After sustaining the havoc and human loss wrought by COVID-19, many long-term post-acute care (LTPAC) providers may finally get some breathing room in 2021. With the focus no longer solely on survival, post-acute care providers can begin shifting attention to enhancing outcomes in areas like facility operations, which include the maintenance of resident trust fund accounts.
What Is a Resident Trust Fund Account?
A resident trust fund account, often formally known as a personal needs allowance (PNA) account, holds money a Medicaid recipient (and LTPAC resident) uses for personal needs expenses. What the money is spent on and how often it is accessed is entirely at the resident’s discretion. Personal needs expenses are those that are not covered by an LTPAC provider such as clothing, toiletries, haircuts and hobbies.
Impact of Stimulus Payments on Resident Trust Fund Accounts
In most states, including Ohio, Medicaid recipients can accumulate up to $2,000 in assets in their trust fund accounts. Because of this limitation, many residents may be worried that they won’t be able to keep the Economic Impact Payments (also referred to as “stimulus payments”) they’ve received as part of federal COVID-19 relief packages. However, residents who qualify for stimulus funds are not required to surrender this money either to Medicaid or to an LTPAC provider.
It’s important to note that there is a deadline for the use of these funds. Residents have 12 months from the date stimulus funds were deposited into an account to spend the money. Otherwise, any leftover funds will be added to their trust fund account balances. If their funds go above the account asset limit, residents may lose their Medicaid coverage until the money is spent down.
Furthermore, stimulus money must be used to pay for typical personal needs expenses. It cannot be used to pay an LTPAC provider for care.
Why Understanding State Regulations Is Important
Resident trust fund accounts are held and managed by LTPAC providers. Providers are required to offer resident trust accounts, but it’s against the law for a provider to make it mandatory for a resident to entrust their funds to them. It is the resident’s or a family member’s decision whether to deposit their funds into the trust account.
State Medicaid regulations for trust fund accounts can vary widely, so it’s important for providers to be aware of the parameters for their state. For example, in the event of the death or discharge of a resident, a provider is required to refund the balance in the resident’s account within a certain time frame and to provide a final report for the account. Some states allow 30 days to identify where to send the funds and to determine if there is an estate with probate open, and up to 90 days to disperse the funds.
It’s incumbent upon LTPAC providers, especially their administrative and financial personnel, to know and understand their state’s regulations in order to stay compliant and avoid disruption in Medicaid benefits. You should refer to your state Medicaid guidelines for specific details for your organization.
Best Practices for Managing Resident Trust Fund Accounts
LTPAC providers are subject to numerous rules for managing a resident’s finances. Providers can make it easier to maintain compliance with state regulations by implementing certain best practices, including:
Developing a reliable system for documenting each resident’s transactions individually, particularly if all participating residents’ funds are combined into a single bank account.
Verifying that the total balance of residents’ funds shown in your internal recordkeeping system reconciles to the bank account and your general ledger balances.
Ensuring that any account balance over $50 is interest-bearing, and updating residents on the status of their accounts via quarterly statements.
Keeping trust account funds separate from the facility’s operating funds and providing protection for trust account funds such as a surety bond, which minimizes risk to the provider’s finances and operations.
Utilizing software that facilitates account management, such as the Resident Fund Management System (RFMS) and EHR solutions that can assist in a number of areas including documentation, disbursement of funds, statement processing, analytics and general ledger balancing.
Engaging a performance provider that offers account management services. At Richter, we specialize in bringing erroneous trust accounts into compliance and training LTPAC staff on account management software functionality, as well as state rules and regulations.
Contact Richter’s Long-Term Care and Senior Living Accounting Consultants