Medicaid Long Term Care Handbook, Planner, and State Resource Guide
Medicaid was established in 1965 by Title XIX of the Social Security Act to furnish medical assistance to the needy. It is a cooperative venture jointly funded by the federal and state governments (including the District of Columbia and the Territories) and is administered by the states. Within broad federal rules, each state decides what groups are eligible, what services to provide, what to pay service providers, and its operating procedures. Payments for services are made directly by the state to the providers providing care.
The Omnibus Budget Reconciliation Act of 1993 (OBRA 93) revised the federal guidelines for Medicaid eligibility. Its provisions are generally effective after August 10, 1993. The Deficit Reduction Act, effective on February 8, 2006 (DRA 2005), contains several provisions affecting Medicaid services, eligibility, and asset transfers.
To qualify for Medicaid long term care, you must:
Be a U.S. citizen or an alien lawfully admitted for permanent residence
Be a resident of the state where you are applying
Meet your states functional criteria (65 or older, blind or disabled) and be certified by the attending physician as needing institutional care
Apply for and accept all benefits for which you may be entitled (e.g., VA, disability, or retirement benefits)
Not have monthly resources (assets) or income exceeding the amount specified by your state for the applicable Medicaid category
In 1988, Congress enacted provisions to help prevent the impoverishment of the spouse remaining at home (Community Spouse) while the other spouse is institutionalized. These provisions protect the income and assets of the Community Spouse up to an amount set by your state within federal limits.
If you have too many assets to qualify for Medicaid long term care, you cant just give them away to become eligible. You cant transfer assets for less than fair market value (FMV) either. Transferring assets for less than FMV includes: transfers or cash gifts to family members; payment for education of grandchildren; donations to charitable organizations; and other ordinary transactions. Medicaid also has strict rules covering trusts and annuities. The look-back period is 60 months for transfers made after February 8, 2006. Some transfers made prior to February 8, 2006 may only be subject to a 36 month look-back period
In 1993, Congress made it mandatory for states to seek recovery for Medicaid payments from the probate estate of Medicaid long term care recipients. Recently, Congress allowed states, at their discretion, to: (1) expand their definition of an estate to include nonprobate assets; and (2) place a lien against real property preventing a sale until the lien is satisfied utilizing TEFRA liens. This means states may seek recovery from resources that were exempt in determining eligibility such as a recipient's home. Some states pursue estate recovery much more aggressively than others.
There are strategies you can use to qualify for Medicaid long term care and still leave a legacy to your loved ones. Thes strategies include:
Spending Down Countable Resources
Converting Countable Resources to Excluded Resources
Federally Sanctioned Transfers
The long-term care insurance and transfer strategy
Converting excess resources into income
Less common strategies such as life estates, family reverse mortgages, and care agreements.