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.