Medicare, Rehab, and “Failure to Improve”

After a hospital stay, Medicare-covered people may need rehab to continue improving from the treatment that the hospital provided.  (As discussed in the March 10, 2017 installment, the hospital stay must be at least three days and a full “admission” to the hospital.)  In the past, as a way to save money, Medicare would cut off rehab for someone who wasn’t getting better (or wasn’t getting better fast enough.)

BUT, Medicare’s rules don’t allow for a cut-off of rehab for a failure to improve.  Medicare got sued to stop using the “improvement” standard.  A class action lawsuit was filed in 2011 in Vermont, Jimmo v. Sebelius (Kathleen Sebelius was the United States Secretary for Health and Human Services between 2009-2014.)  Jimmo and the other claimants pointed out that the Medicare rules do not set restoration of the patient’s condition as the only goal of rehab.  Instead, the rules specifically list the preservation of current capabilities and the prevention of further deterioration as alternate goals if restoration isn’t possible.

Now, restoration is listed in the rules as the goal of rehab when the patient is trying to recover from a malformed body part.  Unfortunately, that restoration goal came to be applied to most or all rehab programs, not just to malformed limbs.  Using a “failure to restore” the patient’s function test allows payment to be cut off earlier in the rehab process than would using a “preservation of current function/prevention of deterioration” test.  Cutting off rehab earlier saves Medicare and its insurance affiliates save a great deal of money when rehab gets shut down early.  As a result, bit by bit, most or all rehab patients came to be measured by their progress toward restoration of function, and when the patient failed to improve toward that goal, payment for rehab get cut off.

The Jimmo lawsuit forced Medicare to face its failure to follow its own rules.  The Jimmo lawsuit didn’t go to trial but, instead, led to a settlement agreement that Medicare would stop improper use of the “restoration” standard and its “failure to improve” test for ending rehab payments.  (The restoration goal still applies to malformed body parts.)  The judge approved the settlement as a court order.

Unfortunately, years later, rehab providers and Medicare’s insurers are still applying the failure to improve standard.  The Jimmo case went back to court to demand that Medicare follow the settlement agreement.  (Based on the resulting court order, it appears that the judge is not happy with Medicare.)  Under the new court order that adds to the original settlement agreement, Medicare must undertake an effort to educate the public that the failure to improve test does not apply.

To patients undergoing rehab, the Jimmo case is the basis to argue that rehab should not be ended.  The proposed ending of rehab must come in writing with an explanation of the right to appeal.  The Jimmo settlement is an argument to present in the appeal.

Unfortunately, many hearing officers are more familiar with the incorrect approach that “failure to improve” is a reason to end rehab than they are familiar with the Jimmo agreement.  Appeals about the continuation of rehab may require the help of an attorney who works in Medicare or Medicaid.

Also, the Jimmo settlement does not get rid of the 100-day limit on Medicare payments for rehab.  The 100 days of available rehab does not reset unless the patient can go 60 days without needing Medicare’s support for the health issue that led to rehab.  If the family is concerned about the patient going 60 days without needing more medical help, the family may not wish to push the Jimmo issue too far.  The family may wish to “save” some of the 100 days.

In summary, if a patient seems to be getting pushed out of rehab early and the patient or family wishes rehab to continue, argue that Medicare can’t cut off rehab for a failure to improve.  Use the name “Jimmo,” so the care provider, insurer, or hearing officer can look for the agreement.

Medicare, Rehab, and Observation Status

Rehab is expensive.  No surprise there.  Under the right circumstances, the person getting rehab care sees little or no cost.  Under the wrong circumstances, the person getting rehab will get stuck with the entire cost.

Just to be sure we all understand, “rehab” is rehabilitation.  An example of rehab is the effort to strengthen the legs after a knee replacement.

In our discussion today, rehab follows a hospitalization.  Most often, rehab takes place in a nursing home or in a facility similar to a nursing home that has chosen to focus on rehab services.  (There is a trend to rehab at home, relieving the insurer from the room and board cost of a care facility.)

To have Medicare or an Advantage Plan cover rehab, the patient must be admitted to a hospital for a three-day period immediately before the start of rehab.  If such a hospitalization took place and the patient has Medicare, then Medicare will usually pick up the entire bill for the first 20 days of rehab and all but $165 of the costs for any additional days (up to 100.)  The patient or supplemental insurance picks up the $165.  If the patient has an Advantage Plan, the plan’s rules will control how the costs of rehab will be handled.  (Ed. Note:  The $165 amount was inserted on 3/20/2017 after receiving new information.)

Separate from rehab, hospitals have economic pressures to control who gets “admitted” to the hospital.  If a Medicare-covered person is re-admitted to the hospital within 30 days, Medicare will penalize the hospital for the first hospitalization for not treating the patient’s malady adequately enough the first time that another hospitalization was needed.  The penalty will be a reduction in the Medicare reimbursement for the first hospital stay.

Because the risk of this payment reduction, hospitals tend not to “admit” someone on Medicare if the hospital’s staff isn’t sure that the patient can be cured.  Many chronic illnesses of older adults can’t be cured.  Perhaps they can be treated, or perhaps the symptoms can be controlled, but the illness may not be curable.  The lack of a cure creates a stronger likelihood of the need for more hospital care for the same person for the same medical needs.  This risk of more care creates a high risk of a “readmission” for the patient.  So, the hospital has a reason to look for a way to avoid admitting someone with an uncurable chronic illness or with symptoms that can’t be completely diagnosed.

Hospitals have started to use “observation status.”  Observation status takes place in the hospital in a hospital bed in a hospital room and looks just like an admission to the hospital, but it’s not an admission.  A person on observation is “outpatient” for billing purposes.  Medicare is billed via Part B rather than Part A.  Advantage Plans are billed via outpatient billing codes.  But, the patient doesn’t see a difference.

If a patient goes from observation status to rehab, the rehab will NOT be covered by Medicare.  Rehab in a nursing home or rehab center can cost $10,000 per month.  Unfortunately, someone on observation status may not know that rehab won’t be covered by Medicare or an Advantage Plan until it’s too late.

So, a person on Medicare or an Advantage Plan who is in the hospital (or the person’s loved ones) needs to advocate for full admission to the hospital.  When the patient goes into a hospital room (i.e., not in the emergency room any more,) ask if the patient is admitted or on observation status.  (Just using the terminology will get the staff’s attention.)  If not admitted, demand to know why.  Demand to know how to get fully admitted  Demand to be fully admitted.  Talk to the hospital social worker.  Talk to the nurses.  Talk to the doctors.  Talk to the patient ombudsman.  Talk to anyone necessary to get a full admission.  (It may not happen, but if you don’t try, it definitely won’t happen.)

Check again everyday.  (Status can change at any time.)

Being an advocate isn’t fun (for most people,) but it may be necessary.

Be careful who helps you with Veterans Benefits

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2017 Ohio Medicaid Financial Standards for Long Term Care – Update

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

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

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

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

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

Special Needs Trust Fairness Act

People with special needs have a new ability to help themselves.

On December 13, 2016, President Obama signed the Special Needs Trust Fairness Act (buried within a larger law titled the 21st Century Cures Act.)  The Special Needs Trust Fairness Act allows someone with special needs to create his/her own Special Needs Trust.  (For background on Special Needs Trust, read the April 2, 2015 installment of this blog.)

Before adoption of the SNT Fairness Act, only a parent or grandparent of the special needs person or a court could create a SNT.  As awful as it sounds, the Congress that first memorialized the concept of a Special Needs Trust must have assumed that all people with special needs lacked the ability to handle their own affairs.  Of course, that was a terribly incorrect assumption.  Unfortunately, the law that allows Special Needs Trusts wasn’t updated for years.  Finally, that oversight is fixed.

So, what does this mean?  If a person needs to create a Special Needs Trust, he/she can do it.  A parent, grandparent, or court isn’t necessary.  The person with special needs now has control that wasn’t available before.

Here’s an example.  Some people with special needs have injury claims against someone.  (Perhaps the person is the victim of medical malpractice or an industrial accident.  Perhaps the injury is even the cause of the person’s disability.)  The injury claim can take a long time to pursue through the court system.  During the interim, the person may have started to receive Supplemental Security Income for food and housing and Medicaid for medical care.  When the court award or settlement payment arrives, it can cause a break in Medicaid coverage (because the new money is “income” during the month it arrives) and long term suspension of SSI payments (because the person will have more “savings” that SSI allows.)

To avoid the loss of these benefits, the person with special needs often places the judgment/settlement award into a Special Needs Trust.  Rarely was there a Special Needs Trust waiting for use.  The person usually needs a Special Needs Trust set up about the time that the award is going to arrive.  Before the SNT Fairness Act, the person needed a parent, grandparent, or court order to create the SNT.  Now, he/she can set up the SNT directly.

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

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

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

The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016installment discussed the difficulty in understanding the need for a Miller Trust.  The July 1, 2016 installment discussed the need to empty the Miller Trust account every month.  The July 7, 2016 installment discussed the need to balance the Miller Trust with the desire to have health insurance.  The July 15, 2016 installment discussed the confusing deposit rules for Miller Trusts.  The July 21, 2016 installment discussed the changes that the Ohio Department of Medicaid made to the form Miller Trust document.  The July 28, 2016 installment discussed whether income is supposed to go directly into the Miller Trust.  The August 4, 2016 installment discussed Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.  The August 11, 2016 installment discussed money that doesn’t actually reach the Medicaid-recipient that, nonetheless, counts as “income” for purposes of using a Miller Trust.  The August 18, 2016 installment discussed  the appearance that a person on long term care Medicaid has an increase in income when he/she stops paying Medicare premiums.  The August 25, 2016 installment discussed the impact of tax withholding on certain income sources and the difficulty that the tax withholding creates for the Miller Trust.  The September 2, 2016 installment discussed the limit placed on monthly costs of the Miller Trust.  The September 9, 2016 installment discussed how Ohio’s Medicaid rules appear to count income tax refunds twice.  The September 15, 2016 installment discussed the Ohio Department of Medicaid’s change in policy regarding real estate (other than the residence.)  The September 22, 2016 installment discussed keeping the house with an intent to return to home.  The September 29, 2016 installment discussed keeping the house while a dependent family member lives there.   The October 6, 2016 installment discussed the home that is co-owned by someone else (other than the spouse.)  The October 27, 2015 installment discussed real property that is “essential for self-support.”  The November 10, 2017 installment discussed the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs.  The November 17, 2016 installment discussed the 2016 changes in how Ohio Medicaid will allow applicants to give away some of their assets cover the resulting penalty period through a return of part of the assets.  The December 1, 2016 installment discussed Ohio Medicaid’s new prohibition on using promissory notes to recover from an applicant giving away assets.   The December 8, 2016 installment discussed the possibility of using a Special Needs Trust to recover from assets given away creating a Medicaid penalty period.  The December 15, 2016 installment discussed the use of short-term annuities to recover from a long term care Medicaid penalty period that results from giving away assets.  The December 22, 2016 installment discussed the end of the monthly “spend-down” to achieve income eligibility for the type of Medicaid that substitutes for health insurance.  Today’s installment will follow up the September 15, 2016 installment on a 2016 change to how Medicaid views real estate holdings with a discussion of a recent state hearing decision.

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

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

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

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

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

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

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

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

2017 Ohio Medicaid Financial Standards for Long Term Care

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

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

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

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

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016installment discussed the difficulty in understanding the need for a Miller Trust.  The July 1, 2016 installment discussed the need to empty the Miller Trust account every month.  The July 7, 2016 installment discussed the need to balance the Miller Trust with the desire to have health insurance.  The July 15, 2016 installment discussed the confusing deposit rules for Miller Trusts.  The July 21, 2016 installment discussed the changes that the Ohio Department of Medicaid made to the form Miller Trust document.  The July 28, 2016 installment discussed whether income is supposed to go directly into the Miller Trust.  The August 4, 2016 installment discussed Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.  The August 11, 2016 installment discussed money that doesn’t actually reach the Medicaid-recipient that, nonetheless, counts as “income” for purposes of using a Miller Trust.  The August 18, 2016 installment discussed  the appearance that a person on long term care Medicaid has an increase in income when he/she stops paying Medicare premiums.  The August 25, 2016 installment discussed the impact of tax withholding on certain income sources and the difficulty that the tax withholding creates for the Miller Trust.  The September 2, 2016 installment discussed the limit placed on monthly costs of the Miller Trust.  The September 9, 2016 installment discussed how Ohio’s Medicaid rules appear to count income tax refunds twice.  The September 15, 2016 installment discussed the Ohio Department of Medicaid’s change in policy regarding real estate (other than the residence.)  The September 22, 2016 installment discussed keeping the house with an intent to return to home.  The September 29, 2016 installment discussed keeping the house while a dependent family member lives there.   The October 6, 2016 installment discussed the home that is co-owned by someone else (other than the spouse.)  The October 27, 2015 installment discussed real property that is “essential for self-support.”  The November 10, 2017 installment discussed the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs.  The November 17, 2016 installment discussed the 2016 changes in how Ohio Medicaid will allow applicants to give away some of their assets cover the resulting penalty period through a return of part of the assets.  The December 1, 2016 installment discussed Ohio Medicaid’s new prohibition on using promissory notes to recover from an applicant giving away assets.   The December 8, 2016 installment discussed the possibility of using a Special Needs Trust to recover from assets given away creating a Medicaid penalty period.  The December 15, 2016 installment discussed the use of short-term annuities to recover from a long term care Medicaid penalty period that results from giving away assets.  Today’s installment will discuss the end of the monthly “spend-down” to achieve income eligibility for the type of Medicaid that substitutes for health insurance.

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

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

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

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

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

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

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

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

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

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

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

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