Medicaid is a combination state and federal program that helps pay for long-term care. Once an applicant successfully completes the application process, Medicaid will pay for nursing home costs, and certain home and community-based services. In most nursing home cases, the individual receiving Medicaid benefits must pay his or her income to the facility, less a $45 allowance for personal needs, and less an allowance for the community spouse. A short-term resident in a nursing home, certified for 6 months or less, may also be allowed a housing allowance.
Benefits are available only to individuals who meet these Medicaid eligibility standards. An applicant for Medicaid benefits must prove medical and financial eligibility. Montgomery County’s Office of Aging and Adult Services determines medical eligibility for nursing facility care. The nursing home requests a medical assessment automatically when an application for Medicaid benefits is made. To avoid delay, one should be certain this assessment is completed. Establishing medical eligibility is rarely a problem in qualifying for Medicaid to cover nursing home costs. The main challenge is verifying financial eligibility.
All income and resources must be disclosed to the Medicaid caseworker. The applicant’s non-excluded, available resources must not exceed the applicable limit. Single applicants with income over $2,022 must have total resources under $2,400. Single applicants with income less than $2,022 have a resource limit of $8,000.
The eligibility rules for married Medicaid applicants are much more complicated. An elder law attorney familiar with Medicaid planning should be consulted in order to make sure you do not spend-down more money on nursing home costs than is required under Medicaid rules. Medicaid rules provide that the person in the nursing home will have the $2,400 or $8,000 limit described above. The spouse of the nursing home resident (community spouse) must also meet certain resource limits. Absent exceptional circumstances, the maximum community spouse resource allowance is $109,560, effective January 1, 2010. The minimum allowance is $21,912, effective January 1, 2010. The community spouse is also allowed to have a certain level of income to avoid impoverishment, between $1,822 (effective July 1, 2009) and $2,739 depending on shelter costs.
Some assets are “excluded resources” and are not counted when determining initial eligibility. For example, the residence is usually an excluded resource where the applicant intends to return home or where in cases where there is a spouse. An automobile is also an example of an excluded resource.
Certain gifts or transfers for less than fair market value will make the applicant temporarily ineligible for Medicaid benefits even if all of the other eligibility requirements have been satisfied. Gifts made prior to February 8, 2006 are subject to a three (3) year look-back, and are “grandfathered in” under the old law. Such gifts within that 3-year window cause one day of Medicaid ineligibility for every $247.06 given away, starting on the first day of the month in which the gift is made. Gifts made after February 8, 2006 are subject to a five (5) year look-back, and the penalty period begins to run when the Medicaid applicant is otherwise eligible for Medicaid but for the gift. Aggregate gifting of $500 or less in a given month is not penalized, but other gifts can cause major problems with Medicaid eligibility.
Several exceptions to the gifting penalties exist. For example, special exceptions in the law permit certain asset transfers to disabled children, siblings, and family caregivers. Sometimes trusts can be used to protect assets, particularly for disabled individuals. You and your attorney need to know and carefully follow the rules before making any asset transfers, or the Medicaid application will be denied, possibly leaving you or your family personally liable for thousands of dollars in unpaid nursing home costs. “Selling” the family residence for $1.00, for example, is considered a gift and causes Medicaid ineligibility unless an exception applies.
Transfers made exclusively for a purpose other than to qualify for Medicaid benefits should not cause a period of ineligibility, but you may need to prove certain facts to an administrative law judge before the exception will be allowed. Unless you have enough money or long-term care insurance to pay nursing home care privately for 5 years, see an attorney with specialized knowledge in Medicaid law before making any gifts or asset transfers. There are planning techniques that work, but Medicaid laws and regulations are constantly changing. If gifts have been made, and a penalty period exists that creates undue hardship, there are often steps that can be taken to correct the problem of Medicaid ineligibility. A Medicaid planning attorney can provide guidance in this area.
Pennsylvania is required by federal law to seek reimbursement from the estates of certain deceased Medicaid recipients, including those over age 55 who received nursing home care or home and community-based long-term care services through the PDA 60+ Waiver Program. At present, recovery is permitted only from the “probate estate” of that person, i.e., any assets titled in the individual’s name alone at the time of death. In some cases, proper Medicaid planning can avoid estate recovery.
Under certain circumstances, Pennsylvania law allows individuals or their spouses to keep their homes and much of their money without becoming ineligible for Medicaid benefits. However, relevant laws are extremely complicated. Medicaid planning should not be attempted without the assistance of an elder law attorney specializing in Medicaid law.