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A MaineCare waiver that would have fundamentally changed crisis planning for married couples was rejected in its entirety by new Democratic Governor, Janet Mills. The waiver was put into motion by former Republican governor Paul LePage and approved to go into effect on December 22, 2018. When governor Mills took office in January, she directed her Commissioner of Health and Human Services to deny this waiver completely.
She cited that “Maine’s low unemployment rate, its widely dispersed population, and our lowest per capita income in New England make mandates….problematic.” There was a concern that the proposed changes would “result in an impact on eligibility, enrollment, benefits, cost sharing, or financing.” The MaineCare program currently provides health coverage to roughly 258,000 people.
Most of the news coverage focused on the work requirement piece of the waiver. However, the waiver also contained clauses that would have allowed the state of Maine to deviate from the annuity rules set forth in the Deficit Reduction Act of 2005 for long-term care recipients. Section IV Eligibility, 17a – The pertinent section is as follows:
- Limitations on Annuities. Except as noted below, the state may apply transfer-of-asset penalties to beneficiaries eligible for Medicaid under the state plan who purchase, or whose spouses purchase, annuities that are otherwise compliant under Section 1917 of the Act with the annuity-related rules described in Section 1917 of the Act and that are purchased after the effective date of this demonstration…
c. Penalties will not be applied against married institutionalized individuals for the purchase of compliant annuities when the income of the community spouse is less than the minimum monthly maintenance needs allowance (MMMNA), and/or the income of family members is less than the family allowance, as described in section 1924(d)(1) of the Act, prior to the addition of the income produced by the annuity, and the annuity raises their income to an amount equal to or below the statutory minimums. If the annuity raises the income of the community spouse or family members of the institutionalized spouse above the statutory minimums, the entire amount used to purchase the annuity (subject to subsection (b)) may be penalized.d.The amount that will be deemed to have been transferred for the purchase of compliant annuities will be limited to, for married individuals, amounts exceeding the CSRA that were used to purchase the annuities, and, for single individuals, amounts exceeding the resource standard for a single individual that were used to purchase the annuities.
The waiver would have penalized the purchase of annuities in the following instances: (1) when the income of the annuity would raise the income of the community spouse about the minimum MMNA (currently $2,057.50). And (2) Any amount exceeding the CSRA (currently $126,420) that is invested in the annuity would have been penalized.
This would have violated the widely-recognized spousal impoverishment principal that the community spouse’s income is not considered when applying for Medicaid benefits. Their income is protected, even if it exceeds the MMNA. This makes MCAs a great planning strategy for married couples seeking Medicaid, as they can eliminate excess countable assets above the CSRA without fear of increasing the community spouse’s income.
This leads to the other issue the MaineCare waiver addressed. They proposed the purchase of an MCA with funds in excess of the Individual Resource Allowance or CSRA be penalized. There is no federal mandate that penalizes annuity purchases with excess countable assets, so long as it meets five general requirements. It must be irrevocable, non-assignable, provide equal, monthly payments, be actuarially sound, and name the state Medicaid agency as beneficiary in the proper position. MCAs are almost exclusively used by those with countable assets in excess of their resource allowance. Implementation of this measure would have greatly reduced the opportunity for crisis Medicaid planning in this state.
With the denial of this proposal, there will continue to be no penalty on transfers for those who purchase Medicaid Compliant Annuities. This is great news for Maine elder law attorneys, as it maintains a popular crisis planning option and helps their senior clients gain eligibility for benefits without losing their life savings paying the nursing home bill.
A special thanks to Marty Womer and David Goldfarb for keeping us up to date with all the key developments on this waiver!