COVER STORY: TennCare Changes: What You Need to Know

Funding Pooled Trust no longer an option; spousal IRAs must be annuitized

It seems like TennCare rules change every year. Some rule changes are significant; some are relatively minor. This year has seen major changes. Two of these will have a profound impact on people who are applying for TennCare CHOICES long-term care services. 

Changes in Pooled Trusts

Thanks to 42 U.S.C. Section 1396(d)(4)(C), Pooled Trusts like Vista Points, Inc, have been a practical Medicaid spenddown tool for disabled adults of all ages. Pooled Trusts have proven to be particularly useful to people over the age of 65. In fact, in 2000, Takacs McGinnis Elder Care Law founder and Certified Elder Law Attorney Tim Takacs established the Tennessee Pooled Trust to serve this vulnerable population.

Unfortunately, thanks to the recent TennCare rule change, Pooled Trusts will no longer be an option for applicants over the age of 65 in Tennessee. The new rule will limit the use of Pooled Trusts to people under the age of 65, just like Special Needs Trusts.

The new law states that Pooled Trusts can be established for individuals, under age 65, living with a physical or intellectual disability and who have resources over the asset limit for a government benefit. Assets are transferred into a trust in an effort to qualify for or maintain government benefits while preserving those assets for the disabled person’s individual use. This kind of Trust can be established by a parent, grandparent, conservator, court, or an individual with a disability and/or an attorney-in-fact. A Pooled Trust is different from other kinds of Trusts in that the trustee is a nonprofit organization.

Effective August 22, 2019, TennCare will not impose a period of ineligibility on transfers to a Trust established solely for the benefit of an individual under age 65 who is disabled according to the Social Security administration and that meets the requirements of 42 U.S.C. section 1396(d)(4)(C).

Will this affect someone you love? It will if they attempted a transfer after August 22, 2019. This change should not have any impact on program eligibility for disabled adults over the age of 65 who transferred funds to a Pooled Trust prior to August 22, 2019.

Annuitization of Spousal IRAs

The second change related to TennCare CHOICES applications and financial eligibility involves the retirement accounts of the community spouse. For those not up on TennCare lingo, the community spouse is the husband or wife of a person who resides in a medical institution or nursing facility and is likely to remain there for at least 30 consecutive days. Effective August 22, 2019 the retirement funds of a community spouse are fully countable if the funds are accessible to the owner. Previously, the retirement funds of the community spouse were not considered a resource if payments were being received. Ultimately, this means that an IRA will need to be annuitized in order to prevent it from being countable as a resource. 

Whenever changes like these occur, it takes some time for the dust to settle. One thing is clear: TennCare continues to close loopholes that once made it easy for families of moderate means to pay for long-term care. What this means for the future is anyone’s guess.

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