Beware Block Grants

President-elect Donald Trump has indicated in his platform that he was in favor of block grants for the Medicaid program. This is not a new idea. The Republican party has promoted this in the past and almost certainly there would be broad party support for this now. The concept of a block grant is that the federal government gives the States a fixed amount of money but then each State decides how to administer their own Medicaid program. The current Medicaid system involves Federal law and regulations setting forth all eligibility criteria and rules governing the operation of the Medicaid program. The States actually administer the program and have a little latitude to do things according to their interpretation of the law. However, they are generally governed by federal law. A block grant Medicaid program would totally change this so there would be no more federal standards.

Based on my experience with the Ohio Medicaid program, a block grant program would almost certainly result in a substantial tightening of eligibility and more restrictive standards. In general, a block grant would be bad news for people on Medicaid in Ohio and certainly for the most expensive component of the program, long term care in a nursing home.

When we have a major change in the law (Medicaid, tax law etc…), estate plans, trusts and other arrangements that are entered into prior to the new law are usually grandfathered under the new law. However, sometimes the law retroactively sets the date for grandfathering to a date prior to the actual signing of the law. It may go back even to the first date a bill was introduced into Congress. This is done to prevent last minute planning by persons attempting to avoid the restrictions of the new law. If you are considering any planning to protect your estate from possible nursing home costs, the sooner you do this the better.