Update on Irrevocable Funeral Trusts and Medicaid Eligibility

Earlier this year I wrote about problems that are cropping up for Medicaid applicants who purchased irrevocable funeral trusts. The problem is that certain County Boards of Social Services were/are counting some of the dollars in the irrevocable funeral trust as if they are available resources (assets). The theory was that the items are ‘for the living,” and not “for the funeral of the deceased.” The result is that a Medicaid applicant thinks he is eligible for MLTSS to pay for his nursing home care, but his application is rejected for “excess resources.”  This can cause catastrophic consequences, considering as the cost of a nursing home in New Jersey is at least $12,000 a month and the decision is received months after the expected date of eligibility, leaving the individual (and his spouse) exposed to enormous bills. Such a decision by a county welfare board creates a legal problem that requires adept legal representation to address.

Recently, one county advised us that the following items are “disallowed:”

  • Acknowledgement cards- $10
  • Crucifix- $25
  • Flower Car- $350
  • Gratuity- $30
  •  Limo- $425
  •  Register Book- $25
  • Specially:  Prayer Cards- $50

When you are setting up an irrevocable prepaid funeral trust, discuss these details with the funeral director and try to obtain current guidance from the funeral director or an elder law attorney regarding what will or won’t cause a “Medicaid eligibility problem.” The State issued a policy memorandum, but it does NOT inform the public of what the consequence is of making a mistake of this sort. This is an example of the numerous legal traps that are embedded within the MLTSS program and aren’t always obvious on the surface to people who are filing applications. Although appeals are possible (Medicaid Fair Hearings), it would be preferable if people could know in advance exactly what the rules are so they can plan accordingly.

Call for advice on NJ Medicaid eligibility, applications & appeals …..732-382-6070

Medicaid annuity planning is alive and well in NJ

When a person applies for Medicaid under the NJ MLTSS program after having made gift transfers during the most recent 5 years, there will likely be a penalty period in which Medicaid will not pay for the care that this person needs (unless the transfers were exempt, such as transfers to a spouse or disabled child). This transfer penalty is mandated by federal law, and the greater the amount that was transferred, the longer the transfer penalty will be. If an applicant addresses this issue before the end of his spend-down period, there may be opportunities to protect the applicant by using some of the spend-down funds to purchase an annuity contract that can provide the income needed to pay for care during the penalty period.

The type of annuities that fit the bill are highly restricted and are not designed to maximize the rate of return the way conventional annuities might be. The reason that the technique works is because under federal and state Medicaid law, a distinction is made between “income” and “resources.” Resources must be reduced to a certain level before the person can even apply for benefits. Income, on the other hand, is usually received on a monthly basis and is turned over to the facility as a contribution towards the cost of care (with certain deductions). For the annuity plan to work, the contract cannot be countable as a “resource” as defined by Medicaid law. We had successfully litigated an IRA annuity case with the NJ Division of Medical Assistance and Health Services (DMAHS) in 2009-10 (the P.K. case) PK FAD  A few years later, after several cases were decided in out of state venues,Lopes 2nd Cir ; Carlini we successfully litigated a non-IRA annuity case against DMAHS in 2013 (the M.W. case; M.W. FAD 1-28-140001 M.W. Initial ALJ decision ) leading to confirmation that if properly structured, an annuity effectively transforms countable resources into an irrevocable stream of income. If properly done, this technique can provide protection for the Medicaid applicant as well as his/her community spouse, and can also help to assure that there is a way to pay for care during an anticipated Medicaid penalty period.

Seniors who are planning for their care have many tools in their toolbox; the question is always which tools to use and how to get the results that the senior needs.

Call us to discuss a Medicaid spend-down plan that suits your circumstances … 732-382-6070

Nursing Home resident on Medicaid gets second chance to win her bid for a medically necessary power wheelchair

When an individual resides in a nursing home and receives Medicaid benefits, the facility is paid an all-encompassing per diem rate which is designed to cover all of the costs of medically necessary services that the facility provides to the resident. There are times that a facility declines to provide some specialty service or equipment because of its extra cost, or the facility seeks Medicaid reimbursement for the service and is rebuffed by the Division of Medical Assistance and Health Services (DMAHS). The remedy is for an appeal to be taken. The Medicaid recipient is the petitioner, and seeks a Fair Hearing at the Office of Administrative Law. In a recent  case, the nursing home resident had her day in court but the total record was considered insufficient for the Appellate Division, which remanded for further findings. The case is called  M.S. v. Div. of Med. Assistance and Health Serv., App. Div.  (per curiam)  

M.S. was a 73-year-old hemiplegic who resided in a health care facility and used a wheelchair. She asked the Division to  authorize a power wheelchair for her because of her difficulties in operating the one-armed manual wheelchair she was using. The division denied the application, saying that the wheelchair was considered part of the per diem rate paid to the facility under N.J.A.C. 10:59-1.4(a)(4). After her Fair Hearing, the Administative Law Judge (ALJ) reversed the denial, and found that the  deterioration and pain in petitioner’s right shoulder were caused by her manual wheelchair and would be alleviated by a power wheelchair. The Judge found that a power wheelchair was medically necessary. The Director of DMAHS reversed the ALJ. M.S. appealed to the Appellate Division.

The Appellate panel found that: (1) power wheelchairs were “not routinely used” or essential to the facility’s function, and as such they were not considered part of the facility’s per diem rate, and (2) the power wheelchair was not excluded by (a)(4) and could be covered if “required due to the medical need of” petitioner; (3) petitioner showed that a power wheelchair was medically necessary; (4) there was no sufficient, competent and credible evidence to support the director’s conclusion that the facility was required under the Medicaid per diem rate to push petitioner’s wheelchair. However, the Court found the record below to be inadequate because  the ALJ made no finding on whether the purchase of the power wheelchair was a cost-effective solution to petitioner’s increasing difficulty in propelling herself to activities with the manual wheelchair. The decision below was vacated and remanded for further fact-finding proceedings.

As the saying goes, “the squeaky wheel gets the oil” or “don’t ask, don’t get,” and this is certainly true when it comes to advocating for residents’ needs in a nursing home. And when pursuing administrative appeals — especially in the Medicaid context, given the high rate of reversal —  it is particularly important to make sure that you introduce copious evidence  through documents or testimony to substantiate every single fact that would be necessary to support the decision you are looking for.

Call us for representation on Medicaid applications and fair hearings … 732-382-6070

2015 Medicaid numbers now available


Starting January 1, 2015, the Community Spouse Resource Allowance (CSRA) for the community spouse of a married Medicaid applicant is being raised to $119,220 from $117,240.00.  This is the amount of countable available resources that the community spouse can have as of the date they want eligibility for their applicant-spouse (the home and one car are still considered non-countable). Does that mean that every excess dollar has to be “spent down” on nursing home care? Hardly. If you have moved your loved one to a nursing home and are being steered to someone such as a Medicaid application preparer who tells you that this is what’s necessary before an application can be filed, you should seriously consider getting personalized legal advice about your options.

The $19,220 is the CSRA maximum The “floor” under the CSRA is $23,844, so if the assets are quite limited, the community spouse does not have to “spend down” below this amount.

The Income Cap Limit which triggers the need to establish a Qualified Income trust (QIT) in New Jersey for the Medicaid applicant (see my prior posts) will be $2,199 gross monthly income.

The community spouse is entitled to have a Minimum Monthly Maintenance Needs Allowance for income support. This amount was raised on 7-1-2014 and remains in effect. The minimum is $1,966.25  and the maximum is $2,980.50. Several variables play into this calculation. Then the community spouse’s available income is applied first, and if there is a shortfall, a deduction is made from the applicant-spouse’s income to allocate some income to the community spouse. There are special rules in cases where the combined incomes are below the MMMNA. Seek legal advice at the earliest possible date before the assets are spent down, to protect your interests

Call for an appointment about Medicaid eligibility and applications … 732-382-6070

NJ proposes to eliminate its Medically Needy Medicaid Program

Friday’s post talked about the new state program being developed for delivery of home and community-based Medicaid services (MLTSS), which will require individuals whose income exceeds the income cap to set up a Miller Trust to receive and handle the excess income. The State has actually published a Notice of Proposal, announcing its intent to ask the federal government to allow it to do away with the Medically Needy Medicaid Program for residents in nursing homes whose income exceeds the “income cap” ($2,163/month in 2014), and replace it with the MLTSS which will require the use of a Miller Trust.

The Miller Trust is also called a Qualified Income Trust. Friday’s post discussed the need for new applicants for home-based or assisted living Medicaid services to first establish their Miller Trust before filing the application. The State is now forewarning that people who reside in nursing homes may need to engage counsel to prepare a Miller trust for them in order for their benefits to continue.

The exact implementation date for the proposal is not known at this time. Further, it is possible that existing Medically Needy Medicaid recipients will be “grandfathered” so that new trusts are not necessary. As of now, there are many questions left to be answered.  However, you should begin thinking about who you’ll want as trustees to handle the responsibilities of managing the income, the trust and the benefits once the program is implemented if you have income in excess of the cap.  The trustee may be your Power of Attorney or if necessary, your Guardian, or any other sensible, reliable, trustworthy individual who helps you out.

Our firm prepares specialized trusts for clients with disabilities and on Medicaid, and we are ready to prepare Miller Trusts that are appropriate for your situation.

Contact us regarding Medicaid eligibility, applications, appeals and trusts … 732- 382-6070 http://www.finkrosner.com/contact.html