Understanding Medicaid Eligibility: Avoid the Confusion

What are the assets subject to Medicaid Spend-Down and the assets that are not? What is the Community Resource Spouse Allowance? What are the Spousal Impoverishment Rules of Medicaid? How to avoid the Medicaid Spend-Down?

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Understanding Medicaid Eligibility Provisions and Rules

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We can design, for you, an IRREVOCABLE TRUST with an INDEPENDENT TRUSTEE that can IMMEDIATELY qualify your MEDICAID ELIGIBILITY. At the end of our design, you will NOT own any assets.

Medicaid is an entitlement. So long as individuals meet the legal eligibility provisions, they are ENTITLED to Receive Medicaid Benefits. You must legally own nothing.

For people seeking admission to a nursing home, the NURSING HOME MUST provide (orally and in writing) and prominently display written information about how to apply for and use MediCARE and MediCAID benefits. The nursing home, must also provide information to receive refunds for your previous payments covered benefits.

Ever since Medicaid was introduced during the mid-1960s as a key element of Great Society programs, state expenditures on items such as infrastructure, education and other public services to maintain economic competitiveness have been constrained by rapid growth in state Medicaid obligations. The Patient Protection and Affordable Care Act (ObamaCare) enacted in March 2010 expands states’ Medicaid funding burdens yet again by mandating health insurance coverage among those already eligible for Medicaid but not enrolled in it. It also expands eligibility for Medicaid benefits to additional categories of people and to those with incomes both above and below the federal poverty level (FPL).
– Source: Estimating ObamaCare’s Effect on State Medicaid Expenditure Growth: A Study of Five Most Populous U.S. States by Jagadeesh Gokhale,Senior Fellow, Cato Institute.

Nursing home care can be very expensive. Most people who enter the nursing home begin with a short hospital stay, then transferred to a nursing home for re-habilitative skilled care services, which ultimately ends in their becoming permanent nursing home residents, because they cannot go back home.

MediCARE covers skilled nursing facility care for a limited time after a 3 day qualifying hospital stay for some medical condition. MediCARE part “A” covers the first 100 days.

Nursing-Home covered under Medi-[CARE] Part “A”

Short-term nursing home care expenses are covered under MediCARE for less than 100 days.

The trigger – is your hospital stay of at least 3 days, or longer, primarily to pay for your re-hab services for some medical condition requiring high skilled care, and
Days 1 – 20 is paid for by MediCARE Part A, and
Days 21 – 100 the patient is responsible for a co-pay of approximately $133/per day, and
Moving forward, you pay 100% unless you have Long Term Care Insurance, or you qualify for Medi-[CAID].

What is MediCAID?

MediCAID pays for care for about 7 out of every 10 nursing home residents. Medicaid is a joint Federal and state program that pays for certain health services and nursing home care for older people with limited income and resources. If you qualify, you are ENTITLED to get help to pay for nursing home care and/or other health care costs.

What is MediCARE?

MediCARE on the other hand is for hospital and doctor care for individuals over the age of 65.

Assets Subject to MediCAID Spend-Down:

Eligibility for qualified MediCAID payments to your nursing home, varies from state to state. Eligibility for Medicaid is determined by your available resources that are subject to spend-down: cash, savings, checking, CDs, stocks, bonds, mutual funds, IRAs, 401Ks, 403(b), TIAA-CREF and other retirement accounts, cash value life insurance, annuities, cars, farm equipment, machinery, commercial real estate, etc. IN SHORT: your available resources available for payment of your own nursing home expenses is everything that can be converted to cash.

Assets Not Subject to Medicaid Spend-Down

Resources NOT available for your Medicaid spend-down are: your personal possessions, such a clothing, furniture, jewelry, one motor vehicle without regard to value, second auto – to the extent it’s medically required for transportation of the Medicaid participant or family member providing for such purpose (each state may have different rules) – prepaid funeral plans, small amounts of life insurance, assets that are not easily accessible such as a lawsuit in progress or other property that cannot be liquidated.

How Much of Your Assets are Protected from the Medicaid Spend-Down: Married or Single?

For married spouses, the residence is protected up to $500,000 of equity (some states $750,000), if you are single the residence is up for grabs with some exceptions such as the Medicaid patient/resident can prove that there’s a reasonable likelihood of being able to return to the home, and other similar nuances i.e. disable child living in the home, or another relative living in the spend-down means that you must first pay for your own nursing home and other qualified medical expenses down to your last-remaining $2,000, before your state begins to pay. NOTE: It’s STRONGLY ADVISABLE that you consult with a COMPETENT Certified Medicaid Planner. You’d be enormously surprised at the number of “self-proclaimed experts” that are incompetent. Since your nursing home costs are unpredictable and nobody knows your length of stay, good planning shapes good decisions.

In preparing for battle I have always found that plans are useless, but planning is indispensable.
– Dwight D. Eisenhower (1890 – 1969)

SOME IMPORTANT THINGS YOU SHOULD KNOW ABOUT Medicaid

Your Personal Residence: When the State Cannot Put a Lien on Your Home

The state cannot put a lien on your home if there’s a reasonable chance you’ll return home after getting nursing home care or if you have a spouse or dependents living there.
The state cannot take, sell, or hold your property to recover benefits that are correctly paid for nursing home care while you are living in a nursing home. The state cannot recover on a lien against a person’s home if it’s the residence of the person’s spouse or sibling with an equity interest and was residing in the home at least one year prior to your nursing home admission.
The state cannot lien your home if you have a blind or disabled, or a child under the age of 21 living in your home. NOTE: protection of your home is a highly contested and dynamic litigation frontier. States are aggressively filing motions to recover their costs, if there’s any perception of avoidance.

Reducing your assets, first: Community Spouse Allowance

A spouse who is not in a nursing home (community spouse) may keep joint assets up to $109,560 and a monthly income allowance. The Community Spouse Resource Allowance (CSRA) is equal to one-half of the couple’s combined countable resources, valued once (snapshot) at the time the institutionalized spouse permanently enters the nursing facility. However, the CSRA cannot be more than a set amount, as adjusted annually for inflation ($109,560 effective in 2011), and it cannot be less than a fixed amount, also adjusted annually for inflation ($21,912 effective in 2011). You need to check with your state of any exceptions and you need to understand the “snapshot” of your assets on the date the spouse is permanently institutionalized. Laws and rules are complex and the field is fraught with land mines. People who ask for our advice, almost never take it, because it was free.

Spousal impoverishment Rules of Medicaid

Federal laws prohibit community spouses (spouses not in the nursing home) from losing all of their income and assets to pay for nursing home care for their spouse. When one spouse enters the nursing home and applies for Medicaid, his/her eligibility is determined under what is called the “spousal impoverishment” rules.

Spousal impoverishment helps make sure that the spouse, still at home (community spouse) will have resources available, money needed to pay for living expenses by protecting a CERTAIN amount of the couple’s total available resources, as well as at least a portion of the nursing home resident’s income, for the use of the spouse who is still at home.

Do you want the state government to tell you how you are going to live?

Resolve not to be poor: whatever you have, spend less. Poverty is a great enemy to human happiness; it certainly destroys liberty, and it makes some virtues impracticable, and others extremely difficult.
– Samuel Johnson (1709-1784) British author.

Medicaid is an Entitlement: For the Reckless and Lazy?

Laws, laws, laws…rules, rules, rules. How you can avoid depression from the Medicaid spend-down rules? In America, risky behavior is rewarded. The man who spends every nickel he ever earned, and was not motivated to work hard and save for the rainy day, lives a wreckful life with drinking, smoking, womanizing, recreational drugs and more, is rewarded by quick eligibility to nursing home care, because he is legally entitled. Medicaid is an entitlement. By not having a nickel to his name, he’s entitled. The one who worked hard, did not go to a fine restaurant, did not drive a luxury car, did not overspend his limits with his credit card, is punished for living a frugal life in his sunset years. This is his justice?

“If it were not for injustice, men would not know justice.”
– Heraclitus (540 BC – 480 BC)

HOW TO AVOID MEDICAID AND YOUR MIGRAINE HEADACHE

THE TAX-FREE BRIDGE

“I live in Alexandria, Virginia. Near the Supreme Court chambers is a toll bridge across the Potomac. When in a rush, I pay the dollar toll and get home early. However, I usually drive outside the downtown section of the city and cross the Potomac on a free bridge. This bridge was placed outside the downtown Washington, DC area to serve a useful social service, getting drivers to drive the extra mile and to help alleviate congestion during the rush hour. If I went over the toll bridge and through the barrier without paying the toll, I would be committing tax evasion. If, however, I drive the extra mile and drive outside the city of Washington to the free bridge, I am using a legitimate, logical, and suitable method of tax avoidance, and I am performing a useful social service by doing so. For my tax evasion, I should be punished. For my tax avoidance, I should be commended. The tragedy of life today is that so few people know that the free bridge even exists.”
– Supreme Court Justice Louis D. Brandeis (1856 – 1941)

Tip to MediCAID: Do Not Own Any Assets with the Ultra Trust® Irrevocable Trust

By definition: when it comes to MediCAID eligibility, if you have no assets, you qualify. You are ENTITLED for paid nursing home medical care. You understand this, right?

Therefore, if you plan ahead, when the seas are calm, you can implement a plan of no assets titled in your name or jointly with your spouse. A perfect example of planning is from the recent Apple founder – Steve Jobs. In the last days of his life, he designed a plan to eliminate probate and eliminate estate taxes, with an uncanny ability to control his amassed wealth, beyond his grave.

It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.
– Steve Jobs (1955 – 2011), BusinessWeek, May 25 1998