MEDICAID IN GENERAL

I. Introduction.

This memorandum is intended to give the readers a brief understanding of Medicaid law and how it applies to the elderly. Because the laws and regulations governing Medicaid are ever changing, the readers should discuss their specific situation with their attorney before relying on the information contained herein.

Medicaid is a state and federally funded program administered by the Nebraska Department of Social Services which is designed to pay the cost of nursing home care for an elderly patient when they are unable to financially afford nursing home care. As the cost of nursing home care can run between $5,000.00 and $7,000.00 per month, there are many elderly individuals who are unable to afford this cost yet do require the supervision and assisted living arrangements that a nursing home provides. In this situation, the Department of Social Services, as the administrator of Medicaid, will investigate the elderly person's assets and determine if they have insufficient funds in which to provide for nursing home care. There are certain assets that the elderly person may have and that the Department of Social Services will not consider when determining whether the elderly person has insufficient assets in which to pay for their nursing home care. The assets that are not included will be discussed later in this memorandum. In addition if the elderly person has a spouse that does not need nursing home care, some of the assets and income of the non-nursing home spouse will not be considered in determining whether the spouse to be placed in the nursing home qualifies for Medicaid. These assets and their amounts will also be discussed later in this memorandum.

If an elderly person does qualify for assistance from the Medicaid program, generally his or her income or social security benefits will be paid directly to the nursing home. The remainder owed to the nursing home for nursing home care will be paid by Medicaid. The elderly person in the nursing home is
reserved $40.00 per month out of his or her income as a "spending allowance".



II. How Does One Qualify For Medicaid?

There are three elements that a person must meet before they can qualify for Medicaid and thus, have their nursing home care paid, in part, by state and federal funding. The first element involves status issues, the second element involves resources, and the third element involves income.

A. General Status Requirements.

1. The applicant for Medicaid assistance must be a
United States citizen.

2. The applicant must be a Nebraska resident. A
resident is defined as an individual living in
this state voluntary with the intent of making
Nebraska his or her home.

3. The applicant for Medicaid may not reside in a
public institution such as a regional center or
any Veterans Administration facility.

4. The applicant for Medicaid must not have deprived
him or herself of resources or income in violation
of Medicaid program rules. This topic will be
discussed below under III (Transfer of Assets).

5. The nursing home facility that the applicant
intends to reside in or has been residing in must
be certified by the Medicaid program.

6. The applicant must be age 65 or older, or if the
applicant is age 65 or younger, they must be
disabled or blind.



B. Resource Guidelines.

1. At the time the person applies for Medicaid
assistance, their total resources must be less
than the following:

(a) Single person - $4,000.00.

(b) Married couple who applies for Medicaid
for both spouses at the same time - $6,000.00


(c) Married couple who apply under the "Spousal
Impoverishment Program":

i. If the total amount of their assets is
less than $18,552.00; the non-nursing home
spouse may keep the entire amount plus
$4,000.00 for the spouse who is entering
the nursing home and applying for
Medicaid.


ii. If the total amount of both spouse's
property exceeds $18,552.00. The spouse
who is not entering into the nursing home
may retain one-half of said assets so
long as that one-half portion does not
exceed $92,760.00. Any amount beyond
$92,760.00 and the remaining half of the
total assets must be applied towards the
spouse's nursing home costs before
Medicaid will begin paying for said
spouse's nursing home costs.

2. It is very important to note that under Medicaid regulations, certain assets and their values are completely excluded from consideration as a resource in the formula outlined in paragraph 1 above. The following resources are excluded in making a determination of whether a person is eligible for Medicaid:

(a) Real property occupied as a home if the person
applying for Medicaid, his or her spouse, or a
dependent of the person applying for Medicaid
resides in the house. The house is also
excluded as a resource if the individual
entering into the nursing home plans on
returning back to the house within six months
of entering into the nursing home.

(b) Household goods and personal effects of a
moderate value used in the home. For example,
paintings by a Master would not be excluded
as a resource while a piece of antique
furniture in daily use at the home would be
excluded.

(c) One motor vehicle per person or per married
couple. A single person who is entering into
a nursing home must demonstrate that the car
is needed for employment or medical transpor-
tation. However, if one spouse enters the
nursing home, the non-nursing home spouse
may keep one motor vehicle regardless of its
intended use.

(d) An irrevocable burial trust for each person
funded with a maximum amount of $3,000.00
per person or $3,000.00 in burial insurance,
or $1,500.00 designated for burial either in
an account or in an insurance policy.

(e) $1,500.00 combined original cash value of
life insurance for each person.

(f) Business equipment, fixtures, or machinery
which is being used in a trade or business.

(g) Life estates in real property. However, any
income generated by the life estate must be
used to pay a portion of the nursing home
care.

(h) Land contracts which cannot be sold. For
example, if a Medicaid applicant has
privately sold land on contract to a third
party in return for $400.00 a month payments,
the $400.00 a month payment will go towards
the applicant's nursing home care, however,
the land will not have to be sold.

(i) A trailer or mobile home occupied as a home.

(j) There are other miscellaneous excluded
resources which are listed under HHS 496 NAC
2-009.02B as well as other regulations dealing with Medicaid.

C. Income Requirements.

1. Individuals in long-term care facilities:

Each individual is allowed to retain $40.00 per month of his/her income for personal needs. The remainder of his/her income is paid to the care facility. Medicaid will pick up the remaining balance of the nursing home care.

2. Married couples who have completed the spousal impoverishment process:

The community spouse (spouse who does not require Medicaid assistance or nursing home care) may retain all income which comes in his or her name regardless of the amount. If the community spouse's income is less than $1,254.00 per month, income from the spouse who requires Medicaid assistance is given to the community spouse to bring the community spouse's income to as close to $1,254.00 per month as possible. If the community spouse has a mortgage payment or pays rent, a formula is used which could raise the community spouse's income to as high as $1,918.00 per month.

III. Transfer of Assets.

So far we have discussed the eligibility, income, and asset criteria that a person must meet at the time they apply for nursing home assistance through the Medicaid program. If these were the only items that the Department of Social Services looked for as the administrator's of the Medicaid program, then it would be very easy for someone to qualify for Medicaid. All a person would have to do is transfer or gift out all their assets a week or two before they go into the nursing home and apply for Medicaid. Presumably, if they had nothing left, Medicaid would pick up the cost of the nursing home care. However, as with many government programs, it is not that easy. Medicaid laws and regulations are designed to disqualify someone who transfers assets that could have been used to pay their nursing home care. Therefore, certain transfers by a person which were made before such person applies for Medicaid may make that person ineligible for Medicaid and, therefore, that person must pay for their nursing home care without any state or federal assistance. The transfer that makes a person ineligible for Medicaid is called a "deprivation of a resource".

A. Rule Regarding Deprivation of a Resource.

A person applying for Medicaid will be ineligible
for assistance if he or she disposed of a resource for less than fair market value within 60 months (five years) of the date that person applied for Medicaid (look back period).


B. Period of Ineligibility.

If a deprivation of a resource occurred within the period of above-described, the individual intending to reside in the nursing home will be ineligible for Medicaid for a number of months depending upon the value of the resource that was transferred. The Department of Social Services will determine the value of the resource that was transferred and the divide that by the actual monthly cost of care in a nursing home at a private pay rate. That result will be the number of months that the individual will be ineligible for Medicaid beginning with the month that the person filed the application for assistance. For example, if an elderly widow gave her house to her son on June 1, 2005, and at the time of the transfer the house was worth $100,000.00, the private pay rate of nursing home care is $5,000.00 a month. The elderly widow applies for Medicaid on February 1, 2008. The elderly widow will be ineligible for Medicaid assistance in her nursing home care costs for 20 months after February 1, 2008

In the above example, if the elderly widow had transferred her home to her son on or before February 1, 2000, the transfer would not be considered a deprivation of resource and the elderly widow would more than likely qualify for Medicaid. This is because the transfer did not occur within the 60 month look back period from the time that the elderly widow applied for Medicaid in February of 2008.

C. Transfers Not Considered a Deprivation of Resource.

It is not considered a deprivation of a resource if:

1. The individual applying for Medicaid
transfers an asset to a trust established
solely for the benefit of the individual's
son or daughter who is blind or disabled.

2. The individual applying for Medicaid
transfers an asset to his or her spouse
under the spousal impoverishment regulations
(outlined below).

3. The individual transfers an asset to a
resource that is excluded, such as an
irrevocable burial trust, life insurance,
or other excluded assets indicated under
III B.

IV. Spousal Impoverishment Program.

The spousal improverishment program deals with a situation where one spouse requires Medicaid assistance in a nursing home and the other spouse does not. This situation will arise when
one of the spouses in the marriage requires nursing home care while the other spouse does not.

(a) If the combined assets (less the excluded
assets as previously described in this memorandum)
of both spouses are less than $19,348.00, the
spouse requiring the nursing home care is
eligible for Medicaid without reduction of assets.
However, if the combined assets are in excess of
$19,348.00, some of the assets must be reduced
or transferred as outlined below.

(b) If the combined assets are more than $19,348.00,
and less than $153,480.00, the Department of
Social Services as the administrator of the
Medicaid program will do an assessment of the
resources of the married couple during the month
the nursing home spouse enters the nursing home.
The non-nursing home spouse will be entitled to
retain one-half of the combined equity value of
all assets (including the excluded assets as
previously discussed) so long as that one-half
does not exceed $76,740.00. The remaining
one-half of the married couple's assets will
be used to pay the nursing home spouse's care.
Once the remaining one-half of the assets have
been dried up, Medicaid will begin paying for
the nursing home spouse's care.

In the above situation, after the application for
Medicaid is received, the non-nursing home spouse
will be given 90 days to transfer the
aforementioned assets in his or her name and out
of the name of the nursing home spouse.

NOTE: The married couple's family home in the
above situation is not considered an asset and
is excluded so long as the non-nursing home
spouse continues to stay there. Title to the
family home may remain in joint tenancy. However,
it may be a good idea to title the family home
in the non-nursing home spouse's name because
if the home is later sold while it is in joint
tenancy, one-half of the value realized after
the sale will become an asset of the nursing
home spouse and must be applied towards his or
her nursing home care.

NOTE II: The non-nursing home spouse may retain
all income which comes in his or her name
regardless of the amount. In addition, if
the non-nursing home spouse's income is less
than $1,254.00, the non-nursing home spouse
is entitled to the income received by the
nursing home spouse in order to bring his
or her income to the level of $1,254.00. If
the non-nursing home spouse has a mortgage
payment or pays rent, a forumla is used
which could raise the non-nursing home spouse's
income to as high as $1,918.00 per month when
adding in the nursing home spouse's income.



FINAL NOTE: As Medicaid law is always changing, it is very important to seek the advice of an elder law attorney before relying upon anything in this memorandum. This memorandum is not intended to give legal advice.