Establishing Miller Trusts

Sweeping changes to the way Indiana administers Medicaid are expected to save the state millions of dollars, but the transition is causing headaches and putting some recipients at risk of losing benefits.

To help some of the most vulnerable Medicaid beneficiaries – nursing home residents – attorneys are offering their services pro bono to navigate through a financial maneuver that will enable the residents to continue receiving the care they need.

“The state is trying to do this in a way that doesn’t hurt Hoosiers,” said elder law attorney Keith Huffman, “but we’re switching from one complicated system to another complicated system.”

An estimated 3,232 nursing home residents in Indiana will need to obtain a Qualified Income Trust, more commonly known as a Miller Trust, by the end of June to keep their Medicaid coverage. These individuals have personal incomes over the eligibility limit effective June 1 and must divert the excess money into the trusts in order to maintain their benefits.

Nursing home patients who do not have the trusts in place by the deadline will be removed from the Medicaid rolls and will have to reapply for the program by going through the interviews and submitting the paperwork all over again.

Indianapolis attorney Claire Lewis has been coordinating an effort on behalf of the Indiana State Bar Association to enlist lawyers to work with nursing home residents and their families to complete and file the documents that set up the Miller Trusts.

The response to the ISBA’s call for help has been wonderful, Lewis said. She is proud of the way her profession has stepped up and is especially pleased with the association’s Elder Law Section, which has been “absolutely phenomenal in responding.”

Still, her major concern is that some nursing home residents will not get the assistance they need and will lose their Medicaid benefits. She said she has been living and breathing Miller Trusts for the past couple of months and very good people at the state are working long, ridiculous hours to ensure no one slips through the cracks but, she noted, “I think transitions are always difficult.”

Stopping the spend down

As part of Indiana’s change in Medicaid administration, the state will not have to operate the spend-down program, which has been described as expensive, inefficient and a nightmare.

Individuals whose incomes are higher than roughly 75 percent of federal poverty level are currently being shifted into the spend-down program. This program functions like a monthly deductible. If a recipient does not incur enough medical expenses, Medicaid will not kick-in and pay for services that month.

With Medicaid coverage fluctuating month to month, sometimes patients have had their medical care interrupted and other times providers have had difficulty collecting payments from patients.

Lewis

Indiana predicts it will save $35.7 million annually starting in fiscal year 2015 by ending the spend-down program.

The transition is possible partly because of the Affordable Care Act. Prior to the federal health care exchange, low-income individuals who did not qualify for Medicare had no other option than to enroll in the spend-down program. Now, according to the state, the federal marketplace enables eligible individuals to receive “affordable comprehensive coverage” without having to spend a certain amount each month to ensure continuous coverage.

As a result of the end of the spend-down program, nursing home residents with personal monthly incomes higher than $2,163 will have to establish a Miller Trust. The amount over the limit will be essentially hidden in the trust so the person can qualify for Medicaid. Then the funds will be withdrawn and used to help pay for the nursing home costs.

“I really describe it to clients as they just got to jump through hoops,” said Dennis Frick, director of the Senior Law Project at Indiana Legal Services Inc. “It does seem silly. It’s done just because of the way the federal law is written.”

Preventing loss of benefits

The staff at TLC Management, a company that operates several nursing facilities in Indiana, decided to handle all the details of setting up the trust accounts for their residents.

“They’re sick, and they’re old, and they don’t need to deal with that,” said Alma McKibben, regional field accountant and Medicaid specialist for TLC. “We feel if we can alleviate any of the stress for our residents we’re going to do that.”

She explained some of the residents do not have family who can help them wade through the Miller Trust paperwork, and others have family but they cannot provide assistance. Many residents became worried they would lose their benefits after receiving letters from the state describing the change in how Medicaid benefits are handled.

TLC welcomed the volunteer attorneys into the process to create the trusts. McKibben said the lawyers have been “extremely helpful across the board,” and many residents are comforted by knowing an attorney is assisting them.

Huffman, an attorney at Dale Huffman & Babcock in Bluffton and chair of the ISBA Elder Law Section, is among the attorneys helping TLC residents. To date, he said his practice has completed more than 100 trusts.

However, Huffman and other attorneys say they are concerned about the backlog at the Indiana Family and Social Services Administration and they are frustrated by the resistance from some banks.

Frick

Paperwork is being submitted to the state, showing the trusts are set up. A pending verification may then be issued but, attorneys have noted, instead of giving approval, the state has come back and asked for information already provided in some cases.

The lag by the state is raising fears that nursing home residents will have their benefits terminated even though they turned in all the documents by the deadline.

FSSA did not provide exact numbers but said “several hundred trust documents” have been received and are at various stages of the approval process. And changes are being made to expedite the approval process. The FSSA is continuing to reach out to all parties involved in setting up the trusts.

Aside from the problems at the state, attorneys are also dealing with a “great deal of confusion among the banks,” Huffman said.

Attorneys are trying to persuade the banks to not tack on fees and service charges to the Miller Trusts because those fees would come out of the resident’s monthly allowance. Some financial institutions maintain family members who have been legally designated to handle a nursing home resident’s affairs cannot sign the trust account documents because the power of attorney does not give specific authority to do so.

Some attorneys pointed to Regions Bank, in particular, as not handling Miller Trusts. The institution confirmed it does not establish these trusts but did not provide any explanation for its policy.

McKibben pushed back after one bank that TLC had been doing business with for 20 years turned down the Miller Trusts. After she demanded to know why and reiterated the trusts are needed in order to maintain eligibility, the institution relented.

With the deadline approaching, Huffman anticipates 90 percent of nursing home residents who need Miller Trusts will have established them in time. Frick is equally optimistic, saying some may have coverage terminated but, hopefully, the number will be small and the situation will be resolved quickly.•