This Article is 4th in a Series on “Medicare does not cover Long-Term Care after 100 Days”
Medicaid is the nation’s largest public payer of long-term care.
Eligibility for Medicaid Long-Term Care
Medicaid requirements are established by each state. Most recipients of Medicaid long-term care assistance come from the low-income aged, blind, and disabled group of eligible beneficiaries.
Those who apply to Medicaid for payment of Long-Term Care services must generally meet three criteria. They must:
- Belong to a Medicaid-eligible group (categorically needy or medically needy.)
- Have a medical or functional need—inability to perform activities of daily living (ADLs.) Those who are able to receive care in the home may also qualify. Medicaid case management agencies evaluate individuals to determine if their medical or functional needs require long-term care services.
- Have income and assets at or below specified levels. If the individual exceeds these limits, they must “spend down” their resources to qualify.
Medicaid Income Requirements
First, let’s define Community Spouse: this is the spouse of a Medicaid recipient who remains in the home, they’re not the one applying for financial assistance. The sole income of the community spouse does NOT have to be counted as being spent on the recipient’s care. Also, if the community spouse has a low monthly income, it is possible for the community spouse to receive an allowance from the income of the Medicaid-recipient spouse.
Once individuals become eligible for Medicaid long-term care, they’ll have to direct almost all their available income toward the cost of their care. Medicaid covers the balance. Each recipient is permitted to retain only a nominal amount, such as $50 or $80 each month, for personal use. Those who receive Long Term Care services in their home are given a higher income allowance to allow them to maintain their home.
When determining Medicaid eligibility, an individual’s income is categorized as countable or not countable. Examples of income counted in determining Medicaid eligibility include wages, interest & dividends, social security benefits, veteran’s benefits, pensions. Remember that any income the community spouse receives in his or her own name—Social Security, pension, or dividend income, for example—may be retained fully by the community spouse and will NOT be counted.
Income not counted towards eligibility includes temporary aid to needy families, supplemental security income (SSI), food stamps, Low Income Home Energy Assistance Program benefits, foster care payments, certain housing or utility subsidies.
In some states, residents whose countable incomes exceed the state’s income limit may still qualify for Medicaid payment of nursing home costs if they establish a Miller Trust, which is designed specifically for this purpose. The amount of the applicant’s income that exceeds the Medicaid limit is assigned as payable to the trust. In turn, the trust pays out monthly to the nursing home facility.
Medicaid Asset/Resource Requirements
Just like income eligibility, an applicant’s assets are either countable or non-countable.
Countable Assets include cash, checking and savings accounts, certificates of deposit and money market accounts, stocks, mutual funds, bonds, and other investment holdings, IRAs, Keoghs, and other retirement funds, and nonresident property. In most states, the cash value of any policies with face values (generally) over $1,500 will be counted toward the asset limit.
If the value of total countable assets exceeds the Medicaid eligibility limit, the applicant must spend down these assets to the limit before Medicaid assistance is available. Certain allowances are made for married couples that enable a community spouse to retain countable assets up to a certain limit.
Noncountable Assets include the primary residence as long as the equity value in the home is less than (generally) $500,000. The exempt value of the primary residence is unlimited if the applicant has certain family members living there, such as: a spouse, a child under age 21, a blind or permanently disabled child. Also excluded are one automobile of any value if it is used by a household member, and household and personal items, burial plots and the purchase or prepayment of various items and details of burial.
Spending down is the process of depleting private or personal resources to become eligible for Medicaid. Many people enter a nursing home or obtain Long Term Care services by initially paying the costs out of pocket, and then they apply for Medicaid once they’ve depleted their resources to the point of meeting eligibility requirements.
Spending down does not have to be limited to spending on costs of care or care needs; an individual could spend down by acquiring noncountable assets, for example. Mary the Medicare Lady has helped clients become Medicaid eligible with Dental, Vision, Hospital Indemnity and Cancer plans, and Irrevocable Funeral Expense Trusts. These can be up to $6507 per person in Nebraska and can be purchased for yourself, your spouse, children, siblings, parents, and stepchildren.
Look-Back and Penalty Periods and Transfers of Assets
If, during the 60 months before applying for Medicaid, an improper transfer of property was made, it could result in a penalty period. The penalty period is the waiting period—the period during which Medicaid will not pay for care. It begins when the individual enters a nursing home and otherwise meets Medicaid’s eligibility requirements.
If an asset is improperly transferred, Medicaid will still count the transferred asset. When such transfers are added to other countable assets, and the total exceeds the maximum level allowed for Medicaid qualification, the result will be a period of ineligibility—in other words, a waiting period—before Medicaid coverage begins.
Certain transfers are allowed and will not be penalized. These include transfers to a spouse, to a third party for the benefit of the spouse, and to disabled individuals.
Medicaid Estate Recovery
The fact that property or assets are exempt or noncountable for purposes of determining Medicaid Long Term Care eligibility does not necessarily protect them in the future. For any noncountable property held by the Medicaid recipient at his or her death, Medicaid reserves the right to take from the estate the amount it paid for nursing home or skilled facility care. This is done through a process called estate recovery.
The state may claim a portion of personal property owned jointly. Recovery of assets from an estate may be made after the death of an unmarried Medicaid recipient or the surviving spouse, when the Medicaid recipient has no surviving child under age 21, or who is blind or totally disabled. In cases where asset recovery from an estate would create undue hardship, the right to immediate recovery may be waived by the state.
Mary Hiatt is a Retirement & Insurance Advisor and President of Mary the Medicare Lady (A non-government entity.) She is Certified in Long Term Care Programs, Policies, & Partnerships and Annuities. She offers Educational Workshops on Medicare, Long Term Care and more at no charge. She works with reputable estate planning Attorneys to help her clients get Medicaid. Not connected with or endorsed by the U.S. government or the federal Medicare program. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. See www.hiattagency.com or contact licensed independent agent mary [at] hiattagency [dot] com or call or text 402 672 9449 for more information.