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.