When it comes to Medicaid for long term care, we encounter many questions. People encounter many rumors, misunderstandings, and outright lies related to Medicaid. It is necessary for us to provide a general background to the program’s eligibility requirements before any discussion of planning can occur.
It is common for families to assume that they do not qualify for long term care Medicaid when in fact, they could. Even more commonly, families attempt to plan for their future long term care by acting on rumors and incorrect advice. The purpose of this article is to provide a general overview with the intent that once the reader is armed with the basic knowledge, he or she will not make the same mistakes as so many of the people who came before them.
What Is the Difference Between Medicaid and Medicare?
Medicare is the federal health insurance program for people who are over the age of 65 or meet other specific criteria if they are younger. Medicare is broken down into Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Advantage Plans, and Part D (prescription drug coverage). A monthly premium is paid for this coverage and is typically deducted from a person’s Social Security benefit each month. Many times when a person enters into a Long Term Care facility, their stay is covered by Medicare for the first 20 days. Longer coverage can occur if supplemental insurance coverage is in place.
Medicaid is a federally mandated program that provides payment for skilled nursing care for individuals who meet certain requirements. Although Medicaid is a federally created program, the actual administration of that program is left to the individual states. Because of this division between federally created rules and state administration, there are many specific differences between the states, although the overall rules are generally the same. Also, the rules change frequently, so from the time a reader starts this article, the rules may change before they even finish the article. As a result, the following information is for general knowledge and should not be relied upon without the advice of an expert in the field. This article will be describing the qualifications of the Medicaid program.
What Are the Requirements for Qualifying for Medicaid for Long-Term Care Facility?
In order to qualify, a person must meet the following criteria:
- Be a U.S. citizen or an alien lawfully living in the U.S. and reside in the state where they are applying for benefits;
- Be over the age of 65, disabled or blind;
- Have a gross monthly income of less than $2,199.00 (in 2016);
- Meet “medical necessity” requirements for skilled nursing care;
- Meet certain asset requirements; and
- Live in a facility that accepts Medicaid.
What Is a “Medicaid Bed”?
Only some facilities accept Medicaid as a way to pay for long term care. These facilities typically only accept a limited number of Medicaid recipients. A “Medicaid bed” refers to a bed in a semi-private room at a facility that accepts Medicaid and has fewer than their limited number of available spots.
If My Spouse Has to Go to the Nursing Home, Will I Be Required to Pay All of Their Income to the Nursing Home?
Not always. Each state allows a Monthly Maintenance Needs Allowance (MMNA) for the community spouse. The federally mandated minimum is $1,991.25 (in 2015) and the maximum is $2,980.50 (in 2015). The MMNA differs from state to state. This means that the community spouse is given an allowance up to the maximum amount allowed by their state of residency.
Does Medicaid Count Our Total Income Toward the Income Cap?
No. Medicaid only counts the applicant’s income towards the income cap. The current income cap is $2,199.00 (in 2016).
What if the Applicant Has too Much Income?
Even if the applicant has too much income, they can still qualify for Medicaid. If the applicant otherwise qualifies for Medicaid long-term nursing home benefits, the applicant (or the applicant’s spouse or duly appointed agent) may create a Qualified Income Trust or “Miller Trust.” This trust allows the applicant to transfer his/ her income into the trust and then qualify for Medicaid long term nursing home care benefits. This means that no one should ever be disqualified for Medicaid because they have too much income! Either you have less than the income limit and qualify or you have more than the limit, set up a Miller Trust and then qualify. This type of trust has very specific requirements and you should contact an expert for more details.
A Miller Trust is only used to overcome the income cap issue and is not a trust used to protect assets.
What Assets Can I Keep and Still Qualify for Medicaid?
When applying for Medicaid, the state will look at what they call your “countable resources.” To qualify for Medicaid, an unmarried individual’s countable resources cannot exceed $2,000.00. If both spouses are applying for long term care nursing home benefits, then their combined countable resources generally cannot exceed $3,000.00.
When a couple is married and only one of them is applying for long term care Medicaid, all available non-exempt resources of both spouses will be counted as resources. One-half of the couple’s resources will be set aside for the spouse not applying for Medicaid, with a minimum set aside amount of $23,844.00 and a maximum of $119,220.00 (in 2016). There may be ways in which to increase the maximum amount that can be set aside for the spouse staying at home but the strategies can be complex and should be discussed with an expert.
The following is a more extensive list of exempt assets:
- The principal residence of the Applicant up to a value of $552,000.00;
- A burial plot held for the Applicant or the Applicant’s family;
- Term or burial insurance, if it has no cash value;
- Identifiable burial funds in the amount of $1,500.00 or a prepaid irrevocable burial contract regardless of the value;
- One automobile is exempt, regardless of value;
- Household goods and personal items;
- Life insurance policies owned by the Applicant with total face values of $1,500.00 per insured person or less;
- Livestock and poultry that are held for business purposes or for consumption;
- Business property essential for self-support; and
- Non-business property valued at up to $6,000.00, essential for self-support (generally mineral interests).
Can’t I Just Give Everything to My Children or My Church?
No. Any gift made within a 5-year “lookback” period will incur a penalty. During the penalty period, the applicant may be qualified for some limited Medicaid benefits but Medicaid will not pay for the nursing facility. Consult with an expert to discuss any gifts before they are made.