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Medicaid makes decision regarding IRAs

Posted by April Grunden | May 20, 2019

In September 2018, Indiana FSSA, which oversees Medicaid benefits for long-term care, added a provision to the Medicaid rules allowing IRA's to be exempt from the countable assets of an institutionalized applicant/recipient if he/she has been taking required minimum distributions for a “reasonable” period of time. The change was an unexpected and exciting addition to the toolbox of Medicaid planners state-wide. Gone would be the days of liquidating IRA's and taking a tax hit to allow for additional planning and spend down. Another hope was that this rule would decrease the number of “Medicaid” legal separations and divorces being filed in Indiana. The purpose of such a court action is to transfer the institutionalized spouse's assets for earlier Medicaid eligibility and resulting in community spouse retaining both IRA's. As more and more wealth has become concentrated in IRA's, the use of this strategy was on the uptick.

Although promising, the provision failed to define a “reasonable” period of time, and many attorneys were reluctant to gamble on the new strategy for Medicaid crisis planning (planning immediately prior to application) without further clarification from FSSA. Well… we now have clarification. At the annual “Medicaid for The Elderly and Disabled in Indiana” conference hosted by the Indiana Senior Law Project on April 26, 2019, it was announced that effective May 1, 2019, the IRA rule will be replaced.

What do they say about Indiana weather, “Don't like the weather? Just wait a few minutes and it will change.” Hey, maybe sometimes we DO like the weather. As with Indiana weather, so goes the Indiana Medicaid rules. As always, we will remain diligent in watching the forecasts, reading the tea leaves, and letting you know when the rules change at the drop of the hat as they so often do.

If you would like to discuss these or any other Medicaid planning strategies further, please contact our office for a complimentary welcome meeting.

About the Author

April Grunden

I am the anti-attorney.  I buck the system at every turn because I believe the system is broken.  I have seen the old way of dictating to families and business owners how their plans should work.  I've seen how attorneys run roughshod over clients. Enough is enough. I want to protect my family. ...

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At GLO we’re reviving the lost art of listening. It’s your planning, not ours. You tell us how you want to take care of your family and business. We will listen and put everything in place.
— April Grunden

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