Let's not let the CMS change the law on their own!
Submitted by dpfitch.
on 2008-05-27 03:49 PM.
CMS issued a memo in April 2008 that is taking aim at the continued use of Pooled Trusts for people over the age of 65 as a tool to shelter assets in the eligibility process for Medicaid.
It is a strategy of misinformation that will work if the Elder Law Bar around the country does not say NO MORE!
It is a strategy of misinformation that will work if the Elder Law Bar around the country does not say NO MORE!
The Elder Law Bar is often times its own worst enemy because members without full knowledge communicate information to other lawyers and the public that supports the misinformation of the CMS.
Here is a blog post made today that takes the CMS hook, line and sinker. I have not put the link up as a professional courtesy to the lawyer that posted it. Following his post is my reponse to his post.
His post -
CMS Says Transfers to Pooled Trusts Subject to Transfer Penalties for those over Age 64.
The Centers for Medicare and Medicaid Services (CMS) have issued a new bulletin clarifying policy on the application of transfer of asset provisions to pooled trusts established by individuals age 65 and older. According to CMS, transfers to these pooled trusts are subject to transfer penalties for Medicaid eligibility purposes. The Bulletin says that States may need to change their regulations to come into compliance with the new directive.
A pooled trust is a trust established for a disabled individual under United States Code Section 1917(d)(4)(C) and they are often called (d)(4)(C) trusts.
The bulletin issued on May 12, 2008, states that “funds placed in a pooled trust established for an individual age 65 or older may be subject to penalty as a transfer of assets for less than market value.” The bulletin says that these trusts may be established for a disabled individual of any age, but the transfer to the trust for a person age 65 and over is a disqualifying transfer for Medicaid eligibility purposes.
[NOTE: The CMS does NOT say this, it says "it MAY BE a disqualifying transfer"]
Since the Deficit Reduction Act of 2005 (DRA) was enacted in February of 2006, Elder Law attorneys have been struggling to find ways to protect their elderly clients from the impoverishment required by the Medicaid rules and regulations. The Pooled Trust had looked [It still is if we don't give up on it!] like a great way to provide elders with needs that the Medicaid program fails to fulfill, while also serving a charitable purpose and protecting other similarly situated frail elders. This new directive means that these hopes may be dashed {READ the response] and new options must be explored.
My Response -
CMS is rattling sabers again. There are two points in this CMS memo, one is old news and the other is false.
The following language is already in the CMS manual and has been for a number of years.
"Although a pooled trust may be established for beneficiaries of any age, funds placed in a pooled trust established for an individual age 65 or older may be subject to penalty as a transfer of assets for less than fair market value."
The following language is not correct.
"Upon the death of the disabled individual, the balance remaining in the account is paid back to the State Medicaid agency in an amount equal to the medical assistance paid on behalf of the beneficiary. The statute also allows the trust to retain some portion of the balance remaining after the death of the beneficiary."
The disposition of the Pooled Trust account's remaining assets at death is ENTIRELY at the discretion of the Trustee and there is NO limit on the amount that the Trustee may retain. The only time that money should leave a Pooled Trust to pay back the State is when the Trustee decides to follow that course of action, probably because the amount owed to the State is significantly less than the account balance and the Trust agreement itself allows money to flow to the decease's estate after State liens are satisfied.
Personally, I believe that CMS is publishing this memo, knowing that it not correct and knowing that most of the States will scoop it up and use it in their "bully pulpits" for as long as the Elder Law Bar fails to challenge this effort to eliminate one of the last tools that the middle class elderly have to save of their money for their personal use.
For a further analysis of this issue regarding transfer penalties for transfers made after age 64 see -
elderlawminnesota.com/article01.shtml/
or
Fitch, David. "What Is a Pooled Trust and Why Do We Care?". Aspen Publishing."The Elder Law Report" Volume XIX, Number 3, October 2007.
Elder Law Services, PLLC
David P. Fitch, Attorney at Law
dpfitch@elderlawminnesota.com
www.elderlawminnesota.com
Here is a blog post made today that takes the CMS hook, line and sinker. I have not put the link up as a professional courtesy to the lawyer that posted it. Following his post is my reponse to his post.
His post -
CMS Says Transfers to Pooled Trusts Subject to Transfer Penalties for those over Age 64.
The Centers for Medicare and Medicaid Services (CMS) have issued a new bulletin clarifying policy on the application of transfer of asset provisions to pooled trusts established by individuals age 65 and older. According to CMS, transfers to these pooled trusts are subject to transfer penalties for Medicaid eligibility purposes. The Bulletin says that States may need to change their regulations to come into compliance with the new directive.
A pooled trust is a trust established for a disabled individual under United States Code Section 1917(d)(4)(C) and they are often called (d)(4)(C) trusts.
The bulletin issued on May 12, 2008, states that “funds placed in a pooled trust established for an individual age 65 or older may be subject to penalty as a transfer of assets for less than market value.” The bulletin says that these trusts may be established for a disabled individual of any age, but the transfer to the trust for a person age 65 and over is a disqualifying transfer for Medicaid eligibility purposes.
Since the Deficit Reduction Act of 2005 (DRA) was enacted in February of 2006, Elder Law attorneys have been struggling to find ways to protect their elderly clients from the impoverishment required by the Medicaid rules and regulations. The Pooled Trust had looked [It still is if we don't give up on it!] like a great way to provide elders with needs that the Medicaid program fails to fulfill, while also serving a charitable purpose and protecting other similarly situated frail elders. This new directive means that these hopes may be dashed {READ the response] and new options must be explored.
My Response -
CMS is rattling sabers again. There are two points in this CMS memo, one is old news and the other is false.
The following language is already in the CMS manual and has been for a number of years.
"Although a pooled trust may be established for beneficiaries of any age, funds placed in a pooled trust established for an individual age 65 or older may be subject to penalty as a transfer of assets for less than fair market value."
The following language is not correct.
"Upon the death of the disabled individual, the balance remaining in the account is paid back to the State Medicaid agency in an amount equal to the medical assistance paid on behalf of the beneficiary. The statute also allows the trust to retain some portion of the balance remaining after the death of the beneficiary."
The disposition of the Pooled Trust account's remaining assets at death is ENTIRELY at the discretion of the Trustee and there is NO limit on the amount that the Trustee may retain. The only time that money should leave a Pooled Trust to pay back the State is when the Trustee decides to follow that course of action, probably because the amount owed to the State is significantly less than the account balance and the Trust agreement itself allows money to flow to the decease's estate after State liens are satisfied.
Personally, I believe that CMS is publishing this memo, knowing that it not correct and knowing that most of the States will scoop it up and use it in their "bully pulpits" for as long as the Elder Law Bar fails to challenge this effort to eliminate one of the last tools that the middle class elderly have to save of their money for their personal use.
For a further analysis of this issue regarding transfer penalties for transfers made after age 64 see -
elderlawminnesota.com/article01.shtml/
or
Fitch, David. "What Is a Pooled Trust and Why Do We Care?". Aspen Publishing."The Elder Law Report" Volume XIX, Number 3, October 2007.
Elder Law Services, PLLC
David P. Fitch, Attorney at Law
dpfitch@elderlawminnesota.com
www.elderlawminnesota.com
