County Medicaid Agency Backs Off – Small Business Saved

Recently, a senior client who had a very small business that he ran by himself came to see me in a panic.  He was just making ends meet. His spouse had been on Medicaid in a nursing home for several years, but the county board of social services was now questioning the nature of the business and whether it was a countable resource that should have been spent down.  They were going to  terminate the wife’s eligibility.  “How can I appeal this?” was one of his worries.

The client was distraught, but we helped him to keep a level head.  Our first step was to file for a Medicaid Fair Hearing and make sure that benefits were continued while that administrative appeal was going on. Next was getting more information about this business–did it have any other employees other than the spouse?  What equipment or real estate was owned by the business?  How were taxes handled–could we see the returns?  Did the applicant spouse have an ownership interest in the business?

Once we had this information, it looked like these business activities and the equipment associated with them would fall firmly in the category of excluded resources under the New Jersey Medicaid regulations (N.J.A.C. 10:71-4.4):

“Excludable resources (b) The following resources shall be classified as excludable:  5. Nonhome property that is used in a business or nonbusiness self-support activity that is essential to the means of self-support of an individual and/or spouse, is excluded from resources.   i. Tools, equipment or other items that are used for trade or business and required for employment, including, but not limited to, the machinery and livestock of a farmer, are assumed to be of a reasonable value and producing a reasonable rate of return and are, therefore, excluded from resources.”

Further, under the Social Security Administration interpretive publication (called the POMS), there is no value limit to property that is essential to a trade or business.  It would all be excludable as long as it is in current use. The income the business generates to a community spouse is exempt, regardless of how much.  This is true of all income of a community spouse.

Once we fully disclosed the nature of the business and how it was essential to the spouse’s self-support, the county backed off and reinstated benefits. We could then withdraw the fair hearing.  The client was relieved and thrilled.  He could get back to caring for his wife without this cloud hanging over his head!

The Medicaid regulations are a thorny thicket, but sometimes protection is available if you can just find where it is hidden in there.

If you or a spouse needs Medicaid, but you are unsure about how an active business affects this, give us a call…. 732-382-6070

 

NJ Medicaid raises spousal maintenance allowance; options still exist to increase the share of resources

Effective July 1, the State of New Jersey Division of Medical Assistance and health Services (DMAHS) has raised the Minimum Monthly Maintenance Allowance (MMMNA) for the spouse of a person who is on Medicaid. For residents of nursing homes, the general rule is that all of the resident’s income must be turned over to the facility as a cost-share, except for authorized deductions which include support of a spouse if the spouse’s own income is less than the Maintenance Allowance. The NJ MMMNA is now $1,991.25. The relevant regulation is N.J.A.C. 10:71-5.7, and here is the new MedCom No. 15-09, dated July 1m 2015.

15-09_2015_Community_Spousal_Maintenance_Allowance

In calculating the amount of this spousal support deduction, an excess shelter allowance is provided if shelter costs are in excess of $597.38. Also, if the spouse pays for utilities, a utility allowance of $491.00 per month is added to the base MMMNA.

Typically, these calculations are not done until after the applicant has been found to be resource-eligible (“after the spend-down”). This does not mean that all the excess assets have to be spent on the nursing home, and there are techniques available which we use regularly, that preserve substantial assets for support of the spouse.

Also, in some cases, the combined income of the spouses will not be enough to provide the spousal support amount. There is a special regulation for those cases, in which the community spouse can keep more assets than usual because the income is too low. N.J.A.C. 10:71-5.7(d) and N.J.A.C. 10:71-8.4. This is based on the federal statute at  42 USC 1396r-5(e)(2)(C). These issues have to be addressed at the earliest possible time,  before the couple embarks on a spend-down. This protection of extra assets can only be obtained by going through a hearing process at the NJ Office of Administrative Law. New Jersey is an “income-first” state, which means that before the extra resources can be set aside for or transferred to the community spouse, all income must be made available. The U.S. Supreme Court dealt with this issue in  Wisconsin Dep’t. of Health v. Blumer, 534 U.S. 473 at 484, 151 L. Ed.2d 935 at 946, 122 S. Ct. 962 at 969, 151 L. Ed.2d 935 (2002).

First, the income of the community spouse is applied toward their maintenance amount. Then, the income that the institutionalized spouse is earning or receiving (such as pension or Social Security retirement) at the time of the fair hearing is considered. If there is a pending receipt of income based on a prior award notice, that income would also be taken into account (such as where they had received notice that they would be receiving Social Security Disability income as of a certain date). If there is still a “gap,” there is a basis to ask for an increase in the community spouse resource allowance or CSRA to set aside additional resources for the community spouse.

Call us for legal advice on Medicaid eligibility and asset protection, and to prepare your medicaid applications and appeals … 732-382-6070