Number One: Medicaid is not Medicare.
Medicare is a federal health insurance program for people 65 years of age and older and for people under 65 who are totally and permanently disabled. Medicare is not means tested. Medicare provides limited coverage for nursing home stays – only up to 100 days, after meeting eligibility requirements.
Medicaid is also a federal program that provides insurance coverage, as well as in-home, assisted living, and nursing home benefits. Medicaid is a means tested program, meaning the applicant must have income and resources below a certain threshold. Medicaid eligibility depends on meeting both financial and non-financial requirements.
Number Two: Non-Financial Requirements for Long Term Care Medicaid Eligibility.
To qualify, generally an individual must be a resident of the state and be blind, disabled or over the age of 65. Additionally, the individual must need skilled nursing care. In general, this means that the individual needs assistance with at least two activities of daily living (ADLs) – bathing, toileting, eating, dressing, grooming and mobility.
Number Three: Financial Requirements: Income.
In 2020, an individual applying for Medicaid benefits must have gross monthly income under $2,349 per month. If the gross monthly income is higher, then we can establish a Qualified Income Trust (QIT) or Miller Trust to make the individual income eligible for Medicaid. If the applicant is married, only the applicant’s income is counted. The “Community Spouse” is allowed to keep their own income and in certain circumstances where the Community Spouse’s monthly income is below a certain threshold, they may be entitled to keep a portion of the applicant’s income.
Number Four: Financial Eligibility: Assets.
The final eligibility test is the asset test. An individual must have under a certain amount of countable assets in order to qualify for benefits. In general, an individual must have less than $2,000 in countable assets. Not everything you own is countable. For example, one vehicle capable of transporting the applicant for medical care is not countable. Additionally, for married couples, their home is exempt so long as the Community Spouse continues to live in the home and their equity is under $595,000; however, a single applicant may only exempt their home for six months. In addition, certain protections are offered to the Community Spouse to protect them from impoverishment. In Kentucky, the Community Spouse may keep half of the couple’s combined assets up to a maximum of $128,640 and if their combined assets do not exceed $25,728, the Community Spouse can keep all of their assets. Any assets not protected for the Community Spouse, or above $2,000 for a single applicant, must be spent down for the benefit of the applicant (or couple) in order to meet this eligibility requirement.
Number Five: Five Year Look-Back Period and Penalties.
An applicant’s eligibility for Medicaid can be adversely affected when the individual (or spouse) transfers assets for less than fair market value during a period known as the “Look-Back Period.” The Look-Back Period is the 60-month (five-year) period, which begins on the date that a Medicaid application is submitted. Any transfers (including gifts!) for less than fair market value made within the Look-Back Period must be disclosed to the caseworker. Any gift during this time period can subject the applicant to a penalty period. This penalty will cause the applicant to be ineligible for Medicaid beginning with the month that an application is filed, assuming they are otherwise eligible at the time. The penalty period is calculated based on the total amount transferred. For roughly every $6,000 that an applicant transfers without fair compensation, Medicaid will not pay for one month of nursing home care. However, under Kentucky law some transfers to spouses and children may be exempt. The rules on exempt transfers are very specific, so before making any transfers, you should consult an attorney familiar with the nuances of exempt transfers for Medicaid eligibility.
Individuals and couples may be able to implement Medicaid planning before or after the Look-Back Period. The planning options available depend on the applicant’s exact circumstances. Here at English, Lucas, Priest, & Owsley, we have attorneys familiar with your planning options and their effects on future long term care. We can help you determine the best path. Contact me, attorney Leah Morrison, for assistance in planning for your future & long term care. You can reach me at 270-781-6500 or lmorrison@elpolaw.com.
-by Leah Morrison
About the Author: “This area of the law is very personal to me. I witnessed first-hand the struggles a family can go through in having to place a family member in skilled nursing care with my grandfather. Before his passing, my grandmother had to shoulder the burden of first needing to make the decision to place him in a skilled nursing facility and then obtain the financing to assure he received quality care for the rest of his life. Neither was easy on her. In offering these new services, I hope to be able to help families navigate the Medicaid application process and alleviate the burden of financing their loved one’s care during an already difficult time.”
