Q: I am afraid that nursing home expenses will take the little money that I have left. What are the eligibility requirements for Medicaid?
A: You have asked the Number One question that I encounter in my practice.
There are three areas of qualification: income, assets, and statutory tests. First, a person must be determined to meet the disability criteria for a nursing home stay. If a person is under 65, a person also needs to be determined disabled by the Disability Determination Service.
Next, there is an income test. The Medicaid applicant (or the applicant and the spouse together) cannot have available income of more than $1692 per month. However, for the Fort Collins region, if income is more than $1692 but under $4742, the income test can still be met by having the income paid into a "Utah Trust." The community spouse (the one not in the nursing home) may receive (based on a formula) up to $1575 (with the possibility of receiving up to $2319 under special circumstances) from the Trust for living expenses.
The third and final test concerns net worth. A single individual cannot have more than $2000, or if married, a couple cannot have more than $94,760 ($92,760 + 2,000 of the institutionalized personÕs resources) of assets. The value of certain assets is not included in the total, such as the value of a home used as the primary residence, a vehicle used on behalf of the spouse for medical purposes, required medical equipment, and wedding or engagement rings. But note that for an unmarried individual, the home subsequently can be sold to reimburse for Medicaid expenditures. However, if married and the community spouse survives and is not on Medicaid too, the home remains exempt and the house will not be claimed by Social Services. But all of this is subject to change as the rules and regulations are periodically adjusted.
Household goods and personal effects of a single individual are excluded if their total equity value is $2,000 or less. If the total value of life insurance does not exceed $1,500, it is also excluded. Prepaid irrevocable burial expenses are not included in calculating asset thresholds for Medicaid eligibility. But in a nutshell, for a single Medicaid applicant, only $2,000 of assets may be owned (excluding the previously mentioned exempt property such as a home, car and an engagement or wedding ring).
Note that a person or a couple cannot just give away property to qualify for the asset test limits because anything transferred for less than adequate consideration within three years prior to applying for Medicaid will be added to the eligibility total. And any such transfer to an irrevocable Trust will increase the waiting period from three years to five years.
Some individuals attempt to qualify for Medicaid by "spending down" such as improving the home, paying off the mortgage, buying irrevocable prepaid burials, buying burial plots, buying a newer car, investing in needed medical equipment, etc. But it is not permitted to pay debts of another, buy things for another, etc.
In the past couples would convert all of their assets into an annuity and then have the payments directed to the community spouse. But now that the Medicaid income test takes into account the total income of both, such a maneuver may not be that effective.
Another tactic that people try is to transfer assets to start the three-year waiting period, but this approach is not wise for the majority of people and can be downright foolish most of the time. Never just give away assets or put childrenÕs names on assets unless you have reviewed the advantages and disadvantages of such an action with an experienced elder law attorney. But that is a topic for another column where discussion will revolve around making the appropriate moves to minimize the economically devastating consequences of nursing home and late life medical expenses.
Out of space, but I do want to give a tip of the old fedora to Sue Kern of the Larimer County Social Services for her input and suggestions.