attorneys. People who are not attorneys can be accredited. They are called accredited agents. All people who get accredited must keep their training on VA benefits up to date to keep their accreditation.

In addition to the accredited attorneys and agents, a person can help someone apply for VA benefits once. Most often, these one-time helpers are children of the applicants.

In addition to accreditation requirements, no one (accredited or not) is allowed to charge a fee to help someone apply for VA benefits. Put another way, no one is supposed to accept money for help applying for VA benefits. The applicant isn’t supposed to have to pay. The applicant’s family isn’t supposed to have to pay. The applicant’s nursing isn’t supposed to have to pay. Plain and simple, it’s supposed to be free.

To be sure, certain people work for organizations that help veterans and their families apply for benefits, and, as employees, these people get paid. The organizations, however, don’t get paid to help with the applications. For example, in many states, certain state or local government employees are paid to help residents apply for benefits. In Ohio, we have county Veterans Services Commissions. These are government employees that receive a paycheck, but their pay does not depend on the number of people that they help. Similarly, many veterans organizations, such as American Legion, Veterans of Foreign Wars, and Disabled American Veterans, help with VA applications, but they do so at no charge to the applicant. These organizations are supported by donations and fundraisers that are completely separate from the help with VA applications.

There are some non-profit organizations set up to help with VA applications for Pension (more often called Aid and Attendance.) Such organizations can’t charge a fee. Some of them, though, explain that they expect a “donation” in return for help with the application. Is this “expected donation in return” a violation of the “no fee for application” rule? I’m not sure. Such a “non-profit” organization once offered to prepare my clients’ VA applications in exchange for a certain dollar amount donation per application. That offer didn’t pass my personal “smell test.”

Now, please remember that the VA Pension benefit is not available to an applicant whose wealth is over a certain limit. (The limit on wealth, comes from a complicated formula rather than a certain dollar figure, so I won’t go into detail on the wealth limit in this installment.) Certain non-profit often speak to residents of assisted living facilities about the Pension benefit, offering free help with Pension applications. Then, when a resident meets with the organization’s representative one-on-one, the resident is told that he/she has too much money to qualify. The residents who have too much wealth are then referred to someone who can help them become “poor enough” to qualify for the Pension benefit. According to the information I have received over the years, the referrals to help someone become poor enough to qualify are almost always to someone who offers to sell an annuity that the VA won’t count as “wealth” because the annuity has a long surrender period.

(Feb. 27, 2017 Ed. Note: I received a comment in response to this post from someone with the Academy of VA Pension Planners explaining that VA doesn’t care about a surrender period for an annuity. If the person can access the funds, the funds count as wealth in the eligibility determination. I admit that I don’t know whether the comment that I received is true or if the position taken by the annuity salesperson that VA won’t count an annuity with a surrender charge is true. BUT, I have witnessed an annuity salesperson claim that VA won’t count annuities with surrender charges. My concerns expressed below about such annuities if the owner would need Medicaid are great enough for me to dislike such an approach no matter VA’s position on them.)

Now, there is nothing inside current VA rules that indicates that a long surrender period annuity violates VA policy. If the person’s income and VA benefit cover his/her care costs for the rest of his/her life, then everything is fine. If the person’s care costs exceed the income plus VA benefit, problems can arise.

If the person needs to go on Medicaid to get all of his/her care costs paid, then the money placed in the annuity is now considered for Medicaid eligibility. (Medicaid doesn’t ignore annuities with a surrender charge the way that the VA ignores them.) The annuity will probably have to be cashed in, and the surrender charge lost, before the person can get Medicaid coverage. Depending on the age of the annuity, that surrender charge can be huge.

Many elder law attorneys help people who want to get VA benefits, and sometimes that help includes becoming “poor enough” to qualify for VA Pension (in the same way that elder law attorneys can help people become “poor enough” to qualify for Medicaid for long term care.) None of the elder law attorneys that I know use the “bait and switch” tactic that these annuity salespeople use. The elder law attorneys that I know do not get your attention with the “free” help with applications as a way to get your attention.

So, when considering VA benefits (especially VA Pension,) if you want help from someone who does many such applications, look for someone accredited and be wary of “free” help and of organizations that you’ve not heard of before that have official sounding names.

My thanks to Craig Hannus of Gateway Advisors in Mentor, Ohio for suggesting this topic.

My apologies for not posting last week. I did not have time to prepare something that I considered satisfactory.

2017 Ohio Medicaid Financial Standards for Long Term Care – Update

Posted on February 1, 2017 by Jim Koewler — No Comments ↓

Okay! I’ve got to stop trying to post an update of this information right after the first of the year. Too many of these financial eligibility limits trickle out during January.

So, here’s an update of my early January 2017 post.

The Medicaid program helps pay for long term care (nursing home, assisted living, or in-home care) for many seniors. The Medicaid rules allow the patient and the patient’s spouse to keep certain amounts of their savings and certain amounts from their monthly income. As of January 2017, Ohio’s Medicaid program allows the following amounts:
Savings patient can keep: $2,000
Savings spouse at home can keep: $24,180 – $120,900
Monthly income patient can keep: $50
Monthly income allowance for spouse: $2,003 – $3,023
Monthly housing allowance for spouse at home: $601
Monthly utility allowance for spouse at home: $513
What Medicaid pays nursing homes each month: $6,570
Limit on equity in home: $560,000
Monthly gross income above $2,205 triggers the need for a Qualified Income Trust (aka Miller Trust)

Note: Because this information is an update of the Medicaid “financial standards,” it also appears on my website’s Medicaid page.

P.S. I’ll try to remember to publish the 2018 values in February next year rather than rushing to publish in early January and then having to correct myself.

Ohio Medicaid 2016 Rule Changes – Change of Heart on “Intent to Return” Home

Posted on January 19, 2017 by Jim Koewler — No Comments ↓

Well, the discussion of the 2016 changes to Ohio Medicaid’s rules continues.

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, 2016installment 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.) The October 27, 2015 installment discussed real property that is “essential for self-support.” The November 10, 2017 installment discussed the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs. The November 17, 2016 installment discussed the 2016 changes in how Ohio Medicaid will allow applicants to give away some of their assets cover the resulting penalty period through a return of part of the assets. The December 1, 2016 installment discussed Ohio Medicaid’s new prohibition on using promissory notes to recover from an applicant giving away assets. The December 8, 2016 installment discussed the possibility of using a Special Needs Trust to recover from assets given away creating a Medicaid penalty period. The December 15, 2016 installment discussed the use of short-term annuities to recover from a long term care Medicaid penalty period that results from giving away assets. The December 22, 2016 installment discussed the end of the monthly “spend-down” to achieve income eligibility for the type of Medicaid that substitutes for health insurance. The January 12, 2017 installment followed up the September 15, 2016 installment on a 2016 change to how Medicaid views real estate holdings with a discussion of a December 30, 2016 state hearing decision. Following up on the , today’s installment will discuss what appears to be a shift in policy by Ohio Medicaid on the applicant’s “intent to return” home.

Note on real estate: Before the rule changes, Medicaid treated the home differently than it treated other real estate. Now, after the rule changes, Medicaid still treats the home differently than it treats other real estate. However, neither the home nor other real estate is treated the same way now as it was before the rule changes.

If the applicant still lives in the home, its value is not counted toward the applicant’s financial eligibility for Medicaid. Likewise, if the applicant’s spouse or dependent child lives in the home, its value is not counted. These policies regarding home occupancy by the applicant or spouse have not changed during 2016.

Now, however, occupancy by other family members who are dependent on the applicant for support also keeps the house out of the eligibility determination. This is new and a result of the new rules.

If the applicant is not in the house and the house is not occupied by the spouse or a dependent family member, the house’s value is counted toward the applicant’s financial eligibility unless the applicant intends to return home. This is also new and also a result of the new rules. BUT, there seems to have been a switch in the interpretation of the “intent to return” in just the few months since the August 1, 2016 rule change.

Right after the rule change, county Medicaid officials explained that an applicant listing a house for sale shows that he/she does not intend to return and the house’s value should be counted in the eligibility determination. At the time that Medicaid explained its policy that putting a house up for sale showed an intent NOT to return, certain elder law attorneys explained that the applicant may need to move to a more suitable house. (For example, a smaller, one floor house with a larger bathroom and open space under the kitchen counters may be easier to navigate for someone who now needs a walker or a wheelchair.) A more navigable house would, after all, make it easier for the Medicaid applicant to return home. Nonetheless, the county officials explained that planning to move to a different house isn’t actually a “return,” so the house’s value is counted in the eligibility determination.

Now, in a recent public meeting, county Medicaid officials have expressed a change of heart on how it views an applicant’s plan to “return” home but to a “different home.” Now, Medicaid no longer automatically concludes that putting a house up for sale shows an intent not to return. Ohio Medicaid has apparently concluded that making it easier to allow a person receiving long term care to move out of a nursing home or assisted living into a home of his/her own could be a good thing.

After all, most people want to stay in their own homes. Living at home, even if one receives long term care, has certain emotional benefits for some people. It also allows Medicaid to pay for care without also paying for housing.

Assuming that the position expressed by this county official in fact reflects the state policy, it’s a move to make the application process for long term care Medicaid and, even more, the location where one receives the care itself, more favorable to the person.

Ohio Medicaid 2016 Rule Change on Real Property may not Stick

Posted on January 12, 2017 by Jim Koewler — No Comments ↓

I thought I had finished the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled program for 2016-2017 with my installment on December 22, 2016. A recent ruling in an administrative appeal, however, might reverse one of the August 1, 2016 rule changes.

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, 2016installment 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.) The October 27, 2015 installment discussed real property that is “essential for self-support.” The November 10, 2017 installment discussed the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs. The November 17, 2016 installment discussed the 2016 changes in how Ohio Medicaid will allow applicants to give away some of their assets cover the resulting penalty period through a return of part of the assets. The December 1, 2016 installment discussed Ohio Medicaid’s new prohibition on using promissory notes to recover from an applicant giving away assets. The December 8, 2016 installment discussed the possibility of using a Special Needs Trust to recover from assets given away creating a Medicaid penalty period. The December 15, 2016 installment discussed the use of short-term annuities to recover from a long term care Medicaid penalty period that results from giving away assets. The December 22, 2016 installment discussed the end of the monthly “spend-down” to achieve income eligibility for the type of Medicaid that substitutes for health insurance. Today’s installment will follow up the September 15, 2016 installment on a 2016 change to how Medicaid views real estate holdings with a discussion of a recent state hearing decision.

Appeal number 3148728, in a decision dated December 30, 2016, resolved a conflict between one of the 2016 changes and a longstanding Medicaid eligibility concept regarding “availability” of the applicant’s “resources.” (Remember, Medicaid calls “resources” what most of the rest of the world calls “assets” or “life savings.”)

The 2016 rule change at issue was the repeal of Ohio Administrative Code section 5160:1-3-05.15 which provided that real property was exempt from the resource calculation for a Medicaid recipient/applicant if the property was up for sale through a broker or agent. When that rule was rescinded, elder law attorneys concluded that the Ohio Department of Medicaid wanted to make the ownership of real estate a bar to eligibility to long term care Medicaid even if the applicant was trying to sell the real property.

The resource “availability” test for counting resources is set forth in Ohio Administrative Code 5160:1-3-05.1(B)(7), the definition of “resources.” This rule defines “resources” as “cash, other liquid asset, personal property, and real property an individual and/or the individual’s spouse has an ownership interest in, has the legal ability to access in order to convert to cash (if not already cash), and is not legally prohibited from using for support and maintenance.” The language from this rule that is important to our discussion is “has the legal ability to access in order to convert to cash.”

In the application that led to the December 30, 2016 state hearing decision, the applicant had listed three parcels of real property for sale in June 2016, two to three months before applying for Medicaid on August 29, 2016. The initial asking price for the real properties was the value as listed in the county’s property tax records. After some time passed with no sales (but before the Medicaid application,) the seller reduced the asking price for each parcel. The state hearing decision ruled that, because the properties had not been sold despite the attempts to do so, they were not “available resources” because they could not be converted into cash.

As a result, the applicant was able to get Medicaid coverage for long term care despite continued ownership three parcels of real property. This result seems directly to contravene the apparent intent of rescinding Ohio Administrative Code section 5160:1-3-05.15.

Now, the state hearing decision is rather brief. It is not clear whether the same result would have been reached if the real properties would have been listed for sale for a time period shorter than the two to three months. Likewise, it is not clear whether the same result would have been reached if the asking prices had not been reduced. (The initial asking prices set at the county appraised value was important because any higher asking price would be viewed as an attempt to avoid a sale.)

Similarly, Ohio Medicaid has a spotty history in recognizing the precedential value of state hearing decisions in later applications, so this individual decision may not lead to other similar decisions.

Nonetheless, the first case that looked at the conflict between the new real property rules and the “availability” requirement was decided in favor of the Medicaid applicant. It’s a good sign.

2017 Ohio Medicaid Financial Standards for Long Term Care

Posted on January 5, 2017 by Jim Koewler — No Comments ↓

Note: There was no blog post last week (December 30.) Happy 2017!

The Medicaid program helps pay for long term care (nursing home, assisted living, or in-home care) for many seniors. The Medicaid rules allow the patient and the patient’s spouse to keep certain amounts of their savings and certain amounts from their monthly income. As of January 2017, Ohio’s Medicaid program allows the following amounts:
Savings patient can keep: $2,000
Savings spouse at home can keep: $23,844 – $119,220
Monthly income patient can keep: $50
Monthly income allowance for spouse: $2,003 – $2,981
Monthly housing allowance for spouse at home: $601
Monthly utility allowance for spouse at home: $513
What Medicaid pays nursing homes each month: $6,570
Limit on equity in home: $552,000
Monthly gross income above $2,205 triggers the need for a Qualified Income Trust (aka Miller Trust)

Note: Because this information is an update of the Medicaid “financial standards,” it also appears on my website’s Medicaid page.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – No more Monthly “Spend Down”

Posted on December 22, 2016 by Jim Koewler — No Comments ↓

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, 2016installment 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.) The October 27, 2015 installment discussed real property that is “essential for self-support.” The November 10, 2017 installment discussed the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs. The November 17, 2016 installment discussed the 2016 changes in how Ohio Medicaid will allow applicants to give away some of their assets cover the resulting penalty period through a return of part of the assets. The December 1, 2016 installment discussed Ohio Medicaid’s new prohibition on using promissory notes to recover from an applicant giving away assets. The December 8, 2016 installment discussed the possibility of using a Special Needs Trust to recover from assets given away creating a Medicaid penalty period. The December 15, 2016 installment discussed the use of short-term annuities to recover from a long term care Medicaid penalty period that results from giving away assets. Today’s installment will discuss the end of the monthly “spend-down” to achieve income eligibility for the type of Medicaid that substitutes for health insurance.

The Medicaid that has no more monthly spend-down is NOT Medicaid for long term care. It’s the Medicaid that provides financial support for doctor visits, prescriptions, hospital visits, etc. for the Aged, Blind, and Disabled population that has no more monthly spend-down. In other words, there’s no more monthly spend-down for the Medicaid that is available to Aged, Blind, and Disabled people who need Medicaid because they can’t afford privately purchased health insurance. We’ll call this “health-insurance-Medicaid” (as opposed to the “long-term-care-Medicaid about which I usually write.)

Obviously, a statement that a monthly spend-down is no longer available means that there used to be a monthly spend-down. That’s right. There used to be a monthly spend-down that allowed many people to meet the income requirements necessary to receive Medicaid support.

Here’s how it worked. Medicaid is available only to people below a certain level of income. Before the Affordable Care Act made health-insurance-Medicaid available to people based only on income, health-insurance-Medicaid used to be available only to people who had a particular, identified need AND whose income was low enough to qualify. For example, families with low income that qualified for the Aid to Families with Dependent Children also qualified for health-insurance-Medicaid.

One of the particular, identified needs that could qualify someone for health-insurance-Medicaid was a disability. People who were disabled (meaning that they cannot financial support themselves through work) who also had income below a certain level (which was adjusted for inflation from time to time,) qualified for health-insurance-Medicaid. So, some people who had disabilities could not qualify for health-insurance-Medicaid because their incomes were too high.

BUT, according to Ohio rules, a disabled person could spend money on his/her health care each month, and that amount would be deducted from his/her income. If, after the deduction of health care spending, the person’s remaining income was below the income limit enough to qualify for health-insurance-Medicaid, then the person would receive health insurance Medicaid for that month.

This was a monthly nightmare for the various county Departments of Job and Family Services, the agency that oversees financial eligibility for Medicaid. According to some estimates, 20,000 to 30,000 people had have their monthly spending monitored to see if they qualified for Medicaid for that month. Then, next month, it would start over again.

I MUST HERE GIVE CREDIT TO OHIO for taking care of its people. (You won’t hear that from me terribly often.) Most of these 20,000 to 30,000 people would have had no health insurance if Ohio had not allowed a monthly spend-down to qualify for health-insurance-Medicaid. With their disabilities, they would not have been able to get private health insurance because their disabilities would be “pre-existing condition” that health insurance companies would not have covered.

Then, after the Affordable Care Act was put into effect, all of the 20,000-30,000 could get health insurance. (Remember, pre-existing conditions could not be used as a reason to withhold insurance coverage.) So, Ohio ended its monthly spend-down program for disabled people with the expectation that all Ohioans (including people with disabilities) could get health insurance. Even if a good number of these 20,000 to 30,000 people qualified for Medicaid under the Affordable Care Act income test, Ohio will have a smaller share of the health care costs for those people. Under the ACA, the federal government picks up a larger share of the cost than it picked up for pre-ACA health-insurance-Medicaid. The state saves money.

That savings of state money for disabled people’s health-insurance-Medicaid is, in my view, the driving force behind all of the changes in Ohio’s Medicaid rules of August 1, 2016. It’s all about the money.

This is the end of the series on “Ohio Medicaid changes ‘Aged Blind Disabled’ Eligibility” for 2016, for now at least. (This series started April 28, 2016.) We finished just in time. The end of the year is here.

With Christmas and New Year’s Day around the corner, I do not expect to post another blog until January. Happy Holidays to all. Best wishes for 2017.

Peace on Earth! Good will to all Men and Women!

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Penalty Recovery through Annuities

Posted on December 15, 2016 by Jim Koewler — No Comments ↓

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, 2016installment 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.) The October 27, 2015 installment discussed real property that is “essential for self-support.” The November 10, 2017 installment discussed the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs. The November 17, 2016 installment discussed the 2016 changes in how Ohio Medicaid will allow applicants to give away some of their assets cover the resulting penalty period through a return of part of the assets. The December 1, 2016 installment discussed Ohio Medicaid’s new prohibition on using promissory notes to recover from an applicant giving away assets. The December 8, 2016 installment discussed the possibility of using a Special Needs Trust to recover from assets given away creating a Medicaid penalty period. Today’s installment will discuss the use of short-term annuities to recover from a long term care Medicaid penalty period that results from giving away assets.

Note: What I am calling “assets” Medicaid calls “resources.” In Medicaid’s terminology, “assets” includes both “resources” and “income.” Because most of the public thinks of “resources” as human resources or natural resources, and thinks of money in the bank as “assets,” I will use the term “assets” in this installment to refer to money in the bank and other similar things of value (like real estate, life insurance, etc.) that may be included in the applicant’s life savings.

Generally, when an applicant for Medicaid for long term care services gives away something of value (aka “assets,”) Medicaid will not pay for services for the amount of time that the given-away assets would have covered. This “penalty” is found within the “transfer of assets” rule in Medicaid’s regulations.

Despite the penalty, some Medicaid applicants wish to give away some of their assets. Usually, the applicants wish to give assets to their children. The giving of these assets to the applicant’s children often gives the applicants a great deal of emotional relief because it allows some of their money (the results of their working lives) to outlive them. Most parents want to leave something to their children and grandchildren. Finding a way to allow these applicants to give some of their assets is what most elder law attorneys try to do.

The trick is finding a way to cover the applicant’s long term care costs during the time that Medicaid will not (i.e., during the “penalty period” aka the “Restricted Medicaid Coverage Period.”) There used to be 4 different ways to cover such a penalty period. During 2016, Ohio Medicaid changed the rules on covering this penalty period. Today’s installment will discuss the use of short-term annuities to cover a penalty period in long term care Medicaid benefits.

Medicaid rules allow a person who gave away assets to use an annuity to cover his/her long term care costs during the associated penalty period. The annuities must meet a number of criteria:
– The annuity remainder beneficiary must be the state of Ohio. (Ohio may be named after the spouse or a dependent child.);
– The annuity must be Irrevocable and non-assignable;
– The annuity must be “actuarially sound” by paying out over a time period equal to or shorter than the annuitant’s life expectancy as determined by the Social Security Administration (usually found via a certain online calculator); and
– The annuity must pay out in equal monthly payments with no anticipated lump sum (except, potentially, to a remainder beneficiary.)
An annuity that meets these requirements is often called a Medicaid-Compliant Annuity.

Satisfying these requirements is relatively easy. They can all be set at the time of the purchase of the annuity. The trickiest part is determining the monthly payment and the number of monthly payments from the annuity. The annuity payments should be large enough to almost cover the monthly difference between the client’s monthly income and monthly costs. The number of months should be long enough to cover the penalty period.

Short term annuities are available (to my knowledge) from two sources, Krause Financial Services (MedicaidAnnuity.com) and Safe Harbor Annuity (SafeHarborAnnuity.com.) I have used Krause for such annuities. I became aware of Safe Harbor’s participation in this market in August 2016 and have not yet used Safe Harbor.

Until recently, Cuyahoga County’s Medicaid office had espoused the position that “actuarially sound” meant that the annuity must pay out for the ENTIRE life expectancy of the annuitant rather than for a period of time equal or less than the annuitant’s life expectancy. This position posited that any designed payout shorter than the life expectancy set forth in the Social Security tables referenced in the rule made the purchase of the annuity an improper transfer. (I do not know whether any other counties or individual caseworkers did so.) Two appeals of this position ruled against the county’s policy. Then, in November 2016, Cuyahoga County announced that it would accept annuities that were as long as or shorter than the person’s life expectancy.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Penalty Recovery through a Special Needs Trust

Posted on December 8, 2016 by Jim Koewler — No Comments ↓

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, 2016installment 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.) The October 27, 2015 installment discussed real property that is “essential for self-support.” The November 10, 2017 installment discussed the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs. The November 17, 2016 installment discussed the 2016 changes in how Ohio Medicaid will allow applicants to give away some of their assets cover the resulting penalty period through a return of part of the assets. The December 1, 2016 installment discussed Ohio Medicaid’s new prohibition on using promissory notes to recover from an applicant giving away assets. Today’s installment will discuss the possibility of using a Special Needs Trust to recover from assets given away creating a Medicaid penalty period.

The trick is finding a way to cover the applicant’s long term care costs during the time that Medicaid will not (i.e., during the “penalty period” aka the “Restricted Medicaid Coverage Period.”) There used to be 4 different ways to cover such a penalty period. During 2016, Ohio Medicaid changed the rules on covering this penalty period. Today’s installment will discuss the use of a Special Needs Trust to cover a penalty period in long term care Medicaid benefits.

Prior installments have introduced the Special Needs Trust. The April 2, 2015 installment discussed Special Needs Trusts as part of the series on qualifying for Supplemental Security Income (SSI) and Medicaid. The April 9, 2015 installment introduced the Pooled Trusts, a Special Needs Trust for a number of people simultaneously, also as part of the series on qualifying for SSI and Medicaid. Either of these kinds of trusts, a stand-alone Special Needs Trust and a Pooled Trust, are possible vehicles for helping to cover a penalty period.

Special Needs Trusts can be useful for covering a penalty period because a deposit into a Special Needs Trust is not an “improper transfer” triggering a penalty period. Likewise, the contents of a Special Needs Trusts do not count as “resources” or “assets” for someone who is trying to qualify for long term care Medicaid. These two rules concerning Special Needs Trusts make the trusts useful for “riding out” a penalty period during which Medicaid won’t pay for long term care.

To make an improper transfer (i.e., to shelter part of one’s assets from the costs of long term care,) someone who needs long term care would give away some of his/her assets and then place enough money into a Special Needs Trust to cover the monthly costs during the penalty period that results from the assets given away. Then, enough money could come out of the Special Needs Trust each month to cover that month’s costs.

The bringing money back each month from the Special Needs Trust is just like getting money back each month from a family member in Partial Give-Back method described in the November 17, 2016 installment. There is a big difference between the Partial Give-Back method and the Special Needs Trust method, though. The money given away in the Partial Give-Back method (part of which money came back each month) is part of an “improper transfer” that creates a penalty period. (The penalty period got reduced each month because of the partial give-back in that method (until the January 2016 rule change.)) Depositing money into a Special Needs Trust is not considered an “improper transfer,” so it does not increase the penalty period for Medicaid coverage.

If the plan to give away assets when applying for Medicaid includes leaving a large amount in the Special Needs Trust after the penalty period has ended, the applicant might wish to use a stand-alone Special Needs Trust (as discussed in the April 2, 2015 installment.) If the plan to give away assets includes leaving nothing or leaving a small amount in the Special Needs Trust after the penalty period has ended, the applicant might wish to use a Pooled Trust (as discussed in the April 9, 2015 installment.)

HOWEVER, I would prefer that Special Needs Trust not be used in this manner. A Special Needs Trust is a very important shelter for assets to benefit people with special needs. As discussed in prior installments, a Special Needs Trust can give a great deal of life enjoyment to someone who might otherwise be able to have nothing because of the financial limitations of government income and health programs for people with disabilities. That enabling of life enjoyment is what a Special Needs Trust should, in my opinion, be used for.

Unfortunately, government policy makers who do not like to spend money on people with special needs repeatedly launch attacks on the Special Needs Trust law and rules, especially focusing on Pooled Trusts. The use of Special Needs Trusts to counterbalance an improper transfer of assets when applying for Medicaid gives such hard-hearted government officials another reason to attack Special Needs Trusts. Because other methods are available to cover a penalty period that accompanies an improper transfer of assets, I urge you NOT to use Special Needs Trusts for that purpose.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Penalty Recovery through a Promissory Note

Posted on December 1, 2016 by Jim Koewler — No Comments ↓

Friends, I didn’t write a blog last week. I was celebrating Thanksgiving with my family. I hope you too enjoyed your Thanksgiving weekend.

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, 2016installment 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.) The October 27, 2015 installment discussed real property that is “essential for self-support.” The November 10, 2017 installment discussed the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs. The November 17, 2016 installment discussed the 2016 changes in how Ohio Medicaid will allow applicants to give away some of their assets cover the resulting penalty period through a return of part of the assets. Today’s installment will discuss Ohio Medicaid’s new prohibition on using promissory notes to recover from an applicant giving away assets.

The trick is finding a way to cover the applicant’s long term care costs during the time that Medicaid will not (i.e., during the “penalty period” aka the “Restricted Medicaid Coverage Period.”) There used to be 4 different ways to cover such a penalty period. During 2016, Ohio Medicaid changed the rules on covering this penalty period. Today’s installment will discuss the use of a promissory note between the Medicaid applicant and a family member.

First, let’s explain a promissory note. A promissory note is a legal document that contains a promise to repay a loan. For example, anyone who has mortgaged a home has probably signed a promissory note as an agreement to pay back the borrowed money.

In the context of Medicaid for long term care context, the person needing care can give away some of his/her assets. Then, to pay for care during the penalty period that results from the give-away of assets, the person who needs care must set up a flow of income to pay the monthly care costs. (The assets given away are protected from long term care costs and from Medicaid as long as the flow of income to pay for the penalty period is calculated correctly. It really is a big math problem.)

Monthly installments to repay a loan can be just the flow of income to appropriately cover such a penalty period. So, the person who needs long term care can lend money to someone (usually a family member, but it can be someone else.) Then, the family member (as the borrower) would repay the loan in installments of an appropriate size to cover the monthly care costs during the penalty period. To document the repayment terms (and to ensure that the “loan” wasn’t actually given away, which would result in a longer penalty period,) the lender (the person needing care) and the borrower (the family member or friend who offering to make the monthly payments) would have to sign a promissory note.

Remember, there’s no need for a promissory note if it isn’t used to cover a penalty period.

Before Ohio Medicaid’s August 1, 2016 rule changes, the acceptability of promissory notes was a bit unpredictable. Some county Medicaid offices would accept promissory notes. Some county offices would not accept them. And then, even within some county Medicaid offices, some caseworkers would accept promissory notes and some would not accept them.

Now, after the August 2016 rule changes, Ohio Medicaid has (supposedly) prohibited the use of promissory notes for penalty recovery.

So, if promissory notes are prohibited, why would I even write about them? I’m not sure that Ohio’s prohibition on promissory notes in Medicaid cases is permanent.

The federal Social Security law allows promissory notes to be used as described here, and the Medicaid program (at both the federal and state level) are part of the Social Security law. One would think, that something allowed by the Social Security law would be allowed by the Medicaid rules that exist only because of the Social Security law. So, at some point, some elder law attorney will probably challenge Ohio’s prohibition of promissory notes as a violation of the Social Security law.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Penalty Recovery through Partial Give-Back

Posted on November 17, 2016 by Jim Koewler — No Comments ↓

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, 2016installment 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.) The October 27, 2015 installment discussed real property that is “essential for self-support.” The November 10, 2017 installment discussed the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs. Today’s installment will discuss the 2016 changes in how Ohio Medicaid will allow applicants to give away some of their assets and still qualify for Medicaid.

Before January 2016, the Medicaid applicant could give away substantially all of his/her assets and then receive back enough each month to pay for his/her long term care for that month. (The conveyance back of pieces of the gift leads to call this the “partial give-back” approach.) The penalty period would be reduced a little bit at a time because the net amount given away went down a bit each month with the monthly return of part of the gift. At the same time, with the passage of a month during which Medicaid didn’t have to pay for the person’s long term care, part of the money still held by the applicant’s children is forgiven (The amount of the gift that is forgiven each month that Medicaid doesn’t have to pay for long term care is equal to the average amount that it pays to nursing homes throughout the state. That amount is adjusted from time to time with as the care costs go up with inflation.)

In January 2016, Ohio Medicaid enacted a rule that completely ended this partial give-back strategy.

The end of partial give-backs is an inconvenience but not a tragedy in the practice of elder law. It has, however, led to some Medicaid applicants getting caught in a penalty period without knowing it would happen.

Some Medicaid applicants have given gifts of money to family members within the five years before asking for Medicaid’s help. If someone makes gifts to family and then fails to account for the resulting penalty period before applying for Medicaid, the Medicaid caseworker will probably find a record of the gift in the person’s bank records. Then, the caseworker will have to impose a penalty period. By the time the person applies for Medicaid, however, he or she will have reduced assets to $2,000 through spending or other gifts. If the reduction of assets leading up to the application doesn’t include a way to cover the penalty from the prior gifts, the person will be left without a way to pay for care for the unexpected penalty period.