43 Trial Lawyer • Winter 2023 be gone in three years before reaching $137,400. The $35,000 remaining in his MSA trust counted as part of the $137,400. To reach that amount, Vern was advised to pay off the mortgage, the Kia loan, credit card debt, reroof and insulate the house and purchase a $75,000 single premium immediate annuity product producing monthly payments of just under $400.00 in Vern’s name alone. By purchasing the annuity product, Vern did not have to spend down the $75,000. The downside of using the single premium immediate annuity was if Vern did not outlive his actuarial life expectancy of 16 years, federal law required the remaining payments to be paid to Oregon DHS. Vern’s separate income consisting of Social Security, a pension and the annuity payments would not be considered available to pay the care facility under Medicaid law. Vern applied for Medicaid on behalf o f L i nda t h rough t he r e c en t l y implemented DHS “One” application system. The August 6, 2022 Oregonian article “Oregon Medicaid Applicants Erroneously Denied Benefits Due to Software Glitches, Lack of Training” highlighted the significant difficulties this new Medicaid application created for Oregonians like Vern and Linda. The article reported that in one case, “…the state’s mistake forced her husband to run through the little savings they had. Their three daughters chipped in what they could. In total, they estimate they spent $30,000 that should have been covered by Medicaid.” Not only is the application format difficult to navigate, but the DHS staff reviewing the applications often have little or no training on the spousal impoverishment provisions of Medicaid, implemented in 1988. These provisions governing eligibility for Medicaid long term care are multi-faceted and complex. Eligibility determinations require worker knowledge of the rules. The Oregonian reported that many wrongful Medicaid denials under the One System have forced Oregonians to spend down beyond requirements. Erroneously, DHS initially denied Linda’s Medicaid application. Our office immediately submitted a Request for Hearing and quickly reversed the denial. Once on Medicaid, Linda’s payment to the care facility amounted to her Social Security income, minus a $187 monthly “personal needs allowance.” Vern’s income, including the annuity payments remained exempt. At the time of settlement, Medicaid had paid over $200,000 for Linda’s long term care. Her employer’s ERISA plan made no payments for her long term care. Only Linda’s 50% of the net settlement was subject to spend down to $2,000 for Medicaid eligibility. After the initial Medicaid eligibility determination, Vern’s assets, including his net settlement proceeds, were not available in determining Linda’s continuedMedicaid See Medicare and Medicaid p 44
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