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.