Qualify for Medicaid?
September 19, 2017
Medicaid is at the center of the current health care debates in Washington. People fear that the demographics in this country will result in skyrocketing Medicaid program costs. Americans have not saved enough to pay for end-of-life health care – thus Medicaid will come under increasing strain. Many of our clients confer with us concerning Medicaid planning, which is sometimes described as divestment. First and foremost, before talking about Medicaid planning, a client needs to talk about how to “qualify” for Medicaid. Medicaid eligibility differs by state and also by marital status. Currently, you cannot have income higher than $2,205.00 to $2,898.00 per month per person, including your Social Security benefits. In addition, there are asset restrictions of $2,000.00, unless there is a spouse who is not receiving care – in which case that spouse can have up to $120,900.00, while their husband or wife qualifies for Medicaid. The primary residence does not count in the asset calculation, but there is a cap of home equity if the recipient of Medicaid is single.
To “qualify” for Medicaid, some lawyers may encourage gifts to family members, but those gifts must be made more than five (5) years before an application for Medicaid is ever filed. Unfortunately, there may be hundreds of nuances, and even then, no one can guarantee that a person will qualify for Medicaid benefits, no matter what estate planning is currently crafted. Our clients need to keep in mind that this is an ever-changing area of the law. There are no guarantees that the eligibility requirements set for today will be the same tomorrow – or when our clients actually apply for Medicaid eligibility.
In order to determine whether a person is eligible for Medical Assistance, he or she must meet two requirements: Resource Limitations, and Income Limitations. Much to the surprise of many of our clients, in the determination process, a married couple’s total resources, regardless of title, premarital agreement, or marital classification agreement, are added together.
Another aspect of determining whether a person is eligible for Medical Assistance that surprises many of our clients, is that the Community Spousal Resource Allowance (the amount of assets the community spouse may keep – currently $120,900.00) is determined as of the date of “institutionalization” not on the date that the Medicaid application is actually submitted.
We can discuss with our clients how to meet the Resource Limitation requirements, if there is enough time before the institutionalization of one of our clients, or the application for Medicaid eligibility by one of our clients. In order to meet the Resource Limitation requirements, it may be necessary to “spend down” resources, until our clients meet the required level. We discuss with our clients the differences between “spending down” and “divestment.” Divestment is when our clients give away, transfer, or sell any asset for less than fair market value. If divestment occurs within five (5) years of applying for Medical Assistance, or institutionalization, a person will be considered ineligible for Medicaid at that time.
If one of our clients chooses to “divest” assets, a waiting period for Medicaid/Medical Assistance eligibility will be imposed. This waiting period is calculated by dividing the value of the gift(s) by the average monthly cost of private care in Wisconsin. For example, if a person were to gift away $60,000.00 worth of assets, and the average nursing home cost in the State of Wisconsin was $5,339.00 a month, that person would have to wait eleven (11) months before becoming eligible for Medical Assistance.
In addition, the State of Wisconsin has an Estate Recovery program, wherein they may file claims against the estate of the deceased Medical Assistance recipient in order to attempt to recover some of the benefits paid. In addition, the State of Wisconsin may be able to impose a lien against the home of a nursing home resident who received Medical Assistance.
Our office, when representing clients in Medicaid cases, understands one basic fact: Medicaid law is confusing, contradictory and in a permanent state of flux. Due to the fact that Medicaid planning is so complex, you have a need for a qualified lawyer if it is your desire to protect your family’s assets from huge nursing home costs. There are many factors that need to be considered in estate planning. If you are already Medicaid-eligible by the time long-term health care is needed, there may indeed be few choices available to you. Not every in-home provider or nursing home accepts Medicaid, or has unlimited capacity to accept persons on Medicaid. Your care may be worse if you are on Medicaid, as compared to if you kept as much money as possible to pay for future health care of your choice.
Ethically, if you worked to accumulate assets that can be used to pay for your future health care, shouldn’t those assets be used to pay for your health care? Why should you plan to transfer your assets, so that you can become eligible for governmental medical assistance, just for the purpose of preserving those assets for your children – after your death? The law does allow people to pre-plan, and to set up their estates in a manner which makes it more likely that they will qualify for Medicaid, and at the same time preserving their assets for their heirs.
We are all getting older. If we wait too long with regard to our estate planning options, there may be no options available to us – unless we properly plan right now.