1. How Trusts Affect Medicaid Eligibility and Estate Recovery
3/20/2019 Audio Webinar
Matthew J. Leonard, Esq.
Matthew J. Leonard, Esq. Salter McGowan Sylvia & Leonard, Inc. 56 Exchange Terrace, 5th Floor Providence, RI Ph:  (401) ex Fax: (401)
Admitted To Practice In: Rhode Island, Massachusetts and Florida

2. Who is Eligible for Medicaid? Three Possible Scenarios
Single Person:
“Countable Assets” must not exceed $2,000 ($4,000 in some states)
Married Couple – one spouse institutionalized and one spouse in the community:
General Rule: Countable assets must not exceed:
$25,284 minimum
$126,420 maximum (Spousal share ½ of joint resources as of beginning of period of continuous institutionalization)
Assets available to at-home spouse are called the “community spouse resource allowance” (CSRA)

3. Who is Eligible for Medicaid? Three Possible Scenarios
Married Couple, both spouses institutionalized:
Countable assets may not exceed $4,000 ($8,000 in some states)
Medical Need: To be eligible for Medicaid under a long term care support one needs to demonstrate a medical need for skilled nursing
Income: Individuals who receive Medicaid benefits are able to retain $50 per month (varies by state) of their income with the balance being remitted to the nursing facility subject to spousal needs. Income may not exceed $9,581

4. Revocable vs. Irrevocable Trust Considerations
Countable Assets and Medicaid Eligibility – All assets owned by applicant (or spouse) are countable assets other than:
Principal Residence ($878,000 maximum home equity limit)
Household Belongings
One Automobile
Personal Belongings (jewelry and clothing)
Prepaid funeral and Prepaid burial account
Life insurance policies with cash value of less than $4,000
Inaccessible assets (e.g., disputed claims and some types of joint property)
Assets necessary for self-support

5. Single Clients vs. Married Couples Assets
All countable assets owned directly by applicant or applicant’s spouse are considered assets of applicant
Joint Ownership:
Bank Accounts – General Rule: Entire balance is allocable to Medicaid applicant
All other assets – General Rule: Proportionate Ownership (i.e., percentage of ownership in parcel of real estate)
Rebuttable Presumption of Ownership – applicant must provide proof if they do not own or control an asset despite being title owner (i.e., being placed on bank account for convenience purposes for a parent of child)

6. Single Clients vs. Married Clients Assets
“Community Spouse” permitted to keep one-half of the couples combined countable assets (as of the date of institutionalization) up to $126,420 for 2019 – with a minimum allowance of $25,284 – this is the CSRA
Example: Couple owns $100,000 in countable assets. Applicant eligible for Medicaid once assets reduced to $54,000: $4,000 for applicant and $50,000 for community spouse (one-half of $100,000).
Example: Couple owns $325,000 in countable assets. Applicant eligible for Medicaid once assets reduced to $130,420 ($4,000 for applicant and $126,420 for community spouse)

7. Single Clients vs. Married Couples Income
Single Medicaid Beneficiary – All income to nursing home except for:
$50.00 personal needs allowance (varies by state)
Amounts needed to pay for uncovered medical costs, including health insurance premiums
Allowance may be given if owning a personal residence
Institutionalized Spouse – All income to nursing home except for:
Community spouse share (where monthly needs exceeds actual income)

8. Single Clients vs. Married Couples Community Spouse
Income of Community Spouse – Untouched and preserved intact
Added protection of community spouse – Minimum Monthly Maintenance Needs Allowance (MMMNA)
What is MMMNA – Under a prescribed formula based on housing costs, the state permits a community spouse to earn a minimum monthly income ranging from $2, to $3,160.50
What if MMMNA exceeds actual monthly income of community spouse?
Example: The CS earns $1000 a month SSI and pension, but her MMMNA is calculated to equal $3,160, so there is a $2,160 a month shortfall.

9. Single Clients vs. Married Couples
Community Spouse is entitled to make up the shortfall by:
Receiving a portion of the institutionalized spouses income equal to shortfall,
$3,500 Institutionalized Spouse’s Income
- 2,160 To Community Spouse
50 Personal Need Allowance
140 Prescription Plan Premium
1,150 To Nursing Home (“patient-paid amount”)
If Community Spouse still has shortfall, she can appeal for an increased CSRA; the extra assets retained will generate income equal to shortfall.

10. Life Expectancy of Client
Transfers of assets within 5 years of applying for Medicaid where the transfer occurred and the person transferring the asset did not receive something back of value, will create a disqualification of that person for a period of time.
Pre-Need Planning vs. Emergency Planning
Understanding a clients health, timeline and life expectancy is critical before embarking on a plan of Medicaid qualification
If a client is expected to need skilled nursing care within the next 5 years, executing transfers that will cause a period of disqualification is not advised
If a client is not expected to need skilled nursing care within the next 5 years, executing transfers that will cause a period of disqualification is more manageable – be sure to obtain client buy-in on the plan and consequences.

11. How Revocable Trusts Can Interfere with Medicaid Eligibility
Revocable Trusts and Pre-Need Planning: If applicant (or spouse) has access to trust principal or income the trust may be considered an available resource.
Revocable Trusts do not work for Medicaid qualification
Assets transferred to a trust (revocable or irrevocable), will be subject to the 60 month “look back” period. 
This 60-month period applies to the transfer to an irrevocable trust of assets which cannot be paid under any circumstances to the individual making such transfer, and to income from those assets, payment of which to the individual is prohibited.  Thus, the effective cap on periods of ineligibility resulting from the transfer of assets to a trust is 60 months.
Revocable Trusts allow for payments of principal and thus are always deemed available to applicant regardless of if the transferred occurred over 60 months ago or if the asset it otherwise exempt (i.e., home).

12. Funding Trusts with Exempt Assets: The Transfer Penalty
Transfers Leading To Medicaid Ineligibility
Any transfer of assets for less than fair market value will trigger a period of ineligibility.
Ineligibility is determined by dividing the amount transferred by the figure published by each state as to the average cost for nursing care for that state, in Rhode Island for 2019 that figure is $9,581
If an applicant made gifts totaling $172,458, he or she would be ineligible for Medicaid for 18 months ($172,248 divided by $9,581). 
Another way to look at this is that for every $9,581 transferred, an applicant will be ineligible for nursing home Medicaid benefits for one month.

13. Funding Trust with Exempt Assets: Exceptions To Transfer Penalty Rule
No Period of ineligibility will apply to transfers of asset made to:
spouse
blind or disabled child
trust for benefit of blind or disabled child
trust for benefit of disabled person under age 65
trust for benefit of under 65 disabled applicant
pooled disability trust
No period of ineligibility will apply to transfers of principal residence made to:
child under 21
caretaker child
sibling living at home with equity interest in house
Cure: transfers can be cured by transferring assets back to applicant.