Qualifying for Medicaid

Long term care refers to medical and other care services provided to assist persons with disabilities or chronic illnesses with their daily activities such as bathing, dressing, and eating. The government website Medicare.gov estimates that 40% of people who reach age 65 will end up needing some type of long term care.

Like most people, you have probably not taken time to plan ahead financially for your (or maybe your parent’s) long term care needs. Or you may think that Medicare, Medicare supplemental policies or standard health insurance policies will cover the costs of long term care services provided in settings such as nursing facilities or assisted living residences. Unfortunately, they don’t and as a result many people are needlessly impoverished each year by the costs of long term care.

The most common options for paying for long-term care include: private payment from one’s own income and/or savings, long term care insurance, veterans benefits, Medicare, and Medicaid.

Medicaid

Medicaid is a state and federal public benefits program that was enacted in 1965 as part of Title XIX of the Social Security Act Amendment. The federal government sets minimum standards, but each state tailors its own Medicaid program based on individual state needs and budgets. Idaho’s Medicaid program is administered by the Idaho Department of Health and Welfare.

Medicaid pays for basic health services for low income persons in certain categories, generally children, pregnant women, the elderly, and persons with disabilities. Additionally, Medicaid can pay the costs of long term care. In Idaho, Medicaid long term care coverage can pay nursing home care, assisted living care, and also in-home nursing care through a Home and Community Based Services waiver (commonly referred to as HCBS waiver).

Medicare

Medicaid is sometimes confused with the federal program Medicare. Medicare is a health insurance program that covers those over 65 and persons with disabilities. There are three branches of the Medicare program: Part A hospital benefits, Part B physician benefits, and prescription drug coverage. Medicare has very limited long term care benefits. Medicare can only pay for long term care in a skilled nursing facility and only if the admission occurs after a hospital stay. Medicare is further limited in its long term care benefits because it will only cover 100 days in a skilled nursing facility.

Medicaid Eligibility

In Idaho, Medicaid eligibility is determined based on regulations established by the Idaho Department of Health and Welfare. It is important to work with an attorney familiar with these regulations in determining your eligibility as there are many factors individual to each case that must be considered. Generally speaking, there are three eligibility requirements. First, the long term care must be medically necessary. Second, your income must fall below the State’s income cap, which is set at three times the federal Supplemental Security Income payment amount. Third, your assets must fall below the State’s asset cap.

Assets

Idaho’s asset cap for an individual is set at $2000. However, certain property is not counted by the State as an asset. Additionally, under the federal Spousal Impoverishment Act, a married couple can keep much more than $2000 in assets. Finally, people with low incomes may be able to keep more assets through a process called “upward revision.” It is difficult to give general guidelines regarding asset limits for Medicaid because it is highly dependent on individual circumstances, but an attorney familiar with this area of law can give you more specific guidance based on your particular case.

What is Covered?

Once you are approved for Medicaid, the state will begin paying benefits to cover in-home nursing care, assisted living care, or nursing home care. Generally, the person receiving benefits will have a co-payment called a “patient contribution” or “patient liability.” This co-payment is calculated based on your income and can be as low as zero.

Other Considerations

• Transfer Penalties – Idaho will look back five years and will apply penalties for gifts made during that period. If you are likely going to need Medicaid benefits in the near future, you should consult with an elder law attorney prior to making gifts.
• Miller Trusts - You may be able to qualify for Medicaid benefits even if you are over income through the execution of a Miller Trust.
• Estate Recovery – Idaho Department of Health and Welfare will keep track of what is paid out for your benefit and will try to recover those amounts out of your estate after you (or both you and your spouse, if married) pass away. If you are interested in trying to protect assets from estate recovery, you should consult with an elder law attorney.

The Benefits of Planning

The following case studies illustrate how vital it is to obtain legal advice early in the Medicaid-planning process. Failure to consult with an attorney can result in loss of assets or loss of Medicaid eligibility.

Example 1
Virginia and Lee are a married couple. Lee has advanced dementia and is need of nursing home care. Virginia and Lee have $150,000 in “countable” assets. They have heard that they must spend down to $2000 to qualify for Medicaid. They spend $148,000 on Lee’s care before applying for Medicaid. Lee is approved for Medicaid, but Virginia now has only $2000 in savings to supplement their income.

Example 2
Same facts as above. This time, however, Virginia talks with a friend of hers whose husband is also on Medicaid. Her friend tells her about something called “spousal impoverishment” that will allow her to keep half of their assets. Virginia and Lee spend $75,000 on Lee’s Care and then apply for Medicaid. They are informed that they must spend down to $39,500 before Lee will be eligible for Medicaid.

Example 3
This time, Virginia and Lee decide to meet with a Medicaid planning attorney. They receive advice about the Spousal Impoverishment Act, which allows a spouse to keep one-half of the couple’s countable assets (up to a maximum of $109,560) and the Medicaid applicant can keep up to $2000 in assets in his name. The attorney also informs them of the necessity of completing a couple’s resource assessment before they start spending down their assets. They complete the couple’s resource assessment and find out that Lee will qualify for Medicaid once they have spent down to $77,000. Lee is able to obtain Medicaid and Virginia is left with substantially more assets to supplement their income.

Example 4
Vernon and Helene are a married couple. Vernon is in need of an in-home care provider. Vernon and Helene’s monthly income is $4,600. Their only assets are their home, two vehicles worth $10,000 each, and a savings account with $5,000 in it. They apply for Medicaid for Vernon and are denied.

Example 5
Same facts as above, but this time, Helene and Vernon meet with an attorney. The attorney drafts a Miller Trust in order to bring Helene and Vernon below the income cap for Medicaid eligibility. Helene and Vernon also have $15,000 in countable assets. Because Idaho is a community property state, all $15,000 in assets are deemed available to Vernon, which puts him above the $2000 asset cap for the Medicaid recipient. The attorney drafts a marriage settlement agreement for Helene and Vernon. In the marriage settlement agreement, the attorney puts the home, vehicles, and savings account into Helene’s sole name. Helene now has $15,000 in countable assets in her name (which is below the minimum amount allowed under spousal impoverishment for the spouse to keep, $21,912). Helene and Vernon re-apply for Medicaid and are approved.