Medicaid Eligibility and Application Assistance

For all practical purposes, in the United States the only “insurance” plan for long-term institutional care is Medicaid. Medicare only pays for approximately 7 percent of skilled nursing care in the United States.  Private insurance pays for even less.   The result is that most people pay out of their own pockets for long term care until they become eligible for Medicaid.  While Medicare is an entitlement program, Medicaid is a form of welfare – or at least that’s how it began.  So to be eligible, you must become “impoverished” under the program’s guidelines.

For most individuals, the object of long-term care planning is to protect savings (by avoiding paying them to a nursing home) while simultaneously qualifying for nursing home Medicaid benefits.  This can be done within the following rules of Medicaid eligibility.

The basic rule of nursing home Medicaid eligibility is that an applicant, whether single or married, may have no more than $2,000 in “countable” assets in his or her name.  “Countable” assets generally include all belongings except for (1) personal possessions, such as clothing, furniture, and jewelry, (2) one motor vehicle, (3) the applicant’s principal residence (if it is in Massachusetts), and (4) assets that are considered inaccessible for one reason or another.

If an applicant (or his or her spouse) transfers assets (i.e. makes gifts), he or she will be ineligible for Medicaid for a period of time beginning on the date of the transfer.  The Division of Medical Assistance may only consider transfers made during up to 60 months preceding an application for Medicaid – the “look-back” period.  Effectively, then, there is a 60-month cap on periods of ineligibility resulting from transfers.  People who make transfers have to be careful not to apply for Medicaid before the 60 month look-back period passes.  You may not even realize that you are making a transfer if, for instance, you pay for a wedding, school, a vacation, or other items for your children or grand-children. Transferring assets to certain recipients will not trigger a period of Medicaid ineligibility. These exempt recipients include: (1)  A spouse (or anyone else for the spouse’s benefit); (2)  A blind or disabled child; (3)  A trust for the benefit of a blind or disabled child; or (4) trust for the benefit of a disabled individual under age 65 (even for the benefit of the applicant under certain circumstances).

Special rules apply with respect to the transfer of a home.  In addition to being able to make the transfers without penalty to one’s spouse or blind or disabled child, or into trust for other disabled beneficiaries, the applicant may freely transfer his or her home to: (1) A child under age 21; (2) A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home; or (3) A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided such care that the applicant did not need to move to a nursing home.  A transfer can be cured by the return of the transferred asset in part or in its entirety.

When a nursing home resident becomes eligible for Medicaid, all of his or her income, less certain deductions, must be paid to the nursing home.  The deductions include a $72.80-a-month personal needs allowance, a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance he or she must pay to the spouse that continues to live at home.

Medicaid law provides for special protections for the spouse of a nursing home resident, known in the law as the “community” spouse.  Under the general rule, the spouse of a married applicant is permitted to keep up to $115,920 in 2013. But you should also remember that it is not always necessary to spend down excess assets.  There are legal ways to preserve these assets for the benefit of the community spouse.

In all circumstances, the income of the community spouse will continue undisturbed; he or she will not have to use his or her income to support the nursing home spouse receiving Medicaid benefits.  In some cases, the community spouse is also entitled to share in all or a portion of the monthly income of the nursing home spouse.

Applying for Medicaid is cumbersome and tedious. Every fact asserted in the application must be verified by documentation.  The application process can drag on for several months as the Division of Medical Assistance demands more and more verifications regarding such issues as the amount of assets and dates of transfers.  If the applicant does not comply with these requests and deadlines on a timely basis, the Division of Medical Assistance will deny the application. In addition, after Medicaid eligibility is achieved, it must be re-determined every year, this is why it is important to consult an elder law attorney when looking to apply for MassHealth benefits.


Contact Attorney Margot Birke for More Information

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