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Long Term Care  

Financial Rules For Long Term Care Recipients

Medicaid pays for medically necessary nursing home care for patients in skilled or intermediate care nursing homes or in intermediate care facilities for the mentally retarded. The patient's income must be less than the cost of care in the facility at the Medicaid rate, and there is a limit on resources. If the patient or his representative gives away assets or sells them for less than market value, he may be ineligible for payment of the cost of care. The sanction period is based upon the value of the assets transferred away.

Financial Protection for a Spouse

Medicaid policy specifies that when a legally married individual needs Medicaid to help pay for nursing facility services, a portion of the couple's income and assets may be protected for the spouse at home, the community spouse. The following is a summary of spousal protection rules:

  • Medical services: nursing home care, hospital care that exceeds 30 days, or services provided by the Community Alternatives Program (services which enable an individual to remain at home who would otherwise be institutionalized)
  • The community spouse is allowed to keep one half of the couple's assets, with a minimum of $20,880 and a maximum of $104,400 (current as of 1/1/2003).
  • The protected share is calculated by assessing the value of all assets owned separately or jointly by either spouse at the point the individual becomes institutionalized. The homesite is generally not counted in determining the value of assets since the homesite is protected for the spouse.
  • The nursing facility applicant/recipient can reduce his/her assets without penalty by paying cost of care, or any other expenses the applicant/recipient or spouse has incurred.
  • The protected assets must be transferred to the name of the community spouse.
  • Once assets have been allocated following spousal impoverishment rules, spousal financial responsibility ends and each spouse will be treated separately for Medicaid purposes.
  • A portion of a married institutionalized Medicaid recipient's income may also be allocated to the community spouse.
  • Income is allocated for the needs of the community spouse if the community spouse's income is less than 150% of the poverty level (currently $1,712). It is also possible to allocate additional income to the community spouse for excessive shelter costs.
  • Income may also be allocated for the needs of other dependents.

Transfer of Assets

Medicaid law prohibits the transfer of assets for less than market value by an institutionalized Medicaid applicant/recipient or anyone acting on their behalf.

  • Certain transfers are allowable, such as the transfer of a homesite to a spouse or disabled child.
  • The lookback period is 3 years (5 years for transfers to a trust) from the date of application or institutionalization, whichever occurs later.
  • A sanction is applied for a period of time based on the value of the asset. The length of the sanction is determined by dividing the value of the transferred assets by the average monthly Medicaid cost for nursing home care (currently $5,000). The sanction generally begins when the applicant / recipent is institutionalized and applies for Medicaid.
  • During the sanction period the individual may be eligible for Medicaid but Medicaid will not pay for institutional services.

Estate Recovery

  • When a Medicaid recipient in a nursing home or receiving CAP services dies, Medicaid files a claim against the estate to recover expenses paid by Medicaid.
  • Estate recovery is waived if there is a spouse or dependents who continue to live on the property, the total assets in the estate are less than $5,000, Medicaid charges are less than $3,000, or in cases of hardship.