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| Medicaid Eligibility |
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The problem with becoming eligible for Medicaid is that you must become “impoverished” under the program’s guidelines. Whereas, for most individuals, the objective is to preserve and protect their assets (by not paying them to a nursing home or the government) while still qualifying for nursing home Medicaid benefits.
This objective is attainable. This is where The Estate Planning and Elder Law Firm, P.C. can help you and/or your loved ones. If you or your loved ones reside in Virginia, Maryland or Washington, D.C., call Toll Free (800) 881-1070 or e-mail us today at office@virginiamedicaid.com for a complimentary consultation.
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| Introduction |
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For all practical purposes, the only “insurance plan” for long-term, institutional care in the United States is Medicaid. Medicare only pays for approximately Seven Percent (7%) of skilled nursing care in the United States and private insurance pays for even less!
The result is that most people pay out of their own pockets for long-term care (and in Northern Virginia, for example, nursing home fees average $7,500.00/month) - until they become eligible for Medicaid.
In Virginia, Medicaid is administered by the Department of Social Services (the “DSS”). However, in order to qualify for federal reimbursement, the state program must comply with applicable federal statutes and regulations. Thus, the following explanations include both Virginia and federal law, as applicable.
You can use the Desk Reference for specific information regarding the Medicaid allowance figures for Virginia, Maryland and Washington, D.C.
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| The Asset Rules |
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The basic rule of nursing home Medicaid eligibility is that an applicant, whether single or married, may have no more than $2,000 in "countable" assets in his or her name. "Countable" assets generally include all belongings except for (1) personal possessions, such as clothing, furniture, and jewelry, (2) one motor vehicle, (3) the applicant's principal residence, and (4) assets that are considered inaccessible for one reason or another.
The Home
The home will not be considered a countable asset and, therefore, will not be counted against the asset limits for Medicaid eligibility purposes as long as the nursing home Resident’s spouse or other dependent relatives live there. If a spouse or dependent does not live in the home then it will be considered a resource after six months of institutionalization.
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| The Transfer Penalty |
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The other major rule of Medicaid eligibility is the penalty for transferring assets to individuals other than a spouse. If an applicant (or his or her spouse) transfers assets, he or she will be ineligible for Medicaid for a period of time beginning on the date of the transfer. The actual number of months of ineligibility is determined by dividing the amount transferred by $5,403.00, the Northern Virginia nursing home reimbursement rate. For instance, if an applicant made gifts totaling $100,000 he or she would be ineligible for Medicaid for 18 months ($100,000 / 5,403.00 = 18.5). Another way to look at this is that for every $5,403.00 transferred, an applicant will be ineligible for nursing home Medicaid benefits for one month.
There is no cap on the period of ineligibility. So, for instance, the period of ineligibility for the transfer of property worth $500,000 is 92 months ($500,000 / $5,403.00= 92.54). However, the eligibility worker may only consider transfers made during the 36-month period (60 months in the case of some trusts) preceding an application for Medicaid, the "look-back" period. Effectively, then, there is a 36-month cap on periods of ineligibility resulting from transfers. People who make large transfers have to be careful not to apply for Medicaid before the 36-month look-back period passes.
Exceptions to the Transfer Penalty
Transferring assets to certain recipients will not trigger a period of Medicaid ineligibility. These exempt recipients include:
(1) A spouse (or anyone else for the spouse's benefit);
(2) A blind or disabled child;
(3) A trust for the benefit of a blind or disabled child; or
(4) A trust for the benefit of a disabled individual under age 65 (even for the benefit of the applicant under certain circumstances).
Special rules apply with respect to the transfer of a home. In addition to being able to make the transfers without penalty to one's spouse or blind or disabled child, or into trust for other disabled beneficiaries, the applicant may freely transfer his or
her home to:
(1) A child under age 21;
(2) A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home; or
(3) A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided such care that the applicant did not need to move to a nursing home.
A transfer can be cured by the return of the transferred asset in its entirety.
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| Liens and Estate Recovery |
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The state has the right to recover whatever benefits it paid for the care of the Medicaid recipient from his or her estate upon the recipient’s death. Given the rules for Medicaid eligibility, the only property of substantial value that a Medicaid recipient is likely to own at death is his or her home. Under current law, the state may make a claim against the decedent's home and estate. The law also provides exceptions to estate recovery when hardship can be proven and will delay estate recovery if a surviving spouse or other dependent relative is living in the house.
While estate recovery occurs only at death, during life the DSS will place a lien on the home of a Medicaid beneficiary living in a nursing home unless certain relatives are living there. These include a spouse, a child under age 21, a blind or disabled child, and a sibling who lived in the house for at least a year before the owner moved to a nursing home. If a lien is placed on the house and the house is sold during the Medicaid beneficiary's life, then the DSS will have a claim against the proceeds of the sale up to the amount it has already paid for the beneficiary's care. In addition, since the balance of the proceeds will constitute a countable asset, they will render the owner ineligible for Medicaid until such funds are spent down.
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| Treatement of Income |
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When a nursing home resident becomes eligible for Medicaid, all of his or her income, less certain deductions, must be paid to the nursing home. The deductions include a $30 per month personal needs allowance, a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance he or she must pay to the spouse that continues to live at home.
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| Spousal Protections |
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Assets
Medicaid law provides for special protections for the spouse of a nursing home resident, known in the law as the "community" spouse. Under the general rule, the spouse of a married applicant is permitted to keep one-half of the couple's combined assets (as of the date of institutionalization) up to $99,540.00 (in 2006). In addition, there is a minimum resource allowance for the community spouse of $19,908.00 (in 2006).
So, for example, if a couple owns $90,000 in countable assets on the date the applicant enters the hospital, he or she will be eligible for Medicaid once their assets have been reduced to a combined figure of $47,000 -- $2,000 for the applicant and $45,000 (one-half of $90,000) for the at-home spouse. If the couple owned $200,000 in assets, the spouse in need of care would not become eligible until combined savings were reduced to $99,540.00 ($2,000 for the nursing home spouse plus a maximum of $99,540.00 for the community spouse).
The determination of the level of the couple's assets is made as of the 1st date of institutionalization of the nursing home spouse. That date is the day on which he or she enters either a hospital or a long-term care facility in which he or she then stays for at least 30 days. It is advantageous for the couple to try to have as much money as possible in their names on that date up to $199,080.00 so that the amount the community spouse is allowed to keep will be as high as possible.
Income
In all circumstances, the income of the community spouse will continue undisturbed; he or she will not have to use his or her income to support the nursing home spouse receiving Medicaid benefits. In some cases, the community spouse is also entitled to share in all or a portion of the monthly income of the nursing home spouse. The DSS determines an income floor for the community spouse, known as the minimum monthly maintenance needs allowance, or MMMNA, which, under a complicated formula, is calculated for each community spouse based on his or her housing costs. (Where the community spouse can show hardship, the DSS may award a larger MMMNA, but only after an appeal to fair hearing.) The MMMNA may range from a low of $1,603.75 to a high of $2,489.00 per month in 2006. If the community spouse's own income falls below his or her MMMNA, the shortfall can be made up from the nursing home spouse's income.
Increased Resource Allowance
Those community spouses whose own income is less than their MMMNA have an alternative to receiving the shortfall from the nursing home spouse. Instead, they may petition the DSS for an increase in the standard resource allowance so that these additional funds may be invested in order to generate income to make up the shortfall. Given current low rates of return, this often can permit the community spouse to retain a substantial level of savings. In some instances, even with the award of the higher resource allowance the community spouse will need to draw on the nursing home spouse's income to some extent. Unfortunately, the DSS may not award an increased resource allowance upon application. The intake worker must award the standard allowance described above and the applicant must appeal the determination to a fair hearing.
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| The Medicaid Application |
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Applying for Medicaid is cumbersome and tedious. Every fact asserted in the application must be verified by documentation. The application process can drag on for several months as the DSS demands more and more verifications regarding such issues as the amount of assets and dates of transfers. If the applicant does not comply with these requests and deadlines on a timely basis, DSS will deny the application. In addition, after Medicaid eligibility is achieved, it must be re-determined every year.
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Call us today for a Complimentary Consultation:
Toll Free (800) 881-1070
Email office@virginiamedicaid.com |
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