OK Health Care Authority Enforcing Income Cap
Disclaimer: Since Medicaid rules and insurance regulations are updated regularly, past blog posts may not present the most accurate or relevant data. Please contact our office for up-to-date information, strategies, and guidance.
Oklahoma Health Care Authority
We have learned of an Oklahoma health care authority regulation regarding income caps for institutionalized individuals. Those individuals are ineligible for benefits if their income exceeds the private pay rate at their care facility. However, there are some states that enforce a separate cap on income, which shouldn’t be confused with the cap requiring any income over $2,199.00 to flow through a trust (known as the Miller Trust or Qualified Income Trust). The income we’re talking about limits the monthly income a client may receive (even if the income is in a Miller Trust) while also remaining eligible for benefits.
Pennsylvania, North Carolina, and Ohio each have some counties basing the income cap off the facility’s Medicaid per diem rate. In addition, Colorado sets an income cap based on which part of the state the person resides. Oklahoma seems to be following suit. According to OHCA 317:35-5-41.6(6)(B), a Miller Trust will need to be established for individuals collecting a monthly income of over $2,199.00, but that income cannot be greater than the average cost of being in a nursing home. That average cost, as of July 1,2016, is $4,400. Therefore, institutionalized individuals can’t be greater than this amount.
How Does The Oklahoma Health Care Authority Affect Medicaid Planning?
A large monthly income from the institutionalized person may create some issues for married couples, but an even bigger concern comes when a gifting/MCA plan is performed. This planning involves structuring the annuity to assist the client in making payments due to the penalty period from divesting otherwise available assets. The applicant and their family may have to cover a bigger monthly shortfall since the applicant’s monthly income must fall below the maximum of $4,400 to be deemed “otherwise eligible” and start the penalty period.
As an example, a client with $6,000 monthly cost of care would be best suited with an annuity structured to provide them with an income sufficient enough to pay privately during the penalty period. Because the client must deal with the $4,400 income cap, though, the amount of income provided by the annuity will be limited. This situation would see the client have a monthly shortfall of $1,600 when you subtract the income cap from the cost of care. Additionally, smaller annuities come with larger divestments, and larger divestments will render longer penalty periods. In summary, adjusting the income cap in the planning strategy causes a ripple effect throughout the rest of the plan that will impact the amount in the annuity, divestment, length of the plan, and total income shortfall.
Is The Gifting / MCA Strategy Still A Viable Option In Oklahoma?
While the income cap alters how Oklahoma residents structure their plans, the option is still there. As previously mentioned, this isn’t the only state to set income limitations. Despite the impact on planning for a gifting/MCA strategy, you can get it done right by having the right team on your side. Get in touch with The Krause Agency to learn more about our services, and we’ll get started on your case right away!