An Inconvenient Obstacle to Community Based LTC

Posted on: Tuesday, February 12th, 2013

Doug Chalgian

Summary

Because asset protection strategies commonly used in the context of nursing home Medicaid are problematic in the context of MI Choice Waiver and PACE programs, a significant number of potential beneficiaries are disincentivized from pursuing these services.

Background

PACE is the Program for All Inclusive Care that is operating in several parts of the State.  It is a unique and growing concept for long term care (“LTC”) that combines Medicare and Medicaid dollars for individuals who meet the Medicaid Level of Care requirements for long term care services.  In that combines Medicare and Medicaid money, PACE is especially interesting as it may anticipate something like what will come (if anything) from the current push for “integrated care” services.

Waiver or “MI Choice” is the home and community based Medicaid long term care benefit that provides benefits to Medicaid beneficiaries who meet the Medicaid Level of Care requirements for LTC services.  Services may be provided in the home or in those Assisted Living Facilities that participate in the program.

Both PACE and Waiver use the traditional Medicaid financial eligibility rules for nursing home Medicaid, but with an income cap.

Currently most PACE programs are looking to fill slots, whereas most Waiver programs are backlogged (but catching up).

Lawyers have long worked to qualify Medicaid beneficiaries in nursing homes while preserving assets for the spouse or other family members.  This practice area has grown dramatically in the past decade so that whereas a decade ago only a hand full of attorneys provided this type of advice and only a small percentage of nursing home residents took advantage of these asset protection strategies, today there are hundreds of lawyers in Michigan offering advice in this practice area and the majority of nursing home Medicaid beneficiaries receive advice on these strategies.

The Issue

Because the rules that allow for asset protection strategies for residents of Medicaid nursing homes are unclear in terms of how they apply to beneficiaries seeking PACE and Waiver services, a significant number of people seeking Medicaid funded LTC services are being, and will continue to be. disincentivized from pursuing PACE and Waiver services until these issues are resolved.  There are two specific areas of concern: (1) Spousal Protections and (2) Divestment.

Spousal Protections

LTC Medicaid policy provides for a so-called “protected spousal amount;” that is an amount of “countable assets” that the so-called “community spouse” (spouse not in the nursing home) gets to keep in addition to the $2,000 that the nursing home resident can keep.  The protected spousal amount is established by looking at the couple’s assets on the “snapshot date” (another term of art) and applying a formula provided by policy.  In PACE and Waiver programs it becomes difficult to establish a snapshot date, and therefore to take steps necessary to exercise strategies available to maximize the protection of assets for the community spouse.  For married couples these protections can be quite generous.  Although Medicaid policy provides a process for establishing a snapshot date in community based programs, most PACE providers and Waiver agents are unfamiliar with the importance of this process and the result is insecurity for the community spouse when pursuing these benefits.

Divestment

“Divestment” is the policy that penalizes asset transfers for people who give away assets before applying for Medicaid benefits in LTC during the five years prior to applying for benefits (the so-called “lookback period”).  Notwithstanding the policy people do give away assets, either because they do not know the consequences, because they think they should notwithstanding the consequences, or because they have been provided advice on how to do so and preserve assets by using the policy to their advantage.  A key component to fixing inadvertent or ill-advised conduct and for using strategies that allow for transfers notwithstanding divestment policy is the ability to trigger the running of the penalty period of ineligibility that arises as a result of the transfer, and further to provide income to pay for care while the penalty period of ineligibility is running.  Policy for PACE and Waiver services provides no clear direction as to how these two important features of divestment rules apply in this context.  Again, for individuals seeking benefits where divestment is an issue, the lack of ability to fix divestment problems and use the rules to protect assets serves as a disincentive to pursuing these benefits.

Conclusion

These obstacles are fixable if PACE and Waiver providers are willing to work with planners, and apply the rules in a manner that allows families to exercise the same options that are now commonly exercised in the nursing home situation.  Until then, these issues will remain disincentives to those who seek these services.

mm By: Doug Chalgian
Doug Chalgian

Posted in Elder Law , Medicaid , Medicaid , Medicare