Medicaid: What You Need to Know – Part Two

Last month, we left you hanging on the edge of your seat. In this month’s blog, we pick up the conversation between Elizabeth A. Anderson, Esq. and Mike Henley, MD, regarding Medicaid in his upcoming publication.

MH: Will Medicaid pay for in-home care, or must one live in a care facility?

EAA: Medicaid can pay for in-home care services, but there is typically a cap on how many hours of services or the number of visits a Medicaid participant is allowed each week.  Once the level of care exceeds these limits, then a transition to a care facility may be necessitated.

MH: What is the 5-year look back rule?

EAA: We typically encounter the 5-year look back rule when someone is trying to qualify for Medicaid Long Term Care. Since this program has a resource limit as part of the eligibility criteria, Medicaid wants to ensure that Medicaid applicants are not simply giving their assets away in order to qualify. With this in mind, the applicant must disclose to Medicaid any gifts they have made in the past 5 years.

Gifting includes assets that were sold under fair market value and assets that were transferred without fair consideration. If a gift was given in the past five years, a penalty may be applied. A penalty is simply a period of time that the applicant is ineligible. This means that, even though a person may qualify for Medicaid, Medicaid will not pay for care during the period of ineligibility, so the applicant or the applicant’s family must find the means to privately pay for care during the time period of ineligibility. This rule may appear harsh, but had those assets not been gifted, Medicaid would not have needed to pay for care.

MH: What is “spend-down” and what does it affect?

EAA: Generally, when we talk about spend-down, this means that the individual is spending down all of their available assets in order to become eligible for Medicaid. For a single person, this may mean they are spending down their non-exempt assets to $2,000.

MH: How does it work? For example, if I gave my son $75,000 three years ago, and then needed to go into an assisted living facility or a nursing home and ran out of my own private pay money a year later, would that $75,000 gift impact my qualifying for Medicaid?

EAA: Definitely. Since the gift was within the 5-year Medicaid lookback period, Medicaid would determine there is a period of ineligibility. This period of ineligibility is based on where you live and the average cost of care for your particular county. For instance, let’s say the average monthly cost of care in your area is $8,776 a month. Medicaid will state the penalty is $75,000 divided by $8,776, which is 8.55 months in which they would not pay for care.  Your son would need to “cure” this gift, i.e. he would need to pay the money back to eliminate the penalty or the applicant will need to find another means to pay for care during this period of ineligibility.

MH: Are there “spousal protection” rules in the event one spouse is healthy, but the other one must be admitted into a nursing home?

EAA: Medicaid will look at both spouses’ assets to determine eligibility, but Medicaid does allow the non-applicant spouse, or better known as the “community spouse”, to keep up to $137,400 in available resources. A portion of the applicant spouse’s income may be shifted to the community spouse in order to prevent spousal impoverishment. The community spouse is also entitled to any exempt assets such as their primary home, one car, a prepaid cremation/funeral plan, and $1,500 cash value life insurance.

Tune in next month for the exciting conclusion!

(This information is based on an interview of Elizabeth Anderson with The Analyst for an article in the “Beyond Water…” column of the technical journal, which is available at AWT. Content is copyrighted (2022) to Elizabeth Anderson and MD Henley & Associates.)

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©2022, Elizabeth A. Anderson, The Law Network, P.C.

©2022, MD Henley & Associates.

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