January 18

Irrevocable Trust Is Available Asset Because Medicaid Applicant Had Right to Use Trust Asset

A Massachusetts trial court rules that a Medicaid applicant’s irrevocable trust is an available asset because the applicant still had a right to live in, use, and get income from the condominium owned by the trust. Daley v. Sudders (Mass. Super. Ct., No. 15–CV–0188–D, Dec. 24, 2015).

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 MassHealth (Medicaid) benefits. The state denied him benefits after determining that the trust was an available asset.

Mr. Daley appealed, but after a hearing the state ruled that the trust was an available asset because the Daleys had the right to occupy and use the condo and the trust granted them the right to convert the trust’s principal into income. Mr. Daley died during the appeal, and his estate appealed to court.

The Massachusetts Superior Court affirms, holding that the trust is an available asset. The court rules that the main trust asset — the condominium — was available to the Daleys because they retained life estates under the deed and continued to use and live in the condo after establishing the trust. In addition, the court holds that the trust is an available asset because the Daleys had the right to income from the condo. 

For the full text of this decision, click here.

For commentary on the decision by Harry S. Margolis in his blog, click here.

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December 31

Guardian May Not Deduct Fee From Medicaid Recipient’s Income

A Florida appeals court rules that the guardian of a Medicaid recipient may not deduct a guardianship fee from the recipient’s income because the fee is not medically necessary. Lutheran Services Florida, Inc. v. Department of Children and Families (Fl. Ct. App., 2nd Dist., No. 2D13-5840, Nov. 25, 2015).

Lutheran Services Florida (LSF) is the court-appointed guardian of nursing home resident Larry Peron. LSF’s duties include reviewing Mr. Peron’s medical treatment and giving consent for medical procedures. When Mr. Peron qualified for Medicaid, he paid the majority of his income to the nursing home as the patient responsibility amount.

LSF obtained a court order authorizing that a monthly $200 guardianship fee be deducted from Mr. Peron’s income and petitioned the Department of Children and Families to deduct the guardianship fee from Mr. Peron’s patient responsibility amount. The Department denied the petition, determining that the fee cannot be deducted from a Medicaid recipient’s income because it is not “medically necessary” under state law.  A hearing officer upheld the determination, noting that state law defines medically necessary as services provided in accordance with generally accepted standards of medical practice and reviewed by a physician. LSF appealed.

The Florida Court of Appeals affirms, holding that the guardianship fee is not medically necessary. According to the court, state law allows only deductions from a Medicaid recipient’s income for “medical or remedial care services rendered by a medical professional directly to the Medicaid recipient.” The court acknowledges that this result leaves a gap “wherein a guardian of an incapacitated ward who provides the necessary consent for medically necessary treatment cannot be compensated for its services under the state’s Medicaid program,” and suggests that the legislature look into changing the law. 

For the full text of this decision, go to: http://www.2dca.org/opinions/Opinion_Pages/Opinion_Pages_2015/November/November%2025,%202015/2D13-5840.pdf

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December 28

State Properly Rejected Medicaid Application When Requested Verifications Were Not Provided

A New Jersey appeals court rules that the state properly rejected a Medicaid application because the appropriate verifications were not provided, preventing the state from determining whether the applicant’s property and life insurance policy were available resources. A.T. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-3341-13T3, Nov. 23, 2015).

A.T. entered a nursing home and her son, S.T., applied for Medicaid on her behalf. The state requested verification regarding A.T.’s bank account statements, the deed for property she owned, and proof that a life insurance policy had been liquidated. S.T. did not provide the requested verifications, and the state denied Medicaid benefits. After selling A.T.’s property and converting the life insurance policy to an irrevocable trust, S.T. again applied for benefits on A.T.’s behalf, and the state approved the application.

After the nursing home filed a complaint against A.T. and S.T. for non-payment of services, S.T. appealed the original denial of Medicaid benefits. A hearing officer ruled that the original application was properly denied due to lack of verification. S.T. appealed to court, arguing that the state did not distinguish which documents were necessary to make an eligibility determination.

The New Jersey Superior Court, Appellate Division, affirms the original denial of Medicaid benefits. According to the court, the state could not determine whether the property and life insurance policy were available resources until it received the requested verifications.

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December 17

No Penalty Period for Medicaid Applicant Who Sold House for Far Less Than Tax Assessment Value

A New York appeals court rules that the state should not impose a penalty period on a Medicaid applicant who sold her house for less than one-fifth of its tax assessed value because the price was fair market value based on the property’s condition. Matter of Whittier Health Services, Inc. v. Pospesel (N.Y. App. Div., 3rd Dept., No. 520890, Nov. 25, 2015).

A nursing home applied for Medicaid on behalf of a resident. The state determined that the applicant sold her home for less than market value within the look-back period and assessed a penalty period. Tax assessment records showed the property was valued at $143,511, but the applicant sold the home for $23,122.

The nursing home appealed, arguing that the house was sold for fair market value because it needed significant repairs and was sold to someone who was not related to the applicant. After a hearing, the state affirmed the penalty, and the nursing home appealed to court.

The New York Supreme Court annuls the penalty period based on the sale of the house. According to the court, the evidence shows the sale was an arms-length transaction and “a recent arm’s length sale is a more accurate indicator of actual market value of the [applicant’s] property than the tax assessment records relied upon by” the state.

For the full text of this decision, go to: http://www.nycourts.gov/reporter/3dseries/2015/2015_08690.htm. 

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December 7

Medicare Announces Parts A and B Premiums and Deductibles for 2016

The Centers for Medicare and Medicaid has announced the Medicare premiums, deductibles, and coinsurances for 2016. As expected, for the third year in a row the standard Medicare Part B premium that most recipients pay will hold steady at $104.90 a month.  However, about 30 percent of beneficiaries will see their Part B premium rise to $121.80 a month.  Meanwhile, the Part B deductible will increase for all beneficiaries from the current $147 to $166 in 2016.

The Part B rise was supposed to be much steeper for the 30 percent of beneficiaries who are not “held harmless” from any increase in premiums when Social Security benefits remain stagnant, as will be the case for 2016.  But the premium rise was blunted by the Bipartisan Budget Act signed into law by President Obama November 2.  Medicare beneficiaries who are unprotected from a premium increase include those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and “dual eligibles” who receive both Medicare and Medicaid benefits.

For beneficiaries receiving skilled care in a nursing home, Medicare’s coinsurance for days 21-100 will go up from $157.50 to $161.  Medicare coverage ends after day 100.  (For more on Medicare’s nursing home coverage, click here.)

Here are all the new Medicare figures:

  • Basic Part B premium: $104.90/month (unchanged)
  • Part B premium for those not “held harmless”: $121.80
  • Part B deductible: $166 (was $147)
  • Part A deductible: $1,288 (was $1,260)
  • Co-payment for hospital stay days 61-90: $322/day (was $315)
  • Co-payment for hospital stay days 91 and beyond: $644/day (was $630)
  • Skilled nursing facility co-payment, days 21-100: $161/day (was $157.50)

Higher-income beneficiaries will pay higher Part B premiums:

  • Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $170.50 (was $146.90).
  • Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $243.60 (was $209.80).
  • Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 will pay a monthly premium of $316.70 (was $272.70).
  • Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more will pay a monthly premium of $389.80 (was $335.70).

Rates differ for beneficiaries who are married but file a separate tax return from their spouse:

  • Those with incomes between $85,000 and $129,000 will pay a monthly premium of $316.70 (was $272.70).
  • Those with incomes greater than $129,000 will pay a monthly premium of $389.80 (was $335.70).

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premiums. So the income reported on a beneficiary’s 2014 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2016. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements.  The average Medicare Advantage premium is expected to decrease slightly, from $32.91 on average in 2015 to $32.60 in 2016. 

For Medicare’s press release announcing the new  figures, click here. 

For Medicare’s “Medicare costs at a glance,” click here.

For more about Medicare, click here.

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