MEDICAID – a common way to finance long-term care
Kansas Medicaid Basics
Medicaid is a state and federal Program to assist those persons who qualify with their medical expenses. Medicaid began as a welfare program, but has begun to be viewed as a way to finance long-term care for many more Americans. The expense of long-term care can be devastating, so Medicaid may be a real boon to you or your family.
This is an overview of Medicaid eligibility requirements. These may or may not apply to your situation. The comments appearing on this website are not intended to substitute for a consultation with a qualified elder law attorney regarding an individual situation.
Medicaid benefits can be available to those who:
- Are medically needy, meaning age 65 or disabled
- Have insufficient means to meet medical expenses which include nursing home fees [as determined by law, not personal viewpoint]
- Have total non-exempt resources no greater than $2,000 for an individual ($3,000 for married couple both in nursing care)
- Have made no gifts (uncompensated transfers) to other persons or trusts within 5 years immediately prior to the Medicaid application [includes converting into joint tenancy with another individual].
Of these rules, the resource and transfer rules are the most difficult to understand. First, Medicaid considers certain resources as exempt, or not countable, for purposes of Medicaid eligibility:
- The homestead, and surrounding land [if located in Kansas]
- Household goods & furnishings [but not valuable artwork, guns, coin collection, etc]
- One car, regardless of value
- Most burial arrangements and a cemetery plot for each spouse
- Ongoing business or income-producing property, in limited situations
- Retirement accounts of the “community spouse” (the one residing outside the nursing home)
Resource Rules for Married Persons
If the Medicaid applicant is married, special resource rules apply. Medicaid looks at all of the resources owned by the couple, whether owned jointly or individually. The amount of non-exempt assets owned by the couple at the time nursing care begins for one spouse (the “nursing home spouse”) determines how much the community spouse will be allowed to keep. The Community Spouse Resource Allowance (CSRA) depends on the total combined non-exempt resources of the couple. Under current law (2014), the “community spouse” (the one still at home) may keep the first $23,448, or 1/2 of the non-exempt resources (assets), up to a $117,240 maximum.
The remaining resources are attributed to the nursing home spouse and must be spent down to reach Medicaid eligibility. The way these resources are spent down can be critical to good Medicaid planning, so it is important to consult an elder law attorney before significant spending is done, rather than afterward when it may be hard to unravel. Ina Kay Zimmerman can discuss many different options for achieving Medicaid eligibility for all types of family situations.
Medicaid also has rules to protect income for the community spouse remaining in the home, which can allow that spouse to keep his/her own income and enough of the income of the nursing home spouse to assure as much as $2,931 per month in some instances, but no less than $1,966.25 in monthly income. The remainder of the nursing home spouse’s income must be used for care expenses except for a $62 monthly “personal needs allowance” and an allowance to pay health insurance premiums and pre-existing medical debt.
Medicaid rules are designed to discourage applicants from giving away their money. The Medicaid agency (Kansas Dept. for Families and Children, formerly SRS) will look in the five years prior to the Medicaid application for any transfers of money or property for less than fair market value (often referred to as gifts).
Any gifts during this “lookback” time can disqualify the applicant for Medicaid benefits. The penalty begins when a Medicaid application is filed, rather than the date of the gift, so it is important to keep records of any gifts made to preserve the information for a time when questions are asked about them. All plans for transfers of money or property for less than fair market value should be made with caution, and AFTER a consultation with an elder law attorney. There can be tax consequences for such gifts, as well. Remember that neither the $13,000 federal estate tax exclusion or the Kansas gift tax exclusion have anything to do with Medicaid.
Concealing assets is usually self-defeating, and it’s worthwhile to remember that Medicaid fraud is a crime. It is often possible to shelter resources to provide goods or services to the spouse at home, and still allow the nursing home spouse to be eligible for Medicaid benefits. A primary goal for an elder law practitioner will usually be ensuring a high standard of care and dignity for a loved family member in a long-term care facility. Remember that each case is unique because of the differences in the family dynamics and the type of resources involved. Don’t expect that the same solution your friend used will work for you.
Medicaid is required to recover reimbursement of the benefits paid out for care of the recipient, from the estate of every recipient over the age of 55. Property which was not counted for eligibility may still be subject to a claim by estate recovery on the death of the Medicaid recipient. This can have a significant effect on decisions about the home and other property. Liens may attach to the home, and retaining an empty house is difficult to justify, even when the sentimental value is high. If the spouse or a disabled child live there, additional rules apply and things may look a little better.
Why Long-Term Planning?
Most people make plans to deal with their estates upon their death. Planning makes sense to avoid unnecessary expenses and delay. Estate planning and long-term care planning can contradict each other, though, and what is an advantage in one situation can be a liability in the other. The expense of long-term care can render that expensive estate plan meaningless by robbing your estate of its value. In the same way you plan to avoid expenses upon death, consider planning for long-term care. With careful planning, you can maximize the protections under the law, and plan to use your resources to the fullest advantage.
Regardless of your situation, you have choices. Make sure you know about your full range of choices. Seek professional advice about long-term care planning for you and your family. It’s never too early or too late to plan for your own future and the future of your family.
Medicaid rules are complicated. Each of the rules discussed has exceptions and limitations which may cause them not to fit your situation. The Zimmerman Law Office is available to assist you in making the right decisions for your situation, and help you deal with all aspects of long-term care planning.