The Secret Handshake – Paying for Long Term Care in a Nursing Home

The “Secret Handshake” refers to that gesture known only by the select few who are allowed access to an exclusive club.  I use that as the title to this post because the State of Maryland has adopted policies that make it hard for people who do not have “inside information” to make good informed decisions regarding their financial planning should nursing home care loom on the horizon.

Paying for Nursing Home Care

There are several ways to pay for long term care in a nursing home.  Everyone knows the first way — reach into your pocket, take out your checkbook, and write a check.  This method is referred to as private payment.

In addition to private payment, Medicare offers some coverage for nursing home care, but only if you transfer to the nursing home from the hospital, and then, only so long as you require rehabilitative care and continue to improve, will Medicare pay, 100% for the first 20 days and then about 80% for the next 80 days.  That is all.  Medicare does not provide a long term nursing home benefit.

A third way to pay for nursing home care is with long term care insurance.  Many people, however, do not have or cannot get long term care insurance.

Medicaid Benefits for Nursing Home Care

The fourth way to pay for long term care in a nursing home is with Medical Assistance or Medicaid.  Unfortunately, the laws governing the Medicaid program are extremely complex, even more so since Congress changed the Medicaid laws in 2006.

It used to be easier to figure out what rules applied to an individual seeking Medicaid eligibility.  While Medicaid is a joint Federal and State benefits program, and both Federal and State law governs eligibility for Medicaid, whenever the Federal law changed, State law and regulations, both publicly available in the Maryland Annotated Code and the Code of Maryland Regulations (commonly known as COMAR), changed as well.

Medicaid Eligibility Rules

In order to figure out if one qualified for Medicaid in Maryland, one could look up the applicable statutes and regulations.  Indeed, the Administrative Procedure law of Maryland requires that any new rules that a government agency wishes to apply in the State of Maryland must be published in COMAR.   These rules, to be sure, are arcane and complex, and as such, are not easy to understand, but at least one knew where to find them.

Since Congress changed the Medicaid law in 2006, however, which change was substantial, the Maryland agency that administers the Medicaid program, the Department of Health and Mental Hygiene, has seen fit to bypass the regulation process and has attempted to implement the new Federal rules by simply publishing them in the Department’s Medical Assistance Manual.  That Manual is the rulebook the Department sends to the various county Departments of Social Services to assist them in making Medicaid eligibility determinations.

Unlike the Maryland Code and COMAR, the Maryland Medical Assistance Manual is not readily available to the public.  Indeed, it is not even readily available to lawyers, although those lawyers who know the “secret handshake” manage to obtain a copy of this manual.

New Rules Impose Strict Requirements

This is important because the 2006 Medicaid rule changes impose severe restrictions on one’s ability to obtain Medicaid to pay for nursing home care.  For example, no one is allowed to get Medicaid if that person or that person’s spouse owns a house worth more than $500,000, unless a loan is placed against the house to bring its net equity value below $500,000.

To some people, that may seem like a grand dwelling, but in some areas of Maryland, such as the D.C. suburbs, even a simple, small house could be worth more than $500,000.  And if a married couple has only their house and otherwise lives on their Social Security income, requiring one of the couple to borrow against the equity value of that house to enable Medicaid to pay for the nursing home care of the other could impose an extreme financial burden.  This is because the Medicaid rules will not allow the borrower to keep all of the borrowed funds.  Rather, the rules require (unless other financial planning is done) that those funds be paid to the nursing home before Medicaid will pick up the tab.

Medicaid Manual Does Not Comply with Maryland Law

The Department of Health and Mental Hygiene, by simply publishing the 2006 Congressional law changes in the Maryland Medical Assistance Manual, has not followed the procedures required by Maryland law to make the new rules effective and enforceable in Maryland.  Consequently, under Maryland law, these rules should not be enforceable.

Medicaid Lawyers Have Not Challenged the Rules

Indeed, in some instances, the rules set forth in COMAR, the official administrative regulations in Maryland, conflict with the new provisions added to the Maryland Medical Assistance Manual.  Medicaid lawyers in Maryland know this but have not seen fit to challenge the new rules as unenforceable.  The reason not to challenge the rules is three-fold.  First, if a challenger succeeds in overturning the new provisions in the Maryland Medicaid Manual, the State would simply follow the procedure necessary to have the rules published in COMAR, thereby making them enforceable under Maryland law.

Second, any such challenge in a particular case, even if successful, would apply only to the individual on whose behalf the challenge was made.  In other words, a judicial decision that the new rules are unenforceable would apply only to that one person, and any other person would likewise have to mount a legal case to challenge the rules.  This would have to be done for each and every case.

Third, it generally is more cost effective for individuals to comply with the new rules, notwithstanding their technical unenforceabililty in Maryland, then to apply for Medicaid, suffer a determination of ineligiblity based upon the Maryland Medical Assistance Manual, and file, prepare and pursue an appeal of that adverse determination.

Court Action Carries Risks

Indeed, even where the law is clear that any new regulations must go through the proper procedures and be published in COMAR before they are enforceable in Maryland, whenever anyone takes a matter to court, there is a risk that the result will not be satisfactory.

In a recent case in which an individual ran afoul of a technical requirement under the new rules and consequently suffered three months of Medicaid ineligibility, that individual, because she had nothing more to lose, with our assistance, filed an appeal and challenged the enforceability of the Maryland Medicaid Manual provisions that are not also published in COMAR.  In fact, the relevant COMAR provision conflicts with the manual provision and is more generous to the person who filed the appeal.

Nevertheless, even though the law is clear cut, in the context of an administrative appeal under the auspices of the Department of Health and Mental Hygiene, the Administrative Law Judge who heard the case ruled that Maryland’s Department of Health and Mental Hygiene was entitled to apply the Manual provisions to deny Medicaid eligibility in this case.  I believe that the decision is wrong, and the affected individual has the right to appeal to a Court for a definitive determination on the issue.  Doing so, however, would be more costly than accepting the consequences of the denial of Medicaid eligibility.  And so the matter rests.

The Law Remains Inaccessable

As a consequence of Maryland’s new practice of bypassing the statutorially mandated procedure for implementing new regulations, the Department of Health and Mental Hygiene has made the complicated process of getting Medicaid for long term care in a nursing home even more complex.  No longer can a lawyer review the applicable law and regulations to give you sound advice as to how to proceed.  Instead, only those who know the “secret handshake”, those who are so involved in this area of legal practice as to be aware of the specialized rules that are not generally published, are able to provide you with competent advice and representation in the complex field of Medicaid eligibility and asset preservation planning.

Does your advisor know the secret handshake?