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By Swogger Bruce & Millar, Jul 2 2018 04:46PM

On May 22, 2018, the Michigan Court of Appeals ruled on a common Medicaid planning technique. The case was In re Estate of Joseph Vansach, Jr. v. Department of Health and Human Services. The ruling was helpful in part, but mostly put limits on planning.

The Michigan Department of Health and Human Services argued that a probate court could not enter a support order directing some of a Medicaid recipient's income to his spouse. MDHHS asserted that it had exclusive jurisdiction to decide income diversion for a community spouse, or Medicaid laws preempted Michigan probate laws. The court of appeal shot down both of these arguments and confirmed that a probate court order may be used to change the Medicaid formula for a community spouse income allowance. This was the good part of the ruling.

The court of appeals ruled:

[A] community spouse is not entitled to have the probate court simply disregard Medicaid . . . in order that the community spouse may maintain his or her standard of living . . . [s]uch a procedure is not contemplated by EPIC, and it is a gross misapplication of the probate court’s authority to enter an order when money is “needed” for “those entitled to the [incapacitated] individual’s support.” See MCL 700.5401(3)(b) (emphasis added). Instead, the actual Medicaid-related realities facing the couple—with all of Medicaid’s pros and cons—become part of the couple’s facts and circumstances that should be considered by the probate court when considering whether to enter a support order a community spouse under MCL700.5401(3)(b). Ultimately, when a community spouse’s institutionalized spouse is receiving Medicaid benefits and has a patient-pay amount, a community spouse seeking a support order under EPIC must show, by clear and convincing evidence, that he or she needs money and is entitled to the institutionalized spouse’s support despite the CSMIA provided under Medicaid and the institutionalized individual’s patient-pay amount under Medicaid.

This was the bad part of the ruling because it placed an extremely high bar to clear to obtain relief from the probate court. We believe that the overall effect of this ruling will be to reduce support orders for community spouses.

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