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Nursing Home Secrets Revealed
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Medicaid Overview, Part I
Author: Paul Nicolosi
Medicaid, also known as medical assistance is a joint
federal-state program that provides health insurance coverage to
low-income children, seniors and people with disabilities. In
addition, it covers care in a nursing home for those who
qualify. Medicaid is a state administered program and provides
more comprehensive coverage than Medicare, particularly with
regard to nursing home care. However, not all nursing homes
participate in the Medicaid program. There are no limits on the
maximum length of a Medicaid recipient's stay at a facility. The
Federal government pays roughly one-half of the costs, while the
State covers the remainder. In Illinois, the agency that
administers Medicaid is the Illinois Department of Public Aid
(IDPA). In the absence of any other public program covering
long-term nursing home care, Medicaid has become the default
nursing home insurance of the middle class. While Congress and
the federal Health Care Financing Administration set out the
main rules under which Medicaid operates, each state runs its
own program. As a result, the rules are somewhat different in
every state, although the framework is the same throughout the
country. The following describes some of the basic rules
regarding Medicaid in Illinois.
Resource (Asset) Rules
In order to be eligible for Medicaid benefits in Illinois a
nursing home resident may have no more than $2,000 in
"countable" assets. While a Medicaid applicant may be eligible
even if these assets exceed the limits, the applicant will be
required to "spend down" these assets. This means that the cost
of care must be paid for by the Medicaid applicant to the extent
that the assets exceed the $2,000 limit. The spouse of a nursing
home resident--called the 'community spouse'-- is limited to one
half of the couple's joint assets up to $84,120 (in 2000) in
"countable" assets (see Medicaid, Protections for the Healthy
Spouse). The $84,120 figure changes each year to reflect
inflation. In addition, the community spouse may keep the first
$17,400, even if that is more than half of the couple's assets.
These figures change annually and are found in the Department of
Human Services policy manual. Basic Medicaid information is also
available at http://www.state.il.us/dpa/mednews.htm. All assets
are counted against these limits unless the assets fall within
the short list of "non countable" assets. These include: (1)
Personal possessions, such as clothing, furniture, and jewelry
with an equity value of no more than $2000. However, wedding
rings, engagement rings and items required because of an
individual's medical or physical condition are exempt regardless
of value. (2) One motor vehicle if it meets any one of the
following criteria: A) If it is necessary for employment B) If
it is necessary for transportation for medical treatment of a
specific or regular medical problem C) If it is modified for
operation by or transportation of a handicapped person or D) If
it is necessary because of terrain, remoteness or similar
factors to provide necessary transportation to perform essential
daily activities. A motor vehicle owned by a nursing home
resident is also exempt if transferred to a spouse. In all other
cases the exemption is limited to $4,500. (3) The applicant's
principal residence, provided it is in the same state in which
the individual is applying for coverage although some
limitations, discussed below, exist. (4) In Illinois, up to
$1,500 of revocable burial expenses are exempt and up to $4,120
in irrevocable prepaid expenses are exempt. However, the amount
of the revocable expense exemption is reduced by the amount of
irrevocable expenses. In all cases, expenses for burial space or
plots and other customary items such as a casket or headstone
are completely exempt. (5) Assets that are considered
"inaccessible" for one reason or another. These assets often
come in the form of specific types of trusts.
The Home Nursing home residents do not have to sell their homes
in order to qualify for Medicaid. In Illinois, the home will not
be considered a countable asset for Medicaid eligibility
purposes as long as the nursing home resident intends to return
home. The home may also be kept if the Medicaid applicant's
spouse, sibling, minor or disabled child lives there. However,
if the applicant leaves the home with no intention of returning,
the property must be counted as an asset.
The Transfer Penalty The second major rule of Medicaid
eligibility is the penalty for transferring assets. Congress
does not want you to move into a nursing home on Monday, give
all your money to your children (or whomever) on Tuesday, and
qualify for Medicaid on Wednesday. So it has imposed a penalty
on people who transfer assets without receiving fair value in
return. This penalty is a period of time during which the person
transferring the assets will be ineligible for Medicaid. The
penalty period is determined by dividing the amount transferred
by what Medicaid determines to be the average private pay cost
of a nursing home in Illinois. The period of ineligibility
starts on the first day of the month of the transfer. Example:
If a Medicaid applicant made gifts totaling $90,000 in a state
where the average nursing home bill is $5,000 a month, he or she
would be ineligible for Medicaid for 18 months ($90,000 ÷ $5,000
= 18). Another way to look at the above example is that for
every $5,000 transferred, an applicant would be ineligible for
Medicaid nursing home benefits for one month. In theory, there
is no limit on the number of months a person can be ineligible.
Example: The period of ineligibility for the transfer of
property worth $400,000 would be 80 months ($400,000 ÷ $5,000 =
80). However, the IDPA may look only at transfers made during
the 36 months preceding an application for Medicaid (or 60
months if the transfer was made to certain trusts). This is
called the "look-back period." Effectively, then, there is now a
36-month limit on periods of ineligibility resulting from
transfers. This means that people who make large transfers must
be careful not to apply for Medicaid before the 36-month
look-back period passes. Example: To use the above example of
the $400,000 transfers, if the individual made the transfer on
January 1, 1998, and waited until February 1, 2001, to apply for
Medicaid -- 37 months later -- the transfer would not affect his
or her Medicaid eligibility. However, if the individual applied
for benefits in December 2000, only 35 months after transferring
the property, he or she would have to wait the full 80 months
before becoming eligible for benefits.
About the author:
Rockford native Paul Nicolosi concentrates his legal practice in
business law and transactions, and business and estate planning.
He is active on several company boards and participates in
regular company reviews for consideration by venture capital
firms.
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A Quick Note
From The Publisher...
If you like the article above, you may be
interested in the following article which is also related to Elder Care...
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How Will You Pay For Skilled Rehabilitation In The Nursing Home |
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One of the most frustrating events for individuals facing rehabilitation is thinking that their insurance is going to pay for everything and finding out that their insurance will not pay for the complete services required for a successful rehabilitation. Nursing home skilled units want to be assured that the necessary steps will be taken to assure that they will be paid. Nursing homes are most familiar with Original Medicare, Medicare Advantage Plans, Medicare Managed Care Plans, Medicare Preferred Provider Organization Plans, Medicare Private Fee-for-Service Plans, Medicare Specialty Plans, federal employee health program, military health program and railroad retirement programs. If your patient has one of these, they will be highly considered once that payer source is verified. Medicare Part A is the primary source of insurance that will pay for a skilled nursing home stay. Medicare pays 100% of day 1 through day 20 and from day 21 up to day 100 Medicare will pay everything less... |
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