A life-insurance funded burial contract (LIFBC or “burial insurance”) can be funded with more than $4,500 and still be exempt for Medicaid eligibility; but an irrevocable funeral trust can only make up to $4,500 truly irrevocable and exempt. In this case, the petitioner had an irrevocable funeral trust agreement containing $7,349.67. ALJ Beth Whitaker concluded the agency was correct to count the value above $4,500 as available and deny the application.
Note that the petitioner was able to cash out the funeral trust and purchase burial insurance instead. But she lost two months of eligibility before this was done.
This decision was published with support from the Elder Law & Special Needs Section of the State Bar of Wisconsin and the Wisconsin chapter of the National Academy of Elder Law Attorneys.
Preliminary Recitals
Pursuant to a petition filed on December 18, 2023, under Wis. Stat. § 49.45(5), and Wis. Admin. Code § HA 3.03(1), to review a decision by the La Crosse County Department of Human Services regarding Medical Assistance (MA), a hearing was held on January 31, 2024, by telephone.
The issue for determination is whether the agency correctly counted petitioner’s assets for September and October 2023 and correctly found petitioner ineligible for Medicaid.
There appeared at that time the following persons:
PARTIES IN INTEREST:
Petitioner:
—
Respondent:
Department of Health Services
1 West Wilson Street, Room 651
Madison, WI 53703
By: Dana Lee
La Crosse County Department of Human Services
300 N. 4th Street
PO Box 4002
La Crosse, WI 54601
ADMINISTRATIVE LAW JUDGE:
Beth Whitaker
Division of Hearings and Appeals
Findings of Fact
- Petitioner (CARES # —) is a 84 year old resident of Monroe County.
- On September 7, 2023 petitioner began residing in a nursing home.
- On October 27, 2023, petitioner submitted an application for Wisconsin Medicaid for the Elderly, Blind or Disabled, requesting that the application be backdated one month.
- In her application petitioner reported as assets an irrevocable burial trust established in 2017 and a checking account .
- Petitioner provided documentation of an Irrevocable Funeral Trust Agreement costing $7,349.67, entered into on July 14, 2017.
- On November 6, 2023, the agency issued to petitioner an About Your Benefits notice, informing her that effective December 1, 2023, petitioner was enrolled in Medicare Savings Program and was ineligible for Medicaid benefits because her assets exceeded the program limit.
- On November 22, 2023, petitioner was discharged from nursing home care.
- On December 4, 2023, the petitioner submitted evidence to the agency that on November 21, 2023, petitioner cashed out the burial trust and purchased irrevocable burial insurance assigned to —.
- The agency treated the new information as a reapplication for benefits with a request for a three month backdate.
- On December 14, 2023, the agency issued to petitioner an About Your Benefits notice, informing her that effective November 1, 2021 petitioner was enrolled in Nursing Home Long Term Care with a monthly cost of $963.40 and effective December 1, 2023, petitioner was enrolled in Medicaid. The decision was based on income of $1138 and $0 counted assets.
Discussion
The issue for hearing is whether the agency correctly counted a portion of the value of an irrevocable funeral trust resulting in a determination that petitioner’s assets exceeded the program limit for September and October 2023. Petitioner does not appeal any aspect of the determination of eligibility for November or December 2023.
A single individual applying for Medicaid benefits must have less than $2000 in countable assets to be eligible for benefits. Wis. Stats., § 49.47(4)(b)3g; Medicaid Eligibility Handbook (MEH), § 39.4. In its determination dated November 6, 2023 the agency denied the Medicaid application because it found petitioner’s assets exceeded the program limit. The agency counted as assets a checking and savings account and $7,349.67 in burial assets. It relied on Medicaid Eligibility Handbook (MEH) 16.5.1 to count the portion of the irrevocable burial trust exceeding $4,500. This resulted in counted assets in the amount of $2,967.65, which exceeded the counted asset limit of $2,000.
MEH 16.5.1 states, in relevant part:
Per Wisconsin law, when a person makes a pre-need agreement with a funeral provider to purchase funeral or burial products and services (not including burial spaces), all payments made under the agreement are trust funds, including interest and dividends, until the person’s death. For Medicaid purposes, Wisconsin law stipulates that such trusts may be made irrevocable as to the first $4,500 of the funds paid under the agreement. The irrevocable amount of such a trust is referred to as an irrevocable burial trust and is an exempt asset. If the total value of an otherwise irrevocable pre-need agreement with a funeral provider exceeds $4,500, the amount over $4,500 is revocable and is a countable asset. Interest and dividends, if any, are exempt only if they accrue to irrevocable burial trusts and the trust agreement specifies that they are irrevocable.
Petitioner’s representative testified credibly that the entirety of the irrevocable burial trust was unavailable to petitioner and should not be counted as an asset. She expressed that it is unfair to count it because it is not available. She said that petitioner and her family acted in good faith and that petitioner had no house, car or other assets and should not be denied because of an irrevocable trust that she set up years ago just to make sure she could have a funeral. She also testified credibly that petitioner’s family tried to take care of everything financially rather than apply for benefits.
Petitioner’s representative did not dispute any aspect of the agency’s calculations, rather she disagrees with exempting only $4,500 of the burial trust. The agency has no discretion to make the determination that she requests. The relevant rule in the MEH are clear. The agency agrees that value of the burial trust in question was unavailable to petitioner and was intended to be irrevocable. It must apply the rules, which limit the value of an irrevocable burial trust that may be exempted to $4,500. I find that the agency applied the law correctly in this matter.
While I sympathize with petitioner’s position, I also lack the discretion to alter this determination. It is the long-standing policy of the Division of Hearings & Appeals that its assigned administrative law judges do not possess equitable powers, and cannot base a ruling upon an idea of what is deemed fair. See, Wisconsin Socialist Workers 1976 Campaign Committee v. McCann, 433 F. Supp. 540, 545 (E.D. Wis. 1977). This office must limit its review to the law as set forth in statutes, federal regulations, and administrative code provisions. Under law, she is not eligible; no exception applies, and I am without any equitable powers to direct any remedy beyond the remedies available under law. Because petitioner’s countable assets exceeded $2,000 from during September and October 2023, I must uphold the agency’s decision.
As stated by the agency representative at hearing, petitioner’s representative is advised to contact the agency regarding this matter to determine whether some other action may be taken that is favorable to petitioner.
Conclusions of Law
The agency correctly limited the asset exemption applied to petitioner’s irrevocable burial trust to $4500, based on MEH 16.5.1, correctly treated the additional value as revocable and counted $2,967.65 as assets resulting in assets above the $2,000 limit. The agency correctly found petitioner ineligible for Medicaid for September and October 2023.
THEREFORE, it is
Ordered
That the petition for review is dismissed.
[Request for a rehearing and appeal to court instructions omitted.]