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.