Chapter Eleven
Long-Term Care Medicaid
Scope of Chapter. This chapter will treat Medicaid Coverage for Long-Term Care. Between
Medicare and Medicaid, Medicare’s long-term coverage is much more limited than Medicaid’s.
However, Medicaid has strict income and resource eligibility criteria.
Chapter questions and answers. After some of the paragraphs there are questions relating to the
material covered in the paragraphs. An answer key is at the end of the chapter.
Overview of paragraphs.

Paragraphs 1 through 16 provide background information regarding long-term care
Medicaid.

Paragraphs 17 through 19 provide brief information regarding income and resources
under long-term care Medicaid.

Paragraphs 20 through 24 discuss the services that long-term care Medicaid providers are
required to deliver.

Paragraphs 25 through 30 discuss residency, citizenship, and immigration criteria
pertaining to long-term care Medicaid.

Paragraphs 31 through 34 discuss the link between SSI and Medicaid.

Paragraphs 35 through 49 discuss income aspects of long-term care Medicaid, pertaining
to the institutionalized person.

Paragraphs 50 and 51 discuss the right to a fair hearing, and the right to state court
judicial review.

Paragraphs 52 through 55 concern the CBA program.

Paragraphs 56 through 61 deal with the Qualified Income Trust.
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
Paragraphs 62 through 94 discuss resources and how they are counted under long-term
care Medicaid.

Paragraph 95 and 96 discusses divestment (giving property away, which may lead to a
penalty period).

Paragraph 97 discusses the possible usefulness of an annuity.

Paragraph 98 introduces the Long-Term Care Partnership Program.

Paragraphs 99 through 106 discuss transfers of assets that may be excepted from penalty.

Paragraphs 107 through 145 discuss protections of income and resources for the spouse
of an individual receiving long-term care Medicaid.

Paragraphs 146 through 149 discuss the use of trusts.

Paragraph 150 discusses the hardship exception to the penalty for giving away property
to qualify for long-term care Medicaid.

Paragraph 151 discusses additional steps that can be taken so that resources will not be a
barrier to receiving long-term care Medicaid.

Paragraphs 152 through 153 discuss the fact that divorce should play no role in long-term
care Medicaid, but marriage might.

Paragraph 154 provides a reminder about amounts remaining in a Qualified Income
Trust.

Paragraphs 155 through 161 discuss medical necessity as an aspect of qualifying for
long-term care Medicaid.

Paragraph 162 discusses the role of the Minimum Data Set in determining nursing facility
payment rates.

Paragraphs 163 through 167 discuss the application process for long-term care Medicaid.

Paragraph 168 provides further treatment of fair hearings in long-term care Medicaid.
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
Paragraph 169 reiterates the role of the Social Security POMS and the State Medicaid
Manual, in long-term care Medicaid.

Paragraph 170 covers the Rights of the Elderly under Chapter 102 of the Texas Human
Resources Code.

Paragraph 171 covers the Rights of Residents of Nursing Facilities under Chapter 242 of
the Texas Health and Safety Code.

Paragraphs 172 through 173 discuss the importance of truthfulness in regard to
applications for long-term care Medicaid.

Paragraph 174 reiterates the back-up and support that Benefits Counselors have from the
Legal Hotline for Texans.

Paragraphs 175 through 198 cover the Medicaid estate recovery program in Texas.

Paragraph 199 provides a reminder regarding the Qualified Income Trust.

Paragraphs 200 through 203 discuss the Long-Term Care Partnership Program in Texas.
Back-up and support.
Any Benefits Counselor who has questions about the information in this chapter can call the
Legal Hotline for Texans at the Benefits Counselor unlimited back-up and support number for
further information. In certain paragraphs, websites are identified. Once the reader has located
the level of a website page or link that the reader will be using time and again, the reader can, of
course, bookmark that World Wide Web location. Many paragraphs have references (such as
statutes or rules) which are underlined. These are “hyperlinks” and if clicked on, will take the
reader to the source of the statute or rule. Some statutes or rules may have extensive subsections
and thus, the hyperlink may take the reader to a location, at which some scrolling may be needed
to arrive at the precise subsection of the statute or rule which pertains to the paragraph.
1.
Fundamental summary of facility-based long-term care Medicaid or long-term care
under a Medicaid waiver. Long-term care Medicaid (facility-based or under a Medicaid
waiver) is available to applicants who reside in Texas and who: (1) Have medical necessity for
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long-term care, (2) Have countable income of not more than three times the maximum monthly
benefit of the Supplemental Security Income (SSI) program, (3) Have countable resources
attributable to the individual of not more than $2000, (4) Meet a citizenship or immigration
category that is not a bar, and (5) Are not under a penalty period for having given assets away to
qualify. All of the foregoing criteria must be met. If the applicant is seeking long-term care
Medicaid in a nursing facility, the applicant must have been in an institutional setting (hospital
and/or nursing facility) for 30 days before eligibility will occur (coverage can be retroactive to
the first day in the nursing facility). If the applicant is seeking long-term care under a Medicaid
waiver program, the applicant will either have to have risen to the top of a waiting list (called an
“interest list”), or will have had to receive facility-based long-term care Medicaid for at least
thirty (30) days. If the applicant is certified as eligible, the services that will be covered by longterm care Medicaid are included in the “vendor payment” under facility-based long-term care, or
in the individual service plan under the waiver program.
2.
Accuracy is important in applying for long-term care Medicaid. Long-term care
Medicaid is, in effect, a publicly-financed health insurance program. As with other health
insurance, false statements on an application for Medicaid can have serious consequences. The
Medicaid program in Texas can use the services of a “data broker.” The data broker collects
information such as addresses of the applicant, property of the applicant, and income of the
applicant. Data broker and its use are discussed in Appendix IV of the Medicaid for the Elderly
and People with Disabilities Handbook. This handbook, which is of fundamental importance, is
at the website of the Texas Department of Aging and Disability Services, at
http://www.dads.state.tx.us/handbooks/mepd/. In addition, by virtue of a bill authored by a
member of Congress from Texas (H.R. 2642 in the 110th Congress), by 2014, all states will be
required to use “asset verification systems” to access information held by financial institutions,
concerning applicants for long-term care Medicaid. Thus, it does not pay to be inaccurate in an
application for long-term care Medicaid.
3.
Sources of law – Long-Term Care Medicaid. Cooperative federalism. Medicaid is an
example of what is called “cooperative federalism.” That means the state operates the program,
but subject to federal laws and regulations. It also means there is “matching” – the federal
government pays for approximately 59.30% of the cost of Medicaid benefits in Texas, and the
state pays 40.70% (figures are as of 2013). The federal matching percentage is called the
“FMAP.” No state receives an FMAP of less than 50% of the cost of the Medicaid program.
Some states with low per capita personal income receive FMAP of close to 60%, close to 70%
and (in a few states) between 70% and 75%. The FMAP was increased temporarily by 6.2
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percentage points by the American Recovery and Reinvestment Act of 2009 (ARRA), but that
increase is now history; it is not a part of the current FMAP.
Question:
Medicaid is an example of:
A. Cooperative Extension Services.
B. Agricultural Cooperatives.
C. Cooperative Federalism.
D. Cooperative Telemarketing.
Answer: ____________________
4.
Sources of law – the federal Medicaid statute. The federal legal basis for the long-term
care Medicaid program is Public Law 89-97. That was the 97th public law of the 89th Congress.
President Lyndon Johnson signed it into law in 1965. P.L. 89-97 added two “Titles” to the
Social Security Act – Title XVIII (Medicare) and Title XIX (Medicaid) Medicaid is sometimes
referred to as “Title 19.” The Social Security Administration has a complete version of Title XIX
on its website, at http://www.socialsecurity.gov/OP_Home/ssact/title19/1900.htm. A public law,
once signed, is codified – placed in the U.S. Code. The Medicaid program is codified – made
part of the U.S. Code – at 42 United States Code Section 1396. The United States Code is
usually abbreviated “U.S.C.” A recent public law that significantly amended long-term care
Medicaid was P.L. 109-171, which the 109th Congress passed in 2005 and the president signed in
2006. It is called the “Deficit Reduction Act of 2006” and is usually abbreviated “DRA.” The
DRA amended 42 United States Code Section 1396 especially in regard to transfers of resources
to qualify for long-term care Medicaid (and the resulting penalty period that may arise).
5.
Sources of law – other related titles of the Social Security Act.
In addition to
Medicaid (which is Title XIX of the Social Security Act), there are other Titles of the Social
Security Act, which may be encountered in serving an applicant for or recipient of Medicaid.
These include: Title II (Retirement, Survivors, and Disability Insurance), Title IV (TANF –
Temporary Assistance for Needy Families), Title XVI (SSI – Supplemental Security Income),
Title XX (Social Services Block Grant), and Title XXI (CHIP – State Children’s Health
Insurance Program). Title II is what many people have in mind when they say they are receiving
“Social Security.” Title IV is the “cash welfare” program for children and adults in families that
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have very low (or no) income. Title XVI is, in effect, a cash welfare program for persons who
are 65 years of age, or who meet the blindness or disability criteria under Social Security.
Children who have disabilities can qualify for SSI, if income and resources are not too high.
Some people who receive Title II benefits receive a benefit that is low enough, such that they can
also qualify for some amount of SSI. All persons who receive TANF cash assistance or SSI are
eligible for Medicaid in Texas. If such persons have medical necessity for long-term care, they
can also qualify for long-term care Medicaid.
6.
Sources of law – federal Medicaid regulations. Medicaid federal regulations are at 42
Code of Federal Regulations Section 430 et seq., accessible at the link
http://www.access.gpo.gov/nara/cfr/waisidx_08/42cfrv4_08.html.
The Code of Federal
Regulations is usually abbreviated “C.F.R.” or “CFR.”
The regulations are sometimes also
called “rules.” Because rules in the CFR have gone through a rule making process under the
federal Administrative Procedure Act, the rules in the CFR are said to have “the force of law.”
7.
In brief, The state laws referred to in this chapter are accessible through the website
http://www.statutes.legis.state.tx.us/. State administrative rules are codified by the Secretary of
State
in
the
Texas
Administrative
Code,
which
is
at
http://info.sos.state.tx.us/pls/pub/readtac$ext.viewtac. Federal statutes are codified in the United
States
Code,
which
is
at
http://www.gpo.gov/fdsys/browse/collectionUScode.action?collectionCode=USCODE
and
http://uscode.house.gov/search/criteria.shtml. Federal administrative rules are codified in the
Code
of
Federal
Regulations,
which
is
at
http://www.gpo.gov/fdsys/browse/collectionCfr.action?collectionCode=CFR. In this chapter,
where a reference to a law or regulation is hyperlinked, the hyperlink, in effect, leads to a point
in one of the website locations mentioned above in this paragraph.
8.
The federal agency responsible for Medicaid. The federal agency responsible for
Medicaid is now known as the “Centers for Medicare and Medicaid Services” (“CMS”). (It used
to be called the “Health Care Financing Administration” or “HCFA.”) CMS maintains a “State
Medicaid Manual,” which is meant to provide some explanation of what various federal
Medicaid laws and rules require. Because the Texas long-term care Medicaid program uses SSI
concepts to determine the countability of income and resources, the Program Operations Manual
System of the SSI program is a useful reference source.
It can be accessed at
https://secure.ssa.gov/apps10/poms.nsf/chapterlist!openview&restricttocategory=05.
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Question:
Medicaid is in which Title of the Social Security Act:
A.
B.
C.
D.
Title IV.
Title II.
Title XVI.
Title XIX.
Answer: ____________________
9.
Sources of law – the state Medicaid statute. The state Medicaid law in Texas is
Chapter 32 of the Texas Human Resources Code.
10.
Sources of law – state Medicaid rules. The state rules for long-term care Medicaid are
at Title 1, Part 15, Chapter 358 of the Texas Administrative Code and Title 40, Part 1, Chapter
48 of the Texas Administrative Code. The Texas Administrative Code is usually abbreviated
“T.A.C.” or “TAC.” Just as rules in the CFR have gone through a federal rule making process
under the federal Administrative Procedure Act, rules in the TAC have gone through a rule
making process under the Texas Administrative Procedure Act. The state rules in the TAC thus
also are said to the have force of law, like the federal rules in the CFR.
11.
The state agency responsible for Medicaid. Vis-à-vis the federal government, the
Texas state Medicaid agency is the Texas Health and Human Services Commission (“HHSC”).
This means that when Texas amends its Medicaid plan (through a state plan amendment – a
“SPA”) the amendment goes from HHSC to CMS. But HHSC has delegated certain aspects of
the operation of Medicaid to other agencies in the “health and human services ‘enterprise’.”
Therefore, the Texas Department of Aging and Disability Services (“DADS”) has some
responsibilities for the long-term care Medicaid program in Texas. The state policy manual
(“Medicaid for the Elderly and People with Disabilities”) is accessible at the website of DADS.
The link is http://www.dads.state.tx.us/handbooks/mepd/.
12.
The State Medicaid Plan. The federal Centers for Medicare and Medicaid Services
(CMS) has developed the template for the “State Medicaid Plan.” Within parameters set by the
federal Medicaid law and rules, states have some leeway to choose the extent of their state
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Medicaid program. For instance, Texas has chosen to not include routine dental care in the
scope of its long-term care Medicaid program. The Texas State Medicaid Plan is at
http://www.hhsc.state.tx.us/medicaid/StatePlan.html.
13.
Applicants for long-term care Medicaid apply to the Texas Health and Human
Services “enterprise,” but providers submit their claims to the “Medicaid claims
administrator.” Whereas applications for Medicaid eligibility are submitted to the Texas
Health and Human Services Commission (or one of the agencies of the Texas Health and Human
Services “enterprise,” such as the Department of Aging and Disability Services), providers
submit their claims for vendor payment to the state “Medicaid claims administrator.” In Texas,
the state Medicaid administrator is the “Texas Medicaid and Health Partnership” (“TMHP”).
The HHSC website links to this description of TMHP:
“As of January 1, 2004, ACS State Healthcare LLC, under contract with the
Texas Health and Human Services Commission (HHSC), assumed
administration of Medicaid claims processing and the Medicaid primary
care case management services program. ACS meets its new consolidated
Medicaid responsibilities with a team of subcontractors under the name of
TMHP.”
As noted, when individuals apply for long-term care Medicaid, their application is made to the
Texas Health and Human Services Commission (HHSC), or an agency to which HHSC has
delegated receiving applications, such as the Department of Aging and Disability Services.
Question.
Vis-à-vis the federal government, which Texas state agency is the state Medicaid
agency?
A. The Texas Department of Assistive and Rehabilitative Services.
B. The Texas Department of Family and Protective Services.
C. The Texas Health and Human Services Commission.
D. The Texas Department of State Health Services.
Answer: ___________________________________
14.
Unauthorized practice of law considerations. Because both federal and state rules
allow a client to request the assistance of a non-lawyer in applying for long-term care Medicaid,
a non-lawyer can provide full representation at the client’s request in regard to long-term care
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Medicaid, at the administrative level. In Medicaid matters, the “administrative level” means
dealings with the Texas Health and Human Services Commission (and, if need be, with the
Centers for Medicare and Medicaid Services). However, if the client needs to use court
proceedings to access Medicaid, only a lawyer can provide representation at that level. Also, if a
client needs to have a trust prepared, to access long-term care Medicaid, a non-lawyer should not
prepare the trust.
For some aspects of qualifying for long-term care Medicaid, such as
transferring resources to a spouse to implement the “protected resource amount,” one or more
real property deeds may be needed. In Texas, only a lawyer can prepare a deed for another
person. For those aspects of assistance that do not require a lawyer, a Benefits Counselor who is
not a lawyer cannot charge a fee. The Texas Human Resources Code prohibits a non-lawyer
from charging a fee for representation of a person in regard to services of the Texas Health and
Human Services Commission. Texas Human Resources Code, 12.001. This offense of a nonlawyer charging a fee for representing a person in obtaining assistance from the Texas Health
and Human Services Commission is a class A misdemeanor.
Question:
How much can a non-lawyer charge a person for representation in regard to services of
the Texas Health and Human Services Commission (HHSC)?
A.
B.
C.
D.
Three times the federal SSI maximum monthly benefit.
An amount equal to the current Medicare Part B premium.
Zero.
Whatever the non-lawyer and person seeking HHSC find agreeable.
Answer:__________________________________
15.
Medicaid pays providers, not recipients. Medicaid is a program which provides certain
health care services to a variety of needy individuals. As noted above, Medicaid is an example
of cooperative federalism. Medicaid does not pay money to individuals for health care that the
individuals receive. Rather, Medicaid – including long-term care Medicaid – pays providers
who have signed up with Medicaid and who provide “reasonable and necessary” medical
services to individuals who are eligible for Medicaid. Although Medicaid is jointly administered
by the federal Centers for Medicare and Medicaid Services and the Texas Health and Human
Services Commission (HHSC), applications are made through HHSC.
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16.
Medicare does not pay for custodial level nursing services in nursing facilities,
Medicaid can. Most persons in nursing facilities need what is called “custodial” care. Most
persons in nursing facilities do not need the routine, hands-on care of a skilled nurse. Much of
the care that is provided for persons who need custodial care is provided by nurse aides in
nursing facilities. Medicare does not pay for custodial care if that is all the person needs.
Medicaid can pay for custodial care in nursing facilities for persons eligible for Medicaid who
have medical necessity for long-term care. If the individual’s need for long-term care can be met
in the community, the individual can seek to qualify for services under a Medicaid communitybased waiver.
Question:
Which program has more extensive coverage of custodial care?
A. Medicare.
B. Medicaid.
Answer:___________________________
17.
Income and Resources – A Brief Introduction.
Medicaid has strict income and
resource eligibility criteria, which will be discussed in greater detail further on in this chapter,
after the discussion of what services are available under nursing facility Medicaid. To state the
income criteria very briefly, this may be said: In Texas, the income limit for one person to
qualify for nursing facility Medicaid is three times the maximum Supplemental Security Income
(SSI) limit. Because the federal SSI program historically increased its maximum benefit for an
individual effective every January, the maximum income limit for nursing facility Medicaid
historically increased every January. That is the case for 2013. The maximum monthly SSI
benefit for an individual has increased in 2013 to $710 (up from $698 in 2012). Thus, the
income limit for long-term care Medicaid in Texas in 2013 is three times that, which equates to
$2130. If both spouses are entering nursing facility care under Medicaid, the monthly income
limit is double the individual limit; hence $4260.
Question.
The Texas monthly income limit for an individual to qualify for long-term care Medicaid
is:
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A.
B.
C.
D.
Three times the current TANF benefit.
Twice the current maximum Title II benefit.
Three times the current maximum SSI benefit.
The current average per capita personal income.
Answer:______________________________
18.
If a person meets the applicable income test, then from the person’s income the person
can deduct a monthly allowance of $60. Under Texas law, if the institutionalized person has a
guardian, court-ordered guardianship compensation of up to $175 per month can be deducted. If
the person has a spouse at home, the person can deduct so much income as is necessary when
combined with the at-home spouse’s income, to provide the at-home spouse $2,898 of monthly
income. There can be a deduction for “maintenance needs of the family.” The person can also
deduct what is called “Incurred Medical Expenses.” These include medical expenses for items
that Medicaid does not cover, such as dental care, premiums for health insurance policies of a
general nature (that is, not disease-specific) and special equipment (such as a customized
wheelchair). Under certain circumstances, there can be a deduction for home maintenance. The
amount remaining of the applicant’s income is called “applied income.” (This may also be
referred to as the client’s “co-pay” or “copayment.”) The sequence of deductions from income,
in Texas, is set forth at Section H-1400 of the Medicaid for the Elderly and People with
Disabilities Handbook, available at http://www.dads.state.tx.us/handbooks/mepd/. The amount
of applied income for an individual is determined by the Medicaid program, not by the nursing
facility. It is the Medicaid program which determines what income is countable and what
deductions are available. Applied income is applied to the cost of nursing facility care. Income
aspects of long-term care Medicaid are treated in greater detail further on in this chapter. The
income limit for long-term care Medicaid and the minimum monthly maintenance allowance for
the community spouse, are shown in Appendix XXXI of the Medicaid for the Elderly and
People with Disabilities Handbook, at http://www.dads.state.tx.us/handbooks/mepd/.
Question.
True or False:
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Applied income is the amount of an applicant’s income that the Medicaid program
determines must be applied to the cost of nursing facility care; it is also called the co-pay
or copayment.
____ True
____ False
19.
Brief description of resource limits. Regarding resources, an individual cannot receive
nursing facility Medicaid if the individual has more than $2000 of countable resources. If both
spouses of a couple need nursing facility Medicaid, the couple cannot have more than $3000 of
countable resources. Countable resources do not include the homestead that the person lives in
or intends to return to, life insurance with a face value of $1500 or less, a vehicle regardless of
value if it is used by a household member for transportation, burial items if paid in full (plot,
casket, grave marker), separately identifiable burial funds of up to $1500 (that is, to the extent
that the $1500 life insurance exclusion has not been used), household possessions and personal
belongings, including clothing and one wedding ring and one engagement ring. Resources will
be treated in greater detail further on in this chapter.
20.
What services are covered by long-term care Medicaid? The long-term care Medicaid
program meets many of the needs of persons in nursing facilities. The Medicaid long-term care
coverage is set forth at 40 Texas Administrative Code § 19.2601. That TAC section describes
what services the nursing facility must provide, in return for the “Vendor Payment.” The
“Vendor Payment” is the amount of money that the Texas Medicaid program pays a nursing
facility to care for a resident under Medicaid. The Vendor Payment and the “applied income” of
the resident, described above, are all that the nursing facility can demand as payment for services
that are included in the “vendor payment.”
21.
The Vendor Payment. In the Texas Administrative Code, specifically at 40 Texas
Administrative Code §19.2601, the Items and Services which a nursing facility must provide in
return for receiving the Vendor Payment, are listed, namely:
§ 19.2601. Vendor Payment (Items and Services Included).
(a)
A facility provides, under the terms of the contract, for the total medical, nursing,
and psychosocial needs of each recipient.
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(b)
The daily rate is compatible with reasonable charges consistent with efficiency,
economy, and quality of total care. The facility must ensure that care meets the health
needs and promotes the maximum well-being of recipients. The following items and
services are included in the payment rate made to the facility by the Department of Aging
and Disability Services (DADS) and, therefore, the facility must provide:
(1)
nursing care;
(2)
social services;
(3)
regular, special, and supplemental diets, including tube feedings;
(4)
nonlegend drugs, with the exception of insulin, and alcoholic beverages
unless prescribed for medicinal purposes. Alcoholic beverages:
(A)
prescribed for medicinal purposes must include the dosage and
frequency of the alcohol; and
(B)
not prescribed for medicinal purposes are at the expense of the
recipient or family;
(5)
for a recipient who is not eligible for Medicare Part D benefits, legend
drugs that are not covered by the Medicaid Vendor Drug program;
(6)
for a recipient who is eligible for Medicare Part D benefits, legend drugs
in a category that is not covered by Medicare Part D and that are not covered by
the Medicaid Vendor Drug Program;
(7)
regular laundry services, except dry cleaning;
(8)
medical accessories, such as canulas, tubes, masks, catheters, ostomy bags
and supplies, IV fluids, IV equipment, and equipment that can be used by more
than one person, such as wheelchairs, adjustable chairs, crutches, canes,
mattresses, hospital-type beds, enteral pumps, trapeze bars, walkers, and oxygen
equipment, such as tanks, concentrators, tubing, masks, valves, and regulators.
(A)
Facilities are required to maintain, in good repair, equipment
necessary to meet the needs of the recipient.
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(B)
If a recipient desires equipment for exclusive use, its purchase is
the responsibility of the recipient.
(i) Only the recipient can use the equipment, and it must be
identified as the personal property of the recipient.
(ii) Upon discharge from the facility, the recipient retains the
equipment he purchased. If the recipient dies, the purchased
equipment must be transferred to the estate. It if is donated or sold
to the facility by the recipient or the estate, the transaction must be
documented. (See §19.416 of this title (relating to Personal
Property)).
(C)
If a recipient owns a piece of equipment that is medically
necessary, the facility must maintain and repair the equipment.
(D)
When Part B Medicare benefits are accessed to pay for equipment
and accessories, the recipient or family may not be charged by the facility
or supply company for any portion of these items.
(9)
medical supplies, including, but not limited to tongue depressors, swabs,
bandaids, cotton balls, and alcohol; and
(10) basic personal hygiene items and services to meet the needs of the
residents (See §19.405(h) of this title (relating to Additional Requirements for
Trust Funds in Medicaid-Certified Facilities) for a list of such items and services).
The specific type or brand of personal hygiene items used by the facility must be
disclosed to the recipient; then, if a recipient prefers to use a specific type or
brand of a personal hygiene item(s) rather than the item(s) furnished by the
facility, he may use his personal funds to purchase the item(s).
(A)
Before purchasing or charging for the preferred item(s), the facility
must secure written authorization from the recipient or family indicating
his desired preference, the date, and signature of the person requesting the
preferred item(s). The signature may not be that of an employee of the
facility.
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(B)
If the recipient’s personal funds are used to purchase an item(s),
the item(s) is for his sole use.
(C)
When the facility purchases personal hygiene item(s) with the
recipient’s personal funds, the facility must ensure that the item(s) is in an
individual container or package that is labeled with the recipient’s name.
The facility is not held responsible for labeling personal hygiene items
brought into the facility and not reported to the management.
(c)
Facilities are not required to provide any particular brand of non-legend drug,
medical accessory, equipment, or supply, but only those items necessary to ensure
appropriate recipient care.
(1)
Unless the physician orders a specific type or brand, the facility may
choose the type or brand.
(2)
If the recipient or family prefers a specific type or brand of item rather
than the one furnished by the facility, the recipient, responsible party, or family
may be billed for the item, or the recipient’s personal funds may be used to
purchase the item, or both.
(3)
Before purchasing or charging for the preferred item, the facility must
secure written authorization from the recipient or family indicating his desired
preference, the date, and signature of the person requesting the preferred item.
The signature may not be that of an employee of the facility.
(d)
If a resident has requested and freely chosen to participate in an activity, or to
have an item or service provided that is not included, or is different than that provided, in
the daily vendor rate, then the resident may be charged for the activity, item, or service.
(1)
When documentation is present that supports the above criteria, and that is
required by §19.404(d)(5) of this title (relating to Protection of Resident Funds),
the amount may be paid from the resident’s trust fund.
(2)
When the facility acts as a collection agent for any item, service, or
activity not included in the daily rate, the facility must be able to provide
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documentation that clearly indicates that any charges made to the recipient or his
trust fund are pass-through costs only. The facility may not charge any fees,
including handling fees, for these types of transactions.
Question:
In the long-term care Medicaid context, the vendor payment is:
A.
The amount that can be charged by vendors selling items from carts outside
nursing facilities.
B.
The amount that can be charged by beauty shops that serve residents of Texas
nursing facilities.
C.
The amount that a Texas nursing facility receives from the Texas Medicaid
program for providing long-term care services to Texas Medicaid
recipients.
D.
The amount that florists can charge for delivering flowers to Texas Medicaid
recipients.
Answer:___________________________________
22.
Prohibition against supplementation of the vendor payment. Thus, all the items and
services just described at length in paragraph 21 above must be provided by a nursing facility in
return for the vendor payment. There are very strong prohibitions against supplementing the
vendor payment for items covered by it. 40 TAC § 19.2606-2608 state the prohibitions as:
§ 19.2606. Supplementation of Vendor Payments.
(a)
Facilities must abide by Public Law 95-142 related to Medicare/Medicaid
antifraud and abuse amendments.
(b)
Participation will be limited to providers of services who accept, as payment in
full, the amounts paid in accordance with the fee structure approved by the Texas Health
and Human Services Commission (HHSC).
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(c)
Providers who have a contract with HHSC and who solicit contributions,
donations, or gifts from Medicaid recipients or family members will be in noncompliance
with federal requirements.
(d)
The facility must inform Medicaid recipients and their families that their right to
nursing facility services is not contingent upon contributions. The facility must give
copies of this notice to the recipient, and either the responsible party or family
representative.
(e)
If a recipient, family member, guardian, or other interested party does make a
free-will contribution, the nursing facility administrator executes a statement for
signature by both the contributor and the administrator. It will state that the services
provided to any Medicaid recipient in the nursing facility are not predicated upon
contributions and that the gifts are free-will contributions.
(f)
When a provider accepts federal and/or state funds for items or services delivered
which are not reimbursed within the per diem, the facility must document:
(1)
that the type of item or service is ordered by the physician,
(2)
and
that the item or service has not been billed to more than one payor source,
(3)
that the recipient actually received the item or service.
In sum, what is set forth above at paragraph 21 of this chapter – is the broad scope of
care and services that a person who qualifies for nursing facility Medicaid is entitled to receive
under the program. Keep in mind that the description begins with this wording: A facility
provides, under the terms of the contract, for the total medical, nursing, and psychosocial needs
of each recipient.
Question:
For services that are included in the vendor payment, what is the percentage of co-pay
that a Texas nursing facility can collect from the individual receiving long-term care
Medicaid in the facility?
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A.
B.
C.
D.
20% (Twenty percent).
0 % (Zero percent).
10% (Ten percent).
The percent by which the SSI benefit increased from the prior year.
Answer:____________________________.
23.
Penalties for violating the prohibition against supplementation of the Medicaid
payment. It is prohibited for a nursing facility to demand more in payment than the Medicaid
program says the nursing facility is due for caring for a Medicaid recipient. (The resident may
have an “applied income,” also called a “co-pay” or “copayment,” amount to pay, but that
amount is determined by the Medicaid program, not the nursing facility.) 40 TAC § 19.2607
provides “Penalties for Supplementation,” that is, penalties for demanding additional money
from the resident, beyond the amount that the Medicaid program says the resident should pay.
Penalties include:
A felony conviction with a fine of not more than $25,000 or imprisonment for not more
than five years or both can be imposed on anyone in the facility who knowingly and
willfully:
(1)
accepts, from the recipient, money or other considerations in excess of rates
established by the state for services provided under a state plan approved under Title
XIX;
(2)
charges, solicits, accepts, or receives any gifts, money, donation, or other
consideration in addition to amounts required to be paid under a state plan approved
under Title XIX (other than charitable donations from an organization or a person
unrelated to the recipient) as a precondition for admitting or keeping a recipient in the
nursing facility; or
(3)
accepts reimbursement from more than one source (including per diem
reimbursement) for the same item or service.
24.
Limitations on provider charges. The Texas Administrative Code, at 40 TAC §
19.2608, has “Limitations on Provider Charges.” This section states that a provider of Medicaid
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(Title XIX services) may neither charge nor take other recourse against Medicaid applicants or
recipients, their family members, or their representatives for any claim denied or reduced by the
Texas Health and Human Services Commission (HHSC) because of the provider’s failure to
comply with any HHSC rule, regulation, or procedure.
25.
Residency and citizenship are considerations in addition to financial need and
medical necessity for long-term care Medicaid. Thus, Medicaid provides extensive coverage
of long-term care. But there must be financial need for Medicaid, and the applicant must also
show that the applicant has what is termed “medical necessity” for long-term care. Additionally,
residency and citizenship status should be considered.
26.
Residency. To be eligible for Texas long-term care Medicaid, the person must be a
Texas resident. This is provided for at 1 TAC Section 358.207. This Texas rule adopts the
federal rule for determining when a person is a resident of a state, namely 42 CFR Section
435.403. For an individual to receive facility-based long-term care Medicaid, it is also necessary
that the individual have lived in an “institutional setting for at least 30 consecutive days.” 1 TAC
Section 358.107 (c)(2). If an individual is in a hospital for a period of days and then immediately
enters a long-term care facility, the numbers of days in the hospital counts toward the required
thirty consecutive (30) days.
Question.
True or False.
There is no residency requirement for Medicaid long-term care in Texas.
____ True
____ False
27.
Citizenship. Before August 23, 1996, the person had to be a legal resident of the United
States: a citizen, a permanent resident alien, or a person permanently living in the U.S. "under
color of law." "Color of law" includes: (1) persons residing in the U.S. continually since
January 1, 1972; (2) an alien living in the U.S. indefinitely with the knowledge and permission of
the INS; and (3) any person who entered the U.S. before January 1, 1972, and who may be
eligible for permanent residence at the discretion of the Attorney General.
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28.
Immigration aspects of the Personal Responsibility and Work Opportunity Act of
1996. On August 22, 1996, the "Personal Responsibility and Work Opportunity Reconciliation
Act of 1996" (Public Law 104-193) took effect. It is often cited as "PRWORA."
A
Congressional Summary of PRWORA is available. The Texas Medicaid program has adopted
the immigration status requirements of PRWORA, at 1 TAC Section 358.203. PRWORA and
the TAC section uses a new term -- "qualifying alien." Section 431 of PRWORA defines a
qualifying alien as
(1)
an alien who is lawfully admitted for permanent residence under the Immigration
and Nationality Act (the “Act”),
(2)
an alien who is granted asylum under section 208 of such Act,
(3)
a refugee who is admitted to the United States under section 207 of such Act,
(4)
an alien who is paroled into the United States under section 212(d)(5) of such Act
for a period of at least 1 year,
(5)
an alien whose deportation is being withheld under section 243(h) of such Act, or
(6)
an alien who is granted conditional entry pursuant to section 203(a)(7) of such
Act as in effect prior to April 1.
29.
Texas has opted to provide long-term care Medicaid to certain qualifying aliens. In
general, Texas has the option under § 402(b)(1) of the PROWA of 1996 of choosing to provide
long-term care Medicaid or not to persons who are "merely" qualifying aliens. So far, Texas has
opted to provide long-term care Medicaid to qualifying aliens who were in the U.S. before
August 22, 1996.
30.
As to some qualifying aliens the state must provide long-term care Medicaid. There
are three categories of qualifying aliens to whom the state must provide long-term care
Medicaid, if other eligibility criteria are met. If a person meets one of the six criteria set forth in
paragraph 28 above, and if the person meets any of the three criteria in this paragraph, the person
is not barred from Medicaid for lack of citizenship. PRWORA, § 402(b)(2) as amended by the
1997 Balanced Budget Act states:
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(2)
EXCEPTIONS - Qualifying aliens under this paragraph shall be eligible for any
designated Federal program.
(A)
TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES (i)
An alien who is admitted to the United States as a refugee under
section 207 of the Immigration and Nationality Act until 7 years
after the date of an alien's entry into the United States.
(ii)
An alien who is granted asylum under section 208 of such Act until
7 years after the date of such grant of asylum.
(iii)
(B)
(C)
An alien whose deportation is being withheld under section 243(h)
of such Act until 7 years after such withholding.
CERTAIN PERMANENT RESIDENT ALIENS - An alien who -(i)
is lawfully admitted to the United States for permanent residence
under the Immigration and Nationality Act; and
(ii)
(I)
has worked 40 qualifying quarters of coverage as defined
under title II of the Social Security Act or can be credited
with such qualifying quarters as provided under section
435, and
(II)
in the case of any such qualifying quarter creditable for any
period beginning after December 31, 1996, did not receive
any Federal means-tested public benefit (as provided under
section 403) during any such period.
VETERAN AND ACTIVE DUTY EXCEPTION - An alien who is
lawfully residing in any State and is -(i)
a veteran (as defined in section 101 of title 38, United States Code)
with a discharge characterized as an honorable discharge and not
on account of alienage,
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(ii)
on active duty (other than active duty for training) in the Armed
Forces of the United States, or
(iii)
the spouse or unmarried dependent child of an individual described
in clause (i) or (ii).
Note: Even though a non-citizen may meet the criteria for eligibility for long-term care
Medicaid, the receipt of long-term care Medicaid can render some non-citizens “public
charges.” Before assisting a non-citizen to become certified for long-term care Medicaid, one
should make sure of whether the non-citizen may thus come to be labeled a “public charge” and
be barred from citizenship. Federal regulations promulgated at 64 Federal Register 28681 (May
26, 1999) to be codified at 8 Code of Federal Regulations §212.102(a), deal with this. A
Department of Justice memorandum provides “Field Guidance” on the topic of public charge. A
Benefits Counselor dealing with this concern can contact the Legal Hotline for Texans for
consultation (as with all other matters being handled for an area agency on aging client).
31.
Categories of Medicaid-eligible persons. Medicaid is sometimes called a “categorical
eligibility program.” That means if a person fits in a certain category, the person is Medicaideligible. People who are 65 years old or older, blind, or disabled may be categorically eligible
for Medicaid coverage, 1 TAC. § 358.107, including the following:
a. individuals who receive Supplemental Security Income (SSI) are automatically
eligible.
b. individuals who are institutionalized in a nursing facility or hospital, who have
medical necessity for long-term care, and whose income is at or below 300% of the
SSI standard ($710 x 3 or $2,130 in 2013).
c. individuals who would be eligible for Medicaid if they were institutionalized, but
instead receive in-home or community-based services.
As noted in paragraph 5, individuals who receive TANF cash assistance qualify for Medicaid,
and if they have medical necessity for long-term care, they will qualify for long-term care
Medicaid.
32.
Detailed treatment of financial eligibility for long-term care Medicaid. (Eligibility
Based on Income/Resources (Assets)). This chapter will first treat the income and resource
limits that affect an individual. Paragraphs 107 – 145 deal with special income and resource
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protections for spouses. Those paragraphs explain some income and resource procedures that
can be used to protect spouses of recipients of long-term care Medicaid.
33.
SSI recipients are eligible for Medicaid and if they have medical necessity for longterm care, they are eligible for long-term care Medicaid. As noted in paragraph 31, elderly
and disabled people who receive Supplemental Security Income (SSI) benefits are automatically
eligible for Medicaid benefits. The SSI federal maximum benefit (in effect, an income limit to
receive SSI) in 2013 is $710 per month for an individual. The Medicaid that one receives as a
recipient of SSI includes nursing facility care, if there is medical necessity for it. 1 TAC §
358.433.
Question.
True or False.
The Medicaid that one receives as a recipient of SSI includes nursing facility care, if
there is medical necessity for it.
____ True
34.
____ False
The 300% of SSI income limit for long-term care Medicaid. The same TAC section
mentioned in paragraph 33 – 1 TAC § 358.433 – allows persons with countable monthly
income up to three times the SSI federal maximum monthly benefit to receive long-term care
Medicaid, if there is medical necessity for it. This "income cap" is $2,130 per month (300% of
$710) in 2013. Under the federal Medicaid law, Texas could choose to limit eligibility for
nursing facility Medicaid to one time the SSI federal maximum monthly benefit, two times the
federal maximum monthly benefit, three times federal maximum monthly benefit, or to not be an
“income cap state” at all. Texas has chosen three times the SSI federal maximum monthly
benefit as the monthly income limit for an individual for long-term care Medicaid. If both
spouses of a couple will be receiving nursing facility Medicaid, the couple income limit is
$4,260 monthly (twice the individual income limit). If monthly income is over the limit,
Medicaid eligibility can occur via a “Qualified Income Trust,” also called a “Miller Trust.” The
Qualified Income Trust (QIT) is discussed below at paragraphs 56 – 61.
Question.
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In regard to the monthly income limit for long-term care Medicaid, what has Texas
chosen?
A.
B.
C.
D.
One time the SSI federal maximum monthly benefit.
Two times the SSI federal maximum monthly benefit.
Three times the SSI federal maximum monthly benefit.
No income cap at all.
Answer:________________________________
35.
Definition of Income: “Name on the Check” Rule. The general income rule is at 1
TAC Section 358.381. Note that this TAC section incorporates 20 CFR Sections 416.1101
through 1104. "Income" is "any property or service a client can apply, either directly or by sale
or conversion, to meet basic needs for food, clothing and shelter." Texas uses the "name on the
check" rule to determine what income belongs to which spouse. Thus, a pension check, Social
Security retirement check, or dividend check payable to one spouse is counted as that spouse's
income alone--even though Texas is a community-property state.
36.
How income is calculated under long-term care Medicaid. Two overarching
fundamentals concern income under long-term care Medicaid (300% of the federal maximum
monthly SSI benefit). The two overarching fundamentals are: What is “countable income,” and
what deductions are available from countable income, to arrive at applied income (the co-pay,
also called the copayment). Texas has chosen to use the methods of the Supplemental Security
Income (SSI) program, to determine what income counts and does not count for long-term care
Medicaid. This choice is made by Texas in its State Medicaid Plan, at Attachment 2.6-A. (The
State Medicaid Plan can be accessed at http://www.hhsc.state.tx.us/medicaid/StatePlan.html.) So,
in regard to income, a first step is to determine if the type of income would count under the SSI
program. The Social Security Program Operations Manual System (POMS) has a list of what
unearned
income
does
not
count.
That
list
is
at
https://secure.ssa.gov/apps10/poms.nsf/lnx/0500830099. After determining what income counts,
and after a series of deductions, required by 42 U.S.C. §1396r-5(d), the amount of “applied
income” is determined. Applied income from the institutionalized individual plus the “vendor
payment” from the Medicaid program is the totality of what the nursing facility can receive for
Medicaid-covered services for the institutionalized individual. In determining income eligibility
for a Medicare recipient under the long-term care Medicaid program, the countable Social
Security benefit is the gross benefit. This is the amount of the Social Security check plus any
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monthly Medicare premiums that are being deducted from the gross Social Security. This means
the true (gross) Social Security benefit for the purpose of income eligibility for long-term care
Medicaid typically includes the Medicare Part B monthly premium (which is $104.90 for 2013
for most Medicare enrollees), plus any other Medicare premiums being deducted from the
individual’s gross Social Security benefit, such as Medicare Part D premium. Medicare has an
explanation of the Part B premium (and other co-pays) for 2013 in Your Medicare Costs.
Question.
In regard to countable monthly income under the long-term care Medicaid program,
which statement is true?
A.
B.
Countable monthly income includes the net Social Security benefit that is direct
deposited to the account of the applicant but countable income does not include
the amounts deducted from the Social Security benefit for Medicare premiums.
Countable monthly includes the gross Social Security benefit, which is the
amount of the direct deposit of Social Security plus any amounts deducted from
the Social Security benefit for Medicare premiums.
Answer:_____________________________________
37.
Deductions from gross income, to determine the applied income of the
institutionalized individual.
The federally required deductions from gross income to arrive
at applied income are set forth at 42 U.S.C. §1396r-5(d), in the case of an institutionalized
individual with a spouse. They are a personal needs allowance (currently $60 monthly), the
amount of income necessary to provide for the community spouse minimum monthly needs
allowance, a family allowance (if there is a community spouse and if the circumstance for it
exists), and a deduction for incurred medical expenses. In the case of an institutionalized
individual without a community spouse, the deductions from gross income to arrive at applied
income are set forth at 42 U.S.C. §1396a(q) and (r). In addition to the federally required
deductions from countable income, Texas has by state statute (Human Resources Code
§32.02451) adopted a deduction for court-ordered guardianship fees (up to $175 monthly, taken
after the personal needs allowance). As an option in its State Medicaid Plan, at Attachment 2.6A, Texas has also adopted the optional deduction for maintenance of the home, for not longer
than 6 months, if a physician has certified that the institutionalized individual or the spouse is
likely to return to the home within that period. The home maintenance deduction is the actual
amount of the cost to maintain the home, capped at the SSI income limit. The calculation of the
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applied income in the case of an institutionalized individual with a community spouse is treated
in the section of this chapter that deals with spousal impoverishment, at paragraph 135.
38.
Gross income must first be at or below the long-term care Medicaid income limit.
Before deductions are allowed from gross income, gross income must be at or below the longterm care Medicaid income limit. In Texas, for an institutionalized individual (or an
institutionalized individual with a spouse in the community), this gross income limit is three
times the federal maximum monthly SSI benefit. In 2013, thus, the gross monthly income limit
for an institutionalized individual under long-term care Medicaid in Texas is $2,130 (which is
three times the federal maximum monthly SSI benefit of $710). If gross monthly income is
above that $2,130 limit, then one or more streams of income will need to be put into a Qualified
Income Trust, in order to bring countable gross income to at or below the long-term care
Medicaid income limit. The Qualified Income Trust is treated at paragraphs 56 – 61. Once the
Qualified Income Trust is established, the deductions from income that are available in order to
arrive at applied income, can be taken either out of the income stream(s) that are not directed into
the Qualified Income Trust, or they can be taken from the income stream(s) that are directed into
the Qualified Income Trust.
39.
The Texas Administrative Code section that treats the determination of applied
income (“co-payment”). The Texas Administrative Code, at 1 TAC §358.438, has provisions
for the determination of “applied income” which is also called the “co-payment,” the amount of
the income of the long-term care Medicaid recipient which must be applied to the cost of care.
This section of the Texas Administrative Code basically repeats the deductions from countable
income that are required by the federal Medicaid statute and the rules in Code of Federal
Regulations. The applied income (or co-payment), when added to the vendor payment, is the
total amount that the facility may take in for services that are covered by long-term care
Medicaid. The calculation of the applied income amount – the co-payment – uses deductions
that are required by the federal Medicaid statute, and deductions that are provided by federal rule
and state rule.
40.
The federal Medicaid statute requires two deductions from gross income, to
determine the applied income of the institutionalized individual who does not have a spouse
in the community. In the case of an institutionalized individual who does not have a spouse in
the community, the federal Medicaid law requires two deductions to be allowed from gross
income to arrive at applied income: A personal needs allowance (required by 42 U.S.C.
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§1396a(q)), and a deduction for “incurred medical expenses.” As noted, in addition to these
federally required deductions, the Texas Medicaid program allows for a deduction for a courtordered guardian fee of up to $175 monthly (if there is a guardian), and a deduction for home
maintenance (as permitted by federal rule – 42 CFR §435.725(d), and as described in
Attachment 2.6-A of the State Medicaid Plan, mentioned in paragraph 37 above).
41.
The federally-required personal needs allowance deduction. As noted, the federal
Medicaid law requires the allowance of a personal needs deduction. Texas currently sets this
amount at $60 per month. For veterans, the personal needs allowance is $90 per month. This is
provided for at 42 U.S.C. §1396a(q) for non-veterans, and at 42 U.S.C. §1396a(r)(1)(A) for
veterans.
42.
The federally-required deduction for incurred medical expenses. For both veterans
and non-veterans, the federal Medicaid law at 42 U.S.C. §1396a(r)(1)(A) requires a deduction
“with respect to post-eligibility treatment of income” of incurred medical expenses. These are
“amounts for incurred medical expenses for medical or remedial care that are not subject to
payment by a third party.” These include Medicare and other health insurance premiums,
deductibles, or coinsurance. Incurred medical expenses (which can be deducted) also include
“necessary medical or remedial care recognized under State law but not covered under the State
[Medicaid] plan … subject to reasonable limits the State may establish on the amount of these
expenses.”
43.
The incurred medical expense part of the Medicaid for the Elderly and People with
Disabilities Handbook. The Medicaid for the Elderly and People with Disabilities Handbook
has extensive treatment of the incurred medical expense deduction, in its chapter H-2100. In
addition to Medicare and other health insurance premiums, deductibles, or coinsurance amounts,
some examples of allowable incurred medical expenses are: routine dental services, medically
necessary prosthetic devices, medically necessary walking aids, special shoes or support devices
for feet, and physical exams.
44.
An irony of the incurred medical expense deduction. An irony of the incurred medical
expense deduction is this: In determining whether the income limit for long-term care Medicaid
is not exceeded, it is necessary to add to the net (cash) Social Security benefit, the amount of any
Medicare premiums that are being deducted from the gross Social Security benefit. But once it
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is determined that countable income (including the gross Social Security benefit) does not
exceed the income limit for long-term care Medicaid, the Medicare premiums can be deducted in
determining the applied income. The Medicare premiums are an incurred medical expense.
45.
The deduction for home maintenance. As described in paragraph 37, Texas has opted
to permit a home maintenance allowance. The federal Medicaid rules, at 42 CFR §435.725(d),
permit this. That federal rule allows the home maintenance deduction for a single individual or
for couples (in addition to the personal needs allowance) if certain criteria are met. The
allowance is for the maintenance of the individual’s or couple’s home. The deduction is for not
more than six months. A physician must certify that either the individual or the spouse is likely
to return home within the six month time-frame. The deduction is for actual maintenance
expenses, capped at the SSI income limit.
46.
The deduction for guardian fees.
The Texas Administrative Code, at 1 TAC
§358.439, provides for a deduction (from countable income) of a guardian fee, “in an amount set
by the court.” The Texas Medicaid program deducts the guardian fee from total countable
income after deducting the personal needs allowance, but before deducting any other allowance.
This is permitted by 1 TAC §358.439(b) . It is required by Texas Human Resources Code
§32.02451. That section of the Human Resources Code mandates a deduction of court-ordered
guardianship fees (in calculating “applied income”) of up to $175 per month. Costs directly
related to establishing the guardianship are also deductible, up to $1000. (A higher amount can
be ordered deductible if “supported by documentation acceptable to the court.”) Other
administrative costs related to the guardianship, not exceeding $1000 during any three-year
period are also deductible.
In the Texas sequence of deductions, at Section H-1400 of the
Medicaid for the Elderly and People with Disabilities Handbook, the deduction from countable
income for court-ordered guardianship fees is the second deduction – right after the $60 per
month personal needs allowance.
47.
The deduction for maintenance needs for family members.
The deduction for maintenance needs of the family is required by 42 CFR §435.725(c)(3). This
is for “an individual with a family at home.” This is in addition to the maintenance needs of the
spouse, if there is a spouse. The Texas Medicaid program has a rule that follows the federal rule;
the Texas rule is at 1 TAC §358.440. It states, “For a person with at least one dependent relative
at home, HHSC [the Texas Health and Human Services Commission – the state Medicaid
agency] allows the individual SSI federal benefit rate for each dependent relative and deducts the
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individual federal benefit rate from the dependent relative’s countable income.” For a person
with a spouse at home, the maintenance needs allowance for a dependent is determined “in
accordance with 42 U.S.C. §1396r-5.” This is a deduction of one-third of the amount by which
the monthly spousal dependent allowance exceeds the monthly income of the dependent (living
with the spouse of the institutionalized individual). The monthly spousal dependent allowance is
150% of the federal poverty income limit for a two-person household. As of January of 2013,
this monthly spousal dependent allowance was stated by the Texas Medicaid program to be
$1,892. Thus, if the dependent (living with the spouse of the institutionalized individual) has
income of $992 monthly (for example), the deduction for that dependent would be $300 (onethird of ($1,892 minus $992)). The Texas State Medicaid Plan in Attachment 2.6-A defines
dependent for this purpose (dependent living with the spouse of the institutionalized individual)
as “either spouse’s minor or dependent children, dependent parents, and dependent siblings
(including half-brothers, half-sisters, and siblings gained through adoption) who were living in
an institutionalized client’s home before client’s institutionalization, and who are unable to
support themselves outside the client’s home because of medical, social, or other reasons.” New
federal poverty income limits are usually published in mid- to late-January of each year, so this
figure may change (increase) in 2013. The Texas Medicaid program has set forth the $1,892
figure in revision 12-4 to the Medicaid for the Elderly and People with Disabilities (MEPD)
Handbook, as Appendix L to the Handbook. Revision 12-4 was effective December 1, 2012.
MEPD Handbook Appendix L, established by Revision 12-4, can be viewed at
http://www.dads.state.tx.us/handbooks/mepd/appendix/L/index.htm.
48.
The deduction for maintenance needs for the spouse. This is required by 42 U.S.C.
§1396r-5(d) and 42 CFR §435.725(c)(2).
It is not a matter of Texas having chosen the
deduction in the State Medicaid Plan; this deduction is required by the federal Medicaid statute.
In the case of an institutionalized individual who has a spouse in the community, this deduction
allows the institutionalized individual to divert to the spouse in the community so much income
as is available, so that the spouse in the community will have the minimum monthly needs
allowance (if the couple’s combined incomes reach that far). The minimum monthly needs
allowance for the spouse in the community is currently (in 2013) $2,898. If the spouse in the
community has, say, only $1,898 in income, the institutionalized individual could divert to the
spouse in the community $1000 of monthly income (if that much is available), to bring the
spouse in the community up to the full minimum monthly needs allowance. If the couple’s
combined incomes do not bring the spouse in the community to the full minimum monthly needs
allowance, the Medicaid program does not supplement their incomes. However, this can be a
reason for which the protected resource amount (PRA) can be expanded, on the theory that the
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expanded PRA will allow enough income to be generated to bring the spouse in the community
closer to the full minimum monthly needs allowance. This is discussed in greater detail at
paragraphs 138 – 139.
49.
The order of deductions, reiterated. To reiterate, the federal Medicaid statute (42
U.S.C. §1396r-5) specifies the order of deductions from countable income as (1) the personal
needs allowance, (2) the maintenance needs of the spouse (the minimum monthly needs
allowance), (3) the maintenance needs of the family, (4) amounts for incurred medical expenses,
and (5) the optional allowance for home maintenance. The Texas Medicaid for the Elderly and
People with Disabilities Handbook specifies the order of deductions as: (1) the personal needs
allowance, (2) court-ordered guardian fees, (3) maintenance needs of the spouse (the minimum
monthly needs allowance), (4) maintenance needs of the family, (5) amounts for incurred
medical expenses, and (6) the deduction for home maintenance. Section H-1400, Medicaid for
the Elderly and People with Disabilities Handbook.
50.
Right to a “fair hearing.” With regard to all aspects of eligibility – income, resources,
deductions, medical necessity, transfer of resource issues – the applicant has a right to a “fair
hearing” – an informal administrative law hearing, if the applicant disagrees with the decision of
the Medicaid program.
51.
Right to state court judicial review. After exhausting the administrative hearing
process, an applicant who is still in disagreement with the Medicaid agency about one or more
aspects of eligibility has a right to request review by a state court of the record of the application,
to determine if there has been error. This is provided for by Texas Government Code Section
531.019.
52.
Nursing facility waiver program (CBA). The Texas Medicaid program also operates a
"nursing facility waiver" program, which provides long-term Medicaid, to persons in their own
homes. This waiver program is a “coverage group” listed at 1 TAC Section 358.107 (c)(3). This
waiver program (“Community Based Alternative”) has the same income limits and resource
criteria as nursing facility Medicaid, and the applicant must have medical need for long-term
care (just as with nursing facility Medicaid). If these criteria are met, and if services can be
provided in the home, and if the cost to the Medicaid program of in-home care will be no more
than the “cost limit,” and if there is a "waiver" provider serving the client's geographic area, the
client can receive long-term care in-home, rather than having to enter a nursing facility. There
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is a waiting list for services under this “Community Based Alternatives” (CBA) program. (The
state calls the waiting list an “interest list.”)
53.
The cost limit for the nursing facility waiver program (CBA). The cost limit on CBA
services (required by the individual’s “ISP” – Individual Service Plan – are set forth in Appendix
XIV of the Community Based Alternatives Provider Manual, and Appendix VII of the Case
Manager Community Based Alternatives Handbook. The annual CBA cost limit is two times the
annualized nursing facility daily rate, for the Resource Utilization Group (RUG), which the ISP
justifies. So, if an ISP justifies a RUG that has daily rate of $142.92 (about the daily average
cost of nursing facility care), that would be an annualized cost of nursing facility care of
$52,166. The annual cost cap for that RUG in the CBA program is twice that amount –
$104,332.
54.
Two manuals are important for the CBA program. The DADS Community Based
Alternatives (CBA) Provider Manual includes rules and procedures for administering Texas’
CBA program. All providers of CBA services are required to follow these rules and procedures
in order to comply with the terms of the DADS contract. This manual is at
http://www.dads.state.tx.us/handbooks/cba/. The Case Manager Community Based Alternatives
Handbook is also important, to fully understand the CBA program. This handbook “includes
rules, policies, and procedures for DADS case managers to administer the Community Based
Alternatives (CBA) program. The handbook is used in conjunction with the CBA Provider
Manual, which provides rules and procedures for contracted provider agencies to administer the
program.” This handbook is at http://www.dads.state.tx.us/handbooks/cm-cba-hb/.
55.
How to get around the waiting list for the nursing facility waiver program. A way of
getting around the CBA waiting list is to use the “Money Follows the Persons” (MFP) concept.
Texas operates a “Money Follows the Person Demonstration” (MFPD) program, under a CMSapproved waiver from regular long-term care Medicaid rules. MFP has its own area on the
DADS website, at http://www.dads.state.tx.us/providers/pi/mfp_demonstration/. To use MFPD
to access CBA services, the individual must request CBA services while residing in a nursing
facility and must meet all eligibility criteria for the CBA program. See Sections 3211.2 and
3211.3 of the Case Manager Community-Based Alternatives Handbook. The money that
Medicaid would have spent to care for the person in the nursing facility “follows the person” to
the community setting. Care in the community is often less costly than care in a nursing facility.
56.
Qualified Income Trust (“Miller Trust”). As noted in paragraph 34, if a client has
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income that is in excess of the monthly limit, but the client has medical necessity for long-term
care and if the client’s resources would not disqualify the client from long-term care Medicaid,
the client can use a “Qualified Income Trust,” also called a “Miller Trust,” to bring countable
income to or below the monthly income limit. The services of a lawyer should be used, to
prepare a trust of this sort.
57.
The basis in law for the Qualified Income Trust.
The Qualified Income Trust is
provided for by the Omnibus Budget Reconciliation Act of 1993 (OBRA '93). That law
amended 42 U.S.C § 1396p by allowing a new subsection (d), which provides for the treatment
of trusts. The Qualified Income Trust requirements are at 42 U.S.C. §1396p(d)(4)(B).
58.
The impact of the Qualified Income Trust. The Qualified Income Trust (also called
the Miller Trust) is having a tremendous impact in Texas and across the country with the
potential to eliminate the "Utah Gap" and its harsh consequences. The term "Utah Gap" has been
used to describe the situation of elderly individuals who have income in excess of 300% of the
SSI benefit rate. These individuals do not have enough income to purchase needed facility
services, yet they have too much income to qualify for Medicaid. Since the income cap in 2013
is $2,130 per month, if an individual has income of (for example) $2,200 per month, but for the
Qualified Income Trust, he/she would not qualify for Medicaid even though the average cost of
nursing facility care is over $4,288 per month. (Keep in mind: For a person who is receiving
Social Security and who is enrolled in Medicare and who has the $104.90 Medicare Part B
premium or other Medicare premiums – such as for Part D – deducted from the Social Security
benefit, the true – countable -- Social Security benefit is the amount of the direct deposit or the
check plus the Medicare premiums that have been deducted.)
59.
How it was before the Qualified Income Trust was allowed. Prior to the relief granted
by OBRA '93, Medicaid assistance was simply unavailable to most victims of the Utah Gap.
The case of Miller v. Ibarra, 746 F. Supp. 19 (D. Colo. 1990) first suggested a form of relief for
those in the Utah Gap. "Miller Trusts," as they are often referred to, involve the diversion of a
part or all of a person's unearned income into a trust in which monthly distributions are set at a
level less than or equal to the income gap limit ($2,130 in 2013).
60.
Requirements of the Qualified Income Trust. As noted in paragraph 57, the
requirements for the Qualified Income Trust are set forth at 42 U.S.C. §1396p(d)(4)(B). The
requirements of the Qualified Income Trust (“Miller Trust”) are:
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a. The trust is comprised only of pension, Social Security, and other income. No
resources of any kind can be put in this trust without the risk of incurring a transferof resource penalty.
b. The state will receive all amounts remaining in the trust upon the death of such
individual up to an amount equal to the unreimbursed medical assistance paid on
behalf of the individual during his or her lifetime.
c. The trust must be irrevocable. It is advisable that the beneficiary not be the same as
the trustee, because of potential problems relating to discretionary distributions.
61.
Texas recognizes Qualified Income Trusts. Texas recognizes Qualified Income Trusts,
a/k/a Miller Trusts (federal law requires that these trusts be allowed). The trust should be
prepared by a lawyer. It is submitted to the Texas Health and Human Services Commission, as
part of the application for long-term care Medicaid. It will usually be reviewed by the regional
attorney of the Texas Health and Human Services Commission, to make sure it complies with the
requirements described above. The appendices to the Medicaid for the Elderly and People with
Disabilities Handbook have, for several years, included a form for the Miller Trust. In 2013, this
form (and the explanation of its use) can be found at Appendix XXXVI to the Medicaid for the
Elderly and People with Disabilities Handbook.
The link to this Appendix is
http://www.dads.state.tx.us/handbooks/mepd/appendix/XXXVI/index.htm.
Questions.
True or False.
The “Miller Trust” (the Qualified Income Trust) in the context of long-term care
Medicaid can be a way of achieving income eligibility for individuals whose monthly
income would otherwise be disqualifying.
____ True
____ False
The services of a lawyer should be used if a “Miller Trust” (the Qualified Income Trust)
is needed for eligibility for long-term care Medicaid.
____ True
62.
____ False
Resource limits for long-term care Medicaid are tied to the resource limits under
the SSI program. In Texas, the Medicaid resource limits are tied to the SSI program limits
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Certain property is exempt and not counted. The general treatment of resources rule is 1 TAC
358.321. The limit for nonexempt property for an individual is $2,000. If the individual exceeds
$2,000 in countable resources, the individual will be denied Medicaid benefits. If both spouses
will be receiving nursing facility Medicaid, the amount is $3,000. Resource provisions of
eligibility are at 1 TAC §§ 358.321 - 358.371. The concepts of countable (included) resources
and not-countable (excluded) resources are fundamental under long-term care Medicaid. The
Medicaid for the Elderly and People with Disabilities Handbook has a chart of “common
resource
exclusions.”
The
chart
can
be
accessed
at
http://www.dads.state.tx.us/handbooks/mepd/F/F-5000.htm#secF-5200. If a person’s countable
resources exceed the resource limit as of 12:01 a.m. on the first day of the month, the person is
not eligible for the entire month. This is provided for by 1 TAC Section 358.321, Section F1100 of the Medicaid for the Elderly and Persons with Disabilities Handbook, and 20 CFR
Section 416.1207.
Question.
True or False.
The Medicaid for the Elderly and People with Disabilities Handbook has a chart that
shows “common resource exclusions.”
____ True
63.
____ False
Common non-countable (excluded) resources and some ways to deal with countable
resources -- introduction. There are some resources which, under long-term care Medicaid, are
not counted toward the general resource limit of $2000 for an individual (or $3000 if both
spouses of a couple are in a nursing facility.
For example, for many applicants for long-term
care Medicaid, the homestead can be excluded from countable resources.
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64.
The Texas long-term care Medicaid rule on the exclusion of the homestead. The
Texas long-term care Medicaid program rule on the exclusion of the homestead is at
1 TAC Section 358.348.
An individual's equity in the homestead, up to $536,000 is not
counted, as long as that individual (or the individual's guardian, attorney-in-fact, etc.) signs a
statement that such individual intends to return to the home. This is done on a Form 1245 (as of
2013).
This
form
(and
the
instructions
for
it)
can
be
accessed
at
http://www.dads.state.tx.us/forms/H1245/. Intent to return to the homestead is not necessary if
the community spouse or a dependent is residing in the home. The $536,000 exclusion in 2013
is an increase from 2012 (when the exclusion had been $525,000). The home equity exclusion is
increased from year-to-year, based on the percentage increase in the consumer price index for all
urban consumers.
65.
The cap on homestead equity under the Deficit Reduction Act of 2005. The Deficit
Reduction Act of 2005 caps protected equity in a homestead at $536,000 in the case of a person
whose home is not the residence of the person’s spouse, child under the age of twenty-one (21),
or blind or disabled child.
(As noted above, the $536,000 figure is an increase from 2012.)
States can opt to expand the cap to $802,000. Texas has not, as of January of 2013, through its
legislature, expanded the cap. As noted, the cap does not apply if the home is occupied by the
spouse of the applicant, or a child of the applicant if the child is under age 21 or is blind or meets
the Social Security definition of permanently and totally disabled. The cap can be waived “in the
case of a demonstrated hardship.” These exemptions from the cap are provided for at 42 U.S.C.
§1396p(f).
Question.
True or False.
In the case of an unmarried individual, there is a cap on the equity value of the homestead
that can be excluded from countable resources under long-term care Medicaid but the cap
can be waived “in the case of a demonstrated hardship.”
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____ True
66.
____ False
How does the Medicaid program define the homestead? The home is a structure in
which the client, or his or her spouse, lives (including mobile homes, houseboats and motor
homes), other buildings and all adjacent land. All land adjacent to the home includes any land
separated by roads, rivers or streams. Land is adjacent as long as it is not separated by
intervening property owned by another individual. This means all the land associated with the
home, whether or not there is a business operated in connection with the home or property.
Adjacent property is a part of the home even if there is more than one document of ownership
(i.e., separate deeds), the home was obtained at a different time from the rest of the land, or the
holdings are assessed and taxed separately. Home property may be jointly owned or ownership
may be in the form of a life estate or interest in an intestate estate. Only one principal place of
residence can be excluded from being countable. Sometimes clients reduce countable resources
by either reducing or paying off the mortgage, making repairs or improvements to the home, and
sometimes by even purchasing a more expensive home. As of 2013, it is permissible to sell
countable resources, and use the cash received to buy a more valuable homestead or pay off the
mortgage on the current homestead or make improvements to the current homestead and thus
“shelter” resources that would that otherwise be countable. As long as the $536,000 cap in
homestead equity is not exceeded and as long the homestead can remain occupied by a spouse or
other person who qualifies to keep it non-counted, or as long as the signed Form 1245 (see
below) is on file, this can be an effective way of “sheltering” value.
67.
The role of HHSC Form 1245 in keeping the homestead non-counted.
HHSC Form
1245 can protect the homestead of a nursing facility Medicaid recipient who is not married and
does not have a dependent, but who intends to return home. If a person lives in a long-term
facility, and has a spouse or a dependent living at the principal place of residence of the
institutionalized person, that home is not considered an available resource (even if Form 1245 is
not signed). A dependent relative is a relative who was living in the client's home before the
client's absence and who is unable to support himself or herself outside of the client's home due
to medical, social, or other reasons. "Relative" includes children and grandchildren, parents and
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grandparents, stepchildren and stepparents, siblings, half-siblings, and stepsiblings, nieces and
nephews, and in-laws. Medicaid for the Elderly and People with Disabilities Handbook Section
F-3112.
This section can be accessed at http://www.dads.state.tx.us/handbooks/mepd/F/F-
3000.htm#secF-3112.
Even married applicants or applicants with dependents can sign Form
1245 – it does no harm.
68.
Exemption of home placed for sale.
The value of the home property, including life
estates and remainder interests in the property, is exempt if the client places the property for sale.
The exemption continues until the proceeds are available to the client. A home outside of Texas,
which is normally a countable resource (unless the community spouse lives outside of Texas and
the property is transferred to the community spouse prior to the first annual review), becomes
exempt if it is placed for sale.
69.
The rule on real property placed for sale.
The state rule on real property placed for
sale is 1 TAC §358.349. It states that excess real property continues to be excluded so long as
the individual continues to make reasonable efforts to sell it, and including the property as a
countable resource would result in a determination of excess resources. The state rule is said to
be based on 20 CFR 416.1245, which is a rule under the federal SSI program. That federal rule
sets a 9-month time-frame, within which excess property is to be disposed of, in order for it to
not count as a resource under the SSI program.
70.
The state handbook provision on the home placed for sale.
The Medicaid for the
Elderly and People with Disabilities Handbook deals with the home placed for sale at Section F3130. That section states that the value of real property, including a home, is exempt from
counting as a resource, if the person places it for sale. The exemption continues until the
proceeds of the sale are available from the person. The handbook section does not have any time
limit on how long the home remains exempt if placed on the market for sale. The handbook
section – F-3130 – does state that if the home is sold, the proceeds only remain exempt for three
months. In other words, a replacement homestead – which would be exempt, of course, if there
is intent to return to it – would have to be purchased with the proceeds from the former
homestead, within three months, or else the proceeds from the sale of the former homestead lose
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their exemption from counting as resources.
71.
Problems with unoccupied homestead. Rental occupancy. If a client is unmarried and
goes to a nursing facility this results in several problems - payment of taxes, insurance and
maintaining the property. Furthermore, if the property is leased in the traditional manner, then
the income must be applied to the nursing facility and if the lease was long-term it would be
contrary to the intent to return home and could create an income cap problem creating the need
for a Qualified Income Trust. However, the state does permit short term leases that have
payments directly to the taxing authorities, insurance companies, etc. (but not to pay mortgage
payments) so that there is no income in the name of the client. Additional planning can be done
in this regard. For example, a lease can be prepared where the tenant is responsible solely for
taxes, insurance, utilities and maintenance of the property. However, if the client’s home is
rented and the lease agreement specifies that the tenant pays the client’s mortgage company in
lieu of rent, these payments are countable.
72.
Household goods and personal effects are another category of resources which do
not count. As of March 9, 2005, the Social Security Administration removed the former $2000
limit on certain "household goods" and "personal effects". Therefore, the SSI rules (which affect
community-based programs linked to SSI as well as long-term care Medicaid) now place no limit
on the value of household goods that are found in or near the home and used on a regular basis,
or needed for maintenance, use and occupancy of the home. They do not count personal effects
as resources if they are "ordinarily worn or carried by the individual" or "articles otherwise
having an intimate relation to the individual." 42 CF.R Section 416.1216.
The Medicaid
program has traditionally not even "evaluated" the value of individual household goods unless
the value of the item exceeds $500. The current handbook provision on household goods and
personal effects is Section F-4222 of the Medicaid for the Elderly and People with Disabilities
Handbook. This Section can be accessed at http://www.dads.state.tx.us/handbooks/mepd/F/F4000.htm#secF-4222.
73.
Personal effects can be bought before entry into a nursing facility. For an individual
who will be receiving “facility-based” long-term care or who will be receiving CBA services in
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an assisted living facility, it should be kept in mind that the facility very likely will not supply inroom electronic devices (such as a TV, stereo, or computer). These are personal effects that the
Medicaid long-term care recipient can have, and which will not count as resources. Nice
clothing can maintain the dignity of a person receiving Medicaid long-term care, and as long as it
is ordinarily worn by the individual, it will not count as a resource.
74.
The vehicle exclusion.
One vehicle regardless of value is excluded if used to transport
the individual or a member of the individual's household. Furthermore, an additional vehicle for
work transportation (if the household is made up of more than one individual and the additional
member of the household requires an additional vehicle for transportation to and from work) is
excluded. Also, an additional specially equipped vehicle (if the household is made up of more
than one individual and the additional member of the household requires handicap accessible
transportation) is excluded. This rule became effective March 9, 2005 and can be found at 42
CFR Section 416.1218 . The handbook provision regarding the vehicle exclusion is Section F4221 of the Medicaid for the Elderly and People with Disabilities Handbook. This section can
be accessed at http://www.dads.state.tx.us/handbooks/mepd/F/F-4000.htm#secF-4221.
The
exclusion of the vehicle offers another possibility for taking resources that count and selling
them and using the cash to buy a newer or more reliable vehicle.
75.
Certain resources essential to self-support can be excluded (but the income may be
counted). This is treated in detail in the Medicaid for the Elderly and People with Disabilities
Handbook
at
Section
F-4300.
This
section
can
be
accessed
at
http://www.dads.state.tx.us/handbooks/mepd/F/F-4000.htm#secF-4300. Business property used
in the trade or business of the client is excluded from resources regardless of value or rate of
return (but, of course, the income counts). Excluded business property is tangible business assets
including but not limited to land and buildings, equipment and supplies, inventory, livestock,
motor vehicles, and all liquid assets needed for the business. Furthermore, personal property used
in the client’s trade or business is also excluded from resources, such as tools, safety equipment,
and uniforms. To be considered as an excluded resource, business property must be in current
use in the client’s trade, business or employment. If the property is not in current use, the
Medicaid program excludes the property only if it has been previously used by the client, and if
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it is reasonable to expect that it will be used again. Non-business property essential to selfsupport is excluded up to $6,000 in equity value, if it produces a return of at least 6% of the
equity value. Any excess equity value over $6,000 counts toward the resource limit. If the nonbusiness property produces a return of less than 6% of the equity value, the total equity value is a
countable resource. Thus, much more can be excluded if the property is business property as
opposed to non-business income property. If it is business property it must be shown that the
owner “materially participates” in the business. Tax returns should be reviewed to determine if
the property is business property or rental property.
76.
Life insurance to a very modest extent can be excluded, but term life insurance is
totally excluded. Term life insurance is excluded regardless of the amount of the death benefit
since it has no cash surrender value. Term life insurance is life insurance for which a periodic
premium is paid (such as a monthly, semi-annual, or annual premium). Term life insurance only
pays benefits on the death of the insured during the term for which the premium was paid. That
death benefit is the value of term life insurance; term life insurance cannot be borrowed against
or cashed out. However, life insurance that has a cash surrender value, such as whole life or
universal life, is counted as a resource if the total face value of the policies owned by the client
or his or her spouse is more than $1,500. Otherwise, the cash value would be excluded.
Therefore, if the cash value of insurance could be converted to term, the countable value can be
eliminated. If the face value of the life insurance is greater than $1,500 the policy will need to be
cashed to spend down the proceeds or convert the proceeds into excluded resources (or a loan
can be taken on the cash value to spend it down or convert the loan proceeds into excluded
resources). Life insurance (and its exclusion up to $1500) is treated in the Medicaid for the
Elderly and People with Disabilities Handbook at Section F-4223. This section can be accessed
at http://www.dads.state.tx.us/handbooks/mepd/F/F-4000.htm#secF-4223.
77.
Separately identifiable burial funds can be excluded to the extent that the exclusion
of life insurance with cash value has not equaled $1,500. Separately identified burial funds
(including revocable unperformed burial contracts, and revocable burial trusts) are excluded to
the extent that the $1,500 life insurance exclusion has not been fully used. These burial funds are
treated in the Medicaid for the Elderly and People with Disabilities Handbook at Section F-
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4227.
This section can be accessed at http://www.dads.state.tx.us/handbooks/mepd/F/F-
4000.htm#secF-4227. After the funds are designated by the Medicaid long-term care recipient as
being burial funds, interest or earnings on them will also be excluded if the burial funds
themselves are excluded. The designation can be as simple as stating that a particular bank
account is solely for burial purposes. The designation can be made retroactively.
78.
Burial insurance in the nature of term insurance is excluded. Burial insurance that is
in the nature of term insurance (having no cash or loan value) is excluded. This exclusion is
provided for in the Medicaid for the Elderly and People with Disabilities Handbook Section F4226.
This section can be accessed at http://www.dads.state.tx.us/handbooks/mepd/F/F-
4000.htm#secF-4226.
79.
Burial spaces (for individual, spouse, and members of immediate family), caskets,
urns, vaults, headstones, markers and plaques, are excluded. A burial space or agreement
that represents the purchase of a burial space held for the burial of the client, his or her spouse, or
any other members of the client’s “immediate family” is excluded, regardless of value. “Burial
space” includes a burial plot, casket, grave site, crypt, mausoleum, urn, niche, or other
repository, plus reasonable improvements or additions, including headstones, markers, plaques,
vaults, caskets, arrangements for opening and closing of the grave site, and contracts for the
maintenance of the grave site. “Immediate family” includes the client’s spouse, minor and adult
children, step-children, adopted children, brothers, sisters, parents, adoptive parents and the
spouses of those individuals. It does not include grandchildren or the immediate family of the
client’s spouse. If the relationship is by marriage only, the marriage must be in effect for the
exclusion to apply. If any of the listed items is not fully paid for, the amounts already paid are
considered merely burial funds, which are subject to the above described $1,500 limit. This
exclusion is provided for in the Medicaid for the Elderly and People with Disabilities Handbook
Section
F-4214.
This
section
can
be
accessed
at
http://www.dads.state.tx.us/handbooks/mepd/F/F-4000.htm#secF-4214.
80.
Prepaid burial contracts may be excludable. The treatment of prepaid burial contracts
or trusts is in the Medicaid for the Elderly and People with Disabilities Handbook at Section F-
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4160.
This section can be accessed at http://www.dads.state.tx.us/handbooks/mepd/F/F-
4000.htm#secF-4160. An irrevocable, pre-paid burial contract is excluded regardless of value.
Older pre-paid burial contracts were required to be revocable. The client may want to consider
changing the contract into being irrevocable; otherwise 90% of its value would count towards the
$1,500.00 burial fund. Since these services will ultimately have to be purchased by someone and
since it is often less expensive to buy the same prior to need, it is often used as a technique to
convert countable resources into being excluded resources. Funeral homes often provide a
waiver of right to cancel form so that the contract will not count as a resource.
81.
Livestock may be excludable.
Livestock that is maintained as part of a trade or
business or exclusively for the home consumption is not counted; otherwise, the livestock's
current market value is a countable resource. This is an opportunity for a ranch family. If the
ranch house and all attached land are excluded as the homestead, one strategy for “sheltering”
cash that would count as a resource is to purchase livestock if livestock is the business of the
ranch. Since livestock do not produce income unless sold, and the sale can usually be delayed
until the nursing facility resident has died, there is no violation of the income cap. The livestock
exclusion is in the Medicaid for the Elderly and People with Disabilities Handbook at Section F4250.
This section can be accessed at http://www.dads.state.tx.us/handbooks/mepd/F/F-
4000.htm#secF-4250.
82.
An annuity may be excludable. Post-DRA policy regarding annuities. Note: In Texas,
only an agent with a general life, accident, and health license from the Texas Department of
Insurance can sell annuities. Texas Insurance Code Section 4054.051 so requires.
The
information provided here is for background use only, regarding how annuities are treated for
eligibility for long-term care Medicaid. Individuals wanting advice regarding annuities should
be referred to their insurance agent. The Medicaid for the Elderly and People with Disabilities
Handbook has a 12-page part that deals with annuities. This part of the Handbook is F-7000. It
is
at
the
link
http://www.dads.state.tx.us/handbooks/mepd/F/F-7000.htm#secF-7000.
Employment-related annuities are not countable resources. (Income from such annuities is
counted.) The complexity regarding annuities concerns non-employment-related annuities. For
a nonemployment-related annuity, purchased after the effective date of the DRA (February 8,
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2006) to be excluded, the annuity must have the following features:
(1) The annuity must be irrevocable;
(2) The annuity must be nonassignable;
(3) The annuity must provide for payments in equal amounts during the term of
the annuity, with no deferral and no balloon payments made;
(4) The annuity must be guaranteed to return within the person's life expectancy at
least the person's principal investment (which means it is actuarially sound, as
determined in accordance with actuarial publications of the Office of the Chief
Actuary of the United States Department of Health and Human Services); and
(5) Except for annuities in the name of the community spouse, the annuity must
name the state of Texas as the remainder beneficiary in the first position for at
least the total amount of Medicaid paid on behalf of a person in an
institutionalized setting.
If a person in an institutionalized (facility-based long-term care) setting is married and the
spousal impoverishment provisions of 1 TAC § 358.413 (relating to Spousal Impoverishment
Treatment of Income and Resources) apply, a nonemployment-related annuity in the name of the
institutionalized spouse is not a countable resource if the annuity meets the requirements of
subsection (1) - (4) above and the annuity:
(1) names the state of Texas as the remainder beneficiary in the first position for
at least the total amount of Medicaid paid on behalf of the person in an
institutional setting; or
(2) names the state of Texas in the second position if the community spouse or a
minor or disabled child is named in the first position.
83.
count.
If the annuity can be revoked by the applicant for long-term care Medicaid, it will
A nonemployment-related annuity that is revocable is a countable resource. For a
revocable nonemployment-related annuity, the Medicaid program:
(1) uses fair market value to determine the value of the resource; and
(2) applies transfer-of-assets rules based on the amount already paid out of
the annuity.
84.
Although a nonemployment-related annuity that is irrevocable may not be counted
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as a resource, transfer-of-assets rule may cause its purchase to be subject to penalty. A
nonemployment-related annuity that is irrevocable is not a countable resource. Even so, for an
irrevocable nonemployment-related annuity, the Medicaid program:
(1) applies usual transfer-of-assets provisions (to determine if the value of
annuity is equal to or greater than the money used to buy it, such that there
is not a transfer of resources penalty, and
(2) for a transaction involving an existing annuity, applies transfer-ofassets provisions to the remaining payout value at the time of the
transaction (such that if the future payments are given away there may be
a transfer of resources penalty).
85.
Income from an annuity will count as unearned income. Income from an annuity that
is not a countable resource is treated in accordance with 20 CFR §§ 416.1120 - 416.1124
(meaning the income counts as unearned income).
86.
There is an administrative rule that deals with annuities. The administrative rule
regarding annuities is at 1 TAC Section 358.335.
Benefits Counselors should avoid leading
clients to believe that the Area Agency on Aging can provide advice regarding annuities.
Individuals wanting advice regarding annuities should be referred to their insurance agent or
broker.
87.
Availability of Resources. The Medicaid rules presume that resources in which the
person has a legal interest are available to pay for long-term care, with some exceptions. This is
dealt with at Section F-1220 of the Medicaid for the Elderly and People with Disabilities
Handbook. That section can be accessed at http://www.dads.state.tx.us/handbooks/mepd/F/F1000.htm#secF-1220.
88.
Resources owned by others. Resources owned with others are subject to 1 TAC §
358.325, but that section merely incorporates 20 CFR Section 416.1201(a)(1).
That CFR
section states “If the individual has the right, authority or power to liquidate the property or his
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or her share of the property, it is considered a resource.” If a property right cannot be liquidated,
the property will not be considered a resource of the individual (or spouse).
89.
Valuing Resources. Resources are “valued” as of 12:01 a.m. on the first day of the
month of institutionalization. 1 TAC § 358.321. The value of a non-cash resource is equity
value (fair market value less any encumbrance). For real property, the fair market value is cash
value from the property statement or a lower amount set by appraisal. The fair market value of a
car is established by “blue book” or similar reference or reliable sources.
90.
Asset Transfers, Penalties, Spend-Down. Spending down to the resource limit can be a
way of achieving resource eligibility for long term-care Medicaid. However, transfers that are
made within the “look-back period” before the application for long-term care Medicaid can lead
to a penalty. The penalty is a period of ineligibility. The penalty period does not begin to run
until the individual meets all other requirements for long-term care Medicaid. For individuals
applying for facility-based long-term care Medicaid, that means (1) having medical necessity for
long-term care, (2) having countable income low enough for long-term care Medicaid, (3) having
countable resources low enough for long-term care Medicaid, and (4) having been in a long-term
care facility for 30 days.
91.
The Handbook and TAC sections that treat transfers of assets. An entire chapter of
the Medicaid for the Elderly and People with Disabilities Handbook, Chapter I, deals with
transfers of assets. Chapter I can be accessed at http://www.dads.state.tx.us/handbooks/mepd/I/I1000.htm#secI 1000.
That chapter of the Handbook is consistent with a detailed administrative
rule on transfer of assets, 1 TAC Section 358.401..
92.
Some things that excess resources can be spent on, without causing a penalty period.
Excess resources can be used to buy those things that do not count as resources. As long as
dollar-for-dollar value is received, this is a way of converting resources (such as money in bank
accounts) that are a barrier to eligibility, into resources that are not a barrier (such as an
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improved homestead, up to the $536,000 equity cap, or a better automobile).
Because the
Vendor Payment, discussed above, does not include clothing or personal comfort items such as a
TV, radio, music recordings, or other items of personal entertainment, excess resources can be
used to buy these for the applicant, so she or he will have them after qualifying for long-term
care Medicaid.
93.
Excess resources can be used to pay for care.
There is no requirement that the
excess resources be spent for care or related needs. However, to avoid a transfer of resources
penalty, the applicant should be sure to receive equivalent value for the money spent. One way
that “spend-down” may occur is by the applicant paying for care until the resources are low
enough that there will be eligibility for long-term care Medicaid. For individuals whose longterm care will be in a facility, the transition from home to the facility can be taxing in terms of
the flexibility it requires. Excess resources can be used to pay for single-occupancy care until
they are spent down and eligibility for Medicaid arrives. Medicaid will not pay for singleoccupancy care, unless it is medically required (or unless single occupancy space is all the
nursing facility has at the time). Thousands of individuals receiving Medicaid long-term care are
in double-occupancy rooms. Excess resources that are used to purchase care in a nursing facility
on a single-occupancy basis will not be considered a transfer of resources, since dollar-for-dollar
value is being obtained. This can be a way of transitioning into the double-occupancy rooms that
are typical settings for Medicaid long-term care. By the time the individual’s resources are thus
“spent down” the individual may have become acclimated to the nursing facility, may have
become acquainted with a compatible individual, and will find the transition to Medicaid more
palatable than just going straight from their home into a double-occupancy setting.
94.
Further points regarding spend-down options.
Spend-Down Options Include:
a.
Paying for care and related costs, such as a wheelchair or adaptive equipment.
(Remember that under the vendor payment rule at 40 TAC §19.2601(b)(7)(D), If a
recipient owns a piece of equipment that is medically necessary, the facility must maintain
and repair the equipment.)
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b.
Conversion of resources from nonexempt to exempt by purchasing or improving
exempt resources. This might include paying off a mortgage on a homestead, or making
home repairs. As noted above, it can include buying personal property (TV, clothing,
books, etc.). It can also include purchasing burial plots, burial insurance, and creating a
burial fund of $1,500.
c.
Paying off debts or accounts and prepaying future expenses.
d.
Transferring assets and waiting out a penalty period of ineligibility (discussed below).
e.
Making transfers that meet with the exceptions to the transfer penalty rules (i.e., such
as transfer of home to disabled child, transfers of assets to spouse). .
f.
95.
Expansion of the Protected Resource Amount (discussed below).
Common misconceptions regarding preserving family assets when qualifying for
Medicaid. There are several misconceptions regarding preserving family assets when qualifying
for long-term care Medicaid.
a. It is a misconception to think, “One can make annual exclusion gifts (presently
$14,000 per year per person under the Internal Revenue Code) and gifts to a charity or
non-cash gifts and the same will have no impact on Medicaid eligibility.” In fact, the
penalty for giving away property to qualify for Medicaid is not avoided merely because
the amount of the gift is at or below the annual gift tax exclusion amount.
b. It is a misconception to think, “You must pay all of your assets to the nursing facility
prior to Medicaid eligibility.” If countable assets (such as cash, stocks, bonds) are used
to purchase assets that do not count, that can be one way of lowering the eligibility
barrier of having too many assets.
c. It is a misconception to think, “The state will take my home after my death no matter
what.” (There are several exceptions to Medicaid estate recovery.)
d.
It is a misconception to think, “One can place all of their assets into a Miller Trust to
obtain Medicaid eligibility.” (The Miller trust – also called a Qualified Income Trust –
can only be used to make income not a barrier; this type of trust cannot be used to deal
with disqualifying resources.)
e.
It is a misconception to think, “A married couple should consider divorce to obtain
Medicaid for one of the spouses and only the poorest of people can obtain Medicaid.”
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(The provisions to prevent spousal impoverishment make this unnecessary).
f. It is a misconception to think, “If a Medicaid recipient inherits assets (whether it be
from a spouse or another) or gets an award from a lawsuit (i.e., personal injury) this
should have no impact on Medicaid eligibility.” (In fact, it may result in a loss of
eligibility, and a lawyer familiar with the consequences of the inheritance or the award on
eligibility for long-term care Medicaid should be consulted.)
96.
Implications of gifts during the look back period.
As of February 8, 2006 (the
date of the Deficit Reduction Act – the DRA’s signing), the look-back period is 60 months on
gifts or uncompensated transfers by the applicant. Uncompensated transfers made within 5 years
from the month that one applies for Medicaid could result in a transfer penalty and in a denial of
Medicaid eligibility.
There is no cap on the length of the penalty period. The “daily transfer
penalty” factor in Texas is $142.92 (the presumed average cost of one day’s care at a private pay
rate in a nursing facility). Section 6011 (d) of the DRA requires states to allow for hardship
waivers to avoid the penalty endangering the applicant’s health or life or depriving the applicant
of food, clothing, shelter, or other necessities of life. Note: The 60-month look-back period
required under the Deficit Reduction Act of 2005 was phased in. For transfer transactions
occurring on or before February 28, 2009, the 36-month look-back period was used. Starting in
March of 2009, each new calendar month added one month to the look-back period.
By
February of 2011, all transfer transactions became subject to the 60-month look-back period.
Medicaid for the Elderly and People with Disabilities Handbook, Section I-2110. That section
can
be
accessed
at
http://www.dads.state.tx.us/handbooks/mepd/I/I-2000.htm#secI-2110.
Individuals who contemplate making transfers of assets to impoverish themselves to qualify for
long-term care Medicaid under circumstances in which the transfer(s) of assets may lead to a
period of ineligibility should consult with a licensed attorney regarding such transfers and the
consequences of such transfers. In addition to having consequences for Medicaid eligibility,
such transfers may also have consequences under the federal gift tax law.
97.
The possible usefulness of an annuity in some transfer-of-resources cases. A possible
planning strategy is the use of a short-term immediate annuity in lieu of retaining a portion of the
assets for spend-down during the penalty period. In this way, a person can become "otherwise
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eligible" by keeping less than the resource allowance and still maintain a source of funding
payments to be made to the nursing facility during the running of the penalty period. For
example, an individual with $120,000 in resources transfers $60,000 to children and purchases
an immediate annuity with the remaining $60,000 that will pay $5000 per month for a period of
12 months (shorter than Medicaid applicant's life expectancy). The following day the individual
enters a nursing facility, which (for this particular individual) costs $5000 per month. The
penalty period, which commences on upon the filing of the application for benefits, begins to
run. The individual pays for the nursing facility through the 12 month penalty by using monthly
annuity payments. At the end of the 12 month penalty period, the individual reapplies with assets
below the resource allowance and the 12 month penalty period having expired. Although these
steps are currently permitted by law, only a Texas-licensed insurance agent or broker can sell an
annuity.
Benefits Counselors should refer individuals interested in knowing about annuities, to
a Texas-licensed insurance agent or broker, in addition to a referral to a lawyer due to potential
gift tax consequences.
98.
The Long-Term Care Partnership. By virtue of Senate Bill 22 from the 80th Texas
Legislature, Texas in 2009 established a “Long-Term Care Partnership.” This program is meant
to give an incentive to higher income persons to purchase long-term care insurance. Benefits
paid under long-term care insurance policies that comply with the requirements of the Deficit
Reduction Act of 2005 (which authorized the Long-Term Care Partnership) will off-set amounts
otherwise due under Medicaid Estate Recovery. Because higher-income persons who purchase
qualifying long-term care insurance policies under the Long-Term Care Partnership will, in
effect, be arranging their own coverage for long-term care, they may have less incentive to give
property away to qualify for Medicaid. Paragraphs 200 – 203 discuss the Long-Term Care
Partnership in greater detail.
Question.
In connection with Medicaid, what is the Long-Term Care Partnership meant to do?
A.
Give an incentive to recipients of long-term care Medicaid to establish small
businesses.
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B.
Give an incentive to recipients of long-term care Medicaid to buy shares in family
limited partnerships.
C.
Give an incentive to higher income persons to consult with law firm partners
instead of law firm associates.
D.
Give an incentive to higher income persons to purchase long-term care insurance.
Answer:___________________________
99.
Transfer of assets: strategies based on exceptions to the transfer penalty - protecting
assets for a spouse, a minor child, or a disabled child. Note: Before transferring an asset so
that the value of the asset goes from being countable to being non-countable, the advice of an
attorney should be sought.
The federal Medicaid statute at 42 U.S.C. §1396p has certain
provisions that permit certain transfers to specified relatives not subject to penalty.
100.
The transfer exception provided for by 42 U.S.C. §1396p(c)(2)(A). There is not a
penalty for the gift of the home to a spouse, a child under the age of 21, a blind or disabled child
(as defined by the SSI standard at 42 U.S.C. §1382c), a sibling who has an equity interest in the
house and who has resided there at least one year immediately before the date of
institutionalization, or a son or daughter who resided in the client's home for a period of at least
two years before the date of institutionalization and who provided care to the client which
permitted the client to reside at home rather than an institution or facility.
Transfers of real
property from one person to another require a deed. Only an attorney can prepare a deed for an
individual.
101.
The transfer exception provided for by 42 U.S.C. §1396p(c)(2)(B)(i) protects from
penalty any gifts (of any assets – not just the home) to the client's spouse or to another for the
sole benefit of the client's spouse.
If such a transfer relates to real property, it will require a
deed. Only an attorney can prepare a deed for an individual.
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102.
The transfer exception provided for by 42 U.S.C. §1396p(c)(2)(B)(ii) protects from
penalty any gifts (of any assets – not just the home) from the individual’s spouse to another for
the sole benefit of the spouse. If such a transfer relates to real property, it will require a deed.
Only an attorney can prepare a deed for an individual.
103.
The transfer exception provided for by 42 U.S.C. §1396p(c)(2)(B)(iii) protects from
penalty any gifts (of any assets – not just the home) to the client’s blind or disabled child (as
defined by the SSI standard, at 42 U.S.C. §1382c). This section also protects from penalty such
gifts if made to a trust for the client’s blind or disabled child. If such a transfer relates to real
property, it will require a deed. Only an attorney can prepare a deed for an individual.
104.
The transfer exception provided for by 42 U.S.C. §1396p(c)(2)(B)(iv) protects from
penalty any gifts (of any assets – not just the home) to a trust established solely for the benefit of
an individual under 65 who is disabled (as defined by the SSI statute at 42 U.S.C. §1382c(a)(3)).
If such a transfer relates to real property, it will require a deed. Only an attorney can prepare a
deed for an individual.
105.
The transfer exception provided for by 42 U.S.C. §1396p(c)(2)(C) is sometimes referred
to as “Transfers made for a purpose other than to qualify for Medicaid.” This must be proved at
a fair hearing to avoid the transfer penalty. As a result of the DRA, it is anticipated that there will
more of these hearings than there have been in the past. The relevant part of this section of the
U.S. Code states, “An individual shall not be ineligible for medical assistance … to the extent
that … a satisfactory showing is made to the State (in accordance with regulations promulgated
by the Secretary) that (i) the individual intended to dispose of the assets either at fair market
value, or for other valuable consideration, (ii) the assets were transferred exclusively for a
purpose other than to qualify for medical assistance, or (iii) all assets transferred for less than fair
market value have been returned to the individual…” (The “Secretary” is a reference to the U.S.
Department of Health and Human Services, of which CMS is a part.)
106.
The transfer exception provided for by 42 U.S.C. §1396p(c)(2)(D).
If the denial of
eligibility would work an undue hardship, the penalty period can be avoided or shortened. This
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requires that the State Medicaid program determine, under procedures established by the State,
that the denial of eligibility would work an undue hardship. The Medicaid for the Elderly and
People with Disabilities Handbook treats this undue hardship exception at Section I-4300, thusly:
a. A person may claim undue hardship when imposition of a transfer penalty would result
in discharge to the community and/or inability to obtain necessary medical services so
that the person's life is endangered. Undue hardship also exists when imposition of a
transfer penalty would deprive the person of food, clothing, shelter or other necessities of
life. Undue hardship relates to hardship to the person, not the relatives or responsible
parties of the person. Undue hardship does not exist when imposition of the transfer
penalty merely causes the person inconvenience or when imposition might restrict
lifestyle, but would not cause risk of serious deprivation.
b. Undue hardship may exist when any one of the following conditions exists: location of
the receiver of the asset is unknown to the person, other family members or other
interested parties, and the person has no place to return in the community and/or receive
the care required to meet the person's needs; person can show that physical harm may
come as a result of pursuing the return of the asset, and the person has no place to return
in the community and/or receive the care required to meet the person's needs; or receiver
of the asset is unwilling to cooperate (such as an Adult Protective Services exploitation or
potential fraud case) with the person and HHSC, and the person has no place to return in
the community and/or receive the care required to meet the person's needs.
c.
If a person claims undue hardship, HHSC must make a decision on the situation as
soon as possible, but within 30 days of receipt of the request for a waiver of the penalty.
The person has the right to appeal an adverse decision on undue hardship.
d. HHSC must permit the institution in which the individual is residing to file for an
undue hardship waiver on behalf of an individual who would be subject to a penalty
period resulting from a transfer of assets. Before filing for an undue hardship waiver, the
institution must have the consent of the individual or the individual's authorized
representative. In addition to requesting an undue hardship waiver, the institution may
present information on behalf of the individual and may, with the specific written consent
of the individual or the individual's authorized representative, represent the individual in
an appeal of an undue hardship denial decision.
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e. At a minimum, a written statement explaining the person's reasons for the transfer,
who received the asset, how that person can be located, why the person's needs cannot be
met and why there is undue hardship for the person must be included in the
documentation. The supervisor must sign off on all undue hardship cases.
107. Special income and resource protections for spouses. As noted above, there are several
resources that simply are exempted from counting in determining financial eligibility for longterm care Medicaid. For married persons, there are also some provisions that “protect” some
income for the spouse at home, and some resources. Spousal impoverishment rules constitute
Chapter I of the Medicaid for the Elderly and People with Disabilities Handbook. This chapter
can be accessed at http://www.dads.state.tx.us/handbooks/mepd/J/index.htm. The administrative
rules on spousal protections are at 1 TAC Sections 358.411 through 358.423.
108.
The origin of the federal provisions protecting community spouses against
impoverishment due to long-term care institutionalization of the other spouse. Originally,
Medicaid law required that all property standing in the name of either spouse regardless of
community property status must be counted for eligibility purposes. Since the Medicaid
countable resource limit was $2000 for an individual and $3000 for a couple, this resulted in
most couples being required to spend almost all of their accumulated savings on nursing facility
care in order for the institutionalized spouse to become eligible for long-term care Medicaid. As
a result, Congress passed the Medicare Catastrophic Coverage Act (which became effective
September 30, 1989) which prevented the spouse who stays in the community (the “community
spouse”) from being impoverished as a result of their spouse being institutionalized. Such laws
discouraged “Medicaid divorces” - which were often happening prior to the change in the law.
Congress basically decided that it was against public policy to choose between marriage and
receiving public benefits. Thus, the law provides at least partial protection of the community
spouse from this spend-down requirement, allowing the community spouse to retain a share of
the couple’s countable resources, commonly known as the Community Spouse Resource
Allowance (known in Texas as the “Protected Resource Amount” or the “PRA”) - which could
often be expanded as set forth hereinbelow.
The provisions pertaining to preventing spousal
impoverishment are at 42 U.S.C. §1396r-5 (c) (as to resources) and 42 U.S.C. §1396r-5(d) (as to
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income).
109.
The federal provisions protecting resources for the community spouse.
The federal
Medicaid statute, at 42 U.S.C. §1396r-5(f)(2) establishes a definition for the “community spouse
resource allowance.” After setting aside resources that do not count, the couple’s combined
countable resources (whether owned as separate property, or community property) are added
together. The community spouse resource allowance is one-half of the couple’s combined
countable resources, except there is a “floor” and a “ceiling.” The “floor” and the “ceiling” are
required by 42 U.S.C. §1396r-5(g) to be indexed for inflation. In 2013, the floor is $23,184 and
the ceiling is $115,920.
That means that if one-half of the couple’s combined countable
resources is less than $23,184, the community spouse can have the floor amount. If one-half of
the couple’s combined countable resources is more than $115,920, the community spouse is
limited to this “ceiling” amount, with two exceptions.
110.
The exception to the ceiling on the protected resource amount in order to afford the
community spouse the full protected income amount. The first exception (to the ceiling on
the protected resource amount) is that the protected resource amount can be expanded if
necessary in order to afford the community spouse the full protected income amount. This
exception is provided for at 42 U.S.C. §1396r-5(f)(2)(A)(iii). This will require a “fair hearing,”
as provided for by 42 U.S.C. §1396r-5(e)(2).
111.
The exception to the ceiling on the protected resource amount in order to comply
with a court order for spousal support. The second exception is that the protected resource
amount ceiling does not limit the amount of resources that can be allocated to the community
spouse or a family member, if a court orders amounts of resources transferred pursuant to a
support order. This exception is provided for at 42 U.S.C. §1396r-5(f)(3).
112.
The concept of the resource “snapshot.”
The federal Medicaid law provides for a
resource “snapshot” to be taken at the request of either spouse. The snapshot is provided for at
42 U.S.C. §1396r-5(c)(1)(B).
This section provides, “Assessment. At the request of an
institutionalized spouse or community spouse, at the beginning of the first continuous period of
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institutionalization (beginning on or after September 30, 1989) of the institutionalized spouse
and upon the receipt of relevant documentation of resources, the State shall promptly assess and
document the total value [of the couple’s combined countable resources] and shall provide a
copy of such assessment and documentation to each spouse and shall retain a copy of the
assessment for use under this section. If the request is not part of an application for medical
assistance [long-term care Medicaid] the State may, at its option as a condition of providing the
assessment, require payment of a fee not exceeding the reasonable expenses of providing and
documenting the assessment. At the time of providing the copy of the assessment, the State shall
include a notice indicating that the spouse will have a right to a fair hearing under subsection
(e)(2) [42 U.S.C. §1396r-5(e)(2)].” The assessment can be requested at the time of the first
thirty-day period of institutionalization, which can be a continuous period of hospitalization plus
nursing facility or rehabilitation facility stay. Even if the assessment was done ten years before
long-term care Medicaid is applied for, the assessment can be the basis for determining the
resources which can be protected for the spouse.
113.
Transfers of resources from the institutionalized spouse to the community spouse, in
order to achieve the protected resource amount, are not subject to penalty.
The federal
Medicaid law, at 42 U.S.C. §1396r-5(f) forbids penalizing transfers of resources from the
institutionalized spouse to the community spouse, to the extent necessary to afford the
community spouse the protected resource amount. The statute states that the transfer shall be
made as soon as practicable after the date on which the institutionalized spouse is determined
eligible for long-term care Medicaid.
114.
Separate treatment of resources after eligibility for benefits established.
Once
eligibility for long-term care Medicaid is established, no resources of the community spouse
shall be deemed available to the institutionalized spouse, “during the continuous period in which
an institutionalized spouse is in an institution and after the month in which the institutionalized
spouse is determined to be eligible for” long-term care Medicaid. This is provided for at 42
U.S.C. §1396r-5(c)(4).
115.
The institutionalized spouse must live in a Texas nursing facility, but the community
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spouse does not have to live in Texas. Spousal impoverishment provisions apply as long as the
institutionalized spouse is a Texas resident and is living in a Texas facility, even if the
community spouse lives in another state or outside the United States. If the spouse (who is not
the applicant) lives in a nursing facility or a medical care facility, then such spouse will not be
considered to be living in the community. Thus, such spouse would not be considered a
community spouse and the spousal impoverishment rules would be inapplicable. A spouse can be
considered a community spouse even if such spouse lives in an assisted living facility or a
personal care home or facility provided that such facility does not provide medical care and
services in the cost of care - which can be determined by reviewing the monthly bill from the
facility. “Medical institutions” include, in addition to nursing facilities, both hospitals and
Intermediate Care Facilities for persons with mental retardation and related conditions, also
known as “group homes”.
116.
Separated and uncooperative spouses. If a community spouse refuses to cooperate in
furnishing information to establish a spousal protected resource amount (PRA) at the beginning
of a continuous period of institutionalization, the Medicaid program does not complete the
assessment and does not take further action. No benefits are authorized so no penalty is imposed.
If an assessment is completed in conjunction with an eligibility determination, and a community
spouse refuses to furnish information to help determine the PRA, the Medicaid program
determines the living arrangement before institutionalization.
117.
A non-cooperative spouse can impede the eligibility for long-term care Medicaid. If
the couple was living in the same household before institutionalization of the Medicaid applicant,
the Medicaid program denies the application based on the couple’s failure to furnish information.
Living in the same household includes temporary separations (such as separations for medical
care, respite, and/or visits).
If the couple was not residing in the same household when a
spouse is institutionalized, the Medicaid program determines the purpose of separation, length
of separation, and resources or income commingled and/or managed jointly by one member of
the couple or a third party. The Medicaid program makes a determination as to whether or not
the separation occurred for the purpose of avoiding the pooling of resources under the Medicaid
rules. The Medicaid program assumes intent to circumvent Medicaid policy if: (1) separation
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occurred after a change in the health of the institutionalized spouse; (2) the community spouse
potentially owns separate resources; or (3) ownership of commingled resources was changed
recently.
The couple has a right to rebut the assumption that the separation occurred to
circumvent Medicaid policy. The rebuttal period is 5 workdays after oral notification and 7
workdays after written notification. If circumstances indicate there was no intent to circumvent
Medicaid policy, the Medicaid program treats the institutionalized spouse as an individual for
consideration of resources, income and applied income.
118.
Further points about the “snapshot,” calculation of the protected resource amount
(PRA) and the transfer of resources to the community spouse.
Unlike the income
requirements whereby Texas follows the name on the check rule and thus only looks at the
income of the institutionalized spouse (except to determine any amounts to be diverted to the
community spouse up to the minimum monthly maintenance needs allowance), the Medicaid
program looks at the resources of both the institutionalized and community spouse in
determining what resources may be kept by the community spouse. All resources of both
spouses are combined even if the community spouse owns separate property. The Protected
Resource Amount for the community spouse is determined, and then, within the first year of
eligibility all countable assets in excess of $2,000.00 must be transferred to the community
spouse, although it is recommended that this be done as soon as possible for several reasons
including: (1) if the PRA is expanded as described hereinbelow and there is a determination of
Medicaid eligibility but the resources of the couple are greater than the PRA, including the PRA
as expanded, on the first day of any month at 12:01 a.m. within the first year prior to the
reassessment, then there could be a loss of Medicaid eligibility; (2) if the community spouse dies
first prior to the transfer of the reassessment, then the institutionalized spouse will likely lose
eligibility since the institutionalized spouse will likely have countable resources greater than
$2000 - not to mention any potential assets inherited if the community spouse has named the
institutionalized spouse as a beneficiary of his or her will, trust, IRA, or life insurance policy.
119.
It may be appropriate to transfer to the community spouse certain resources that do
not count (and that thus were not part of the PRA). In some instances, it may be appropriate
to consider having certain non-countable resources partitioned and transferred to the community
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spouse such as the homestead since if the community spouse died first, then such homestead
could not be sold or mortgaged, until after the death of the institutionalized spouse since it
would then convert the non-countable resource into one that was countable in addition to
possibly subjecting the institutionalized spouse’s interest in the homestead to estate recovery
rules. (Keep in mind that the transfer of the home to the community spouse is not a transfer that
is subject to penalty, since 42 U.S.C. §1396p(c)(2)(A) excepts such a transfer – the home to the
spouse – from penalty.) Only an attorney can handle proceedings for another individual, to
partition real property. Only an attorney can prepare for another individual, a deed to real
property.
120.
Further explanation of the snapshot for the protected resource amount (PRA). As
noted, the Medicaid program can take a “snapshot” of all countable resources of both spouses as
of the first day of the first month in which the first continuous period of institutionalization
(whether it be in a hospital or nursing facility) on or after September 30, 1989 began. The
snapshot is taken as of 12:01 a.m. on that first day. Thus, normally resources are assessed on
two dates, the date of the protected resource allowance “snapshot” and the date on which there is
a test for eligibility. Thus, if the institutionalized spouse entered into a hospital on January 25,
2013 and then was immediately transferred to a nursing facility on February 7, 2013 where such
spouse stayed until at least February 24, 2013, the PRA snapshot date can be January 1, 2013, if
the snapshot is requested by either the institutionalized spouse or the community spouse. It is so
provided, by 42 U.S.C. §1396r-5(c)(1)(B).
121.
Forms used by the Texas Medicaid program in connection with the snapshot for the
protected resource amount (PRA).
The Texas Medicaid program uses form H1274 to advise
the married couple (who requested a resource assessment) of the spousal protected resource
amount. Form H1274 is filled out by the Texas Medicaid program when a resource assessment
(the “snapshot”) has been completed. This form is in the “Forms” area of the Medicaid for the
Elderly and People with Disabilities Handbook, on the website of the Texas Department of
Aging and Disability Services. Form H1274 lists the resources that were considered in the
“snapshot” process and then states, toward the foot of the form, what the protected resource
amount is, according to the Medicaid program. Form H1274 also states the amount of the
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allowance that the spouse in the community can have. This figure will be the current maximum
spousal allowance. Form H1274 is in the appendices to the Medicaid Elderly and People with
Disabilities Handbook.
122.
Notification of right to appeal the protected resource amount (PRA). Form H1274
states on its second page, “The Health and Human Services Commission does not hold hearings
on spousal protected resource amounts until an application for Medicaid has been filed. If you
have filed an application and are dissatisfied with the spousal protected resource amount, or are
being denied Medicaid because of excess resources under spousal impoverishment provisions,
you can appeal either decision. You can also appeal to increase the initial spousal protected
resource amount to produce additional income for the community spouse.” Form H1274 goes on
to say, “To start the appeal process, please sign the “Request to Appeal Caseworker’s Decision”
on the second page of Form H1232, Notification of Ineligibility, and return it to the HHSC staff
person. As an alternative, you may call the HHSC staff person listed on Form H1232 to start the
appeal process.” It should be noted that 42 U.S.C. §1396r-5(e) does not require ineligibility, as a
condition of appealing the protected resource amount. Under 42 U.S.C. §1396r-5(e), “upon a
determination of eligibility for medical assistance of an institutionalized spouse,” there is a right
to request a “fair hearing.”
123.
Right to expanded protected resource amount (PRA). Pursuant to 42 U.S.C. §1396r-
5(e)(2), the PRA can be expanded to afford the community more income for two reasons: Either
if the amount of income that the community spouse would otherwise receive is less than the
customary community spouse monthly maintenance allowance permitted by 42 U.S.C. §1396r5(d)(3), or if “due to exceptional circumstances resulting in significant financial duress,” there is
a need for the community spouse to have more than the customary community spouse monthly
maintenance allowance. The fair hearing provisions of 42 U.S.C. §1396r-5(e)(2) permit a fair
hearing for either of these reasons for expanding the PRA.
124.
Examples of calculation of the protected resource amount.
As required by 42 U.S.C.
§1396r-5(c), the protected resource amount (PRA) (unless expanded) is one-half of the couples’
countable resources but not less than $23,184.00 (the minimum protected resource amount) but
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not more than $115,920.00 in year 2013 (the maximum protected resource amount). A greater
amount can be authorized by the caseworker through expansion or at a fair hearing. Countable
resources are in addition to the value of exempt resources such as the homestead, car, pre-need
funeral, personal property items, and other resources which do not count.
The minimum and
maximum protected resource amount changes (it usually increases) on January 1 of each year.
Example 1 - in addition to exempt resources, a couple’s countable resources are $40,000.00. The
spouse to be institutionalized applies for Medicaid and is otherwise qualified for Medicaid. Half
of the assets is less than the minimum protected resource allowable amount (i.e., $20,000.00 is
less than $23,184.00). As a result, the community spouse is allowed to retain $23,184.00 and the
institutionalized spouse is charged with the difference less the maximum $2,000.00 in resources
that the institutionalized spouse may keep. Therefore in this example the total of counted
resources that both spouses can keep is actually $25,184.00 ($23,184.00 for the spouse at home
and $2000 for the spouse in the facility). It must be kept in mind that any amount unspent of the
$60 personal needs allowance of the spouse in the facility goes into a trust account for that
facility resident. The amount of money in the trust account at the facility held in the name of the
resident reduces the $2000 resource exclusion. Example 2 - the same couple has assets of
$240,000.00.
Since one-half of the assets exceed the maximum allowable amount (since
$120,000.00 is greater than $115,920.00) the community spouse is allowed only to retain
$115,920.00, the maximum resource allowance in 2013, and the institutionalized spouse is
charged with $240,000.00 minus $115,920.00 (which equals $124,080.00). Therefore, in this
example, $124,080.00 must be spent down until the facility resident (the institutionalized spouse)
has no more than $2000 in countable resources prior to eligibility and only $115,920.00 could be
kept by the community spouse (unless expanded as discussed below). Example 3 - the same
couple has $100,000.00 of countable resources. The community spouse may retain $50,000.00
as a spousal resource allowance and $50,000.00 is attributed to the institutionalized spouse who
must spend down $48,000.00 ($2000 of countable resources can always be kept by the
institutionalized spouse) since it exceeds the resource limits for medical care.
125.
The “Spousal Impoverishment Notification” form – Form H1279.
The Texas
Medicaid program uses form H1279 to notify the client or the client’s responsible party of four
matters, related to the protected resource amount (PRA): The initial eligibility period, the
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resource limit that the institutionalized spouse must meet at the end of the initial eligibility
period, the fact that interspousal transfers are permitted, and the potential transfer-of-assets
penalty if resources are transferred to anyone other than the spouse. Form H1279 is completed
when an applicant for long-term care Medicaid has been certified eligible and a protected
resource amount (PRA) was used in determining eligibility.
126.
Form H1279 – the first four sentences. The first sentence of form H1279 will inform
the institutionalized person who has been certified for long-term care Medicaid of the date of the
annual review of eligibility (within one year of certification). The second sentence states, “At
that time, we will look at countable resources to which you have access and compare their total
value to the $2000 resource limit.” The third sentence states, “Resources of your spouse will not
be considered at that time.” This means that resources that can be “titled” – such as autos, boats,
motor homes, real property, stocks, bonds, banks accounts – which are titled in the name of the
community spouse will not be counted against the institutionalized spouse, at the annual review.
The fourth sentence states, “Certain resources which were not counted in determining your
eligibility at application may be counted at the annual review.” This means that resources which
were protected by the protected resource amount (PRA) but which should have been transferred
to the community spouse and which were not, may be counted against the institutionalized
spouse at the annual review. Thus, if a resource that has a title did not have the title changed
during the first year of eligibility (so as to be titled only in the name of the community spouse) it
may be counted against the institutionalized spouse at the annual review. In effect, this sentence
of form H1279 is giving the institutionalized spouse a one-year “heads up” to re-title property so
as to be solely the resource of the community spouse, if it is to be kept from counting against the
institutionalized spouse at the time of the annual review.
127.
Form H1279 – sentences five, six, and seven. Sentences five, six, and seven of form
H1279, state as follows: “You may transfer assets (resources or income) from your name to your
spouse’s name. It may be necessary for you to consult an attorney for assistance in transferring
your assets to your spouse. There is no penalty for this type of transfer.” There are several
concepts in the federal Medicaid law (42 U.S.C. §1396) which are behind these three sentences.
Although the applicant for (or recipient of) long-term care Medicaid must pursue all income that
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the individual is entitled to, the community spouse is entitled to a “minimum monthly
maintenance needs allowance,” as provided by 42 U.S.C. §1396r-5(d)(3). The institutionalized
spouse can divert to the community spouse income necessary to bring the community spouse’s
income up to the minimum monthly maintenance needs allowance, to the extent that the
community spouse’s own income is less than the minimum monthly maintenance needs
allowance. The statement in the seventh sentence of form H1279 that there is no penalty for
transferring assets to the community spouse is rooted in 42 U.S.C. §1396p(c)(2)(A)(i), which
exempts from the transfer penalty, transfers from one spouse to the other. The statement in the
sixth sentence of form H1279, that consultation with an attorney may be necessary, is rooted in
the fact that only an attorney can prepare a deed to transfer title to real property (unless the
owner prepares the deed for himself or herself). A deed to convey real property must be totally
accurate in describing the property to be conveyed (using the legal description for the property,
which can be very complex). Thus, it is advisable to always have an attorney prepare a deed to
convey an interest in real property, even from one spouse to the other spouse.
128.
Form H1279 – sentence eight. The eighth sentence of form H1279 states: “Transfers to
anyone other than your spouse (or transfers of assets by your spouse to anyone else) are
considered under transfer of assets rules and could result in a penalty period.” This is rooted in
42 U.S.C. §1396p(c).
Under 42 U.S.C. §1396p(c)(1)(A), transfers by the institutionalized
individual, or that individual’s spouse may result in a penalty period, if one of the reasons for the
transfer was to achieve eligibility for long-term care Medicaid. As noted previously, under 42
U.S.C. §1396p(c)(2), there are certain exceptions to the transfer-of-resources penalty.
129.
Form H1279 – sentences nine and ten. Sentences nine and ten of form H1279 state:
“During a penalty period for transfers of assets, you would be ineligible for payment for nursing
facility services or home and community-based waiver services. If otherwise eligible, however,
you would receive all other Medicaid services (for example, inpatient and outpatient hospital
services, physician services, prescription drugs, etc.).” Although this latter sentence – sentence
ten of form H1279 – is true, it will be most helpful to adults whose income is at or below the SSI
federal benefit rate.
That is because, for persons who do not qualify for long-term care
Medicaid, in Texas, the main route to Medicaid for adults is through eligibility for SSI.
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130.
Form H1279 – sentence eleven – duty to inform of changes. The eleventh sentence of
form H1279 states a general point concerning Medicaid: “If there is any change in your or your
spouse’s circumstances, you have the responsibility of notifying this office within 10 days of the
change.” Note: Because of the fact that changes which are reported are not always properly
recorded, it is best to report changes in a way that is witnessed (if by phone) or receipted for (if
by mail or in person).
131.
The Texas Medicaid program’s “Spousal Impoverishment” explanation (Appendix
XIII of the Medicaid for the Elderly and People with Disabilities Handbook). Appendix
XIII of the Medicaid for the Elderly and People with Disabilities Handbook has an explanation
of the spousal impoverishment aspects of long-term care Medicaid, and includes some
calculation examples.
132.
Income aspects of spousal impoverishment. The same overall section of the Medicaid
law as deals with the protection of resources for the community spouse – 42 U.S.C. §1396r-5 –
also deals with the protection of income for the community spouse.
133.
The minimum monthly maintenance needs allowance.
The minimum monthly
maintenance needs allowance is provided for at 42 U.S.C. §13965-5(d)(3). Each state is required
to establish a minimum monthly maintenance needs allowance for the spouse in the community,
in keeping with a formula (which the statute sets forth).
134.
The statutory formula for the minimum monthly maintenance needs allowance and
the excess shelter allowance. The statute requires that the minimum monthly needs allowance
must equal or exceed 1/12 of 150% of the federal poverty income limit for a family unit of two,
plus an excess shelter allowance. If the state’s usual minimum monthly maintenance needs
allowance is higher than what the federal statute requires, there will be fewer cases in which the
Because Texas’ community spouse monthly
excess shelter allowance will be available.
maintenance needs allowance is already at the federal maximum ($2,898 in 2013), Texas does
not use – does not accord – the excess shelter allowance. (In states that do use the excess shelter
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allowance – states that use less than the maximum community spouse monthly maintenance
needs allowance – the state-chosen community spouse monthly maintenance needs allowance
plus the excess shelter allowance cannot exceed the federally-set maximum monthly
maintenance needs allowance.)
135.
The sequence of deductions from the income of the institutionalized spouse, in
relation to the diversion of income to the community spouse, under the federal Medicaid
law.
The federal Medicaid statute at 42 U.S.C. §1396r-5(d) sets forth the sequence of four
deductions, pursuant to which income can be diverted from the institutionalized spouse to the
community spouse, to bring the community spouse up to the full minimum monthly maintenance
needs allowance. Keep in mind that income is gross income. The means, for example, that if a
Social Security beneficiary is having the Medicare Part B and/or Part D premium deducted
before the cash amount of the Social Security benefit is direct-deposited (or received by check),
the gross Social Security benefit is the cash amount plus any deducted Medicare premiums added
back in. From gross income in the name of the institutionalized spouse, there is deducted a
monthly personal needs allowance (in Texas, in 2013, this is $60 monthly).
Under the
Medicaid statute, there is then a deduction of the amount necessary to bring the community
spouse up to the minimum monthly maintenance needs allowance (when added to the income of
the community spouse). Then there can be a deduction – a “family allowance” – for each
“family member” (as defined in this part of the Medicaid law). The family allowance must be
equal to at least 1/3 of the amount by which the minimum monthly maintenance needs allowance
exceeds monthly income of that family member. “Family member” for the purpose of this
deduction of the family allowance means a minor or dependent child of the institutionalized
spouse or the community spouse, dependent parents of the institutionalized spouse or the
community spouse, or dependent siblings of the institutionalized spouse or the community
spouse. In order to trigger the family allowance deduction, the family member must reside with
the community spouse; this is required by 42 U.S.C. §1396r-5(d)(2)(D). The fourth and final
deduction that 42 U.S.C. §1396r-5(d) requires is a deduction from the income of the
institutionalized spouse for “incurred medical expenses.”
136.
The sequence of deductions from the income of the institutionalized spouse, in
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relation to the diversion of income to the community spouse, under Texas’ Medicaid for
the Elderly and People with Disabilities Handbook.
Keep in mind that under Section H-
1400 of the Medicaid for the Elderly and People with Disabilities Handbook, the sequence of
deductions is: Personal needs allowance of the institutionalized person; court-ordered guardian
fees, then maintenance needs of the spouse, maintenance needs of dependent family members,
incurred medical expenses, and the deduction of the allowance for home maintenance.
137.
Relationship of the Qualified Income Trust to the minimum monthly maintenance
needs allowance. The income necessary to bring the community spouse up to (or closer to) the
minimum monthly needs allowance can be directed from the Qualified Income Trust (if one is
used) to the community spouse.
138.
Expansion of the Protected Resource Amount to provide for the spousal allowance –
the formula. The Medicare Catastrophic Coverage Act created a process to expand and increase
the community spouse’s income to the allowed maximum. As Texas required in 2004 and now as
required federally pursuant to the Deficit Reduction Act of 2005, all states shall become income
first states. This means that if the non-countable resource income of both spouses together is not
enough to give the community spouse the full spousal allowance, the Protected Resource amount
can be expanded. If this is established, the Medicaid program is required to increase the PRA to
an amount sufficient to provide for the full minimum monthly needs allowance. To determine the
same the Medicaid program uses the following rule:
a.
The total resources that can be protected are equal to the cost of a one year CD
that will produce enough interest when added to the couples’ non-investment countable
income to give the community spouse a total of $2,898.00 per month (in 2013).
b.
The formula is annual income needed x 100 divided by interest on one year CD =
maximum dollar amount of resources to be protected.
c.
The interest rate to be assumed in doing the calculation is the rate of a one year
CD as published in the local paper or as provided by a local bank (when representing the
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client, the attorney often looks for the lowest interest rates since more assets will be
needed to generate enough income to get to the minimum monthly needs allowance when
the rate is lower).
d.
The formula is used regardless of the actual income paid by the couples’
resources - and they need not actually buy a one year CD.
e.
The protected resource amount can be increased through a “fair hearing” or in
cooperation with the Medicaid caseworker. Therefore, the initial Medicaid application is
often denied and, unless the caseworker provides or grants authority for expansion of the
protected resource amount under the spousal impoverishment rules which is agreed to by
the applicant, the denial needs to be appealed on the ground that the PRA should be
increased.
f.
In determining the amount of income to be paid from the institutionalized spouse
to the community spouse after eligibility, the caseworker uses the actual dollar amount
being produced by the investments if it is in excess of the amount a one-year CD would
produce. But if is less than that amount, the caseworker uses the amount a one-year CD
would produce.
g.
The total protected resource amount to which there can be expansion may not
exceed the total of the couple’s countable resources on the “snapshot date”. Thus, the
community spouse should take care to not be afraid of spending some of their money,
especially during the first month - including paying the nursing facility, etc., and the
community spouse should watch his or her investments during the first year after the date
of eligibility or else there could be a loss of eligibility since if the countable resources are
greater on the first day of any month at 12:01 a.m. prior to the reassessment date in one
year, there will be a loss of eligibility.
139.
Expansion of the Protected Resource Amount to provide for the spousal allowance –
an example. An example of an increase in the PRA is as follows:
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(a)
The total of the monthly income of the nursing facility resident (i.e., Social
Security and pension income) is $2000. This is a gross amount. This includes the
Medicare premiums added back into the amount of the Social Security direct deposit.
After the $60.00 per month personal needs allowance, $1,940.00 is left. The spouse at
home has Social Security of $860 monthly (including the Medicare Premiums added back
in). Thus, the total available income to the spouse at home is $2800 monthly ($1,940
plus $860). This is $98 monthly less than the minimum monthly maintenance needs
allowance that the federal Medicaid law and rules say the spouse at home should have. A
local bank offers one year CD’s with an interest rate of 2% per annum.
(b)
The couple has resources that exceed what can be protected under the Protected
Resource Amount.
(c)
The income on an annual basis that is lacking for the community spouse is $98.00
X 12, which is $1176.00.
(d)
Thus, the question to be answered is: How much in principal – how much of a
principal balance – is needed to generate, via a CD paying 2% interest, $1176.00 of
income per year. The answer is: $1176.00 X 100 ÷ 2, which is $58,800. That is how
much in resources the community spouse can keep in addition to resources that are
excluded. Thus, if the PRA otherwise would have allowed the community spouse to keep
just $50,000 (because the couple’s non-excluded resources totaled $100,000), the
expanded PRA would add $8,800 to what the spouse can keep (and reduce down to
$13,400 what the spouse in the facility must spend down). (Since the spouse in the
facility can have $2000 of liquid resources, the $50,000 share of the couple’s countable
resources that is allocated to the spouse in the facility will be reduced by $8,800 and then
by $2000. The result of $50,000 minus $8,800 minus $2000 is $39,200, which is how
much must be spent down (in the example) in order for the nursing facility resident to
qualify, from a resource standpoint, for long-term care Medicaid). If the gap to be filled
to give the community spouse the full monthly maintenance needs allowance were
greater, or if the return on a CD were lower, the expanded PRA could be dramatically
greater.
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(e)
As noted at the outset of the resource discussion, it must be kept in mind that if
the countable assets of the spouse in the facility exceed $2000, there is ineligibility. If a
person’s countable resources exceed the resource limit as of 12:01 a.m. on the first day of
the month, the person is not eligible for the entire month. This is provided for by 1 TAC
Section 358.321, Section F-1100 of the Medicaid
for the Elderly and People with
Disabilities Handbook, and 20 CFR Section 416.1207.
Since the $60 monthly personal needs allowance goes into the facility resident’s
(f)
trust account, if there is also another $2000 available, there will be resource-ineligibility.
The personal needs allowance (and the $2000) can be used to purchase for the resident
such items as clothing, furniture, electronic entertainment devices, books, magazines,
meals for visitors, and also, of course, health care related items not included in the vendor
payment. At present, one health care need that is not covered by the vendor payment is
routine dental care.
(g)
The section of Medicaid for the Elderly and People with Disabilities Handbook
that deals with expanding the protected resource amount is Section J-6000. That section
is
at
http://www.dads.state.tx.us/handbooks/mepd/J/J-6000.htm#secJ-6000.
The
administrative rule that deals with expanding the protected resource amount is 1 TAC
Section 358.420.
(h).
It should be noted, that expansion is not available in most Community Based
Alternative (CBA) cases, because the spousal allowance is only the amount of SSI benefit
rate ($710 per month) instead of the MMNA of $2,898.00. However, in the case of CBA
client living in an assisted living facility or adult foster care, it is appropriate to determine
if the community spouse will indeed have more income than the SSI maximum federal
benefit. This is calculated by subtracting from the income of the CBA in the assisted
living facility or adult foster care, the amount of the maximum monthly SSI payment for
an individual (in 2013, $710). The remaining income of the CBA client in an assisted
living facility or in adult foster care is then allocated to the spouse in the community. If
that income plus the spouse’s own income is greater than the SSI maximum benefit, there
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is not a deficit in the income available to the spouse in the community, and there would
be no expansion of the PRA. If the income of the spouse in the community (after
diversion to that spouse of the income from the CBA client in excess of $710) is less than
the SSI maximum benefit, the deficit is then the amount that is multiplied by 12 to
annualize it, and then multiplied by 100 and divided by the CD interest rate, to determine
what the expanded PRA can be for the spouse of the CBA client. This is provided for at
section J-6310 of the Medicaid for the Elderly and People with Disabilities Handbook.
(i).
In those times when interest rates are rising because of concerns over inflation, it
is advisable to get applications and necessary documentation in as quickly as possible to
lock in a more favorable rate.
140.
The use of a “fair hearing” to increase the minimum monthly maintenance needs
amount. If it is established at a fair hearing that the community spouse needs income above the
level of the monthly maintenance needs allowance ($2,898.00 in year 2013), due to “exceptional
circumstances resulting in significant financial duress,” the MMNA can be increased. In cases of
undue hardship, hearing officers can set higher amounts for the MMNA. This is provided for in
the federal Medicaid law at 42 U.S.C. Section 1396r-5(e)(2)(B). (That section states that a fair
hearing can also be requested regarding the attribution of resources, and regarding the amount of
the PRA.) As with other aspects of Medicaid eligibility that can be the subject of a fair hearing,
once the administrative process is exhausted, the applicant can request state court judicial
review, using the record that was created in the hearing process.
141.
Other steps to shift income from the institutionalized spouse to the spouse in the
community. Since Texas follows the name on the check rule, the income of the community
spouse is disregarded in determining eligibility of the institutionalized spouse (except for
expansion of the PRA as discussed above). Thus, sometimes planning is done to shift the income
from the institutionalized spouse to the community spouse through a qualified domestic relations
order or converting resources from being countable to being non-countable, or creating income
in the name of the community spouse by the purchase of a certain type of annuity discussed
below. An attorney must be consulted before any of these techniques is used.
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142.
A court order against the institutionalized spouse setting the amount of support will
become the floor on the minimum monthly maintenance needs allowance. Under 42 U.S.C.
§13965-5(d)(5), “If a court has entered an order against an institutionalized spouse for monthly
income for the support of the community spouse, the community spouse monthly income
allowance shall be not less than the amount of the income so ordered.”
143.
The role of Qualified Domestic Relations Orders (DQROs) in shifting income to the
spouse in the community. Often the income of the community spouse is close to or above the
minimum monthly maintenance needs allowance (MMNA), and thus there is often little if any
diversion of income to the community spouse from the institutionalized spouse, and thus more
income is applied to the nursing facility or other provider from the institutionalized spouse. As a
result it is often better for the community spouse to shift income from the institutionalized
spouse to give the community spouse more income than the MMNA (in 2013, $2,898.00). Under
the Internal Revenue Code Section 414(p), qualified retirement benefits cannot be “voluntarily
alienated,” but the same can often be transferred to spouse by means of a Qualified Domestic
Relations Order (“QDRO”). In Texas, most courts permit this to be done without a divorce, in a
suit for spousal support pursuant to the Texas Family Code which indicates one spouse has a
duty to support the other spouse. The Medicaid program accepts such court ordered recharacterization of income and does not require being cited in the suit (the Medicaid program
does not require that it be made a party to such a suit). Since this is litigation, each spouse
should be represented by their own attorney. The plan administrator of the retirement benefits
should be contacted to give approval in advance before submission of the order to the judge
because different plan administrators often have certain language that they request in such
orders. Usually, the attorneys then agree to the proposed judgment and submit the same to the
court for approval - sometimes courts require an appearance at an uncontested docket call and
sometimes they will just sign the order since both sides have agreed. The QDRO is often better
than the Qualified Income Trust (if such a trust is needed due to the institutionalized spouse
having income greater than the income cap presently $2,130.00 in year 2013) since more income
can be shifted to the community spouse - but due to the time needed to obtain the order it is often
best to have prepared and use the Qualified Income Trust due to the time delays in obtaining a
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court order or the approval of the proposed order by the plan administrator. When the QDRO is
approved and pension income is shifted, the applied income will be adjusted even after Medicaid
eligibility is obtained.
144.
The use of an annuity to create and shift income to the spouse. In
cases
where
expansion of the PRA cannot be achieved, such as in cases where the income of the community
spouse is above the MMNA, the purchase of a certain type of annuity in the name of the
community spouse is often considered. This type of annuity converts countable resources into
income after the countable resource has been transferred into the name of the community spouse
(there is no transfer penalty between spouses under the current rule). For example, a couple has
$50,000 more than the PRA. The countable resources are then transferred (penalty free, of
course) into the name of the community spouse, and the community spouse then purchases a
single-premium irrevocable immediate annuity which is to be paid to the community spouse in
level payments of principal and interest (i.e., $500 each month) for a term certain less than the
actuarial life expectancy of the community spouse, as set out in the life expectancy table in the
Medicaid for the Elderly and People with Disabilities Handbook, from an insurance company
licensed in the state of Texas. Because Texas has changed to being an “income-first” state and if
interest rates rise, the use of the annuity may become even more in vogue. Keep in mind, the
transfer to the spouse of resources is free of penalty, since under 42 U.S.C. §1396p(c)(2)(B)(i),
transfers of assets between spouses are not subject to penalty. Under 42 U.S.C. §1396p(c)(1)(G),
the purchase of an irrevocable and nonassignable annuity, that is actuarially sound, and that
provides for payments in equal amounts during the term of the annuity, with no deferral or
balloon payments made, may not be a transfer of resources. Keep in mind that in Texas, only a
licensed insurance agent or broker can sell an annuity, and clients interested in considering the
use of an annuity in connection with long-term care Medicaid should be referred to a Texaslicensed insurance agent or broker.
145.
Strategies for dealing with excess resources that cannot be otherwise protected
through spousal impoverishment provisions, including the expansion of the protected
resource amount. If spousal impoverishment protections are not sufficient to protect resources
(either because the Medicaid applicant does not have a spouse, or the spousal impoverishment
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protections have been exhausted), keep in mind that there are some “spend down” strategies that
can be used to maintain the quality of life for the individual who needs Medicaid-funded longterm care.
146.
Paragraphs 92 – 94 discuss options for dealings with excess resources.
Treatment of Trusts. Trusts are also treated at 42 U.S.C. Section 1396p. OBRA '93
established a 60-month look-back period for transfers involving most trusts. Note also: In the
past there had been some use of trusts to “shelter” homesteads from Medicaid estate recovery.
The theory of this was that, by placing a homestead into a trust – a revocable trust – one could
transfer it to whom one wanted “by operation of law” at the death of the owner, but at the same
time continue to have the homestead be a non-counted resource for eligibility purposes. This
practice is now curtailed as set forth at Section F-3210 of the Medicaid for the Elderly and
People with Disabilities Handbook. Trusts in general are dealt with in the Medicaid for the
Elderly and People with Disabilities Handbook at Section F-6100. The administrative rule on
trusts is at 1 TAC Section 358.339. It must be kept in mind that advice regarding trusts, the
drafting of trusts, and the implementation of trusts, are not matters for a nonlawyer. These
matters involve the practice of law, and can only be handled by a lawyer or by a nonlawyer
directly supervised by the lawyer. The Legal Hotline for Texans can assist Benefits Counselors
in understanding what Benefits Counselors may or may not say regarding trusts.
147.
Revocable Trusts. Payments to third parties from a revocable trust established by the
applicant or applicant's spouse will be subject to a 60-month look-back period. So, if application
for Medicaid is likely, the asset should be removed from the trust before transferring to someone
else. This may be more complex in operation due to joint ownership control issues.
148.
Irrevocable Trusts. There is also a 60-month look-back period for assets that are
unavailable because they have been transferred to an irrevocable trust. Payments actually made
from the trust which benefit the institutionalized individual are counted as income.
149.
Certain Trusts are exempt from counting as resources, and from transfer of
resource penalties. They include:
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a.
Testamentary trusts. This is a trust in the will of another person which benefits
the nursing facility resident.
b.
Qualified Income Trusts (Miller Trusts) (discussed at paragraphs 56 – 61).
c.
Any trust containing the assets of the disabled person under 65 which was
established by a parent, grandparent, legal guardian, or court--if upon the disabled
person's death the state Medicaid agency is reimbursed up to the Medicaid
payments provided.
d.
Trusts containing the assets of a disabled individual when the trust assets of many
individuals are pooled and managed by a nonprofit association, and if the account
is established solely to benefit the individual by a parent, grandparent, legal
guardian, the individual, or a court, and if the individual is not yet age 65, when
the property is transferred to the trust. This type of trust is called a “Master
Pooled Trust.” If an individual age 65 or older transfers property into a Master
Pooled Trust,” and the person then applies for long-term care Medicaid within 60
months, the value of property transferred will be divided by the current daily
factor of $142.92 to determine how many days of a penalty period arose.
150. Undue Hardship Exception. Long-term care Medicaid will not be denied to an
individual due to the transfer of assets if the “denial of eligibility would work an undue hardship
on the basis of criteria established by the Secretary.” 42 U.S.C. Section 1396p(c)(2)(D) requires
this hardship exception to the denial of long-term care Medicaid due to hardship. The Texas rule
on undue hardship is 1 TAC Section 358.402(m). It provides:
Undue hardship.
(1) A person may claim undue hardship when imposition of a transfer penalty
would result in discharge to the community and/or inability to obtain necessary
medical services so that the person's life is endangered. Undue hardship also
exists when imposition of a transfer penalty would deprive the person of food,
clothing, shelter, or other necessities of life. Undue hardship relates to hardship to
the person, not the relatives or responsible parties of the person. Undue hardship
does not exist when imposition of the transfer penalty merely causes the person
inconvenience or when imposition might restrict his lifestyle but would not put
him at risk of serious deprivation.
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(2) Undue hardship may exist when any one of the following conditions specified
in subparagraphs (A) - (C) of this paragraph exists:
(A) location of the receiver of the asset is unknown to the person, or other
family members, or other interested parties, and the person has no place to
return in the community and/or receive the care required to meet his or her
needs;
(B) the person can show that physical harm may come as a result of
pursuing the return of the asset, and the person has no place to return in
the community and/or receive the care required to meet his or her needs;
or
(C) the receiver of the asset is unwilling to cooperate with the person and
HHSC, and the person has no place to return in the community and/or
receive the care required to meet his or her needs.
(3) If a person claims undue hardship, HHSC makes a decision on the situation as
soon as possible but within 30 days after receipt of the request for a waiver of the
penalty. The person has the right to appeal an adverse decision on undue hardship.
If a client claims undue hardship, HHSC must make a decision on the situation as soon as
possible but within 30 days of receipt of the request for a waiver of the penalty. The client has
the right to appeal an adverse decision on undue hardship. Proving undue hardship often
requires a “fair hearing.” The Texas undue hardship rule – 1 TAC 358.402(m) –.is mirrored by
the Medicaid for the Elderly and People with Disabilities Handbook has policy on undue
hardship at Section I-4300.
151. Other resource manipulations may be available, to achieve eligibility for long-term
care Medicaid.
a.
Exempt Resources
i.
Any purchase of exempt resources (home, car, burial plot, etc.) would
reduce the excess resources. You can make a schedule of such purchases
and ask the Medicaid caseworker to approve it in advance. Whether or not
the worker is cooperative, this is clear: If one converts non-exempt assets
into exempt assets, and receives dollar-for-dollar value, this is not a
penalizable transfer.
ii.
Pay off debts for exempt resources (especially for homes and homeimprovement loans).
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iii.
b.
Make repairs to home.
Plan Ahead
Transfer Assets (without keeping control) beyond (far ahead of) the applicable 60
month look-back period. Negatives in this strategy are:
i.
Loss of control.
ii.
Loss of stepped-up tax basis that would be received if acquired upon
death. (In other words, when a person receives a gift of real property or
stock and then later sells it, the capital gain is measured from the date of
gift to the date of sale. If the gift only occurs when the donor dies, the
“basis” for the capital gain is the value at the date of death of the donor.)
ii.
Death of donee (possible). (In other words, if the elderly individual was
counting on the recipient of the property (the donee) being the one to
enjoy the property and the recipient dies soon after the gift, the gift will go
to the person named in the will of the donee. That may not be who the
donor wanted the gift to go to.)
iv.
Possible gift tax. (A gift of more than a certain amount may trigger the
need for a federal gift tax return.)
iii.
Potential liability of donee. (For instance, whether the real property needs
to be cleaned of clutter.)
152.
Divorce is not advisable as a means of financial eligibility for long-term care
Medicaid and is not necessary, given the other options. Only a lawyer can handle a divorce.
Although this is not advised, a court order could divide the property, and the assets of the
community spouse would no longer figure into the equation. One reason why divorce would
be not be advisable is that the purchase of a homestead for the community spouse can
convert countable resources into resources that do not count. The homestead can be
excluded without limit on its value, if the long-term care Medicaid applicant is married.
(For single persons, there is a $536000 limit on allowable amount of homestead equity,
unless a dependent relative lives in the homestead, in which case there is no limit on the
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allowable homestead equity.) Thus, if a married couple (or an individual with a dependent
relative living in the home) has two hundred thousand dollars of countable resources, the
purchase of a two hundred thousand dollar homestead will take care of the excess
resources. Countable resources can be made uncounted if they are used to purchase
homestead equity (such as buying a home or paying off a mortgage) or if they are used to
improve an existing home.
153. Medicaid estate recovery has made marriage even more advantageous. If a long
term care Medicaid recipient passes away married, the State of Texas (unlike some other states)
does not pursue estate recovery. To date, there has not been a study to determine if this is
resulting in people who enter nursing facilities not married, to marry. Additionally, a spouse
can be an excellent source of help in making sure that quality care is provided in a nursing
facility.
Question.
True or False.
Divorce is an advisable and necessary option to achieve eligibility for long-term care
Medicaid.
____ True
____ False
154. A reminder about amounts remaining in the Qualified Income Trust. It should be
kept in mind that any amounts which accumulate in a Qualified Income Trust (Miller Trust) do
have to be handed over to the State when the beneficiary (i.e., recipient of long-term care
Medicaid) has died, to the extent needed to reimburse the Medicaid Program. In the unlikely
event that the balance accumulated in the Qualified Income Trust is not fully needed to repay the
Medicaid Program, the excess can be paid to whoever the trust says should receive what is not
needed to reimburse Medicaid.
155.
Medical necessity. Medical necessity determinations are dealt with in 40 TAC
§§19.2401 through 19.2413. Medical necessity is dealt in the “40 TAC” because it is related to
the facility’s receipt of the vendor payment. “40 TAC” deals with “social services and
assistance.” Medical necessity “is the prerequisite for participation in the Medicaid (Title XIX)
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Long-term Care program." 40 TAC §19.2413. The section “contains the general qualifications
for a medical necessity determination.”
156. The two prongs of the medical necessity rule at 40 TAC §19.2401. There are two
“prongs” that must be met under the “general” qualifications of 40 TAC §19.2401. The first
prong requires that the individual demonstrate a medical condition that:
a. is of sufficient seriousness that the individual’s needs exceed the routine care
which may be given by an untrained person; and
b. requires licensed nurses’ supervision, assessment, planning, and intervention
that are available only in an institution (that is, a nursing facility).
The second prong of 40 TAC §19.2401 requires that the individual need medical or
nursing services that:
(A)
(B)
(C)
(D)
are ordered by a physician;
are dependent upon the individual’s documented medical conditions;
require the skills of a registered or licensed vocational nurse;
are provided either directly by or under the supervision of a licensed nurse in an
institutional setting; and
(E) are required on a regular basis.
Note that both prongs of 40 TAC §19.2401 are “conjunctive” – the subparagraphs are separated
by “and” rather than by “or.” Thus, all seven subparagraphs must be fulfilled. The nursing
facility has, of course, a significant interest in medical necessity being found to exist. Thus,
usually, the nursing facility makes sure the information submitted to the Medicaid program
supports a determination that medical necessity exists. If an individual is denied long-term care
Medicaid because the program decides that the individual does not have medical necessity for
long-term care, the individual can appeal the denial to a “fair hearing.” A nursing facility
resident, for whom the facility did not properly complete information needed for medical
necessity can be referred to the Facility Victims Project for legal services, at 1-800-622-2520.
157. The determination of medical necessity, meaning the determination of whether the
requirements of 40 TAC §19.2401 are met, is made using the “Minimum Data Set” of
information (MDS). The MDS was developed by the federal Centers for Medicare and
Medicaid Services (CMS). A nursing facility must complete the MDS according to CMS’
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instructions, although the form is submitted to the Texas Medicaid program. It is the duty of the
nursing facility to submit the MDS, in accordance with 40 TAC §19.2403. A registered nurse
“must sign and certify that the MDS assessment is completed in accordance with 40 TAC
§19.801.” It is the state Medicaid claims administrator (TMHP) that reviews the MDS and
decides, in the name of HHSC, whether medical necessity exists. If TMHP decides there is not
medical necessity and the individual thus receives a denial notice from HHSC, a nurse from
TMHP will usually participate in the “fair hearing” (if the individual requests one). The TMHP
nurse will usually seek to justify the denial. The individual (or the advocate representing the
individual) can cross-examine the nurse. The individual’s physician is required to certify or
recertify medical necessity. 1 TAC §19.2405 requires this.
158. The periodicity requirement for recertification of medical necessity. Certification or
recertification must be done in intervals specified by 40 TAC §19.1210(b). That section
requires that the need for nursing facility care be certified with 20 days after the individual’s
admission to the nursing facility, and every 180 days after the first certification. Of course, for
many individuals in nursing facilities, the “individual’s physician” is the medical director on
contract with the facility.
159. The former list of fourteen (14) examples of medical needs qualifying for medical
necessity. The Medicaid program rules used to provide examples of 14 different medical needs
that can qualify an individual for a finding of medical necessity for long-term care under
Medicaid. The list was in former 40 TAC §19.2410 (which no longer exists). Although the list
of conditions is no longer in the TAC, it was illustrative of what types of medical conditions
could lead to medical necessity for long-term care. The list was never exhaustive. The list
included the following medical needs:
a.
routine monitoring of an individual in stable condition to
determine responses to the treatment plan and to detect problems
requiring the physician’s attention and/or a change in the plan of
care;
b.
administration of intramuscular (IM) medications and observation
of the individual’s response and side effects;
c.
administration and adjustment of medication for pain and
monitoring of result and side effect;
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d.
administration of insulin to a diabetic individual whose condition
is stable but who is unable to self-administer insulin because of
physical, medical, or mental reasons;
e.
routine oxygen administration after a regimen of therapy has been
established and/or therapy can be done by the individual with
nursing supervision;
f.
routine oral suctioning;
g.
tracheotomy care when a individual’s condition is stable, but s/he
is unable to care for her/his tracheotomy;
h.
routine IPPB therapy after a regimen of therapy has been
established and/or a therapy can be done by the individual with
nursing supervision;
i.
routine maintenance of an indwelling catheter system;
j.
routine care of stoma and surrounding skin in the presence of a
colostomy or ileostomy and routine care of a supra pubic catheter;
k.
decubitus care involving superficial, non-infected lesions and
physical illness which makes him/her susceptible to decubiti
formation;
l.
bowel and bladder control training and maintenance after a
successful program has been established;
m.
care of an individual with an amputation or a fracture requiring
routine care of a stylized condition and reinforcement of an
established rehabilitation plan; and
n.
rehabilitative/restorative care, passive range-of-motion (ROM)
exercises and positioning, care and assistance in application of
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braces/prosthetic devices
rehabilitative procedures.
or
reinforcement
of
maintenance
160. The Legal Hotline for Texans has a form that can be useful in providing proof of
medical necessity. The Legal Hotline for Texans has a form which a doctor in the community
can use to verify that medical necessity is present, meeting the requirements of 40 TAC
§19.2401, and using the above 14 possible, though non-exclusive, medical needs for fulfilling
medical necessity.
161.
There is a process for contesting denied medical necessity. This is set forth in 40 TAC
§19.2407, which provides:
(a) If the state Medicaid claims administrator determines that a Medicaid applicant or
a recipient does not meet the criteria for medical necessity, the state Medicaid claims
administrator notifies the attending physician and the nursing facility in writing and
provides them an opportunity to present additional information about the applicant's or
recipient's medical need for nursing facility care.
(1) If the attending physician or a nursing facility physician does not respond or
contest the findings of the state Medicaid claims administrator within 10 working
days after receipt of the written notice about the decision, the findings are final.
(2) If the attending physician or a nursing facility physician contests the findings
of the state Medicaid claims administrator, at least one physician with the state
Medicaid claims administrator must review the case. If the state Medicaid claims
administrator's physician determines that the applicant's or recipient's admission
or stay is not medically necessary, the determination becomes final.
(3) The state Medicaid claims administrator sends written notification of the final
determination of denied medical necessity to the attending physician, the nursing
facility, and the applicant or recipient (or responsible party).
(b) After an applicant receives written notice of a determination of denied medical
necessity, the applicant or responsible party must request a fair hearing within 90 days
after the date of denied medical necessity, or the applicant loses the right to a fair
hearing.
(c) After a recipient receives written notice of a determination of denied medical
necessity, the recipient or responsible party must request a fair hearing within 10 days
after the date of the written notice in order to have nursing facility services paid for
during the appeal.
(1) If the recipient requests a fair hearing within 10 days after the date of the
written notice and the determination of denied medical necessity is upheld, the
effective date of the denial is 10 days after the hearing officer's written decision.
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(2) If the recipient does not request a fair hearing within 10 days after the date of
the written notice, DADS makes vendor payments to the nursing facility at the
previously established RUG rate for 15 days or until the recipient is discharged,
whichever occurs first.
(3) If the recipient does not request a fair hearing within 10 days after the date of
the written notice, the recipient must request a fair hearing within 90 days after
the date of denied medical necessity, or the recipient loses the right to a fair
hearing.
(d) Fair hearings are conducted by the Texas Health and Human Services Commission
(HHSC) in accordance with HHSC rules at 1 TAC Chapter 357.
Thus, if medical necessity is denied there is an opportunity for the attending physician to provide
information to reverse the decision. If that does not result in the denial being reversed the
individual can make use of the fair hearing procedures.
Question.
True or False.
If medical necessity is denied, there is a right to appeal the denial.
____ True
____ False
162. The role of the Minimum Data Set in determining nursing facility payment rates.
The Minimum Data Set information is used to determine the nursing facility’s payment rate for
services to the individual. 40 TAC §19.2413. Keep in mind that the nursing facility, for
services that are covered by the Medicaid payment rate, cannot collect more than the applied
income (co-payment) from the institutionalized individual, plus the vendor payment from the
Medicaid program.
163. The processing of applications for long-term care Medicaid. Applications for nursing
facility Medicaid are processed by the Texas Health and Human Services Commission. The
application form is Form H1200. The applicant can have the help of a relative, friend, or other
acquaintance in completing the form. English and Spanish versions of the application can be
accessed at http://www.dads.state.tx.us/forms/H1200/. Medicaid applications must be decided
upon within ninety days if based on disability, and within forty-five days for all other applicants.
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This is provided for by Section B-1000 of the Medicaid for the Elderly and People with
Disabilities Handbook. That section makes reference to 1 TAC §358.530, which also sets forth
the 45-day and 90-day time-frames. The TAC section in turns references the federal regulation,
42 CFR §435.911, which also states the 45-day and 90-day time-frames.
164. State Medicaid agencies are under a duty to assist applicants to achieve eligibility.
The case of Grimes el al. v. Hansen, Case No. 3AN-90-4511 Civil (Superior Court for the State
of Alaska) dealt with this duty.
In the Grimes case, the court ruled that the Grimeses’ rights
were violated because they had not been informed by the Medicaid agency of their right to
transfer resources to achieve eligibility. The Legal Hotline for Texans can provide a copy of the
Grimes court opinion. In the Medicaid for the Elderly and People with Disabilities Handbook
at Section B-2500 a distinction is made between explaining policy, and giving advice. The
distinction is stated as follows:
B-2500 Explaining Policy vs. Giving Advice
Revision 09-4; Effective December 1, 2009
Explaining policy is appropriate. The law requires that Medicaid rules, policies and
procedures be freely available to the public. The rules governing MEPD are contained in
the Texas Administrative Code (TAC), Title 1, Part 15, Chapters 358, 359 and 360. This
handbook also contains the MEPD rules, as well as policies, procedures and examples.
Both the TAC and MEPD Handbook are available online. MEPD eligibility specialists
act properly in explaining the rule or policy that applies to an applicant's or recipient’s
situation, and in referencing the applicable rule or handbook sections.
Giving advice is contrary to HHSC policy. Giving advice includes suggesting options for
how to become eligible or how to avoid Medicaid estate recovery, as well as expressing
any opinion of what is preferable or more advantageous to the applicant or recipient.
Giving advice is contrary to HHSC policy because it:

usually constitutes the unauthorized practice of law (which can subject the eligibility
specialist to legal penalties);

encroaches on the contractual relationship that may exist between the applicant or
recipient and attorney or financial advisor; and

can subject the eligibility specialist to personal liability for giving advice that is
incorrect or that fails to take into account issues other than eligibility (attorneys and
financial planners take into account other issues, such as tax laws, in giving estate
planning advice relating to Medicaid eligibility).
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The approach taken by MEPD eligibility specialists should be to explain policy but not to
make recommendations. If an MEPD eligibility specialist is asked for advice, an
appropriate response would be to provide the policy that applies to the situation, and to
otherwise decline the request. The MEPD eligibility specialist should explain that agency
policy prohibits giving advice, and may suggest that the applicant or recipient seek the
assistance of an attorney or other estate planning professional of their own choosing.
Thus, an applicant for long-term care Medicaid will not receive advice from the staff person of
the Medicaid program. Benefits Counselors can provide advice, but should not engage in the
practice of law (unless the Benefits Counselor is also a lawyer). When in any doubt as to
whether the Benefits Counselor is being asked for advice or services that only a lawyer can
legally provide, the Benefits Counselor should call the back-up number at the Legal Hotline for
Texans for guidance.
165. Who may complete a Medicaid application, a Form 1200? Who may complete the
Medicaid application is covered at Section B-3210 of the Medicaid for the Elderly and People
with Disabilities Handbook. It provides:
The Texas Health and Human Services Commission (HHSC) must allow an
individual or individuals of the client’s choice to accompany, assist, and represent
the client in the application process. A responsible party or bona fide agent is a
person who is familiar with the client and knowledgeable of the client’s financial
affairs. If a client’s responsible party is not his spouse, parent, legal guardian,
immediate family member, or holder of his power of attorney (POA), evidence of
written authorization by that client for the independent party to file for benefits on
the client’s behalf must be provided.
Nursing facility staff, hospital discharge planning staff, and hospital collection
agency staff are not considered bona fide agents to file an application on behalf of
a client unless they have the client’s written authorization. If none of the persons
described in this subsection are available to complete the application for assistance
[Form 1200], the eligibility specialist uses the application as a recording document,
while documenting, on the Medical Assistance Only Worksheet [Form 1201],
contacts with all sources having knowledge of the client’s finances.
166.
Who may sign the Medicaid application, the form 1200? The Medicaid
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for the Elderly and People with Disabilities Handbook Section B-3220 concerns “Who May
Sign a Form 1200.” It states:
A person who signs an application or redetermination form for a client must furnish
evidence of the authority to complete and sign an application on behalf of a client. Such
evidence may be a copy of guardianship papers, POA (power of attorney) papers, or, in
the absence of a guardianship or POA, a written statement describing the representative’s
relationship to the client and responsibility for the client’s care. Such a statement is not
required from the parent or spouse of a client.
If the client makes an “X” on the signature line for applicant/recipient, two witnesses
must sign on the signature lines for witnesses.
If the client cannot complete and sign the Form 1200 and there is no legal guardian,
power of attorney, or responsible party, the eligibility specialist uses the Form 1200 as a
recording document. The eligibility specialist uses the section “Name of Person
Completing Form (if different from applicant/recipient).” In this instance, the signature
lines are left blank, and the eligibility specialist documents on the Form 1201 that the
Form 1200 was used as a recording document and the reason it was not signed.
167. How is the date of application determined? The Medicaid for the Elderly and People
with Disabilities Handbook at Section B-4000 concerns the “Date of Application.” It states:
“The date of application is not established when DADS receives a completed and signed
application form. The date of application is established when HHSC receives the completed and
signed application form.”
168.
Fair hearings.
a.
A fair hearing is an administrative law hearing before a hearing officer. Nursing
facility Medicaid applicants/recipients can ask for fair hearings, just as can TANF
clients, food stamp clients, and non-nursing facility Medicaid clients.
b.
A fair hearing must be requested within ninety days of the decision being
appealed. If the fair hearing is requested within ten days of the decision, the
“status quo” can be maintained (in most cases) until the hearing officer makes
his/her decision.
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c.
d.
e.
A fair hearing can be requested:
1.
To contest the denial, reduction, suspension, or termination of nursing
facility Medicaid.
2.
To contest a discharge from a nursing facility.
3.
To rebut the presumption that assets were transferred within the “lookback” period in whole or in part to become eligible.
4.
To show that the denial of nursing facility Medicaid would work an undue
hardship.
5.
To seek an increase in the community spouse monthly allowance.
6.
To seek a re-computation of the protected resource amount.
At the request of the client, a non-lawyer can represent the client at a Medicaid
fair hearing.
1.
Because there is no right to add evidence to the record of a fair hearing,
once a case has to up to state court judicial review, it is critical that fair
hearings be handled expertly.
2.
Fair hearings are governed by 1 Texas Administrative Code Chapter 357.
Fair hearings are discussed in Chapter 14 of this Training Manual.
Although there is now a right, in Texas, to appeal administrative hearing decisions
into state court, one must first exhaust what is called “administrative review.”
This is a review by an attorney for the Texas Health and Human Services
Commission. 1 Texas Administrative Code Section 357.702. Requests for this
“administrative review” must be postmarked within thirty (30) days of the date of
the decision and should be addressed to the appropriate regional attorney.
Because Medicaid remains an entitlement program, a person wrongfully denied it
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can also seek legal advice regarding the possible success of a suit under 42 U.S.C.
§ 1983.
Question.
True or False.
At the request of the client, a non-lawyer can represent the client at a Medicaid fair
hearing.
____ True
169.
Further points:
____False
The POMS of Social Security and the State Medicaid Manual.
a.
The POMS of Social Security. As noted, because many aspects of Medicaid
eligibility are dealt with in the same way as under the Supplemental Security Income
(SSI) program administered by the Social Security Administration, it can be useful to
know how SSI deals, for instance, with resources, such as which resources “count.”
These matters are covered in the “Program Operations Manual System” of Social
Security. This “system” is often abbreviated “POMS.”
.
b.
State Medicaid Manual. The federal Centers for Medicare and Medicaid Services
maintain the “State Medicaid Manual.” It is a comprehensive explanation of what
various aspects of the Medicaid law require of states.
170. Rights of the elderly. Residents of Texas nursing facilities are protected by Texas’
“Rights of the Elderly Law.” That law is in Chapter 102 of the Human Resources Code. It
provides:
Sec. 102.001. Definitions.
In this chapter:
(1)
“Convalescent and nursing home” means an institution licensed by the Texas
Health and Human Services Commission under Chapter 242, Health and Safety
Code.
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(2)
“Home health services” means the provision of health service for pay or other
consideration in a patient’s residence regulated under Chapter 142, Health and
Safety Code.
(3)
“Alternate care” means services provided within an elderly individual’s own
home, neighborhood, or community, including:
(A)
day care;
(B)
foster care;
(C)
alternative living plans, including personal care services; and
(D)
supportive living services, including attendant care, residential repair, or
emergency response services.
(4)
“Person providing services” means an individual, corporation, association,
partnership, or other private or public entity providing convalescent and nursing
home services, home health services, or alternate care services.
(5)
“Elderly individual” means an individual 60 years of age or older.
Sec. 102.002. Prohibition.
(a)
A person providing services to the elderly may not deny an elderly
individual a right guaranteed by this chapter.
(b)
Each agency that licenses, registers, or certifies a person providing
services shall require the person to implement and enforce this chapter. A
violation of this chapter is grounds for suspension or revocation of the
license, registration, or certification of a person providing services.
Sec. 102.003. Rights of the Elderly.
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(a)
An elderly individual has all the rights, benefits, responsibilities, and
privileges granted by the constitution and laws of this state and the United
States, except where lawfully restricted. The elderly individual has the
right to be free of interference, coercion, discrimination, and reprisal in
exercising these civil rights.
(b)
An elderly individual has the right to be treated with dignity and respect
for the personal integrity of the individual, without regard to race, religion,
national origin, sex, age, disability, marital status, or source of payment.
This means that the elderly individual:
(c)
(1)
has the right to make the individual’s own choices regarding the
individual’s personal affairs, care, benefits, and services;
(2)
has the right to be free from abuse, neglect, and exploitation; and
(3)
if protective measures are required, has the right to designate a
guardian or representative to ensure the right to quality
stewardship of the individual’s affairs.
An elderly individual has the right to be free from physical and mental
abuse, including corporal punishment or physical or chemical restraints
that are administered for the purpose of discipline or convenience and not
required to treat the individual’s medical symptoms. A person providing
services may use physical or chemical restraints only if the use is
authorized in writing by a physician or the use is necessary in an
emergency to protect the elderly individual or others from injury. A
physician’s written authorization for the use of restraints must specify the
circumstances under which the restraints may be used and the duration for
which the restraints may be used. Except in an emergency, restraints may
only be administered by qualifying medical personnel.
(d)
A mentally retarded elderly individual with a court-appointed guardian of
the person may participate in a behavior modification program involving
use of restraints or adverse stimuli only with the informed consent of the
guardian.
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(e)
An elderly individual may not be prohibited from communicating in the
individual’s native language with other individuals or employees for the
purpose of acquiring or providing any type of treatment, care, or services.
(f)
An elderly individual may complain about the individual’s care or
treatment. The complaint may be made anonymously or communicated
by a person designated by the elderly individual. The person providing
service shall promptly respond to resolve the complaint. The person
providing services may not discriminate or take other punitive action
against an elderly individual who makes a complaint.
(g)
An elderly individual is entitled to privacy while attending to personal
needs and a private place for receiving visitors or associating with other
individuals unless providing privacy would infringe on the rights of other
individuals.
This right applies to medical treatment, written
communications, telephone conversations, meeting with family, and
access to resident councils. An elderly person may send and receive
unopened mail, and the person providing services shall ensure that the
individual’s mail is sent and delivered promptly. If an elderly individual
is married and the spouse is receiving similar services, the couple may
share a room.
(h)
An elderly individual may participate in activities of social, religious, or
community groups unless the participation interferes with the rights of
other persons.
(i)
An elderly individual may manage the individual’s personal financial
affairs. The elderly individual may authorize in writing another person to
manage the individual’s money. The elderly individual may choose the
manner in which the individual’s money is managed, including a money
management program, a representative payee program, a financial power
of attorney, a trust, or a similar method, and the individual may choose the
least restrictive of these methods. A person designated to manage an
elderly individual’s money shall do so in accordance with each applicable
program policy, law, or rule. On request of the elderly individual or the
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individual’s representative, the person designated to manage the elderly
individual’s money shall make available the related financial records and
provide an accounting of the money. An elderly individual’s designation
of another person to manage the individual’s money does not affect the
individual’s ability to exercise another right described by this chapter. If
an elderly individual is unable to designate another person to manage the
individual’s affairs and a guardian is designated by a court, the guardian
shall manage the individual’s money in accordance with the Probate Code
and other applicable laws.
(j)
An elderly individual is entitled to access to the individual’s personal and
clinical records. These records are confidential and may not be released
without the elderly individual’s consent, except the records may be
released:
(1)
to another person providing services at the time the elderly
individual is transferred; or
(2)
if the release is required by another law.
(k)
A person providing services shall fully inform an elderly individual, in
language that the individual can understand, of the individual’s total
medical condition and shall notify the individual whenever there is a
significant change in the person’s medical condition.
(l)
An elderly individual may choose and retain a personal physician and is
entitled to be fully informed in advance about treatment or care that may
affect the individual’s well-being.
(m)
An elderly individual may participate in an individual plan of care that
describes the individual’s medical, nursing, and psychological needs and
how the needs will be met.
(n)
An elderly individual may refuse medical treatment after the elderly
individual:
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(1)
is advised by the person providing services of the possible
consequences of refusing treatment; and
(2)
acknowledges that the individual clearly understands the
consequences of refusing treatment.
(o)
An elderly individual may retain and use personal possessions, including
clothing and furnishings, as space permits. The number of personal
possessions may be limited for the health and safety of other individuals.
(p)
An elderly individual may refuse to perform services for the person
providing services.
(q)
Not later than the 30th day after the date the elderly individual is admitted
for service, a person providing services shall inform the individual:
(1)
whether the individual is entitled to benefits under Medicare or
Medicaid; and
(2)
which items and services are covered by these benefits, including
items or services for which the elderly individual may not be
charged.
(r)
A person providing services may not transfer or discharge an elderly
individual unless:
(1)
the transfer is for the elderly individual’s welfare, and the
individual’s needs cannot be met by the person providing services;
(2)
the elderly individual’s health is improved sufficiently so that
services are no longer needed;
(3)
the elderly individual’s health and safety or the health and safety of
another individual would be endangered if the transfer or discharge
was not made;
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(s)
(4)
the person providing services ceases to operate or to participate in
the program that reimburses the person providing services for the
elderly individual’s treatment or care; or
(5)
the elderly individual fails, after reasonable and appropriate
notices, to pay for services.
Except in an emergency, a person providing services may not transfer or
discharge an elderly individual from a residential facility until the 30th day
after the date the person providing services provides written notice to the
elderly individual, the individual’s legal representative, or a member of the
individual’s family stating:
(t)
(1)
that the person providing services intends to transfer or to
discharge the elderly individual;
(2)
the reason for the transfer or discharge listed in Subsection (r);
(3)
the effective date of the transfer or discharge;
(4)
if the individual is to be transferred, the location to which the
individual will be transferred; and
(5)
the individual’s right to appeal the action and the person to whom
the appeal should be directed.
An elderly individual may:
(1)
make a living will by executing a directive under the Natural Death
Act (Chapter 672, Health and Safety Code) [as of June 2002:
Chapter 166, Subchapter B of the Health and Safety Code];
(2)
execute a durable power of attorney for health care under Chapter
135, Civil Practice and Remedies Code [As of June 2002: Chapter
166, Subchapter D of the Health and Safety Code (and now called
“Medical Power of Attorney”)]; or
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(3)
designate a guardian in advance of need to make decisions
regarding the individual’s health care should the individual become
incapacitated.
Sec. 102.004. List of Rights.
(a)
A person providing services shall provide each elderly individual with a
written list of the individual’s rights and responsibilities, including each
provision of Section 102.003, before providing services or as soon after
providing services as possible, and shall post the list in a conspicuous
location.
(b)
A person providing services must inform an elderly individual of changes
or revisions in the list.
Sec. 102.005. Rights Cumulative.
171. Rights of residents of Texas nursing facilities. Residents of Texas nursing facilities
are also protected by Section 242.501 et seq. of the Texas Health and Safety Code, titled “Rights
of Residents.” It provides:
Sec. 242.501. Resident's Rights.
(a)
The department by rule shall adopt a statement of the rights of a resident.
The statement must be consistent with Chapter 102, Human Resources
Code, but shall reflect the unique circumstances of a resident at an
institution. At a minimum, the statement of the rights of a resident must
address the resident's constitutional, civil, and legal rights and the
resident's right:
(1)
to be free from abuse and exploitation;
(2)
to safe, decent, and clean conditions;
(3)
to be treated with courtesy, consideration, and respect;
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(4)
to not be subjected to discrimination based on age, race,
religion, sex, nationality, or disability and to practice the
resident's own religious beliefs;
(5)
to privacy, including privacy during visits and telephone calls;
(6)
to complain about the institution and to organize or
participate in any program that presents residents' concerns to
the administrator of the institution;
(7)
to have information about the resident in the possession of
the institution maintained as confidential;
(8)
to retain the services of a physician the resident chooses,
at the resident's own expense or through a health care plan, and
to have a physician explain to the resident, in language that the
resident understands, the resident's complete medical condition,
the recommended treatment, and the expected results of the
treatment;
(9)
to participate in developing a plan of care, to refuse
treatment, and to refuse to participate in experimental research;
(10)
to a written statement or admission agreement describing the
services provided by the institution and the related charges;
(11)
to manage the resident's own finances or to delegate that
responsibility to another person;
(12)
to access money and property that the resident has deposited
with the institution and to an accounting of the resident's money
and property that are deposited with the institution and of all
financial transactions made with or on behalf of the resident;
(13)
to keep and use personal property, secure from theft or loss;
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(b)
(c)
(14)
to not be relocated within the institution, except in accordance with
standards adopted by the department under Section 242.403;
(15)
to receive visitors;
(16)
to receive unopened mail and to receive assistance in
reading or writing correspondence;
(17)
to participate in activities inside and outside the institution;
(18)
to wear the resident's own clothes;
(19)
to discharge himself or herself from the institution unless
the resident is an adjudicated mental incompetent;
(20)
to not be discharged from the institution except as provided
in the standards adopted by the department under Section 242.403;
and
(21)
to be free from any physical or chemical restraints imposed
for the purposes of discipline or convenience, and not required
to treat the resident's medical symptoms.
A right of a resident may be restricted only to the extent necessary to
protect:
(1)
a right of another resident, particularly a right of the
other resident relating to privacy and confidentiality; or
(2)
the resident or another person from danger or harm.
The department may adopt rights of residents in addition to
those required by Subsection (a) and may consider additional
rights applicable to residents in other jurisdictions.
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Sec. 242.502. Rights Cumulative.
The rights established under this subchapter are cumulative of the rights established
under any other law.
Sec. 242.503. Duties of Institution.
(a)
An institution shall develop and implement policies to protect resident
rights.
(b)
An institution and the staff of an institution may not violate a right adopted
under this subchapter.
Sec. 242.504. Information About Resident's Rights and Violations.
(a)
(b)
(c)
An institution shall inform each resident and the resident's next of kin or
guardian of the rights adopted under this subchapter and shall explain the
rights to the resident and the resident's next of kin or guardian. The
institution shall provide a written statement of:
(1)
all of the resident's rights; and
(2)
any additional rules adopted by the institution involving resident
rights and responsibilities.
The institution shall provide a copy of the written statement to:
(1)
each resident;
(2)
the next of kin or guardian of each resident; and
(3)
each member of the staff of the institution.
The institution shall maintain a copy of the statement, signed by the
resident or the resident's next of kin or guardian, in the institution's
records.
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(d)
The institution shall post the written statement in the manner required by
Section 242.042.
(e)
An institution that has been cited by the department for a violation of any
right adopted under this subchapter shall include a notice of the citation in
the informational materials required by Section 242.042(a)(8). The notice
of citation must continue to be included in the informational materials
until any regulatory action or proceeding with respect to the violation is
complete and the department has determined that the institution is in full
compliance with the applicable requirement.
172. Medicaid applications are considered applications for health insurance, in regard to
the anti-fraud provisions of the Kassebaum-Kennedy law. Those who assist others in
completing applications for health care should be aware of the need for unwavering truthfulness
in providing information, on the part of applicants and those who assist them. The 104th
Congress passed the Kassebaum-Kennedy health insurance law, as Public Law 104-191. It is
called the "Health Insurance Portability and Accountability Act of 1996." Although the law has
received publicity because it improves employment-based health insurance, the law also creates
new crimes related to health care. Persons in need of health care, and their advisors, must be
aware of these new criminal prohibitions:
a.
The new law criminalizes the use of "schemes" or artifices (a) to defraud any
health care benefit program or (b) to obtain by false pretenses, representations, or
promises, any of the money or property owned by or under the custody or control
of, any health care benefit program. A fine, or 10 years imprisonment, or both, can
be imposed. If the violation results in serious bodily injury, up to 20 years
imprisonment can be imposed. 18 U.S.C. § 1437.
b.
Another new crime is also very important to know about. It concerns "False
statements relating to health care matters." The law says:
Whoever, in any matter involving a health care benefit program, knowingly and
willfully --
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(1)
(2)
falsifies, conceals, or covers up by any trick, scheme, or device a
material fact; or
makes any materially false, fictitious, or fraudulent statements or
representations, or makes or uses any materially false, fictitious, or
fraudulent statement or entry,
in connection with the delivery of or payment for health care benefits, items, or
services, shall be fined under this title or imprisoned not more than 5 years, or
both. 18 U.S.C. § 1035.
c.
Under § 201 of the Kassebaum-Kennedy law (enacted in 1996), federal
appropriations to curtail health care fraud and abuse were slated to exceed $1
billion within seven years (in other words, by 2002). The FBI, the U.S. Attorney
General, the Inspector General of the U.S. Department of Health and Human
Services, and the Secretary of that Department will each receive part of these vast
new funds to combat fraud and abuse. The Kennedy-Kassebaum law increased the
stakes for those committing health care fraud and abuse.
d.
Under 42 U.S.C. §1396w, each state is have a system to verify assets (of Medicaid
applicants) in financial institutions. By September 30, 2013, this requirement will
be applicable in the case of all Medicaid “enrollees” (the term used by the statute).
173. Truthful information is required. Thus, in completing the Medicaid applications, one
must be scrupulous in providing truthful information.
174. Back-up is available for Benefits Counselors. As with other matters, Benefits
Counselors of Texas Area Agency on Aging Systems of Access and Assistance can call the
Legal Hotline for Texans for back-up and support in assisting older Texans on long-term care
Medicaid matters. Benefits Counselors of Texas’ Area Agency on Aging Systems of Access and
Assistance have a dedicated toll-free phone line that they can call for back-up and assistance in
serving older persons and persons with disabilities.
175. Recovery by the State (Medicaid Estate Recovery). The following information
concerning Medicaid estate recovery is provided in order that the Benefits Counselor will have
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basic information regarding this feature of long-term care Medicaid – a feature that is required
by the federal Medicaid Law at 42 U.S.C. §1396p(b)(1) . However, it must be kept in mind that
Texas’ Medicaid estate recovery program can only take legal action regarding a claim for
recovery, in a probate of an estate. The Medicaid claim is a class 7 claim in probate. Thus,
Medicaid estate recovery claims should be dealt with by attorneys. Moreover, Texas Medicaid
estate recovery operates after the death of the Medicaid recipient; Texas does not use liens
during the lifetime of the recipient, in Medicaid estate recovery (some states do use liens during
the lifetime of the recipient, to protect the interest of the public). Thus, Medicaid estate recovery
in Texas (1) requires the assistance of a lawyer to deal with a claim in probate, and (2) affects the
survivors of the recipient of long-term care Medicaid; the recipient will have departed.
A.
Medicaid Estate Recoveries are required by federal law. The Texas Legislature
has assigned to the Texas Health and Human Services Commission the duty of
implementing this federal requirement.
Texas Government Code, §531.077.
The
proposed Texas estate recovery rules were published at 29 Texas Register 4038, on April
30, 2004. The proposed Texas rules became part of 1 TAC Chapter 373. The Texas
Department of Aging and Disability Services (DADS) has extensive information in
English and Spanish on its website, regarding Medicaid Estate Recovery.
The
information provided here regarding Medicaid estate recovery is meant to provide
thorough information concerning the law and administrative rules on Medicaid Estate
Recovery. However, Benefits Counselors of Texas Area Agency on Aging Systems of
Access and Assistance who perceive that they are being asked to go beyond providing
information from the DADS website on Medicaid Estate Recovery should contact the
Legal Hotline for back-up and support. Because the Texas Medicaid program only
recovers against a probate estate, going beyond the information and resources at the
DADS website means going into “the practice of law.”
Question.
Which agency has extensive information in English and Spanish on its website, regarding
Medicaid Estate Recovery?
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A.
The Texas Department of Transportation.
B.
The Texas Department of Information Resources.
C.
The Texas Department of Aging and Disability Services
D.
The Texas Department of Licensing and Regulation.
Answer:_____________________________________
B. The federal law requires "recovery" or "adjustment" for "correctly paid" Medicaid
from the estates of:
i.
Persons 55 and older, for payments for nursing facility services, home and
community-based services, related hospital and prescription drug services.
ii.
Persons in nursing facilities, intermediate care facilities for the mentally
retarded, or other medical institutions who pay a share of the cost of care and
cannot "reasonably be expected, ever, to be discharged"--the cross-references
section of the Medicaid statute requires an administrative hearing after notice to
determine ability to return home.
iii.
Persons who have received or may receive benefits under a long-term care
insurance policy (where assets are disregarded).
The state must seek
reimbursement or adjustment from the individual's estate for long-term care
services.
C.
An estate is defined as all real and personal property under Texas probate law.
The federal law also now allows states to attempt to recover all other assets, including
those conveyed to a survivor, heir, or assign of the decedent through joint tenancy,
tenancy in common, survivorship, life estate, living trust, or other arrangement.
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D.
There is a hardship waiver provision. Also, estate recovery under the federal law
cannot occur as long the recipient of long-term care Medicaid has a surviving spouse or
disabled child.
E.
The Texas estate recovery rules took effect March 1, 2005.
F.
As of
January, 2013, neither the Texas Medicaid Estate Recovery Statute
(Section 531.077 of the Government Code) nor the rules at 1 TAC Chapter 373 call for
the use of liens.
176.
Texas' adopted Medicaid Estate Recovery rules - general. Consistent with its duty
under the Older Americans Act to inform older persons of their rights and responsibilities, the
Texas Department of Aging and Disability Services has very detailed information about Texas’
estate
recovery
program
on
its
website.
The
link
to
the
information
is
http://www.dads.state.tx.us/services/estate_recovery/. There one will find information in both
English and Spanish, including pertinent forms, in regard to Texas’ estate recovery program.
177.
rules.
The location in the Texas Administrative Code of the Medicaid Estate Recovery
The adopted Texas Medicaid Estate recovery rules are at 1 Texas Administrative Code
Chapter 373. Chapter 373 of Title 1 of the Texas Administrative Code has three subchapters:
Subchapter A - General; Subchapter B - Recovery Claims; and Subchapter C - Notice.
Subchapter A has three parts: § 373.101 - Purpose; § 373.103 - Applicability; and § 373.105 Definitions. Subchapter B has ten parts: § 373.201 - Basis for Claims; § 373.203 - Claims
Procedures; § 373.205 - Medicaid Estate Recovery Program (MERP) Claim; § 373.207 Exemptions from Claims; § 373.209 - Undue Hardship Waivers; § 373.211 - Right to a Review
of an Undue Hardship Waiver Denial; § 373.213 - Deduction Allowed for Expenses for Home
Maintenance and Costs of Care; § 373.215 - Recovery Not Cost-Effective; § 373.217 - Claim
Amount; and § 373.219 - Claim Payments. Subchapter C has four parts: § 373.301 - Notice
Upon Application; § 373.303 - Additional Application Notice Provision to Recipients and
Others; § 373.305 - Medicaid Application Estate Recovery Notice Contents; and § 373.307 Notice of Intent to File A Claim upon the Death of a Medicaid Recipient.
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178.
The stated purpose of the Texas Medicaid Estate Recovery rules. The purpose of the
Medicaid estate recovery rules is stated as: “The purpose of this chapter is to implement section
531.077, Government Code, consistent with applicable federal law at 42 U.S.C. § 1396p(b)(1),
which requires the Health and Human Services Commission, as the State Medicaid Agency, to
operate a Medicaid Estate Recovery Program (MERP) to recover the cost of Medicaid longterm care benefits received by certain Medicaid recipients.” 1 TAC § 373.101. Section 531.077
of the Texas Government Code also requires that Texas’ share of receipts from Medicaid estate
recovery is to go into a long-term care fund, for community-based and facility-based care.
179.
Applicability of Medicaid Estate Recovery in Texas.
The rules state that the
applicability of Medicaid estate recovery is:
(a) A Medicaid Estate Recovery claim may be filed against the estate of a deceased
Medicaid recipient for covered Medicaid services if the recipient:
(1) Was age 55 years or older at the time the services were received; and
(2) Initially applied for covered Medicaid long-term care services on or after March
1, 2005, the effective date of these rules.
(b) For purposes of this chapter, an individual will be considered to be age 55 as of the
first day of the month following the month in which the recipient attains the age of 55.
(c) Covered Medicaid long-term care services include the following services provided to
a recipient age 55 years or older under the State of Texas Medicaid plan under Title XIX
of the Social Security Act (SSA):
(1) Nursing facility services;
(2) Intermediate Care Facilities for the Mentally Retarded (ICF-MR);
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(3) Home and Community-Based Services (§ 1915(c), SSA) and Community
Attendant Services (§ 1929(b), SSA); and
(4) Related costs of hospital and prescription drug services.
(d) For the purposes of this chapter, covered services do not include services provided
before the effective date of these rules.
1 T.A.C § 373.103
180.
Definitions in the Texas Medicaid Estate Recovery rules.
The rules use these
definitions:
(1) Applied for Covered Medicaid Long-Term Care Services -- An individual or his or
her representative files an application, a nursing facility submits an admission notice and
medical necessity determination, or an individual elects Medicaid waiver services, which
results in a covered service being approved under Medicaid.
(2) Claim -- A right to recover the total amount of Medicaid assistance paid for the
following services: nursing facility; Intermediate Care Facility for the Mentally Retarded
(ICF-MR); Home and Community-Based Services (§ 1915(c), SSA) and Community
Attendant Services (§ 1929(b), SSA); and all related hospital and prescription drug
services, provided from the time the decedent was 55 years of age or older.
(3) Cost-effective -- Economical to the extent that the amount reasonably expected to be
recovered by the Medicaid Estate Recovery Program exceeds the cost of recovery by the
program as provided in this chapter.
(4) Decedent -- A deceased individual who was 55 years of age or older at the time that
covered Medicaid long-term care assistance was received.
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(5) Effective date -- March 1, 2005, the date on which these rules take effect under §
2001.036, Government Code.
(6) Estate -- The real and personal property of a decedent, both as such property
originally existed and as from time to time changed in form by sale, reinvestment, or
otherwise, and as augmented by any accretions and additions and substitutions that are
included in the definition of the probate estate found in § 3(l), Definitions and Use of
Terms, Texas Probate Code.
(7) Federal Poverty Level -- Income guidelines established annually by the federal
government.
(8) Heirs -- Those persons, including the surviving spouse, who are entitled under the
statutes of descent and distribution to the estate of a decedent who dies intestate, as
defined in § 3(o), Definitions and Use of Terms, Texas Probate Code.
(9) Intestate -- To die without leaving a valid will.
(10)
Legatee -- Any person entitled to a legacy under a will, as defined in § 3(s),
Definitions and Use of Terms, Texas Probate Code.
(11)
MERP -- The Medicaid Estate Recovery Program.
(12)
Personal
Representative
--
Includes
executor,
independent
executor,
administrator, temporary administrator, together with their successors as defined in §
3(aa), Definitions and Use of Terms, Texas Probate Code.
(13)
Recipient -- An individual who received covered long-term care Medicaid
services on or after the effective date of these rules.
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(14)
Value of real property -- Property value determined by current year tax appraisal
district.
1 TAC § 373.105
181.
The basis for a Medicaid Estate Recovery claim in Texas, as stated in the TAC rules.
The basis for a Medicaid estate recovery claim is stated as: The acceptance of Medicaid medical
assistance, as defined by Title XIX of the Social Security Act, including mandatory and optional
payments under the Social Security Act, provides a basis for: A Class 7 probate claim, as
defined in § 322 of the Texas Probate Code, Classification of Claims against Estates of
Decedents, in favor of the Medicaid Estate Recovery Program as an interested party in the estate
of the deceased Medicaid recipient. 1 TAC § 373.201.
182.
The Probate process provides the only route for the Medicaid Estate Recovery
Program (MERP) to file a claim, in Texas. The Texas Medicaid Estate Recovery rules
provide:
(a) The Medicaid Estate Recovery Program (MERP) may file or present a: Class 7
probate claim under § 298, Claims Against Estates of Decedents, Texas Probate Code,
against the estate of deceased Medicaid recipients in accordance with the priorities
contained in § 322, Classification of Claims against Estates of Decedents, Texas Probate
Code.
(b) A claim may be filed in accordance with applicable provisions of the Texas Probate
Code, including § 298, Claims Against Estates of Decedents, which allows unsecured
claims to be presented at any time before the estate is closed or within 4 months of
receipt of notice from the estate administrator.
1 TAC § 373.203.
183.
The Texas Medicaid Estate Recovery Rules specify the content of the MERP claim.
The rules specify the contents of the claim:
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(a) Contents of MERP Recovery Claim. The MERP claim will be presented to the estate
personal representative (executor, administrator, or guardian) or filed by depositing it in
the appropriate Probate Court and will include the amount of the claim, the date or dates
of the covered Medicaid services provided, and a statement that to MERP's best
knowledge the deceased Medicaid recipient had:
(1) No surviving spouse;
(2) No surviving child under age 21;
(3) No surviving child of any age who is blind or disabled as defined by 42 U.S.C. §
1382c;
(4) No unmarried adult child residing continuously in the decedent's homestead for at
least one year prior to the time of the Medicaid recipient's death; and
(5) That to the best knowledge of the MERP no undue hardship, as defined by these
rules, exists and that recovery will be cost-effective.
(b) A Medicaid Estate Recovery (MERP) claim will be filed within 70 days after MERP
has actual notice of the death of a Medicaid recipient aged 55 years or older who received
covered long-term care services.
1 TAC § 373.205.
184.
The Texas Medicaid Estate Recovery Rules specify the exemptions from a MERP
claim. The rules also specify exemptions from the claim:
(a) Under 1 TAC §373.207 Medicaid Estate Recovery claims will be sought only after
the death of the Medicaid recipient, and if there is no:
(1) Surviving spouse;
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(2) Surviving child or children under 21 years of age;
(3) Surviving child of any age who is blind or disabled as defined by 42 U.S.C. §
1382c; or
(4) Unmarried adult child residing continuously in the decedent's homestead for at
least one year prior to the time of the Medicaid recipient's death.
(b) Certain assets and resources of American Indians (AI) and Alaska Natives (AN) are
exempt from estate recovery claims.
The following AI/AN income, resources, and
property are exempt from Medicaid Estate Recovery:
(1) Certain AI/AN income and resources (such as interests in and income derived
from Tribal land and other resources currently held in trust status and judgment funds
from the Indian Claims Commission and the U.S. Claims Court) that are exempt from
Medicaid estate recovery by other laws and regulations;
(2) Ownership interest in trust or non-trust property, including real property and
improvements:
(A)
Located on a reservation (any federally recognized Indian Tribe's
reservation, pueblo, or colony, including former reservations in Oklahoma,
Alaska Native regions established by Alaska Native Claims Settlement Act and
Indian allotments) or near a reservation as designated and approved by the Bureau
of Indian Affairs of the U.S. Department of the Interior; or
(B)
For any federally recognized Tribe not described in subparagraph (A) of
this paragraph located within the most recent boundaries of a prior Federal
reservation.
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(C)
Protection of non-trust property described in subparagraphs (A) and (B) of
this paragraph is limited to circumstances when it passes from an Indian (as
defined in section 4 of the Indian Health Care Improvement Act) to one or more
relatives (by blood, adoption, or marriage), including Indians not enrolled as a
member of a Tribe and non-Indians such as spouses and step-children, that their
culture would nevertheless protect as family members; to a Tribe or Tribal
organization; and/or to one or more Indians;
(3) Income left as a remainder in an estate derived from property protected in
paragraph (2) of this subsection, that was either collected by an Indian, or by a Tribe
or Tribal organization and distributed to Indian(s), as long as the individual can
clearly trace it as coming from protected property;
(4) Ownership interests left as a remainder in an estate in rents, leases, royalties, or
usage rights related to natural resources (including extraction of natural resources or
harvesting of timber, other plants and plant products, animals, fish, and shellfish)
resulting from the exercise of Federally-protected rights, and income either collected
by an Indian, or by a Tribe or a Tribal organization and distributed to Indian(s)
derived from these sources as long as the individual can clearly trace it as coming
from protected sources; and
(5) Ownership interests or usage rights to items not covered by paragraphs (1) - (4) of
this subsection that have unique religious, spiritual, traditional, and/or cultural
significance, or rights that support subsistence or a traditional life style according to
applicable Tribal law or custom.
(c) American Indians and Alaska Natives Income, Resources, and Property Not Exempt
from Medicaid Estate Recovery include:
(1) Ownership interests in assets and property, both real and personal, that are not
described in subsection (b) of this section; or
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(2) Any income and assets left as a remainder in an estate that do not derive from
protected property or sources in subsection (b) of this section.
(d) Government reparation payments to individuals in special populations are exempt
from Medicaid estate recovery claims.
1 TAC §373.207
185.
Federal law requires that Medicaid Estate Recovery avoid undue hardship. In
regard to avoiding undue hardship, the Texas MERP rules provide:
(a) The Medicaid Estate Recovery Program (MERP) will not recover from estates if
recovery would cause undue hardship. An undue hardship waiver request form will be
provided with the MERP Notice of Intent to File a Claim, and undue hardship waiver
requests must be made within 60 days of the date of the MERP Notice of Intent to File a
Claim. The form is Form 5006. This form is in the Medicaid Estate Recovery page of
the website of the Texas Department of Aging and Disability Services.
(b) An undue hardship does not exist solely because:
(1) Recovery would prevent heirs or legatees from receiving an anticipated
inheritance; or
(2) The circumstances giving rise to the hardship were created by, or are the results
of, estate planning methods under which assets were sheltered or divested contrary to
the requirements of Medicaid law in order to avoid estate recovery.
(c) Undue hardship waivers include:
(1) The estate property subject to recovery has been the site of the operation of a
family business, farm, or ranch at that location for at least 12 months prior to the
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death of the decedent; is the primary income producing asset of heirs and legatees,
and produces 50 percent or more of their livelihood; and recovery by the State would
affect the property and result in the heirs or legatees losing their primary source of
income;
(2) Heirs and legatees would become eligible for public and/or medical assistance if a
recovery claim were made;
(3) Allowing one or more survivors to receive the estate will enable him or her or
them to discontinue eligibility for public and/or medical assistance;
(4) The Medicaid recipient received medical assistance as the result of a crime, as
defined by Texas law, committed against the recipient; or
(5) other compelling reasons.
(d) Undue Hardship Waivers Applicable to Homesteads. After receiving a Medicaid
estate recovery claim, an heir may assert that recovery against a deceased Medicaid
recipient's homestead would be an undue hardship and that the homestead should
therefore be exempt from recovery for the cost of Medicaid long-term care services. The
Health and Human Services Commission will exempt a decedent's home from estate
recovery based on undue hardship when the following conditions have been established
to the Commission's satisfaction:
(1) The tax appraisal district value of the homestead is less than $100,000. If the tax
appraisal district value of the homestead exceeds this amount, the first $100,000 of
the tax appraisal district value for the most recent tax year at the time of the
recipient's death shall be exempt from estate recovery. Any equity value of the tax
appraisal district value for the most recent tax year at the time of the recipient's death
in excess of $100,000 is subject to estate recovery.
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(2) One or more siblings or direct descendents of the deceased person (lineal heir(s),
such as children and grandchildren) will inherit the homestead of the deceased
Medicaid recipient, provided that each sibling or lineal heir inheriting the homestead
has gross family income below 300 percent of the Federal Poverty Level.
(3) When there are multiple heirs and not all heirs qualify for the hardship waiver,
only that percentage of the homestead that corresponds to the qualifying heir or heirs'
share of the homestead will be exempt from Medicaid estate recovery.
(4) "300 percent of the federal poverty level" is a gross income test; no exclusions or
deductions are allowed.
(5) "Family" means that the Health and Human Services Commission will consider
each heir separately. Heirs will not be aggregated into one family unless the heirs are
minor children who are siblings. In the case of the adult heir, his or her family will be
limited to the heir, the heir's spouse, and the heir's biological or legally adopted minor
children and stepchildren residing in the household. In the case of the heir who is a
minor, the heir's family will be the heir, his or her parent(s) or stepparent residing in
the household, and the heir's minor siblings residing in the household, including half-,
step-, and legally adopted siblings.
(e) HHSC has exclusive authority to waive its Medicaid estate recovery claim and grant
undue hardship waivers as determined by the Medicaid Estate Recovery Program
(MERP) on an individual case-by-case basis. An undue hardship waiver determination
will be made by MERP within 40 days of the receipt of an undue hardship waiver request
form and all required necessary supporting documents by MERP.
(f) Undue hardship waiver request forms usually have the address stated on them, to
which the form should be returned (the address has changed from time to time, and thus
the form that the survivor(s) receive from the Medicaid Estate Recovery program should
be scrutinized for the address to which the current Form 5006 is to be returned).
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186.
The Texas Medicaid Estate Recovery rules have a procedure to request a review of
a denial of a request for an undue hardship waiver. There is a right to a review of a denial of
undue hardship if requested within 60 days of the denial. 1 TAC § 373.211.
187.
The Texas Medicaid Estate Recovery rules provide for deductions from the MERP
claim. Even if a claim will be pursued, there can be deductions for "Home Maintenance" and for
"Costs of Care." The Texas MERP rules provide:
(a) An amount equal to necessary and reasonable maintenance expenses and taxes may
be deducted from the Medicaid Estate Recovery Program (MERP) claim for maintaining
the home of the deceased Medicaid recipient, provided that sufficient supporting
documentation of these expenditures, such as receipts, is provided to MERP by estate
personal representatives, heirs, or legatees.
Necessary and reasonable expenses for
maintaining the home include real estate taxes, utility bills, insurance, home repairs, and
home maintenance expenses such as lawn care.
(b) An amount equal to the necessary and reasonable expenses for the direct payment of
the costs of care (including payment of personal attendant care) provided for a deceased
Medicaid recipient that enabled the recipient to remain in his or her home and thereby
delayed the institutionalization of the Medicaid recipient may be deducted from the
MERP claim, provided that sufficient supporting documentation of these expenditures,
such as receipts, is provided to MERP by estate personal representatives, heirs, or
legatees.
(c) Requests for obtaining allowable deductions from MERP claims for expenses under
subsections (a) or (b) of this section must be made in writing within 60 days after receipt
of the Notice of the Intent to File a Claim. All supporting documentation must be
attached to the request and sent to MERP, Home Maintenance/Costs of Care Request,
P.O. Box 13247, Austin, Texas 78711. This is according to the rule in effect in January
of 2013. As always, correspondence and notices from the Medicaid Estate Recovery
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Program, from the Texas Department of Aging and Disability Services, and from the
Texas Health and Human Services Commission must be scrutinized to know the current
address for response. The notice(s) may also come in the name of a contractor for any of
the foregoing.
1 TAC § 373.213
188.
Texas’ Medicaid Estate Recovery rules only allow for a MERP claim to be filed if
the claim will be “cost-effective.” In Texas, the MERP rules provide that claims will only be
filed if they are "cost-effective." The rules state:
No Medicaid estate recovery claim will be filed if it is not cost effective. A claim will not be
cost-effective if:
(1) the value of the recoverable estate is $10,000 or less,
(2) the recoverable amount of Medicaid costs is $3,000 or less, or
(3) the cost involved in the sale of the property would be equal to or greater than the value of
the property.
1 TAC §373.215
189.
The Texas Medicaid Estate Recovery rules have provisions regarding the
calculation of the MERP claim.
In regard to calculating the claim amount, the rules provide:
(a) The amount of the Medicaid Estate Recovery Program (MERP) claim will be
calculated as the amount paid under § 373.103(c) of this title for the benefit of a
Medicaid recipient for covered medical assistance services received after the Medicaid
recipient reached 55 years of age.
(b) No claim will be filed for services prior to the effective date of these rules.
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(c) The claim amount may be amended prior to and after MERP files the recovery claim.
1 TAC § 373.217
190.
The Texas Medicaid Estate Recovery rules address the payment of MERP claims.
The payment of claims is addressed as follows:
(a) All payments on estate recovery claims must be made payable to the "Texas Medicaid
Account for Long-Term Care," and must be sent to MERP, P.O. Box 13247, Austin,
Texas 78711. This is according to the rule in effect in January of 2013. As always,
correspondence and notices from the Medicaid Estate Recovery Program, from the Texas
Department of Aging and Disability Services, and from the Texas Health and Human
Services Commission must be scrutinized to know the current address for response. The
notice(s) may also come in the name of a contractor for any of the foregoing.
(b) HHSC MERP may compromise, settle, or waive any claim that does not qualify for
an undue hardship waiver upon good cause shown. Interest on the unpaid portion of any
claim is the same as the amount provided under § 2251.025(b), Government Code.
1 TAC § 373.219
191.
The Texas Medicaid Estate Recovery rules address notices in the Texas Medicaid
Estate Recovery Program. Subchapter C of the rules has the notice provisions. Subchapter C
of the rules contains three rules that deal with notice upon application for long-term care
Medicaid, and one rule that deals with notice upon the death of the recipient of long-term care
Medicaid.
192.
The first MERP rule regarding notice upon application for long-term care
Medicaid.
The rule at 1 TAC §373.301 provides:
(a) Written notice of the MERP provisions will be provided to:
(1) Individuals for Medicaid-covered nursing facility services:
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(A)
With an application packet or notice or eligibility for Medicaid nursing
facility services;
(B)
Within 14 days of the Department of Aging and Disability Services'
receipt of a nursing facility admission notice for a Medicaid recipient.
(2) Individuals for Medicaid-covered Home and Community-Based Services (§
1915(c), Social Security Act) and Community Attendant Services (§ 1929(b), Social
Security Act):
(A)
Prior to an individual's signing an election statement for Home and
Community-Based Services, as an alternative to institutionalization; or
(B)
At the initial home visit for Community Attendant Services;
(3) Individuals for Medicaid-covered mental retardation services by the Local Mental
Retardation Authority, in conjunction with other notification described in:
(A)
40 TAC § 9.244, for Intermediate Care Facilities for the Mentally
Retarded;
(B)
40 TAC § 9.164, for the Home and Community-Based Services waiver;
(C)
40 TAC § 9.567, for the Texas Home Living waiver.
and
(4) Individuals committed by a court order for evaluation of fitness or competency to
state Intermediate Care Facilities for the Mentally Retarded (ICFMR) will be notified
of the MERP provisions by facility staff at the time of their admission to the facility.
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(b) Medicaid long-term care services provided before the effective dates of these rules
are not covered services for the purpose of MERP.
1 TAC § 373.301
193.
The second MERP rule regarding notice upon application for long-term care
Medicaid. The rule at 1 TAC §373.303 additionally provides:
Additional application notice is as follows:
Written notice about the Medicaid Estate Recovery Program (MERP) will be
provided to the following, if known by MERP, upon request for an application for
Medicaid benefits, release from a waiver interest list, or notice of admission to a
nursing facility or an Intermediate Care Facility for the Mentally Retarded (ICFMR):
(1)
The recipient;
(2)
The recipient's guardian of the person, if any; guardian of the estate, if
any; or guardian of the person and estate, if any provided that the name and
address of the guardian or guardians are known;
(3)
The recipient's agent under a durable power of attorney if the name and
address of the agent are known;
(4)
The recipient's agent under a medical power of attorney if the name and
address of the agent are known: or
(5)
If none of the above are known, to family members acting on behalf of the
recipient, provided that the name and address of those family members acting on
behalf of the recipient are known.
1 TAC § 373.303
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194.
The contents of the Texas MERP notice at the time of application for long-term care
Medicaid are specified in Subchapter C of the rules. The contents of the application notice
are as follows:
The written notice provided about the Medicaid Estate Recovery Program (MERP) to
those listed in § 373.303 of this chapter (relating to Additional Application Notice
Provision to Recipients and Others) will contain the following information:
(1) Description of the Medicaid Estate Recovery Program;
(2) Information as to covered Medicaid long-term care services subject to estate
recovery;
(3) Claim procedures found in § 322, Classification of Claims Against Estates of
Decedents, Texas Probate Code;
(4) Information as to applicable "look-back" penalties for transfers of property for
less than market value when applying for Medicaid benefits described at 1 TAC §
358.430(e);
(5) Description of undue hardship waiver requests and related request procedures in
regard to any recovery claim; and
(6) Information concerning the MERP Notice of Intent to File a Claim and the
Medicaid Estate Recovery Claim on the death of a Medicaid recipient.
1 TAC § 373.305
195.
Subchapter C of the Texas Medicaid Estate Recovery rules also contains the
provisions for the notice on the death of the Medicaid recipient. The notice to be given upon
the death of the Medicaid recipient is as follows:
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(a) The Medicaid Estate Recovery Program (MERP) will, within 30 days of the
notification of the death of a Medicaid recipient, provide a Notice of Intent to File a
Claim, to the following:
(1) Estate representative;
(2) Recipient's guardian of the person, if any; guardian of the estate, if any; or
guardian of the person and estate, if any provided that the name and address of the
guardian or guardians are known by MERP;
(3) Recipient's agent under a durable power of attorney if the name and address of the
agent are known by MERP;
(4) Recipient's agent under a medical power of attorney if the name and address of
the agent are known by MERP; or
(5) If none of the above are known, family members who have acted on behalf of the
recipient provided that the name and address of those family members who have
acted on behalf of the recipient are known by MERP.
(b) Contents of Notice of Intent to File a Claim. Written notice of MERP's intent to file
an estate recovery claim against the estate of a deceased Medicaid recipient for covered
services will be provided to individuals identified in subsection (a) of this section. The
notice will include the following:
(1) A program overview;
(2) A questionnaire that seeks to determine whether the deceased recipient had:
(A)
A surviving spouse;
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(B)
A surviving child under age 21;
(C)
A surviving child of any age who is blind or disabled, as defined by 42
U.S.C. § 1382c; or
(D)
An unmarried adult child residing continuously in the decedent's
homestead for at least one year prior to the time of the Medicaid recipient's death.
(c) An undue hardship waiver request form.
Undue hardship request forms and
supporting documentation must be submitted to MERP within 60 days of the date of the
Notice of Intent to File a Claim. No action will be taken on an undue hardship request
that is submitted without supporting documentation.
The request form and
documentation should be sent to MERP, Hardship Waiver Request, P.O. Box 13247,
Austin, Texas 78711. This is according to the rule in effect in January of 2013. As
always, correspondence and notices from the Medicaid Estate Recovery Program, from
the Texas Department of Aging and Disability Services, and from the Texas Health and
Human Services Commission must be scrutinized to know the current address for
response.
The notice(s) may also come in the name of a contractor for any of the
foregoing.
(d) The Notice of Intent to File a Claim will state the date that MERP received
notification of the death of a Medicaid recipient and the source of the death notification
of the Medicaid recipient.
1 TAC § 373.307
196.
Federal Guidelines on Medicaid Estate Recovery.
The advocate should also be
familiar with the federal guidelines on estate recovery. These are in the State Medicaid Manual
at Section 3810. The State Medicaid Manual is published by the federal Centers for Medicare
and Medicaid Services (CMS).
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197.
The advocate should be familiar with the “Receipt Acknowledgement” form of the
Texas Medicaid Estate Recovery program.
Advocates should also be familiar with the
Medicaid Estate Recovery Program Receipt Acknowledgement form of the Texas Department of
Aging and Disability Services (DADS). This is Form 8001. It is a document presented by
DADS to those who apply for long-term care. If the Form 8001 is not signed, the application
will be processed as if it had been signed.
198.
Texas Department of Aging and Disability Services website information on Estate
Recovery.
At the website of the Texas Department on Aging and Disability Services, at
http://www.dads.state.tx.us/services/estate_recovery/index.html
one can find an overview of
Medicaid Estate Recovery in Texas, and links to these items:
Receipt Acknowledgement Form (Form 8001);
Application for Hardship Waiver (Form 5006);
Rules and Statutes;
Additional Information;
Frequently Asked Questions;
Your Guide to Medicaid Estate Recovery Program; and
How to apply for DADS services.
199.
A reminder about amounts remaining in the Qualified Income Trust. It should be
kept in mind that any amounts which accumulate in a Qualified Income Trust (Miller Trust) do
have to be handed over to the State when the beneficiary (i.e., recipient of long-term care
Medicaid) has died, to the extent needed to reimburse the Medicaid Program. In the unlikely
event that the balance accumulated in the Qualified Income Trust is not fully needed to repay the
Medicaid Program, the excess can be paid to whoever the trust says should receive what is not
needed to reimburse Medicaid.
200.
The Long-Term Care Partnership Program.
The Deficit Reduction Act of 2005
(DRA) allows all states to establish "Long-Term Care Partnership Programs." Section 6021 of
the DRA also allows additional states (beyond California, Connecticut, Indiana, and New York)
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to establish "Long-Term Care Partnership Programs." Under these programs, states can develop
standards for long-term care insurance in compliance with model guidelines of the National
Association of Insurance Commissioners. (The guidelines require compound annual inflation
protection for purchasers sixty (60) years of age and younger, and they require some degree of
inflation protection for purchasers 61 to 76 years of age; inflation protection for purchasers 77
and older is permissible but not required.) The policies result in disregard of assets for Medicaid
eligibility to the extent benefits are payable under the policy. The DRA became law on February
8, 2006. In the 80th Texas Legislature in 2007, Senate Bill 22 passed (and was signed by the
Governor).
Senate Bill 22 allowed the State to implement in Texas the “Long-Term Care
Partnership Program.”
201.
The HHSC rules for Texas’ Long-Term Care Partnership. Texas’ Long-Term Care
Partnership Program has its HHSC administrative rule at 1 TAC §358.355. The rule explains the
resource disregard, resource protection, and dollar-for-dollar disregard which a qualified longterm care insurance policy can achieve.
Persons interested in purchasing long-term care
insurance (or considering such a purchase) should consult a licensed insurance agent. The
section of the Medicaid for the Elderly and People with Disabilities Handbook that deals with
the Long-Term Care Partnership is Section P-1000.
The HHSC rules treat the subject of the
dollar-for-dollar disregard of assets in the application process for long-term care Medicaid, to the
extent that a Long-Term Care Partnership insurance policy has provided long-term care benefits.
The HHSC rules also treat the disregard, in estate recovery, of assets that were disregarded at
application, due to benefits having been paid under a Long-Term Care Partnership policy.
202. The Texas Department of Insurance has adopted rules that specify the requirements
which Long-Term Care Partnership policies must meet. The rules of the Texas Department
of Insurance that specify the requirements which a Long-Term Care Partnership policy must
meet, are at Title 28 of the Texas Administrative Code, Part 1, Chapter 3, Subchapter Y.
203. The website of the Texas Department of Insurance has a wealth of information
concerning the Long-Term Care Partnership. The website of the Texas Department of
Insurance has extensive information concerning the Long-Term Care Partnership at
http://www.tdi.state.tx.us/consumer/hicap/hicapltc05.html. Remember: Only a Texas-licensed
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insurance agent or broker is permitted by law to provide advice regarding Long-Term Care
Partnership policies.
Question.
True or False.
Persons interested in purchasing long-term care insurance (or considering such a
purchase) should consult a licensed insurance agent or broker.
____ True
____ False
Answer Key for Questions
Question (paragraph 3):
Medicaid is an example of:
A.
B.
C.
Cooperative Extension Services.
Agricultural Cooperatives.
Cooperative Federalism.
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D.
Cooperative Telemarketing.
Answer: ________C____________
Question (paragraph 8):
Medicaid is in which Title of the Social Security Act:
A.
Title IV.
B.
C.
D.
Title II.
Title XVI.
Title XIX.
Answer: _________D___________
Question (paragraph 13):
Vis-à-vis the federal government, which Texas state agency is the state Medicaid agency?
A.
B.
C.
D.
The Texas Department of Assistive and Rehabilitative Services.
The Texas Department of Family and Protective Services.
The Texas Health and Human Services Commission.
The Texas Department of State Health Services.
Answer: _________________C__________________
Question (paragraph 14):
How much can a non-lawyer charge a person for representation in regard to services of the Texas
Health and Human Services Commission (HHSC)?
A.
B.
C.
Three times the federal SSI maximum monthly benefit.
An amount equal to the current Medicare Part B premium.
Zero.
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D.
Whatever the non-lawyer and person seeking HHSC find agreeable.
Answer:___________________C_______________
Question (paragraph 16):
Which program has more extensive coverage of custodial care?
A.
Medicare.
B.
Medicaid.
Answer:____________B_______________
Question (paragraph 17):
The Texas monthly income limit for an individual to qualify for long-term care Medicaid is:
A.
Three times the current TANF benefit.
B.
C.
D.
Twice the current maximum Title II benefit.
Three times the current maximum SSI benefit.
The current average per capita personal income.
Answer:_____________C_________________
Question (paragraph 18):
True or False:
Applied income is the amount of an applicant’s income that the Medicaid program determines
must be applied to the cost of nursing facility care.
___ True
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____ False
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Question (paragraph 21):
In the long-term care Medicaid context, the vendor payment is:
A. The amount that can be charged by vendors selling items from carts outside nursing
facilities.
B.
The amount that can be charged by beauty shops that serve residents of Texas
nursing facilities.
C.
The amount that a Texas nursing facility receives from the Texas Medicaid program
for providing long-term care services to Texas Medicaid recipients.
D.
The amount that florists can charge for delivering flowers to Texas Medicaid
recipients.
Answer:_________C__________________________
Question (paragraph 22):
For services that are included in the vendor payment, what is the percentage of co-pay that a
Texas nursing facility can collect from the individual receiving long-term care Medicaid in the
facility?
A.
B.
C.
D.
20% (Twenty percent).
0 % (Zero percent).
10% (Ten percent).
The percent by which the SSI benefit increased from the prior year.
Answer:__________B__________________.
Question (paragraph 26).
True or False.
There is no residency requirement for Medicaid long-term care in Texas.
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____ True
___ False
Question (paragraph 33).
True or False.
The Medicaid that one receives as a recipient of SSI includes nursing facility care, if there is
medical necessity for it.
___True
____ False
Question (paragraph 34):
In regard to the monthly income limit for long-term care Medicaid, what has Texas chosen?
A.
B.
One time the SSI federal maximum monthly benefit.
Two times the SSI federal maximum monthly benefit.
C.
D.
Three times the SSI federal maximum monthly benefit.
No income cap at all.
Answer:________________C________________
.
Question (paragraph 36):
In regard to countable monthly income under the long-term care Medicaid program, which
statement is true?
A.
Countable monthly income includes the net Social Security benefit that is direct
deposited to the account of the applicant but countable income does not include
the amounts deducted from the Social Security benefit for Medicare premiums.
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B.
Countable monthly income includes the gross Social Security benefit, which is the
amount of the direct deposit of Social Security plus any amounts deducted from the
Social Security benefit for Medicare premiums.
Answer:_______________B______________________
Questions (paragraph 61):
True or False.
The “Miller Trust” (the Qualified Income Trust) in the context of long-term care Medicaid can
be a way of achieving income eligibility for individuals whose monthly income would otherwise
be disqualifying.
___True
____ False
The services of a lawyer should be used if a “Miller Trust” (the Qualified Income Trust) is
needed for eligibility for long-term care Medicaid.
___True
____ False
Question (paragraph 62):
True or False.
The Medicaid for the Elderly and People with Disabilities Handbook has a chart that shows
“common resource exclusions.”
___True
____ False
Question (paragraph 65):
True or False.
In the case of an unmarried individual, there is a cap on the equity value of the homestead
that can be excluded from countable resources under long-term care Medicaid but the cap can
be waived “in the case of a demonstrated hardship.”
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___True
____ False
Question (paragraph 98):
In connection with Medicaid, what is the Long-Term Care Partnership meant to do?
A.
Give an incentive to recipients of long-term care Medicaid to establish small
businesses.
B.
Give an incentive to recipients of long-term care Medicaid to buy shares in
family limited partnerships.
C.
Give an incentive to higher income persons to consult with law firm partners
instead of law firm associates.
D.
Give an incentive to higher income persons to purchase long-term care
insurance.
Answer:
________________D____________
Question (paragraph 153):
True or False.
Divorce is an advisable and necessary option to achieve eligibility for long-term care
Medicaid.
____ True
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___False
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Question (paragraph 161):
True or False.
If medical necessity is denied, there a right to appeal the denial.
___True
____ False
Question (paragraph 168):
True or False.
At the request of the client, a non-lawyer can represent the client at a Medicaid fair hearing.
___True
____False
Question (paragraph 175):
Which agency has extensive information in English and Spanish on its website regarding
Medicaid Estate Recovery?
A.
The Texas Department of Transportation.
B.
The Texas Department of Information Resources.
C.
The Texas Department of Aging and Disability Services
D.
The Texas Department of Licensing and Regulation.
Answer:_________________C___________________
Question (paragraph 203):
True or False.
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Persons interested in purchasing long-term care insurance (or considering such a purchase)
should consult a licensed insurance agent or broker.
___True
Benefits Counseling Certification Program
____ False
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