Very simply stated, Medicaid is a government-funded health care program for individuals who meet income or resource qualifications. Medicaid provides benefits to pay for Long-Term Care costs.
Many planning techniques exist to preserve assets and achieve current or future Medicaid Long-Term Care benefits eligibility.
What Is the Difference Between Medicaid and Medicare?
Medicare is a federal program of health insurance available to people 65 or older or who have certain disabilities, regardless of income. Medicaid is a program jointly funded by the federal and state governments available to those who meet income and resource tests to help pay for medical and Long-Term Care. Each state has its own Medicaid program. Thus, if you are planning to retire to or move a loved one to another state, you should consult an Elder Law attorney to understand the impact of this decision on benefits. Medicaid is often used to fund Long-Term Care.
What Benefits Does Medicaid Provide?
Medicaid benefits can be divided into two broad categories: acute care (medical) and Long-Term Care; (there are also separate program rules for the developmentally disabled and the seriously mentally ill, but they are beyond the scope of this FAQ). Eligibility for each kind of benefit is different, though they are similar. The Medicaid program pays for all prescription drugs. Medicaid beneficiaries may receive their drugs through Medicare’s Part D program, but the premiums and co-payments are paid by Medicaid.
Does the Medicaid Recipient Have to Pay for Any Portion of His or Her Care?
Yes – usually. The recipient’s portion is known as “participation.” The participation amount is calculated from the recipient’s gross income, less the amount of supplemental insurance premium paid by the recipient, less their personal needs allowance. The recipient’s participation is paid directly to the facility or care provider.
Will the State File a Lien Against a Recipient’s Home or Property?
The state has a right to recover Medicaid costs paid on a recipient’s behalf from the estate of a deceased Medicaid recipient over the age of 55. This may include a lien against any real property owned by the deceased Medicaid recipient. Through utilization of Medicaid Asset Preservation Strategies®, estate recovery liens can be avoided in many instances.
Must an Applicant’s Home Be Sold to Qualify for Medicaid?
No. A home is an exempt resource, though for single people there is an equity limit. If a home is gifted, usually in an attempt to preserve the asset or avoid the state’s lien, a penalty period of ineligibility can be imposed.
However, there are exceptions allowing the home to be gifted without penalty; for example to a disabled child or to a “caregiver-child”. Due to the complex rules applicable to transfers, anyone considering gifting or transferring any asset, including the home, should first consult with an experienced Elder Law attorney.
What Other Assets Can a Medicaid Recipient Retain?
In addition to the home, a Medicaid recipient is also permitted to retain an automobile (without any limitation on its value), household furniture and furnishings, prepaid funeral/burial benefits, a burial plot, a burial fund of $1,500 or less or a life insurance policy with a face value of $1,500 or less, certain sales contracts, a Long-Term Care partnership insurance policy exemption amount, items listed for sale that cannot be converted to cash within 20 days, business property upon which the person relies upon for support. Other than those categories, a single person’s total assets must be under $2,000.
Many planning techniques exist to preserve assets and achieve current or future Medicaid Long-Term Care benefits eligibility.
What Assets Can a Married Couple Retain and Still Have One Spouse Qualify for Medicaid Benefits?
The rules are more complicated and generous for a married couple where only one spouse will be institutionalized. Currently, Washington allows combined non-exempt resources of a married couple $56,726, up to $122,900 if skilled nursing care is needed.
The resources for both spouses are counted, regardless of whether the property is a community, separate or held in trust. All assets are valued according to the fair market value of the applicant’s equity interest in the resource.
How Much Income Can a Medicaid Recipient Have?
A single person’s income must be less than the private pay rate in the nursing home plus the applicant’s regularly recurring monthly medical expenses (health care premiums, prescriptions, etc.). For one spouse of a married couple to receive Medicaid benefits, the income of that spouse must be less than the private pay rate in the nursing home plus the applicant’s regularly recurring monthly medical expenses (health care premiums, prescriptions, etc.).
How Much of A Couple’s Income Can Be Retained by The Spouse Who Does Not Receive Medicaid Benefits?
The Medicaid recipient’s spouse may be entitled to keep some or all of the ill spouse’s income. The calculation of this amount, referred to as the Minimum Monthly Maintenance Needs Allowance, is complicated and will vary significantly in individual cases. One piece of simple (and good) news: the community spouse is not required to contribute any portion of the income in his or her name alone toward the Medicaid recipient’s care costs.
What Is the “Lookback” Period for Medicaid Benefits?
When an application is filed, Medicaid’s financial eligibility worker will inquire about any gifts made by the applicant, the applicant’s spouse or anyone acting on behalf of either of them within the preceding 60 months. This five years before the application is known as the “lookback” period. Gifts made before that period will not affect eligibility. Gifts made during the “lookback” period usually will result in a period of ineligibility, and that disqualifying period will not start to run until the applicant has already spent down all of his or her assets and applied for benefits.
Can Someone Receive Medicaid Benefits Even if They Have Made Gifts During the Preceding Five Years?
If gifts have been made during the “lookback” period, the applicant usually will be ineligible for a number of months calculated from the date of application (NOT from the date of the gift). The ineligibility period is determined by dividing the value of the gift by a number intended to approximate the monthly cost of Long-Term Care in the community. The actual application of this penalty period is further complicated by multiple gifts, a return of some or all of a gift and other factors. This overview must be reviewed with caution, and we recommend you consult with an Elder Law attorney for help interpreting a specific gift.
Can Medicaid Applicant Purchase a New Home, Car, Home Furnishings or Prepaid Burial Arrangements?
Yes. Available resources can easily be made unavailable by purchasing exempt assets.
How Can Annuities Benefit Medicaid Recipients?
A Medicaid-compliant annuity is a critical planning tool available in Washington. It results in the conversion of countable resources to non-countable and allows almost immediate resource eligibility without a five-year look-back concern!
The best advice is to seek the help of a skilled and compassionate Elder Law attorney. The best time is well before you or a loved one needs Long-Term Care!
What Is Copes?
COPES is a Medicaid program that pays for Long-Term Care in a person’s own home, adult family home or assisted living facility. It is designed to help people who, without COPES, would need to be in nursing homes.
What About Veterans Benefits?
Benefits to U.S. Veterans include health care, disability compensation, burial, pension and Long-Term Care. A pension benefit is paid to wartime Veterans who have limited income and assets and who are either over 65 or are under 65 and disabled. There is no service-connected injury or disability requirement, however. To apply for Veterans benefits, contact (800) 827-1000 to find the nearest Veterans Service Office (VSO).