Medicaid Planning Lawyer

300,000 Americans to Gain Medicaid Benefits

Most of those who will be eligible in 2019 are over age 50 and would otherwise have no healthcare.

Ballot measures in three states—Idaho, Nebraska, and Utah—will extend the federal- and state-funded healthcare program to allow access to approximately three hundred thousand low-income Americans.

MP900398819AARP’s recent article, “Medicaid to Expand in 3 States,” reports that with the passage of ballot measures in those three states, 37 states, including DC, have now expanded the Medicaid program, since the Affordable Care Act (ACA) created the opportunity to offer more people coverage.

The success of the three ballot measures “is a recognition that Medicaid plays an important role in our society for those who are in need and that it’s an issue that has changed a great deal over the past five or six years from a political standpoint,” says John Hishta, AARP senior vice president for campaigns. “I think the voters have led the way in some of these states.”

Montana voters rejected a measure that would have increased tobacco taxes on cigarettes and taxed other tobacco products to pay for the state’s share of Medicaid expansion, veterans’ mental health, and home- and community-based services. Nearly 130,000 low-income residents in that state may now lose their Medicaid eligibility in 2019, if the state Legislature doesn’t act.

The mid-term election results in three other states could have implications for their Medicaid programs as well. Maine’s Democratic Governor-elect Janet Mills supports expanding Medicaid. The state’s voters decided in 2017 to expand the program, but the current governor, Republican Paul LePage, refused to implement the expansion.

Kansas’ Democrat Governor-elect Laura Kelly stated in the campaign that she’d push for legislation to expand Medicaid during her first year in office. In 2017 the Republican-controlled Kansas House of Representatives and Senate passed legislation to extend Medicaid, but the current Governor Sam Brownback vetoed it. The Legislature couldn’t override his veto.

Wisconsin’s Governor-elect Tony Evers says he wants to expand Medicaid, which would provide coverage to at least an additional 80,000 people in that state.

Most of the people who apply for Medicaid work but do not earn enough to cannot afford health insurance. The program allows people between 50—64 years of age to get health care coverage.

Reference: AARP (November 8, 2018) “Medicaid to Expand in 3 States”

How Does Medicaid Treat College Savings Funds?

Saving for college but needing to receive Medicaid is a complicated equation.

The answer “It depends” is not much of a comfort when considering how college savings accounts will be treated for Medicaid purposes.  However, it is, unfortunately, the most accurate answer. There are several factors that must be considered:

  • What type of account you used to set aside the college money;
  • How and when you funded the account; and
  • Whether you still have access to the money.

A recentnj.com article asks, “Will my college savings be counted for Medicaid?” If you can liquidate an account and access the money that you deposited, Medicaid will typically expect you to do so to fund your own care for as long as possible. Another challenge is that Medicaid will always penalize gifts. Odds are good that the funds you added to these college accounts are gifts.

MedicaidHowever, there may be an exception: if the account was funded prior to the 60-month lookback period, the applicant can’t be penalized for making a gift.

Let’s examine why the type of account is also important.

If the money was put into a 529 plan, the funds aren’t part of the donor's taxable estate, and the assets aren’t includible. However, if the funds are invested in an account “ITF” (“in trust for”) a grandchild, then the funds would be includible. It its calculations, Medicaid examines all assets in the name of the applicant. Assets held in 529 plans—although the donor's name may be shown as the participant—are deemed to be a gift, when the assets are transferred and, therefore, are no longer the donor's asset.

To be safe, grandparents who set up 529 plans for their grandkids should change the participant to the grandchild's parent or guardian. This entirely disconnects the donor's name with the account.

If the grandparent just added a grandchild's name on one of his savings accounts, then that would be includable. This is true even if it were completed more than 60 months earlier, because it wouldn’t be deemed to be a completed gift.

When it comes to the intersection of college savings and Medicaid, you may need to speak with an elder law attorney who will be able to review how the college savings assets are owned, and whether or not they’ll impact your Medicaid eligibility.

Reference: nj.com (September 19, 2018) “Will my college savings be counted for Medicaid?”

Can a Revocable Land Trust Shield Assets from Medicaid?

Control of an asset is a key element, when Medicaid considers an individual’s eligibility.

Control of an asset is a key element, when Medicaid considers an individual’s eligibility.

31903821451_e117f0eddd_oA recent article from nj.com, “What revocable land trusts mean to Medicaid eligibility,” starts with what sounds almost like a warning: it’s not easy to protect or hide assets from Medicaid. A revocable land trust won't help to protect an asset from Medicaid's spend down requirements, because a trust that’s revocable can be revoked or terminated at any time by the grantor.

A land trust is a private agreement with the trustee agreeing to hold title to property for the benefit of the beneficiary or beneficiaries. The creator of the trust is called the settlor or trustor. This person is usually the titleholder to the property, before it’s transferred into the trust.

The settlor frequently remains the beneficiary of the trust for his lifetime. In effect, the trustee holds the title to the property and must follow the instructions of the beneficiary. The beneficiary typically has the absolute right to direct and control the trustee and receive all income from the trust. The trust agreement, at the creation of the trust, dictates the relationship between the trustee and beneficiary. As a result, the trustee often has no more power than the settlor gives him. In addition, he doesn’t have any other function, other than to do as the trust deed instructs.

Medicaid sees the assets in a revocable trust as countable because the Medicaid applicant who places the home in the trust she created has total control over the Trustee, and therefore, the assets in the trust.  It means that she can take back the asset at any point in time.

In such a case, Medicaid will deny the application. They’re effectively telling the applicant to sell the home, spend down the assets, and then reapply when they have no more than $2,000 in assets in the applicant's name and in the revocable trust combined.

Assets in an irrevocable trust may, however, be excluded from Medicaid spend down rules, based on the terms of the trust.  Though, even if a home was placed in an irrevocable trust that would exclude it from Medicaid, the transfer to the trust must be completed more than five years, before applying for Medicaid to avoid the five-year lookback and Medicaid penalty provisions.

An experienced estate planning attorney, with current knowledge of Medicaid regulations, will know what trusts or other strategies will work best to enable an individual to become eligible for Medicaid.

Reference: nj.com(April 9, 2018) “What revocable land trusts mean to Medicaid eligibility”

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