Questions & Answers
Qualifying for Medicaid
How Does Medicaid Qualification Work
for the Married Patient?
Q1: What is the difference between MediCARE and MediCAID, and doesn't MediCARE cover a nursing home stay?
A1: MEDICARE is your government health insurance. It covers medical expenses such as hospital and doctor charges. It has a limited benefit for a nursing home stay, but only if you were hospitalized for at least three days prior, require skilled nursing care, and are continuing to benefit medically (usually undergoing rehab of some type). Under those circumstances, you may be entitled to benefits (100 days, at the most, but usually much shorter).
Under any other circumstances, you’re on your own. MEDICARE does not pay for long-term care. MEDICAID, on the other hand, is the Federally funded, state-administered program designed to provide long-term care (nursing home and, depending on the particular state, other types of facilities or care), but only after the patient meets certain financial conditions.
Q2: What types of long-term care does Medicaid cover?
A2: Medicaid, depending on the particular state, covers the full range of long-term care, including nursing home, adult foster care, assisted living, as well as at-home care. Remember, Medicare is your Government health insurance, and, except for a limited benefit for skilled nursing care, does not cover long-term care. Medicaid, on the other hand, is the program that can provide benefits for long-term care.
Q3: Do we have to be broke to get Medicaid?
A3: No! As a married couple, there are a number of Medicaid asset protection strategies in the Medicaid procedures that can be used to protect the spouse financially. In many cases there may be a "spend down" requirement (technically, a "reduction of countable resources"), but even then, that can often times be quickly accomplished, with the spouse retaining the full value of the family assets and savings.
Q4: Will we have to sign over our house to get Medicaid to help?
A4: No! As long as either the patient or the spouse is living in the home, is expected to return, or indicates an intent to return, the home is usually an exempt asset. After both spouses are dead, Medicaid may attempt to make a claim for the money it has advanced, but they are generally limited, in most cases, to that which was owned by the patient at the patient’s death. By taking the proper steps, the family should be able to limit, or even avoid completely, any Medicaid estate recovery claim against the home or any other portion of the couple's estate.
Q5: Under the Medicaid eligibility rules, whose income is counted?
A5: For Medicaid eligibility purposes, only the patient’s income is considered. The spouse’s income is irrelevant. About half the states observe the Federal cap of $2,022 per month. But even if the patient’s income exceeds the cap, an "Income Cap" or "Miller" Trust can be established to bring the income (for Medicaid eligibility purposes) to within standard. The remaining states have no cap.
Q6: Will the spouse be forced to contribute any of his/her income to the "cost of care" for the Medicaid patient?
A6: No! The only contribution to the cost of the patient’s Medicaid care would come from the patient’s income. Depending on the specific circumstances (including the spouse’s income, or lack thereof), that could range from nothing to most of the patient’s income.
Q7: How is Medicaid eligibility determined?
A7: Medicaid eligibility is based primarily on three criteria: 1) the need for care (specific state standards); 2) the income of the patient (only), and 3) the combined countable assets of the couple. Assuming a sufficient level of care is required and the patient’s income is under the cap, if any (or the patient intends to establish an Income Cap Trust), a Medicaid Resource Assessment would be completed. The purpose of this procedure is to identify and value all countable (non-exempt) assets and resources. Certain assets may be exempt (non-countable), such as the home (assuming that the patient or the spouse is residing there, or is expected to return), one vehicle, household and personal property, medical equipment, burial plans and goods, etc.
Virtually everything else of value (bank accounts, CDs, mutual funds, retirement accounts, other real estate, cash value in life insurance, motor homes, additional vehicles, stocks, bonds, etc.) will generally be counted by Medicaid. It doesn't make any difference how the assets are titled (single, joint, living trust, etc.); Medicaid simply comes up with a total of all the countable assets available to either spouse.
If that total is less than the current state minimum (ranges between $23,912 and $111,560, depending on the state), then there would be no "spend down" (reduction of countable resources) required - the patient qualifies. If, however, that total were higher than the state minimum, then there likely would be a spend down requirement. If that were the case, the patient would not qualify for Medicaid until the couple could show that they had reduced their countable resources down to the required amount.
What is important, here, is an understanding of the term spend down. Although this term is commonly used, even among Medicaid workers, it is a term that is not actually used in the Medicaid rules. The actual requirement is that the couple reduce countable resources. The common misconception is that the excess money must be spent on care; it does not. The rules do not limit what the couple can spend their resources on. The only requirements are that, 1) they not give it away, and 2) that they get “fair market value” for what they transfer.
Q8: Will transfer (or gifting) of assets result in denial of Medicaid benefits?
A8: The transfer of assets between spouses is not a problem. However, if you transfer or sell an asset to someone other than your spouse, you must get fair market value for it, or you risk disqualification. Medicaid has a five-year "look-back" provision. (In many cases there are special exemptions for a blind or disabled son or daughter, as well as a caretaker son or daughter who lived with the parent.) If you sell or transfer an asset for less than fair market value, the difference between the price you received and the actual value would likely be considered an "uncompensated transfer of assets," resulting in a period of disqualification from Medicaid benefits.
Contrary to what most people think, that disqualification period is not five years. It can actually range from a few days to decades, depending on the value and timing of the transfer and the state in which you are applying. In addition, there are exceptions which may reduce or eliminate the Medicaid penalty period.
Q9: Will putting an offspring’s name on your account (for example, joint savings account) protect it from Medicaid? What about a revocable "Living Trust?"
A9: No! The account will still be counted by Medicaid, no matter how long ago it was done. And since the trust is revocable, it provides no protection from Medicaid either.
Q10: Is there any way to satisfy Medicaid’s "spend down" requirement without actually losing the value of the assets? In other words, can we protect assets from Medicaid?
A10: When one spouse is in need of long-term care, and the couple approaches Medicaid for help, they will typically have a Medicaid Resource Assessment completed, which will determine their combined countable resources. Aside from their home, household/personal property and one vehicle, most everything else of value will be counted. Of the total countable resources available, the Community (healthy) Spouse will be allowed to keep some portion of the total. That amount depends on the specific methodology used by your state Medicaid agency. The balance of the combined resources would be considered available to the patient and must be "spent down" before the patient could qualify for Medicaid. (The actual term used in the procedures is "reduce countable resources.")
Here is where the confusion comes in, and it can be deadly from a financial point of view. Contrary to common belief, the Medicaid rules do not limit specifically what the couple can spend their resources on. The only requirements are that, 1) they not give it away, and 2) that they get "fair market value" for what they spend or transfer. For example, if Mr. and Mrs. Jones had a $20,000 spend down (reduction of resources) requirement from Medicaid, they could, quite literally, go on a $20,000 world cruise, and when they came back they would qualify for Medicaid. They could remodel their home; replace their car with a newer one; rent every video in town, etc., just as long as they received fair market value for their money.
All of these actions would help reduce their countable resources. (What would not do them any good would be to buy another countable resource. For example, cashing in a bank CD to purchase a mutual fund; they really haven't reduced their total countable resources.) The problem with these types of expenditures, though, is that once the money is spent, it is gone forever and will be of no future benefit to the Community Spouse in terms of providing income or support.
The way that people in these circumstances are helped is by identifying how they can "spend" their resources in such ways as to save the value for the support of the Community Spouse. There are a number of ways a couple can do just that. In fact, the Medicaid Married Solutions Manual discusses at least seventeen different strategies a married couple can use. Although each situation is unique, by simply spending the money in the "right" way, a married patient can often qualify for Medicaid immediately, and still preserve the full value of their life's savings for the benefit of the Community Spouse.
These strategies are basically simple, straightforward and accepted by Medicaid. There is no attempt to "get around" the rules, but to simply utilize the options available within the Medicaid rules, which were specifically included to protect the Community Spouse. Unfortunately, without the education and knowledgeable provided in the Medicaid Married Solutions Manual, most couples end up losing a large portion of their life's savings, and it is almost always avoidable.
Q11: Won't the Medicaid caseworkers tell us how we can save our assets?
A11: No! The Medicaid caseworker’s primary responsibility is to perform assessments and determine eligibility for the various Medicaid programs. It is not their responsibility to help you save your assets. In addition, they would not normally have the intimate knowledge of the various strategies and financial tools required to save assets. Besides, as government employees they are not allowed to give specific financial or legal advice, nor are they licensed or trained to do so.
The MEDICAID MARRIED SOLUTIONS MANUAL was designed specifically to empower individual families to take action to protect the assets of a married couple when one of them is forced into a nursing home or other long-term care.Click Here to learn how to protect assets from Medicaid while quickly qualifying a married patient for nursing home or other long-term care Medicaid.