QUALIFYING FOR MEDICAID
Medicaid is a joint federal-state program that provides health insurance coverage to low-income children, seniors and people with disabilities. In addition, it covers care in a nursing home for those who qualify. The dilemma is that one must qualify and in order to qualify, it requires having assets below a certain threshold. For those wealthy enough, it may not be necessary to reduce assets in order to qualify for Medicaid because these individuals can afford to pay privately, however, for most of us, this is not possible.
In order to be eligible for Medicaid benefits, a nursing home resident may not have more than $2,000 in “countable” assets. And if married, the spouse of a nursing home resident – called the “community spouse” – is limited to one half of the couple’s joint assets up to $117,240.00 in “countable” assets. “Countable” assets do not include the home, personal possessions or a car, but many people who have worked their entire lives have acquired modest estates, which can make it difficult to qualify.
For example, if a couple has $200,000 in countable assets on the date the applicant enters a nursing home (known as the “snap shot” date), he or she will be eligible for Medicaid once the couple’s assets have been reduced to a combined figure of $119,240.00; $2,000 for the applicant and $117,240.00 for the community spouse. Some states, however, like Massachusetts, are more generous toward the community spouse and allow the community spouse to keep up to $117,240.00 regardless of whether or not this represents half the couple’s assets. Every state has different rules, so it is important to seek experienced legal counsel like that offered by Jaffarian Law, P.C.
Naturally, it makes sense to want to give your assets away to family or friends in order to qualify for Medicaid, but there are pros and cons to this. One problem created by Medicaid laws requires that the transfer of assets, not made between spouses, must occur 60 months prior to applying for Medicaid. Often families and individuals do not plan when nursing home placement is more than five years away and find themselves planning in a “crisis situation.”
Another issue with transferring assets occurs when parents deed their home to a son or daughter prior to the 60 month “look back” in order to protect the house from the possibility of a Medicaid lien. A problem can occur if that child is later involved in a divorce. The parents’ home will be considered marital property of the divorcing couple and thus becomes a divisible asset. The child holding title to his or her parent’s home may have to forgo any interest in the home that he or she shares with his or her spouse in exchange for keeping the parent’s home in the divorce.
While most transfers are penalized with a period of Medicaid ineligibility of up to five years, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:
- Your spouse (but this may not help you become eligible since the same limit on both spouse’s assets will apply).
- Your child who is blind or permanently disabled.
- Into a trust for the sole benefit of anyone under age 65 and permanently disabled.