Medicaid is a joint federal and state program that provides payment for medical care for persons unable to afford to pay. Medicaid covers physicians’ services, hospital care, supplies and other necessary services once a person has been made eligible for the program. It also pays for the expenses of long–term care in a nursing home.
The Medicaid program is administered independently in each state. While the basic eligibility standards are the same throughout the United States, there are significant differences between the state Medicaid programs. Despite these differences, eligibility is generally based upon the amount of assets a person has along with the income that the person receives. Eligibility is determined at state Medicaid offices and, in the case of married individuals, the assets and income of both spouses are considered in the determination process.
It is important to distinguish between Medicare and Medicaid. Medicare is an insurance program providing payment for medical needs for persons 65 and over and for certain people with disabilities. All persons 65 and over, regardless of financial resources or income, are eligible for Medicare. Medicare and Medicare supplemental insurance, however, provide very limited coverage with regard to the cost of long–term care in nursing homes. These non-covered services must be paid privately by the individual unless the individual has coverage under a long–term care insurance policy. Medicaid, on the other hand, pays for medical needs for those of any age that have been determined to be eligible. In fact, a person with limited income and resources who has Medicare coverage may also qualify for Medicaid benefits.
What You Need to Know
Medicaid is considered to be one of the most complex laws of the United States and, further complicating matters, each state has a different version of Medicaid. Many Elder Law Attorneys have carefully studied the Medicaid statutes and regulations and are able to assist clients.
Medicaid is often of importance to middle-income Americans because Medicare does not cover the costs of long-term care for illnesses such as Alzheimer’s disease or paralysis caused by a stroke. Most people who need such care for extended periods will eventually deplete their assets and become unable to pay the costs of their care.
At such a time Medicaid is available to pay the difference between their income and the actual costs of care provided in a nursing home, including room and board, as well as physicians’ care, hospital care and all other reasonable necessary medical expenses. Medicaid covers the costs of such care in nursing homes, adult care homes, hospices, and, in appropriate cases, in the individual’s own home.
If faced with the possibility of such long–term care expenses, there are certain rules that you should be aware of:
In determining eligibility for Medicaid payment for long-term care expenses, the eligibility team will review the individual’s actual need for care, the person’s available resources (including life insurance and retirement plans) and income received from any source. In some states, if monthly income exceeds a certain amount, then the individual is ineligible for Medicaid, even though the individual’s long–term care expenses exceed his or her income.
In determining eligibility, a person will be disqualified from Medicaid for gifts made within the previous few years.
In determining eligibility for one spouse, the assets and income for both spouses are considered, regardless of premarital agreements, community property laws or the nature of the ownership of the asset.
Assets of married couples, however, receive special treatment so that the spouse who remains living at home will not be unduly impoverished. Such a community spouse is permitted to keep one-half of all of the available assets (up to a federally-established maximum) and is allowed to keep a minimal amount of income of the couple in order to provide for support expenses at home(See below for details on Division of Assets).
In addition, there are certain resources that are considered non-countable for eligibility purposes; these include the family residence, household contents, a vehicle, a prepaid burial fund and other necessary items.
It is important to be aware of the state specific eligibility provisions and exemptions so that assets will not be unnecessarily spent down before applying for Medicaid.
Finally, it is important to know that there are appeals processes built into the Medicaid system. If you are unhappy with eligibility determinations, care decisions or placements made under Medicaid, there is a process for an administrative hearing and even court proceedings to enforce your rights.
Source: National Academy of Elder Law Attorneys, NAELA.org
Division of Assets – Frequently Asked Questions
What is the Spousal Impoverishment Law?
The Spousal Impoverishment Law, sometimes called Division of Assets, changes the Medicaid eligibility requirement for couples in situations in which only one spouse needs nursing home care. It allows the spouse remaining at home to protect a portion of income and resources. The spouse needing care can receive Medicaid sooner and without the spouse at home being reduced to poverty.
If my spouse should require long-term care in a nursing home, will he or she be able to get help from Medicaid?
Yes, but only if your spouse can establish a medical need for nursing home placement and meet the federal and state eligibility guidelines.
How do I qualify for Medicaid assistance for nursing home care?
You must meet the following requirements:
Have a medical need to be in a nursing home;
Meet Medicaid financial eligibility requirements; and
Not be disqualified for unauthorized property transfers.
How do I apply for Medicaid assistance using the Spousal Impoverishment Law?
You will need to contact KanCare to obtain the proper forms. You will be asked to complete a Medicaid application. You will be asked to list all of the assets owned by you and your spouse. The KanCare worker will determine the amount of resources that can be protected for the community spouse. If resources need to be transferred to the at-home spouse, the KanCare worker will notify you and tell you which forms will need completed and signed.
Will I need to transfer resources? If so, how do I go about making the property transfers?
Based on the information on the assessment form, you will divide resources. Some assets may need to be transferred from the institutionalized spouse and into sole ownership of the at-home spouse. You will be notified if any resources need to be transferred. You may also contact an attorney to help you with the necessary legal documents involved with the transfers. During the transfer process, do not add other persons’ names to any assets without checking with KanCarefirst, as it may result in a delay or cancellation of Medicaid coverage for nursing home expenses. Medicaid benefits can be paid for 90 days while you make the actual property transfers. In some instances, extensions may be granted if you have been actively working on transferring ownership and have not completed the process.
If my spouse becomes eligible for Medicaid, what resources can I keep?
Some items do not count in the Medicaid determination. These are called exempt resources, and you can keep them. They include:
The home and its contents;
One car (per family);
One burial plot, casket, etc. (per person);
A funeral plan within certain limits;
The share of property allowed to the at-home spouse by the Spousal Impoverishment Law;
Personal possessions, such as wedding rings and clothes; and
In some situations, property used in an on-going business.
How much of the NON-EXEMPT RESOURCES can the at-home spouse keep?
You can keep the greater of: the first $23,844 of total non-exempt resources, or one-half of the total non-exempt resources owned at the time the spouse entered nursing home care. The maximum share you can keep is $119,220. These amounts are subject to change annually, so contact Kancare to get the latest figure. The remaining amount of combined resources is considered available to the institutionalized spouse.
How does KanCare determine the amount of resources that can be protected?
The amount of resources that can be protected is determined by the amount of total non-exempt resources owned by the couple when the spouse first entered an institution. This figure is determined from information you report and verify on the Resource Assessment form. It is also called the Community Spouse Resource Allowance.
If our current total non-exempt resources are less than $23,844 must I go back and figure out what we owned several years ago when my spouse entered nursing home care?
No. So long as your total non-exempt resources are $23,844 or less, any or all of this property may be transferred to the at-home spouse.
How much income can the at-home spouse keep?
You will not be required to contribute any of your own income toward the cost of your spouse’s care. However, you may be able to keep a portion of the institutionalized spouse’s income for your use. You can keep at least $1,992 per month of the total income of both spouses. Plus, if there are shelter expenses (rent, mortgage, taxes or insurance) in excess of $229 per month you may be entitled to an allowance up to $2,981 per month. Also a special allowance of $664 is given monthly for any dependent family members living with the at-home spouse.
How is the cost of care for the institutionalized spouse determined?
Once approved for Medicaid, the LTC spouse may be responsible for a portion of the cost of his or her medical care. The cost of the care is determined by the monthly income of the institutionalized spouse. A $62 personal needs allowance is deducted from the gross monthly income as well as the amount of any incurred medical expenses not paid by Medicaid or another third party, such as the cost of health insurance premiums. If the at-home spouse is eligible for an income allowance as described above, that amount is also deducted. The remainder, if any, is paid to the nursing facility toward the cost of the care. This amount is called the patient liability or client obligation.
When can a couple transfer income and assets?
No transfers should be made until all of the paperwork has been completed and the amount of income and resources that the at-home spouse can keep is determined. In some cases, transfers made prior to coming to KanCare can jeopardize Medicaid eligibility. Always seek prior approval from KanCare before transferring any resources or income.
Will KanCare seek recovery of medical assistance benefits out of our property?
The State Medicaid agency by law has a first-class claim against the estate of the Medicaid recipient or the surviving spouse for benefits paid to the recipient. The Medicaid recipient must have been 55 years of age or older or in a nursing facility while on Medicaid. This claim arises only after the death of the recipient and the surviving spouse. No recovery would occur if there is a surviving minor or disabled child.
Do we have to transfer resources and income if one of us applies for Medicaid?
No. It is strictly an option for the couple to seek a division of resources, income, or both. If you do not, certain resources and income will be considered available to the spouse in the nursing home, and he/she may not gain eligibility as quickly.
If we apply for Medicaid under the Spousal Impoverishment Law, when will Medicaid coverage begin?
Benefits will not be paid until the spouse applying for assistance is able to meet the Medicaid eligibility requirements. This means the spouse needing care will have to deplete his or her share of the divided resources to the Medicaid eligibility level (presently $2,000).
What if either my spouse or I receive additional property after we have transferred our property to sole ownership?
If the additional resources are acquired before the LTC spouse is actually receiving Medicaid coverage, the resources are usually considered a part of his/her share of assets and must be depleted before eligibility begins. Because the Community Spouse Resource Allowance is determined as of the month of the entrance into long-term care, resources that were not owned by either spouse in that month cannot be considered for division purposes. Resources acquired by a Medicaid-recipient institutionalized spouse will be countable toward the $2,000 limit. Receipt of resources in excess of this amount could result in a loss of Medicaid coverage. Receipt of additional resources by the at-home spouse can usually be held without affecting the other spouse’s eligibility for Medicaid.
Will the amount of income and resources available to the at-home spouse be adjusted for inflation?
Adjustments for inflation will be made based on changes in the Consumer Price Index. KanCare will automatically figure any increase and adjust your case accordingly. The amount of resources the at-home spouse can keep will be fixed at the time of the application and will not be adjusted.
Does the Spousal Impoverishment Law apply to all of our medical expenses?
No. The law applies only to Medicaid eligibility for long-term care (nursing home), Home and Community-Based Services (HCBS) and Program of All-Inclusive Care for the Elderly (PACE) covered by Medicaid.
When should I ask KanCare to review my eligibility for Medicaid and begin transfers under the Spousal Impoverishment Law?
When you and your spouse meet the following conditions:
A spouse is already in a nursing home;
The at-home spouse has income less than $1,992.
If the at-home spouse dies, what happens to the property that has already been divided?
Whatever property was transferred to a spouse belongs to that spouse’s estate and will pass to heirs unless the at-home spouse survives the recipient. The recipient spouse, as one of the heirs, should receive at least half of the estate based on state inheritance laws. If this does not occur there may be a transfer of asset issues which could affect the recipient’s eligibility. If the at-home spouse survives the recipient, the estate of the at-home spouse will be subject to a claim by the State Medicaid Agency under Estate Recovery upon his or her death.
If I have a will leaving specific property to certain persons, but I transfer the property to my spouse, will this property still go to the people I named in my will?
No. Your heirs can only inherit what you actually own on the day you die. In addition, remember that the estate of the at-home spouse will be subject to estate recovery as noted above.
Can I use the Spousal Impoverishment Law even if I don’t need Medicaid covered services?
No. The law applies only to Medicaid eligibility.
Source: Kansas Department for Aging and Disability Services (www.kdads.ks.gov)