Old and In The Way

How slow turnings of tiny bureaucratic gears grind up real Texans

What was actually on the way, though, was inertia and indecision.
"They passed the law, but we in Texas are just waiting here," Mayo says. He sees no good reason to mistake Congress's intent.

"That's pretty simplistic. You would think that everybody would know what that was, an attempt to codify or make part of the federal law, this Miller v. Ibarra case, because that's exactly what they did."

Whatever Congress's intent, it appears that the federal Health Care Financing Administration and state Medicaid officials are bogged down in an interpretive quagmire.

Mayo and others anxious to use an exempt trust to get someone under the income gap have been told, more or less, that Austin is waiting for HCFA to come up with regulations before trust funds can be set up. Congress proposes, HCFA disposes.

As for being told to wait for a decision, Mayo has heard that tune played before.

"The last time I heard them say something like that, it took six months to hear from them," Mayo says. "I'd say there's an indefinite delay."

Representatives of the Texas Department of Human Services met with HCFA officials in Washington, D.C. two weeks ago and discussed possible regulations affecting Medicaid eligibility. Mayo and others are worried that HCFA may scotch the deal and virtually prohibit using exempt trusts to slide in under the cap.

So far, HCFA has not sent out any regulations, given the state any guidance or set up a timetable to do so. Dee Church, the person in charge of Medicaid eligibility for long-term care in Texas, refrained from predicting what would happen.

"There were no specifics. They just said they were in the process of reviewing the information," Church says of the meeting in Washington. "We can look at the law and say what it says, and explain what the law says, but as to how they are going to interpret it, that's what we waiting on for their direction on."

Trying to guess what restrictions will be put on the trust - or even whether trusts will be allowed - appears to be all that people outside Washington can do.

Church hedged when discussing what the eventual outcome will be, but admitted that at least one of the HCFA folks "seemed to think congressional intent was to look at these exactly like the Miller trusts are." That would mean the trusts could be used to divert income, come in under the cap and qualify for Medicaid. Church made it clear that in her eyes, Austin is waiting for marching orders from Washington.

Those orders will have to deal with several obstacles. One of them is the federal prohibition against assigning Social Security checks to anyone other than the intended recipient, a rule designed in part to prevent creditors from getting Social Security checks. If HCFA decides that putting the Social Security check in an exempt trust fund is giving it to someone or somewhere else, they could rule it a violation.

Sam Perlin, president of Texans for the Improvement of Nursing Homes, is also concerned about people who retire from large corporations and receive pensions that are protected by the Employment Retirement Income Security Act (ERISA), part of which prohibits pensioners from declining to receive any part of the pension. Strictly interpreted, those two rules could prevent checks from Social Security and large corporate pensions from being used in the proposed trust funds.

Church says that which income is allowed to go where may have a lot to do with how - or whether - the trust proposal works.

Preliminary speculation -- and the preliminary nature of this speculation needs to be emphasized -- is that the federal legislation addresses only the treatment of the exempt trust. It does not address the income before it is actually within the trust.

Says Church, "It gets a little complicated to try to explain, but an example was given to us when [HCFA officials] were trying to explain it to us."

Here goes: Federal benefits (i.e. Social Security) cannot be assigned to someone else, so they would be considered countable income toward the cap. Other forms of income, such as private pension benefits, that are "irrecoverably assigned" to the trust would then fall under the provision for income transfer of assets and would result in a "potential penalty for payment of vendor services."

That means, in English, that if a retiree diverts $400 of her pension so she can get under the income cap, Medicaid would not pay for $400 of the nursing-home bill.

Church says, "A transfer of asset penalty... means we would not pay for the nursing facility services, up to the amount that would be considered as transferred.ÉThere is a potential that if her pension is $400, whatever the facility rate is, we would not pay $400 of that facility rate. She would probably be billed by the facility for that," Church says.

Perlin sees it as a Catch-22 for people who have enough problems already: "They're not ready with the trust fund. They won't let you reduce your income, so where the hell are you?"

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