PEORIA COUNTY BAR ASSOCIATION ELDER LAW/PROBATE/ESTATE PLANNING SEMINAR JANUARY 30, 2016

ILLINOIS MEDICAID UPDATE SUSAN DAWSON-TIBBITS Attorney at Law Johnson, Bunce, and Noble, P. C. 7800 N. Sommer Street, Suite 425 Peoria, IL 61615 Phone: (309) 691-9650 E-mail: [email protected]

I.

LATEST DEVELOPMENTS IN ILLINOIS MEDICAID LAW

On May 29, 2015, the Illinois Department of Human Services published proposed amendments to Chapter 89 of the Illinois Administrative Code in the Illinois Register (Volume 39, Issue 22). The Illinois Chapter of the National Academy of Elder Law Attorneys responded by submitting 54 pages of comments, which pointed out such problems with the proposed regulations as violating due process of law, as spelled out by the United States Supreme Court in the seminal case of Goldbert v. Kelly, 397 U.S. 254 (1970). Some of the proposed regulations, if adopted, would have the following effects: A. would shift the burden of proof from the Medicaid agency in proving that an applicant is NOT eligible to the applicant to prove that the Medicaid agency’s action was against federal or state law, OR ITS OWN POLICY (which does not have the weight of law); B. would implement a reduction or discontinuance of benefits unless an appeal is filed within ten days of the date on the notice (which is presumed to be received five days after the date of the notice; C. would provide that a notice of an appeal hearing would be sent to the attorney and appellant “at least ten days prior to the hearing”; D. would limit the reasons why a continuance could be granted to those involving “good cause”, which is defined as death, a personal injury or illness, or a sudden or unexpected emergency beyond the appellant’s control (none of which would include an attorney’s responsibility to attend a previously-scheduled mandated court hearing or deposition); E. would require the appellant or his/her attorney to file a written request for a postponement of the appeal hearing at least two days prior to the scheduled 1

hearing, and then require them to show up at the hearing to see if their request for a postponement has been granted; F. would allow the Medicaid agency to provide a statement of facts only two days before the scheduled hearing; G. would prohibit the payment of attorneys’ fees to appellants who have been wrongfully denied benefits without reasonable cause based upon untrue allegations; H. would prohibit the appellant and his/her attorney from making any information from his/her application or the agency’s decision public information; I. would remove the term “impartial” from every reference to an “impartial hearing officer”; J. would require all appellants and their counsel to travel to either Decatur or Chicago to have an appeal hearing; K. would require all appellants to sign a notice of appeal or the application itself (which is quite a trick when the appellant is deceased or has dementia)1; and L. would give the Medicaid agency the authority to refuse an appeal for certain issues, and would refuse to allow an appellant to appeal that refusal. On August 25 and 26, 2015, about twenty members of the Illinois Chapter of NAELA and the ISBA Elder Law Section Council attended and testified at hearings on these proposed rules. The Medicaid agency must publish a second set of proposed rules before they can go before the Joint Committee on Administrative Rules to have these rules go into effect. To date there has been no second publication. In other news regarding Medicaid applications, elder law attorneys around the state are representing clients whose applications have been handled improperly by nursing homes, the clients’ themselves, and attorneys who purport to represent them. The Office of Inspector General is still scrutinizing every application in which the applicant reports having an attorney involved. The process of having an application approved is still taking several months to go through the system, and sometimes as long as a year or more. Also being reported is a lack of response to everyday inquiries or the status of an application. All of these actions are making it harder and harder for the average Medicaid applicant to successfully complete the process. 1

The “new” Illinois Health Care Power of Attorney, 755 ILCS 45/4-10(c), has been amended, effective 1/1/2016, to include the following language: (6) At any time during which there is no executor or administrator appointed for the principal's estate, the agent is authorized to continue to pursue an application or appeal for government benefits if those benefits were applied for during the life of the principal. This should alleviate at least some of the harmful effects of this particular proposed rule.

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II.

OVERVIEW OF THE 2012 MEDICAID CHANGES

Every elder law and estate planning attorney must be aware of the eligibility requirements for the Illinois Medicaid program, even if you don’t actually prepare Medicaid applications. Since January, 2012, the Illinois Department of Human Services (IDHS) and the Illinois Department of Healthcare and Family Services (IDHFS) have restructured the entire Medicaid system in the state of Illinois, and have promulgated new administrative regulations, policies and procedures. The 2012 market survey of long-term care costs, published by MetLife each year, found that the average cost of a semi private room in the Peoria area in that year was $173 per day. This translates into an average cost of $63,145. There are only four ways to pay for long-term care, and two of those methods are severely limited: a) Long-term care insurance, which must be purchased long before any health issues arise; b) Medicare payment, limited to a maximum of 100 days (with a sizable co-pay four days 21 through 100) and a requirement that the resident needs "skilled" care; c)

Private pay; and

d)

Medicaid.

Thus, every attorney or financial planner who deals with elderly clients must keep in mind the possibility that his or her client and or spouse may need nursing home care at some point in the remainder of their life. According to an article on MorningStar.com, 40% of individuals who reach age 65 will enter a nursing home during their lifetime. While 38% of that population will eventually be discharged to go home or to another setting, approximately 10% of people who enter a nursing home stay there for five or more years, with an average stay of approximately 3 years.2 Obviously, while we cannot predict with any certainty which individuals will need nursing home care, we can predict that the odds of needing such care are sufficiently high to necessitate planning for such a possibility. The new Medicaid eligibility rules are significantly more restrictive than what was in place prior to 2012. Transfers to other persons or to trusts are scrutinized more closely than before, and many transfers now precipitate penalties for unallowable transfers. The attorney drafting wills, revocable trusts or irrevocable trusts must understand the rules regarding transfers so as to not set up future denial of Medicaid due to unallowable transfers. Attorneys dealing with elderly clients must also know how to defuse the many myths and misperceptions about the Medicaid long-term benefit. Using family gifting strategies in estate planning may now result in penalties that prevent becoming eligible for Medicaid payment at all. 2

http://news.morningstar.com/article net/article.aspx?id= 564139; 40 Must-Know Statistics About Long-Term Care, 08-09-12.

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The Medicaid program does not recognize any gifts at all within the look-back period, notwithstanding the fact that federal tax law allows gifts under a certain amount to be exempt from gift tax or filing gift tax returns. Many persons entering a second marriage may also have misconceptions about Medicaid. The Medicaid program does not recognize the validity of prenuptial or post-nuptial agreements between spouses. Regardless of whether assets are his, hers, or theirs, the Medicaid agency will consider all such assets to be available for the payment of long-term care for either or both spouses, subject only to allowable Medicaid exemptions. In applying for Medicaid long-term care benefits, the applicant must disclose whether they have received any type of counseling from an attorney or other professional regarding the Medicaid program. This disclosure will automatically trigger that application to be sent to the Office of Inspector General for the Illinois Department of Human Services, who will audit that application and request documentation for every factual statement thereon. This presentation will not teach you how to submit a Medicaid application. It is limited to those points which are essential for and elder law or estate planning attorney to know in dealing with elderly clients. The entire topic area is too complex to present in a one-hour presentation. For additional training and resources on the Medicaid program itself, it is suggested that you attend the elder law short course put on by the Illinois Institute on Continuing Legal Education each fall or a program presented by the Illinois State Bar Association Elder Law Section Counsel. II.

WHERE TO FIND THE APPLICABLE LAW A.

Federal Law 1. Title XIX of the Social Security Act, 42 U.S.C.S. §1396 et seq. – http://www.ssa.gov/OP_Home/ssact/title19/1900.htm 2. Centers for Medicare and Medicaid Services (CMS) regulations, 42 C.F.R. part 430 et seq. – http://www.gpoaccess.gov/cfr/index.html

B.

State Law 1. Illinois Public Aid Code, 305 ILCS 5/1-1 et seq. – http://www.ilga.gov/legislation/ilcs/ilcs2.asp?ChapterID=28 2.

Medical Assistance regulations, 89 Ill. Admin. Code 120 et seq. – http://www.hfs.illinois.gov/assets/120.pdf

3. Illinois Dept. of Human Services Policy Manual and Workers’ Action Guide – http://www.dhs.state.il.us/page.aspx?item=4107 C.

Other State Resources 4

III.

1.

IDHS website: http://www.dhs.state.il.us/

2.

IDHFS website: http://www.2.Illinois.gov/hfs

NEW PROCEDURES IN THE SUBMISSION OF MEDICAID APPLICATIONS

A. All Medicaid applications that contain certain "triggers" are now sent to the LTCADI section of the Office of Inspector General (OIG) for the Department of Human Services. These triggers include: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Any case involving a trust; Transfers over $5000; Annuities; A home equity line of credit; Promissory notes; Reverse mortgages; Personal-care contracts; The use of a lawyer or financial planner in connection with the Medicaid application; and Where OIG suspects the applicant failed to answer Form 3654 or where OIG suspects unreported transfers.

B. A new online application process has been implemented, and all nursing homes in the state of Illinois are now required to submit applications using this online system. This application can be found at https://abe.illinois.gov/abe/access/ and is referred to as "ABE" (Application for Benefits Eligibility). C. DHS now has two major "hubs" for processing LTC applications. All applications for applicants residing north of Illinois Route 80 are submitted to the Chicago hub. Applications for counties south of I-80 are submitted to the Decatur hub. The contact information for the Decatur hub is: Macon County Long Term Care (LTC) 707 E. Wood St. Decatur, IL 62523 Fax: 217-364-6515 [email protected] D. Submitting the application online will send the application directly to the correct hub. Ultimately the goal for DHS will be that all applications and documentation will be submitted electronically through ABE. (In this writer's opinion, the ABE system is not quite ready for prime time use.) E. It is still permissible to submit an application to the hub by mail, email or fax. It is strongly suggested that you obtain a mailing receipt and delivery receipt, as Medicaid 5

applications have been known to be lost in the abyss. A complete written (non-online) Medicaid application will consist of the following: 1. Form IL444-2378B: Request for Cash Assistance, Medical Assistance and Supplemental Nutrition Assistance Program (SNAP) 2. Form HFS 3654: Additional Financial Information For Long Term Care Applicants 3.

Form IL 444-2998: Approved Representative Consent Form

4. A cover letter itemizing all documents enclosed with the application in the preferred order of presentation; and 5. The required five years of supporting documentation categorized by each asset and presented in the preferred order of presentation. F. Be sure to submit the application to the processing hub by a process that generates a delivery receipt (i.e. certified mail with a receipt requiring a signature, etc.) or a tracking process. Keep the packet of the documents described in Paragraph E. above for your own reference, so that you are able to promptly resubmit documents that you are told are “lost”. G. Nursing home staff have allegedly been trained to complete and submit a Medicaid applications. However, remember that nursing home staff are employees of the nursing home, and may not advise Medicaid applicants of certain situations which allow for exceptions to the general rule. These staff employees may not even be aware of those exceptions or special circumstances. In those situations, the Medicaid agency may deny the application, and the nursing home staff may fail to follow-up with the Medicaid agency. If you are contacted by a client in this situation, who may have been presented with a significant bill from the nursing home due to the denial of the Medicaid application, it is essential to file an appeal immediately in order to preserve the potential eligibility date. IV.

ELIGIBILITY CRITERIA FOR MEDICAID

A. The applicant must be a resident of Illinois. He or she must also be a U.S. citizen or a non-citizen living in the United States under a certain INS status or residing under color of law. Proof of citizenship or legal non-citizen residency must now be proven at the time of application with the submission of original documents. B.

The applicant must be 65 years of age or older, blind, or disabled.

C.

Medicaid payment is NOT available to an individual: 1.

who has more than $2,000.00 in cash and non-exempt assets, or

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2. whose monthly income exceeds the cost of private pay care at the long-term care (LTC) facility. D. If both spouses receive Medicaid, or an individual recipient resides with a dependent, the asset limit is $3,000.00. E.

ELIGIBILITY is evaluated differently than RECOVERY.

F.

ELIGIBILITY can also be affected by certain TRANSFERS.

G.

Treatment of Assets 1.

Exempt Assets a.

homestead property (PM 07-02-04-a)

(1) exempt when owned by applicant AND applicant resides there OR if applicant in LTC has (even a subjective) intent to return home, OR (2) is occupied by applicant’s spouse, sibling, minor child or disabled child (of any age) (3) as of June 14, 2012, the person is not eligible if his or her equity interest in the homestead property exceeds $525,000. 305 ILCS 5/3-1.2; 89 Ill. Admin. Code §120.385(c)(1). There are now specific requirements for determining equity interest in this property. (4) 89 Ill. Admin. Code §120.381(a)(1)(C) provides that homestead property held in a trust is NOT exempt unless a community spouse, minor child or disabled child resides there. b. Continuing Care Retirement Communities (CCRC) and Life Care Community Admission Contracts – 89 Ill. Admin. Code §120.380(j) (1) CCRC’s and Life Care Community contracts may require residents to spend resources declared for the purpose of their admission on their medical care prior to applying for Medicaid (2) entrance fees to such communities shall be considered available resources to the extent that the contract allows the entrance fee to be used for medical care if other resources or income of the individual is insufficient, when the individual is eligible for a refund of said fee when s/he dies or terminates the 7

contract, and when the entrance fee does not confer any ownership interest in the CCRC or the Life Care Community c.

motor vehicle (PM 07-02-05) (1)

only FMV of $4,500.00 or less is exempt

(2)

excess FMV applied to asset limit

(3) additional FMV over $4,500.00 may be exempt in certain circumstances d.

personal effects and household goods (PM 07-02-06-b)

(1) exempt to the extent excluded under 20 CFR 416.1216 – exclusion does NOT apply to items acquired or held for their value as investments (2)

equity value in excess of $2,000.00 is applied to asset

limit e.

life insurance policies (PM 07-02-07)

(1) exempt if a term policy (no cash value) or if total face value is $1,500.00 or less (2) if face value is more, entire cash value is applied to asset limit (3) policy owned by someone other than recipient is exempt upon proof of ownership (4) f.

each spouse is entitled to one policy of $1,500 or less

burial funds

(1) $1,500.00 set aside in bank account clearly identified as burial fund, OR $1,500.00 in revocable prepaid burial contract – this amount is reduced by the face value of any excluded life insurance of any irrevocable trust/arrangement available for burial expenses per person -- 305 ILCS 5/3-1.2; 89 Ill.Admin.Code §120.381(c) (2)

excess in either is applied to asset limit

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(3) any burial spaces for applicant, his/her spouse, and immediate family members are exempt – this includes gravesites, crypts, mausoleums, urns, caskets, vaults, plots, niches, eadstones, markers, plaques, burial containers, and arrangements for opening and closing the gravesite (4) as of June 14, 2012, up to $6,050 in irrevocable prepaid burial contract – contract must spell out in detail the goods and services to be provided and the price thereof, or it will be treated as a transfer of assets for less than fair market value – 305 ILCS 5/3-1.2; 89 Ill. Admin. Code §120.381(d)(2) (5) prepaid burial contract funded by life insurance policy where policy is assigned to third party funeral home – same requirement of detailed itemization and pricing – trust must also provide for a payback provision of all remaining funds to the State, up to the amount of Medicaid provided – 305 ILCS 5/3-1.2; 89 Ill.Admin Code §120.381(d)(3) g. resources needed for self-support – 305 ILCS 5/3-1.2; 89 Ill. Admin. Code §120.381(a)(3) (1) significant changes have been made in this area – now, only 6% of the person’s equity in the asset or resources (including farmland) is exempt, and only if that income producing property produces a net annual income of at least 6% of the excluded equity value of the property (2) this provision applies to non—homestead property, homestead property that is no longer consider exempt, farmland and the like -- prior to the implementation of this rule, farmland was not considered an available resource regardless of the net annual income it produced h.

medical fund-raisers (PM 07-01-12)

(1) not have i.

exempt only if recipient or responsible relative does control of funds

life estates (89 Ill. Admin. Code §120.380(i) (1)

life estate itself is not an available asset

(2) BUT lien (for recovery purposes) may be placed on a life estate

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(3) AND any transfer in change of ownership of real property (including creation or liquidation of life estate) is subject to asset transfer rules (4) a life estate purchased by one person in another person’s home will be a non-exempt asset unless the purchaser resides in the home for a period of at least 1 year after the date of purchase j. non-homestead real property or homestead property that has lost its exemption (1) this property is considered available, unless it meets the requirements of income-producing property under 89 Ill. Admin. Code §120.38(a)(3) (2) property will not be counted for six months if listed for sale, as long as good faith effort to sell continues – additional extension may be given if certain requirements are met -- 89 Ill. Admin.Code §120.380(k) k.

trusts – 89 Ill. Admin. Code §120.347

(1) revocable living trusts are all considered as available resources – new provision that homestead property loses its exemption if held in a revocable living trust, unless the person’s spouse, minor child or disabled adult child resides there – 305 ILCS 5/3-1.2; 89 Ill. Admin. Code §120.381(a)(1)(c) (2) all trusts created after August 11, 1993, and created with the person’s own assets, outside of a will, are considered available assets, unless one of the following exemptions applies (a) an irrevocable trust, created using the person’s own assets, before the person turns 65, and that contains a payback provision to the Medicaid agency (b) an irrevocable pooled trust containing the resources of a disabled person that includes a payback provision – however, if the person is 65 or older, a transfer to a pooled trust is considered an unallowable transfer, unless that individual is a ward of the state or of the county public guardian -- 305 ILCS 5/3.1-2. 89 Ill. Admin. Code §120.347(d)(2)

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(c) irrevocable grantor trusts, IF established more than five years prior to application for Medicaid – however, income will be includable in the person’s income, if the trust provides that s/he has the right to any income (as will any portion of the principal that is available l.

annuities – 89 Ill. Admin. Code §120.347

(1) revocable and assignable annuities are considered available -- if annuity can be surrendered, the surrender amount is considered available (2) income received by either the institutionalized spouse or the community spouse is considered available (3) as of January 1, 2012, the ownership or purchase of an annuity must be disclosed on the application – the penalty for failure to do so is a denial or termination of eligibility -89 Ill. Admin. Code §120.385(b) (4) the State of Illinois must be named as the first remainder beneficiary (after a community spouse or minor child) on an annuity purchased by either the applicant or the community spouse – the penalty for failure to do so is a denial or termination of eligibility -- 89 Ill. Admin. Code §120.385(b) (5) the purchase of an annuity by an institutionalized person will be treated as an unallowable transfer of assets unless it meets certain requirements (PM 7/02-20-b) (6) purchased annuity must be irrevocable, non-assignable, actuarially sound, and provide for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments m.

certain government benefits (PM 07-02-18)

2. If an asset is not explicitly stated to be exempt, it is a non-exempt asset and will be counted for eligibility purposes. 3.

Jointly Held Assets (PM 07-02-02)

a. jointly-held non-exempt personal property is treated as the asset of the applicant in its totality UNLESS proof is provided of either the lesser ownership interest or of the non-accessibility of the asset to the applicant (i.e. 11

mom puts child’s name on bank account but child does not contribute to said account) b. jointly-held non-exempt real property is treated as the asset of the applicant in proportion to the number of owners c. transfer of any change in ownership, either into or out of joint ownership, is subject to asset transfer policies H.

Effect of Transfers of Non-Exempt Assets (PM 07-02-20) 1. Transfers of non-exempt assets can result in penalty periods of noneligibility. 2.

Look-back period is now five years (60 months), regardless of whether a trust is involved

3.

Allowable Transfers (PM 07-02-20-b) a.

transfers more than 60 months prior to application

b.

transfers for fair market value

4.

transfers that the recipient intended to make for fair market value

5.

transfer of homestead property to: a.

a spouse

b.

a minor child

c.

a blind or disabled child of any age

d. the applicant’s sibling who has equity interest in the homestead property AND who was living in the home for at least one year prior to the date the recipient either entered the LTC facility or applied for Medicaid, OR e. the applicant’s child who provided either nursing care or support for the recipient AND who was living in the home for at least two years immediately prior to the date the recipient either entered the LTC facility or applied for Medicaid – however, the new regulations require proof that the person would have required institutionalized care; that the adult child actually resided with the person for the required two year period; and that the adult child actually provided the required care. 89 Ill. Admin. Code §120.388(m)(1)(E).

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6. transfer of homestead property to spouse or to another for the sole benefit of the spouse; to a trust or another person for the sole benefit of blind or disabled child; or to a trust established solely for the benefit of another disabled person – note that the regulations contain a definition of “sole benefit” and requires this type of transfer to be established via a written instrument of transfer that contains certain requirements itself– 89 Ill. Admin. Code §120.388(m)(2) 7. the transfer was made exclusively for a reason other than to qualify or remain eligible for assistance – this provision also contains certain required proofs – 89 Ill. Admin. Code §120.388(m)(4) 8. transfer of assets that have been returned to the person – 89 Ill. Admin. Code §120.388(m)(6) a. for transfers prior to January 1, 2012, a partial return shall result in a reduction, but not elimination, of the penalty period b. for transfers after January 1, 2012, all of the assets transferred for less than fair market value must be returned in order to eliminate the penalty period 9.

promissory notes, loans or mortgages – 89 Ill. Admin. Code §120.388(q) a.

now requires a written instrument with certain required provisions;

b. a repayment term that is actuarially sound, with payments to be made in equal installments, no balloon payment, and no cancellation upon death; c. a “tangible, verifiable record of consistent, timely payments in the amounts provided for” in the written instrument for a demonstration of good faith – unpaid installments delinquent for three months or more will result in the amount remaining unpaid being considered as an unallowable transfer; and d. the State of Illinois must be named as a remainder assignee, up to the amount of the amount of medical assistance provided 10. transfers to the “community spouse” pursuant to the spousal impoverishment provisions 11. transfer to the community spouse of personal effects, household goods, and one motor vehicle, regardless of dollar value, for the sole benefit of the community spouse 12.

transfers where denial of Medicaid would result in undue hardship

I. New Provisions Relating to Non-Allowable Transfers – 89 Ill.Admin. Code §120.388(d) 13

1. definition of “transfer”: when the applicant/recipient or community spouse buys, sells or gives away real or personal property or changes the way an asset is held – 89 Ill. Admin. Code §120.388(e) 2. includes changing ownership of property to a life estate interest, reducing or eliminating an ownership interest, purchasing an annuity, transferring income if the income would have been considered an asset in the month following the transfer 3. assets or income INCLUDE any income or resources not received due to any action or inaction by the applicant/recipient or community spouse, such as: a.

irrevocably waiving pension income;

b.

waiving or disclaiming the right to receive an inheritance;

c.

not accepting or accessing an injury settlement;

d. arranging for a defendant to divert a settlement into a trust for the benefit of a person who is a plaintiff in a case; e. refusing to take legal action to obtain a court-ordered payment that is partially or wholly unpaid, such as alimony; f. receiving an inheritance under a will when renouncing the will and taking a statutory share is more advantageous, OR renouncing a will and taking a statutory share when taking the inheritance is more advantageous – 89 Ill. Admin. Code §120.388(d)(3)(F). J.

Penalty Period for Non-Allowable Transfers 1.

The method of determining the penalty period remains the same

a. determine uncompensated amount of assets transferred (i.e. FMVof each asset minus any value received) b. total all uncompensated amounts for each unallowable transferand add together c.

divide private-pay rate of LTC into total uncompensated amount

d. result is number of months of penalty period (i.e. number of months the individual is NOT eligible for Medicaid) 2.

however, these significant changes now apply

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a. partial months in the calculation above are no longer ignored – the Medicaid agency will determine the penalty down to the number of months, days and portions of a day – 89 Ill. Admin. Code §120.388(i). b. multiple uncompensated transfers are now aggregated and treated as a single period of ineligibility c. the penalty period now BEGINS either the first day of a month during or after the asset transfer, OR when the person is institutionalized AND is otherwise eligible for Medicaid, but for the imposition of the penalty period (in other words, when the person has spent down all of their assets and has less than $2,000), whichever is LATER K.

Undue Hardship Waiver – 89 Ill. Admin. Code §120.388(r)

1. “Undue hardship” exists here the application of a penalty would deprive an institutionalize person: a.

of medical care, endangering the person’s health or life; or

b.

of food, clothing, shelter, or other necessities of life.

2. Actual, not just possible, hardship must be proven – regulation includes criteria to be considered 3.

Examples of undue hardship: a.

applicant is unable to explain the transfer;

b.

there is evidence of fraud or elder abuse;

c. spouse.

the person will be forced to move, or will be separated from a

4. for transfers occurring prior to November 1, 2011, a hardship waiver SHALL be granted upon submission of an affidavit that the penalized transfer was made in reliance on the administrative rules in effect at the time of transfer, and that without a waiver, the person faces deprivation of the elements described in Paragraph K.1.a. and b. immediately above – 89 Ill. Admin. Code §120.388(r)(3) L.

[Prevention of] Spousal Impoverishment Provisions – 89 Ill. Admin. Code §120.379

1. Special rules apply where one spouse resides in a LTC facility and the other spouse resides in the community

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2. These provisions also apply where one spouse would be in a LTC facility but for receiving IDOA home and community-based services, and the spouse also resides in the community. 3.

Treatment of Assets

a. ALL non-exempt assets belonging to EITHER spouse or BOTH spouses are considered available to the institutionalized spouse b. property in an amount that will bring the Community spouse’s assets up to the Community Spouse Asset Allowance (CSAA) can be transferred without penalty to the community spouse (1) Note: this is in addition to any transfers of exempt assets to the community spouse (i.e. homestead, one motor vehicle, personal effects and household goods) (2) as of January, 2012, CSAA is $109,560 – this amount will NOT be adjusted for inflation c. if community spouse’s separate non-exempt assets exceed the CSAA, then no asset transfer is allowed without penalty d. additional income-producing assets can be transferred to the community spouse without penalty if court-ordered or if the result of an IDPA appeal hearing (i.e. to provide greater monthly income to the community spouse) e. applicant spouse is NOT required to transfer any assets to spouse -if not transferred, assets are counted in eligibility determination f. assets must actually be transferred to community spouse in order to be excluded from eligibility determination 4.

Treatment of Income

a. monthly income of the institutionalized spouse in the amount necessary to bring the community spouse’s income up to the Community Spouse Maintenance Needs Allowance (CSMNA) can be transferred each month without penalty to the community spouse b. as of January, 2012, CSMNA is $2,739 per month (and here it will remain indefinitely) c. community spouse’s non-exempt income is compared to CSMNA; if less than CSMNA, non-exempt income of the applicant spouse, and joint 16

income of both spouses, can be transferred each month the community spouse

without penalty to

d. if community spouse’s separate non-exempt income exceeds the CSMNA, then no income transfer is allowed, and all of recipient spouse’s monthly income (less must be paid to the LTC facility (1) if community spouse’s separate non-exempt income exceeds CSMNA, the Medicaid agency will require that a support payment be made on behalf of the institutionalized spouse – see WAG 09-02-02 e. income must actually be diverted to community spouse in order to be excluded from monthly payment to LTC facility f. additional income can be diverted to the community spouse without penalty if court-ordered (typically in dissolution, legal separation or guardianship proceeding) or if the result of an IDPA appeal hearing g. new provision provides that the community spouse’s income (including income from investment of community spouse’s assets) plus diverted income of institutionalized spouse will be calculated first before any additional diversion of resources to make up difference between community spouse’s income and the CSMNA – called the “income first” rule – 89 Ill. Admin. Code §120.379(e) and (f) 5.

Community Spouse Must Now Disclose All Income and Assets

a. community spouse can no longer refuse to disclose separately owned assets – any failure to disclose WILL RESULT in DENIAL OF ELIGIBILITY – 89 Ill. Admin. Code §120.379(j) b. the institutionalized spouse must assign his/her rights of support to the State – 89 Ill. Admin. Code §120.379(i) c. the State may seek support from the resources and income of the community spouse by either court order OR ADMINISTRATIVE RULING -89 Ill. Admin. Code §120.379(k) – however, this support order cannot reduce the community spouse’s resources to below the CSAA or monthly income below the CSMNA 6.

Deductible Allowances from Recipient’s Countable Monthly Income a.

Monthly Personal Needs Allowance (MPNA)

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(1) $30.00 per month personal needs allowance; $90.00 personal needs allowance for veterans receiving VA benefits or persons/spouses in supportive living facilities (2)

usually kept in trust account at LTC facility

b. Community Spouse Minimum Monthly Maintenance Needs Allowance (CSMMNA) c.

Family Maintenance Needs Allowance (FMNA)

(1) spouse

for dependent family member living with community

d. medical insurance premiums and medical bills or other expenses for medical necessities not paid by Medicaid e. all remaining monthly income must be paid to LTC facility for the recipient’s contribution to the cost of his/her care V.

LIENS AND ESTATE CLAIMS

A. IDPA will attempt to recover dollars spent on Medicaid recipients by placing liens on real estate and filing claims against estates. B.

Liens

1. homestead property can be exempt for eligibility purposes, but IDPA can place a lien on homestead property after the recipient has been in LTC for 120 or more days a.

lien is not filed if one of the following lives in the property:

(1) recipient’s spouse; (2) recipient’s minor, blind or disabled child; (3) recipient’s sibling if he/she has lived there for at least one year prior to the recipient entering the LTC facility and he/she has an equity interest in the property; OR (4) if recipient goes into medical institution (including LTC) for what is intended to be a short stay 2. The presumption that a Medicaid recipient is not reasonably expected to return home if in the facility for more than 120 days does not affect the exempt status of homestead property for eligibility purposes C.

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1. can be filed only against estate of deceased recipient, NOT estate of recipient’s deceased spouse – see Hines v. Department of Public Aid, 22 Ill.2d 222, 850 N.E.2d 148, 302 Ill.Dec. 711 (2006) a. can be enforced against all real and personal property that is included in estate b. many states have expanded their definition of “estate” – Illinois has not yet done so VI.

NEW SPEND-DOWN CONSIDERATIONS

A. Spend-down and backdating eligibility provisions have significantly changed under the new rules. 89 Ill. Admin. Code §120.61; 89 Ill. Admin. Code §120.380. B. Retroactivity for three months prior to the date of application now only applies if the applicant would have been eligible for Medicaid during those three months 1. the purchase of pre-paid funeral and burial contracts, payments for medical expenses, and the payment of legal fees during those prior three months WILL NOT be considered allowable transfers 2. therefore, it is CRITICAL to pay for these expenses more than three months prior to the date of application 3. determination of eligibility for the three back-dated months will be based on the amount of income and resources available as of the first day of each month – 305 ILCS 5/5-2.1(d), 89 Ill. Admin. Code §120.380(d)(2)

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