I thought that we would start 2011 with a “quick” review of Medicaid rules for obtaining care in a nursing home.
Medicaid is a needs based program – both your income and your assets are considered in determining whether you qualify.
Let us say that Mrs. Jones goes into the nursing home. She will be required to pay for her care with her private resources. Medicare will not pay for her stay in the nursing home except when the care is “skilled” care and then only for a very limited time. (Note: “skilled” care is not available in many nursing homes). When the care is no longer skilled care or when the Medicare benefits run out, Mrs. Jones’ private resources must be exhausted before Medicaid will kick in.
Benjamin Franklin pointed out that, “The U.S. Constitution doesn’t guarantee happiness, only the pursuit of it. You have to catch up to it yourself.”
A lot of us pin our happiness to external factors…if only we had more money…or a better house…or whatever your latest “want” is, but your happiness has been…and always will be… right inside yourself. There is no better time than now to enjoy life.
Medicaid will begin paying for Mrs. Jones’ care when her assets have been spent down completely, except Mrs. Jones can keep $2,000 in cash, $1,500 (cash value) in life insurance, a certain amount in a funeral plan, one vehicle, her personal property and her home (if she has an intent to return to the home).
Once she goes on Medicaid, Mrs. Jones is allowed to keep $62 per month as her personal needs allowance. The rest of her income must be used to pay for her care. Medicaid pays what her income does not pay.
If Mrs. Jones is married, the rules change significantly. Mr. and Mrs. Jones are allowed to divided their assets. The intent is to not cause Mr. Jones to go broke just because Mrs. Jones is in the nursing home.
Aldous Huxley, was a pioneer in the study of philosophies and techniques to develop human potential. In a lecture toward the end of his life, he said this:
“People often ask me…what is the most effective technique for transforming their lives?”
He then said, “It’s a little embarrassing that after years and years of research, my best answer is just be a little kinder.”
This is the paradox of the power of kindness. It doesn’t feel powerful at all. In fact, it almost feels too simple to be important. But as Huxley said, it is the #1 thing that can transform your life.
How can that be? Because simply put, kindness is the foundation of a good heart and with a good heart…a good life will follow.
Only the “countable” assets need to be divided between Mr. and Mrs. Jones. They do not need to divided non-countable assets such as the home. Mr. Jones is entitled to one-half of the assets but there are limits. The minimum amount that he is entitled to keep is approximately $21,000. The maximum amount that he is allowed to keep is approximately $110,000.
As an example, if Mr. and Mrs. Jones’ countable assets are $30,000, Mr. Jones is allowed to keep $21,000 (the rules call it his Community Spouse Resource Allowance-CSRA). The balance of $9,000 goes to Mrs. Jones and that amount must be spent down to $2,000 before she will qualify for Medicaid.
If Mr. and Mrs. Jones countable assets are $300,000, Mr. Jones will get $110,000 as his CSRA. The balance of approximately $190,000 is set over to Mrs. Jones and she will qualify for Medicaid when that sum is spent down to $2,000 – unless appropriate planning is done.
The income is also handled differently. The law provides that Mr. Jones should receive a certain amount of income, called the Minimum Monthly Maintenance Needs Allowance. That sum is $1,822. What does that mean? Let us assume that Mr. Jones’ social security is $1,200 per month; Mrs. Jones’ social security is $800 per month. Then Mrs. Jones qualifies for Medicaid. Rather than all of her income going to the nursing home, the law allows part of Mrs. Jones’ income to be directed to Mr. Jones. Mr. Jones’ income of $1,200 is short $622 of the $1,822 to which he is entitled. Therefore, he can keep $622 of Mrs. Jones’ income to bring his total income up to the $1,822. That $1,822 can actually be increased if Mr. Jones has “excess shelter” expenses (such as high rent or a mortgage or high utilities).
Gifting of property can cause a person to be disqualified from receiving Medicaid. Generally, any gift of $50 or more will cause a person to be disqualified from Medicaid (if that gifting occurred within five years of applying for Medicaid). Selling something for less than fair market value can be considered a gift.
This is just a brief overview of the fundamental rules of qualifying for the Medicaid benefit for long term care. There are many more rules.
The rules are complicated and do not always follow common sense. They can trap the unwary and the innocent. Please be careful.