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Medicaid for Long-Term Care
Originally published in the Spring 2011 issue of PDF News & Review.
By Janna Dutton, J.D.
For people with Parkinson’s disease (PD) and their families who are thinking about the possible need for long-term medical care, it is important to understand what help may be available through Medicaid. As we have mentioned in previous installments of this four-part series covering legal issues and Parkinson’s, long-term care includes not just the services of a skilled nursing facility, but such resources as assisted-living communities and the in-home aides who can help you with personal needs such as dressing, shopping, eating and cooking. The term can also include community services.
Medicaid, which is funded jointly by federal and state governments, is separate from Medicare, the program for older Americans. Medicaid helps people with few financial resources to pay for medical care and can pay for long-term care services. Determining eligibility for Medicaid, however, is complex, and varies from state to state. In general, to be eligible you will need to show family income below a certain level, but there are provisions to enable you to keep certain assets without losing eligibility.
In the last three issues in this series, we reported on the importance of long-term care, and delegating decisions for health care and financial matters. In this final article, we discuss the basics of eligibility for long-term care under Medicaid. If you think that you may need help in paying for long-term care in the future, it is best to begin investigating Medicaid now. By planning ahead, you also can help ensure that your assets are protected.
The federal government establishes general guidelines for Medicaid. In general, in all states, to be eligible for Medicaid coverage of long-term care in a nursing home, assisted living, or in-home program, you must be:
- over the age of 65, or disabled
- able to show that you do not have enough income to pay for your needed care
- able to show that you have not made a non-allowable transfer of assets during a certain period of time before your application (see details below)
One of the most important things to understand about Medicaid is that each state administers its own Medicaid program. Because of this, the services that are covered by Medicaid vary significantly from state to state — as do the income limits that are used to establish eligibility for the program.
In most states, as long as your accountable monthly income — that is, your net income after adjustment for certain allowable deductions — is less than the cost of your care, you will be eligible for Medicaid. Be aware that there are ways to protect certain assets to ensure you can provide for your needs and those of your family without losing your eligibility.
Supporting Your Spouse
If you bring in most of the household income, and also need nursing home care, the eligibility rules will usually allow you to give some portion of your income to supporting your spouse who is still living at home. A spouse who lives at home is called, in legal terms, a “community spouse” (hereinafter described simply as “spouse”).
The rules will also allow you to take a deduction for the funds you have set aside for your spouse if he or she qualifies for it.
Some types of property are considered exempt from consideration for Medicaid eligibility. These include:
- $2,000 in a bank account, for the purchase of clothing and other items
- Homestead property (this helps protect your home, but in some cases the equity protected is limited)
- Personal effects and household goods
- Automobile worth $4,500 or less (if needed for medical transportation, modified, or for employment, the allowance is higher)
- Burial plot, tangible burial items and exempt prepaid burial arrangements
- An asset allowance for your spouse (calculating the amount allowed is complicated and varies by state)
Medicaid programs have regulations about how you can transfer funds to others without putting your eligibility at risk, and recent legislation has made these regulations more stringent. For example, under the new law, the “look-back” for Medicaid eligibility is 60 months. This means that if today you are applying for Medicaid to cover long-term care, you must report on what you have done with your assets during the last five years.
This provision is designed to make sure that people do not give away assets to make themselves eligible for Medicaid. If this review shows that you have made what is called a “non-allowable transfer” of funds or assets, you might be denied eligibility for Medicaid for a specified period.
Some financial transfers are allowable; for instance, you can transfer unlimited assets to or for the benefit of any disabled person (that is, a person who meets the Social Security Administration definitions for being disabled and is receiving benefits). This person can be, but does not have to be, a child. Such a transfer would need to be part of a trust document or a power of attorney (see previous installments of this series for further information).
Additional allowable financial transfers that will not affect your eligibility for Medicaid include:
- Transfer to or for the benefit of an adult disabled child (SSA definitions of disabled)
- Transfers to a trust for the benefit of a disabled person
- Transfers made exclusively for reasons other than to become eligible for Medicaid
- Transfers for fair market value (you can sell assets for fair value, but cannot give them away and then apply for Medicaid)
- In cases where the imposition of a penalty period will cause a hardship (e.g., it would impact a person’s health or basic necessities such as food, clothing or shelter)
- Certain transfers of homestead property (for example, to a spouse, to a disabled child, or to a caregiver child who has been living in the home for at least two years)
You can also plan for the future without losing eligibility by putting your assets into a trust — that is, a legal arrangement in which one person, the trustee, holds property for the benefit of another, the beneficiary. The funds held in one of these trusts can be used for your benefit while you continue to receive Medicaid. There are certain requirements, e.g., the trusts must be irrevocable, meaning they cannot be reversed and under certain circumstances (for example, if the beneficiary passes away), the trust must pay back Medicaid.
There are two kinds of exempt “OBRA Trusts” — named for the Omnibus Budget Reconciliation Act of 1993 — that are authorized under federal law to help people with disabilities to plan for Medicaid. One of the approved uses of such a trust — in states where Medicaid would not pay for a private room in a nursing facility — would be to pay for the difference in rates between a private room and a shared room. Another would be to pay for additional services or facilities not typically paid for by Medicaid, such as recreation or a computer.
OBRA Trusts are good planning devices, and can be set up at the last minute. If you are sure that you want to use this option in the future, be certain that you have provisions in your power of attorney or finances document allowing your agent to set up the trust if you are not fully capable.
Applying for Medicaid
How can you get started? You can apply for Medicaid by contacting your local department of social services or human services and asking for a Medicaid application (this may be administered by your county, and may have a different name, such as “Department of Children and Families”). To fill out the application, you will need, among other things, your birth certificate, social security number, proof of address, and information about your finances and any insurance you have.
But before you do this, remember that there are planning options that you can use in order to make the most of your assets. For help, you should consult a knowledgeable elder law attorney in your state. You can find one through the National Academy of Elder Law Attorneys. If possible, work with someone who is a certified elder law attorney (CELA). Remember, it still is important to get a referral to make sure you find an attorney with whom you are comfortable.
As with other legal issues and Parkinson’s, if you think that it is likely you will need some sort of chronic long-term care, and you have no source of paying for it other than Medicaid, start right now to do your planning. This can put you and your loved one’s minds at ease and ensure your quality of care for the future.
Ms. Dutton is an Eldercare Attorney with Dutton & Casey. She recently presented this topic at one of PDF’s PD ExpertBriefings. This article is the final in a series of four articles, now available on PDF's website.