Spoiler Alert: No, you don’t have to spend all of Momma’s Money down to get Medicaid to pay for her care!
My guess is that, because you are reading this, how to “Get Medicaid to Pay for Your Momma’s Nursing Home Stay” was not even on your horizon a few months ago. You might be the Family Caregiver who is responsible for helping to care for your parents or spouse. Therefore, you are doing everything possible to protect what your Mom, Dad, or Loved One has worked a lifetime to accumulate. You want to prevent it all from being lost in the last few months of their life while honoring their wishes
First of all, you are in the right place if this is the case. In this blog post, we are discussing Medicaid. This government program will help pay for your Loved One’s Nursing Home care.
As a side note, click here to review our post entitled, Finding the Best Nursing Home for Momma. Especially if you haven’t selected a specific facility yet and are seriously considering Nursing Home care for a Loved One. This post discusses Nursing Home care along with a couple of other options.
However, continue reading if your Loved One is going to a Nursing Home soon. Furthermore, keep reading if your Loved One is currently paying out of pocket for Nursing Home care. Medicaid is a huge and very complex program. But, we are going to try our best to explain as simply as possible. Through a very broad overview to make it as simple as possible, we will discuss how Medicaid pays for a declining seniors’ long-term stay in a Nursing Home. The laws concerning Medicaid differ from state to state. In this blog, we will be focusing our attention only on Seniors who are in Nursing Homes in Arkansas.
There is a lot of Medicaid “lingo” out there. Our goal is NOT to wade off into the “lingo jungle”. Rather, we will explain some of the big and often perplexing Medicaid topics and buzz words.
By the way, if are a “JUST GET TO THE BOTTOM LINE” person, just click HERE. Or, if you are reading a hard copy, go to p.7 the YELLOW Section, entitled (SKIP POINT FOR THE ‘JUST GET TO THE BOTTOM LINE FOLKS’)
However, below you will find some of the terms used in Long Term Care Medicaid. If you are one of those folks who likes details, this is for you. This information is very useful to know when trying to get someone qualified for Medicaid. Likewise, if you want to see to Bottom Line, just skip to the yellow skip point.
Medicaid Terms You Should Know
AR DHS – Arkansas Department of Human Services. This is the government agency administering the Medicaid program in Arkansas
Resource Limit – Limits set by Medicaid on what assets an individual (or married couple) is allowed to have to qualify for benefits. In 2018, the limits are as follows:
- $2,000 for a single individual going into a nursing facility.
- $3,000 for a couple going into a facility at the same time ($4,000 every month after)
- $2,000 each if entering at different times (must be a different month)
Resource Allowance – This only applies to the “Community Spouse”. This person is the spouse who lives at home while their significant other lives in a Nursing Facility
- For 2018, The maximum amount of total assets the “Community Spouse” is allowed to keep is $120,900
- In order to keep the maximum $120,900, you must have double this amount in total assets ($241,800). DHS divides your assets in half to determine what the “Community Spouse” is allowed to keep.
Which Assets “Count” and Which Don’t?
Countable Assets – Assets which count toward the individual’s resource limit. Some common Countable Assets include cash, bank accounts, CDs, stocks, bonds, IRAs, other retirement accounts, anything in a trust, land/property other than home(s), insurance cash values, extra vehicles, etc.
|Note: These assets also create a penalty period (where Medicaid will not pay the Nursing Home) if transferred without equivalent compensation also known as an “uncompensated transfer”.|
5 Year Lookback Rule – The amount of time that DHS can “look-back” to see if any gifts or transfers have been made. Any transfers made prior to the 5-year time period are not considered in this calculation.
Uncompensated Transfers – A transfer or gift for less than Fair Market Value. For example, say Momma gave Susie $5,000 two years ago. This falls within the 5 year window that DHS can “look back” and see. Therefore, this transfer would be considered an uncompensated transfer that would result in a penalty period.
Penalty Period – Based on uncompensated transfers, the penalty period is the amount of time which Medicaid will NOT make payments to the Nursing Home. This penalty period WILL NOT EVEN START until an individual has become eligible for Medicaid.
Can “They” Take Momma’s House?
Recoupment – The family home is an exempt asset for Medicaid calculation purposes. But, after the spouse dies, the state has the right to place a lien on this home. If the home sells, the state gets paid first. It is true that the state does not recoup on every property after the death of a spouse. However, if it was exempted, they have the right to do so. Your Elder Law Attorney can show you what options may exist (there usually are) to protect the home.
Exempt Assets – Assets that do not count toward the individuals Resource Limit. Exempt assets include the family home, one vehicle, prepaid funeral plan, and personal assets. Countable assets are all other assets. One thing to keep in mind: the home is exempt only because the State has the right to recoup on it once the individual passes (see recoupment above).
|Note: Items in a Revocable Living Trust are NOT Exempt and count toward your resource limit. In other words, if “its” in a trust, it may keep you from qualifying for Medicaid. (Don’t worry – there’s a fix for this!)|
Single Person Planning
Asset Eligibility for Single Person – A person must be asset eligible in order to receive Medicaid assistance to help pay for a long-term care stay. In order to receive Medicaid assistance, this means that a single person may have no more than $2,000 in countable assets. Allow me to simplify this for you. Say that Momma had $100,000 in cash saved up. Without proper planning, she would have to spend $98,000 before she could receive Medicaid assistance. Spending down this much money is very frightening thought to most families.
Fortunately, with Asset Protection Planning, families typically don’t have to spend ALL of Momma’s life savings to help her get the care she needs in a Nursing Home.
|Note: Even if you wanted to spend this much money to become eligible, the funds MUST be spent for the benefit of the Medicaid Applicant. Any assets spent for others, given away, or transferred for less than fair market value will be deemed as uncompensated transfers. Thus generating a penalty period.|
Hence, with Asset Protection Planning, the good news is, the family may not have to spend down virtually all assets before qualifying for Medicaid assistance. A portion (sometimes up to 50%, with proper planning) of the assets can be transferred to the family. In addition, the remainder of the assets can be set up so as to pay through the penalty period. This type of planning doesn’t work in every situation, but for many families, it will work well. However, your Loved One may qualify for Medicaid assistance while still getting to pass on a large portion of the estate they accumulated during their working life. That is the bottom line
Single Person Example
Momma owns a home, has 2 vehicles (one car and her deceased husband’s truck which no one drives anymore), a pre-paid funeral plan, $5,000 in Checking, $15,000 in Savings, $100,000 in CD’s. If Momma needed to go to a nursing Home and DID NOT DO any type of Asset Protection Planning, her plan would look like this:
|1 – Vehicle||$ 17,500|
|Pre-paid Funeral||$ 8,500|
|Personal Assets at Home||$ 4,000|
|2nd Vehicle||$ 10,000|
Treatment of Momma’s Exempt Assets / No Plan
Without advanced planning, Momma could exempt her home, 1 vehicle, pre-paid funeral and personal assets at home. Again, “exempt” means that these assets would not count against her for Medicaid qualification purposes. In hence, she could keep these assets (for now). From the recoupment section above, remember that even though her home is exempt, the State has the right to recoup against it later to recover any Medicaid benefits paid out on her behalf.
Treatment of Momma’s Countable Assets / No Plan
Without advanced planning, Momma would have to “spend down” her countable assets from $130,000 to less than $2,000 before qualifying for Medicaid assistance. You cannot not “spend” a truck. As a result, it must be sold for fair market value, and the money received must be spent down. Therefore, this Non-plan would cost $128,000 spend down (to the nursing home) + possible recoupment of the home after Momma’s death.
Single with a Plan in Place
With Asset Protection Planning – As above, with Asset Protection in place, the same assets could be exempted. The home can often be protected too. Along with the assets listed above. If protecting the home is the desire of the family, your Elder Law Attorney can help you plan.
In addition, with Asset Protection Planning, a portion (sometimes up to 50%) of the countable assets can be transferred to the family and the remainder of the assets can be set up to pay through the penalty period. Again, not every situation will work with this type of planning, but it will work well for many families.
Married Individuals Planning
Asset Eligibility for Married Individuals – Married individuals have been given a slightly better deal by lawmakers – it’s called Division of Assets. When calculating Medicaid eligibility, married couples’ assets are divided up. The “community spouse” (the “well spouse” who is staying at home) gets to keep half of the countable assets (up to $120,900). This is the Community Spouse Resource Allowance (CSRA). In most cases, the “institutionalized spouse” (the one going to the nursing home) has to spend down their share to $2,000 before qualifying for Medicaid assistance. However, with more advanced planning, the deal gets better than this.
It is not unusual for the Community Spouse (CS) to be able to keep most of the “spend down” amount. A plan can be established where the CS receives all of the money that would have been spent down. This is much better than spending all of the money down for nursing home expenses. The result of this type of planning is tremendous savings for those who qualify.
Married Person Example
For this example, let’s assume that Dad is still alive and that Momma needs to go to a Nursing Home. They own a home, have 2 vehicles, have a pre-paid funeral plan, $5,000 in Checking, $15,000 in Savings, $100,000 in CD’s. If Momma needed to go to a nursing Home and DID NOT DO any type of advanced planning, her plan would look like this:
1 – Vehicle
Personal Assets at Home
Treatment of Couple’s Exempt Assets / No Plan
Without Asset Protection Planning, Momma could exempt her home, 1 vehicle, pre-paid funeral and personal assets at home. Remember, exempt means that these assets would not count against her for Medicaid qualification purposes. She could keep these assets (for now). From the recoupment section above, remember that (even though the house is exempt) the State has the right to recoup against it after the death of the surviving spouse to recover any Medicaid benefits paid out on her behalf.
Treatment of Couple’s Countable Assets / No Plan
The Countable Assets, without Asset Protection Planning, would be divided between Mom & Dad as shown in the following chart. Remember that the Community Spouse can keep one-half of the countable assets (up to $120,900). Once they hit this threshold, they can only keep this amount.
|Mom (Institutionalized Spouse)||Dad (Community Spouse)|
– 63,000 (Spend Down Amount)
2,000 Mom’s allowable resource
|$65,000 (Dad may keep this amount|
Dad can choose which assets to keep to make up his share. In this example, Dad chose to keep his truck, the $5,000 in checking, the $15,000 in savings and $35,000 of the CD. Mom must then “spend down” the rest of the assets. The couple suffered a total loss of $63,000 spend down plus possible recoupment against the family home after the surviving spouse’s death.
Married with a Plan in Place
With Asset Protection Planning – As above, with Asset Protection in place, the same assets could be exempted. In many cases, the home can be protected too. (Along with the assets listed above.) If protecting the home is the desire of the family, your Elder Law Attorney can help you plan.
Furthermore, With Asset Protection Planning in place, most of the “spend down” amount can typically be kept by the Community Spouse (CS). A plan allowing the CS to receive all of the money that would have been spent down on nursing home expenses can be established. This type of planning works well for many families, however, not every situation will apply.
Income Issues and Miller Trust
Income Eligibility – In order to receive Medicaid benefits, applicants must also be income eligible. If Momma’s monthly income is in excess of $2,250 (2018 amount which changes annually), then she’s not eligible for Medicaid. The average monthly cost of nursing home care in Arkansas is $5,383 per month. Momma would not qualify for Medicaid if she has a pension check of $1,200 per month and a social security check of $1,100 a month. She is “too rich” to receive assistance, yet “too poor” to be able to pay for the cost of her care in a Nursing Home.
Miller Trusts – Otherwise known as a Miller Trust, Medicaid regulations allow individuals with “too much income” to use an approved legal document known as an Irrevocable Income Trust. All income placed in this special Income Trust does NOT count toward the resource limit OR the income limit. HOWEVER, each month the income MUST be strictly used to pay the nursing facility (and any health insurance premiums). Failure to comply can result in denial or cancellation of Medicaid.
Shortfall – The amount due after all of an individual’s income has been paid to the Nursing Home. This amount, once eligibility is determined, Medicaid actually pays (after any penalty period has ended).
Whew. That was a lot. Did you even read it all? Probably not. Scanning web pages is normal for most people. That’s ok, I probably would have skimmed it as well. The crazy part? All of the information above is still just a greatly over-simplified sample of the most common Medicaid terms. As we discuss how this process works, continue to look back over these definitions. You will have a better end-to-end grasp on the truth of Long Term Care Medicaid.
Skip Point for the “Just Get to the Bottom Line” Folks
As a “Just Get to the Bottom Line!!!” type of person, just you are in good company. You can start reading again… Here’s the good stuff!
Yes, Nursing Home care is very expensive. In this post, we are discussing Medicaid. In America, Medicaid is the primary long-haul payment source of Nursing Home care. However, you may want to read our post entitled, How to Pay for Nursing Home Care. It discusses other ways to pay for a Long Term Care stay in a Nursing Home. We review options other than Medicaid.
Next let’s review a typical admission to a Nursing Home.
Taking Mom or Dad from Home to the Nursing Home
Sometimes, Mom or Dad just declines and home care is no longer in anyone’s best interest. The family concludes that Mom or Dad really need a Nursing Home level of professional care. Nursing Home level of care is hard to replicate at home. At home, your “staff” consists of you (the primary Family Caregiver), maybe one or two family member helpers (if you’re lucky) and maybe one part time paid caregiver.
In a situation like this, the family contacts the Nursing Home. The Nursing Home then “assesses” Mom or Dad to determine if the need for Nursing Home level of care exists. Also taken into consideration is if this particular Nursing Home feels that they can meet the needs of your declining parent. “Meet the needs” of a resident is a term of art. Nursing Homes are not all equipped or staffed the same. In some cases, they don’t believe they can “meet the needs” of an incoming resident. The Nursing Home must then decline the admission.
A person will be “private pay” from Day #1 if he/she goes directly from home to a Nursing Home. Unless your parent qualifies for Medicaid immediately, your parent (or you acting on their behalf) will write a check to the Nursing Home upon admission. These checks will continue to monthly until your Loved One become asset eligible (a.k.a. broke).
|Note: Don’t become too discouraged yet! There are ways to qualify for Medicaid much earlier in the process, well before all the money or property is gone. We’ll discuss this in a minute.|
Short Term Rehab Stay Paid By Medicare
In the section above, in the situation we discussed, Mom or Dad go directly from their Home to a Nursing Home. It sometimes happens like this. However, sometimes the journey starts with a hospital stay. Momma may qualify for Medicare to help pay for rehabilitative care in a nursing home for up to 100 days. Momma might, for example, fall and break a hip or have a serious illness that requires a hospital stay for several days. Then, the hospital admitted Momma for at least 3 midnights, as a patient. Don’t let the term “up to 100 days” fool you. Consequently, many think that this means that they will receive 100 days of paid Nursing Home care. FALSE. Most Nursing Homes require that Momma must actually be improving during the 100 days to qualify for the full amount. If Momma doesn’t respond to therapy, her funding may cease.
|Note: One other thing you should know is that Medicare will pay 100% during days 1 – 20. After that, Medicare will only pay 80%. That sounds great, but your 20% share can be very expensive. It is critical to have a good Medicare supplement policy to pay this share. If you have not done so, you should check on Mom’s Medicare supplement policy before the day comes that you need it. You don’t want to be in for a rude awakening, because they’re not all the same.|
At this point in time, Momma’s options are going home or moving to a private pay wing of the Nursing Home. Private Pay is simply Momma paying the Nursing Home completely out of her own pocket. Her room in the private pay wing will probably be exactly like her room in the Medicare or rehab wing. The only difference is that she is now paying out-of-pocket for her care rather than Medicare paying the bill.
Typical Admissions Process
When Momma transitions to “private pay” the family will normally have a meeting with an admissions person or business office manager. Together, you will go over the admissions process. You will sign a ton of admissions paperwork and will have the “how are you going to pay” discussion. The family may be told that Momma is “over-resourced” if she has over $2,000 in assets. Therefore, Momma must must “spend-down”. Only then is she eligible to receive Medicaid to help pay for her Nursing Home expenses,
While this is technically true, it is incomplete. Yes, before she’s eligible for Medicaid assistance, (if she is single) Momma does have to “spend down” to less than $2,000 . In this blog, you will find advanced Medicaid planning techniques discussed. Many of these techniques will allow her family to save a substantial portion of the spend-down amount. With such planning, it’s not uncommon for her to become Medicaid eligible. In addition to Momma’s eligibility, the family may be able to preserve over 50% of her assets.
Asset Protection Planning
As the Community Spouse (the “well spouse” at home), it is not unusual for Dad (if he’s still alive) to be able to protect the vast majority of the couple’s assets. While protecting their assets, he may not have to spend down everything that he and his wife had spent their life working for.
Protecting the family home from Medicaid recoupment is important to most families. Likewise, protecting hard earned family money from Nursing Home spend down is important, too. Both may be possible with advanced Asset Protection Planning.
The understanding of Medicaid planning techniques can be very complicated. The Community Spouse or adult children must do a lot of fact finding. Only the family knows which assets they have. Preparing an effective Medicaid Asset Protection Planning requires information can only come from the family.
While this type of planning is not cheap, it’s a LOT less expensive than spending everything down. It is not unusual for this type of planning to be equivalent to the cost of 2 – 3 months of nursing home care. One major benefit, however, is that it closes the back door on endless Nursing Home expenses. Without this type of planning, you pay out of pocket for your Loved One’s care until they’re broke or dead. With this type of planning, you’ll know with certainty how much you will spend in order to have Medicaid pay for their care until they pass. You can have the confidence of knowing that you can honor their Last Wishes by passing some of their Life’s Work to the ones they love.
You can expect the following when you contact our office:
Brief Phone Call
We will have a brief phone conversation with you to make a quick preliminary determination of whether we can help. There are some situations where we cannot do anything to help. Furthermore, there are some cases that are just not appropriate for this type of planning. We will tell you if this is the case. It will have cost you nothing to find out.
Fill Out Questionnaire
If it looks as if we can help, we send you an Information Questionnaire to fill out and send back to us. We ask questions allowing us to collect the needed information for the Medicaid application process.
Schedule Initial Consultation
We will schedule an initial office consultation to collect more information. Did we mention that this is a rather long process? In this meeting, we will determine whether your Loved One would be Medicaid eligible immediately or if it would take some work to get them eligible. As a result, we will collect more information if it looks like we can help. Only then will we collect a processing fee (less than what you would pay for one month’s care in a Nursing Home).
Report of Findings Meeting
Finally we come to the meeting you were waiting for. On paper, it seems as if takes forever to get here. However, from first phone call to this point it only take about a week. In this meeting, we present a few things:
- How best to get your Loved One qualified for Medicaid
- When they will qualify
- How much this process will cost
- (Most importantly) How much money or property this process will save and protect for your family.
Download Free Tip Sheet
In Conclusion, it is important to find the best facility possible if your Loved One is in the Nursing Home now (or is going there soon). You must also know how to pay for it, as described in this blog. Download our Free How to Find & Pay for the Best Nursing Home for Momma Tip Sheet for help with both. The Tip Sheet will provide some quick and easy tips to may the search process and the knowledge of how to pay much easier.
If we can help your family with a plan to qualify for Medicaid while protecting assets, please Call us at (501) 843-9014. We are looking forward to your questions.
DISCLAIMER: The above overview was a greatly oversimplified and generalized 30,000 foot view of the Medicaid application process. No legal opinions were intended or given here. Our purpose here was to give you a broad overview so you can know in general terms what may be possible and so that you will be better able to separate fact from fiction when your Loved One goes to a Nursing Home. Please don’t think that you can read this and strike out on your own to get great results. Please seek the assistance of an Elder Law Attorney or some other qualified professional with this intricate process. You will be glad you did.
Yes, the Medicaid application process is very complex. With the right assistance, you can help get your Loved One the care they need and deserve in a Nursing Home without depleting all of their assets.
If you are the one responsible for protecting your family’s lifetime of work, please Call us at (501) 843-9014. We look forward to helping you come up with a plan to achieve the goal of saving your Loved One’s hard earned assets.