The Secret Handshake – How Do I Find Out What Rules Apply?

The “Secret Handshake” refers to that gesture known only by the select few who are allowed access to an exclusive club.  I use that term in the title to this article because there are times when only those lawyers who closely follow Medicaid rule changes are aware of rules that impact clients. Everyone else is left in the dark.

One example relates to the use of a certain type of special needs trust. A person under age 65 who has high medical costs that would overwhelm that person’s income and assets may use a type of trust that allows such person to put his or her limited resources into the trust to enable such person to obtain Medicaid benefits to pay that person’s medical costs. This type of trust is useful where the amount of that person’s own assets cause such person to not be eligible for State medical care benefits, but which assets and the person’s income are too low to cover that person’s medical costs. I will call such person the “Beneficiary” for purposes of this article.

For many years, this special type of trust could only be created by the Beneficiary’s parent or guardian or by a court. If the Beneficiary’s parents were not living and the Beneficiary had no court appointed guardian, then there was an added cost, the cost of petitioning a court, to establish such a trust. It would be so much easier and less costly to the Beneficiary if the Beneficiary herself could be the person who created the trust.

And then, about 5 years ago, the rules changed, such that the Beneficiary could create such a trust and it would qualify to shelter the beneficiary’s assets so the beneficiary could obtain State benefits to pay for the Beneficiary’s high care costs.

But who knew? Who was privy to the fact that this rule had changed? Is it clear even today that this rule has changed? Consider this: Today, as was the case five years ago, the Maryland Medicaid eligibility manual, available online to anyone and the rule book used by public benefits case workers to evaluate applications for benefits, states at Section 800-16(c)4 that only those trusts that are created by a parent, guardian, or a court (and otherwise meet the special requirements for such trusts) are sufficient to shelter the Beneficiary’s assets.

Notwithstanding that the Maryland Medicaid manual no longer had accurate information after the rule changed, and still, to this day, has inaccurate information as to who may create such a trust, those lawyers who knew the “secret handshake,” that is, those lawyers who were privy to the discussions about Medicaid policy became aware of such rule change. This rule change was communicated to a select few Maryland lawyers by means of an email from the Office of Eligibility Services of the Maryland Department of Health. That email is reproduced below at the bottom of this article.

For a long time after the rule changed, even the Code of Maryland Regulations was not accurate, which regulations stated, like the Maryland Medicaid manual, that only those trusts that are created by a parent, guardian, or a court (and otherwise meet the special requirements for such trust) are sufficient to shelter the Beneficiary’s assets. The State of Maryland finally got around to updating its regulations, so that the regulation set forth at the Code of Maryland Regulations, Section 10.09.24.08-2 C, now correctly states that the Beneficiary herself may create the trust and it would qualify for the favorable treatment to enable such Beneficiary to obtain state benefits to pay high medical care costs.

But for years, the only guidance as to the issue in Maryland from the Maryland regulators was the obscure email shown below. And even today, the Maryland Medicaid manual, which is the rule book used by Medicaid caseworkers to evaluate applications for public benefits, is incorrect as to the issue of who may create such a trust.

Skilled public benefits lawyers bring a lot to the table to assist persons in need to enable them to participate in public benefits programs, not the least of which is such a lawyer’s access to timely and relevant information regarding the current state of the law and regulations that impact persons in need.