The legal basis of the "no asset test" rule

We noted in our March 2 post that CMS's web-published materials announce that asset limits will not apply to disqualify persons newly eligible for Medicaid on the basis of their Modified Annual Gross Income - i.e., the "Obamacare" Medicaid expansion applicable in many but not all states. Michigan is included.

The legal basis for this position is the new 42 USC 1396a-e-14, added by the Affordable Care Act and effective January 2014, which includes as its subparagraph C:

(C) No assets test.—A State shall not apply any assets or resources test for purposes of determining eligibility for medical assistance under the State plan or under a waiver of the plan. 

The statute goes on to make exceptions under subparagraph D, however, for those who were previously eligible on other bases. Just to be clear, it also specifically exempts anyone over the age of 65. Thus, we will still have resource limits for those who wish to qualify for Medicaid coverage for nursing home care for the elderly.

(D) Exceptions.—
    (i) Individuals eligible because of other aid or assistance, elderly individuals, medically needy individuals, and individuals eligible for medicare cost-sharing.— 

Subparagraphs (A), (B), and (C) shall not apply to the determination of eligibility under the State plan or under a waiver for medical assistance for the following:
       (I) Individuals who are eligible for medical assistance under the State plan or under a waiver of the plan on a basis that does not require a determination of income by the State agency administering the State plan or waiver, including as a result of eligibility for, or receipt of, other Federal or State aid or assistance, individuals who are eligible on the basis of receiving (or being treated as if receiving) supplemental security income benefits under subchapter XVI, and individuals who are eligible as a result of being or being deemed to be a child in foster care under the responsibility of the State.
       (II) Individuals who have attained age 65.

Why use a lawyer?

"Why should I pay a couple hundred dollars to a lawyer when I can get this online form for $35?"

This is a fair question. A few recent examples will help to illustrate the answer.

• Clients came in with a will prepared by Quicken WillMaker. The first several pages of the will provided detailed instructions for their funeral services, how their bodies are to be handled, etc. I explained to them that this may be useful as their requests to their children, but that none of this is binding on anyone. In Michigan, decisions on the handling of a dead body are made by the next of kin, not by the personal representative of the estate.
• A quit-claim deed done years ago to transfer a cabin, using a form found at an office supply store, was ineffective because the grantor was a married man at the time, and his wife did not join in the deed. The fact that the man had been single and the only grantee when he acquired the land did not change that outcome.
• In a recent reported case coming out of Florida, Ann Aldrich created a will using an "EZ Will Form" in 2004. The form did not include a residuary clause, a provision directing what should happen with the remainder of the individual's property after specific bequests are made. As a result, after her death, her two nieces received a substantial sum of money, even though the rest of the will showed that her brother was her intended beneficiary.

The answer to the question: Yes, you can do it for $35, but you can do it right for a little more. A simple quit-claim deed done in our office may cost $100, for example. When your transaction involves property worth several thousands of dollars, spending what it takes to do it right makes much more sense.