SCOTUS Rules State Medicaid Programs Can Recoup a Larger Share of Personal Injury Settlements

Suppose you were injured due to another person’s negligence and your medical expenses were paid in whole or part by Medicaid. In that case, the state has a legal right to recover the funds it spends on your care from a personal injury settlement or award. In a case involving a Florida teen catastrophically injured more than a decade ago, the United States Supreme Court has ruled that state Medicaid programs can recover the amounts paid from settlement funds reserved for future medical expenses.

In 2008, a truck struck 13-year-old Gianinna Gallardo, leaving her in a persistent vegetative state. The state’s Medicaid agency provided $862,688.77 in medical payments on Gallardo’s behalf. Her parents sued the parties responsible, and the case eventually settled for $800,000, of which about $35,000 represented payment for past medical expenses. The settlement also included funds for Gallardo’s future medical expenses, lost wages, and other damages.

The state Medicaid agency claimed it was entitled to more than $300,000 in medical payments from this settlement, including money specifically allocated for Gianinna’s future medical expenses.

Gianinna’s parents then sued the agency in federal court, arguing that Florida should be able to recover monies only from that portion of the settlement allocated for past medical expenses in accord with a prior Supreme Court ruling.

A U.S. District Court ruled for Gianinna, and the Medicaid agency appealed. The Court of Appeals reversed the lower court’s decision. Ultimately, the Supreme Court agreed to hear the case

In a 7-2 decision, the Supreme Court agreed that Florida could recover from the proceeds allocated to Gianinna’s past and future medical care. Justice Clarence Thomas, who wrote the majority opinion, noted that Medicaid law “distinguishes only between medical and non-medical care, not between past (paid) medical care payments and future (un-paid) medical care payments.”

Justices Sonia Sotomayor and Stephen Breyer dissented. They argued that accepting Medicaid shouldn’t leave a beneficiary indebted to the state for future care that may or may not be necessary.

If you or a family member are receiving care through Medicaid and expect a settlement, it would be wise to contact our office and learn if Medicaid will zero in on you or your estate for past, present, and future medical expenses.

Compare and Contrast: Medicaid Asset Protection Trust and Medicaid Annuity

The prospect of a spouse needing nursing home care is one of the biggest financial worries for couples. With some facilities on Long Island now charging more than $600 a day, even with long-term care insurance policy benefits, the monthly out-of-pocket cost of a room in a nursing home can easily exceed $6,000.

For couples who worked hard throughout their careers and saved to own a home and healthy retirement accounts, the thought of impoverishing a well spouse so the sick spouse can apply for Medicaid is frightening.

When family members determine they know what to do, the results are often disastrous. The Medicaid Program, funded by the federal and state governments, is extremely complex, and you are dealing with both federal and state law. Many Medicaid strategies can have unintended federal and state tax consequences. They transfer homes and other assets to family members and change the names on various bank and investment accounts. But, if a person needs Medicaid within five years of a transfer, they are ineligible for Medicaid.

There are ways to protect assets. A personalized asset protection plan prepared by an experienced Elder Law attorney will assure the plan stands up to Medicaid scrutiny.

What does work is pre-planning with an experienced Elder Law attorney.

Our firm works with families and individuals facing the challenges of ensuring their loved ones receive the care they need while protecting their accumulated assets over a lifetime. The earlier this planning takes place, the more options the person will have.

A Medicaid Asset Protection Trust is used to allow a person to qualify while protecting assets. The family home, investment accounts, etc., can be placed in the trust and are not countable. If investments fund a trust, the prior owner may not sell them but can continue to receive income if the MAPT restricts payments only to income.

A MAPT trust must be created and funded five years before the application. Some assets cannot be transferred into the trust. They may need to be liquidated and placed in the trust.

There are numerous other strategies, depending on the individual’s situation.

A Medicaid Compliant Annuity is another way to reduce non-exempt assets so a person can qualify for Medicaid. The Medicaid compliant annuity is a single premium immediate annuity (SPIA). Upon payment of the premium, the healthy spouse receives equal monthly payments for the payment period selected. Medicaid must be named the initial beneficiary to Medicaid paid for care. Any amount remaining goes to the family.

Annuities are complicated financial products. There are many ways to structure an SPIA. An experienced Elder Law attorney has the knowledge and experience to ensure the SPIA meets the family’s needs.

There may be other strategies when a person requires institutional care. It is known as Medicaid Crisis Planning. Medicaid Crisis Planning strategies differ significantly from the Medicaid pre-planning. However, they are not mutually exclusive and can increase the ability to protect assets.

Our practice helps people with Medicaid planning and Medicaid crisis planning. If you have questions, we invite you to call 516-307-1236. Please note that we limit our practice to New York State and Florida.

How Do the New Rules for Community Medicaid for Home Care Work?

While October 1, 2020 may feel like it’s a long way off, it will be here before you know it. October 1 is the date when a host of new rules go into effect regarding Medicaid home care and all community based long term care services. It is essential to plan now if this is on the event horizon for you or a member of your family.

Perhaps the most significant change is the 30 month look-back for Community Medicaid. It provides care for people at home and other benefits for people living in the community. After October 1, 2020, anyone who wants to receive Community Medicaid benefits must submit financial statements for the past 30 months, or 2.5 years, when applying for benefits. Any funds transferred by the applicant or a spouse may create a period when the person will not be eligible for Medicaid benefits. That starts on October 1, 2020.

Until October 1, 2020, there is no look-back period and no penalties for transfers, so now is the time to talk with our office so we can create a plan.

Next, there are changes to the CDPAP – Consumer Directed Personal Assistance Program (CDPAP) and PCS (Personal Care Services) program. The CDPAP allows recipients to hire a non-licensed person to provide services in the home, instead of through a home healthcare agency. The person can be a family member, friend, or someone the family knows to provide caregiving, and Medicaid pays for that care.

The New York State Department of Health is creating a new assessment tool to determine how much care a person will receive through Medicaid.

And instead of your treating doctor giving you the go-ahead, after October 1, 2020, the plan of care will need to be determined by an independent physician approved by the Department of Health.

The PCS program allows Medicaid recipients to receive care services through home healthcare agencies who have contracts with the local department of social services.

Changes that also begin on October 1, 2020:

Eligibility requirements change – you must require help with three (3) ADLs (Activities of Daily Living). It is an increase from the previous requirement of needing help with two (2) ADLs, meaning people will require more care to be eligible for Community Medicaid. Those diagnosed with dementia, including Alzheimer’s, need require only help with one (1) ADL. The Activities of Daily Living include bathing, dressing, grooming, toileting, walking, turning, positioning, and feeding.

For those who believe they will need help, an application for Medicaid must be completed and submitted soon. Many people will likely wait until September, but that’s a mistake. Wait too long, and you or a loved one may not get the services needed.

If you have questions about Medicaid and these changes, please call our office at 516-307-1236. We are open and able to serve you through phone, email, and videoconferencing.