September 12

Master Your Finances podcast

Handling your finances can be stressful, but that doesn’t need to be the case! Sunday’s at 9 a.m. on 107.7 the Bronc, Kurtis Baker, CFP®, AIF® will teach you how to Master Your Finances.

On this week’s episode, Kurtis is joined by Harold Grodberg, Esq., Certified Elder Law Attorney, to discuss how to apply for Medicaid and make sure you get the coverage right for you.


June 30

Irrevocable Trust Belonging to Medicaid Applicant’s Spouse Is Available Asset

Three women entered nursing homes. Their husbands created irrevocable "sole benefit trusts." The trusts allowed the trustee to distribute principal to the husbands as necessary with the expectation that all the resources would be used up during the husbands' lifetimes. A few months later, the women applied for Medicaid. The state determined that the trusts were available assets and denied the applications.

The women appealed, arguing that the trusts were not countable assets because they were for the sole benefit of the husbands. After three trials, two trial courts ruled that the assets in the trust were not available, and the state appealed and the Michigan Court of Appeals decided the cases together.

The Michigan Court of Appeals reverses, holding that the trusts are available assets. The court rules that when states make an initial eligibility determination, "an institutionalized individual’s assets includes not only those that he or she has, but also those that his or her spouse has." [emphasis in original] According to the court, because "there was a 'condition under which the principal could be paid to or on behalf of the person from an irrevocable trust,' the assets in the trusts were properly determined to be countable assets."

For the full text of this decision, go to: http://publicdocs.courts.mi.gov/OPINIONS/FINAL/COA/20170601_C329508_63_329508.OPN.PDF

June 28

State Can Apply Means Test to Estate Seeking Hardship Waiver from Medicaid Estate Recovery

Patricia Bacon received long-term care Medicaid benefits before she died. After her death, the state sought to recover the amount it paid Ms. Bacon in Medicaid benefits. Ms. Bacon's estate sought a hardship waiver, which the state denied.

The estate appealed to court, and the trial court reversed the state's decision, ruling that the hardship definition in the state Medicaid plan exceeds state law because it includes a means test for the beneficiary. Michigan state law authorizing the state to seek approval for its Medicaid plan provides that the definition of hardship must include an exemption for the value of the Medicaid recipient’s home that is equal to or less than 50 percent of the average price of a home in the county in which the Medicaid recipient lives. The state Medicaid plan further requires the state to apply a means test to anyone seeking a waiver. The state appealed.

The Michigan Court of Appeals reverses, holding that the state can include a means test as part of the hardship waiver. Citing Ketchum v. Department of Health and Human Services (Mich. Ct. App., No. 324741, March 1, 2016) and In re Estate of Klein (Mich. Ct. App., No. 329715, July 19, 2016), the court rules that state law includes provisions allowing the state plan to include other requirements for the hardship exemption.

For the full text of this decision, go to: http://publicdocs.courts.mi.gov/OPINIONS/FINAL/COA/20170601_C330260_57_330260.OPN.PDF

June 26

Son Did Not Breach Contract With Mother’s Nursing Home by Not Retrieving Improperly Transferred Assets

Jessica Mayo made payments to her son and his wife for personal care services. A few years later, she appointed her other son, Robert, as her agent under a power of attorney. Mr. Mayo applied for Medicaid benefits on behalf of his mother and signed a nursing home admission agreement on her behalf as the "responsible party." The contract stated that if the state denied Ms. Mayo Medicaid benefits due to an improper asset transfer, it would be considered a breach of contract between the resident and the nursing home. The state imposed a penalty period due to the transfers to Ms. Mayo's son and his wife. After a hearing, the state upheld the penalty period, and Ms. Mayo died still owing the nursing home $26,414.31.

The nursing home sued Mr. Mayo for breach of contract. The trial court ruled in favor of the nursing home, finding that the admissions agreement contract defined the duty of the responsible party to include retrieval of improperly transferred assets from third parties. Mr. Mayo appealed, arguing that he was not responsible for transfers made before he entered into the contract with the nursing home.

The Illinois Court of Appeals, Fourth District, reverses, holding that Mr. Mayo did not breach the contract with the nursing home. The court notes that the contract states that an improper transfer of assets would result in a breach of contract with the resident, not the responsible party. According to the court, "nowhere in any of the contractual documents does [Mr. Mayo] promise to recover assets that [Ms.] Mayo transferred before the inception of [Mr. Mayo's] contractual relationship with [the nursing home]. "

For the full text of this decision, go to: http://www.illinoiscourts.gov/R23_Orders/AppellateCourt/2017/4thDistrict/4160651_R23.pdf

June 9

Applicant’s Ability to Use House Placed in Trust Does Not Render Trust Available, Mass. High Court Rules

James and Mary Daley created an irrevocable trust. They conveyed their interest in their condominium to the trust, but retained a life estate in the property. Seven years later, Mr. Daley was admitted to a nursing home and applied for Medicaid benefits. The state denied him benefits after determining that the trust was an available asset. Lionel Nadeau and his wife created an irrevocable trust and transferred their house into the trust. The trust provided that the Nadeaus had the right to use and occupy the house, which they did until Mr. Nadeau entered a nursing home and applied for Medicaid benefits. As with the Daleys, the state considered the trust a countable asset and denied benefits.

The Daleys and the Nadeaus appealed, but following hearings the state ruled that the trusts were available assets because the Daleys and Nadeaus had the right to occupy and use the properties that were in the trusts. In separate rulings, Massachusetts trial courts held that both trusts were available assets. (Daley v. SuddersMass. Super. Ct., No. 15–CV–0188–D, Dec. 24, 2015 and Nadeau v. ThornMass. Super. Ct., No. 14-DV-02278C, Dec. 30, 2015). The Daleys and Nadeaus appealed and the Massachusetts Supreme Judicial decided both cases together.

The Massachusetts Supreme Judicial court reverses, holding that the trusts are not available assets. According to the court, "where a trust grants the use or occupancy of a home to the grantors [as in the Nadeau's case], it is effectively making a payment to the grantors in the amount of the fair rental value of that property." The court adds that these payments "do not affect an applicant's eligibility for Medicaid long-term care benefits, but they may affect how much the applicant is required to contribute to the payment for that care." In the Daleys' case, the court rules that because the Daleys hold a life estate, their use of the home is not considered income and "the continued use of the home by the applicant pursuant to his or her life estate interest does not make the remainder interest in the property owned by the trust available to the applicant."

In reaching its conclusion in the Daley case, the court cites the Elder Law section of West's Massachusetts Practice series, written by Harry S. Margolis and Jeffrey A. Bloom of the Boston firm of Margolis & Bloom, LLP.

For a Boston Globe article on the ruling, click here.

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