Wednesday, June 27, 2018
How Far Can Courts Go in Reassigning Income to a Community Spouse When it Affects Medicaid Payments?
It is a while since I've had a chance to report on an interesting Medicaid planning case. Perhaps that alone is a sign of the times?
Last month in Michigan, however, an appellate court weighed in on an interesting question about the power of courts to reallocate income, from the institutionalized spouse to the community spouse, where such a decision would impact payment sources for the nursing home. In a per curiam decision, the court considered a pair of similar cases, where the state probate courts had entered protective orders that directed "all income" received by an institutionalized spouse (IS) be paid to the community spouse for maintenance purposes. The State Department of Health and Human Services objected, as clearly the state winds up paying more for the IS's care if the community spouse gets all the IS's income.
Does the probate court have authority -- jurisdiction? -- to make such a ruling? What criteria are relevant to the allocation of income? In other words, is the probate court the right place to avoid inadequate safeguards against impoverishment of the community spouse? Interestingly, the Court, at footnote 13, distinguished the two cases from past attempts to make gifts or use protective proceedings for planning purposes before an initial determination of Medicaid eligibility. The court summarized its ultimate decision:
For the reasons explained in this opinion, we conclude that the probate courts have the authority to enter protective orders providing support for a community spouse whose institutionalized spouse is receiving Medicaid benefits. However, we also conclude that the probate courts’ authority to enter such support orders under the Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq, does not include the power to enter an order preserving the community spouse’s standard of living without consideration of the institutionalized spouse’s needs and patient-pay obligations under Medicaid. Given that the orders in this case were entered without consideration of Joseph’s and Jerome’s needs and patient-pay obligations under Medicaid, we find that the probate courts abused their discretion by entering the orders at issue in this case. We therefore vacate both support orders and remand for a reconsideration of Beverly’s and Ramona’s need for support under the proper framework.
For more, read the full decision in In re Estate of Vansach, Michigan Court of Appeals, May 22, 2018.
Counsel representing the community spouse has posted his own take on the decision, describing it as a win, in a post titled BRMM Wins Significant Elder Law Case in Michigan Court of Appeals.
No success in finding a mirror image article from the DHHS lawyers. With the split decision, I suppose they could have written DHHS Wins Significant Elder Law Case in Michigan Court of Appeals.