Policy Decisions Affect Medicaid Rules

Policy Decisions Affect Medicaid Rules

Clients often feel that the Medicaid rules or certain rules are unfair. The purpose of this article is to discuss what I believe are the policy decisions behind certain rules.

1. Life Insurance Issues – As discussed in Post 3, the cash value of a life insurance policy or policies in excess of $1,500 constitutes a resource. The rationale behind such rule is that if such value were not counted, an applicant or a spouse could use substantial funds to obtain life insurance policies with large cash values that would not be considered for Medicaid purposes.

2. Spousal IRA’s – In Mistrick v. Division of Medical Assistance and Health Services 154 NJ 158 (1998), the Court held that the IRA’s of a spouse are a countable resource. This was a change from the prior law in which a spousal IRA was exempt.

The basis of this decision again was policy so that a spouse would not establish an IRA or would not rollover a retirement distribution to an IRA without limit. Under prior law, an individual could have an unlimited amount in an IRA and this would not preclude Medicaid eligibility.

3. 90-Day Rule – Post 10 discusses the significance of the 90-day rule. As an administrative decision, New Jersey has allowed eligibility if the total amount of resources held by the applicant and the community spouse equal the computed amounts whether they are held by the applicant, community spouse or jointly at the date of eligibility. However, within 90 days, the applicant must meet his or her requirement ($2,000 or $4,000) and the community spouse resource allowance amount must be in the sole name of the community spouse. The policy behind this decision is that if a couple inadvertently have not severed a joint account at the date eligibility is sought, they are not to be penalized. This makes sense in that most adults keep accounts with a spouse held jointly and should not be penalized.

4. Checks Written and Not Cashed – Post 4 discusses the significance of payment of debts and expenses. Examples in this post indicate that if a check is written before the date sought for eligibility, it is irrelevant whether or not such check has been negotiated. The policy reason for such a rule is that an applicant should not be penalized for the inaction of a payee (i.e. negotiating a check).

5. Real Property Owned Jointly With Other Than Spouse – In Post 35, the relevant regulation indicates that real estate owned jointly with a person other than a spouse is an “inaccessible” resource. Therefore, it is not a countable resource for Medicaid purposes unless the other person consents. The rationale behind this rule is that, if the property were treated as a countable resource, such decision would affect an interest in property held by someone not involved in the Medicaid proceeding (i.e. the co-owner).

The above constitutes a very brief summary of some policy positions taken by Medicaid in administering its eligibility decisions. Obviously, the number of examples is infinite.

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


© July 2009, Post 49