Medicaid was established to accommodate the medical needs of those whose financial circumstances require assistance. Medicaid is a program funded by a combination of State and Federal governments. As such, the rules for qualifying are different in every state.
There may come a time that you or a loved one needs to consider tapping this resource for long term care. Qualifying for Medicaid in such circumstances is a very tricky situation and requires planning as long as five years into the future. That is the case when the estate has too many assets to qualify but distributing them legally as a means of planning in advance is a strategy to consider. If you give away assets to others before applying for Medicaid, your receipt of benefits may be delayed.
When there is a need for immediate additional healthcare, but the family wants to legally protect as many assets as possible certain (careful) steps need to be taken. In the case of a couple, where one needs care and may ultimately return to the home or dies, the couple or surviving spouse does not need to be left destitute, but that requires a plan.
Developing a Plan
If you see your family being in a situation were qualifying for Medicaid may be necessary, it is important to understand the process. While the steps below are informative, it is critical that you be guided by an elder law attorney who will know the ins-and-outs of the laws of California or in whatever state in which the person needing care lives.
Planning for this eventuality requires a three-step process:
- Have a financial power of attorney and a healthcare power of attorney in place. They need to include specific powers needed to act on the person’s behalf. These powers are specific to state laws. Good planning requires a POA to provide broad powers so agents can access and change documents like deeds, bank accounts and investment accounts.
- The next step is to get a detailed breakdown of the couple’s financial position and cost of care. This is easier if the couple is well organized and has the information available for each income stream and asset. The Medicaid approving agent will need proof of income including the taxes and other deductions taken from that income including such things as health insurance. You will also need several months of statements (bank, investment, retirement) for each account as well as deeds to property and other assets.
- The third step is to determine eligibility for Medicaid and make the necessary applications. This will depend on the type of care needed, but a typical case is for nursing home care. All income and assets are reported to Medicaid through a Resource Assessment request. The Medicaid office will do an assessment of what will be counted against the applicant. Assets in excess of the allowance will determine what must be “spent down” to be eligible for Medicaid coverage.
What is Counted – And What is Not
Not all income and assets are counted when considering eligibility for Medicaid. For your elder law attorney to best help you, you need to have all of the information available.
In simplest terms, Medicaid considers things that can be converted to cash to pay for your expenses to be countable assets. Countable assets include:
- Cash, checking, savings, credit union accounts, and certificates of deposit (CDs)
- Securities, stocks, bonds, and mutual funds
- Retirement accounts (deferred compensation, IRA, 401K or Keogh)
- Life insurance policies with a face value over $1,500
- A burial fund over $1,500 (or $3,000 per couple)
- Trust accounts
- Annuities
- Real property (other than a primary residence)
- Any vehicles other than your primary vehicle. Extra vehicles would include campers, snowmobiles, boats, and motorcycles.
Those assets that are considered non-countable by Medicaid include:
- Your Primary Residence if it will be used by the spouse or if the Medicaid recipient returns to the residence.
- Your primary vehicle (and a second vehicle if it is deemed medically necessary or necessary for employment)
- Funeral and Burial Funds under $1,500
- Property for Self-Support. (Property or equipment that you use in your job, property that provides income, or property that you use to provide goods to feed your household)
- Life Insurance Policies.
- Also generally not counted are the value of household goods and personal effects, such as household furniture, appliances, family heirlooms, household tools, and equipment.
What Is a Medicaid “Spend Down”?
US News has a summary of what a “spend down” involves: A Medicaid spend down is a financial strategy used when an individual’s income is too high to qualify for Medicaid. To be accepted into the program, some of the individual’s income must be spent down to ensure his or her assets are low enough to qualify for Medicaid.
However, keep in mind, each state regulates Medicaid spend-down eligibility differently. The process can be overwhelming and stressful, since Medicaid won’t pay for medical or nursing care until you’ve submitted the medical bills that will make up the spend down amount.
If you suspect your parent or loved one will need to meet spend-down requirements in the future, you’ll first need to understand the eligibility rules and limitations. Talk to an elder law attorney.
Be Prepared
The process of qualifying or Medicaid for long term care can be very stressful, but it can be accomplished in the right circumstances. By providing the necessary documentation, health care needs can be met without the well spouse being impoverished. Get the help you need as far in advance as possible.