Protect Your Assets…Protect Yourself
What is Medicaid?
Medicaid is the largest source of funding for medical and health-related services for people with limited income. This nationwide health care program is operated and administered by the states, with Federal financial participation. Within certain broad federally determined guidelines, states decide who is eligible; the amount, duration, and scope of services covered; rates of payment for providers; and methods of administering the program.
Spousal Impoverishment Law / Division of Assets
The Spousal Impoverishment Law, often referred to as Division of Assets, raises many questions regarding its administration. This Law essentially changes the Medicaid eligibility requirement for couples where only one spouse needs nursing home care. It allows the spouse remaining at home to protect a portion of their income and resources. It is strictly an option for the couple to seek a division of resources, income, or both. If you do not, certain resources and income will be considered available to the spouse in the nursing home, and your spouse may not gain eligibility as quickly. The theory is that the spouse needing care can receive Medicaid sooner and without the spouse at home being reduced to poverty.
Division of Asset Eligibility
If your spouse should require long-term nursing home care, Medicaid assistance will be available if a medical need to be in a nursing home is shown; Medicaid financial eligibility requirements are met; and there are not any disqualifying property transfers. In order to make this determination, it is necessary for you to contact your local Social and Rehabilitation Services (SRS) office. You will be asked to list all of your assets on a Resource Assessment and Allowance Determination form. You should ask SRS to review eligibility for Medicaid and possible Division of Assets if your spouse is already in a nursing home and if your income, as an at-home spouse, is less than $1,650.
If after reporting your assets to SRS you acquire additional resources before your spouse is actually receiving Medicaid coverage, the resources are usually considered a part of his/her share of assets and must be depleted before eligibility begins. Because the Community Spouse Resource Allowance is determined at the month of the entrance into long- term care, resources that were not owned by either spouse in that month cannot be considered for division purposes. Generally, receipt of additional resources by the at-home spouse can be held without affecting the other spouse’s eligibility for Medicaid.
If it is necessary to transfer resources to the at-home spouse, you may need to complete a form called a Notice of Intent to Transfer Resources, which will give you extra time to make such transfers. You should never make any transfers until all of the paperwork has been completed and the amount of income and resources that the at-home spouse can keep is determined. In some cases, transfers made prior to coming to SRS can jeopardize Medicaid eligibility, leaving an otherwise Medicaid eligible recipient with out needed assistance. Always seek prior approval from SRS before transferring any resources or income.
The amount of resources that can be protected is determined by the amount of total exempt and non-exempt resources owned by you when your spouse first enters an institution. This figure is determined from the information you report and verify on the Resource Assessment form. Some items that do not count towards Medicaid eligibility include the home and its contents; one car (per family); one burial plot, casket, etc. (per person); a funeral plan within certain limits; the share of property allowed to the at-home spouse by the Spousal Impoverishment Law; personal possessions, such as wedding rings and clothes; and in some situations, property used in an on-going business.
Your share of property, as the at-home spouse, will be the greater of the first $20,328 of total non-exempt resources, or one-half of the total non-exempt resources owned at the time your spouse entered nursing home care. The maximum share you can keep is $101,640. You will also be allowed to keep all of your own income and a portion of your spouse’s income up to $1,650 per month total. In addition, if there are shelter expenses (rent, mortgage, taxes or insurance) in excess of $213 per month you may be entitled to an allowance up to $2,541 per month.
The remaining amount of combined resources and income is considered available to the institutionalized spouse. Medicaid benefits will not be paid until the spouse applying for the assistance is able to meet the Medicaid eligibility requirements. This means the spouse needing care will have to deplete his or her share of the divided resources to the Medicaid eligibility level (currently $2,000). Once approved for Medicaid, the monthly income of the institutionalized spouse determines patient liability. After deducting a personal needs allowance of $30 and unpaid medical expenses, the remainder of income, if any, is paid to the nursing facility toward the cost of the care.
Estate Recovery Laws
It is important to keep in mind, that SRS will have a first-class claim against an estate for benefits paid to the recipient, under Estate Recovery laws, despite any division or transfers. This claim arises only after the death of the recipient and the surviving spouse. If the recipient is predeceased by the at-home spouse, s/he should receive at least half of the estate based on state inheritance laws. These newly acquired resources by an institutionalized spouse will be countable toward the $2,000 limit. Receipt of resources in excess of this amount could result in a loss of Medicaid coverage until financial eligibility can again be established.
Ask for Advice Now
Medicaid is essentially a welfare program, and as such, is not for everyone. You have to decide what is in your and your spouse’s best interest. This can be very difficult as you try to plot a course through all possible scenarios of the future. However, while Medicaid is an ever evolving and changing area, you can navigate your way through the system. Your local SRS office is a great resource. They will be able to provide you with the proper application forms, the latest allowance figures, and general assistance. Asking for advice early may save you from future complications.
Malissa L. Walden, Esq. ©2007