There’s no “income cap” anymore for Medicaid long term benefits

When I first started filing Medicaid applications for my clients back in 1995, a person who needed long-term care services in the home or assisted living but had run out of money could not even apply for Medicaid if their gross monthly income was higher than the “income cap.” Of course, the income cap was well below the amount that was needed to pay for care, which meant that a lot of people couldn’t receive necessary services. Basically it meant that many people who would have done well in a community environment with a home health aide and other support ended up moving into a nursing home, because that was the only setting where Medicaid would pay for them. Or they had to do without care or cobble together a plan in which family members took care of them.

Finally, in 2014 when the State’s Comprehensive Medicaid Waiver went into effect, the income cap was eliminated as a bar to receipt of community & assisted living services. There is a special procedure that the applicant has to use, because the income has to be funneled through a structure called a Qualified Income Trust (QIT), but at least the person can now apply for Medicaid benefits. You can read more about QIT’s in our earlier blogs.

We continue to meet people who haven’t heard this good news. If your family is struggling with how to arrange and pay for long term care, call us for legal advice regarding Medicaid eligibility that fits your specific situation.

For personalized advice about a Medicaid plan call … 732-382-6070

Third Circuit rejects State’s claim that short-term annuities can’t meet Medicaid requirements

The Third Circuit federal Court of Appeals has just issued a precedential decision concerning Medicaid planning strategies that involve the purchase of short-term, immediate, irrevocable, unassignable annuities. Zahner decision The case is called

ANABEL ZAHNER, by her agent Raymond E. Zahner; ESTATE OF DONNA C. CLAYPOOLE, by Mitchell R. Claypool, Executor; CONNIE L. SANNER, by her agent Jamie R. Rybak,Appellants in No. 14-1328, v. SECRETARY PENNSYLVANIA DEPARTMENT OFHUMAN SERVICES, Appellants in No. 14-1406, Case: 14-1328

 

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The Zahner case is out of Pennsylvania and involved two denials of nursing home Medicaid eligibility by the Pennsylvania Department of Human Services. Both of the applicants had transferred assets to their family members (which would trigger a transfer penalty) and used other assets to purchase immediate irrevocable annuity contracts that met all criteria of the federal Medicaid statute but happened to be for relatively short terms. The State argued that because the annuity’s term was quite a bit shorter than the actuarial life expectancy of the applicants, they were sham transactions, or were trust-like devices. As a result, the State sought to either impose a transfer penalty or continue to count the annuity as a resource. That would mean the applicant’s resources exceeded the required levels for eligibility.

Pennsylvania had actually enacted a law voiding any nonassignability clause in an annuity. The Court affirmed the Federal District Court decision which declared that that statute was pre-empted by the federal Medicaid law, under the Supremacy Clause of the US Constitution. The court further embarked on a lengthy detailed analysis of the requirements put in place by federal statute and CMS’ interpretive rulings concerning the purchase of annuities by Medicaid applicants. The Court concluded that if the annuity meets all of the criteria adopted by Congress and CMS, its purchase cannot be penalized, its value cannot be counted as a Resource, and there is no lawful basis to impose any additional criteria concerning the length of the annuity contract.

In New Jersey, careful Medicaid planning with properly structured immediate annuities enables applicants to preserve some assets for their families. Two of my earlier cases, PK and MW, resulted in Final Agency Decisions by DMAHS that confirmed the viability of such planning.

 

CALL US for asset protection in connection with Medicaid applications, and to prepare and file your application … 732-382-6070