A particularly curmudgeonly Medicaid “reform” has been introduced in Congress. Medicaid receives heaps and mounds of criticism, particularly related to nursing-home coverage. The coverage is expensive, both on an individual basis and as a program. However, individuals in nursing homes need that care and Medicaid is the last resort if they lack the ability to pay for it. The new bill is an unwarranted and unfair swipe at the “truly needy” that conservatives claim they want to protect.
“Medicaid planning,” advising potential or current nursing home residents and their families about legal financial plans to qualify for Medicaid while preserving income and assets, is particularly a target of derision of the long-term care insurance industry, conservative commentators and legislators, and welfare administrators. For example, in a Fordham Law Review article Milan Markovic strains to demonstrate that Medicaid planning is unethical. Milan Markovic, “Lawyers and the `Secret Welfare State,’” 84 Fordham L. Rev. 1845 (2016).
Timothy Takacs and David McGuffey, however, argue that Medicaid planning is a fair and reasonable response when dealing with a prohibitively expensive segment of the health care industry that is bound only by the rules of supply and demand and loosely-enforced regulations. Timothy L. Takacs & David L. McGuffey, “Medicaid Planning: Can It Be Justified?: Legal and Ethical Implications of Medicaid Planning,” 29 Wm. Mitchell L. Rev. 111, 131 (2002).
In my paper, the public-policy arguments that Medicaid should be reserved for the “truly needy” and that it is unethical to exploit loopholes in Medicaid law are addressed. John B. Payne, Ethical and Public Policy Considerations Related to Medicaid Planning, Pennsylvania Bar Association Quarterly, p. 139, October 2013, I urge that the citizen is as entitled to receive the benefit of favorable statutes in public benefits law as in tax law. I also argue that judges must apply the law as written, not according to their perception of public policy.
Congress has made many changes to Medicaid long-term care benefit eligibility over the last three decades. In 1988, the asset rules were changed to protect the financial security of non-institutionalized spouses of nursing home residents. The utility of asset-protection trusts was severely curtailed in 1993 and 2006. Furthermore, the divestment penalty rules were greatly toughened in the Deficit-Reduction Act of 2005, which was enacted in 2006. Congress knows how to find and revise Medicaid law. If opportunities for planning remain, the citizen should be able to rely on the law as written.
A House bill has been introduced that is presumably intended to curtail Medicaid planning. However, it is as related to Medicaid planning as a pitch pipe is to a pitchfork. The only effect of this bill would be to hurt citizens who need and qualify for Medicaid. The bill, HR-5626, introduced by Rep. Markwayne Mullin (R-OK) and Vice-Chair of the Energy and Commerce Subcommittee on Health, Brett Guthrie (R-KY), would eliminate the three-month retroactive eligibility period preceding the month of application for Medicaid.
Presumably, Mullin and Guthrie believe that the three-month retroactive eligibility period represents a Medicaid-planning opportunity. While some states allow applicants to create asset eligibility retroactively by purchasing a funeral contract or paying medical bills, most others close the book on prior months. In those states, the applicant can only be approved for Medicaid benefits in the retroactive benefit period if he or she was below the income and asset limitations in each month for which Medicaid is requested. The applicant cannot go back and cure an asset problem. Therefore, the retroactive benefit period is only useful for applicants who were already eligible for the months in question.
The three-month retroactive eligibility period is far from a planning opportunity. It is a partial failsafe to go back and pick up lost eligibility due to honest mistakes or omissions when applications are submitted. It is also a way to recover from bureaucratic delays and Medicaid worker incompetence or obstructionism.
The 45-day standard of promptness is a joke in many Medicaid offices. Even within a state the typical processing time for a Medicaid application can vary from two weeks to 20 or more weeks. In some Michigan and Pennsylvania counties Medicaid applications lie dormant for upwards of two months before a worker takes a first look at a case. Colleagues in other states make similar complaints. Retroactive eligibility is a vital facet of the Medicaid program because it is a way for applicants to recover from ill treatment by the local offices.
Many provisions in Medicaid policy manuals intended to require fair treatment for applicants are ignored in practice. Further, the deck is often stacked heavily in favor of the Medicaid agency if the applicant requests a “fair hearing.” It is not unusual for a perfectly eligible Medicaid applicant to re-file two or more times before the case is approved. The applicant may lose far more than three months of eligibility due to worker error.
One particular applicant filed for Medicaid in September, but the worker did not process the case until April. The worker improperly denied the case because she did not deduct the current month’s income from the asset total. The family requested a hearing, which was scheduled for August. Shortly before the hearing, the family hired me. At the hearing, I demonstrated the worker’s mistake and Medicaid was approved based on the original application date. It was fortunate that the worker had made a mistake and doubly fortunate that the administrative law judge was fair. Otherwise, there could have been a year of nursing care that Medicaid would not cover.
Another case took three applications, two administrative hearings and three trips to court over ten months before the State admitted its mistake and approved coverage back to the first application date. Each of these applications should have been open-and-shut approvals.
The three-month retroactive Medicaid eligibility period provides crucial protection against mistakes and worker intransigence. It would be shameful for Congress to pass the bill introduced by Reps. Mullin and Guthrie. It would not address medicaid planning. It would only hurt those most in need. Let your member of Congress know that punishing the innocent serves no good purpose.
John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
©2016 John B. Payne, Attorney