Medicaid Spend-Down Litigation Shows Need for Wise Planning

SpenddownThe Buckeye State is hot water over its interpretation of federal rules governing the use of Medicaid funds. In 2013, a group of elderly residents of Ohio sued their state's Department of Job and Family Services for what they consider a wrongful denial of Medicaid benefits. At the heart of the complaint there are issues related to long-term care and the right to enjoy income from insurance annuities. This case has drawn plenty of attention due to its legal and financial implications. Essentially, the case has escalated to the point of a federal judge warning state regulators that she would consider issuing an order to drop Ohio from Medicaid enrollment altogether, leaving the Buckeye State without federal funds to provide medical care for its elderly residents.

Medicaid administrators in Ohio say that an elderly nursing home patient is not entitled to long-term care benefits as long as he or she has a relationship with an individual who has purchased an annuity. In effect, the State of Ohio is penalizing seniors by refusing to grant them long-term care benefits because a spouse or close relative has purchased a Medicaid-compliant insurance annuity.

Other cases have been filed in federal courts in Ohio, and one federal judge has warned Ohio officials that she may hold them in contempt if they don’t follow federal law. The latest lawsuits filed against Ohio’s Medicaid administrators were brought by three elderly women whose husbands used their retirement accounts to buy annuities, which State Medicaid investigators say is illegal.

A recent Insurance News article, titled Medicaid Asset Protection Plan Causes Ohio Judge To Tell Ohio Medicaid to "Follow the Rules" or Lose Federal Funding,” reports that more and more seniors are concerned about Medicaid planning and other retirement planning issues such as Medicaid, and some states are tending to be more heavy-handed than others in the administration of their Medicaid program.

Gentle or severe, it’s important to understand and think through your plans for Medicaid. For example, single Ohio seniors are required to first spend down their assets to $1,500 and receive less than $45 in monthly income before Medicaid's long-term care benefits will apply. Married couples, like the plaintiffs in the cases mentioned above, must split their assets in a way that the healthy spouse retains no more than $117,240, but the spouse in the nursing home cannot have more than $1,500 or monthly income higher than $45.

These kinds of drastic thresholds for income create frustration and anxiety when seniors try to plan the Medicaid spend-down. While some seniors are relieved when they are able to purchase Medicaid-compliant insurance annuities, which gives them some income even when they are in a nursing home, Ohio and some similar states don’t care for these financial solutions. The result is that the elderly can become completely destitute before entering a Medicaid nursing home.

The original article says that planning early—at least five years in advance—is critical in Medicaid planning. Although no one has a crystal ball as far as when a person might need to move to a nursing home, Medicaid spend-down provisions in your state may be restrictive like Ohio, and a qualified Medicaid Planning attorney can assist you in managing this before it becomes an issue, as it did for those involved with the lawsuits in Ohio.

Early planning with a Medicaid Planning attorney is essential to make sure you qualify for Medicaid benefits and still are able to enjoy the life you worked so hard to make for yourself and your family in your younger years.

You can learn more about this topic as well as other strategies on our website under the tab entitled: elder law planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.

Reference: Insurance News (November 18, 2014) Medicaid Asset Protection Plan Causes Ohio Judge To Tell Ohio Medicaid to "Follow the Rules" or Lose Federal Funding


Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment


We have a LOT more where that came from!

We hate spam too. We will never share or sell your information.

Call Now ButtonCall Us Now https://jsfiddle.net/7h5246b8/

Request a free consultation

We hate spam too. We will never share or sell your information.

We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
  • We launched the rollout of our on-demand webinar early so that new clients and our allied professionals can view the important component parts of ‘an estate plan that works’ at their convenience.  That is available on our website.
  • Live video workshops will be produced as quickly as possible and certainly ahead of our previous schedule; we will keep you posted as these events become available. Given the ‘boutique’ nature of the firm, we rarely have more than ten people in our office including team members at any one time. During this period of ‘social distancing,’ we promise to have no more than 8 people at any time.   This allows us to comply with the Governor’s directive to limit in-person gatherings.
  • The best way to communicate with us is still by phone during regular office hours of 8:30 to 5:00, Monday through Friday, or, you can email any of our team members (that is, their first name followed by @zarembalaw.com).  We will respond to these emails as quickly as possible.
  • Please continue to follow the directives of our local, state, and federal agencies. For your health and in consideration of our team who is assisting you, if you’ve scheduled an office appointment or planned to drop off paperwork and are experiencing a fever, dry cough, or shortness of breath, please contact your primary care doctor for guidance and then our office to reschedule.

Thank you, Walt and the Zaremba Team

Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.