Medicaid for Seniors
When it comes time to understand methods of paying for senior care, there is often confusion between Medicaid and Medicare. While Medicare is generally considered the federal health insurance program for people who are 65 or older, Medicaid is a state and federal health insurance program established for individuals with low income and limited assets. Although Medicare was established to provide health coverage for the elderly, it does not cover long-term care services. For this reason, many older Americans look to Medicaid as a means to pay for long-term care. Many people believe that Medicaid will cover all the costs of long-term care, however, although Medicaid does cover some of the costs of long-term care, there are strict eligibility requirements – and they vary greatly from state to state.
Medicaid financial eligibility guidelines are based on both income and asset limits. Income limits are guided by Federal Poverty Level Standards as defined by the Department of Health and Human Services, and asset limits are derived from federal Medicare Low-Income Subsidy asset limits. These numbers are not straightforward; eligibility standards are determined by each state and every state adjusts these numbers for individuals vs. couples. It is crucial to research and apply for Medicaid in the state in which your loved one is receiving care. Long-distance caregivers who are consulting with elder law attorneys or benefit specialists should ensure that they are working with professionals who are knowledgeable about eligibility in the state where the care recipient resides. For eligibility and benefit details, explore the Centers for Medicare & Medicaid Services information specific to your state: Medicaid State Overviews
How much can I have in assets and still qualify for Medicaid?
Asset levels vary from state to state; although states use Federal Poverty Standards as a guideline, they do have the option to adjust the allowable maximum amount. In most states, you can have only about $2,000 in countable assets. Married couples are allowed a higher asset threshold, however, it is still quite low if both people are still living in the same household. The most up-to date eligibility guidelines are available on your state's Medicaid website.
If one spouse lives in a long-term care facility and the other spouse is still living at home, Federal law allows the spouse at home to keep more assets. In general, the spouse who lives at home (also known as the community spouse) is allowed to keep half of the married couples' combined assets, subject to both a minimum amount and a maximum amount.
Learn More: Medicaid Spend Down Rules for Married Couples
How does Medicaid evaluate assets?
A person's primary home, furnishings, burial plots and one vehicle are "allowable" assets. Assets beyond the allowable lists are countable in Medicaid's determination of whether you meet the state's financial criteria for eligibility. The applicant is required to provide documentation of all assets in the verification process -such as the deed to your residence, owned vehicles, cash, savings, stocks, bonds, annuities, life insurance policies, etc. Additionally, states often use an electronic Asset Verification System database to cross verify an applicant's documentation.
Learn More: Assets You Can Have and Still Qualify for Medicaid
What if assets exceed the Medicaid-allowed limit?
If your assets exceed the amount allowed by Medicaid, the application will be denied. If denied, Medicaid informs you how much of your assets exceed the allowances. If you feel the asset evaluation is incorrect, you have the right to appeal the state's determination. Or, you can choose to reduce assets to become eligible in the following ways:
- Convert funds to non-countable assets such as burial arrangements.
- Pay existing debts such as insurance and taxes.
- Spend down funds on personal or medical needs and day-to-day care expenses.
Under Federal law, a person applying for Medicaid cannot reduce or transfer assets to others (for example, children) for the purpose of qualifying for Medicaid coverage of long-term care services. Doing so may result in a significant penalty period. During that time, even if assets have been totally depleted, a period of ineligibility will be assessed by Medicaid. The penalty period requires an individual to pay for their own care until the cost of care expenses match the amount of the asset transfer.
Learn More: Hiding Money from Medicaid: Don't Do It
What does Medicaid consider transfer of assets for eligibility?
A transfer of assets is giving away property for less than it is worth in an attempt to qualify for Medicaid coverage of long-term care. Any assets transferred within the lookback period (typically 5 years prior to the application date) may trigger a penalty period during which Medicaid will not pay for your long-term care.
Certain asset transfers, such as a transfer to a spouse or a disabled or blind child, may not be considered disqualifying transfers.
How far in the past will Medicaid look to see if I have made a transfer?
In most states, Medicaid will look at all asset transfers made in the five-year period prior to the Medicaid application. This is referred to as a "lookback period."
Learn More: Understanding Medicaid Lookback and Penalty Periods
Long-Term Care and Medicaid
Generally, there are two types of Medicaid coverage that apply to long-term care; Community Medicaid and Institutional Medicaid. Any senior who is in need of a nursing home level of care and who meets functional and financial eligibility guidelines can use Instituional Medicaid to pay the costs of long-term care in a Medicaid certified skilled nursing facility.
Most states now recognize a senior's desire to age in place as well as the cost savings of remaining in the home community for as long as possible. Therefore, Community Medicaid programs exist to help seniors stay at home in order to delay or avoid a nursing home setting. Home and Community Based Service Waivers and various other state specific programs provide coverage for both medically necessary and personal care services provided in an assisted living facility or a beneficiary's private home. Programs vary from state to state, but for those who require long-term care, Medicaid offers assistance with paying for nursing homes, assisted living care, home health care, non-medical in-home care, and adult day care.
Planning for Medicaid
While Medicaid is the most common form of payment for long-term care in the U.S., by law it is intended to be the "payer of last resort." Therefore, any means of payment available to an individual is intended to be used prior to Medicaid making any payment for care. That said, there are many legal means of reducing assets and spending-down income in order to meet Medicaid eligibility guidelines.
Proper financial planning often includes Medicaid in the long-term care plan. Thorough answers on an individual's path toward eligibility will depend on the state of residence, the amount of income and assets, and how soon they might need to apply for Medicaid.
Qualifying for Medicaid to pay for long-term care can be a long, tedious and confusing process. To get help in the planning or application process, contact your community's Area Agency on Aging or a certified elder law attorney.
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