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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ohio Medicaid changes “Aged Blind Disabled” Eligibility – Spouse’s Retirement Fund

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.”  Today’s installment will discuss the retirement funds belonging to the spouse who does not seek Medicaid’s help with long term care costs.

Before July 31, 2016, when a married person asked for Medicaid’s help to pay for long term care, all assets (Medicaid calls them “resources”) of both spouses were counted when determining eligibility for Medicaid coverage.  It didn’t matter whether the assets belonged to the spouse seeking coverage, or to the spouse who wasn’t seeking coverage, or to both of them jointly.  After August 1, 2016, that changed for retirement funds belonging to the spouse who doesn’t need care UNDER CERTAIN CIRCUMSTANCES.

The exclusion of the spouse’s retirement account is set forth in the amended version of Ohio Administrative Code section 5160:1-3-05.20(E)(1) that took effect on August 1, 2016.  It applies to retirement funds that are public pensions, private pensions, disability plans, defined benefit employer pension plans, employee stock ownership plans, 403b plans, money purchase pension plans, profit sharing pension plans, IRAs, KEOGH plans, Roth IRAs, SEP-IRAs, and 401k plans, as well as any other pension or retirement plans under sections 401, 403, or 408 of the federal income tax law. (Ohio Administrative Code section 5160:1-3-03.10(B))

Here’s the catch.  The spouse’s retirement funds are excluded from the asset calculation for Medicaid eligibility only if the couple is living together.

When one of them needs long term care, a married couple will probably live together only if the person receiving care is receiving that care in the home (frequently called aging in place) or is receiving care in an assisted living community.  A couple living together in a nursing home when one of them doesn’t need nursing home care is a extremely unlikely.  For that matter, living together in assisted living when only one of them needs long term care is unusual.

Because of the “living together” requirement, this recent rule change seems to create an incentive for the couple remain in the home or in assisted living, both of which are less expensive for Medicaid than full nursing home care.  That incentive to remain in a less expensive setting to receive long term care is all well and good as long as the home or assisted living can provide appropriate care.  For many, if not most, people, the home or assisted living community may not be able to provide appropriate care for the rest of the person’s life.  At some point, the person is likely to need to move into a nursing home.

If the spouse receiving Medicaid’s help for home care or assisted living care needs more care and moves into a nursing home to receive such care, then the spouse’s retirement funds are no longer exempt.  The loss of this exemption will lead to the loss of Medicaid eligibility for the person who needs care.

The likelihood that the exemption of the spouse’s retirement funds is a temporary exemption creates a Catch-22 for the couple.  They must either try to maintain the exemption for the retirement funds  by remaining where they can live together, or, they must spend a potentially large portion of the retirement funds to to allow the provision of more care.

“My Care Ohio” (People on both Medicare and Medicaid) Enrollment for 2017

This week’s blog takes another break from the ongoing discussion of the 2016 changes to Ohio Medicaid’s rules.  My Care Ohio enrollment for 2017 has started, so this installment will discuss strategies to reduce the adverse impacts that My Care Ohio could possibly cause to a person’s long term care.

Ohioans on both Medicare and Medicaid were first enrolled into My Care Ohio in May, June, and July 2014.  These “dual eligible” (better described as “dual covered”) Ohioans were renewed around this time in 2015 and in 2016, and Ohioans who have become covered by both Medicare and Medicaid have been added to the program as they receive that dual coverage.

My Care Ohio is a system of “managed care” for people on both Medicare and Medicaid in Ohio.  It is an attempt to control the state’s costs for long term care paid from the state budget.

When the implementation of My Care Ohio started in 2014, the February 22, 2014 installment tried to provide an overview on how the My Care Ohio program was supposed to work.  The February 28, 2014 installment explained how My Care Ohio is an attempt to cut costs through insurance company command and control methods rather than empowering people to choose lower cost care by making it easier to qualify for in-home care Medicaid through PASSPORT or for the Assisted Living Waiver instead of maintaining the current financial incentive to choose a nursing home, with its higher cost per person  The March 7, 2014 installment described the decisions that “dual eligibles” must make when My Care Ohio comes to their county:  (1) whether to accept managed care for Medicare for this first year; (2) which Managed Care Organization to join; and (3) whether to accept managed care for Medicare for years two and three.  The March 13, 2014 installment outlined what to choices to make when enrolling in My Care Ohio.  When all of 2014’s enrollees were placed into the My Care Ohio program, the July 4, 2014 installment described how enrollees could minimize the likelihood that needed care services would be cut by opting out of Medicare participation in My Care Ohio.  After a few months of experience with My Care Ohio, the December 5, 2014 installment described how the program was cutting off long term care benefits for some people.

Now that it’s time to make enrollment decisions for My Care Ohio for 2017, I want to revisit the strategies that dual-covered Ohioans should use.

My biggest fear for people in the My Care Ohio program is that their managed care organizations (i.e., the insurance companies to which they are assigned) will reduce services that the managed care organizations/insurance companies deem unnecessary as a way to cut costs.  (We’ll call the managed care organizations/insurance companies the “MCOs.”)  For example, if the person is in a nursing home and is doing well, the MCO might decide that the person can go home and receive home care (with a resulting big reduction in costs.)  In fact, friends of mine who work in nursing homes have described a number of such discharges triggered by MCOs.  Unfortunately, without the 24 hour care that a nursing home provides, these discharged seniors are at great risk to their health and well-being.  Some of them will likely die.

The best protection against unwise cuts in services is the personal doctor.  My fear is that a doctor could feel pressured by the MCO that pays the doctor’s fee to comply with an MCO decision.  Because the doctor gets his or her payment from the MCO, the doctor may be hesitant to question or oppose the MCO’s decision to reduce services.

To avoid MCO influence over the doctor, I urge all people in the My Care Ohio program to:

– Opt out of the Medicare portion of My Care Ohio;
– Find out which MCO works best with the care providers (other than the doctor) that you would like to use and enroll with that MCO; and
-Choose a Medicare supplement (not an Advantage Plan) from an insurer that is not one of the MCOs in the My Care Ohio program.
– If you can’t get a supplement, then get the best Advantage Plan you can find.
– If the Advantage Plan is from an insurance company that serves as a My Care Ohio MCO in your area, choose a different insurance company as your MCO.

For example, a person in Summit County (where I live) can choose between United Health Care and CareSource as his/her MCO. Then the person would sign up for a Medicare supplement, preferably with a company other than United or CareSource.  (Get the supplement enrollment done before December 7.)  If the person can’t get a Medicare supplement (most likely because of health issues,) then the person should look for the Advantage Plan that fits best with his/her needs.  (The person should look for coverage of the prescription drugs that the person uses and participation of the person’s doctor.)

If the person got a Medicare supplement or an Advantage Plan from a company other than United or CareSource, then the person should choose an MCO (United or CareSource) whose provider lists for the My Care Ohio program is best for the person’s situation.  If the person DID get a Medicare supplement or Advantage Plan from United or CareSource, then the person should choose the other company as his/her MCO if at all possible.

Then, the person should tell Ohio Medicaid that he/she chooses to OPT OUT of Medicare’s participation in My Care Ohio.

After taking these steps, the person’s doctor is paid by someone other than the MCO and would be immune (as much as possible) to perceived pressure from the MCO to acquiesce to questionable care decisions.

Remember, in this fourth year of My Care Ohio, the program assumes that Medicare will be opted into My Care Ohio.  You must take steps to notify the program that you choose to opt out for Medicare.

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

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

Before July 31, 2016, a single person who asked for Medicaid’s help to pay for long term care costs and who owned a home had 13 months after the beginning of Medicaid coverage during which to put the home up for sale.  (If the Medicaid applicant were married and the spouse still lived in the home, there was no obligation to sell.)  That 13-month time period is gone.  As part of the big August 1, 2016 change in rules, Ohio Medicaid rescinded the 13-month rule.  Now, the person must decide to keep the house or to sell the house before applying for Medicaid.

If the person decides to sell, then the rules regarding real estate discussed in the September 15, 2016 installment apply.

If the person decides not to sell, then one of a number of certain conditions must apply.  Under the new rules, if the applicant for Medicaid for long term care owns a parcel of real estate and the parcel is “essential to [the applicant’s] self-support,” the applicant may keep the parcel.  The complicated criteria for “essential to self-support” are set forth in Ohio Administrative Code section 5160:1-3-05.19 (which was amended effective August 1, 2016.)

The first way in which real estate can qualify as “essential to self-support” is to be used as part of the applicant’s employment.  For a person in long term care, however, employment is unlikely.  To qualify for help with long term care costs, a person must need help with activities of daily living (such as bathing and dressing) or be unsafe to stay home alone.  A person who needs help with activities of daily living or who cannot stay home safely is unlikely to be able to work.  Because of the applicant’s likely inability to work, this language in the Medicaid rules seems pointless.

The second way that a parcel of real estate qualifies as “essential to self-support” is to be a “nonbusiness property used to produce goods or services essential to basic daily living needs.”  “Basic daily living needs” is defined as “food, basic clothing, basic housing, and medical care.”  So, for example, a farm produces food, so it can qualify as “essential to self-support.”  For these nonbusiness properties, however, only $6,000 of the equity in the property is excluded from the Medicaid eligibility calculation.  As a result, this exclusion is not very helpful for real property.  (The same exclusion rules apply to personal property used to produce goods or services essential to basic daily living needs.  For personal property (aka the “stuff” that someone owns other than real estate) the $6,000 exclusion can be useful.

Finally, the last type of real property “essential to self-support” is “nonbusiness income-producing property” such as rental property or mineral rights.  Like with properties that help produce goods and services for basic daily living needs, only the first $6,000 of equity is exempted from the Medicaid eligibility calculation.  However, that exclusion applies only if the annual rate of return is 6% (subject to certain limited exceptions on the rate of return target.)  Because of the $6,000 limit, this is not very useful for people trying to shelter resources from the costs of long term care.  In addition, the rate of return target may make even the $6,000 exclusion inapplicable.

All in all, the “essential to self-support” rule only works for people who fall within the “aged blind disabled” program who do NOT need long term care.  Unfortunately, the Ohio Medicaid rules do not explain this limitation.  Applicants are left to realize for themselves that “essential to self-support” isn’t useful for very many people who need long term care.

Medicare Annual Enrollment is here. Choose your insurance plan wisely.

This week’s blog continues the break from the ongoing discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program.  That series will resume soon.

Medicare’s “Open Enrollment” period has arrived for next year’s coverage.  To have an insurance plan for the upcoming year to help cover the 20% of medical costs that Medicare will not cover, a Medicare-eligible person must enroll in the plan of his or her choice by December 7.  (Open Enrollment is October 15 to December 7 each year.)  The new policy will take effect on January 1.

People who have Medicare available to them have three basic options for medical insurance.  So called “straight Medicare” provides the insured person with Medicare coverage for 80% of medical costs.  The insured person is responsible for the other 20% as a co-pay.  People who do not wish to pay the 20% co-pay can purchase either Advantage Plans or Medicare Supplements.An Advantage Plan is an insurance policy that pays most or all of the 20% of medical costs that Medicare does not cover.  The amount of the insured’s new co-pay depends on the Advantage Plan that the insured chooses.  Generally, the higher the premium, the lower the co-pay.  There are plenty of other options that change the price and co-pay as well.  (An Advantage Plan actually steps into the shoes of Medicare and pays the 80% in addition to whatever costs exceed the insured’s co-pay.  The Advantage Plan insurance company receives both the premium of the individual insured person and a payment from the Medicare program in lieu of Medicare’s usual 80% payment towards the insured’s costs.  The Advantage Program’s coverage of Medicare’s portion of costs is generally not noticed by the insured.)  Because an Advantage Plan is a “replacement” for Medicare, it can have some limitations in covered services or in approved service providers as compared to “straight Medicare.”  In addition, there are many different Advantage Plans, each offering slightly different coverage, from which to choose.

When an insured person has a Medicare Supplement (sometimes called a Medi-Gap policy,) the Medicare program pays its usual 80% pays the insured’s medical costs, and the Supplement pays the 20% not covered by the Medicare office.  Medicare Supplements, because they supplement Medicare rather than replace Medicare, do not generally have any differences from Medicare in covered services or approved service providers.  There are many different Supplements.  The differences among Supplements generally is small, but worth examining.
Please be aware, it isn’t necessary to have Medicare additional insurance.  Someone can choose “straight” Medicare in which he or she must cover the 20% Medicare co-pay by himself or herself.    It costs nothing in a year during which that person has no medical issues.  It can, though, without warning, cost lots of money if that person has an accident or needs an operation, for example.  Each person on “straight” Medicare could pay 20% of $0 or 20% of $200,000, or 20% of any amount depending on what happens during that year.  Before choosing traditional Medicare, you must decide whether you wish to assume the risk of a big surprise in health costs during the coming year.
The monthly premium for an Advantage Plan is generally much lower than the premium for a Medicare Supplements.  (Some Advantage Plans have a $0 premium, in fact.)  An Advantage Plan’s limitations on services and providers is the trade-off for a lower premium.  The most glaring difference, though, between Advantage Plans on the one hand and both straight Medicare and Medicare Supplements on the other hand is the coverage of post-hospitalization rehabilitation services.
With straight Medicare and Medicare Supplements, an insured person who has been admitted to the hospital for three days and then needs post-hospitalization rehab can have 100 days of rehab coverage.  Someone on an Advantage Plan may have rehab coverage end before 100 days have elapsed.  An Advantage Plan (because it has rules slightly different than straight Medicare) can determine that rehab is not helping the insured person and can end coverage.  Sometimes the rehab coverage is stopped as early as day 20.  (Advantage Plans used to base their decisions on ending rehab payments on on day-to-day progress reports.  Now, Advantage Plans must now look at week-to-week comparisons or even bi-weekly comparisons.)  Still, rehab can be very expensive, so Advantage Plans have a strong incentive to end rehab coverage as early as possible.
(“Admission” to the hospital rather than “under observation” in the hospital is a very important distinction in the availability of any insurance coverage for rehab.  That issue is not handled differently by Medicare, Advantage Plans, or Medicare Supplements, though.  Consequently, the “admission” versus “observation status” issue is not important to today’s discussion.  I mention it here as a side note because it is an important issue for all people insured through Medicare.)
Even though we are in an “open” enrollment period, someone covered by any form of Medicare cannot simply switch plans on demand.  Medicare, unlike the Affordable Care Act, allows the insurance company to make underwriting decisions on individual plans.  Trying to move to a plan that provides more coverage may require a medical examination and will certainly require answering medical questions.  Generally, I urge people to move to a Medicare Supplement, if they can (as long as the premium isn’t prohibitive.)
If a Medicare Supplement is not available, an alternative is an Advantage Plan or even straight Medicare with a separate Hospital Indemnity policy.  (The cost of an Advantage Plan plus Hospital Indemnity policy is usually less than a Medicare Supplement.)  A Hospital Indemnity policy is subject to underwriting, though.  Someone who exhibits symptoms that are a concern for the Hospital Indemnity insurance company may not be able to get such a policy.
Without considering the cost of premiums, my preferences for medical insurance is a Medicare Supplement.  My second choice is an Advantage Plan with a Hospital Indemnity policy.  My third choice is straight Medicare.  Finally, my fourth choice is an Advantage Plan.  (Because I provide legal services to people who need long term care or that have special needs, my clients have health concerns.  That possibly causes my preference for the broad coverage that supplements provide.)
No matter your preference, seek out a Medicare insurance agent that represents more than one insurer.  Don’t just assume that the person at the table in your local grocery, pharmacy, or department store can give you all the options.  If the person at that table sells insurance for just one company, please consider whether you want to find more options before deciding.
But, don’t go it alone.  Get help from an insurance broker.  These insurance plans are complicated, and there are many different choices among Advantage Plans and among supplements.  Let someone help you figure out your best options.  Their help doesn’t cost you anything.  They’re paid by the insurer you choose.
Choose your plan wisely.
Acknowledgement:  Thanks to Michael Whitaker of Premier Solutions Group in Brookpark, Ohio for helping me understand Hospital Indemnity insurance.

Election Season 2016 has arrived. PLEASE Vote for Good Judges!

This week’s blog discussion isn’t focused on seniors or people with special needs.

Election Day is Tuesday, November 8, and in many places (including Ohio) early voting is already available.

I urge you to seek out and consider the bar association rankings of judicial candidates when you vote.

Some bar associations meet with judicial candidates to try to predict fairness as a judge (often called “judicial temperament.)  This is NOT a test on issues or ideology.  It is a judgment of a willingness to listen to both sides and an ability to make tough, sometimes uncomfortable, decisions.  These rankings have nothing to do with Democrat or Republican or third party or Independent affiliations.

The possible rankings are:
Highly Recommended (highest ranking)
Recommended
Acceptable, and
Not recommended (lowest ranking)

Or

Excellent (highest ranking)
Good
Acceptable, and
Not recommended (lowest ranking.)

The reviews may not express a preference between candidates.  Sometimes two or more candidates for the same judgeship will have identical rankings.  (Unfortunately, that occasionally means that only “not recommended” candidates are available for a particular judgeship.)

For my friends in northeast Ohio (where I live,) you can find bar association rankings at:

Ohio Supreme Court:  https://www.ohiobar.org/ForPublic/PressRoom/Pages/OSBA-announces-Supreme-Court-of-Ohio-candidate-ratings-for-the-2016-Election.aspx (by the Ohio State Bar Association)

Ohio Supreme Court and local courts in Cuyahoga County: https://youbethejudgesummitcounty.com/ (by 4 bar associations and two newspapers)

Ohio 9th District Court of Appeals and local courts in Summit County: http://youbethejudgesummitcounty.com/ (by the Akron Bar Association)

I was not able to find bar association ratings for other counties.  Sorry.

I urge you to consider these ratings when you vote.  If you live somewhere other than the counties I’ve listed above, I urge you to see if your local bar association has made ratings available for your judicial candidates.

Then, please get out, and vote.

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

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  The July 1, 2016 installment discussed the need to empty the Miller Trust account every month.  The July 7, 2016 installment discussed  the need to balance the Miller Trust with the desire to have health insurance.  The July 15, 2016 installment discussed the confusing deposit rules for Miller Trusts.  The July 21, 2016 installment discussed the changes that the Ohio Department of Medicaid made to the form Miller Trust document.  The July 28, 2016 installment discussed whether income is supposed to go directly into the Miller Trust.  The August 4, 2016 installment discussed Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.  The August 11, 2016 installment discussed money that doesn’t actually reach the Medicaid-recipient that, nonetheless, counts as “income” for purposes of using a Miller Trust.  The August 18, 2016 installment discussed  the appearance that a person on long term care Medicaid has an increase in income when he/she stops paying Medicare premiums.  The August 25, 2016 installment discussed the impact of tax withholding on certain income sources and the difficulty that the tax withholding creates for the Miller Trust.  The September 2, 2016 installment discussed the limit placed on monthly costs of the Miller Trust.  The September 9, 2016 installment discussed how Ohio’s Medicaid rules appear to count income tax refunds twice.  The September 15, 2016 installment discussed the Ohio Department of Medicaid’s change in policy regarding real estate (other than the residence.)  The September 22, 2016 installment discussed keeping the house with an intent to return to home.  The September 29, 2016 installment discussed keeping the house while a dependent family member lives there.  Today’s installment will discuss the home that is co-owned by someone else (other than the spouse.)

Before July 31, 2016, a single person who asked for Medicaid’s help to pay for long term care costs and who owned a home had 13 months after the beginning of Medicaid coverage during which to put the home up for sale.  (If the Medicaid applicant were married and the spouse still lived in the home, there was no obligation to sell.)  That 13-month time period is gone.  As part of the big August 1, 2016 change in rules, Ohio Medicaid rescinded the 13-month rule.  Now, the person must decide to keep the house or to sell the house before applying for Medicaid.

If the person decides to sell, then the rules regarding real estate discussed in the September 15, 2016 installment apply.

If the person decides not to sell, then one of a number of certain conditions must apply.  Under the new rules, if someone else lives in the house and co-owns it, the Medicaid-applicant/recipient may keep it and still receive Medicaid coverage for long term care.

The new rule that describes whether and how to count the house as an asset of the Medicaid applicant/recipient (Ohio Administrative Code section 5160:1-3-05.13) lists the ways that someone can live in a nursing home or assisted living facility AND receive Medicaid’s help with the nursing home/assisted living costs AND to keep his/her home.  Subsection (C)(4)(b) allows the person to keep the home and excludes the value of the home from the count of the person’s assets if someone else owns part of the home.

To allow the home to be excluded from counting as an asset for the Medicaid applicant/recipient, the co-owner must submit a signed statement that the home is (1) his/her principal place of residence, (2) he/she has no other place readily available to use as a principal place of residence, and (3) he/she would have to move out if the property were sold. (These are in a different order in the rule, but this order seemed to make more sense for discussion purposes.)

The first requirement is that the co-owner must use the home as his/her principal place of residence.  As a result, co-ownership with the Medicaid applicant/recipient’s adult child for purposes of avoiding probate (or a weak attempt at avoiding long term care costs) will not protect the home unless the co-owner lives in the home.

The second requirement provides that the home is protected only if the co-owner has no other place readily available where he/she could live.  If the co-owner has a snowbird home in the South, for example, the Ohio home would not be protected.  The co-owner could move to the other house.

The third requirement, that the co-owner would have to move out if the home were sold, seems logical, but I’m not sure how the co-owner wouldn’t be subject to this requirement upon the sale of the home.  The necessity to move out would be a decision of the new owner, but, because we’re trying to document that the house won’t count as an asset for the Medicaid-seeking co-owner and, as a result, won’t have to be sold, the “buyer” is purely hypothetical.  Except for the TV show “Two and a Half Men,” when Walden bought the house from Charlie’s estate and allowed Alan to continue to live there, how often does a buyer allow someone else to continue to live in the property?  The necessity to move out makes sense as a requirement for this rule, but I can’t really foresee events unfolding any other way.

I don’t expect this co-ownership exception to be extremely common, but it will certainly help protect the home of a number of people.  Co-ownership by widowed siblings is relatively common and may be the most likely way that the house is co-owned (among seniors anyway) when someone requires Medicaid for long term care.  Similarly, a number of never-married siblings continue to live in the home left to them by deceased parents and, often, would co-own the home as a result of their parents’ estate plans.

In addition, I suspect that the number of cohabiting unmarried couples will grow in the future (among both same sex couples and opposite sex couples.)  For same sex couples, cohabitation was common before same sex marriage was deemed a right by the U.S. Supreme Court.  Some of these couples may choose not to get married because they became accustomed to their living situation long before their right to marry was recognized, and they simply may not want to bother to change their situation.  Among both opposite sex couples and same sex couples, especially if they come together later in life, they may choose not to marry because their combined finances may be better as single people rather than married people.  As a result, I believe that the co-ownership protection for the house will become more important in the future.

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

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  The July 1, 2016 installment discussed the need to empty the Miller Trust account every month.  The July 7, 2016 installment discussed  the need to balance the Miller Trust with the desire to have health insurance.  The July 15, 2016 installment discussed the confusing deposit rules for Miller Trusts.  The July 21, 2016 installment discussed the changes that the Ohio Department of Medicaid made to the form Miller Trust document.  The July 28, 2016 installment discussed whether income is supposed to go directly into the Miller Trust.  The August 4, 2016 installment discussed Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.  The August 11, 2016 installment discussed money that doesn’t actually reach the Medicaid-recipient that, nonetheless, counts as “income” for purposes of using a Miller Trust.  The August 18, 2016 installment discussed  the appearance that a person on long term care Medicaid has an increase in income when he/she stops paying Medicare premiums.  The August 25, 2016 installment discussed the impact of tax withholding on certain income sources and the difficulty that the tax withholding creates for the Miller Trust.  The September 2, 2016 installment discussed the limit placed on monthly costs of the Miller Trust.  The September 9, 2016 installment discussed how Ohio’s Medicaid rules appear to count income tax refunds twice.  The September 15, 2016 installment discussed the Ohio Department of Medicaid’s change in policy regarding real estate (other than the residence.)  The September 22, 2016 installment discussed keeping the house with an intent to return to home.  Today’s installment will discuss keeping the house while a dependent family member lives there.

Before July 31, 2016, a single person who asked for Medicaid’s help to pay for long term care costs and who owned a home had 13 months after the beginning of Medicaid coverage during which to put the home up for sale.  (If the Medicaid applicant were married and the spouse still lived in the home, there was no obligation to sell.)  That 13-month time period is gone.  As part of the big August 1, 2016 change in rules, Ohio Medicaid rescinded the 13-month rule.  Now, the person must decide to keep the house or to sell the house before applying for Medicaid.

If the person decides to sell, then the rules regarding real estate discussed in the September 15, 2016 installment apply.

If the person decides not to sell, then one of a number of certain conditions must apply.  Under the new rules, if a dependent family member lives in the home, the person may keep it and still receive Medicaid coverage for long term care.

The new rule that describes whether and how to count the house as an asset of the Medicaid applicant/recipient (Ohio Administrative Code section 5160:1-3-05.13) creates a new way for someone to live in a nursing home or assisted living facility AND receive Medicaid’s help with the nursing home/assisted living costs AND to keep his/her home.  Subsection (C)(4)(a) allows the person to keep the home and excludes the value of the home from the count of the person’s assets if a spouse or dependent relative lives there.

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

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

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

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

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

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

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

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