Navigating Complicated Ineligibility Matters for Medicaid
Qualifying for Medicaid benefits for long-term care has always been difficult; however, the Deficit Reduction Act of 2005 has made this cumbersome process even more challenging. The Deficit Reduction Act of 2005 (DRA), which was signed into law by President Bush on February 8, 2006, imposed many restrictions on when and if you will qualify for benefits to cover your long-term care expenses.
Prior to the DRA, an applicant for Medicaid benefits could give away assets in order to qualify for long-term care benefits. The general rule was that for every $6,700 you gave away, you became ineligible for Medicaid benefits for one month. This “ineligibility” period began the month in which the gift was made. For example, if you had transferred $67,000 in January 2006, you would have been ineligible for Medicaid benefits for long-term care for 10 months. This ineligibility period would have started January 1, 2006, and continued through October 31, 2006.
Under the DRA, if you need care within five years of making the gift, this ineligibility period does not begin until both of the following conditions are met:
- The applicant is assessed by the Area Agency on Aging as requiring a nursing home level of care AND 2. The applicant is otherwise financially eligible for Medicaid benefits.
In the example above, the same gift of $67,000 made on or after February 8, 2006, has a much different outcome. Only when an applicant spends his or her resources down to the appropriate limit ($8,000 if their income is under $2,022 per month, or $2,400 if their income is over $2,022 per month) does the ineligibility period begin. This means that the gifted assets may have to be used to pay for care through the ineligibility period. However, planning can be done to get through the ineligibility period. There are a variety of options that can be explored.
Nursing home care can cost up to $96,000 per year, which can quickly deplete an individual or couple’s life savings. Medicare does not pay for long-term care, so when this type of care is needed, if you do not have long-term care insurance, you either privately pay or apply for medical assistance.
The Medicaid program that pays for nursing home care has specific eligibility requirements for individuals and couples. Generally, people think they have to be totally impoverished before Medicaid will begin paying for their care. However, an elder law attorney can review your portfolio and advise on eligibility.
In many situations, property and assets can be saved from the cost of care with careful planning both prior to and after nursing home admission.
For more information on your state’s Medicaid benefits and to review your portfolio, consult an elder law attorney in your area.