GM 12-111

CMS Clarifies Trust Settlement Per Capita Payments to be Excluded as Income for Medical Assistance Eligibility

The Centers for Medicare and Medicaid Services (CMS) has recently clarified that per capita payments from trust accounts resulting from Cobell v. Salazar and similar tribal trust administration settlements are excluded as income or resources for determining eligibility for Social Security benefits, including Medicaid and the Children’s Health Insurance Program (CHIP). See the attached CMS Region VIII Regional Information Letter addressed to State Medicaid Directors, dated August 15, 2012. In addition, the State of Washington Health Care Authority sent a letter to tribal leaders on August 24, 2012, to notify tribes that as a result of CMS guidance, per capita payments issued to tribal members as a result of federal tribal trust settlements would be exempt as income and resources for medical assistance in that state for a period of one year.

In the absence of such clarification, per capita payments could negatively affect eligibility for benefits like Medicaid by raising a per capita recipient’s income above the income cap for Medicaid eligibility, if state agencies determined to include the payments as income. These recent developments suggest that CMS will not permit the states to do so.

The Washington Health Care Authority Letter seeks specific information from tribes in that state, including the date and amount of any per capita payments made to tribal members, in order to implement a system of identification, verification, and documentation of per capita payments which will be exempt as income for eligibility purposes. Tribes should be aware that different state Medicaid agencies may take different approaches to implementation if and when they receive similar guidance from CMS to exempt trust settlement per capita payments.

On another issue related to Cobell and other tribal trust administration settlements, see our General Memorandum 12-112 (September 7, 2012) concerning the Internal Revenue Service clarification regarding the tax status of these per capita payments.

Please let us know if you would like further information on these developments.