Medicaid is a federal and state program that, among other things, provides a safety net for families regarding nursing-home expenses. Medicaid is different from Medicare. Generally, Medicare pays for medical bills.
Medicaid also provides funding for those who reside in an assisted-living facility, which is known as special assistance. The rules governing special-assistance funding are different from nursing-home funding issues, and those rules will be addressed in another column.
The challenge for middle-class Americans is that they can work all of their lives, only to find that everything they have worked for is spent on the nursing home in the last months of their lives.
As many as two-thirds of people in nursing homes today are estimated to be on Medicaid. Many of these individuals start out paying for themselves, but over time, they run through all of their assets.
If you apply for Medicaid benefits for nursing-home expenses, the main issues are: (1) Do you need the highly skilled level of care of a nursing home? Medicaid will not pay for nursing-home expenses if you truly do not need that high level of 24/7 care; (2) Do you have more than $2,000 in so-called countable assets? This is the most difficult part of the test.
Eligibility rulesThe rules that govern these and other inquiries concerning one’s eligibility for Medicaid are set forth in the N.C. Department of Health and Human Services Adult Medicaid Manual, which may be accessed through the following website: http://info.dhhs.state.nc.us/olm/manuals/dma/abd/man/index.htm.
If you have assets above the minimum level, there will be a period of time before you are eligible for Medicaid.
If you have $11,000 in countable assets above the $2,000 exemption, for example, you would have to spend the extra $11,000 on qualified expenses before you would be eligible for Medicaid.
An applicant can either wait out the period of ineligibility, or reduce it by “spending down” one’s assets. An applicant, for example, can spend the extra amount on appropriate expenses, or on non-countable assets until the applicant reaches the level of assets where he is eligible for Medicaid.
There are assets that one might own or purchase that are not countable. The law, for example, wants to encourage you to have your burial plans in place. And owning the proverbial shirt on your back — the most basic of goods — is not going to keep you from qualifying for Medicaid.
Non-countable assets include: an irrevocable burial agreement, burial spaces such as grave sites, personal effects, household items, one car, and whole life insurance with a face value of $10,000 or less.
What prevents an applicant from giving away assets in order to qualify for Medicaid?
When you apply for Medicaid, the local Department of Social Services asks you a lot of questions, and your responses are under oath. You simply must be upfront and honest with DSS. Those questions include: What assets do you currently own, and what assets have you given away in the last five years?
If an applicant transfers assets within this period, they will generate a sanction period during which the applicant is not eligible to receive Medicaid.
There are additional issues as well, such as the tax consequences from any transfers. A transfer may not generate a gift tax, for example, but still disqualify an individual for Medicaid benefits for a period of time.
Families do have legitimate options to protect some assets from the nursing home.
One would be well advised to consult with an elder-law attorney to explore those options. One’s options are greater if these issues are addressed before a loved one’s significant health issues arise.
Remember: An informed choice is a smart choice.
Mike Wells is an attorney with Wells Jenkins Lucas & Jenkins, PLLC, in Winston-Salem.
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