Some recent Medicaid Developments in New York State

by Goldfarb Abrandt Salzman & Kutzin LLP Goldfarb Abrandt Salzman & Kutzin LLP

The Deficit Reduction Act of 2005 (S 1932) enacted Feb. 8, 2006, creates major changes in the Medicaid Transfer of Asset rules: (1) creates a five year look back; (2) calculates a penalty or waiting period from when a person is receiving institutional care and would be otherwise eligible; (3) creates limits on home equity; and (4) requires the state be a beneficiary on annuities. States may have to pass enabling legislation.

New York Changes the way it treats an IRA or other work-related pension plan belonging to a Communit Spouse: “…pension funds belonging to a community spouse which are held in individual retirement accounts or in work-related pension plans, including plans for self-employed individuals such as Keogh plans, are countable resources of the community spouse for purposes of determining the institutionalized spouse’s eligibility and calculating the amount of any community spouse resource allowance….” Amendment to 18 NYCRR Section 360-4.10(a)(9); NYS Register/January 19, 2005 & NYS Register/December 21, 2005. According to the comments in the December 21, 2005 NYS Register, NY will not count the plans as a resource if they are in pay-out status.

NYS DOH Medicaid Library of Official Documents (ADM, INF & GIS): 1996 – present

New York OTDA Policy Directives (ADM & INF): 1990 to present(Includes Medicaid to 1996)

Long Term Care Partnership Policies. Beginning in 2004, if an individual is covered under a Long Term Care partnership policy that provides a nursing home benefit of less than three years then Medicaid coverage will be available and resources will be exempt in an amount equivalent to the value of benefits received by the individual under the partnership policy. Individuals who exhaust there benefits under a 3/6/50 or 4/4/100 plan (see plan descriptions below) will be eligible for Medicaid and none of their assets will be counted. Individuals under a 1.5/3/50 or 2/2/100 plan (see plan descriptions below) will be eligible for Medicaid and allowed to keep assets up to the amount of benefits paid. N.Y. Soc. Serv. Law § 367-f as amended by 2004 N.Y Chapter Laws58.

The original plan is now known as the 3/6/50 plan. The minimum requirements for the 3/6/50 plan are three years of nursing home coverage, or six years of home care coverage, or a combination where two days of home care equals one nursing home day. 11 NYCRR §39.3. The minimum requirements of the 1.5/3/50 plan are: (1) One and a half years of nursing home coverage or three years of home care benefits or a combination of the two where two days of home care equals one nursing home day. 11 NYCRR §39.4. The minimum requirements of the 4/4/100 plan are: (1) Four years of nursing home coverage or four years of home care benefits or a combination of the two where the home care benefit is equal to the nursing home benefit. 11 NYCRR §39.5. The minimum requirements of the 2/2/100 plan are: (1) Two years of nursing home coverage or two years of home care benefits or a combination of the two where the home care benefit is equal to the nursing home benefit. 11 NYCRR §39.6.

EPIC DRUG COVERAGE AND MEDICARE. EPIC will automatically enroll members who are single with an annual income of no more than $12,569 or married with an annual income up to $16,862, in the Medicare drug card plan known as the First Health/EPIC Medicare Drug Card, unless member requests otherwise. See EPIC WEB SITE.

Community Spouse & Robbins. The Department of Health has issued GIS 05 MA/002 effective January 12, 2005 rescinding GIS 00 MA/027 and the applicable provisions of 01 OMM/ADM-4. The new GIS directs that a community spouse can no longer retain additional resources to raise her income if the institutionalized spouse does not make Social Security income available. See Robbins case below. The institutionalized spouse’s Social Security income will be counted towards the cost of his or her care, and the community spouse may seek a higher res

June 30, 2000. The Second Circuit Court of Appeals holds in Robbins v. DeBuono, that the Social Security anti-alienation provisions prohibit New York from applying “income first” provisions to an institutionalized spouse’s Social Security check. However, the Court rejected the same argument when applied to pension funds under ERISA. “Income first” is the policy whereby Medicaid attributes an institutionalized spouse’s income to a community spouse, to raise his or her Community Spouse Income Allowance (CSIA), before letting him or her reatin additional resources to raise income to the CSIA.

SUPPLEMENTAL NEEDS TRUSTS. Medicaid’s right to a payback from a self settled trust cannot be defeated by having a structured settlement or annuity pay into a supplemental needs trust, but have a separately designated remainderman. Sanango v. N.Y. City Health & Hosp. Corp., 6 A.D.3d 519, 775 N.Y.S.2d 343 (2d Dep’t 2004).

NEW MEDICAID RESOURCE DOCUMENTATION RULES . There are new resource documentation requirements which depend on the type of Medicaid applied for. The three types of Medicaid coverage and the resource documentation requirements are: (1) Community Coverage Without Long-Term Care — requires a self-attestation to the amount of current resources; (2) Community Coverage With Community-Based Long-Term Care — requires proof of current resources; or (3) Medicaid coverage of all covered care and services (including nursing facility services) — requires a resource review for the past 36 months (60 months for trusts). N.Y. Soc Serv. Law § 366-a; 04 OMM/ADM-6 (July 20, 2004).

INCOME INTO A SUPPLEMENTAL NEEDS TRUST. Supplemental Needs Trusts and Pooled SNTS may be used by a “disabled person,” however, persons over 65 receiving Medicaid have often never been determined to be disabled. New York State Department of Health will now require a separate disability determination. Disability determinations for all individuals who are over age 65 and are affiliating with a pooled trust are to be performed by the State Disability Review Team in Albany. Social Security Administration Ruling SSR 03-3p, Evaluation of Disability and Blindness in Initial Claims for Individuals Aged 65 or Older, prescribes the method used to determine disability for individuals over age 65. A completed and signed DSS-1151 interview form, all appropriate portions of form DSS-486T, and all pertinent medical evidence, must be submitted. The State Disability Review Team will perform the disability determination and send the completed Disability Review Team Certificate (DSS-639) to the local district. If the individual is determined disabled, any of the disabled individual’s income placed in his or her pooled trust account must be disregarded in determining the disabled individual’s eligibility for Medicaid.

New York Agency Materials (OTDA & DOH) including Administrative Memos, Informational Letters from Western New York Law Center

A class action in federal court,VERDOW V. SUTKOWY, 2002 U.S. Dist. Lexis 16975 (NDNY, 9/10/02), held that New York’s denial of plaintiffs’ Medicaid benefits because they allegedly are potential beneficiaries of self-settled trusts containing limited powers of appointment exceeds the limits of federal law and specifically is in violation of the “Medicaid Qualifying Trust” statute. New York State’s argument was also rejected by a New York State Supreme Court in Spetz v. New York State Dep’t of Health, 737 N.Y.S.2d 524 (Sup. Ct., Chautauqua Co., Jan. 15, 2002). In Spetz, Medicaid benefits were denied on the basis of the creation of an irrevocable trust containing a limited lifetime power of appointment by petitioner’s husband.

New York State Court of Appeals decides Social Services Law § 122 denying Medicaid benefits to lawful immigrants violates the New York State Constitution. The Court stated that in New York “care for the needy is not a matter of legislative grace; it is a constitutional mandate.” Section 122 is not need based, but imposes “an overly burdensome eligibility condition, . . . depriving [aliens] of an entire category of otherwise available basic necessity benefits.” Aliessa v. Novello, (June 5, 2001)

Commissioner of the Department of Social Services of the City of New York v. Fishman (App. Div. 1st Dept. September 7, 2000) DSS’s right to recover against a spouse was created when she refused to make her income available for her husband’s support, and when DSS examined her income and resources and found that she was sufficiently able to pay for her husband ’s care.

Matter of Marzec v. DeBuono (NY Ct. of Appeals, October 24, 2000). Medicaid does not authorized a reduction in the applicant’s income in an amount necessary to meet the needs of his ineligible spouse.

June 8 2000. Matter of Shah. New York State Court of Appeals holds Mental Hygiene Law Article 81 authorizes a guardian, appointed on behalf of an incapacitated person, to transfer the incapacitated person’s assets to that person’s spouse for Medicaid planning and the essential purpose of allowing the spouse to exercise right of spaousal refusal.

Medicaid Trusts in New Yorkand The Homestead and Medicaid Planning in New York.

Letter from State Department of Social Services states that transfer of assets by community spouse after ill spouse is on Medicaid and in a nursing home, does not affect sick spouse’s eligibility. Daniel J. Tarantino letter.