By Kate McGahan
(Remember laws can vary from State to State and from year to year! Be sure to check with an informed attorney, geriatric care manager or Medicaid or other informed human service representative to see how Medicaid rules apply to your individual situation.)
There are strict guidelines for Medicaid eligibility and the rules vary from state to state. If your income, resources and expenses fall within the Medicaid guidelines, you will be eligible for Medicaid assistance. A very important aspect of the Medicaid process is the determination of your ongoing medical and health care expenses as they relate to your income level. After all, the reason you are applying for Medicaid is because your medical expenses outweigh your ability to pay for them.
You will need to verify the extent of your medical expenses as well as account for your income and assets. If your income is too high, you may be eligible if your medical bills, when subtracted from your income, bring you below the eligibility levels needed to qualify. The process of subtracting your medical bills from your income to become eligible for Medicaid is called a "spend down".
If you have excess resources, you must also "spend down" to qualify for Medicaid. Usually assets include anything that can be converted to cash such as real estate, automobiles, IRAs, stocks, bonds, and bank checking and savings accounts. If your countable resources are over allowable limits, you can spend them down to the required level and then become eligible for Medicaid. You can reduce your cash resources by paying off the mortgage, buying a new car, making home improvements, prepaying taxes and utilities, or paying family members to provide you with home care and other services. This is a good time to prepay your burial expenses in the form of an Irrevocable Trust Agreement. You might also cash in a savings account and pay off the mortgage or to make a home improvement. Always keep a complete record of disbursements; Medicaid may ask you to prove how you spent it.
If you need Medicaid assistance and you reside in your home or apartment, Medicaid will set up a budget for you based on your income and medical expenses. There are laws that protect you so that you should always be able to live within the budget that is designed for you. If your income is greater than Medicaid allows you to have to qualify, you can "spend down" your excess income on your medical care needs to "buy in" to the Medicaid program.
If you require care in a nursing home or residential care facility, Medicaid will set up a budget for you that will indicate the amount of your monthly income which will go towards paying your cost of care at the facility. Medicaid makes allowances for you to keep enough of your income to continue to pay your health insurance premiums and provide you with a monthly personal allowance for special expenses such as cable TV, hairdresser services and the newspaper. The remainder of your income is paid to the facility towards the monthly bill. Medicaid is then billed for the rest of your cost of care. Under certain circumstances, you may be able to keep your home as well as a home maintenance allowance if your doctor believes that you will be able to return home within 6 months. This means that Medicaid will allow you to continue to pay your home maintenance costs during your stay at the facility.
Many people are afraid that they will lose their home in the Medicaid process. Your home can be protected for you so long as you reside there or have the potential to return there after a period of rehabilitation in a residential care facility. If your spouse, minor, blind or disabled child is living in the home or if an adult child, sibling or other relative was living with you for an extended period prior to application for Medicaid and has established residency at that address, your home may also be exempt from consideration.
Your spouse is the only person whose income and assets are deemed to be available to you if you require long term care. For purposes of determining eligibility, your combined assets are totaled and then divided equally between you and your spouse.
Part of the Medicare Catastrophic Coverage Act of 1989 brought about the "spousal impoverishment rule" which protects the rights of your healthy spouse. The rule requires that the income and assets of the "at home spouse/community spouse" must be taken into account when determining the eligibility of the spouse applying for Medicaid. Your spouse can keep his or her own income and usually some portion of your income to go towards maintaining his or her standard of living. This amount is determined upon the state's limits and your spouse's needs.
Your spouse who remains at home can keep the home, car, personal belongings, half of the assets up to a set amount (usually around $75,000+). Your spouse has appeal rights if he or she believes that the resource allowance is so low it will cause a hardship. Some states have a "Spousal Refusal" law which gives your spouse the right to refuse to pay towards your cost of care.
If you have extensive health care needs, regardless of income, you may be eligible for what is known as a Medicaid waiver. This is a concept where certain regulations regarding income are waived to allow eligibility for Medicaid to take place to specifically cover those health care needs. Because the application process is a complicated one, it is a good idea to contact an attorney, geriatric care manager or agency adviser to help you with the process. Be sure to seek the advice of a professional familiar with Medicaid eligibility, the limitations of transfers and the right to retain income and assets. If there is a charge associated with the services and you have to spend down your resources to qualify, this is a smart way to do it. You may save a lot more in the process.