The Department of Human Services has begun denying eligibility in Medicaid long term care cases in which there is a married person, and in which assets were placed in a so-called “solely for the benefit” trust (SBO trust). The SBO trust is the most favored planning tool in most married applicants’ cases. The SBO trust has traditionally allowed assets in excess of the protected spousal amount (i.e., a home, a car, a prepaid funeral and the lesser of $117,240 or one-half of non-exempt assets) to be preserved for the needs of the community spouse. It has been used thousands of times over the last 18 years and approved by the department.
Now, DHS has decided that all the assets in an SBO will be counted. DHS is asserting that this change is not a change in policy, only a change in the way they are applying policy – or, in other words, they have been doing it wrong up until now. There is presently one case pending in the Michigan Court of Claims challenging this shift. Other cases are being appealed in the administrative hearing process.
The good news is that it seems that cases using an SBO that have already been approved will not be challenged at the time of redetermination
Further good news is that we can still protect assets of a married nursing home applicant for the benefit of the spouse still at home, although it’s a bit more cumbersome.