Real Estate

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.

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

Posted on October 27, 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, 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.

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

Posted on October 6, 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, 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.)

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.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Dependent Family Member in the Home

Posted on September 29, 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, 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. Today’s installment will discuss keeping the house while a dependent family member lives there.

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 a dependent family member lives in the home, the person 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) creates a new way for someone to 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)(a) allows the person to keep the home and excludes the value of the home from the count of the person’s assets if a spouse or dependent relative lives there.

Now, protection of the house while the spouse lives there is not new. This is a long-standing rule in Medicaid. (Imagine the news headlines and the political fallout if Medicaid evicted spouses from their homes.)

The dependent relative exclusion is largely new. (A blind or disabled child living in the home made it excludable under the old rules, but that was a more limited exclusion than this new one.)

The new rule defines “relative” to include children, stepchildren, grandchildren, parents, stepparents, grandparents (Remember, some people who need long term care are not elderly.), aunts, uncles, nieces, nephews, brothers, sisters, stepbrothers, stepsisters, half brothers, half sisters, cousins, and in-laws. Look at the list. “Relative” includes lots of people.

The new rule states that “dependency may be of any kind” and lists as examples, “financial, medical, etc.” Look at how wide open “dependency” is. It can be of “any kind.” I assume that future rulemaking and possibly litigation will provide more details, but for now, “dependency” is enormously broad. A so-called boomerang child (one who comes back home after having previously moved out) can be described as “dependent” because it’s less expensive to live in a house where Mom and Dad don’t charge rent.

But, THERE’S A CATCH. And, it’s not in the rule regarding the house.

If the Medicaid recipient dies while still owning the house, Medicaid estate recovery will lead to a lien being placed on the property. Medicaid estate recovery (as discussed in previous installments) is the federally-mandated effort to recover from Medicaid-covered people who have died whatever assets can be recovered as a way to replenish (perhaps even a little bit) the Medicaid fund. If Medicaid spent a great deal of money on the deceased homeowner’s care, the lien could easily surpass the value of the property. (The rule is so new that no cases of Medicaid estate recovery have yet occurred under the new system. We’ll have to wait to see if a Medicaid lien results in an eviction of the “dependent family member” from the house.)

If, in an attempt to avoid Medicaid estate recovery, the Medicaid applicant/recipient gives away the house, Medicaid will call the gift an “improper transfer” and will not pay for the person’s care for the amount of time that the value of the house would have paid.

Thus, the “dependent relative” rule on the house is a wide open opportunity to keep the house for a while. It is not, though, a way to keep the house forever.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Intent to Return Home

Posted on September 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, 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.) Today’s installment will discuss the intent to return to home.

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. The most likely condition that Medicaid recipients will invoke is the “intent to return home.”

If the person intends to return home, he/she is not required to sell the house before getting Medicaid coverage. The intent to return must be expressed in a written, signed statement. This exemption of the house ends if the person establishes a “principal place of residence” anywhere else. This new “principal place of residence” is, in my opinion, how people will be tripped up in obtaining or keeping Medicaid coverage.

If a person has been in a nursing home or assisted living community for many months (unless on rehab,) I doubt that the house can be called the “principal place of residence.” If the person’s health isn’t likely to improve, the “principal place of residence” has probably become the nursing home or assisted living community. Even if the “intent to return home” is real, it may not be realistic. The “principal place of residence” allows Ohio Medicaid to avoid covering someone whose intent to return home is not realistic.

Now, during this first year or two under the new rules, I’m not sure that Medicaid will challenge an applicant’s written statement of an intent to return home. (There are so many changes, and they are so complex, that I expect the county Medicaid offices to be overwhelmed trying to keep up with new applications and annual renewals. For example, the computer changes that the new rules necessitated have not gone well. Some county Medicaid offices have been unable to process applications for weeks.) At the person’s annual renewal, however, if he/she is still in the nursing home or assisted living community, the Medicaid office can decide that the house is no longer the “principal place of residence.” (By the time of the first annual renewal, the person will have been out of the house for at least a year, after all.) Medicaid coverage can be suspended until the house is sold and the proceeds spent.

Even if the Medicaid office allows the person to keep the house (i.e., Medicaid accepts the person’s statement of intent to return home even if it’s not likely that the person can ever return,) the person will not have money to keep up the house. Medicaid rules allow the person to keep only $2,000 in savings and $50 of monthly income. The person can’t keep up with property taxes, insurance, and maintenance on the house with that low amount of money.

In addition, if the person keeps the house until he/she dies, Medicaid will place a lien on the house for the amount of money that Medicaid spent on the person’s care. (A lien on real estate is one of the methods of “estate recovery” after a Medicaid recipient dies.)

For a single person who needs Medicaid’s help to pay for long term care who owns a home, I suggest that the person decide what will happen with the house before applying for Medicaid rather than kicking the can down the road. The statement of “intent to return” might be a way to delay making a decision, but the inability to pay to keep up the house will put the person in a financial bind quickly and also might cause the house to lose value. In addition, the risk of Medicaid estate recovery always looms over the house. For these reasons, I suggest dealing with the house (or at least deciding what to do with the house) sooner rather than later.

Letting go of the house is terribly emotional. Still, I think it’s better to deal with it sooner rather than later.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Real Estate blocks Eligibility

Posted on September 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, 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. Today’s installment will discuss the Ohio Department of Medicaid’s change in policy regarding real estate (other than the residence.)

Very few real properties are worth less than $1,500 (the resource limit for Medicaid eligibility under the old rules.) So, ownership of real property would prevent eligibility for Medicaid for long term care. Under the rules in place before August 1, 2016, the value of the real property did not count toward financial eligibility for Medicaid as long as the real property was up for sale.

According to Ohio Administrative Code section 5160:1-3-05.15, 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. (Sale by owner was not sufficient.) The broker or agent had to list the real property on the multi-listing service (the MLS.) And, the asking price could not exceed the value listed in the county appraisal records. If these conditions were met, the property was not counted against the Medicaid recipient/applicant.

As soon as the property sold, the Medicaid recipient/applicant would have to spend down the proceeds to resume Medicaid coverage. If the property didn’t sell before the person passed away, the state could place a lien on the property through the Medicaid Estate Recovery process as a way to partially replenish the Medicaid coffers. (This exemption of real property during the period it was listed for sale was very important during the 2008-2009 real estate market meltdown.)

Under the new rules that took effect on August 1, 2016, Medicaid has gotten out of the real estate business. Ohio Administrative Code section 5160:1-3-05.15 has been rescinded. There is no longer an exemption for real estate even if it is up for sale. (Note: The residence is different and will be discussed in the future.) The ownership of real estate will prevent an applicant from receiving Medicaid coverage for long term care unless the total value of all owned properties is less than $2,000 (the new limit on resources for a Medicaid recipient.) In other words, the real property has to fit into the low limit placed on all resources of a Medicaid recipient.

Now, sale of the real property is not enough to qualify for Medicaid for long term care. Sale of the property turns an illiquid asset (real property) into liquid assets (cash.) The cash proceeds are not likely to be less than $2,000, so the former owner of the real estate would be Medicaid ineligible because of the cash resources he/she has received. The person who needs long term care can do much more with cash than with real estate to move toward Medicaid eligibility. The cash can be used for medical/care expenses, or it can be used to buy some items that the Medicaid applicant would like. Of course, if the proceeds are great enough, some can be given to the person’s children and some used to pay off the Medicaid penalty that results from giving away assets.

Then, when the person’s assets are below $2,000 (and, if necessary, arrangements have been made for a penalty period, the person becomes eligible for Medicaid for long term care.

Because the new rules effectively prevent Medicaid eligibility for a real estate owner, I’m advising clients to sell properties quickly. Because of the speed with which a deal can be completed, I’m starting to move to auctions rather than traditional listings for real property. (I do apologize to my friends in the traditional real estate brokering business, but my clients’ needs must come first.)