Nursing Home Litigation


New Legislation Increases Utility of Special Needs Trusts


Jason Frank M


any individuals with disabilities will ultimately have to qualify for Medical Assistance to pay for necessary long term support and services.1


Medical Assistance


is a means-tested program that pays the cost of medical care for individuals who meet the eligibility requirements.2


An


award from a personal injury case will likely cause an applicant/ recipient (A/R) to exceed Medical Assistance’s income and asset eligibility requirements.3


Te A/R, ineligible for Medical


Assistance, will have to pay the private rate for nursing home care until they meet these eligibility requirements.4


In many of


these cases, the A/R will have to use the personal injury award to pay the exact facility that injured him or her in the first place. In order to prevent the award from affecting the A/R’s


eligibility for Medical Assistance, the award may be placed in a 42 U.S.C. § 1396p(d)(4)(A) trust or a 42 U.S.C. § 1396p(d)(4) (C) pooled asset trust.5


While federal regulations clearly define


the (d)(4)(A) trust, some of the federal regulations concerning a (d)(4)(C) pooled asset trust are unclear. Maryland regulations do not impose requirements for pooled asset trusts beyond those specified under federal law and as a result, Maryland also provides ambiguous guidance on how a pooled asset trust affects Medical Assistance eligibility.6 Te Maryland Department of Health and Mental Hygiene


proposed regulations in January 2011 for the purpose of restructuring and clarifying special needs trust regulations.7


In fact, the proposed


1 Nursing home care is expensive and paying for nursing home care out of pocket rapidly depletes an individual’s savings. A senior can anticipate spending more than $90,000 dollars a year on nursing home care. Genworth, Cost Of Care Survey 2011 at 43, available at http://www.genworth.com/ content/products/long_term_care/long_term_care/cost_of_care.html.


2 Dep’t Health and Mental Hygiene, Maryland Medical Care Programs, http://www.dhmh.state.md.us/ mma/mmahome.html (last visited July 14, 2011).


3 In 2011, the income limit is $350 for an individual and $392 for a couple. Te asset limit is $2,500 for an individual and $3,000 for a couple sharing a room. Baltimore County Benefits Roster - 2011 Eligibility, http://www.baltimorecountymd.gov/Agencies/aging/financial/benefits.html.


4 An individual with a disability may also exceed medical assistance eligibility if they receive an inheritance. In these situations a special needs trust may also be used to hold their assets so that they remain eligible for Medical Assistance.


5 42 U.S.C. § 1396p(d)(4)(A); 42 U.S.C. § 1396p(d)(4)(C). 6 Fiscal and Policy Note, S. 888, 2011 Leg., 428th Sess. (Md. 2011); see Regs.10.09.24.08-2 (2011).


also Md. Code


7 38 Md. Reg. 185 (January 28, 2011) (to be codified at MD. CODE REGS.10.09.24.08-2 through .08-5 (2011)).


regulations stripped special needs trusts of their utility and effectively barred individuals over the age of 65 from using special needs trusts.8


Immediately, there was a ground swell of opposition to


the regulations of tsunami proportions and the proposed regulations paved the way for a bill to bar their enactment. In response to the proposed regulations, Senator Gladden


sponsored Senate Bill 888 which opposed the proposed regulations and established how certain special needs trusts may be used in conjunction with Medical Assistance.9


A broad


spectrum of professionals in disability related fields including the Maryland Association of Justice supported SB 888, including Delegate Smigiel who sponsored the same bill in the House of Delegates.10


Te Maryland legislature passed the bill in April 2011


and Governor O'Malley signed it into law on May 19, 2011.11 Attorneys with clients who have disabilities must understand


how special needs trusts may be used to protect a client’s assets, and how SB 888 will improve the utility of special needs trusts, especially when the client receives a personal injury award.


I. Background on Special Needs Trusts Individuals must meet several eligibility criteria in order to


receive Medical Assistance.12 A/R to have assets below a certain limit.13


One eligibility criterion requires an If an A/R acquires


assets in excess of the program limits, such as through a personal injury settlement or an inheritance, he or she may lose Medical Assistance eligibility until the assets are spent down or placed in a special needs trust.14


An A/R who gives away or transfers assets below market value in order to meet the asset limit could


be subject to a period of ineligibility. 15 8 See id. 9 S. 888, 2011 Leg., 428th Sess. (Md. 2011), codified at MD. CODE ANN. 14-114(A)-(D). Tis bill is effective October 1, 2011.


10 H.D. 1277, Leg., 428th Sess. (Md. 2011), codified at MD. CODE ANN. 14-114(A)-(D). 11 Id. 12 Medical assistance requires an applicant to be a U.S. citizen or qualified alien, and Maryland resident. Te applicant must also meet level of care requirements, and income and asset limits. Lastly, the applicant will have to address the program’s penalty provisions. Regs.10.09.24 (2011).


See Md. Code


13 MD. CODE REGS.10.09.24.08 (2011). Medical Assistance counts such things as bank accounts, stocks, real property, and inter vivos trusts, as assets when determining eligibility. Id. In 2011, the income limit was $350 for an individual and $392 for a couple. Te resource limit is $2,500 for an individual and $3,000 for a couple sharing a room. Baltimore County Benefits Roster - 2011 Eligibility.


14 See MD. CODE REGS.10.09.24.08 (2011). 15 See MD. CODE REGS.10.09.24.08-1 (2011).


Trial Reporter / Fall 2011 17


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