Disclaimer: With Medicaid, VA, and insurance regulations frequently changing, past blog posts may not be presently accurate or relevant. Please contact our office for information on current planning strategies, tips, and how-to's.
This month, the Michigan Department of Health and Human Services (DHHS) made a change to its Medicaid eligibility rules that affects how senior clients can find financial relief from a nursing home stay. However, Michigan attorneys should not fear, especially if they have agents like you on their side.
A Breakdown of the Michigan Rule Change
In most states, as well as under federal law, when an individual or their spouse transfers assets into an irrevocable trust, that transaction is considered a divestment and is subject to the five-year Medicaid lookback period. Therefore, transferring funds to a trust impacts an institutionalized person’s eligibility for benefits for at least five years. That is, other than transfers made to a trust for a minor or disabled child or for a disabled individual under age 65.
The language in the Michigan Medicaid manual, however, also included an exception for trusts established for the sole benefit of the community spouse. Therefore, married couples could fund their excess countable assets into a trust for the community spouse and immediately qualify the institutionalized spouse for benefits.
After realizing this section of the Michigan Medicaid manual was not consistent with federal law, the Michigan DHHS proposed a rule change in June of this year to align with the rest of the country and penalize those transactions. As of December 2, 2020, the state has confirmed this change will go into effect on March 1, 2021.
What Does This Mean for Agents in Michigan?
Michigan attorneys may be fearful that their go-to crisis planning strategy is no longer an option. Fortunately, a Medicaid Compliant Annuity (MCA) is the perfect alternative. This annuity converts a couple’s excess countable assets into an income stream for the community spouse, allowing the institutionalized spouse to qualify for benefits.
Agents in other states may be aware that MCAs typically must name the state Medicaid agency as a primary beneficiary on the annuity. However, Michigan does not have this requirement when it comes to MCAs purchased in the name of the community spouse. That’s right—the state Medicaid agency does not have to be named a beneficiary in these cases. It’s the definition of a win-win situation.
Take Advantage of This Opportunity
If you’ve been looking to grow your referral network, it’s a great time to connect with Michigan attorneys to let them know you can offer a solution for their crisis planning clients. Now that a common strategy is no longer viable and with the favorable beneficiary rules in Michigan, there is no better time to provide Medicaid Compliant Annuities as a solution to attorneys and their clients.
For more information on how to connect with elder law attorneys in your state, check out our video on building relationships with attorneys and download our white paper with techniques for approaching elder law attorneys.