In my last post, I gave a brief overview of what Medicaid is, and what it is not. The natural follow-up to that is a discussion of Medicaid qualification. As a Grand Rapids, MI elder law attorney, it is important to point out that this is a VERY general overview. The policy manual for Medicaid is hundreds of pages and the continuing education materials go beyond that. I am just touching the very tip of the iceberg in this post. The policies that govern medicaid are constantly changing. This information is not meant to be used to attempt to qualify, or do pre-planning to qualify, for Medicaid coverage.
Attorney disclaimer out of the way, what does it take to qualify for Medicaid. Generally speaking, an unmarried person is able to have no more than $2,000 in countable assets and less monthly income than is needed to cover the monthly private pay rate at the nursing home. These numbers apply to “countable” assets – a term I talked through briefly in my last post. A married couple is generally allowed to keep a maximum of $120,900 (2017) in countable assets for the benefit of the “community” spouse (the spouse not in the nursing home). This amount is adjusted each year for inflation. In both cases, there is a penalty applied if the applicant or the applicant’s spouse transferred any assets for less than market value within the 60-month period preceding the Medicaid application. That is a key thing to remember. I really can’t remember the last time I met with an individual or couple for Medicaid qualification and they had not given their kids, grandkids or someone else who they cared about some amount of money or an asset (e.g., car, etc.) within 60 months of applying for Medicaid. That can lead to a penalty. Which leads nicely into the topic of Medicaid planning.
My personal definition of Medicaid planning is analyzing the assets and income a person (or couple) has, historical transactions, and developing a plan to structure the ownership and type of their assets and income to either (1) make Medicaid an option, or (2) make Medicaid an option sooner than it would have been without the planning. For many married couples this involves additional (or a complete overhaul of) estate planning documents, planning for how countable assets can/will be converted into non-countable assets when qualification is needed, and properly documenting any divestments and developing ways to cover any penalties that result.
After someone is approved for Medicaid they will usually have a “patient pay amount”. This is the amount of the applicant’s income that he/she must pay to the facility – Medicaid covers the rest. With a married couple, there will also be a “protected spousal amount” and “community spouse income allowance”. The protected spousal amount is the amount that the community spouse is allowed to keep of his/her assets and the applicant spouse’s assets. The community spouse income allowance is the amount of the applicant spouse’s income that the community spouse can transfer to herself/himself on a monthly basis to help supplement his/her income.
On an annual basis, you will need to complete a redetermination application and submit it before each anniversary of the Medicaid approval. This is just like the initial application, but covers only the time frame from the application (or the prior redetermination), and for a couple it applies to only the applicant spouse’s assets and income (after the first redetermination). Upon approval the community spouse and the applicant spouse become separate in the eyes of Medicaid from an asset and income standpoint, even though they were viewed as one for the initial application.
Again, this is a very basic, general overview. I probably covered about 10% of what I deal with in a typical Medicaid qualification or pre-plan. If you have any questions, let me know.