 |
 |
 |
 |
 |
||
 |
 |
 |
 |
|||
 |
 |
|
|
Introduction While Congress and the federal Health Care Financing Administration
set out the main rules under which Medicaid operates, each state
runs its own program. As a result, the rules are somewhat different
in every state, although the framework is the same throughout
the country. The following describes those basic rules, but check
your state for the specific application where you live. In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in "countable" assets. The spouse of a nursing home resident--called the 'community spouse'-- is limited to one half of the couple's joint assets up to $89,280 (in 2002) in "countable" assets (see Medicaid, chart). The $89,280 figure changes each year to reflect inflation. In addition, the community spouse may keep the first $17,856 (in 2002), even if that is more than half of the couple's assets. This figure is higher in some states. All assets are counted against these limits unless the assets fall within the short list of "noncountable" assets. These include: (1) personal possessions, such as clothing, furniture, and jewelry; (2) one motor vehicle, valued up to $4,500 for unmarried recipients and of any value for the healthy (community) spouse; (3) the applicant's principal residence, provided it is in the same state in which the individual is applying for coverage (the states vary in whether the Medicaid applicant must prove a reasonable likelihood of being able to return home); (4) prepaid funeral plans and a small amount of life insurance; and (5) assets that are considered "inaccessible" for one reason or another. The Home Depending on the state, nursing home residents do not have to sell their homes in order to qualify for Medicaid. In some states, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home; in other states, the nursing home resident must prove a likelihood of returning home. In all states, the house may be kept if the Medicaid applicant's spouse or another dependent relative lives there.
The second major rule of Medicaid eligibility is the penalty for transferring assets. Congress does not want you to move into a nursing home on Monday, give all your money to your children (or whomever) on Tuesday, and qualify for Medicaid on Wednesday. So it has imposed a penalty on people who transfer assets without receiving fair value in return. This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state. The period of ineligibility starts on the first day of the month of the transfer. Example: If a Medicaid applicant made gifts totaling $90,000 in a state where the average nursing home bill is $5,000 a month, he or she would be ineligible for Medicaid for 18 months ($90,000 ÷ $5,000 = 18). Another way to look at the above example is that for every $5,000 transferred, an applicant would be ineligible for Medicaid nursing home benefits for one month. In theory, there is no limit on the number of months a person can be ineligible. Example: The period of ineligibility for the transfer of property worth $400,000 would be 80 months ($400,000 ÷ $5,000 = 80). However, the state Medicaid agency may look only at transfers made during the 36 months preceding an application for Medicaid (or 60 months if the transfer was made to certain trusts). This is called the "look-back period." Effectively, then, there is now a 36-month limit on periods of ineligibility resulting from transfers. This means that people who make large transfers must be careful not to apply for Medicaid before the 36-month look-back period passes. Example: To use the above example of the $400,000 transfer, if the individual made the transfer on January 1, 1999, and waited until February 1, 2002, to apply for Medicaid -- 37 months later -- the transfer would not affect his or her Medicaid eligibility. However, if the individual applied for benefits in December 2001, only 35 months after transferring the property, he or she would have to wait the full 80 months before becoming eligible for benefits.
Transferring assets to certain recipients will not trigger a period of Medicaid ineligibility. These exempt recipients include: (1) A spouse (or a transfer to anyone else as long as it is for the spouse's benefit); (2) A blind or disabled child; (3) A trust for the benefit of a blind or disabled child; (4) A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances). In addition, special exceptions apply to the transfer of a home. The Medicaid applicant may freely transfer his or her home to the following individuals without incurring a transfer penalty: (1) The applicant's spouse; (2) A child who is under age 21 or who is blind or disabled; (3) Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances); (4) A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home; or (5) A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay. Congress has created a very important escape hatch
from the transfer penalty: the penalty will be "cured"
if the transferred asset is returned in its entirety, or it will
be reduced if the transferred asset is partially returned. Is Transferring Assets Against the
Law? As part of a 1996 Kennedy-Kassebaum health care bill, Congress made it a crime to transfer assets for purposes of achieving Medicaid eligibility. Congress repealed the law as part of the 1997 Balanced Budget bill, but replaced it with a statute that made it a crime to advise or counsel someone for a fee regarding transferring assets for purposes of obtaining Medicaid. This meant that although transferring assets was again legal, explaining the law to clients could have been a criminal act. In 1998, Attorney General Janet Reno determined that the law was unconstitutional because it violated the First Amendment protection of free speech, and she told Congress that the Justice Department would not enforce the law. Around the same time, a U.S. District Court judge in New York said that the law could not be enforced for the same reason. Accordingly, the law remains on the books, but it will not be enforced. Since it is possible that these rulings may change, you should contact your elder law attorney before filing a Medicaid application. This will enable the attorney to advise you about the current status of the law and to avoid criminal liability for the attorney or anyone else involved in your case.
In some states, known as "income cap" states, eligibility for Medicaid benefits is barred if the nursing home resident's income exceeds $1,635 a month (for 2002), unless the excess above this amount is paid into a "(d)(4)(B)" or "Miller" trust. If you live in an income cap state and require more information on such trusts, consult an elder law specialist in your state. For Medicaid applicants who are married, the income of the community spouse is not counted in determining the Medicaid applicant's eligibility. Only income in the applicant's name is counted in determining his or her eligibility. Thus, even if the community spouse is still working and earning $5,000 a month, she will not have to contribute to the cost of caring for her spouse in a nursing home if he is covered by Medicaid.
The so-called "spousal protections" work this way: if the Medicaid applicant is married, the countable assets of both the community spouse and the institutionalized spouse are totaled as of the date of "institutionalization," the day on which the ill spouse enters either a hospital or a long-term care facility in which he or she then stays for at least 30 days. In general, the community spouse may keep one half of the couple's total "countable" assets up to a maximum of $89,280 (in 2002). Called the "community spouse resource allowance," this is the most that a state may allow a community spouse to retain without a hearing or a court order. The least that a state may allow a community spouse to retain is $17,856 (in 2002). Example: If a couple has $100,000 in countable assets on the date the applicant enters a nursing home, he or she will be eligible for Medicaid once the couple's assets have been reduced to a combined figure of $52,000 -- $2,000 for the applicant and $50,000 for the community spouse. (Some states have raised this amount to as much as $89,280, meaning that in those states the community spouse can keep the first $89,280 of the couple's combined countable assets. For instance, if the couple had $60,000 in countable assets on the "snapshot" date, the community spouse could keep the entire amount, instead of being limited to $30,000.) In all circumstances, the income of the community spouse will continue undisturbed; he or she will not have to use his or her income to support the nursing home spouse receiving Medicaid benefits. But what if most of the couple's income is in the name of the institutionalized spouse, and the community spouse's income is not enough to live on? In such cases, the community spouse is entitled to some or all of the monthly income of the institutionalized spouse. How much the community spouse is entitled to depends on what the Medicaid agency determines to be a minimum income level for the community spouse. This figure, known as the minimum monthly maintenance needs allowance or MMMNA, is calculated for each community spouse according to a complicated formula based on his or her housing costs. The MMMNA may range from a low of $1,451.25 to a high of $2,232 a month (in 2002). If the community spouse's own income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse's income. (In some states, the community spouse is permitted to increase the MMMNA by retaining more resources.) Example: Mr. and Mrs. Smith have a joint income of $2,000 a month, $1,500 of which is in Mr. Smith's name and $500 is in Mrs. Smith's name. Mr. Smith enters a nursing home and applies for Medicaid. The Medicaid agency determines that Mrs. Smith's MMMNA is $1,500 (based on her housing costs). Since Mrs. Smith's own income is only $500 a month, the Medicaid agency allocates $1,000 of Mr. Smith's income to her support. Since Mr. Smith also may keep a $60 a month personal needs allowance, his obligation to pay the nursing home is only $440 a month ($1,500 - $1,000 - $60 = $440). In exceptional circumstances, community spouses may seek an increase in their MMMNAs either by appealing to the state Medicaid agency or by obtaining a court order of spousal support. Estate Recovery and Liens Under Medicaid law, following the death of the Medicaid recipient a state must attempt to recover from his or her estate whatever benefits it paid for the recipient's care. However, no recovery can take place until the death of the recipient's spouse, or as long as there is a child of the deceased who is under 21 or who is blind or disabled. While states must attempt to recover funds from the Medicaid recipient's probate estate, meaning property that is held in the beneficiary's name only, they have the option of seeking recovery against property in which the recipient had an interest but which passes outside of probate. This includes jointly held assets, assets in a living trust, or life estates. Given the rules for Medicaid eligibility, the only probate property of substantial value that a Medicaid recipient is likely to own at death is his or her home. However, states that have not opted to broaden their estate recovery to include non-probate assets may not make a claim against the Medicaid recipient's home if it is not in his or her probate estate.
Whether or not a lien is placed on the house, the lien's purpose should only be for recovery of Medicaid expenses if the house is sold during the beneficiary's life. The lien should be removed upon the beneficiary's death. However, check with an elder law specialist in your state to see how your local agency applies this federal rule.
|
||
|
|
 |
 |
 |
 |
 |
