What You May Not Know About Medicaid
By now, most everyone knows the basics of Medicaid starting with the fact that a single person can qualify once their assets have been spent down to $2000 in Kansas, $999 in Missouri and a married couple can qualify the institutionalized spouse for benefits once they have spent down one-half of their total assets, with a maximum of $120,900. However, the rules and regulations for Medicaid qualification (which vary by state) are much more complex than most people realize. Often times nursing home residents and/or their spouses needlessly sell property and/or spend down their assets in order to pay their nursing home bill, when in fact, they could have qualified for benefits while retaining those assets - not spending a dime! Below are just a few Medicaid provisions which could save your loved one or your client thousands of dollars:
The general rule for a residence is that so long as the applicant intends to return home, the value (up to $560K equity) is not countable. However, regarding an applicant’s residence, did you know:
• In Kansas, if your house is titled to a trust it is a countable asset?
• In Missouri, if you do not go directly from your home to the hospital or a nursing home prior to applying for benefits, it loses it’s exempt status after 2 years?
• You can transfer your residence to a child, penalty free, if that child has been living with you in your residence for 2 years prior to applying for Medicaid benefits so long as you can prove the care that child provided prevented you from entering the nursing home during that 2 year period (referred to as the “caretaker child exemption”)?
• A Medicaid applicant can transfer their home, without incurring penalty, to: their spouse, their minor child (under 21); their blind or permanently disabled child; or their sibling with an equity interest who has resided there for one year immediately prior to the applicant’s institutionalization?
Most everyone knows that Medicaid considers your residence and one vehicle per family exempt, but did you know:
• In Kansas, the value of your IRA is exempt?
• In Kansas, rental properties are exempt?
• In Missouri, a working farm is exempt? Caveat: to be considered working, the farm must be in use directly by the applicant and/or spouse in the course of his/her business or employment (ex. collecting CRP income would not constitute “working” the farm).
Transfers for less than fair market value incur Medicaid penalties for an applicant during which time they cannot qualify for benefits (for every $192.21 transferred, there is one day of ineligibility in Kansas, and for every $4,889 transferred, there is one month of ineligibility in Missouri), but, did you know:
• Transfers made to disabled children do not cause any penalty?
• Prior to the implementation of the Deficit Reduction Act last year, the penalty used to start on the date the gift was made, now it does not start until an application for benefits is made... so, the gift of $10,000 you made 3 years ago will affect your application today!?
The Medicaid laws are very complicated and very case specific. Before selling, transferring or spending down your assets (or advising your clients on the same) it is important you consult someone who knows how to protect your assets and still qualify for benefits.