Medicaid Case Study: Are IRAs Countable or Non-Countable? If the Policy is Misapplied, Denial is Likely.

Are IRAs Countable or Non-Countable Elder Law

RC, age 67, and married, developed severe Parkinson's disease that required a hospital stay. He eventually needed long-term care. His wife wanted to avoid spousal impoverishment. He would not qualify for Medicaid because he was over income, and they were also over the resource limit. A QIT resolved the income problem, but what about resources?

During the application process, the caseworker rendered a denial of the application for being over the resource limit.

How did this happen? The HHSC caseworker made an error in the calculation of resources by incorrectly counting the IRA as being non-countable when it was countable at the time of the SPRA Snapshot. Even though there is no policy in the MEPD Handbook that expressly states that the IRA is not countable when a client is over the age of 70 ½ and is taking his Required Minimum Distribution (RMDs), The Michels Firm is aware of the legal determination based on federal policy that excludes an IRA from countable resources. This error artificially reduced the amount of resources the community spouse could have for living expenses.

After the SPRA month (the first month that the institutional spouse admitted into a long-term care facility), the Community Spouse converted her husband’s IRA into an Employment-Related Annuity-- which made the annuity non-countable. Interestingly, HHSC made yet another policy interpretation error and counted the now non-countable annuity as a Countable Resource. MEPDH F-7000 clearly states that an employment related annuity is non-countable leaving nothing to interpretation.

The Michels Law Firm had to appeal this case twice—once for the SPRA month and a second time for the ongoing months. Because we prevailed, the facility was able to retroactively bill the state for nine months of coverage. The nursing home collected $33,821.00 in nursing home fees.

RC and his wife would have had to be over $33,000 out of pocket to the long-term care facility had The Michels Firm not prevailed.