What is Medicaid?

Medicaid was established in 1965 to provide various types of assistance for low-income persons and the disabled. It is a joint federal and state program, with funding coming from both. The primary rules are determined by the Federal Government and the state may adapt them to some degree. There are many different types of eligibility and benefits, ranging from assistance to the aged, blind, disabled, medical care for children and chronically ill and newborns.

Medicaid is the program that pays for long-term care when a person needs to remain in a nursing home long term. If a person needs short-term rehabilitation in a nursing home, Medicare covers the cost for up to 20 days and even up to 100 if the person has a supplemental insurance policy.

While Medicaid has the connotation of providing services to the poor, most all families, except the very wealthy, need to eventually look to Medicaid to pay long-term nursing home costs because they are so high. Over 2/3 of the residents in a nursing home are receiving Medicaid benefits to help pay for the expenses. The quality of care is not affected by the manner of payment, whether it is Medicaid, private insurance or private pay.

Who is eligible for Medicaid?

To be eligible to pay for nursing home care through Medicaid, you must be over 65 or disabled. In addition there are a number of financial eligibility criteria. For example, if you are a single person, your “countable assets” must be below $1,500 to qualify. For a married couple, the asset limitation is much higher and depends on the type and extent of your assets.

What does Medicaid cover?

Once a person is eligible, Medicaid coverage is very broad. Almost all necessary medical and dental services are covered. These include, physician services, inpatient and outpatient hospital services, nursing home costs, medical supplies, just to name a few.  In addition, some non-medical services such as transportation expenses may even be covered.

How much property can I keep?

The rules for financial eligibility are complex and differ between a single applicant and married couple. Medicaid places limits on the type and amount of property a person can own and still receive Medicaid. First, the office determines if an asset is “countable” by verifying if the applicant “has the right authority or ability to liquidate the property.” Some assets like income-producing real estate, burial trusts or personal property are exempt and not counted.

The general asset limitation for a single person is $1,500 and $2,250 for a couple who are both in a nursing home. The asset rules are much different for a married couple where only one is in a nursing home. In that situation, certain assets like the marital home and care will be exempt. The non-exempt assets, like savings, CDs, IRAs and the like, for both spouses are counted and the community spouse can keep ½ — up to around $107,000. Medicaid requires that the rest be spent down to achieve eligibility. However, keep in mind that an experience Elder Law attorney can often preserve much of the additional assets reserves through various strategies.

How much income can I keep?

Once a single person is eligible for Medicaid and in a nursing home, Medicaid will require that all of that person’s income be paid to the nursing home each month to defray some of the costs and Medicaid covers the rest. Each month the single person is allocated $52 of his or her income for personal expenses. This is called the personal-needs allowance.

The rules are much different for a married couple where one is in a nursing home and the other remains living in the community. Medicaid may allocate a portion of the income of the spouse in the nursing home in order to ensure that the minimum family income of $1,750 per month is met. This amount can be increased to about $2,700 if certain conditions are met.

Can I give my property away in order to qualify for Medicaid?

Medicaid law does not prohibit a person from giving away property to qualify for Medicaid. However, it does have some serious penalties that can limit the receipt of benefits. When a person applies for Medicaid, the caseworker will ask if there have been any transfers for less than fair market value (ie, gifts) in the five-year period prior to application. If so, then there may be a penalty period applied, which is a period of time in which Medicaid will not pay for long-term care. A number of factors including the amount of the gift, to whom it is given, and the date of the gift determine the extent of the penalty period. These rules changed considerably in 2009. As such, effective legal counsel is important to know how past gifting may affect Medicaid nursing home coverage.

Under the direction of an experienced Elder Law attorney, gifting assets can be an effective tool for preserving some of the assets.

What about the Family residence?

In many cases the family residence can be protected from the cost of nursing home care. If one spouse is seeking Medicare coverage in a nursing home and the other spouse continues to live in the family home, that home is exempt from Medicare and will not be deemed a “countable asset.” In fact, the community spouse could even sell the home later on and retain all the proceeds without affecting continuing Medicaid coverage for the spouse in the nursing home. If a person is single and needs to vacate his or her residence, the alternatives are more limited. However, there are still strategies that can be used to preserve at least a good portion of the home’s value.

Must I repay Medicaid?

Medicaid law does have some “asset recovery” provisions and it’s important that applicants and their families know about such provisions prior to seeking Medicaid coverage. There are limitations though. For example, Medicaid cannot seek recovery for benefits from the assets of that person’s spouse who has continued to live at home. Also, it may not seek to obtain a lien against a marital home if the community spouse or an adult disabled child continues to live there. Medicaid does have priority rights in a probate estate of a person who received Medicaid benefits. Dan will carefully advise you and your loved ones about the potential pitfalls of Medicaid estate recovery.

I have long term care insurance. Can I still get Medicaid and keep my assets?

Long-term care insurance is an effective tool for protecting assets from nursing home costs. While the premiums can be expensive, certain policies, approved by the Michigan Medicaid office, can provide full asset protection. In such cases, once the policy is fully exhausted, a person can receive Medicaid benefits without having to “spend down” their assets.