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

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.

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.  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

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 is 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.)

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Tax Refunds may be counted Twice

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.  Today’s installment will discuss how Ohio’s Medicaid rules appear to count income tax refunds twice.

In determining eligibility for any of Ohio’s Medicaid programs, a Medicaid caseworker must see if the applicant’s income fits within the Medicaid program’s income requirements as set forth in the Ohio Administrative Code (OAC.).  In the general rules of Medicaid eligibility, “‘Income’ means any benefit in cash or in-kind, received by an individual during a calendar month.”  (OAC 5160:1-1-01(B)(31) entitled “Medicaid: definitions”)  So, income is anything that the person receives that month.  That’s the general understanding of “income,” the arrival of money that wasn’t here before.

Then, the rules for processing of applications shows that Medicaid looks at GROSS income.  The rules explain that “the amount of gross monthly non-exempt income must be established first. (OAC 5160:1-2-01.9(C) entitled “Medicaid: income, exemptions, and disregards”)  This provision means that Medicaid looks at all income, even if that income doesn’t arrive, such as Medicare Part B premiums and money withheld for taxes.  (This is the same sort of income described as “invisible” in the August 11, 2016 installment.)

The rules go on to state that income tax refunds are exempted from income (OAC 5160:1-2-01.9(D)(3) in the same “Medicaid: income, exemptions, and disregards” section discussed in the previous paragraph.)  The rules for Ohio’s Medicaid for people who are Aged, Blind, or Disabled agrees, stating that “any amount refunded on income taxes already paid” is not income (OAC 5160:1-3-03.1(J)(8) entitled Medicaid: income)  An exemption for income tax refunds make sense.  Tax withholding was included in “income” because “gross income” is where Medicaid starts its analysis.  An income tax refund is simply a return of money previously withheld that is above the amount of the tax liability.

BUT, what counts as “income” changes in the calculation of patient liability for someone in the Aged, Blind, or Disabled program who needs long term care.  “Patient liability” is the amount of money that the person receiving long term care must pay each month as his/her share of costs.  (Medicaid makes up the difference between the patient liability and the monthly payment for care to which the care provider is entitled.)

To receive Medicaid coverage for long term care services, the person must first be eligible for Medicaid.  The examination of income for that eligibility determination does not, though, carry through to the calculation of patient liability.

To calculate patient liability for long term care services, the administrative agency must “total all income, earned and unearned, of the individual, without applying any exemptions or disregards” (OAC 5160:1-3-04.3(C)(2) entitled Medicaid: determining patient liability)  Remember:  Income tax refunds were “exempt” from income in the eligibility determination.

Because the patient liability calculation must total ALL income, it is looking at gross income, and gross income includes tax withholding.  However, because the calculation does not apply any exemptions, the patient liability calculation also includes tax refunds.  That’s a problem.

Money withheld for taxes and money returned as a tax refund are the same money.  A tax refund is the money that didn’t arrive last year actually arriving this year.  The tax withholding amount was counted in “gross income” even when it didn’t actually arrive in the first place.  That same money should not be counted when it it actually arrives as a tax refund.  It’s the same money.

The inclusion of tax refunds in patient liability calculations (assuming it doesn’t get corrected in the near future) means that the person won’t have all of the money that the Medicaid caseworker calculates as the amount that the person is supposed to pay as patient liability.  Someone (perhaps the Medicaid recipient, perhaps the spouse, or perhaps the care provider) is going to receive less money than the amount to which he/she is entitled.

This double-counting of the tax refund may have been a mistake in drafting the Medicaid rule, or it may have been intentional as a way to shave a few bucks off of the state’s Medicaid costs.  Either way, this needs to be fixed.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Limit on monthly Miller Trust fees

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  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.  Today’s installment will discuss the limit placed on monthly costs of the Miller Trust.

The Ohio Department of Medicaid rule on Miller Trusts (aka Qualified Income Trusts or QITs) took effect on August 1, 2016.  A copy of the final rule is available here.  The latest version of the form Miller Trust from the Ohio Department of Medicaid can be found here.

Ohio’s county offices that oversee Medicaid are going to be able to implement this rule (and the other rule changes that occurred at the same time) very slowly.  While the pace at which the counties get up to speed may seem frustrating, it is very hard to overstate the enormity of the changes that Ohio’s Department of Medicaid is trying to make.  Not only are there the rule changes for people who need long term care that I have been discussing (and will continue to discuss) in my blog and newsletter.  There are bigger changes (affecting tens of thousands more people) in the eligibility rules for Medicaid for people who are disabled but do not need long term care.  In addition, to oversee the new requirements for all affected people, the state and county Medicaid offices have to move to a new software system to manage the Medicaid program.

As discussed previously, someone in Ohio who needs Medicaid support to pay for long term care whose gross monthly income exceeds the Special Income Level ($2,199.00 at this time) must use a QIT to make the income over the Special Income Level not “income” anymore in the eyes of Medicaid.  (Yes, the process is as hard to follow in real life as it is to follow in that sentence.)  In order to get the benefits of the QIT, the amount of income over the $2,199 (or more than just that excess income) must be placed into the QIT each month so that the remaining “countable” income is $2,199 or less each month.  (I know, it’s not getting any more understandable.)  Please realize that there is no real-world logic in this requirement.  These are just the rules.  There are many requirements in the rules that could have been made easier or more logical, but, still, the underlying requirement to put money into a Miller Trust and spend it out of the Miller Trust all in the same month is not logical.

Miller Trusts accounts will probably not be free accounts.  Banks and credit unions sometimes offer free accounts if certain conditions are met.  Often, free accounts are available to a customer who keeps a certain minimum balance in an account or combination of accounts.  Because a person on Medicaid for long term care cannot have assets above $2,000, no one on Medicaid will be able to meet the minimum balance requirements.  Similarly, if a customer has a direct deposit into an account, there will be no fee.  As discussed in the July 15, 2016 installment, it does not appear that the Miller Trust account can accept direct deposits.  As a result, banks and credit unions will usually charge a monthly fee for Miller Trust accounts.

The new Miller Trust rule has provided for such fees.  Section E(4) of the rule (bottom of page 2 on the linked pdf) allows the Miller Trust (aka QIT, short for Qualified Income Trust) to pay up to $15 each month for “bank fees, attorney fees, and other expenses required to establish and administer the trust.”  A separate policy statement (MEPL 117) from the Ohio Department of Medicaid explains that the fee will be deducted from the Medicaid recipient’s patient liability (i.e., the amount that the person must pay toward his/her care costs each month.)  So, the Medicaid fund will, in the end, absorb the fees of the Miller Trusts.

Section E(4) of the Miller Trust rule also provides that, if $15 is “insufficient to cover the cost to administer the [Miller] trust,” the Medicaid recipient (sometimes the person would be an applicant at this point) can request that the Ohio Department of Medicaid allow a higher fee.  However, MEPL 117 states that a request for such a fee increase that is denied cannot be appealed (there are no hearing rights.)  MEPL 117 goes on to explain that, if higher fees are not allowed, the Medicaid recipient/applicant can move the Miller Trust account to a different bank or credit union.  This lack of hearing rights (aka appeal rights) isn’t fair, but the amount of money at stake is not likely to justify the time and expense of a hearing.  (Man, I feel really uncomfortable agreeing that a lack of fairness makes sense.)

In practice, $15 might be an appropriate amount to cover bank and credit union fees.  I’ve heard the fees of a number of different banks and credit unions, and the fees generally fall between $9 and $14.  So, $15 should be enough to cover “bank fees,” as the rule calls them.

That bank and credit union fees will leave $1 to $6 per month for the other allowable costs, “attorney fees, and other expenses required to establish and administer the trust.”  During the first few months of using the Miller Trust account, that amount will probably not be sufficient.

First, most people who need a Miller Trust will probably need paper checks.  Most people who need a Miller Trust will be older than 80 years old.  The Miller Trust trustee will probably be an adult child with an age in the high 50s or the 60s.  The Medicaid recipients and many (perhaps a large majority) of the adult children will probably not be people who use online banking.  As a result, most Miller Trust accounts will need paper checks.  The cost of paper checks is usually more than $15 and, depending on the delivery date, the cost of checks is likely to fall in the same month as the first account fee.  In such months, the $15 dollar allowance is not enough.  Check fees fall under “other expenses required to establish and administer the trust.”  Unfortunately, the form that the Ohio Department of Medicaid has created for the Miller Trusts does not look at any fee that isn’t a monthly bank fee (to use the language from the rule.)

Second, while the Miller Trust trustee (and, if a separate person, whomever is managing the Medicaid recipient’s income before some of it gets to the Miller Trust account) have difficulty understanding his/her obligations, legal fees for an elder law attorney may be necessary to help make sure the requirements are met.  The $1 to $6 dollars available isn’t going to be enough.  The trustee (and anyone else managing the Medicaid recipient’s money) are likely to forego help from an elder law attorney and, as a result, fail to comply with the Miller Trust rule.  When a non-compliance occurs, the Medicaid recipient is not eligible for Medicaid money for the month of the non-compliance.  His/her nursing home or assisted living facility won’t get its Medicaid payment for a month.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Problems with Tax Withholding

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  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.  Today’s installment will discuss the impact of tax withholding on certain income sources.

The Ohio Department of Medicaid rule on Miller Trusts (aka Qualified Income Trusts or QITs) took effect on August 1, 2016.  A copy of the final rule is available here.  The latest version of the form Miller Trust from the Ohio Department of Medicaid can be found here.

Ohio’s county offices that oversee Medicaid are going to be able to implement this rule (and the other rule changes that occurred at the same time) very slowly.  While the pace at which the counties get up to speed may seem frustrating, it is very hard to overstate the enormity of the changes that Ohio’s Department of Medicaid is trying to make.  Not only are there the rule changes for people who need long term care that I have been discussing (and will continue to discuss) in my blog and newsletter.  There are bigger changes (affecting tens of thousands more people) in the eligibility rules for Medicaid for people who are disabled but do not need long term care.  In addition, to oversee the new requirements for all affected people, the state and county Medicaid offices have to move to a new software system to manage the Medicaid program.

As discussed previously, someone in Ohio who needs Medicaid support to pay for long term care whose gross monthly income exceeds the Special Income Level ($2,199.00 at this time) must use a QIT to make the income over the Special Income Level not “income” anymore in the eyes of Medicaid.  (Yes, the process is as hard to follow in real life as it is to follow in that sentence.)  In order to get the benefits of the QIT, the amount of income over the $2,199 (or more than just that excess income) must be placed into the QIT each month so that the remaining “countable” income is $2,199 or less each month.  (I know, it’s not getting any more understandable.)  Please realize that there is no real-world logic in this requirement.  These are just the rules.  There are many requirements in the rules that could have been made easier or more logical, but, still, the underlying requirement to put money into a Miller Trust and spend it out of the Miller Trust all in the same month is not logical.

Like the Medicare premium discussed in the last installment, money withheld for taxes is another form of “invisible” gross income that must be taken into account when determining the need for a Miller Trust.  Unfortunately, determining whether money is being withheld for taxes can be far trickier than determining whether money is being withheld for Medicare premiums.  Almost everyone who receives social security retirement income pays a Medicare premium, and most of those people pay the same set amount each month.  (A few people with “high income” in retirement pay more for Medicare coverage.)  Dealing with the question of Medicare premiums when determining whether someone needs a Miller Trust is relatively straightforward.

Determining whether someone has money withheld for taxes may not be nearly so straightforward.  The amounts of tax withholding aren’t uniform.  There are as many withholding amounts as there are pensioners.  Heaven only knows where the Medicaid applicant put his/her records from setting up the pension at the time of retirement.  Eventually, a pension statement might show arrive in the mail to help the family learn what tax withholding amount the pensioner chose.  Finding the information necessary to calculate gross income is likely to be an uphill battle.  Tax withholding is a more “invisible” form of gross income than others.

Okay.  Eventually, the existence and amount of withheld money for taxes will be sorted out for a Medicaid applicant.  Figuring that stuff out will allow the person to get Medicaid coverage.  That isn’t the end of the problem, however.

A Medicaid recipient’s obligation to pay income for his/her care is based on gross income.  In Medicaid’s view, that money withheld for taxes is not an allowable deduction from income.  The withheld taxes will reduce the amount that the person is allowed to keep each month (the Personal Needs Allowance, currently set at $50) or the amount that the person is supposed to pay to the long term care provider (the Patient Liability, the Patient Responsibility, or, in Medicaid’s new terminology, the Share of Costs.)

The other common form of “invisible” gross income, the Medicare premium, is an allowed deduction from income because it’s a health insurance cost.  As a result, the Medicare premium doesn’t reduce the Personal Needs Allowance or Patient Liability.  Figuring out the Medicare premium and adjusting when the Medicare premium ends (discussed in the previous installment) are paperwork exercises, but they do not impact the actual spending of money.  By contrast, tax withholding impacts the Medicaid recipient’s spending.  Someone will get less money.

Of course, the Medicaid recipient (or family) should try to get the withholding stopped, but that effort may or may not work.  Pension plans are notoriously bureaucratic (not too different from Medicaid in that way.)  The request to stop withholding may or may not float to the top of the paperwork heap in a reasonable amount of time.

In the meantime, the Medicaid recipient or the long term care provider will have to be shorted some money until tax returns can be filed and a refund paid out.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – State Buy-In for Medicare Premiums

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  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.  Today’s installment will discuss the appearance that a person on long term care Medicaid has an increase in income when he/she stops paying Medicare premiums.

The Ohio Department of Medicaid rule on Miller Trusts (aka Qualified Income Trusts or QITs) took effect on August 1, 2016.  A copy of the final rule is available here.  The latest version of the form Miller Trust from the Ohio Department of Medicaid can be found here.

Ohio’s county offices that oversee Medicaid are going to be able to implement this rule (and the other rule changes that occurred at the same time) very slowly.  While the pace at which the counties get up to speed may seem frustrating, it is very hard to overstate the enormity of the changes that Ohio’s Department of Medicaid is trying to make.  Not only are there the rule changes for people who need long term care that I have been discussing (and will continue to discuss) in my blog and newsletter.  There are bigger changes (affecting tens of thousands more people) in the eligibility rules for Medicaid for people who are disabled but do not need long term care.  In addition, to oversee the new requirements for all affected people, the state and county Medicaid offices have to move to a new software system to manage the Medicaid program.

As discussed previously, someone in Ohio who needs Medicaid support to pay for long term care whose gross monthly income exceeds the Special Income Level ($2,199.00 at this time) must use a QIT to make the income over the Special Income Level not “income” anymore in the eyes of Medicaid.  (Yes, the process is as hard to follow in real life as it is to follow in that sentence.)  In order to get the benefits of the QIT, the amount of income over the $2,199 (or more than just that excess income) must be placed into the QIT each month so that the remaining “countable” income is $2,199 or less each month.  (I know, it’s not getting any more understandable.)  Please realize that there is no real-world logic in this requirement.  These are just the rules.  There are many requirements in the rules that could have been made easier or more logical, but, still, the underlying requirement to put money into a Miller Trust and spend it out of the Miller Trust all in the same month is not logical.

The last installment (on “invisible” gross income) included a discussion how people might forget to count the Medicaid applicant’s premium payment for Medicare part B in gross income.  Well, after a time on Medicaid, it will get confusing again.

Ohio, like most other states, has a Medicare buy-in program for people on Medicaid.  The buy-in program is mandatory (or, at least, very close to mandatory) according to federal rules from the Center for Medicare and Medicaid Services.  It leads (or is believed to lead) to better efficiency of operation and coordination among the Medicare and Medicaid programs.

When someone is placed into the buy-in program, the state will pay the Medicare Part B premium (as part of the person’s Medicaid benefits,) and the person will no longer be responsible for the cost of premiums.  For a person who is newly accepted into Ohio’s long term care Medicaid program, the state’s Medicaid management system will usually add the person into the Medicare buy-in program two to four months later.

When the person is placed into the state buy-in program, the Medicare premiums will stop being deducted from the person’s Social Security check.  The end of the premium deduction makes it look like the person’s income went up.  At the same time, the Department of Medicaid will increase the person’s “patient liability” (aka “patient responsibility,”) which is the amount the person pays to his/her long term care provider, by the amount formerly paid for Medicare premiums.  The amount of money works out the same.  The person on Medicaid doesn’t get to keep any more or any less than before the buy-in.  The person’s spouse doesn’t get any more or any less of a share of the income flowing to the person on Medicaid than before the buy-in.  The care provider doesn’t get paid any more or any less than before the buy-in.  The care provider simply receives a little more directly from the person and a little less from the Department of Medicaid.  The money evens out in the end.

BUT, for people who must use a Miller Trust, this is yet another opportunity for confusion.  The appearance of a change in income could perplex the person handling money for the Medicaid recipient.  The state buy-in occurs with little or no explanation.  The income suddenly increases and, at about the same time, a letter arrives stating that the Medicaid recipient’s patient liability has increased.  I’ve not yet seen the state Medicaid office or the national Social Security office explain that these two events are connected.

STILL, it all works out.  So, you’re possibly wondering what is my point.  If the money evens out, what is the problem?

Remember, as discussed before, Ohio’s version of the Miller Trust is tricky.  Any confusion that attacks the person handling a Medicaid recipient’s money is a possibility that the Miller Trust will not be managed correctly that month.  If the Miller Trust isn’t managed correctly, the person could lose Medicaid coverage.

The Miller Trust requirement isn’t about care.  It’s about money.  Medicaid for long term care is expensive.  Any benefits not paid result in monetary savings to the state.  People whose Miller Trusts don’t get managed “just so” in the month or months following commencement of the state Medicare buy-in should not expect benefits to continue despite the confusion.  It looks like the attempts at confusion could be intentional.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – “Invisible” Gross Income

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  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.  Today’s installment will discuss money that doesn’t actually reach the Medicaid-recipient that, nonetheless, counts as “income” for purposes of using a Miller Trust.

The Ohio Department of Medicaid rule on Miller Trusts (aka Qualified Income Trusts or QITs) took effect on August 1, 2016.  A copy of the final rule is available here.  The latest version of the form Miller Trust from the Ohio Department of Medicaid can be found here.

Ohio’s county offices that oversee Medicaid are going to be able to implement this rule (and the other rule changes that occurred at the same time) very slowly.  While the pace at which the counties get up to speed may seem frustrating, it is very hard to overstate the enormity of the changes that Ohio’s Department of Medicaid is trying to make.  Not only are there the rule changes for people who need long term care that I have been discussing (and will continue to discuss) in my blog and newsletter.  There are bigger changes (affecting tens of thousands more people) in the eligibility rules for Medicaid for people who are disabled but do not need long term care.  In addition, to oversee the new requirements for all affected people, the state and county Medicaid offices have to move to a new software system to manage the Medicaid program.

As discussed previously, someone in Ohio who needs Medicaid support to pay for long term care whose gross monthly income exceeds the Special Income Level ($2,199.00 at this time) must use a QIT to make the income over the Special Income Level not “income” anymore in the eyes of Medicaid.  (Yes, the process is as hard to follow in real life as it is to follow in that sentence.)  In order to get the benefits of the QIT, the amount of income over the $2,199 (or more than just that excess income) must be placed into the QIT each month so that the remaining “countable” income is $2,199 or less each month.  (I know, it’s not getting any more understandable.)  Please realize that there is no real-world logic in this requirement.  These are just the rules.  There are many requirements in the rules that could have been made easier or more logical, but, still, the underlying requirement to put money into a Miller Trust and spend it out of the Miller Trust all in the same month is not logical.

To add to the confusion that the Medicaid recipient use a Miller Trust (or his/her family or guardian or long term care provider that is actually handling the income) is already suffering, people will not always realize that some money that counts as “income” does not actually arrive in the Medicaid recipient’s bank account.  Unfortunately, counting everything that constitutes gross is important in determining whether someone needs a Miller Trust at all.  It is also important in the monthly management of the Miller Trust.  Counting gross income incorrectly can make someone ineligible for Medicaid at the time of application and, later, can temporarily suspend Medicaid benefits when a mistake in QIT management is found.

The Miller Trust requirements are triggered by GROSS income over the Special Income Level ($2,199 per month at this time.)  Medicare Part B premiums ($104.90 per month for most Medicare recipients) is part of gross income.  For the vast majority of Medicare-covered people, the Part B premium is deducted from Social Security retirement payments before the monthly Social Security income arrives in the person’s account (via direct deposit.)  Because the Part B premium doesn’t actually arrive, it is easy to overlook when counting up gross income.  Some people on Medicaid for long term care in Ohio whose gross income is approximately $2,300 per month will probably fail to set up Miller Trusts because they overlook the Part B premium and don’t realize that they must comply with this requirement.  Others, even after setting up the Miller Trust, are likely to put too little money into the Miller Trust because they overlook the Part B premium that must be counted in the $2,199 that can stay out of the Miller Trust.

Tax withholding on monthly payments, most often pension payments, will cause the same problems.  Because the withheld money doesn’t arrive, it will often get overlooked in deciding whether to set up a Miller Trust and then again will get overlooked in determining how much money to put into the Miller Trust each month.

“Invisible” income will add to the difficulties that confront Ohioans who need Medicaid for long term care.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Automatic Transfers into Miller Trust

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  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.  Today’s installment will discuss Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.

The Ohio Department of Medicaid has finalized its new rule on Miller Trusts (aka Qualified Income Trusts or QITs.)  A copy of the final rule is available here.  The new version of the form Miller Trust from the Ohio Department of Medicaid can be found here.

Because the rule calls them QITs and today’s installment makes a number of references to the new rule, I’ll usually call them QITs.

The Ohio Department of Medicaid had originally announced that the new rules would take effect on July 1, 2016.  As that date approached, and the enormity of the changeover became more apparent, the effective date was delayed until August 1, 2016.

While the delay may seem frustrating, it is very hard to overstate the enormity of the changes that Ohio’s Department of Medicaid is trying to make.  Not only are there the rule changes for people who need long term care that I have been discussing (and will continue to discuss) in my blog and newsletter.  There are bigger changes (affecting tens of thousands more people) in the eligibility rules for Medicaid for people who are disabled but do not need long term care.  In addition, to oversee the new requirements for all affected people, the state and county Medicaid offices have to move to a new software system to manage the Medicaid program.

As discussed previously, someone in Ohio who needs Medicaid support to pay for long term care whose gross monthly income exceeds the Special Income Level ($2,199.00 at this time) must use a QIT to make the income over the Special Income Level not “income” anymore in the eyes of Medicaid.  (Yes, the process is as hard to follow in real life as it is to follow in that sentence.)  In order to get the benefits of the QIT, the amount of income over the $2,199 (or more than just that excess income) must be placed into the QIT each month so that the remaining “countable” income is $2,199 or less each month.  (I know, it’s not getting any more understandable.)

Last week’s installment described the lack of clarity in Ohio Medicaid’s new rule whether money is supposed to get deposited into the QIT account directly from the income source or it is supposed to be transferred into the QIT account from another account belonging to the Medicaid recipient.  This lack of clarity is compounded by indications in the new rule that the Ohio Medicaid wants the deposits/transfers to go into the QIT account automatically.

Section H of the QIT rule tries to describe the requirement(s) to have money transferred into the QIT automatically.  If money that needs to go into the QIT can’t go into it automatically, the manual transfers into the QIT must be documented.  I hope that the monthly QIT statements that must be provided to the Medicaid caseworker with each annual Medicaid renewal will provide adequate documentation that the manual transfers into the QIT actually took place.

In addition, the reason(s) why the transfers can’t be automatic must be documented.  Unfortunately, there is no explanation what documentation will suffice.  Perhaps a letter stating that the bank or credit union can’t transfer money automatically will suffice.  With luck, only a few people will have trouble arranging automatic transfers into the QIT.  (People who disagree with what I wrote last week about “deposits” versus “transfers” into the QIT should arrange automatic “deposits” into the QIT directly from one or more of the Medicaid-recipient’s income sources.)

But wait.  There’s more (as the TV infomercials say.)

The second sentence of Section H states, “Every effort should be made to have the individual’s EXCESS income deposited directly into the QIT on a monthly basis.”  (emphasis added.)  It is possible to read that sentence as requiring that the amount of the person’s income above the Special Income Limit (currently $2,199) must go into the QIT and any additional income that goes into the QIT (i.e., any deposit/transfer into the QIT that leaves less that $2,199 outside the QIT) must go into the QIT manually.

I do not believe the better, more logical, (or certainly more practical) reading of the second sentence of Section H requires a part automatic/part manual placement of money into the QIT (for people who will have less than $2,199 outside the QIT.)  BUT, some Medicaid caseworkers somewhere in Ohio will eventually read it that way.  Some representative of some Medicaid recipient will eventually have this discussion with the county Medicaid office.  I fear that this little, stupid sentence is going to require a revision of the rule, the issuance of a policy letter (known as an Action Transmittal,) or a hearing.  I hope that none of my clients becomes the guinea pig for this issue.

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Deposits Directly into Miller Trust

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  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.  Today’s installment will discuss whether income is supposed to go directly into the Miller Trust.

The Ohio Department of Medicaid has finalized its new rule on Miller Trusts (aka Qualified Income Trusts or QITs.)  A copy of the final rule is available here.  The first form Miller Trust from the Ohio Department of Medicaid can be found here.  The new version of the form Miller Trust from the Ohio Department of Medicaid can be found here.

Because the rule calls them QITs and today’s installment makes a number of references to the new rule, for this installment, I’ve started usually to call them QITs.

The Ohio Department of Medicaid had originally announced that the new rules would take effect on July 1, 2016.  As that date approached, and the enormity of the changeover became more apparent, the effective date was delayed until August 1, 2016.  I recently heard a rumor (and it is just that, only a rumor) that the implementation will be delayed again.

While the delays may seem frustrating, it is very hard to overstate the enormity of the changes that Ohio’s Department of Medicaid is trying to make.  Not only are there the rule changes for people who need long term care that I have been discussing (and will continue to discuss) in my blog and newsletter.  There are bigger changes (affecting tens of thousands more people) in the eligibility rules for Medicaid for people who are disabled but do not need long term care.  In addition, to oversee the new requirements for all affected people, the state and county Medicaid offices have to move to a new software system to manage the Medicaid program.

As discussed previously, someone in Ohio who needs Medicaid support to pay for long term care whose gross monthly income exceeds the Special Income Level ($2,199.00 at this time) must use a QIT to make the income over the Special Income Level not “income” anymore in the eyes of Medicaid.  (Yes, the process is as hard to follow in real life as it is to follow in that sentence.)  In order to get the benefits of the QIT, the amount of income over the $2,199 (or more than just that excess income) must be placed into the QIT each month so that the remaining “countable” income is $2,199 or less each month.  (It’s not getting any more understandable, is it?)

Despite what I wrote two weeks ago, it is not entirely clear whether income should be placed directly into the QIT upon the income’s arrival from the payer.  Section H seems to conflict (at least partially) with the language of Section D(4) (discussed two weeks ago) on this point.  The second sentence of Section H states, “Every effort should be made to have the individual’s excess income deposited directly into the QIT account on a monthly basis.”  Section D(4), however, states states that the person cannot “cannot transfer or assign to the trust his or her right to receive income.”  Arranging a deposit directly into the QIT (what Section H seems to require) sure sounds like assigning the right to receive income (what Section D(4) prohibits.)

Now, perhaps (as discussed two weeks ago) the arrival of income into the person’s hands must first be into a non-QIT account.  The, money could be “transferred” into the QIT.  Unfortunately, it’s not clear that Section H refers to “transfers” of income from one account to another or “deposits” of income upon its first arrival.  Section H uses both “transfer” and “deposit,” and it’s not clear that these terms mean different things in the QIT rule.  The first clause of the first sentence of Section H refers to income being “transferred” into the QIT account, and the second clause of the same sentence refers to income being “deposited”  into the QIT account.  The second sentence also uses the word “deposited,” adding to the confusion.  In fact, Section H uses “transfer” once and “deposit” five times.

I believe that the rule means to have all income arrive into non-QIT account(s) and then get transferred into the QIT, but whoever wrote the rule did not make its intent clear.  Perhaps, Ohio Department of Medicaid means “transfers” in Section H but used “deposits” because of sloppy writing or sloppy proofreading.   Unfortunately, approximately $5,000 – $6,000 in Medicaid benefits for long term care costs is at stake each month for people who must comply with this rule.  Is it too much to ask for clarity?

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Changes to form Miller Trust

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  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.  Today’s installment will discuss the changes that the Ohio Department of Medicaid has made to the form Miller Trust document.

The Ohio Department of Medicaid has finalized its new rule on Miller Trusts (aka Qualified Income Trusts or QITs.)  A copy of the final rule is available here.  The first form Miller Trust from the Ohio Department of Medicaid can be found here.  The new version of the form Miller Trust from the Ohio Department of Medicaid can be found here.

Because the rule calls them QITs and today’s installment makes a number of references to the new rule, for this installment, I’ve started usually to call them QITs.

The Ohio Department of Medicaid had originally announced that the new rules would take effect on July 1, 2016.  As that date approached, and the enormity of the changeover became more apparent, the effective date was delayed until August 1, 2016.  I recently heard a rumor (and it is just that, only a rumor) that the implementation will be delayed again.

While the delays may seem frustrating, it is very hard to overstate the enormity of the changes that Ohio’s Department of Medicaid is trying to make.  Not only are there the rule changes for people who need long term care that I have been discussing (and will continue to discuss) in my blog and newsletter.  There are bigger changes (affecting tens of thousands more people) in the eligibility rules for Medicaid for people who are disabled but do not need long term care.  In addition, to oversee the new requirements for all affected people, the state and county Medicaid offices have to move to a new software system to manage the Medicaid program.

As discussed previously, someone in Ohio who needs Medicaid support to pay for long term care whose gross monthly income exceeds the Special Income Level ($2,199.00 at this time) must use a QIT to make the income over the Special Income Level not “income” anymore in the eyes of Medicaid.  (Yes, the process is as hard to follow in real life as it is to follow in that sentence.)  In order to get the benefits of the QIT, the amount of income over the $2,199 must be placed into the QIT each month so that the remaining “countable” income is $2,199 or less each month.  (It’s not getting any more understandable, is it?)

As mentioned above, the Ohio Department of Medicaid already has changed the QIT template.

First, a sentence has been added to specify that the trust’s taxpayer identification number will be the Social Security number of the Primary Beneficiary (i.e., the person receiving or applying for Medicaid for long term care.)  This added sentence clarifies that the money handled by the trust, and the small amount of interest earned by the trust, belong to the Primary Beneficiary for tax purposes.  (Few, if any, people receiving Medicaid’s help to pay for long term care have to pay taxes, but the income (even the possibility of income) in a bank account must be assigned to a taxpayer ID number or a Social Security number.)  This added sentence takes away the question of the number to use.  That added language will also, for some banks and credit unions, clarify what kind of account the QIT will need.  (e.g., a personal checking account, or a business account, or a fiduciary account, etc.)

Second, language has been added regarding powers of the trustee . Like the language specifying the taxpayer ID number, this language alleviates some of the concerns that banks and credit unions had about their obligations to verify that the trustee was following the law and carrying out his/her/its duties.  Among the concerns was the issue whether the trustee has the power to open an account, for example.  (Remember, there are no inherent powers of a trustee.  The trustee has only the powers given to him/her/it by the trust agreement.)  The new language makes it clear that the trustee can open an account.

Third, in the same part of the document describing the trustee’s powers, language has been added to require the trustee to prepare a Certification of Trust.  A Certification of Trust is a document that has existed under Ohio law (Revised Code section 5810.13) before the new QIT rules were written.  The Certification is a verification by the trustee that he/she/it has the authority to act as trustee and to carry out the activities that he/she/it is asking the bank to help with (such as opening a trust account, accepting deposits into the trust account, and paying money out of the trust account.)  Banks and credit unions have certain obligations to make sure that they aren’t used to defraud anyone and aren’t defrauded themselves.  There are lots of legal obligations placed on banks and credit unions.  A Certification of Trust relieves the bank or credit union from having to investigate the trustee to determine if he/she/it is legitimate and is performing his/her/its duties correctly.  Because these QIT accounts will not have much money in them and because the accounts must be emptied each month, forcing the banks and credit unions to spend a great deal of time and money to investigate and oversee the QIT trustee would cause the banks and credit unions to lose money on these account.  If these QIT accounts were money-losers to the banks and credit unions, they wouldn’t take these accounts.  If banks and credit unions didn’t take these accounts, there would be no way to comply with the QIT requirements.  In short, allowing banks and credit unions to accept QIT accounts without undertaking expensive oversight is better than not having QIT accounts in Ohio.  We can’t let people lose their Medicaid benefits because banks and credit unions don’t want the QIT accounts.

To go along with this requirement that the trustee prepare a Certification of Trust, the new QIT template includes a template for a Certification of Trust as well.

Finally, the QIT template changes the terminology that describes the person signing the trust declaration with the Trustee.  In the first version of the QIT template, a Trustee and a Settlor signed the document.  In the new version, a Trustee and a Grantor sign the document.  This change may not mean much, or it may mean a great deal.  I haven’t figured it out yet.

Historically, in trust law, Grantor and Settlor meant the same thing.  There was no reason to choose one term or the other.  In fact, some trust documents (even some published form trust documents) used the terms interchangeably in the same document.  But, someone at the Ohio Department of Medicaid consciously chose to change these terms.  My distrust of the Ohio Department of Medicaid makes me think over and over that the change of terms has some significance that I haven’t yet found.

This terminology change is even more puzzling coming at the same time that the requirement for a Certification of Trust was inserted into the document.  The Ohio statute that created the Certification of Trust (Revised Code section 5810.13) uses the term Settlor and doesn’t use the term Grantor.  In fact, despite the use of the term Settlor in the Certification of Trust statute, the template Certification of Trust uses the term Grantor.  One would think that whomever was looking at the statute would probably have used the same term (i.e., Settlor) in the template documents, especially when Settlor was already in the first version of the template QIT.

This change bothers me.  I’m wondering what I’m missing.  (I’m puzzling and puzzling ’til my puzzler is sore, like the Grinch did.)  I’ve posed this question to a number of elder law colleagues but have not yet received any response.  This one really gnaws at me.

Thanks go out to my friend Steve Caine, a Solon, Ohio estate planning attorney, for his help with in confirming that “Grantor” and “Settlor” usually mean the same thing.