Medicaid is a state administered program and provides more comprehensive coverage than Medicare, particularly with regard to nursing home care. However, not all nursing homes participate in the Medicaid program. In the absence of any other public program covering long-term nursing home care, Medicaid has become the default nursing home insurance of the middle class.
Resource (Asset) Rules
In order to be eligible for Medicaid benefits in Illinois a nursing home resident may have no more than $2,000 in “countable” assets. While a Medicaid applicant may be eligible even if these assets exceed the limits, the applicant will be required to “spend down” these 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 $84,120 (in 2000) in “countable” assets (see Medicaid, Protections for the Healthy Spouse). A motor vehicle owned by a nursing home resident is also exempt if transferred to a spouse. The Home
Nursing home residents do not have to sell their homes in order to qualify for Medicaid. In Illinois, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home. The home may also be kept if the Medicaid applicant’s spouse, sibling, minor or disabled child lives there. However, if the applicant leaves the home with no intention of returning, the property must be counted as an asset.
The Transfer Penalty
The second major rule of Medicaid eligibility is the penalty for transferring assets. This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid.
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). Example: To use the above example of the $400,000 transfers, if the individual made the transfer on January 1, 1998, and waited until February 1, 2001, to apply for Medicaid — 37 months later — the transfer would not affect his or her Medicaid eligibility. Exceptions to the Transfer Penalty
Transferring assets to certain recipients will not trigger a period of Medicaid ineligibility. (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;
(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).
The Medicaid applicant may freely transfer his or her home to the following individuals without incurring a transfer penalty:
(1) The applicant’s spouse;
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?
You may have heard that transferring assets, or helping someone to transfer assets, to achieve Medicaid eligibility is a crime.
As part of a 1996 Kennedy-Kassebaum health care bill, Congress made it a crime to transfer assets for purposes of achieving Medicaid eligibility. Treatment of Income
The basic Medicaid rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. A deduction may also be allowed for a dependent child living at home. A deduction is also allowed for community spouse maintenance needs. This allows the Medicaid recipient to exempt some of his/her income for the purpose of spouse maintenance. For Medicaid applicants who are married, the income of the community spouse is not counted in determining the Medicaid applicant’s eligibility. Protections for the Healthy Spouse
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.
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? 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.
Tags: class resource, community spouse, countable assets, eligibility purposes, home residents, medicaid benefits, medicaid eligibility, medicaid program, nursing home care, nursing home insurance
