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faqs

MEDICAID PLANNING
What is a “Miller Trust” and do I place my assets into such a trust? Long-term Medicaid has income eligibility requirements (in addition to resource limits and other requirements) in certain states such as Texas (an “income cap” state). As of January 1, 2014, the income cap will be $2199 per month. If an individual, who is applying for Medicaid, has income over the cap, then a “Miller Trust” can be created to place the income (not resources) to pass such eligibility requirement. “Miller Trusts” are also known as “qualified income trusts” or as “QITs”.

Will I, as the spouse that lives at home (the “community spouse”), be allowed to keep any my spouse’s income if such spouse lives in a nursing home (the “institutionalized spouse”) and is on Medicaid? It depends on the income of the respective spouses and what strategy is employed. If the joint income is greater than what is called the minimum monthly maintenance needs allowance of $2980.50 per month, it will take advanced Medicaid planning to protect assests greater than $23, 844. However, it is often best to not “spend down”, so this situation must be carefully reviewed with your experienced elder law attorney.

If we get my loved one on long-term care Medicaid, are we going to lose the family home? Maybe, if one applies for long-term Medicaid after the rules changed in 2006. The state will have a right to make a claim against the probate estate of a nursing home resident. Presently the rules allow use of a special enhanced life estate deed to keep the family home out of a probate proceeding and thereby protect the home from a Medicaid lien. Our office has found that this type of deed is appropriate planning not just for our Medicaid lients.

Can’t I always transfer $11,000 to my children?
The annual exclusion is still subject to the Medicaid rules. So, the transfer could result in a transfer penalty - depending on when the uncompensated transfer was made and if there was an existing transfer penalty and if the transfer was to a disabled child.

What are countable resources and non-countable resources? Most assets that can be converted to cash are considered countable (such as the cash surrender value of life insurance policies, stocks, IRAs, mutual funds, bank accounts, etc.) and can be used for your support. They are considered in determining Medicaid eligibility. Excluded resources, such as the homestead, a burial space, term life insurance, etc. are considered non-countable for Medicaid eligibility purposes.

Do the accounts that I own jointly with someone else count toward my Medicaid eligibility? It is assumed that the account belongs to the applicant unless it could be proven otherwise.

Do the assets of the community spouse count even if there is a prenuptial or postnuptial agreement? Yes.

Is buying an annuity the best way to protect all of my resources?
It depends on the factual situation. With the rule change which became effective as of September 1, 2004, “Medicaid annuities” became more popular when there is an institutionalized spouse and a community spouse and their total non-countable resource income exceeds or is close to the minumum monthly maintenance needs allowance ($2980.50 as of 1/1/05). ßBefore one makes a decision one should consider all of the options. Be wary of anyone who advises this is the only option.

Can the community spouse keep several hundred thousand dollars and still get Medicaid eligibility for her husband without having to change the nature of her resources? Depending on the income of the community spouse and other factors, often the answer is “Yes”.

Can I transfer my assets to my children? A transfer of assets can result in a penalty for Medicaid eligibility. The penalty is a period of months that is calculated by taking the average nursing home cost in Texas and dividing that number into the amount transferred. There are some transfer strategies available which comply with the Medicaid regulations. There is presently a 3-year look back period on most gifts (5 years on many trusts).