The Most Egregious Example of the Failure of Medicaid to Follow Precedent

In an administrative decision, the father of a nursing home resident (M.M.) predeceased the nursing home resident and established a discretionary testamentary trust for the benefit of M.M. The trust contained no standards of invasion and provided that the trustee had sole discretion as to the use of the funds (see M.M. v. Division of Medical Assistance and Health Services, OAL Docket #11123-95, 2/20/96, 4/11/96). The trust also included supplemental benefit language. The County denied eligibility and the Administrative Law Judge affirmed holding that the trust was not an excludable resource.

The significance of this case is that the Director reversed on the basis that the Medicaid recipient was not the grantor, the trust was irrevocable and the trustee had considerable discretion. Such reversal presumably indicates an acknowledgement by Medicaid authorities that the corpus of a purely discretionary trust (at least without any standards of invasion, and possibly with supplemental benefit language) is not an available resource.

Notwithstanding, what appears to be precedent has not been followed by Medicaid who now treats a purely discretionary trust as an available resource.

This is just an example of Medicaid's refusal to follow precedent.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© March 2012, Post 189