Medicaid Planning

Medicaid Eligibility

Medicaid for Long Term Care is the federally funded-state administered health care program for low-income people. Medicaid is the primary source of payment for the large majority of long term nursing care in the United States.

Due to the 2005 Federal Deficit Reduction Act signed by President George Bush, enacted in 2006, qualifying for this very important program is much more complex and complicated than in the past and the rules and processes need to be strictly followed.

Initial Qualifications

  1.  Residency – the applicant must be a North Carolina resident.
  2. Citizenship – the applicant must be a U.S. citizen.
  3. Age and Disability – the applicant must be age 65 or older, or blind, or disabled. The applicant must need nursing level care as documented by a physician on an FL-2.
  4. Income Limitations:
    • The applicant’s total countable income must be less than the facility’s monthly cost of   care and no more than 100% of the Federal Poverty Rate.
    • Countable income includes: wages, Social Security Benefits, Veteran’s Benefits, pensions, annuities, Supplemental Security Income, and IRAs
    • Non-countable income includes: $30.00 per month Personal Needs Allowance – PNA, health insurance premiums ie. Supplemental Medicare Insurance; community spousal support and a home maintenance allowance under certain circumstances

NOTE:  Medicaid only considers the income of the applicant and not the income of the community spouse when determining financial eligibility.

  1. Asset Limitations – Non-Countable Assets for an Applicant in North Carolina include:
    • $2,000 or less in cash/non-exempt assets for an individual applicant – $3,000 is the asset limit for a married couple and both spouses are applying at the same time.
    • One home is exempt so long as the equity limit $585,000 or less and the applicant is planning to return home.

Special Notes Regarding the Homeplace:

      • The home is also exempt under certain other circumstances, including if a spouse, a child under 21years of age, or a disabled person resides in it.
      • The home may be transferred to a sibling of the applicant who has lived in the home for at least the preceding year or to a sibling who owns an equity interest in the home.
      • The home may be transferred to a child who has lived in the home with the applicant for at least two years prior to the filing of the Medicaid application, during which time the child was providing in home care services that allowed the applicant to remain at home preventing the applicant from having to go to a nursing home for those two years.
  1. Household furnishings, furniture, clothing, jewelry, and other personal effects
  2. One car of any value.
  3. An irrevocable funeral trust with a value of $1,500 or less
  4. Life insurance policies (ie. whole, variable) with a total cash value of all policies under $10,000
    • Term life insurance policies are exempt since they do not have any cash value.
  1. An IRA paying a fixed, irrevocable annuity income stream

Spousal Protection Rules

Community Spouse Resource Allowance: The community spouse can keep a maximum of $126,420 of the couple’s joint assets. The minimum amount of joint assets the community spouse can keep is $25,284 and if the community spouse’s assets do not equal the minimum, the community spouse is able to keep assets from the institutionalized spouse until the minimum is reached.

Community spouse impoverishment protection: If the community spouse has an income of less than $2,057.50 per month, the community spouse can keep part of the institutionalized spouse’s income, up to a maximum of $3,160.50 per month. The additional income allowance for the community spouse is determined from the community spouse’s housing costs, taxes, insurance, mortgages, utilities, etc. that exceed $582 per month.

Estate Recovery

 Following the death of the Medicaid recipient, under certain circumstances, the State of North Carolina will seek reimbursement for the medical and health care expenses paid for the long term care of the Medicaid recipient.  Through the process called Estate Recovery, a claim is made against the Medicaid recipient’s estate.  There are some waivers, for example, if the cost of care is less than $5000;  the value of the estate is less than $5000, there is a surviving spouse, blind or disabled child of any age or a child under the age of 21, the state will not usually pursue the claim.  North Carolina also recognizes an undue hardship waiver in some circumstances. With proper and timely Medicaid Planning, you may not have to worry about Estate Recovery at all.

Changes in the Law

Qualifying for Medicaid benefits for long-term care has always been difficult; however the Deficit Reduction Act of 2005 has made this process even more confusing. The Deficit Reduction Act of 2005 (DRA), which was signed into law by President Bush in 2006, continues to impose many restrictions on when and if you will qualify for benefits to cover your long-term care expenses. Contact us today to learn more about the changes and how they affect your situation.

NOTE:  There are a number of other qualifications, restrictions and requirements that will significantly impact eligibility, including look back periods, transfers, penalty periods etc. Strict adherence to the applicable rules is advised to avoid unnecessary delays and penalties.

For valuable information about Asset Protection for long term care, CLICK HERE.

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