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Medicaid And Medicare
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There needs to be some kind of drinking game tied to breaking news alerts that tell us how grim our financial futures are. It began this morning on the Herald ’s website with the news that employment in Florida is at a 15-year high and that it ...
Publ.Date : Fri, 21 Nov 2008 18:43:00 GMT
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Publ.Date : Fri, 21 Nov 2008 18:00:00 GMT
For six months, Ajana Northcross prayed every day that nothing would happen to her three children, that they wouldn't get sick while the family lacked health insurance. "Luckily, they didn't catch anything bad enough to where we had to go to the ...
Publ.Date : Fri, 21 Nov 2008 16:55:00 GMT
The hole is even deeper than expected. The Senate Finance Committee of the Virginia General Assembly is projecting a budget shortfall of at least $3.2 billion for the 2008-10 biennial budget—an even bleaker projection than the $2.5 billion Gov ...
Publ.Date : Fri, 21 Nov 2008 17:31:00 GMT
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Medicaid Overview, Part II
by Paul Nicolosi
Exceptions to the Transfer Penalty Transferring assets to certain recipients
will not trigger a period of Medicaid ineligibility. These exempt recipients
include: (1) A spouse (or a transfer to anyone else as long as it is for the
spouses benefit); (2) A blind or disabled child; (3) A trust for the benefit of
a blind or disabled child; (4) A trust for the sole benefit of a disabled
individual under age 65 (even if the trust is for the benefit of the Medicaid
applicant, under certain circumstances). In addition, special exceptions apply
to the transfer of a home. The Medicaid applicant may freely transfer his or her
home to the following individuals without incurring a transfer penalty: (1) The
applicants spouse; (2) A child who is under age 21 or who is blind or disabled;
(3) Into a trust for the sole benefit of a disabled individual under age 65
(even if the trust is for the benefit of the Medicaid applicant, under certain
circumstances); (4) A sibling who has lived in the home during the year
preceding the applicants institutionalization and who already holds an equity
interest in the home; or (5) A "caretaker child," who is defined as a child of
the applicant who lived in the house for at least two years prior to the
applicants institutionalization and who during that period provided care that
allowed the applicant to avoid a nursing home stay. Congress has created a very
important escape hatch from the transfer penalty: the penalty will be "cured" if
the transferred asset is returned in its entirety, or it will be reduced if the
transferred asset is partially returned.
Is Transferring Assets Against the Law? You may have heard that transferring
assets, or helping someone to transfer assets, to achieve Medicaid eligibility
is a crime. Is this true? The short answer is that for a brief period it was,
and its possible, although unlikely under current law, that it will be in the
future. As part of a 1996 Kennedy-Kassebaum health care bill, Congress made it a
crime to transfer assets for purposes of achieving Medicaid eligibility.
Congress repealed the law as part of the 1997 Balanced Budget bill, but replaced
it with a statute that made it a crime to advise or counsel someone for a fee
regarding transferring assets for purposes of obtaining Medicaid. This meant
that although transferring assets was again legal, explaining the law to clients
could have been a criminal act. In 1998, Attorney General Janet Reno determined
that the law was unconstitutional because it violated the First Amendment
protection of free speech, and she told Congress that the Justice Department
would not enforce the law. Around the same time, a U.S. District Court judge in
New York said that the law could not be enforced for the same reason.
Accordingly, the law remains on the books, but it will not be enforced. Since it
is possible that these rulings may change, you should contact our office before
filing a Medicaid application.
Treatment of Income The basic Medicaid rule for nursing home residents is
that they must pay all of their income, minus certain deductions, to the nursing
home. The deductions include a $30-a-month personal needs allowance, a deduction
for any uncovered medical costs (including medical insurance premiums), and, in
the case of a married applicant, an allowance for the spouse who continues to
live at home if he or she needs income support. A deduction may also be allowed
for a dependent child living at home. A deduction is also allowed for community
spouse maintenance needs. The allowance in 2000 was $2,103 and is adjusted
annually. This allows the Medicaid recipient to exempt some of his/her income
for the purpose of spouse maintenance. Example: if Mr. X resides in a long term
care facility such as a nursing home and has monthly income of $1,600 and his
spouse has income of $800 a month (from pension or social security for example)
then the difference between the spouses $800/mo. Income and the $2,103 allowance
(in 2000) may be contributed by Mr. X to his spouse and he may deduct that
amount, up to the total allowance, from his income for asset calculation
purposes. Under the facts of the example, this would allow Mr. X a $503
community spouse deduction and $30 personal needs deduction. The amount of Mr.
Xs income in excess of the deductions ($1,600-$503-$30= $1,067) must be "spent
down" or paid to cover the medical expenses each month. A similar deduction
exists for dependent family members including dependent adult children,
dependent parents or dependent siblings.
For Medicaid applicants who are married, the income of the community spouse
is not counted in determining the Medicaid applicants eligibility. Only income
in the applicants name is counted in determining his or her eligibility. Thus,
even if the community spouse is still working and earning $5,000 a month, she
will not have to contribute to the cost of caring for her spouse in a nursing
home if Medicaid covers him.
Protections for the Healthy Spouse
The Medicaid law provides special protections for the spouse of a nursing
home resident to make sure she has the minimum support needed to continue to
live in the community. The so-called "spousal protections" work this way: if the
Medicaid applicant is married, the countable assets of both the community spouse
and the institutionalized spouse are totaled as of the date of
"institutionalization," the day on which the ill spouse enters either a hospital
or a long-term care facility in which he or she then stays for at least 30 days.
In Illinois, the community spouse may keep one half of the couples total
"countable" assets up to a maximum of $84,120 (in 2000). Called the "community
spouse resource allowance," this is the most that Illinois allows a community
spouse to retain without a hearing or a court order. Example: If a couple has
$100,000 in countable assets on the date the applicant enters a nursing home, he
or she will be eligible for Medicaid once the couples assets have been reduced
to a combined figure of $52,000 -- $2,000 for the applicant and $50,000 for the
community spouse.
In all circumstances, the income of the community spouse will continue
undisturbed; he or she will not have to use his or her income to support the
nursing home spouse receiving Medicaid benefits. But what if most of the couples
income is in the name of the institutionalized spouse, and the community spouses
income is not enough to live on? In such cases, the community spouse is entitled
to some or all of the monthly income of the institutionalized spouse as
described above in "treatment of income." In exceptional circumstances,
community spouses may seek an increase in the income allowance either by
appealing to the IDPA or by obtaining a court order of spousal support.
Estate Recovery and Liens Under Medicaid law, following the death of the
Medicaid recipient a state must attempt to recover from his or her estate
whatever benefits it paid for the recipients care. However, no recovery can take
place until the death of the recipients spouse, or as long as there is a child
of the deceased who is under 21 or who is blind or disabled. The IDPA is
permitted to seek recovery of paid benefits in all of the benefit recipients
probate property. Given the rules for Medicaid eligibility, the only probate
property of substantial value that a Medicaid recipient is likely to own at
death is his or her home. In addition to the right to recover from the estate of
the Medicaid beneficiary, IDPA must place a lien on real estate owned by a
Medicaid beneficiary during her life unless certain dependent relatives are
living in the property. If the property is sold while the Medicaid beneficiary
is living, not only will she cease to be eligible for Medicaid due to the cash
she would net from the sale, but also she would have to satisfy the lien by
paying back the state for its coverage of her care to date. The exceptions to
this rule are cases where a spouse, a disabled or blind child, a child under age
21, or a sibling with an equity interest in the house is living there. Whether
or not a lien is placed on the house, the liens purpose should only be for
recovery of Medicaid expenses. The IDPA may seek to enforce the lien at any time
there is a transfer of the real property, in cases of fraud, or at the time of
death of the owner.
Rockford native Paul Nicolosi concentrates his legal practice in business law
and transactions, and business and estate planning. He is active on several
company boards and participates in regular company reviews for consideration by
venture capital firms.
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