Retiree Wants to Stop Receiving Pension

[TimR]

The son of a retiree called in to our corporate office and explained the following situation.

His father is drawing social security as well as the company pension. He is applying for certain Medicaid programs that have limits to monthly income. When the retiree combines social security plus pension, he is over the limit for the medicaid program he wants to apply for. The retiree determined that the medicaid benefits are more important than the amount of his monthly pension.

Is it possible to refuse/stop/suspend pension payments? Is it different based on each plan document? Are there overall rules governing this? I reached out to the actuaries we use and they said from their research, it is impossible for him to discontinue receiving the pension payments. 

[Lou S.]

I am not aware of any way for him to legally forfeit his benefits.

[MoJo]

It wouldn't matter if he can or can't.  To the extent he has a "right" to receive the pension payments, they will count against him for Medicaid purposes (sorry, I can't give you a cite, but Mrs. MoJo works for a county government managing a team of people who qualify people for Medicaid benefits).

[david rigby]

I've answered this question for several retirees in the past, several different plans.  While it may be possible for a plan provision to permit a retiree in pay status to cease or suspend payments, I've never seen a plan that does so.  Also, it seems unlikely the plan administrator (and/or plan sponsor) would want such a provision.  

[jpod]

Forget about it.  MoJo's response sounds completely logical and is the only one that is relevant. 

[TimR]

Thank you all - I was finding these same answers everywhere I looked. Glad to hear a consensus on here as well. 

[JamesK]

If you want to put the blame on the government rather than the plan, point to the required minimum distribution rules as the source of a rule making suspension impossible.  The situation is quite ironic considering the work that went into protecting workers' benefits

[fmsinc]

It would be nice to know the identity of the Plan sponsor.  The answer with respect to an ERISA qualified plan may be different from a FERS or CSRS pension where at least two Merit System Protection Board cases have held the the right to elect a benefit includes the right to reject it.

It would also be helpful to know why the client cannot qualify for Medicare. 

Lastly.  My experience is that in order to qualify for Medicaid they are looking at ASSETS and not income.  For example, if you have under $2500 in assets in Maryland you can be admitted to a nursing home, Medicaid will pay a part of the cost acceptable to the nursing home ($8000/mo instead of $13,000/mo paid by full payors), who can afford it), and the nursing home will take the Social Security check each month (less the cost of Medicare B and D and a Medicare Supplement Plan ) toward the difference.  Why would pension income be treated any differently? Or maybe it would be a credit against what Medicaid would otherwise pay.     

I assume you have spoken to the Medicaid people in your state.  

[MoJo]

15 hours ago, fmsinc said:

Lastly.  My experience is that in order to qualify for Medicaid they are looking at ASSETS and not income.  For example, if you have under $2500 in assets in Maryland you can be admitted to a nursing home, Medicaid will pay a part of the cost acceptable to the nursing home ($8000/mo instead of $13,000/mo paid by full payors), who can afford it), and the nursing home will take the Social Security check each month (less the cost of Medicare B and D and a Medicare Supplement Plan ) toward the difference.  Why would pension income be treated any differently? Or maybe it would be a credit against what Medicaid would otherwise pay.     

I assume you have spoken to the Medicaid people in your state.  

To qualify for Medicaid - it is first an asset test, but the benefits received by Medicaid are *reduced* by income.  For example, in Ohio, you are allowed to keep *only* $50 per month out of any income stream you may have (after you've reduced assets below the threshold).  Any income *over* $50 per month is first used to pay your expenses, and then Medicaid pays the balance (if any).  The philosophy is that taxpayers are only secondary payors to the recipient - who must first use available assets and income, before receiving benefits.