Pre-OBRA Supplemental Trust Is Not Countable by Medicaid

A trust created in 1987 to meet a beneficiary's supplemental needs is not a countable resource for Medicaid purposes. Pack v. Osborn(Ohio Ct. App., 5th, No. 05 CA 83, May 8, 2006). unpublished decision

Charlotte Osborn, 61, is physically and mentally disabled and lives with her brother and sister-in-law. In 2004, Charlotte was determined ineligible for home-based 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. Since the trust was created, however, Ohio's Medicaid regulations concerning trust beneficiaries have changed eight times. Loretta Pack, trustee of the Osborn trust, sued, and the trial court appointed a guardian ad litem for Ms. Osborn. The trial court ruled that the trust was a countable resource because the trustee can be compelled to invade the trust principal for Ms. Osborn's medical care. Ms. Pack appealed.

The Court of Appeals of Ohio reverses, holding that the trust is not a countable resource. After finding that the trust should be governed by the law existing at the time of its creation, the court relies on the Ohio Supreme Court's ruling in a case that interpreted state code language identical to that in effect in 1987 when the trust was created. Young v. Ohio Dept. of Human Serv., 76 Ohio St.3d 547, 1996-Ohio-70. The court rules that, as in Young, the plain meaning of the restrictive language in the Osborn trust is intended to provide Ms. Osborn "with a source of supplemental support that would not jeopardize her access to basic assistance from Medicaid."

Ms. Osborn was represented by longtime National Academy of Elder Law Attorneys member William J. Browning of Columbus.

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