Audio (MP3) Listen in New Window Presentation (PDF) Open in new window Handout (PDF) Open in New Window Medicaid’s 1634 Transition and the Use of Miller Trusts Dennis Frick The Senior Law Project Indiana Legal Services, Inc. 151 North Delaware Street, Suite 1800 Indianapolis, Indiana 46204 WHY IS INDIANA CHANGING MEDICAID? • Indiana chose initially to be more restrictive • Over the years the restrictions have eased • As a 209(b) state, Indiana had to allow spend down, which is difficult for recipients and providers to navigate and costly for FSSA to administer • Limit need to make disability decisions • Health care reform gives other coverage options WHAT DOES IT MEAN TO BE AN SSI STATE? • SSI recipients will automatically receive Medicaid. Follow SSI income & resource rules, with option to be less restrictive (real estate, prepaying for funerals) • 1634 Agreement with SSA – SSA decisions on disability will be decisive • State can choose to allow spend down, sometimes referred to as “medically needy”; Indiana not choosing this option • Will cover “institutional” care subject to an “income cap” Changes June 1, 2014 to “Community” Medicaid • Beginning June 1, 2014 there will be an income limit of 100% Federal Poverty Level (FPL) except for waiver and nursing home services • Anyone with countable income above 100% FPL will not be eligible for community Medicaid. • There will be no spend down for persons with income under 100% FPL. What happens to those above 100% FPL? • If do not have other insurance, can apply on the federal Marketplace for insurance with a subsidy through tax credits. Will have an open enrollment period. Services covered will be more limited. • If have Medicare, then may qualify for a Medicare Savings Program. May be able to purchase a Medicare supplement policy. Options for Medicare recipients with income over 100 % FPL • QMB functions like a basic Medicare supplement policy. Its income limit increasing to 150% FPL. There is no spend down for this! • If income between 150% and 185% FPL, can qualify for SLMB or QI to pay Part B premiums, but no health care coverage • If over 150% FPL, can try to purchase Medicare supplement policy Changes for Institutions, Waiver Services, and Money Follows the Person • Coverage now subject to an “income cap,” or Special Income Level (SIL), which is 300% of SSI, $2,163 per month in 2014 • If Gross Income is above the SIL, must have a Miller Trust in place and must use it to be eligible for Medicaid. • 3,400 current recipients will need Miller Trusts by June 1 Applicability • Institution is defined as hospital, nursing home, ICFMR, or public institution. • Must reside in institution for at least thirty days. If die within 30 days, 30 day test is met. • Applies to all waivers except the PTRF. INSTITIONAL INCOME BUDGET: • Beginning June 1, 2014 will use an “eligibility budget” • Income Must be no more than Special Income Level, which is 300% of SSI, $2,163 in 2014 • Income placed into Miller Trust is not counted in the eligibility budget Income Used in Institional Budget • Use Gross Income - amount before deduction of Medicare premiums from Social Security, or before deduction of taxes or premiums from pensions • Net rent is counted • VA Aid & Attendance should not be counted • Long Term Care Insurance payments not to be counted if will be spent on medical expenses Institutional Eligibility Budget • If Income Greater Than SIL, must use Miller Trust to be eligible • Any income deposited into Miller Trust not counted in eligibility budget • Once pass eligibility budget, then “post eligibility” budget using all income, even that placed into trust, to compute liability Miller Trust Requirements • Federal Statute only lists two requirements – Can only include income; cannot use it for resources – Must provide for payment to state at death for all Medicaid paid • FSSA says it must be Irrevocable Miller Trust: What must be deposited? • Must deposit at least the excess income above the SIL • Can deposit all the income into the trust. Can first receive it and transfer it into trust, or arrange to have payors direct deposit to trust. • Can even deposit some amount between the excess and all the income. E.g., one income source Miller Trust: What can be paid from the trust? • Federal law does not actually limit what can be paid from the trust • Are no limits on transfer to the spouse • But payments from trust for food, clothing, or shelter are counted as income • If FSSA does post eligibility budget properly, income in trust will be needed for liability or for spousal allocation. Preparing the Miller Trust • Attorney can prepare. • FSSA has provided a template for use without an attorney. • See also the alternative template • Should be sufficient if it says will deposit at least the income above the SIL into the trust Miller Trust Terminology Used in the State Template • Beneficiary/Primary Beneficiary: The Medicaid recipient/applicant who needs the trust due to having income above the Medicaid “Special Income Level” ($2,163 in 2014). • Settlor: The person who is setting up the Trust. (This can be the Medicaid recipient/applicant or an Authorized Representative or anyone who manages the income of the Medicaid recipient/ applicant.) More Terminology Used in the State Template • Trustee: The person who manages the funds deposited into the Trust. There can also be a successor (back-up) Trustee appointed if the first Trustee cannot serve. • Distributee(s): If there are funds in the Trust at the Medicaid recipient’s death, those funds must be paid to the state to reimburse it for Medicaid benefits it paid. If at death there are more funds in the Trust than are owed to the state, then the Trustee will pay the remaining funds to the persons who are listed as “distributees” on the trust form. Miller Trust Issues • Use Beneficiary’s SSN as Tax ID Number • Who can Settle if Beneficiary Incapacitated? – POA give authority? – Third Party should be able to settle – Who will serve as Settlor and as trustee? – Is a Guardianship needed? Meeting the June Deadline • FSSA requests by May 1: – Completed trust – Verification of trust account – Attestation of deposits to be made beginning in June • Even if receive termination, can get reinstated if complete trust by June 30 and make deposit for June. Post Eligibility Budgeting • Medicaid eligibility specialist uses “post-eligibility” budget to determine what the institutional liability will be or what the budget will be in waiver cases. • All income, including that deposited into the Miller Trust, is counted. • This budgeting should be the same as before June 1 without a Miller Trust in place. Post Eligibility Budgeting: NON-Allowable Deductions • Attorney fees • Bank fees • CPA fees Even if the Miller Trust authorizes these fees, they are not deducted in post-eligibility budgeting.