MEDICAL ASSISTANCE, TRUSTS AND TRANSFERS by Laurie Hanson
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22 Overview of Presentation Payment Sources for Long-term Care
Medicare Veterans Home and Veterans Benefits Medicaid Medicaid
Eligibility and Transfer Rules in General Medicaid Eligibility and
Trusts Transfers and Trusts Transfers into (d)(4)(C) trusts the
rules and applications across the states Strategies to bring
resolution POSITIVE STRATEGIES FOR AGING AND LIVING WITH
DISABILITIES LONG REHER & HANSON P.A.
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33 PPOSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Acronyms MA-LTC Medicaid for Long-Term
Care POI Period of Ineligibility A or R Applicant or Recipient PTSA
Pooled Trust Sub Account
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Private pay Medicare and supp. insurance Long-term care
insurance Veterans Benefits and Veterans Home Medicaid PAYING FOR
LONG-TERM CARE
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MEDICARE Federal health insurance program for persons over age
65 and some disabled persons under age 65. Long-term care coverage
under Medicare: 3 days hospitalization and admitted to NH within 30
days of discharge Skilled care only is covered Maximum coverage:
100 days per spell of illness After first 20 days, co-payment of
$148.00/day in 2013
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VETERANS HOME RULES Eligibility: 181 consecutive days of active
duty Honorably discharged Wife or widow of veteran 55 years old or
older Payment: If assets more than $3,000, pay full charge If
$3,000 or less, pay only part of income
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VETERANS HOME RULES Allowable Transfers: To spouse or dependent
child if made before admission: admission is the key. To others if
made more than one year before admission
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POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG
REHER & HANSON P.A. Aid and Attendance for veterans or widows
of veterans receiving skilled care Prescriptive drugs Adult day
care Disability pension Death and survivorship benefits Military
Child Protection Act of 2013 authorizing monthly annuity benefits
under a Survivor Benefit Plan to be directed into a supplemental
needs trust for a child of a veteran who is disabled so that the
child can maintain eligibility for needs-based benefits. S. 1076
and H.R. 2249 VA contract nursing homes > 70% disability
VETERANS BENEFITS
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POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG
REHER & HANSON P.A. Medicaid -- A joint federal-state program
created to serve certain categories of lower income, disabled, and
elderly persons. Eligibility is based on need. To participate in
the Medicaid program, states must comply with federal law. Medicaid
is called Medical Assistance (MA) in Minnesota. WHAT IS MEDICAL
ASSISTANCE?
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MA ELIGIBILITY GENERAL REQUIREMENTS Minnesota resident Meet
citizenship requirements Categorical Eligibility MA for Adults
without Children (Affordable Care Act) MA for dependent children
and foster children MA for low income families with dependent
children MA for people aging or living with disabilities MA for
Long Term Care
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POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG
REHER & HANSON P.A. An entitlement program: If you qualify for
benefits, you receive benefits. Benefits for Medical Assistance
include: Hospitalization, physician services, some dental and eye
care Mental health services for adults and children Skilled nursing
home therapies, home health care, hospice, medical supplies and
treatments, etc. MEDICAL ASSISTANCE
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12 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Basic MA-LTC Financial Eligibility 3
basic financial eligibility criteria: Income Limits After allowable
deductions, costs exceed income must apply income to the cost of
care (MA-EPD exception) Asset Limits No more than $3,000 (MA-EPD
exception) No transfers within look back period
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POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG
REHER & HANSON P.A. MA recipient is required to pay portion of
income towards cost of services Income standards for persons living
in community: 100% FPG, currently $958 OR Spending down to 75% FPG
($619) if income is greater than $958. In Nursing home: Must
spenddown to personal needs allowance, currently $94.00 INCOME
RULES FOR MA-LTC RECIPIENTS
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POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG
REHER & HANSON P.A. Income of Individual $ 1,900.00 less
Medicare Part B - 104.90 less personal needs allowance - 719.00
less insurance premium - 100.00 Income applied to care $ 976.10
Cost of Care $ 4,405.00 less - 976.10 MA pays: $ 3,429.90 INCOME
SPENDDOWN FOR SINGLE PERSON IN COMMUNITY:
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POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG
REHER & HANSON P.A. Income of Individual $ 1,900.00 less
Medicare Part B - 104.90 less personal needs allowance - 94.00 less
insurance premium -100.00 Income applied to care $ 1,601.10 Cost of
Care $ 4,405.00 less - 1,601.10 MA pays: $ 2,803.90 INCOME
SPENDDOWN FOR SINGLE PERSON IN NURSING HOME:
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WHAT IF THE MA RECIPIENT IS MARRIED? Spousal Impoverishment
Rules Apply Income allocation to community spouse Bring the CSs
income up to minimum of $1,940 per month Up to a maximum of $2,898
per month, depending upon shelter expenses
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POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG
REHER & HANSON P.A. Income of Individual $ 1,900.00 less
personal needs allowance - 94.00 Less spousal income allocation -
1,100.00 less Medicare Part B - 104.90 less insurance premium -
100.00 Income applied to care $ 601.10 Cost of Care $ 4,405.00 less
-601.10 MA pays: $ 3,803.90 INCOME SPENDDOWN FOR MARRIED PERSON IN
NURSING HOME:
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POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG
REHER & HANSON P.A. Single person - $3,000 in available assets.
Married couple where both spouses are applying - $6,000 in
available assets. One spouse applying - spousal impoverishment
rules apply. MA ASSET LIMITS
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KINDS OF ASSETS Available Assets personal/real property with
monetary value that is not excluded or unavailable Excluded Assets
homestead, household goods, one motor vehicle, burial funds, some
life insurance, etc. Unavailable assets property not excluded but
cannot be liquidated
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TRUSTS ARE SUBJECT TO ASSET AND INCOME STANDARDS ELEMENTS OF A
TRUST Grantor/Settlor Trustee Beneficiary Res POSITIVE STRATEGIES
FOR AGING AND LIVING WITH DISABILITIES LONG REHER & HANSON P.A.
20
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21 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Trusts are Subject to Asset and Income
Standards Revocable Trusts - Assets are counted. Excluded Trusts -
Are not counted. (d)(4)(A) (d)(4)(B) (d)(4)(C) Irrevocable Trusts
(1396p(d)(3)(B)(iii)) If there are any circumstances under which
payment from the trust could be made to or for the benefit of the
individual, the corpus is counted.
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POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG
REHER & HANSON P.A. SPECIAL NEEDS TRUST 42 U.S.C.A
1396p(d)(4)(A) Minn. Stat. 501B.89 subd. 3 Established for a
disabled person under age 65 by a parent, grandparent, guardian, or
court Funded only with the disabled persons assets. Trust states:
at death of the disabled person, any remaining trust assets must be
distributed first to the State as repayment for any MA received by
the disabled person. Trust must be for the sole benefit of the
disabled person. Trust administered so that distributions
supplement and do not supplant government benefits.
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23 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Statute Pooled Trusts ( 42 U.S.C.A
1396P (d)(4)(C) - Minn. Stat. 501B.89 subd. 3. ) A (d)(4)(C) trust
is a trust containing the assets of an individual who is disabled
that meets the following conditions: i.The trust is established and
managed by a non-profit association. ii.A separate account is
maintained for each beneficiary of the trust, but, for purposes of
investment and management of funds, the trust pools these accounts.
iii.Accounts in the trust are established solely for the benefit of
individuals who are disabled by the parent, grandparent, or legal
guardian of such individuals, by such individuals, or by a court.
iv.To the extent that amounts remaining in the beneficiarys account
upon death of the beneficiary are not retained by the trust, the
trust pays to the State from such remaining amounts in the account
an amount equal to the total amount of medical assistance paid on
behalf of the beneficiary under the State plan under this
title.
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CURRENT LEGISLATION AFFECTING TRUSTS FOR INDIVIDUALS WITH
DISABILITIES H.R.2123: Special Needs Trust Fairness Act of 2013
Amends Section 1396p(d)(4)(A) to allow a competent disabled
individual to establish a trust with his or her own resources. Bill
has not yet been introduced in the senate. H.R.647: Achieving a
Better Life Experience Act of 2013 (the ABLE Act of 2013") Amends
the Internal Revenue Code to establish tax-exempt ABLE accounts to
assist an individual with a disability in building an account to
pay for qualified disability expenses. Defines "qualified
disability expenses" to include expenses for education, including
higher education expenses, a primary residence, transportation,
obtaining and maintaining employment, health and wellness, and
other personal support expenses. Requires amounts in ABLE accounts
to be disregarded in determining eligibility for Medicaid and other
means-tested federal programs. POSITIVE STRATEGIES FOR AGING AND
LIVING WITH DISABILITIES LONG REHER & HANSON P.A. 24
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SPOUSAL IMPOVERISHMENT RULES - ASSETS LTC spouse in NH or
Elderly Waiver Community spouse in community Asset Assessment Date:
NH/HH, completed only once Community spouse asset allowance
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COMMUNITY SPOUSE ASSET ALLOWANCE CSAA = 1/2 of non-excluded
assets on asset assessment date with a Minimum of $32,890 and
Maximum of $115,920 Allowable assets at time of MA application =
CSAA + $3,000
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DATE OF INSTITUTIONALIZATION Protected Assets: CSAA $32,890 MA
limit $ 3,000 Excess Assets: $ 810 Date of MA application, if in
2013: $32,890$3,000 $35,000
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DATE OF INSTITUTIONALIZATION Protected Assets: CSAA $50,000 MA
limit $ 3,000 Excess Assets: $47,000 Date of MA application, if in
2013: $50,000$3,000 $100,000
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DATE OF INSTITUTIONALIZATION Protected Assets: CSAA $115,920 MA
limit $ 3,000 Excess Assets $131,080 Date of MA application, if in
2013: $115,920$3,000 $250,000
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30 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Reducing Assets to Eligibility
Standards - Applicants and Recipients Purchase services or items
for fair market value. Purchase excluded assets (house, car, burial
plan, etc.) All purchases must be for the benefit of the MA- LTC A
or R. CANNOT GIVE AWAY MONEY OR ASSETS AND THEN APPLY FOR MA-LTC
WITHIN FIVE YEARS
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31 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Transfer Penalties
1396p(c)(3)(c)(1)(A) if an institutionalized individual disposes of
assets for less than fair market value on or after the look-back
date The individual is ineligible for MA-LTC During the period
beginning on the first date the person is otherwise eligible for
MA-LTC and Equal to the number of months calculated by dividing the
amount transferred by average monthly cost to a private patient of
nursing facility services in the state.
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32 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Transfer Penalty Example Anne gives
$40,000 to her daughter on October 1, 2013; Anne applies for and is
eligible for MA-LTC on December 1, 2015; County agency asks if she
has given away any money in the last five years; She reports the
transfer; $40,000 $5,583 = 7.16 months beginning December 1,
2015.
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SOME TRANSFERS ARE EXEMPT An A or R may transfer the homestead
without penalty for FMV or for less than FMV to: To spouse To
disabled child To child under 21 To caretaker child To sibling with
equity interest
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SOME TRANSFERS ARE EXEMPT An A or R may transfer other assets
without penalty for FMV or for less than FMV to: To spouse To
disabled child Into a trust for the sole benefit of a disabled
child Into a trust for an individual under the age of 65 who is
considered a disabled person Hardship waiver Minn. Stat. 256B.0595,
subd. 4; 42 U.S.C.A. 1396p(c)(2)(B)
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35 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Transfers into Revocable Trusts No
penalty because the assets are available. Counted toward the
standard.
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36 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Transfers into Irrevocable Trusts
1396p(d)(3)(B)(ii) any portion of the trust from which, or any
income on the corpus from which, no payment could under any
circumstances be made to the individual shall be considered, as of
the date of establishment of the trust (or, if later, the date on
which payment to the individual was foreclosed) to be assets
disposed by the individual for purposes of subsection (c) of this
section, and the value of the trust shall be determined for
purposes of such subsection by including the amount of any payments
made from such portion of the trust after such date. (Emphasis
added)
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37 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Transfers into Excluded Trusts Do the
transfer provisions of the federal statute govern? 1396p(c)(1) and
(c)(2)(B) Do the trust provisions of the federal statute govern?
1396p(d)(3)? Turns out it this is a subject of intense debate and
much confusion
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38 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. The Source of Confusion The Transfer
Provisions Section 1396p(c) establishes the general rules for
transfers. Section 1396p(c)(2)(B) sets forth the exceptions to the
general rules. Section 1396p(c)(2)(B)(iii) and (iv) sets forth the
exceptions for certain trusts. This section does NOT say that
transfers into PTSA by individuals age 64 and older should be
penalized only that they are exempt. Must do a fair market
analysis.
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39 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. The Source of Confusion, contd: The
Transfer Provisions Section 1396p(c)(2)(B)(iv) states - An
individual will not be eligible for MA due to a transfer if the
assets were transferred to, or to a trust (including a trust
described in subsection (d)(4) of this section) established solely
for the benefit of, the individuals child , or were transferred to
a trust (including a trust described in subsection (d)(4) of this
section) established solely for the benefit of an individual under
65 years of age who is disabled. Applies only to transfers to
trusts for individuals other than the A or R children,
grandchildren, a disabled nephew, etc.
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40 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. The Source of Confusion, contd: The
Trust Provisions Section 1396p(d)(1) states for purposes of
determining an individuals eligibility for, or amount of,
[Medicaid] benefits under a State plan under this subchapter,
subject to paragraph (4), the rules specified in paragraph (3)
shall apply to a trust established by such individual. Subparagraph
3 addresses availability of trusts and defines when a penalty
should be applied. The pooled trust is irrevocable but there are
circumstances in which payment could be made to the individual.
Therefore assets are available and no penalty- except that assets
are exempt. Subparagraph 4 addresses the exempt trusts and says
This section shall not apply to (d)(4)(A)(B) and (C) trusts. This
section presumably means that the treatment of transfer and asset
provisions shall not apply to the (d)(4) trusts.
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41 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Transfers into (d)(4)(A) and (d)(4)(C)
trusts for people under the age of 65 No penalty for persons age 64
and younger. Authority: Trust not allowed for individuals 65 and
older beyond that is it the (c)(2)(B)(iv)? Or is it just that it is
an exempt trust?
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42 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Transfers into (d)(4)(B) trusts No
penalty for persons of any age. Authority: Only the trust
provisions State Medicaid Manual
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43 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Transfers into (d)(4)(C) trusts for
people over the age of 64 Depends on the State. Eighteen States
(18) and the District of Columbia allow transfers without penalty.
Twenty-six (26) States penalize the transfer per se.
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44 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. Six States Have Different Standards
Colorado New York Connecticut Illinois Minnesota Michigan
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45 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. What are advocates around the country
doing about it? Legislation Transfer for Fair Market Value
litigation NAELA CMS Task Force
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46 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. What are advocates around the country
doing about it? Educating - As to why special needs trusts are
important to the lives of people with disabilities. Legislators
Policy makers NAELA CMS Task Force
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47 POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES
LONG REHER & HANSON P.A. FINAL THOUGHT POOLED TRUST
SUB-ACCOUNTS FOR PEOPLE OVER THE AGE OF 64 ARE ABOUT ENHANCING THE
LIVES OF INDIVIDUALS LIVING WITH DISABILITIES NOT ABOUT PROTECTING
MONEY FOR HEIRS.