Medicaid Essentials for Long-Term Care Needs

Almost certainly, you have heard of Medicaid or know someone who receives Medicaid benefits. However, for many the Medicaid world can seem cryptic and be difficult to understand. We thought it was time to share some information on the subject.

Medicaid is a combined federally- and state-funded benefit program, administered by each state, which can pay for the cost of a nursing home if certain asset and income tests are met. There are two general types of planning to consider, pre-need and crisis planning.

In advance of needing nursing home care, while you are still healthy, you can undertake pre-need planning. One the other hand, if a spouse or a parent has entered, or is about to enter, a nursing home and is not expected to return home,crisis planning may be undertaken.

There are four main eligibility prerequisites for Medicaid recipients, including: Medical Eligibility; Resource Eligibility; Income Eligibility; and Transfer Eligibility (relative to the penalty period).

To be “Medically Eligible,” the applicant must generally be “medically needy.” This determination is based on a comprehensive needs assessment, which must demonstrate that the proposed Medicaid recipient requires nursing facility services.

To establish “Resource Eligibility,” an applicant may have no more than a small amount of “countable assets” or “resources” in his name. This is considered the applicant’s “Resource Allowance.” The Individual Resource Allowance is $2,000. A married couple with both spouses applying for Medicaid long-term care assistance has a Resource Allowance limit of $3,000. The patient is also allowed a “Monthly Maintenance Needs Allowance” of $1,966.23 to $2,980.50.

A number of resources are deemed exempt assets, with a primary residence being the best example. Consulting an attorney about how your particular assets may be characterized for Medicaid purposes is advised, especially since assets that become part of the recipient’s estate after death may become subject to Nevada’s Medicaid Estate Recovery Program.

A Medicaid applicant will be “Income Eligible” if his gross income is less than Nevada’s “income cap” of $2,199. Because of this limitation, an Income Only Trust (a.k.a. a “Miller Trust”) may be needed if the Medicaid applicant’s income exceeds the cap. The patient assigns the right to receive income from social security and pension benefits to the trust, thereby avoiding receipt of excess income. There is a Community Spouse Resource Allowance ($23,844 minimum in Nevada) which a Medicaid recipient may be able to pay to the spouse who continues to live at home.

“Transfer Eligibility” determines whether an uncompensated transfer of assets results in a period of ineligibility known as a “penalty period.” There is a 60-month (five-year) look-back period. The penalty period generally begins when the applicant files for benefits and is receiving care. The patient must privately pay for care throughout the penalty period.

We strongly urge you to weigh your options regarding Medicaid benefits, to pre-plan whenever possible and to act immediately in a crisis. Our office can explain the options, so please call for your consultation.