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.