MONAELA - Notes on Meeting with DSS

February 28, 2014

I.TRUSTS

Whenever a Medicaid applicant/recipient is a party to a trust (meaning Grantor/settlor or beneficiary) then the existence of the Trust must be disclosed to MOHealthNet. Typically this is done at the time of application. However, often times, as is the case with regard to aD4A trust, such trusts are created after the Medicaid recipient has already been approved for benefits. The following are some general suggestions regarding the handling of the issues involved in the establishment and disclosure of these trusts:

  • Cover Letters are Helpful

DSS advises that it would be helpful for attorneys to highlight, in a cover letter, the main provisions of the Trust, with specific reference to the Article and page number in the Trust document.

Such main provisions include

  1. Whether or not the Trust is Revocable or Irrevocable
  2. Who created the Trust, and if not the MOHealthNet applicant/recipient, what is the Grantor's relation to the MOHealthNet applicant/recipient
  3. The role of the MOHealthNet applicant/recipient (i.e. beneficiary, Grantor, etc.)
  4. The terms upon which the Trustee can distribute funds to the beneficiary (i.e. the discretionary standard)
  5. The Trustee powers
  6. The remainder clause, after the death of the beneficiary, if the beneficiary is the MOHealthNet applicant/recipient
  7. Other provisions of the Trust that you think are relevant to the Dept's review of the Trust.
  • Procedure

Any trusts to which a MOHealthNet applicant is a party, should be submitted with the application at the time of application.

If a MOHealthNet recipient's circumstances change after application, for example they become a party to a trust, then this information should be reported to the caseworker, for the MOHealthNet recipient within 10 days, as is the requirement. If the recipient did not timely report the new relationship to a Trust, then such information should be reported as soon as possible, and at a minimum, at the time of the annual reinvestigation.

Also at the time of the annual reinvestigation, any trusts previously submitted, should be resubmitted for DSS’s review so that DSS can review for any changes or modifications to the Trust. (Cover letters are helpful on this issue as well.) If you have a prior approval letter concerning the Trust, it would be helpful to submit that letter along with a signed statement that no changes have been made (or if they have been made, then submit amendments) . The current value of the Trust estate should also be submitted with this information.

With regard to the establishment of D4A trusts, these Trusts should be submitted directly to Gerald Meyr, Assistant Special Counsel for Benefits, Department of Social Services, Division of Legal Services, P.O. Box 1527, Jefferson City, MO 65102. Please clearly identify in your correspondence to him that the Trust is a D4A Trust, the time issues, and the details of the situation.

If there is an annuity involved in the D4A trust, the annuity documentation will also need to be submitted to Mr. Meyr. DSS is entitled to see this documentation whenever there is a request to defer a lien. The remainder beneficiary of the annuity must be the SNT, rather than a family member or other beneficiary so as not to circumvent the payback provision of the Trust.

  • Words of Advice- Watch the Trustee Powers

When asked about problems in trusts that DSS keeps seeing, we were advised that the Trustee Powers are often times too broadly drafted. DSS has a concern:

  1. for the ability of a Trustee to invest in widely inappropriate investments on behalf of a beneficiary, (such as mining or agriculture projects, family businesses, etc.).
  2. the ability of a Trustee to loan trust assets to a beneficiary without adequate security, or assurance of repayment
  3. the ability of a trustee to pay for family members to go on trips…(recommended to follow the POMS guidelines on these issues if a d4a trust.)
  4. the ability of a Trustee to pay family members to care for the beneficiary…(recommended for Trustee to enter into a personal care contract, per MO statute, if D4A trust).
  • Funeral Plans

Most trusts do not specifically provide for the power of a Trustee to purchase a funeral plan for the beneficiary and in D4A situations, the Trustee cannot pay for the funeral after the death of the beneficiary. MOHealthNet lien comes first. DSS does not have discretion to allow for payment of the funeral plan prior to repayment of lien. DSS would like to see the funeral plan paid for during the lifetime of the beneficiary, so that this is not an issue and this problem is avoided.

II.VA BENEFITS

Once an individual who was previously receiving VA benefits, becomes eligible for vendor MOHealthNet benefits, a catch 22 situation is often created by the time lag involved in turning off/reducing the VA benefits. Under applicable law, the VA Aid and Attendance benefit is supposed to be reduced to $90 a month once a recipient becomes eligible for MOHealthNet benefits. However, there is a time lag in the reporting of the MOHealthNet benefits, and the reduction in the VA Benefit. Accordingly, the VA benefit amount is not counted in the MOHealthNet recipient's surplus amount, and the MOHealthNet recipient is still in need of keeping his/her non-exempt assets under the $999.99 eligibility limit. Accordingly, the receipt of the extra aid and attendance benefit amount can cause a MOHealthNet eligibility problem as the VA benefit keeps being received by the MOHealthNet recipient. In addition, the VA has advised MOHealthNet that the VA intends to require a payback of any Aid and Attendance benefits that it wrongly pays out.

MOHealthNet is not in a position to bend on the $999.99 non-exempt eligibility limit, and has to maintain a strict adherence to the limit. Accordingly given that the VA also has a right to demand a pay back of the Aid and Attendance benefit, the suggested course of action is to return the Aid and Attendance benefit to the VA.

III.ESTATE RECOVERY

MONAELA members have an issue/question about estate recovery policy- they are directed to contact the Third Party Liability Unit if the Department of Social Services. 573-751-2005. If however, a MONAELA member has an issue with a particular estate recovery case, the Attorney General’s office handles the enforcement issues.

IV.PENALTY DIVISOR

MOHealthNet is planning on reviewing the current penalty divisor and making appropriate adjustments as needed still this year. An IMM will be issued on this issue once this review has been completed.

V.POOLED TRUSTS

DSS's position with regard to transfers by individuals over the age of 65 to a pooled trust, will be considered a transfer for which a penalty will apply. The length of the penalty will be based upon the "amount transferred", which is determined on a case by case basis.

VI.INFORMATION LINE

MOHealthNet has a general information line set up. The number is 1-855-373-4636.

This is the best number to call for general information such as status of an application. There is currently a time delay in the call center representatives getting access to the authorized representative information. Accordingly, the call center may not be authorized to communicate with an attorney on a particular case. In that situation, please call the eligibility specialist directly.

VII.ANNUITIES

When there is an annuity involved in a particular case, please be sure to submit the ENTIRE annuity contract with the application. The Agency reports that often, it is only to cover page of the annuity that is being submitted. Accordingly, this slows down the processing of the application.