Question: How would I know whether my elderly father is eligible to receive help from the government in order to live in a nursing home? He has no income, to speak of, other than his monthly Social Security check, has a very small checking account, owns his small home, and desperately needs nursing home assistance.
Answer: The Medicaid program bases eligibility on the applicant’s medical condition and on the person’s assets and income. To apply for Medicaid to cover residential long-term care costs, the applicant must live in a nursing home or have a medical need that requires nursing home care. To establish medical eligibility, the applicant must undergo a medical assessment to identify what the person’s long term care needs will be. In addition, applicants must be citizens of the United States or fall within certain categories of aliens who have been lawfully admitted for permanent residence in the United States. Applicants must also live in the state where they apply for Medicaid.
Medicaid places strict limits on the assets you can own. Each state has its own limit on this amount and its own guidelines for which assets count toward the total. In general, the following assets are considered “exempt” and will not count towards your asset total:
- Your home– your principal place of residence is usually an exempt asset, regardless of value. In some cases, the nursing home resident may be required to show some intent to return home, even if that never happens.
- Household and personal belongings– Furniture, appliances, jewelry, and clothing
- One car– Some states may limit the car’s value
- Burial plot/prepaid funeral plan– some states may limit the value of the plot or plan.
- Cash value of permanent life insurance policies up to $1,500– In most states this asset is exempt only if the face value of all policies added together does not exceed $1,500. Term life insurance is not counted.
- Cash– A small checking or savings account not to exceed the limit imposed by the state.
All other assets not include in the above list are considered countable assets, including checking accounts, savings accounts, certificates of deposit, money market accounts, stocks, mutual funds, bonds, individual retirement accounts (IRAs), pensions, 401(k) accounts, 403(b) accounts, second cars, vacation homes, and any other items that can be valued and turned into cash. Once you become eligible for Medicaid, you can generally keep around $30 to $60 in income per month as a personal needs allowance. A veteran receiving veterans benefits is allowed to retain a slightly higher personal needs allowance.
As you begin considering Medicaid as a long-term care funding option you may encounter terms and concepts you are unfamiliar with. The term “look-back” period refers to the period of time prior to applying for Medicaid for which you will have to provide financial records. Transfers and gifts made during the “look-back” period must comply with certain requirements and failure to comply with these requirements may jeopardize an applicant’s Medicaid eligibility.
Also important is the penalty period, which refers to a period of ineligibility imposed because of an uncompensated transfer of assets during the “look-back” period. There is no cap on the length of a penalty period, which is calculated by dividing the value of the transfer in question by the “regional rate.” For this reason, applicants should either wait the full 5 years from the date after such transfers to file a Medicaid application so that they do not have to disclose these transfers or retain sufficient resources to pay privately during the penalty period if it is possible for them to do so.
Due to the numerous and complex rules and regulations, Medicaid planning can be challenging and it is best to consult a specialist who can assist with your application and help ensure that you don’t encounter problems.
Henry C. Weatherby, Esq., CLU, ChFC, CEBS