How would you choose long-term care?
Usually, LTC recipients of Medicaid are usually those who are aged or from the disabled group, but there are only a handful who receive SSI and yet opt for LTC.
What are the assets exempted under Medicaid and LTC?
The following are Medicaid exempt assets:
- A house but only when you (the applicant) are likely to return home. Your home may also be among Medicaid exemptions if your spouse, or a child under the age of 21 years or a child over the age of 21 years but disabled, or a brother/sister owning part of the house and having resided there for at least 1 year continues to live in that house.
- Essential items like furniture, appliances etc.
- Personal items like jewelry, clothing etc.
- Burial plots
- Funds for burial up to $1500 each in case you are married and $1200 if you are a single applicant.
- A cash surrender value in a life insurance. This is possible only when the face value of the policies together is less than $1500. However, term life insurance does not have a cash surrender value and hence is totally exempt.
Related readings:
There are 25 states with Long Term Care Partnership Programs.
This is significant legislation as a person can now LEGALLY exempt their assets from nursing home and Medicaid spend down by simply obtaining Long Term Care insurance.
Click HERE to read Florida Statute 409.9102.
(b) Provide a mechanism to qualify for coverage of the costs of long-term care needs under Medicaid without first being required to substantially exhaust his or her assets, including a provision for the disregard of any assets in an amount equal to the insurance benefit payments that are made to or on behalf of an individual who is a beneficiary under the program.
(4) The Department of Children and Family Services, when determining eligibility for Medicaid long-term care services for an individual who is the beneficiary of an approved long-term care partnership program policy, shall reduce the total countable assets of the individual by an amount equal to the insurance benefit payments that are made to or on behalf of the individual.
States with Partnership Legislation:
Arkansas
Iowa
NorthDakota
Colorado
Maryland
Ohio
Florida
Massachusetts
Oklahoma
Georgia
Michigan
Pennsylvania
Hawaii
Missouri
Rhode Island
Idaho
Montana
Virginia
Illinois
Nebraska
Washington
New York
Indiana
Connecticut
California
Posted: Fri Jun 25, 2010 03:37 pm Post Subject:
Unfortunately, life insurance cash value IS countable as a spendable asset under Medicaid rules. To qualify for Medicaid, one must meet the spenddown test, and the confined person must have assets no more than about $2000, as you indicate.
The only choice is to meet the spenddown test. You do not have to surrender the life policy, but must use the cash value to pay for the needs of your father.
So, take have him take the $6700 as a policy loan, pay his nursing home cost for the one month, leaving him with $700 in assets (assuming there is nothing else in his "countable" assets). Voila! Qualification for Medicaid is probably met, there will still be $5300, less accruing interest in life insurance proceeds at death.
Understand that all Medicaid payments will become a lien against his estate. If life insurance proceeds, however meager, are payable to the estate, although the mortuary would have a claim for burial expenses, the state's claim could interfere.
JUST MAKE SURE THERE IS A NAMED BENEFICIARY!! That way the money will not be available to the state and could be used to pay some of the funeral expense without hindrance.
The complicating matter is your father's dementia. It could be difficult to maintain that he understood what he was doing when signing a policy loan request. If he is the owner of the policy (most likely), and he cannot sign the request due to legal incapacity, this could be a huge problem regarding both Medicaid and beneficiary.
A court order as conservator allows that person to administer the affairs of an incapacitated person, but the contract of insurance is inviolable. The court order cannot change the relationship between owner and insurer. A conservator is unlikely to be able to persuade the insurer to alter the contract (new beneficiary) or allow a loan.
For all who read this post, this is a testimony to the power of independence available through LONG TERM CARE INSURANCE which would have avoided all of this turmoil.
With all due respect to MRH and his/her father, who are innocent pawns in the grand scheme of things, THE MORAL OF THE STORY: If you believe the Government has a plan to take care of you in your old age -- Social Security, Medicare, Medicaid, or Obamacare -- you may already be suffering from dementia.
Posted: Tue Jul 27, 2010 05:22 pm Post Subject: medicaid and life insurance
I am getting conflicting answers.Life ins. must not exceed $1500 face value or $1500 in death benefits. MR
Posted: Tue Jul 27, 2010 08:07 pm Post Subject:
It really doesn't matter what the face value (or death benefit) of the life insurance is, because that money is only available to the insured's beneficiary after the insured dies. Cash value is something else.
If there is CASH VALUE in a life policy, Medicaid (Medi-Cal in California), can force the cash to be borrowed and "spent down" so that the total assets of the Medicaid recipient fall at or below the required limit of $2000. So, to that extent, the Medicaid rules generally require that the cash value in excess of $1500 is a "countable asset" which would be added to all other countable resources of the recipient and spouse that are subject to the spend down test. The policy could have a face amount of $1,000,000, but if the cash value is below $1500, it's not a countable asset.
If the liquidation of other assets, prior to removing the life insurance cash value, gets the remainder below the threshold, the life insurance may not have to be touched at all. Mostly depends on the actual amount of CV in the policy. It it's low, not a problem. If it's substantial, it could be a stumbling block. If it's more than $2,000, it will have to be spent down to at least that point.
And you cannot use policy assignment to another party as a way to avoid the spend down test, unless the policy ownership was transferred at least 60 months ago, if the transfer occurred after February 8, 2006.
Transfers of any assets within the 60 month look back period for the purpose of avoiding the spend down test subject the recipient to a penalty. There are only limited transfer privileges that escape both the look back and the penalty.
The maximum assets that a community spouse may have is one half of the couple's total assets but not more than $109,560 in 2010. The actual rules for Medicaid spend down vary by state, so to try to give more definitive information could be misleading.
Posted: Fri Jul 30, 2010 06:55 pm Post Subject: Recovery excemptions
I was recently told that since my Mother has 2 disabled children, Medicaid would not ever proceed with recovery of her equity in home or other assets as well. Is that correct? Is this a new rule?
So can she have assets in her name that exceed the normal thresholds due to these disabled children.
One was a dependent, disabled child that lived with her all her life. He now lives with one of her other children, as she is in a nursing home.
Posted: Fri Jul 30, 2010 08:52 pm Post Subject:
since my Mother has 2 disabled children, Medicaid would not ever proceed with recovery of her equity in home or other assets as well. Is that correct? Is this a new rule?
This is neither a rule, nor new. The estate of any person age 55 or older receiving LTC benefits courtesy of Medicaid will be subject to asset recovery following their death. The home is "protected" for a surviving spouse or disabled child, but only as long as he/she resides in the home -- but the rule only applies if the individual has "an equity interest" (i.e., is a joint owner with right of survivorship [aka: joint tenants, tenants in common]). Upon the sale of the property, the lien is recoverable, regardless.
He now lives with one of her other children, as she is in a nursing home.
This may be problem, since the disabled child does not reside in the home. To exempt the home as a countable asset from the spenddown test, state rules apply. There are two possibilities.
In some states, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home; in other states, the nursing home resident must prove a likelihood of returning home
If your mother will not be capable of returning home, or has no intent to do so should she no longer need the nursing facility, it will not be exempt, unless her spouse or dependent child still resides there. Apparently that is no longer the case. In such cases, only $500,000 (can be raised by the state to $750,000) of the equity is protected from the spenddown requirement.
One possibility exists: to avoid the recovery of her home by the state, or forced spenddown of excess equity, the home may be placed in a trust for the benefit of the disabled child(ren). That transfer is exempt from the Medicaid look back rules.
So can she have assets in her name that exceed the normal thresholds due to these disabled children.
No. That is not a criteria of the spenddown test. To qualify for Medicaid, she must meet the spenddown requirement, period, subject to the rules pertaining to countable and exempt assets.
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This is a lesson in estate planning and the need for long-term care insurance.
Posted: Wed Sep 08, 2010 10:37 pm Post Subject: whole life ins nursing home MISSOURI SOCIAL SERVICES
Mom in a nursing home, they found she has a whole life ins with a cash surrender value of $2741. now they want us to call MISSOURI SOCIAL SERVICES. what can I do ?
Posted: Tue Sep 21, 2010 05:36 pm Post Subject: assest spend down
My mom is in the nursng home with alzheimers. I (her only son) have to spend down about 4,500.00 on items that will benefit her so she can continue to be qualified for Medicaid. Can you give me examples of what qualifies as items that will benefit her?
Posted: Wed Sep 22, 2010 12:23 am Post Subject:
Nursing home board and care, physical and occupational therapy, direct medical expenses, transportation expenses, and prescription medications are just a few of the qualifying expenses. What you cannot spend money on is stuff like vacations, gambling, gifts to others, etc.
The spenddown test is a monthly thing. So if mom has continuing retirement income, it must be used each month except for a $35 allowance for personal expenses. The purpose is to force "share of cost" expenditures so that the government is not footing the entire bill unnecessarily.
Understand, however, that every dollar the government spends courtesy of Medicaid is a dollar of asset recovery the government forces the state to go after following mom's death. Mom's home and other assets in her name at death can be seized to repay the debt owed, unless dad or a disabled child still resides there. The lien endures without interest until the asset may be seized.
Posted: Fri Oct 15, 2010 03:23 pm Post Subject:
is a spouse's IRA consistered and asset for a medicaid applicant
Posted: Fri Oct 15, 2010 06:21 pm Post Subject:
Not the invested money, but distributions, including any Required Minimum Distributions, are a countable asset in the month received, and must be spent down as part of the "community" spouse's "allowance" each month.
Yes, it sucks! But that's our government at work.
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