We are frequently asked questions regarding Medicaid eligibility to cover nursing home costs. Often, the questions are raised when the need for nursing home care is imminent; it may be too late to establish an ideal plan regarding nursing home care, but usually some planning can be done.
In Pennsylvania nursing care costs may be covered under Medicare or Medicaid. Medicare is an insurance program covering fully the first 20 days of skilled care and about one-fifth the cost for the next 80 days. To qualify, the individual must be at least 65 years of age or disabled and have been in the hospital for three of the past 30 days.
Medicaid, on the other hand, is a welfare program. In Pennsylvania it is referred to as Medical Assistance. To qualify, certain eligibility standards must be met. They are as follows:
- Assets must be below $2,400. Exempt assets include one home, a car, a burial fund, and a limited amount of insurance. After assets are reduced to $2,400, Pennsylvania will look at income. The income will directly reduce the amount of assistance provided to the individual. However, $30 a month can be kept for personal needs.
- A 36-month “look back” period commencing with the application date will be examined for gifts made by the individual; the look back period is 60 months for transfers to trusts. Gifts will not necessarily disqualify the applicant but may result in a penalty period during which Medical Assistance will not be granted. The penalty period is based on the value of the gift divided by $4,589.88 (the monthly average cost of nursing home care). The result is the number of months during which the applicant will not qualify for Medical Assistance. The 36-month look back does not prohibit transfers during this period; it merely serves as a window during which all gratuitous transfers will be examined.
- If the individual is married, the spouse has some protection and will be allowed to keep one-half of the assets up to $87,000 and a minimum income of $2,125 per month.
So how can you protect your assets from having to be spent down to $2,400? The answer is planning. Gifting certain assets, while paying particular attention to the value of the asset and the penalty period, is a commonly used method of qualifying for Medical Assistance. Another method involves the purchase of long-term care insurance.
Long-term care insurance carries a variety of plan options for people with prolonged physical illness, disability or disorders such as Alzheimer’s disease. It can be affordable for those who plan ahead and purchase it before the need arises. Certain health conditions that are likely to require a nursing home stay in the near future will probably disqualify the individual from coverage.
A long-term care policy can buy time for additional nursing home planning. For example if you purchase a four-year policy, this will enable assets to be consolidated and managed with enough time to avoid the 36-month look back period.
A draw back to relying on Medical Assistance is the Pennsylvania Estate Recovery Act. This Act allows the state to make a claim against the estate of any individual who received Medical Assistance after age 55. This claim is generally paid before any estate assets are distributed to beneficiaries.
Since nursing home costs can create a substantial financial burden on the individual and the family, planning is of utmost importance. Planning can preserve your assets and help keep your estate in tact.
Please call us if we can be of assistance in this area.
— Leslie Heffernen