Q: I have seen articles by you in other publications and feel that you should share with your Senior Voice readers the qualification rules for nursing home coverage under Medicaid.
A: The devastation of nursing home bills and late life medical expenses does play on SeniorsÕ minds. Although I have previously written on the subject in the Senior Voice, let me approach the subject from a different perspective.
For a single person there are two tests Š income and asset ownership. To qualify for Medicaid, no more than $1692 can be earned each month. If an applicant has more income than $1692, but less than $4742 a month, a single person can still qualify but must transfer his or her income into a "Utah Trust" or a "Medicaid Trust."
For Northern Colorado, $4742 is the governmentÕs figure for the average nursing home cost (a figure that is adjusted periodically). Thus, if an individualÕs income is more than that figure, then a person is deemed able to pay his or her way. But if a personÕs income is between $1692 but less than $4742, a person is too "rich" to qualify but cannot afford the nursing home expense. Thus, the "Utah Trust" or a "Medicaid Trust" still permits those folks to benefit from Medicaid.
A single person cannot have more than $2000 in personal property (bank accounts, clothes, personal possessions, etc.). However, a single person can have up to $1500 of life insurance, an irrevocable prepaid burial plan, necessary medical equipment, and a car (if used for medical reasons). Further exempt property would include a wedding ring or engagement ring and the equity in the principal residence. But note that the house can be taken after death to reimburse for the Medicaid expenditures.
A married couple must have less than $94,760 ($92,760 + $2000 of the institutionalized personÕs resources). But just as with a single personÕs eligibility criteria, the institutionalized spouse will have the same exempt property restrictions, including the house. But there is one major exception. If the community spouse (the one not in a nursing home) survives his or her institutionalized spouse and if the community spouse is not on Medicaid, then the house will not be taken and remains the exempt property of the surviving spouse.
Remember, there is also an income test for a couple, just as for a single person. The combined income for both cannot exceed $1692 per month. If income is more than that figure but less than $4742, the same trust arrangement can be set up, but the community spouse can receive income from the trust up to $1575 (based on a formula) with the possibility of receiving as much as $2319 under special circumstances.
Now a person cannot just give away assets and income and immediately qualify for Medicaid. There is a three year period of ineligibility after such transfers and a five year waiting period for transfers to a trust.
But there are things that can be done to qualify for Medicaid. A person or couple can "spend down" by purchasing such things as irrevocable prepaid burial plans, burial plots, medical equipment, or a car. A married couple (and possibly a single person too) can pay off the mortgage and do home improvements as well. Until recently, a generally used scheme was to convert assets into an annuity and have that amount payable to the community spouse. But now that the income from both spouses is considered, this approach may not always work, given the previously mentioned income rules.
I must stop here because this column is ending where several of my other Senior Voice columns begin. Please refer to them for ways of evaluating the financial risks of a nursing home stay and why making transfers to start the three-year period running is probably not wise and may be downright foolish for most folks. But review the past columns to refresh your memory as to why I would make such a statement.