Tag Archives: MassHealth ineligibility

Lawyers at the Office of Medicaid Attempt to Mislead Hearing Officers and Judges about Federal Medicaid Trust Law

by: Brian E. Barreira, Esq.

The Office of Medicaid makes a willful, reckless misrepresentation of law to the extent that it suggests that all state trust law is to be ignored in the determination of eligibility for Medicaid benefits for long term care.  Current federal Medicaid law (42 USC §1396p(d)) and Massachusetts MassHealth regulations (130 CMR 520.021-520.024) address the treatment of trusts in the Medicaid arena, and they do not state or even imply that all state trust laws or the common law of trusts are to be ignored.

Under the 1985 changes in federal Medicaid trust law, a door had been left open whereby a provision could be placed in the trust limiting trustee discretion in some circumstances; the 1993 federal Medicaid law at 42 USC 1396p(d)(2)(C) corrected that problem, and specifies four (and only four) aspects of state trust law (often referred to by the Defendant as the “common law of  trusts”) that may be ignored in determining an applicant’s Medicaid eligibility:

“(i) the purposes for which a trust is established,

(ii) whether the trustees have or exercise any discretion under the trust,

(iii) any restrictions on when or whether distributions may be made from the trust, or

(iv) any restrictions on the use of distributions from the trust.”

These 1993 changes in federal Medicaid trust law ended the tactical usage of shifting trustee discretion to obtain Medicaid coverage. The 1985 Congressional intention of authorizing scrutiny of irrevocable trusts under state debtor-creditor laws remained unchanged when the 1993 changes were made, and there have been no further changes in federal Medicaid trust law since that time.

Other than these four exceptions in 42 USC 1396p(d)(2)(C), all Massachusetts trust law applies to an Irrevocable Trust in a MassHealth application.  The United States Court of Appeals for the Third Circuit has already examined Congressional intent in this context, and concluded:  “Congress rigorously dictates what assets shall count and what assets shall not count toward Medicaid eligibility.  State law obviously plays a role in determining ownership, property rights, and similar matters.” Lewis v. Alexander, 685 F.3d 325, 334 (3d Cir. 2012) “[T]here is no reason to believe [Congress] abrogated States’ general laws of trusts.  … After all, Congress did not pass a federal body of trust law, estate law, or property law when enacting Medicaid.  It relied and continues to rely on state laws governing such issues.” Lewis at 343.

The Office of Medicaid continually attempts to mislead hearing officers at MassHealth fair hearings and judges in Superior Court appeals by emphasizing yet decontextualizing the phrase “any circumstances” in the 1993 federal Medicaid trust law, when in fact since 1993 these four circumstances in 42 USC 1396p(d)(2)(C) have been the only “circumstances” addressed by the federal Medicaid trust law wherein state trust law is to be ignored.

What Is a Fair Hearing under MassHealth, and Can You Really Expect It to Be Fair?

by: Brian E. Barreira, Esq.

If you apply for MassHealth (i.e., Medicaid in Massachusetts) and receive a denial, you are entitled to an “independent” review of the denial through a scheduled “fair hearing.” You have to file a written request for the fair hearing, and there are strict deadlines for you to file for it, usually within 30 days. There are also strict deadlines for the Board of Hearings to issue a decision on your case. Unfortunately, the time limits in MassHealth regulations are strictly held against you as the appellant, yet the Board of Hearings routinely and callously fails to issue timely decisions.

The deadline under MassHealth regulations for a decision to be rendered is usually 45 days from the time of filing the appeal. I recall having cases during the 2010-2012 time period where it took 4-5 months just for an appeal to be scheduled. Apparently, regulations are meant to be followed by MassHealth applicants, but not by the people involved in running the MassHealth program.

Not only is the fairness lacking in the strict procedures required under MassHealth regulations, but many Massachusetts elder law attorneys feel the deck is stacked against people who appeal MassHealth denials. While the MassHealth lawyers who defend fair hearing decisions in court often make a point of telling the judge about the independence of the Board of Hearings, the fact remains that the hearing officers work for the Office of Medicaid, which runs MassHealth, and their decisions are subject to review by the Director of the Office of Medicaid, who can order a rehearing. (That means you can win your appeal, and the person in charge of MassHealth can decide to overturn your victory.) Does it sound like the hearing officers are truly independent?

Fortunately, unfair decisions rendered by hearing officers can be overturned by the Superior Court in a further appeal commonly known as a 30A, but new evidence usually cannot be added after a fair hearing decision is written by a hearing officer. On appeal, the weight or amount of the evidence that was placed into the fair hearing record can be important. Therefore, if you are appealing a MassHealth denial, you need to place as much evidence as possible into the record to prove your point. You cannot assume that the hearing officer will write a decision that is fair, so you have to prepare for the fair hearing based on the assumption that you may later have to take the case to Superior Court and prove to a judge that the “fair hearing” decision was unfair.

When is a Community Spouse Allowed to Make Disqualifying Transfers of Assets without Adversely Affecting the Institutionalized Spouse?

by: Brian E. Barreira, Esq.

Under federal Medicaid laws and MassHealth regulations, disqualifying transfers of assets (which are usually gifts or below-market sales) disqualify not only the person who makes those transfers, but also that person’s spouse. A prenuptial agreement or postnuptial agreement has no effect on the required disqualification imposed on MassHealth applicants under federal Medicaid law.

Any disqualifying transfers of assets made by a person are problematic because they can disqualify that person’s spouse for the next 5 years, which is the lookback period currently in effect for MassHealth. Therefore, gifts should not be made if a nursing home stay and MassHealth application are likely in the near future, and should especially not be made during the MassHealth application process.

The month after a MassHealth approval for an institutionalized spouse, however, a different set of rules applies. At that point, whatever the community (i.e., at-home) spouse does with real estate and other assets is not treated as having been done by the institutionalized spouse. This letter I received in 2000 from the federal government agency overseeing the Massachusetts MassHealth agency Medicaid letter post eligibility transfer by spouse confirms that a community spouse may transfer assets the month after MassHealth approval of the institutionalized spouse.

When Are a MassHealth Applicant’s Intentions Considered in Determining Whether a Disqualifying Transfer Occurred?

by: Brian E. Barreira, Esq.

There are many exceptions to disqualifying transfers in federal Medicaid law that the MassHealth program has been required to implement.   If a potential disqualifying does not fit into the categories of permissible transfers, then MassHealth is required to determine what the MassHealth applicant’s intentions were when the transfer occurred.

One exception to a disqualifying transfer occurs when the MassHealth applicant had made the transfer exclusively for a purpose other than obtaining MassHealth eligibility.  This one situation where ignorance of the law can be an excuse for what was done.  Unfortunately, anybody can claim that he/she didn’t know about the law, so hearing officers expect a compelling case to be made, and if there is even a hint of MassHealth planning or knowledge, they can easily rule against the MassHealth applicant.

Another expectation to a disqualifying transfer involves an attempt to receive fair market value or other valuable consideration.

What Is Considered a Disqualifying Transfer When Applying for MassHealth?

by: Brian E. Barreira, Esq.

Under federal Medicaid law and MassHealth regulations, the past five (5) years of a MassHealth applicant’s assets are scrutinized to determine whether the applicant has made any disqualifying transfers.  As the term indicates, a disqualifying transfer makes the MassHealth applicant ineligible for MassHealth.

A disqualifying transfer is usually a gift (or something similar to a gift) that the MassHealth applicant made in the previous 5 years.   Any transfer that occurred more than 5 years ago (even just 5 years plus one day ago) is outside the Medicaid lookback period, and cannot be considered a disqualifying transfer.  A disqualifying transfer, however,  is not limited to gifts.  To put it as simply as possible, if the MassHealth applicant had ownership of anything on one day and did not have the same ownership the next day, a disqualifying transfer may have occurred.  Thus, any sale for less than fair market value can be a disqualifying transfer.  Paying a child or other relative for services, or even reimbursing them for expenses, can be treated by MassHealth as a disqualifying transfer.  Unrepaid loans can also be considered disqualifying transfers.

Sometimes the lawyers representing MassHealth make unfair stretches of the law.  For example, should a  bad investment be treated as a disqualifying transfer.  In one case that I handled that took 5 years to win, the MassHealth lawyers saw that a MassHealth’s applicant’s husband had made a risky investment that dropped in value.  Those lawyers attempted to convince a judge that he should have foreseen that the investment would drop in value, and therefore he had essentially made a disqualifying transfer.   Fortunately, a full 5 years after the MassHealth application had initially been filed, a Superior Court judge overturned the decision of a fair hearing officer who had sided with MassHeath’s silly argument.

Using Long Term Care Insurance to Cover the Medicaid Disqualification Period

by: Brian E. Barreira, Esq.

Many persons do not become aware of long-term care financing issues (including Medicaid transfer restrictions and the lack of coverage of long-term health care by Medicare and other health insurance) until it is too late to engage in anything other than choosing among bad options.  Some persons, however, have the foresight to engage in advance planning, but cannot afford long-term care insurance, so that need to resort to Medicaid planning.  They often are middle-class persons who own a home and limited funds that they need to live on, and typically their primary concern in engaging in Medicaid planning is to preserve their home for eventual inheritance by their children without losing the right to occupy their home.

Long-term care insurance is often the best solution to the long-term care problem, but if it cannot be afforded on a long-term basis, the only way to preserve the home is to transfer it.  (If the home is not transferred, it can still be deemed exempt upon a Medicaid application, but only during the applicant’s lifetime.  After the death of a Medicaid recipient who was a homeowner, however, an estate recovery claim for reimbursement can be made by the state Medicaid program.)

No matter how the transfer is structured, unless it is made to one of the limited number of permissible transfers under federal Medicaid law and state Medicaid regulations, a 5-year (or, in some cases, greater) period of Medicaid disqualification will result, beginning in the month of the transfer.  For example, suppose an unmarried person transfers a home worth $630,000.00 in a state where the average nursing home cost is $7,000.00. If a Medicaid application is made within 5 years of the transfer, the disqualification period would be 90 months, beginning at the time of the application.  If the application is made more than 5 years after the transfer, under federal Medicaid law no disqualification period would exist.

If the need for a nursing home stay became necessary during the Medicaid disqualification period, private payment of nursing home costs will be necessary, unless the transaction is undone at that point; this process is known in Medicaid parlance as a “cure.”  Since a cure will sometimes result in gift tax complications, it may not be advisable from a tax standpoint.  Further, unless a cure is made, the spouse of an institutionalized person may end up spending all of his/her liquid assets, and thereby become impoverished.

For example, suppose an unmarried person transfers a home worth $270,000.00 in a state where the average nursing home cost is $9,000.00. Medicaid law would then provide for a maximum disqualification period of 30 months if a Medicaid application were filed within 5 years of the transfer. If the transferor needs nursing home care after 5 years have passed, the transferor will be eligible for Medicaid. If the transferor required a nursing home stay after 50 months had passed, he or she would be disqualified for the remaining 10 months of the lookback period. The transferor’s monthly income would pay for part of each month’s cost during the lookback period, but the transferees would have to either undo the transaction or pay for the remaining 10 months, an amount of $50,000.00 in this example.

If the transferees in this example were at all able to pay for the remaining disqualification period, they have a great deal to gain. If they were unable or unwilling to cover nursing home costs during this time and were required to make a full cure of the disqualifying transfer, the transferor would be revested with the $270,000.00 home, and a new plan would be needed to attempt to save something.

One way around these problems would be for the person to purchase long-term care insurance at the time of the transfer. While insurance premiums can be very expensive for people in their 70′s and 80’s, the policy could merely be purchased to eliminate the downside risk discussed above. Thus, the person would purchase the policy with short-term interests in mind, and obtain the smallest benefit necessary to cover nursing home care during the disqualification period.

The transferor’s income and other assets would factor into the determination of the amount of insurance to be purchased. As time went on, the transferor could drop the daily amount of the policy to fit his or her needs, and may even choose to get rid of the policy before the disqualification period expires. Once the disqualification period expires, however, the policy would likely be dropped (unless Medicaid laws had changed and it would be advisable to maintain the policy).

Many persons reject long-term care insurance as a long-term planning measure because the premiums are very expensive, and many persons reject the insurance as a short-term measure for the same reason. If someone is balking at the cost of the insurance, or if they are so concerned about the Medicaid disqualification period that they do not wish to make any transfer, it would perhaps be advisable to involve the transferees in the discussion, as it is their eventual inheritance that is at stake here. When the transferees learn how the Medicaid disqualification period works, they may find it is in their best interests to pay the premiums for the transferor. The transferor may not like the idea of others paying the premiums, but since without this insurance the purpose of the transfer can end up being frustrated by fate, payment by the transferee(s) should at least be considered.