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NJ Miller Trusts leave little room for Trustee Fees

New Jersey Medicaid recently began permitting the use of Miller trusts (aka Qualified Income Trusts).  People with incomes above the Medicaid income limit (currently $2,199) can use a Miller trust to qualify for Medicaid in a nursing home, assisted living facility or in the community with home care aides.

While Miller trusts are an excellent development that will help a lot of New Jerseyans afford long term care, there are still some significant flaws to work out in the State’s plan.  One of the biggest is that Medicaid’s rules effectively do not allow a trustee to take a fee.

New Jersey’s Miller Trust template lists on page 4 the order of permitted trust disbursements.  In theory, the trustee (the person managing the trust) is permitted to take a fee of 6% of monthly trust income.  E.g., if the beneficiary (the person who needs long term care) assigned $1,000 of income the trust each month, the trustee is entitled to a fee of 6%, or $60 per month.

However, the trustee can only take a fee after the beneficiary’s other required monthly expenses are paid, including the beneficiary’s share of the long term care cost.  For people in a nursing home or assisted living facility, the share of cost will almost always exceed the monthly income, leaving no money to pay the trustee.  This means that in practice, if the beneficiary is in a facility, the trustee will not be paid a trustee fee.

That’s fine for people who have family members willing to serve as trustee.  A child or spouse can usually be expected to serve without taking a fee.  But what about people who don’t have family members available to serve?  A Miller trust must be managed by a trustee, but if you don’t have close family members and can’t hire someone, who would take on that responsibility for free?

It’s certainly a gap in the Miller trust rules.  Banks and businesses won’t serve as trustee without a fee, and I don’t think non-profits will be willing to take on that role for free either.  The only answer in this situation may be that facilities (nursing homes and assisted living facilities) will have to serve as trustee.  They certainly have a vested interest in seeing the beneficiary’s income get paid out, since the bulk of it will go to them.  There exists some inherent conflict of interest, but the Miller trust rules are very rigid.  Administering the trust should be pretty mechanical, which minimizes the conflict.  In cases where no one else is available to serve as trustee, I think facilities will have to fill that role.

For more information on Medicaid and Miller trusts, call or email us today.

New Jersey Medicaid begins allowing Miller Trusts / Qualified Income Trusts

As of December 1, New Jersey has begun allowing Miller trusts / Qualified Income Trusts (QIT’s) to be used to establish Medicaid eligibility.

With a Miller trust, income that would put Medicaid applicants over the long term care income limit (which in 2015 is $2,199) is deposited into a special bank account, where it is paid out in accordance with Medicaid rules.  Applicants accept restrictions on how the money can be used, and Medicaid does not count the trust money towards the applicant’s income limit, allowing the applicant to qualify for Medicaid.

Miller trusts are only used for long term care, in a nursing home, assisted living facility or with home care aides in the community.  Miller trusts cannot be used to qualify for non-long-term-care Medicaid.

The implementation of Miller trusts means that New Jersey is ending its Medically Needy program for long term care.  People who currently receive assistance under Medically Needy are “grandfathered” and will continue receiving assistance, but may have to establish a Miller trust if their circumstances change.  It’s not clear whether people with pending Medicaid applications, who qualified for Medically Needy when they applied, will have to establish a Miller trust to qualify.  My view on the matter: better safe than sorry.

The main advantage of Miller trusts / QIT’s is that they allow people with higher incomes to receive long term care outside of a nursing home.  Previously, folks with income above the limit could only qualify for Medically Needy assistance in a nursing home.  People who could have received care in an assisted living facility or at home with aides, couldn’t, because their incomes were too high to qualify for ordinary Medicaid (but too low to pay the exorbitant cost of long term care).  Now, these people can put their excess income in a Miller trust and receive care in the most appropriate setting.

New Jersey Medicaid officials seem to expect that initially, the use of Miller trusts will cost the state money.  Reportedly the state has set aside $90 million to cover the cost of new Medicaid enrollees who qualify for the first time using Miller trusts.  However, many people who work in this area, including me, believe that ultimately this program will save the state money.  It costs much more to provide care in a nursing home than in other settings, so allowing people to receive care in less restrictive environments makes economic sense for the state.

If you’re interested in using a Miller trust to qualify for Medicaid, we would be happy to speak with you.  Call or email us today.

What You should Know about Miller Trusts in New Jersey

Note:  See our Miller Trust page for more current information on Miller trusts / Qualified Income Trusts (QIT’s).

Miller trusts are coming to New Jersey. We’ve covered the basics in previous posts, and now I want to cover some current issues with Miller trusts and Medicaid that consumers and practitioners should be aware of. Here’s what you need to know:

Miller trusts won’t be up and running on November 1, but will hopefully be up by the end of 2014. The Centers for Medicare and Medicaid Services (CMS) has yet to approve New Jersey’s Medicaid State Plan Amendment.

When Miller Trusts start, Medically Needy will end. The Medically Needy program will cease to take new applicants, and people with high income will instead apply using Miller trusts. However, folks who currently receive assistance under Medically Needy will be grandfathered in, and won’t have to switch to Miller trusts.

Miller trusts can be used in a nursing home, assisted living facility or for home care. Since Medically Needy only covers care in a nursing home, this creates new options for seniors and disabled people with higher income.

It’s not clear yet whether Miller trusts can be used to obtain DDD services. New Jersey’s Division of Developmental Disabilities (DDD) has said that people who seek group home care and other expensive services must obtain Medicaid through the Community Care Waiver. It’s not clear yet whether Miller trusts can be used to do that for people with higher incomes. Medicaid officials have said no, DDD officials have said yes. My suspicion is yes, but stay tuned.

NJ Miller trusts limit how beneficiaries can use income. NJ miller trusts allow trust funds to be used to pay the beneficiary’s personal needs allowance, spousal allowance, and medical costs. This is more limited than other states. Arizona, for example, allows broad medical expenses, special needs allowances and guardian and trustee fees. New Jersey is much more limited, for now.

It is unclear who will serve as trustee for beneficiaries without family support. A Miller trust requires a trustee to manage the trust and distribute income. In most cases, beneficiaries will rely on their spouse or children to serve in this role. But for people who don’t have family support, it’s not clear who would serve as trustee. Nursing homes have an inherent conflict of interest, it’s outside the statutory mandate of New Jersey’s Office of Public Guardian and most non-profits don’t want the job. New Jersey does allow a very modest trustee fee, and my guess is that private businesses will rise up to fill this role.

DMAHS now has a Miller trust website. The website includes FAQ’s and a trust template. However, a word of caution: Don’t try this at home. Medicaid laws are exceedingly complex, and if you try to do Medicaid planning without understanding the rules you could end up being disqualified from Medicaid for a long time or losing a big chunk of your assets. For something this important, it’s worth working with an expert.

We will post more information on Miller trusts as it becomes available. Stay tuned, or call or email us today for specific information on your situation.

Miller Trusts Lift NJ Medicaid Income Cap for Assisted Living & Home Health Aides

For many years New Jersey’s medical assistance program (“Medicaid”) could help seniors and disabled people with modest incomes fund long term care in nursing home, assisted living facility, or residence with home health aides. However, New Jersey’s Medicaid income cap ($2,163 per month in 2014) limited seniors and disabled people with incomes above the Medicaid income cap to long term care Medicaid in nursing homes. This meant seniors and disabled people exceeding New Jersey’s Medicaid income cap couldn’t get long term care Medicaid for assisted living or home health aides. Fortunately, for New Jersey seniors and disabled people who can receive long term care outside a nursing home, “the times they are a changing.” (apologies to Boy Dylan).

Beginning Nov. 1, 2014, New Jersey seniors and disabled people can use Miller Trusts to bypass the Medicaid income cap and obtain long term care Medicaid in nursing home, assisted living facilities, or residence with home health aides. Originating in the case Miller v. Ibarra, 746 F. Supp. 19 (D. Colo. 1990) Miller Trusts are now memorialized in federal law 42 U.S.C. 1396p(d)(4)(B) in states without Medically Needy Medicaid long term care programs.

Until this fall, Medically Needy Medicaid funded long term care in New Jersey, but only in nursing homes. Even though New Jersey limited long term care Medically Needy Medicaid to nursing homes, New Jersey seniors couldn’t use Miller Trusts for Medicaid in assisted living or with home health aides. Thus, Medicaid couldn’t pay for fund long term care outside a nursing home even if a person with income above the Medicaid income cap could live in a less restrictive environment. However, New Jersey has modified its Medicaid program to eliminate the bar to Miller trusts. Now New Jersey seniors and disabled people with incomes beyond the Medicaid income cap can use Miller Trusts to qualify for Medicaid funded long term care care at home with aides or in an assisted living facility.

This is good news for seniors, people with disabilities and other folks who may need long term care. Miller Trusts give FriedmanLaw a powerful new tool to help our clients receive care in the most appropriate setting– whether nursing home, assisted living, or at home with aides.
For more information on Medicaid and long term care, please see our Practice Areas and Q&A pages, or call us at (908) 704-1900.

Miller Trusts to come to New Jersey Medicaid in November

New details have emerged about New Jersey Medicaid’s shift to Miller trusts.

The state has indicated the Miller trust program will begin on November 1, 2014. People who use Miller trusts will reportedly be eligible for Medicaid in the month after the trust formation. So folks who qualify for Medicaid through a Miller trust created in October would be eligible in November.

The state will reportedly launch a website in October with more information on Miller trusts.

Although New Jersey is expected to end its Medically Needy program for institutional-level applicants, the state indicated it has received approval from the federal government to grandfather in all current Medically Needy beneficiaries. In other words, if you currently receive Medically Needy assistance in a nursing home, you would not need to do anything.

As we covered in previous blog posts, a Miller trust is a legal instrument that allows people with income higher than Medicaid limits (currently $2,163) to qualify for assistance. Currently, these folks can only qualify for the Medically Needy program, which pays for long term care only in a nursing home.

Previously, folks with higher incomes could only receive medical assistance in a nursing home, even if they were capable of living in a less restrictive environment. With Miller trusts, for the first time, New Jersey Medicaid beneficiaries with higher incomes are expected to be able to receive long term care at home or in an assisted living facility.

This is good news for seniors, people with disabilities and other folks who may need long term care. Come November, we expect that FriedmanLaw will have a powerful new tool to help each of our clients receive care in the most appropriate setting.

For more information on Medicaid and long term care, please see our Practice Areas and Q&A pages, or call us at (908) 704-1900.

New Jersey Medicaid to Allow Miller Trusts

New Jersey residents with higher incomes may soon have new options for long term care.

New Jersey Medicaid announced it intends to clear the way for Miller trusts.  NJ Medicaid will request approval from the federal government to discontinue its Medically Needy program for long term care.  This would allow Medicaid applicants who seek long term care to begin using Qualified Income Trusts, or “Miller” Trusts (named after Miller v. Ibarra, 746 F. Supp. 19 (D. Colo. 1990)).

A Miller Trust is a legal arrangement in which the Medicaid applicant directs income in excess of the Medicaid limit to an irrevocable trust, which uses trust assets to pay the applicant’s long term care costs.

Practically, this decision affects people with incomes above the Medicaid limit, which in 2014 is $2,163.  Currently for these folks, Medicaid only pays for long term care in a nursing home, limiting options.  Healthier people who could have received care in an assisted living facility or at home, instead must enter a nursing home or forego long term care.  But we expect that with Miller Trusts, people with higher incomes (such as from Social Security or a pension) will be able to receive Medicaid in these settings.

Federal law (42 USC 1396p(d)(4)(B)) prohibits the use of Miller Trusts in states that have a Medically Needy program, which is why New Jersey is seeking to discontinue Medically Needy institutional Medicaid.  Notably, Medicaid has not proposed discontinuing Medically Needy Medicaid for people receiving non-institutional or “community” Medicaid – i.e., people in the community who use Medicaid for acute care, such as doctor and hospital visits.  The proposal only affects Medicaid applicants who need long term care.

We expect that when Miller Trusts are implemented in New Jersey, FriedmanLaw will have a powerful new tool to help our clients obtain long term care in the most comfortable and appropriate setting.

For more information on Medicaid, long term care planning, protecting assets or other elder law issues, please see our Practice Areas and Q&A pages, call us at (908) 704-1900, or email at LAF@SpecialNeedsNJ.com.

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As this website provides general information and isn’t tailored to your particular situation, it doesn’t constitute legal advice and may not take into account rules and exceptions that affect you. Although updated from time to time, this website may not take account of recent legal developments or differences in laws from state to state. For safety sake, obtain individual legal advice before you act! You assume all risk of acting on information contained in this website. This website doesn’t constitute legal advice, and no attorney-client relationship exists unless FriedmanLaw and you execute a written engagement agreement. Please contact us at 908-704-1900 to discuss engaging FriedmanLaw to help resolve your legal concerns.
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