A Summary of the Medical Assistance Eligibility Rules
LAURIE HANSON
Long & Reher, P.A.
5881 Cedar Lake Road
Minneapolis, Minnesota 55416
(952) 929-0622
www.longreher.com
•Private pay
•Medicare and supplemental insurance • Long-term care insurance
•Veterans Home
•Medicaid/Medical Assistance
Payment sources for long-term care services
What is Medicare? Federal health insurance program for Social
Security and Railroad Retirement recipients
who:
have reached age 65
have received SSDI for two years, OR
are suffering from chronic kidney disease.
Long-term care coverage under MedicareLong-term care coverage under Medicare: 3 days of hospitalization and admitted to NH
within 30 days of discharge
Skilled care only is covered
Maximum coverage: 100 days per spell of illness
After first 20 days, co-payment of $109.50/day in
2004
Medicare Supplemental Insurance policies
Must cover certain coinsurance payments under Medicare.
Will not cover care in nursing homes after the first 100 days, even if skilled.
Will not cover skilled care in nursing homes
if Medicare itself is not paying. If Medicare
doesn’t pay, neither does the supplemental
policy.
What is Medical Assistance? Medicaid -- A joint federal-state program created
to serve certain categories of lower income, disabled, and elderly persons. Eligibility is based on need.
Governed by federal law. To participate in the Medicaid program, states must comply with federal law.
An entitlement program: If you qualify for benefits, you get benefits.
Home and community-based care programs in MN
For persons 65 years old and older:
Elderly Waiver Program (EW)
Special Income Standard Elderly Waiver program (SIS EW)
Alternative Care program (AC) Not a Medical Assistance program
Home and community-based programs in MN
For persons under 65 years of age: Mental Retardation or Related Conditions
(MR/RC)
Community Alternative Care (CAC)
Community Alternatives for Disabled
Individuals (CADI)
Traumatic Brain Injury (TBI)
MA ELIGIBILITY GENERAL REQUIREMENTS
Minnesota resident Categorical Eligibility
Elderly: 65 and older Blind Disabled
Financial Eligibility Assets and income
Financial eligibility for single person
Available assets:
No more than $3,000.
Income:
After allowable deductions, not enough to pay medical and LTC expenses each month.
Financial eligibility for married person with community spouse:
Available assets:
No more than community spouse asset allowance plus $3,000 for LTC spouse. Spousal impoverishment rules apply.
Income:
After allowable deductions, not enough to pay medical and LTC expenses each month.
Assets in general Real property, household furnishings and
wearing apparel, investments including savings and checking accounts, stocks, bonds, CDs, contracts for deed, mortgages, IRAs, collections, cash surrender value of life insurance policies, etc.
Kinds of assets: Available Assets Excluded Assets Unavailable assets
Available assets
Assets are available if the owner has both legal authority and actual
ability to use them for self-support and assets are not excluded or unavailable.
Premarital agreement has no effect.
Excluded assets Homestead Household goods and personal effects One motor vehicle Assets of trade or business Insurance payments to repair or replace
lost, damaged, or destroyed property CSV of certain insurance policies Burial funds
Unavailable assetsUnavailable assets are those that have a legal or
actual barrier to being liquidated. They can include:
Jointly held assets Share of estate that has not been probated Property involved in pending legal action Life estate interest in real property Real property not used as homestead:
reasonable effort to sell
Trusts: available?Depends on:
(1) Kind of trust involved
(2) Who established the trust
(3) Whose assets were used to fund the trust
(4) Whether the trust is revocable or irrevocable
(5) Whether trust was established during
lifetime or through a will
(6) Provisions of the trust agreement
Kinds of trusts
Revocable trust
Medicaid qualifying trust
Trust with springing provisions
Supplemental needs trust
Special needs trust
Pooled trust
Jointly held assets General rule: Presumption that joint
tenants own pro rata share
Exception: Checking or savings account, time deposits owned by MA applicant
Savings bonds: Unavailable if owned jointly and in possession of person who is not applying for MA
Case Study: Single person
Assets owned:
Homestead (sole owner)
Farm property, owned with brother
Irrevocable burial fund
Checking account, joint with brother
Car, value $4,000
Household furnishings
Case Study: Single person
Assets owned:
Homestead (sole owner) Excluded
Farm property, owned with brother
Irrevocable burial fund
Checking account, joint with brother
Car, value $4,000
Household furnishings
Case Study: Single person
Assets owned:
Homestead (sole owner) Excluded
Farm property, owned with brother Unavailable
Irrevocable burial fund
Checking account, joint with brother
Car, value $4,000
Household furnishings
Case Study: Single person
Assets owned:
Homestead (sole owner) Excluded
Farm property, owned with brother Unavailable
Irrevocable burial fund Excluded
Checking account, joint with brother
Car, value $4,000
Household furnishings
Case Study: Single person
Assets owned:
Homestead (sole owner) Excluded
Farm property, owned with brother Unavailable
Irrevocable burial fund Excluded
Checking account, joint with brother Available
Car, value $4,000
Household furnishings
Case Study: Single person
Assets owned:
Homestead (sole owner) Excluded
Farm property, owned with brother Unavailable
Irrevocable burial fund Excluded
Checking account, joint with brother Available
Car, value $4,000 Excluded
Household furnishings
Case Study: Single person
Assets owned:
Homestead (sole owner) Excluded
Farm property, owned with brother Unavailable
Irrevocable burial fund Excluded
Checking account, joint with brother Available
Car, value $4,000 Excluded
Household furnishings Excluded
Income deductionsPay all income after following deductions made: Reparation and restitution payments Medicare premiums Personal needs allowance of $74, $90 for vets G/C fees, 5% of income up to $100 Community spouse income allocation Family member allocation Reasonable and necessary medical expenses
Balance must be paid to the nursing home.
Income Spenddown for Single Person: EXAMPLE
Income of Individual $1,000.60 less Medicare Part B -66.60 less personal needs allowance - 74.00 less insurance premium -100.00
Income applied to care $759.00
Cost of Care $5,440.00 less -759.00
MA pays: $4,681.00
What if the MA recipient is married?
Spousal Impoverishment Rules Apply LTC spouse in NH or Elderly Waiver Community spouse in community Asset Assessment Date:
NH/HH, completed only once Community spouse asset allowance Income allocation to community spouse
Community spouse asset allowance CSAA = 1/2 of non-excluded assets on asset
assessment date with a
Minimum of $26,190
and
Maximum of $92,760
Allowable assets at time of MA application =
CSAA + $3,000
Date of Institutionalization
Protected Assets: CSAA $26,190 MA limit $ 3,000
Excess Assets: $ 5,810
Date of MA application, if in 2004:
$26,190 $3,000
$35,000
Date of Institutionalization
Protected Assets: CSAA $50,000 MA limit $ 3,000
Excess Assets: $47,000
Date of MA application:
$50,000 $3,000
$100,000
Date of Institutionalization
Protected Assets: CSAA $ 92,760 MA limit $ 3,000
Excess Assets $104,240
Date of MA application, if in 2004:
$92,760 $3,000
$200,000
Income Spenddown for Married Recipient
Income of LTC spouse $2,000.60
Income of community spouse $ 700.00
CS is not required to pay any of her income for the care of the LTC spouse
BUT
How is CS going to live on $700/month?
Minimum income allowance for community spouse
Standard of $1,562 per month Increased by amount shelter expenses exceed
$469, up to cap of $2,319 Shelter expenses include:
Mortgage or rent Property taxes Utilities Fire insurance Association fee
Increased asset allowance based on income
If total income of both spouses is less than the CS’s minimum income allowance, the CSAA can be increased.
All retained assets must be income-producing.
Can occur when income is low and shelter expenses are relatively high.
IMPORTANT: ALWAYS REVIEW BOTH ASSETS AND INCOME
REDUCING ASSETS
Pay monthly expenses Purchase excluded assets Pay off debts Prepay funeral expenses Make repairs or improvements to
house Transfer assets
Transfer Warnings Federal law 1997: Makes it a misdemeanor
for paid advisor to counsel or assist in transfers if results in penalty period. Found to be unconstitutional.
Minnesota law 2003: Not enforceable until federal waiver is given or federal law changes
Loss of ownership and control: once given away, assets are no longer yours.
Basic Transfer Rule Transfers of assets or income
By applicant or applicant’s spouse For less than FMV During “lookback period”:
36 months preceding MA application for transfers to people
60 months preceding MA application for transfers to and from certain trusts
Ineligible for LTC coverage for a specific period of time
Period of ineligibility Add total uncompensated transfers in any month
of the 36 months preceding the MA application Value of transfer = FMV of asset less liens and
encumbrances and compensation received
Divide by average monthly cost of NH care in Minnesota, currently $4,111
Penalty period begins the month after the first transfer
Transfer $15,000 in June 2004
$15,000 ÷ $4,111 = 3.64 months
PERIOD OF INELIGIBILITY
Transfer made in June
7/04 ----------------------------------10/04 (.64)
Transfer $50,000 in June 2004$50,000 ÷ $4,111 = 12.16 months
PERIOD OF INELIGIBILITY
Transfer made in June
7/04 ----------------------------------7/05 (.16)
Transfer $200,000 in June 2004
$200,000 ÷ $4,111 = 48.64 months
Period of Ineligibility
If apply before July 2007 (within 36 months), full POI is imposed.
If wait to apply until after 36 months:
June 2004 --------------- July 2007The effective waiting period is 37 months.
APPLY JULY 2007 AT THE EARLIEST
A transfer occurs when:An applicant or spouse Sells Gives away Reduces ownership interest Reduces control Disposes of asset or interest therein Waives right to or refuses inheritance
Refuses to claim elective share Disclaims
Allowable transfers of home To spouse To child under 21 To blind or disabled child To sibling with equity interest To caretaker child For value Denial of eligibility causes undue
hardship
Other exceptions to transfer rules $200 or less per month To spouse at any time, or to 3rd
person for sole benefit or spouse To disabled or blind child or SNT for
sole benefit of child Transfer into SNT for sole benefit of
any disabled person under age 65
Other exceptions to transfer rules Excluded assets other than homestead All transfers have been returned to
individual. The POI can be reduced by return of some of the transferred assets.
Intended to sell for FMV or other valuable consideration
Denial of eligibility causes undue hardship
Proposed changes in transfer lawSee waiver request at http://www.dhs.state.mn.us/HealthCare/waivers/default.htm
72-month lookback period
Average payment used for divisor
POI begins in month person applies and is eligible for MA
Complete ineligibility for MA
Proposed changes to transfer law(cont.)
Homestead cannot be transferred to spouse,
sibling, caretaker child, disabled child, child under
21
No transfers to spouse after MA eligibility
No transfers to blind/disabled child
No transfers of excluded assets
DHS will decide permissible purposes of trusts
Liens and Estate Recovery Medical Assistance and Alternative
Care liens Notice of Potential Claim against real
estate interests Elective share claims Estate recovery, including claims
against life estate and joint tenancy interests
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