State Supreme Court Decides Important Medicaid Case

Posted on: Friday, May 10th, 2019

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On May 9, 2019, the Michigan Supreme Court released a long-awaited opinion regarding Medicaid planning.

In Hegadorn v DHS, the Court held that assets placed in a so-called “Solely for the Benefit” trust are not automatically considered resources in the Medicaid application process.

“Solely for the Benefit” or “SBO” Trusts were successfully used in Medicaid planning for nearly 20 years until 2014 when the State Department of Health and Human Services (“DHHS”) changed its interpretation of policy and began denying applications in which these trusts were utilized.  While the decision of the Michigan Supreme Court holds that DHHS was wrong in the way they treated these trusts, the decision falls short of holding that SBO trusts can again be used.

“At one time SBO trusts were the best method for helping married persons obtain Medicaid benefits,” said Attorney Doug Chalgian.  “With an SBO trust, a married couple could protect assets that exceeded the community spouse resource allowance.  It was a great planning tool and we used them very frequently.  Time will tell whether this decision revives the use of this planning technique.  We can only hope.”

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