Frequently Asked Questions Regarding Medicaid
Q. I have Medicare, is that the same and will it cover my nursing home costs?
Medicare and Medicaid are very different
Medicare was created to deal with the high medical costs that older citizens face relative to the rest of the population. However, eligibility for Medicare is not tied to individual need, rather it is an entitlement program, you are entitled to it because you or your spouse paid for it through Social Security taxes. Medicare is more associated with medical costs, however, If you are entering a nursing facility directly from a qualified in-patient hospital stay of 3 consecutive days or more, Medicare will pay 100% of your nursing home costs for the first 20 days and a portion of the next 80 days [you will be responsible for paying $170.50 per day for the next 80 days], after that you will be responsible for 100% of the costs of nursing care.
Medicaid provides comprehensive inpatient health care coverage, including services and costs associated with nursing facilities and rehabilitation facilities. It is not an entitlement program and you don’t automatically qualify. You must meet certain criteria which differ from state to state and the rules are extremely complex. That’s why it’s important to have an expert on your side.
Q. Why should I use Medicaid
Medicaid is the single largest payer of nursing home bills in America. Medicaid has become, by default, the long-term care insurance of middle class Americans. With the average cost of a nursing facility at $115,000 per year and rising, it will not take long for the average family to completely deplete all of their savings. More than 68% of all nursing care recipients rely on Medicaid to pay their Long Term Care costs
Q. How do I qualify
1. An individual must go through a medical evaluation in order to determine if they meet the minimum level of care required to qualify. [generally, needing regular assistance with activities for daily living]. The need for skilled nursing care will automatically qualify an individual in any state.
2. You must meet the financial guidelines.
3. You must be a resident of the state you are applying in
4. You must have a social security number
5. You must be a US citizen.
Q. I have money in the bank and assets. Can we protect them and still qualify?
Yes Although Medicaid does have strict guidelines, you may retain assets and still qualify, If the applicant has a spouse the Medicaid eligibility criteria may be different. A couple may retain assets up to $125,600, home equity limits are as high as $552,000(PA), $828,000(NJ). There are exemptions that allow spouses to keep resources and income from the applicant. Making a mistake and overspending resources may result in the community spouse losing thousands of dollars of what could otherwise have been funded through Medicaid and possibly creating a situation where the spouse no longer has adequate resources or income. Single applicants have options also.
It is critical to understand Medicaid Resource rules. Common mistakes can leave applicants vulnerable to periods of ineligibility. Consult our Medicaid Eligibility Advisors (MEA)® regarding your individual financial situation.
Q. What happens after my application is submitted?
The caseworker assigned to your application will review the documents submitted- ( keep in mind that the Medicaid caseworkers are overworked and understaffed, they may see dozens of applications a week in some areas ). If the application is clear, precise and has ALL supporting documents attached and it is very evident that you qualify they may approve the application within a short period of time.
If the application and documents are not structured, prepared and presented in a clear and easy to read manner, they may put it in a pile to “get to later” which may delay your approval time by months. If the individual completing the application is not aware of all of the complex rules of Medicaid eligibility and mistakes are made, the caseworker may deny the application or impose a penalty.
That's why it's always best to hire a Professional, you really need an Advocate on your side.
Q. What is the "Look Back Period" that Medicaid talks about?
The "look Back Period" refers to the length of time in which Medicaid looks at your financial history ( currently that time is 60 months ). What they are looking for is any transfer or "gifts" of money or assets. Medicaid rules regarding "gifting" or giving away money is - "any unqualified or uncompensated transfer of assets over $500 may result in a period of ineligibility of benefits". The same "look back period" will be applied to any asset, any asset that is transferred or sold to another person must have been done so for "fair market value", as an example - if you sell your house to your brother for $20,000 but it's "fair market value" at that time was $100,000, that was a transfer for less than "fair market value" and will result in a red flag to Medicaid when they review your financial history. In a case as that or any other when there is a transfer or "gift" of less than "fair market value" if not corrected, it could result in a penalty for the difference in value. The key reason is that they want to avoid having someone with money and assets to become eligible just by giving away everything to a family member or friend.
That's why it is extremely important to have every day of your financial history for the previous 60 months evaluated by a professional. We have the knowledge to locate any transaction that may cause an issue with Medicaid prior to the submission of the application, that way it can be addressed before it results in a denial or penalty.
Q. Can gifts be made to family members each year within the IRS guidelines without affecting the five
year look-back period for Medicaid if Mom or Dad had to be placed in a nursing home?
Absolutely Not! Medicaid and the IRS are completely different when it comes to "gifting". The IRS does allow gifts to be made each year, however. MEDICAID DOES NOT. Gifts [other than to a spouse or disable child] may result in penalties ( see below for explanation of penalties ). To read an article explaining the difference between IRS gift taxes and Medicaid "gifting" rules click HERE
Q. What is a Medicaid penalty?
Whenever an unqualified or uncompensated transfer of an asset occurs withing the 60 months preceding the date of the Medicaid application Medicaid may impose a period of ineligibility. In regards to a cash "gift" any amount over $500 may trigger this or if an asset is sold for less than fair market value.
it is critical to understand Medicaid Penalties and what transfers are allowable and which transfers are not. Mistakes can leave applicants vulnerable to periods of ineligibility which could have been avoided.
If a penalty is imposed it will be calculated as follows;
Let's say an individual has sold their house for $150,000 but it's actual value is $300,000. Basically they have sold their house for less than the fair market value, so the penalty will be the difference in the value of the transfer or $150,000.
To calculate that into the length of time the penalty will be in effect is as follows:
Take the $150,000 value and divide that by your states average daily cost of nursing home care or the [daily divisor rate], we'll use New Jersey which is $423.95 /day as of 04/01/2018).
$150,000 divided by $423.95 = 354... your penalty or period of ineligibility would be 354 days.
bottom line....don't give anything away if there's a chance you may enter a nursing home within the next 60 months. If you have given anything away and your in need of nursing home care, talk to a specialist before you do anything at all with your Medicaid application, they may be able to help, depending upon the circumstances. Not all transfers will result in a Medicaid penalty, it depends on the circumstances and how or why the transfer occurred.
The following are exceptions, transfers are generally permitted in these circumstances; ( consult a specialist prior
to making any transfers just to be safe )
1. your spouse
2. your blind or disabled child or your child under 21 years of age.
3. certain types of trusts or annuities benefiting your spouse ( restrictions apply, consult our specialists ).
4. your child ( who is not blind, disabled or under 21 ) but has resided in your home and provided care for you for at
least 2 years immediately before you entered the nursing home.
5. a sibling having an equity interest in the home and who lived there for a minimum of 1 year before you entered the
6. a family caregiver who has provided care for you that was needed for health reasons [providing that a proper caregiver agreement has been in place].
Please consult our expert staff for more information regarding your individual financial situation
Q. Why should I hire a professional to help with the application process
The application process is tedious and exhausting, failure is not only a very real risk, it will be financially devastating. In addition to completing the application, you will have to supply supporting documents for all of the sections, one of which will require you supply documents detailing the entire financial history for the last 5 years including all closed accounts and an explanation of all checks written and deposits made of $500 or more. Because of the amount of supporting documents required, in order to successfully achieve Medicaid eligibility it is critical that applicants understand Medicaid document rules. Doing this on your own could take months and common mistakes will leave you and your loved one vulnerable to periods of ineligibility, delays and denials.
An average application may contain of over 1,000 pages of documents before its complete and approved
Consult our expert staff before doing any Medicaid Planning or submitting a Medicaid Application
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