In a case argued by ElderLawAnswers member William J. Browning, the Ohio Supreme Court rules that whether a trust is an available asset to a Medicaid applicant depends on the eligibility rules in effect on the date of the application, not when the trust was created. Pack v. Osborn (Ohio, No. 05-CA-83, Jan. 17, 2008).
In 2004, Charlotte Osborn, who is physically and mentally disabled, was determined ineligible for home-based Ohio Medicaid services because of her beneficial interest in a trust her mother had executed in 1987. The trust stated that the income and principal were intended to meet Ms. Osborn’s supplemental needs over and above those met by entitlement benefits. After the trust was created, however, Ohio’s Medicaid regulations concerning trust beneficiaries changed at least eight times.
Loretta Pack, the trustee, sought to have the trust assets declared unavailable to Ms. Osborn. The trial court ruled that the trust was a countable resource because the trustee could be compelled to invade the trust principal for Ms. Osborn’s medical care. Ms. Pack appealed. The Court of Appeals of Ohio reversed, holding that the trust was not a countable resource because the eligibility determination must be based on the eligibility rules in effect when the trust was created. The court found that the Settlor clearly intended to provide Ms. Osborn “with a source of supplemental support that would not jeopardize her access to basic assistance from Medicaid.”
The Ohio Supreme Court reverses, ruling that while the trust itself must be interpreted based on the intent of the Settlor when the trust was created, Ms. Osborn’s eligibility for Medicaid benefits depends on the Medicaid eligibility rules in effect on the date of her application for benefits. The court notes that the legislature has frequently amended eligibility provisions that allowed individuals to receive Medicaid benefits who could otherwise pay for them. The court states, “The rules regarding eligibility for public assistance are not forever locked into place by the establishment of a trust.” The case is remanded to the Court of Appeals for a determination of Ms. Osborn’s interest in the trust and whether the trust qualified as an available resource on the date of her application.
COMMENTS: This case will have significant impact on future planning using the Ohio Irrevocable Trust. It will be even more important in the future to make sure you are not making recommendations when the rules may not allow for this type of action in the future.
