There are several questions surrounding the topic of Medicaid Long-Term Care.
Let's dive into frequently asked questions and provides detailed answers to each.
While Medicaid does have a right to recover assets in the event that the applicant has countable assets available, the Medicaid division of the Department of Health and Human Services is not in the business of acquiring Medicaid applicants’ homes.
In fact when an individual moves from their home and into a Medicaid Long term care facility or nursing home, the applicant’s residence is typically protected for a period of six months.
During this time the applicant may have full coverage through the Department of Medicaid Services.
However, at the end of the six-month period of time, the applicant must provide evidence that they are making a concerted effort to list and sell the home for fair market value.
While the applicant may have been considered low-income in order to qualify for Medicaid services, once the home is sold the Medicaid applicant may then have excess resources that will need to be spent before Medicaid coverage will resume.
So again, the Federal Government is not going to acquire an applicant's home. However, the state Medicaid program in your area may very well expect that you make an effort to sell the home for fair market value within 6 months of otherwise qualifying for Medicaid coverage.
Per the Internal Revenue Service an individual is able to gift up to $16,000 per person without the need to file a gift tax receipt, however, this same gifting that is allowed by the IRS can potentially still have a negative impact on an individual's ability to qualify for Medicaid services.
The person who gave the monetary gift needs to apply for Medicaid services within the five years post the date that the gifting took place, Medicaid would count the gift as an uncompensated transfer and assign a penalty during which time the Medicaid applicant would be ineligible to receive Medicaid benefits.
Typically the penalty is calculated by taking the total value of the gifts that were made and dividing that figure by what is referred to as the Divestment Penalty Divisor (DPV) (DPV) for your specific state.
The Divestment Penalty Divisor is usually equal to the market private pay rate for the state or region. Once the value of the gift is divided by the DPV that figure will equal the amount of time (months) that the applicant will be ineligible for Medicaid benefits.
Many years ago married couples would file for divorce in order to financially protect the healthy spouse/community spouse when the ill spouse needed to apply for Medicaid services.
Thankfully, today, there are spousal protections that have been put in place to ensure that only part of the marital assets will have to be spent in order for the ill spouse to qualify for Medicaid coverage.
Specifically, there is a Community Spouse Resource Allowance (CSRA) and a Community Spouse Monthly Maintenance Needs Allowance (CSMANNA) that is calculated to ensure that the healthy community spouse will have the funds needed to live in the community while the ill spouse applies for and receives the medically required services through the Department of Medicaid.
Typically the Community Spouse gets to keep 50% of the joint marital assets and the institutionalized spouse/ill spouse must spend 50% of the joint marital assets down until their assets are equal to no more than $2,000.00 (2022)/asset limit. Please keep in mind that this asset limit may vary based on the state that you live in.
The CSMANNA is calculated by a specific formula with which the Department of Human Services/Department of Medicaid Services evaluates the Community Spouses' income (if any), the household living expenses including utilities, and rent or mortgage. Then the CSMANNA evaluates how much of the institutionalized spouse's income may need to be carved out and given to the Community Spouse for daily living expenses.
The Community Spouses’ income is not taken into consideration.
This is a common misconception.
While the Medicaid reimbursement rate for services is far less than what the private pay market rate is, there is no difference in the quality of care that is provided. Frankly, if the care being provided is poor that is independent of the payer source.
With the above being said, there are instances when a service provider accepts more Medicaid reimbursement clients than they should, resulting in a negative trickle-down effect of lower pay for staff and disrepair of facilities.
Before you select a dually certified nursing home for yourself or a loved one be sure to consult with a professional geriatric case manager or research the facility's recent inspection reports on Medicare’s government website.
Unfortunately, the language of a revocable living trust does not provide the protection of assets necessary to trigger the five-year look back required by Federal Medicaid Laws.
The fact that the trust is by title, revocable, indicates that the assets in the trust are available to the grantor (the person creating the trust) and therefore would be counted as an asset to the Medicaid applicant.
An Irrevocable Trust is typically used as an asset protection trust to trigger the penalty period for Medicaid qualification purposes.
However, an Irrevocable Trust must be specific in stating that the assets held in trust are not to be used for the benefit of the grantor during his or her lifetime, but are actually to be used for the beneficiary’s benefit.
Medicaid planning is very specialized and irrevocable trusts should be drafted by an attorney that understands both Federal and local Medicaid Laws.
It is advantageous to still have the ability to privately pay for a few months at the normal market rate before seeking to apply for Medicaid benefits. This allows you to be more selective than you would otherwise be able to be if you were in immediate need of Medicaid and seeking admission from home or a hospital or rehabilitation setting.
If you do not have assets to privately pay for a few months at a care facility before qualifying for Medicaid it would be advisable to wait until your Medicaid application coverage is approved before transferring to a more desirable location. You can change locations if you desire to do so.
Please keep in mind that most Medicaid nursing homes have very limited availability and that availability can change daily. Most nursing homes prioritize residents that are already in-house and completing their spending down over those seeking admission from outside of the facility.
Medicaid can actually provide community-directed care, routine health insurance coverage, and custodial living care for:
It is clear to see that there are many questions and assumptions erroneously made concerning Medicaid services.
Over time, the application process for the Medicaid program has become increasingly challenging. It is very important that you educate yourself and seek appropriate counsel before attempting to obtain coverage.
You can find a qualified elder law attorney to assist with your matter by visiting The National Academy of Elder Law Attorneys (NAELA).
Christina Drumm-Boyd is a Certified Senior Advisor with 20+ years of experience in Geriatric Care Management. She focuses on the senior housing industry, especially assisted living, nursing, and specialty memory care. She is also an Accredited Agent with the U.S. Veterans Administration, licensed to represent claims before the Office of General Council, and a licensed insurance agent in life, health, and annuity products for the state of Virginia.
Ready Set Care is creating a community to provide guidance for anyone caring for an aging loved one.
If you know someone that could benefit from our website, click the share icons below
or copy link below