Month: August 2016

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

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

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

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

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

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

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

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

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

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

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

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  The July 1, 2016 installment discussed the need to empty the Miller Trust account every month.  The July 7, 2016 installment discussed  the need to balance the Miller Trust with the desire to have health insurance.  The July 15, 2016 installment discussed the confusing deposit rules for Miller Trusts.  The July 21, 2016 installment discussed the changes that the Ohio Department of Medicaid made to the form Miller Trust document.  The July 28, 2016 installment discussed whether income is supposed to go directly into the Miller Trust.  The August 4, 2016 installment discussed Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.  The August 11, 2016 installment discussed money that doesn’t actually reach the Medicaid-recipient that, nonetheless, counts as “income” for purposes of using a Miller Trust.  Today’s installment will discuss the appearance that a person on long term care Medicaid has an increase in income when he/she stops paying Medicare premiums.

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

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

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

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

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

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

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

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

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

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

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

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  The July 1, 2016 installment discussed the need to empty the Miller Trust account every month.  The July 7, 2016 installment discussed  the need to balance the Miller Trust with the desire to have health insurance.  The July 15, 2016 installment discussed the confusing deposit rules for Miller Trusts.  The July 21, 2016 installment discussed the changes that the Ohio Department of Medicaid made to the form Miller Trust document.  The July 28, 2016 installment discussed whether income is supposed to go directly into the Miller Trust.  The August 4, 2016 installment discussed Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.  Today’s installment will discuss money that doesn’t actually reach the Medicaid-recipient that, nonetheless, counts as “income” for purposes of using a Miller Trust.

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

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

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

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

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

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

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

This week’s blog continues the discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program coming in 2016-2017.  The initial installment (April 28, 2016) provided an overview of the transition from the old system (following section 209(b) of the federal Medicaid law) to the new system (that will follow section 1634 of the federal Medicaid law.)  The May 5, 2016 installment discussed the new income rules that will go into effect with the new eligibility system.  The May 12, 2016 installment discussed setting up a Qualified Income Trust (aka Miller Trust) that will be necessary for people who need ABD Medicaid to help pay for long term care.  The June 16, 2016 installment discussed the Ohio rules that describe how to use the Miller Trust each month.  The June 23, 2016 installment discussed the difficulty in understanding the need for a Miller Trust.  The July 1, 2016 installment discussed the need to empty the Miller Trust account every month.  The July 7, 2016 installment discussed  the need to balance the Miller Trust with the desire to have health insurance.  The July 15, 2016 installment discussed the confusing deposit rules for Miller Trusts.  The July 21, 2016 installment discussed the changes that the Ohio Department of Medicaid made to the form Miller Trust document.  The July 28, 2016 installment discussed whether income is supposed to go directly into the Miller Trust.  Today’s installment will discuss Medicaid’s insistence that the transfers (or deposits) into the Miller Trust account be automatic.

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

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

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

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

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

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

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

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

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

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

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