If you’re applying for Medicaid, what happens if they say you have “too much income?” Elder Law Attorney Jim Koewler joins Suzanne to discuss this interesting scenario.
You would need to seek a lawyer, set up a qualified income trust, called a “Miller trust,” and then you have to use that trust every month, in order to even qualify for Medicaid. Income is a monthly event, so watch your state’s rules, which can be very complicated.
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*The following is the output of transcribing from an audio recording. Although the transcription is largely accurate, in some cases it is incomplete or inaccurate due to inaudible passages or transcription errors.
The following podcast is by Mr Jim Koewler, elder law and special needs attorney, helping and protecting those who need long term care. And Welcome back everyone to the answers for elder’s radio network, and we’re so glad that you’ve been with us for this hour and for Um us to close out now. Obviously, Jim, you have been it’s like drinking from a fire hose with you. There’s so much information, and so all of you Um make sure that you check Jim out on our podcast network. He’s got probably, Oh, I would imagine, podcasts on everything. You need to know a lot of things. You need to know everything yet? No, not yet, but we’re getting there. The NEAT thing about Jim is is that he’s really easy to listen to and we have a lot of fun in the process in in a topic that’s not the easiest thing for the average person to listen to either. So we encourage you to go to our podcast network and Jim, you have been talking about income and certainly Um Medicaid. There’s all kinds of rules, I’ve learned now about resources as opposed to ASSS, as opposed to income. Those are three different buckets. Um I’ve learned. We’ve learned a lot about, you know, single people that are on Medicaid and married people if one person needs to go on Medicaid, and there’s just all kinds of information. It’s fascinating to me. Um, how why is it so complicated? Number One, and number two is is that? Now, Um, we’re going to talk about another little topic, and that is what if they say you have too much income? That’s kind of an interesting scenario. Yep, okay, so I can answer your first question first. It’s complicated because politicians touched it pretty much. They’ve got their own agenda and it’s a compromise between those who don’t want to spend any money in those who feel like we ought to take care of fellow Americans, et Cetera. That’s why it’s complicated. Okay. So, and those of you UH listening, keep in mind. I’m glad you’re listening, because they have the perfect face for radio. Um, okay. So now the concept of making your quotes too much income. That exists as a problem again because of politics. Back in the nineteen sixties, when the Lyndon Johnson Administration was trying to get Congress to enact Medicare and Medicaid. uh, those who consider themselves budget hawks, and we’re talking congress now. Okay, those who consider themselves budget hawks. Um, I felt like they couldn’t vote for something that was going to cost the government so much money. Okay, so h Johnson and his allies in Congress had to find in a way to garner votes of those who would not vote for for budgetary reasons, and that was a pretty big number, I understand. At the time I was alive, but I was I was what four or five or six? I wasn’t watching politics at the time. I was just watching the politics between mom and dad. But that was about it. Um, so Um. But my understanding is in order to get the votes for that, they had to build into the Medicaid rules or the Medicaid law, some not to put to find a point on it, but covering for those self proclaimed budget hawks. Okay, and you can take self proclaimed what it is that Belgiant Hawk self proclaim. Budget Hawks have not, over the decades, convinced me they really care about the budget. That’s just the excuse of not to vote for that particular thing. But that’s neither here nor there. So in the nineteen sixties. The thing that was built in to get votes from budget hawks in order to cover their own butts back home, is an income limitation on who could not get Medicaid. Okay, and I know we’ve talked about this a little bit in the past, but we’re talking about income, we really have to fold it in, okay. Um. So if any would be medicaid recipients, someone who could benefit from medicaids program had income that was even a penny more then three times the current maximum supplemental security income amount, we mentioned this S S I and the maximum amount, and our last installment talked about assistant to installments. They go talking about assisted living. Okay, it’s that same number. Currently eight. Okay. So anyone, under current rules, whose income is more than eight one times three, which is and tree dollars, if I do my math correctly, cities during a computer um if they if their income is point zero one or more, they have poked too much income to qualify for Medicaid. So Pete now let’s let’s go back to the nineteen sixties. Medicaid, as originally designed, was for children on Welfare and pregnant women on Welfare. Okay, so almost nobody who was in the original umbrella of Medicaid coverage was going to be excluded because of income. It was a purely political thing for butt covering, and I was not kidding myself, you know, I was not kidding about the metaphorical butt covering being all this was okay, with children on and pregnant women on Welfare. Well, they were on welfare. The chances of their income being three times even the nineteen sixties number of S S I. It was pretty low because s s I numbers something all security income, remember, so security payments for people who don’t have a significant work history or don’t have a recent work history. There they’re probably low income to begin with anyway. Okay, so the chances of them being having income three times the S S I number even then is almost nothing. So this was purely a way to get votes. I’m in hindsight, I’m glad they did. Okay, the Medicaid program has been very beneficial for lots of people, but we are still living with that political fallacy. Okay, well, the political the political outcome that in the real world was a fallacy at the time. Okay, so fast forward, uh, into the nineteen eighties. So twenty some years, somewhere between fifteen and twenty years. Okay. Now, when long term care is being added to Medicaid, now that income limitation becomes an issue because your income could be at let’s let’s just take today’s number. You’re not going to if you’re a three, you don’t have, quote, too much income, but you’re not going to pay for much long Term Care Bucks. Okay, you ain’t gonna pay for much. Maybe some home care and that’s about it. Okay. So the real impact of that income limitation didn’t apply to people until long term care was added to the Medicaid benefits. And today, anyway, at least in Ohio, about ten of people who receive long term care have what would otherwise be called too much income. Okay. So some lawyer in Colorado Um came up with a way around this and I know we’ve talked about I’ve talked about it so many times, but I think you and I have talked about it, but not an income thing. Okay. Um, somewhere in Colorado created what he called a qualified and I say he because I think it was a man, because I think I’ve read the cases. What it called. It qualified income trust. Um, I think he simply took the qualified label from what we call money, and I are a four one K. it’s money, but it’s different somehow. So it’s qualified. Okay, the trust. Yeah, so. So what this lawyer did was create a trust that was an income passed through. Income goes in and an income comes out. So the trust envies itself. But at least while it’s in the trust, the medical the the person whose name was on the income to begin with, I can’t do anything about it because he or she’s not the trustee of the trust. It basically washed the what I call washed the stink of income off this income. Yeah, okay, we’re dealing with bureaucrats here. So yes, it is crazy. So in most states, there are some, and Ohio. Many states avoided it up until they jumped out of their own intake systems into obamacare again. They jumped into obamacare because they get more money through the obamacare program if they follow obamacare rules. Okay, and Ohio is one of those. They used to be two oh nine B states, meaning they opted under Section Two oh nine b of the Medicaid Law. They have their own income rules. I mean, I’m sorry, their own eligibility rules, okay, and those that the states that simply followed the federal rules. UH, are called sixty four because they follow the federal rules as according to the Medicaid Medicaid section four. And then there’s I don’t know, half a dozen states that say we’re not doing anything. All feeds US take care of our people. Okay, and I’m hoping like eight people live in those states. I couldn’t tell you off top of my head of who they are, but they’re half a dozen or so out there. Um, yeah, so. But with obamacare offering more were money for those who followed federal rules, many of the what used to be sixteen or seventeen, two, O Nine B states became sixteen, thirty four states, including because, as Ohio did it, we were kind of monitoring one of the states. Did. Florida did, Indiana did, Ohio did, or three that immediately come to mind. California did not met California is the biggest single we’re on our own state in the country, both economically as well as Medicaid and public benefits. Um and bully for them. They can. They can do it. They’ve got the income. They could be if they were their own countryol be like the seventh largest UH economy in the world, just one state and they’re part of our whole economy here. Okay, so, yeah, they can do it themselves. Um, but most states are now six four states. So if you have too much income, which current needs above three, do not take my word on the number. Do the calculations yourself. I was doing it while sitting here for the computer, without tapping in the computer, just in my head. Okay, but if your income is more than twenty three, you have two ach income, so your lawyer would have you would need to seek a lawyer to set up at qualified income trust and then you have to use the qualified income trust every month. Remember, income is a monthly event. Yes, okay. Now you may have additional income. You make a big I ra, a withdrawal, it’s still income. You gotta run it through the qualified income trust that month. You Win an inheritance, that’s income that month. You gotta run through the Qualified Income Trust. But Watch your state’s rules. Ohio has made the rules very, very complicated. If money goes in, every state is complicated. Ohio. His Ohio is taking it to another level. The moral of this story for this hour is in an in a nutshell, okay, and more of the story is your your income is all spoken for if you’re on Medicaid. If you are married and on Medicaid, some of your income may get to go to your spouse, but for your purposes as the Medica recipient, your income is still spoken for. And if you have too much income, as calculated as against the three times the SSI maximum amount, then you have to do a special thing through a qualifighting of Drust, also called a Miller Trust, in order to even qualify for Medicaid to begin with, and you have to keep up with that Miller trust every month. Jim, thank you so much for being with us this hour. You have been Um. You’re such such a trooper to explain all this to us and for each and every one of you that are listening, I do encourage you to reach out to Jim through answers for elders radio, our radio program our podcasts. You can find him on all of the major podcast platforms through the answers for elders radio network and Um. Again, for each and every one of you, thank you for listening this hour and Jim, and thank you so much for being with us. Thank you, and to each and every one of you, I always say be good to each other. State of Ohio residents, you have a friend to help you navigate long term care while protecting your assets. You can reach Jim at protectingseniors.com or just email him at jkoewler-AFE@protectingseniors.com
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Originally published August 11, 2022