Several months ago I reported on problems that were cropping up for people with irrevocable funeral trusts who apply for NJ Medicaid/MLTSS to pay for their nursing care, home care or assisted living. The issue is that once the funds are paid and the contract is signed, the contract is irrevocable and the funds cannot be returned to the purchaser at that time. Based on this irrevocability, the Medicaid/MLTSS program has historically excluded those dollars from the determination of available resources. It’s logical — the purchaser can’t get the dollars back.
You might wonder what can be included in an excluded funeral trust contract. Take a look at N.J.A.C. 10:71-4.4(b)i(3). The State’s regulations do not specify a helpful, useful list. And what’s been happening is that applicants are being told that they have excess resources sitting in those funeral trusts. In some egregious cases, the alleged excess dollars (non-excluded dollars) put them over the resource limit, causing a denial of eligibility which they receive from the County Board of Social Services many months down the road after the application was filed. The impact can be catastrophic — there could be tens of thousands of dollars of unpayable nursing home bills and horrific debt suddenly acquired by a community spouse.
Just recently, we were told of a partial change in this policy. We found out that “the State has gone back and forth in what it will allow” as excluded burial trust expenses, and that “now, prepayment for clergy and pallbearers is allowed, along with one limo for the family even though it’s for the living and we aren’t supposed to exclude anything that’s for the living, but the State like I said keeps changing what’s allowed and what’s not, but not Mass cards, register book and those little items.” In this case, the non-excluded items were $100, and in that particular case, it wouldn’t cause the person’s resources to exceed the $2,000 limit. But there are some people whose resources are just barely under the limit. This late-discovered non-excludability could cause ineligibility.
A very recent decision may help the public understand what the “rules of the road” are on this issue. See attached — A.H. vs. Middlesex County Board of Social Services.E.H. v MIDDLESEX Initial decision E.H. FAD on funeral expenses 2020 Med-Com 18-08 Funeral Trusts
When the public does its best to comply with the requirements of a means-tested program, it is impossible to comply when the standards are unwritten or vague, or when established standards are changed in secret through internal meetings among administrative management personnel. The New Jersey Supreme Court addressed that type of governmental action thirty years ago in a case called Metromedia vs Division of Taxation. Among other things, if a new interpretation is intended to have impact on many similarly-situated members of the “regulated public,” it’s necessary to publish the proposed new rule so there can be adequate Notice and Comment, and so that people have the opportunity to find out what the law is and act accordingly.
Call us for advice about senior care planning, Medicaid eligibility planning, applications and appeals ………. 732-382-6070