“Name on the Check Rule” – Success in Missouri
POSTED ON - February 27, 2019
Written By Krause Financial Services
“Name on the Check Rule”
The “Name on the Check Rule” is a guideline used by Medicaid to determine who owns income. If a check is made payable to one individual, that same individual will be considered the sole owner of that income. When planning with Medicaid Compliant Annuities (MCAs), this guideline is used to help married couples where the institutionalized spouse owns an IRA.
In most states, an IRA is a countable asset, so it will need to be spent down in order for the institutionalized spouse to qualify for Medicaid benefits. Instead of liquidating the account, which subjects the entire amount to immediate taxation, the institutionalized spouse can fund a Medicaid Compliant Annuity with their IRA. The institutionalized spouse is the owner, but the payee of that annuity will be the community spouse. Therefore, per the “Name on the Check Rule,” the income belongs to the community spouse rather than going to the institutionalized spouse, where it would become part of their Medicaid co-pay.
Recent Cases in Missouri
Multiple cases involving the “Name on the Check Rule” were being denied in Missouri and were in the process of undergoing a fair hearing. In these cases, the institutionalized spouse was the owner and the community spouse was the payee, however, the state Medicaid agency attributed the MCA income to the institutionalized spouse. The institutionalized spouse gained Medicaid eligibility in these cases, but the MCA income became part of their Medicaid co-pay. The state Medicaid agency argued that because the annuitant was still the IS, that the MCA income belongs to them.
Our office was prepared to provide expert testimony for one such case. However, the day of the hearing, the state Medicaid agency sent over a motion for a continuance in order to review policy and their initial determination. The state Medicaid agency also noted that multiple cases similar to this one were occurring all over the state.
A few days later, the state Medicaid agency sent notice to the attorney handling the case that the appeal had been resolved in their favor. The income from the MCA would be properly attributed to the community spouse – not the institutionalized spouse. Other cases across the state received notice of withdrawal as well.
We stand behind our products and are more than willing to provide complimentary expert testimony for our cases in which the state Medicaid agency may not fully understand the terms of the annuity. Our in-house attorneys specialize in this area of Medicaid planning, and the attorneys that work with us can rely on us for the knowledge and expertise needed to win their client’s case.
Congratulations to the attorneys and clients involved in this case. For more information on the “Name on the Check Rule” in your state, contact our office today!