Granted, most of my posts here are generally not very positive when it is dealing with the Arkansas Department of Human Services (DHS). I don’t see myself as a pessimist but more of a realist. I tell things as they are and try not to candy-coat things.
There have been three really good cases that have been settled over the last month or so. One deals with the qualified retirement plan of the spouse not in the nursing home (Community Spouse, CS), one dealing with using assets to increase the income of the CS and then one where DHS was looking at the length of time between a gift and a payback of that gift. I will go into each one separately.
The first case is a case where Justin Elrod, a partner in our firm, took at case to circuit court making DHS follow Federal law regarding the qualified plan of the CS. Federal law is clear that the IRA or 401K of the CS should not be counted in the assets of the spouse going into the nursing home (Institutional Spouse, IS). Another way to say this is that the amount of the IRA should not go into the snapshot mix at all just like the house, car or household furnishings. However, DHS has been counting that and therefore making that amount either be spent or counted in the CS’s 1/2 of the assets they get to keep. We have tried to fight this a number of times but our clients don’t want the fight or the assets were not enough really go through the process. However, Justin had a client that wanted to fight and we went through the process for them and won. We now get to exclude that amount from the mix of assets and only divide the amount of assets not counting the IRA or 401K meaning the CS get to keep that PLUS half of the other assets. We are very glad to have this win since it really does make a difference for spouses and it does follow Federal law.
The second case was a case that I was lead attorney and Melissa Burton assisted me. We had a client that deeded her house to her son since it was in Oklahoma and she would never qualify if she had kept the house and applied for Arkansas Medicaid. The gift was made, we applied and then hoped that the house would sell fairly quick to allow us some money to cover the penalty. However, the house did not sell for quite some time. The son then paid out of his pocket to the nursing home (which was a return of the gift) while we were waiting on Medicaid to approve or deny the case. Also, we put mom’s name on son’s house which is a gift back from the son to the mom eliminating the gift penalty. DHS recognized the money transfer and decreased the penalty by the amount of the check but they did not decrease the penalty for the son deeding his mom a portion of his home. The reason for the denial by DHS was that “the length of time was too long between the gift and the return of the gift”. There is nothing in DHS policy that requires the gifts to be simultaneous to return a gift. The check was not that much different time-wise than the deed, but they simply liked one and disliked the other. We took this to court and won. The judge did not see any difference between the gift being done early or later, it was a return of the gift. This situation comes up periodically, so we are glad to have this case to refer back to.
Another big case, is a case done by Attorney Chad Oldham in Jonesboro. He pursued a case through the Federal Court system twice to get this victory. Federal law allows for the CS to take money that has to be spent down by the IS in order to qualify for Medicaid, to be converted to an income stream to the CS. In other words, whatever money has to be spent in order to qualify, can be put into a very specific annuity to create an income stream to the CS. Normally, the CS can keep all of his or her income. If his or her income is not $1,891/month, we can get enough from the IS to get up to that amount.
That is normally the max the IS gets to keep since both spouses income is barely over that amount. I think anyone would agree that $1,891 is not that much income. We can drastically increase that income by using an Annuity that meets the DHS guidelines and essentially use the assets saved for a lifetime as income for the spouse for a limited amount of time. Obviously, DHS did not like this federal law but it is the law. Mr. Oldham took the State to Federal Court and won (twice). We are thankful for his hard and long work on this case.
Therefore, with these wins, the spouse that has to face the horrible decision to put a spouse into a nursing home, now doesn’t have to worry about the financial aspect of this decision. As I always tell my clients, do what is best for the sick spouse AND what is best for the “well” spouse. Don’t let your decision be based on the incorrect assumption that you will lose everything when you put someone into a nursing home. Do what is best, and let us deal with the money issues and allow the “well” spouse live comfortably while the “ill” spouse is getting the care they need. Feel free to call our office if you have any questions.