Spousal Impoverishment Laws in 2023

Medicaid eligibility is based on medical conditions, income, and resources. A spouse may require hospitalization, nursing home care, or the equivalent in-home care for assistance with daily living activities like bathing, dressing, and more.

The spouse requiring assistance must have an income of $2,742 monthly or less. However, if they exceed the limit, it’s still possible to qualify for benefits that will pay for long-term care.

The spouse in need of care must not have countable resources (money and personal property) valued over $2,000. However, the well spouse (community spouse) can keep up to $148,620 of their combined countable assets. If those assets exceed the limits, resources can be spent down to become eligible. This can be done in several ways:

• Use resources to pay for nursing home care
• Pay off debts
• Make home repairs and improvements
• Buy a new car or other personal property
• Prepay funeral and burial plans
• Pay for necessary non-medical equipment
• Purchase an annuity to provide income for the community spouse

Protecting Assets in an Irrevocable Trust

For many couples where one requires Medicaid benefits and the other remains at home, transferring assets to an irrevocable trust may be the best way to protect their home and savings while still qualifying for financial help with long-term care needs. But reorganizing assets must be done legally or it will result in penalties that delay coverage. If benefits are delayed, you will be responsible for out-of-pocket expenses until the benefits are approved.

The timeframe for delayed benefits is based on the value of the asset transfers made during Medicaid’s lookback period and the monthly cost of nursing home care in your state. An elder law attorney can review your situation and avoid mistakes that lead to these penalties with pre-planning for care. However, when there are immediate needs for long-term care, the goal is to qualify for benefits quickly, find out the best ways to pay for care until benefits begin, and reduce costs as much as possible.

Are You Caring for a Spouse at Home, or Is Your Spouse in a Skilled Nursing Facility?

When you’re caring for a loved one and serving as their support system, you shouldn’t have to worry about making ends meet, losing your home, or depleting a lifetime of savings. Spousal impoverishment protections help families stay together and get the care they need. Legal strategies can help you meet federal and state Medicaid eligibility requirements while protecting assets for a spouse and even preserving a legacy for your children.

Long-term Medicaid planning can help families avoid a medical or financial crisis. The sooner you start, the better. For immediate needs, time is of the essence. Either way, reach out to an elder law attorney today to discuss your options. You and your family will gain peace of mind knowing you’ve handled a potentially stressful and emotional situation.

To learn more about Medicaid eligibility criteria that protect against spousal impoverishment for recipients of home- and community-based services, contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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Medicaid eligibility is needs-based, meaning both income and assets are counted when determining eligibility.  Both Medicare and Medicaid will cover a broad range of health care services, including hospital stays and physician office visits, yet Medicaid will cover nursing home care, in-home care services, long-term care, and transportation to receive medical care which Medicare will not pay for.  It is possible to qualify for dual coverage, which means both Medicare and Medicaid will work together to provide healthcare coverage and lower costs.

Regarding cost, Medicaid in most instances is free of cost though a small copay may be required depending on the plan.  Medicaid can also recover against assets in a recipient’s estate after the death of the recipient.  This could mean a lien is placed and executed on a recipient’s home, depending on whether a surviving spouse or blind or disabled child is residing in the home.   Medicare is not free in that premiums and co-payments may be required for some parts of Medicare, and may be larger for those with a higher income, but eligibility is not income-based.

With Medicare, one has to work for about 10 years (40 qualifying quarters), at which point no premiums are required for Part A,  which covers hospitalizations.   Premiums may be necessary if you sign up for a Medicare Advantage plan, which is different from Original Medicare where you are permitted to purchase supplemental coverage for out-of-pocket costs.   Because Medicare is not administered by each state, a Medicare recipient will usually have the same coverage and pay the same copays and deductibles regardless of the state of residence.   Co-pays and deductibles are required for Medicare’s Part B (outpatient services) and Part D (medication) plans.   Also, a financial penalty can be assessed if one does not sign up for Medicare  Part B when you first become eligible, and there may be a delay in getting coverage.

Though basic differences are covered here, there is much more information to know regarding both plans, so research is encouraged before you hit the age of eligibility for Medicare to determine which Medicare plan may be right for you.  Medicaid plans and coverage differ from state to state, and sometimes county to county.  We would be happy to answer any questions you have about your potential eligibility for either program.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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Forty-nine of the fifty states have a look-back period of five years (or sixty months). The exception is California, with a thirty-month look-back period. This period of Medicaid ineligibility is a penalty period with no maximum. To determine the penalty period, Medicaid takes the dollar amount of assets transferred and divides it by the daily private patient rate of nursing home care or the average monthly private patient rate.

There are certain look-back exceptions and exemptions, particularly for families in difficult situations. These are very often confusing options and often difficult to implement without the expertise of a Medicaid planning attorney. Certain common mistakes and violations can occur.

Gifts – The federal government’s annual gift tax exclusion amount per recipient is $16,000 in 2022 via the estate and gift tax exemption. However, Medicaid does not consider this transaction exempt from its look-back period. Even birthday gifts or other special occasions like holidays or weddings may result in a Medicaid penalty. Gifting rules change state by state, making things even more complex.

Lack of Documentation – If you transact an asset and receive a value equal to the fair market value without proper documentation, you may violate the rules of the look-back period. This situation is particularly relevant for assets with a government record like boats, motorcycles, or vehicles because of their registration requirements.

Irrevocable Trusts – Many individuals incorrectly assume that an irrevocable trust (sometimes inaccurately called a Medicaid Qualifying Trust) is automatically exempt from the look-back period. Creating an irrevocable trust during the look-back period is considered a gift and a countable asset. Irrevocable trusts created before the look-back period are not countable assets.

Because Medicaid is a federal and state program, look-back rules vary by state. Even the penalty divisor amount varies by state because the average cost of nursing home care varies. Some states calculate using a monthly average penalty divisor, while others use a daily average penalty divisor. In New York, the rules governing asset transfer under fair market value do not include home care, sometimes called community care. Instead, they only apply regarding nursing home care. Pennsylvania will permit an individual to gift $500 per month without violating the Medicaid look-back period. Understanding the nuances and differences between states and Medicaid rules is crucial to successful planning.

Strategies to avoid violating Medicaid look-back rules and avoiding penalties can help families keep some of their assets while still qualifying for Medicaid. A Medicaid planning attorney can help you identify which strategy is best to implement in your circumstance. These strategies can be extremely complex and require professional help. It is easy to have a loved one disqualified, but very difficult to rectify the problem.

Caregiver Agreements – Also referred to as Life Care Agreements, Elder Care Contracts, or Long-term Care Personal Support Services Agreements, the formal agreements permit compensation to the caregiver, spending down assets for services without violating the look-back period. These contracts between a caregiving relative, friend, or older adult permit a senior to receive necessary care that Medicaid does not cover while also providing the caregiver with needed compensation. This contract requires the services of an attorney to ensure its careful drafting.

Medicaid Exempt Annuities – This annuity type is common to avoid violating the Medicaid look-back period. An annuity is a lump sum payment in cash by an individual in return for a monthly payment for the duration of that person’s life or a set number of years. These annuities are Medicaid compliant because they turn assets into income, lowering the assets of the Medicaid candidate below the Medicaid eligibility limit. Some annuities qualify, while others do not, be certain to choose the right product if the goal is Medicaid qualification.

Irrevocable Funeral Trusts – This trust type sets aside a specific amount of money (within state limits) for the sole purpose of funerary and burial costs. This trust helps applicants spend down excess assets without violating the Medicaid look-back period.

Undue Hardship Waiver – Filing an undue hardship waiver request occurs when individuals violate the Medicaid look-back period, but it renders them without basic needs like shelter and food. It is difficult to receive this waiver as there must be an effort to exhaust all avenues of asset recovery, including legal options.

Recuperation of Assets – If previously transferred assets during the look-back period can be recovered, the previous penalty established can be reconsidered. Some states will review all assets transferred to all people. Partial recovery of said assets may shorten the penalty period in some states but not in others. Though the returned assets will put an applicant over the Medicaid asset limit, these assets can then pay for long-term care as the applicant reapplies.

The surest way to avoid violating a look-back period infraction and qualify for Medicaid is to consult a qualified Medicaid planning attorney before you gift or transfer any assets. If a violation has already occurred, a qualified attorney can also offer assistance to rectify what has gone wrong. The best option to avoid the Medicaid penalty period is to plan proactively.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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States Follow Federal Guidelines But Have Some Autonomy

Although Medicaid funding is a federal-state partnership, states administer the programs and have some flexibility in determining who to cover, delivery models, and payment methods for physicians and hospitals. States may apply for a Section 1115 waiver to experiment with different implementation approaches as federal statutes require; however, the Secretary of the US Department of Health & Human Services (HHS) determines advanced program objectives.

Medicaid entitlement has two basic guarantees. First, all Americans who meet Medicaid eligibility requirements are guaranteed healthcare coverage. Second, states receive guarantees for federally matched funds without a cap for enrollees’ qualified services. Under current law, nearly all Medicaid federal funding is open-ended, but this may change for cost containment.

According to the Congressional Budget Office (CBO), the federal government pays anywhere from 54 percent to 79 percent of each state’s annual Medicaid outlays, with the states’ picking up the remainder. Beyond enrollment expansion due to COVID-19 for the fiscal year 2022, nearly one-third of states saw upward pressure on spending due to increasing costs for managed care and provider rate increases.

Medicaid Coverage Continues to Evolve

Medicaid began in 1965 and was a cash assistance program for qualifying individuals or families. In the following years, Congress expanded federal minimum requirements to provide more new coverage types, particularly for children, pregnant women, and people with disabilities. The broader health care coverage of the Affordable Care Act (ACA) in 2010 expanded Medicaid to non-elderly adults with qualifying low incomes and continues to meet changing needs.

A Broad Range of Health and Long-Term Care Services

In addition to the Medicaid federal law service requirements, many states provide optional services. These services include physical therapy, prescription drugs, eyeglasses, and dental care. Medicaid expansion for adults is part of the ACA’s ten “essential health benefits,” which include the following:

• Ambulatory patient services
• Emergency services
• Hospitalization
• Pregnancy, maternity, and newborn care
• Mental health and substance abuse disorders
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Laboratory services
• Preventative and wellness services
• Pediatric services

Medicaid covers the cost of long-term care, including nursing homes and many community-based long-term services. Over half of all Medicaid long-term care spending is for home and community-based services (HCBS), enabling seniors and those with disabilities to live more independently. Emphasis is shifting away from institutional settings, although intermediate care facilities for adults with intellectual disabilities remain a priority.

Privately Managed Care Plans for Enrollees

More than two-thirds of Medicaid beneficiaries account for privately managed care plan enrollments contracting with states to provide comprehensive services. Other enrollees receive their care in a fee-for-service system.

Most states cover long-term services through risk-based managed care arrangements to contain costs. These managed care organizations (MCOs) are comprised of various entities, as some involve physicians while others combine physicians, hospitals, and other providers.

The blended approach of public and private partnerships to provide Medicaid care allows each participating group to function at their highest level, integrating efforts instead of trying to solve issues outside their expertise.

Medicaid beneficiaries have far better access to healthcare than the uninsured and seek medical care before health problems become severe and more costly. The satisfaction ratings of Medicaid recipients are comparable to those rates for individuals with private health insurance.

Conclusions

Despite experiencing low income, the rate of Medicaid enrollment is similar to those with private coverage. Medicaid covers preventative, rehabilitative, and acute health care in addition to costly long-term care for millions of Americans.

Medicaid services account for one-fifth of healthcare spending and receive a lot of attention regarding:

• Capacity expansion to address addictions, in particular, opioids
• Refining payment and delivery systems
• Lowering prescription drug costs
• Refining eligibility requirements
• Increasing community-based long-term care services

Medicaid funding is a major financial support for hospitals, doctors, nursing homes, and many other jobs in the healthcare sector. Federal matching funds guarantee an open-ended basis to provide flexibility in supporting each state’s population’s healthcare needs.

Medicaid is an extensive program and varies by state, making it difficult to know what is available to beneficiaries or potential enrollees. Attorneys specializing in Medicaid and disability can help you understand how to benefit from your state’s programs. They can guide your application process, ensuring you receive the necessary benefits. Reach out to speak to our office and speak with an elder law attorney about Medicaid planning.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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The year 2020 saw total payments for all individuals with dementia diseases reach an estimated 305 billion dollars. This substantial sum does not include the value of informal caregivers who are uncompensated for their efforts. Of this 305 billion dollars Medicare and Medicaid are projected to cover 67 percent of the total health care and long-term care costs of people living with dementia, which accounts for about 206 billion dollars of the total cost of care. Out-of-pocket expenditure projections are 22 percent of total payments or 66 billion dollars. Other payment sources such as private insurance, other managed care organizations, as well as uncompensated care account for 11 percent of total costs or 33 billion dollars.

The Centers for Medicare and Medicaid (CMS) cite that 27 percent of older Americans with Alzheimer’s or other dementias who have Medicare also have Medicaid coverage. In comparison, the percentage of those Americans without dementia is 11 percent. The addition of Medicaid becomes a necessity for some as it covers nursing homes and other long-term care services for those individuals with meager income and assets. The extensive use of CMS services, particularly Medicaid, by people with dementia translates into extremely high costs. Despite the high rate of expenditure by federal social and health services, Americans living with Alzheimer’s and other forms of dementia still incur high out-of-pocket expenses compared to beneficiaries without dementia. Much of these costs pay for Medicare, additional health insurance premiums, and associated deductibles.

alz.org

Older Americans living with Alzheimer’s or other forms of dementia have twice the number of hospital stays per year than those without cognitive issues. Dementia patients with comorbidities such as coronary artery disease, COPD, stroke, or cancer, to name a few, have higher health care costs than those without coexisting serious medical conditions. In addition to more hospital stays, older Alzheimer’s sufferers require more home health care visits and skilled nursing facility stays per year than other older people without dementia.

Cost projections for Medicare, Medicaid, and out-of-pocket costs for Americans living with Alzheimer’s disease or other forms of dementia continue to increase. The average life span of an American with Alzheimer’s is 6 -8 years, and as the disease progresses, so do the requirements of care and support. This care and support include medical treatment, prescription medications, medical equipment, safety services, home safety modifications, personal care, adult daycare, and ultimately residence in a skilled nursing facility. Disease-modifying therapies and treatments remain elusive, and there is no cure for Alzheimer’s and other dementia diseases. ADRD imposes a tremendous financial burden on patients and their families, payers, health care delivery systems, and society.

In the absence of a cure, the Alzheimer’s Association predicts the total direct medical cost expenditures in the US for ADRD will exceed 1 trillion dollars in 2050 because of increases in elderly population projections. Health policy planners and decision-makers must gain a comprehensive understanding of the economic gravity that Alzheimer’s and other dementia diseases present to the US population. The direct and indirect total medical and social costs and accompanying solution-driven mandates must be identified to CMS, private insurance groups, facilities with dementia units, and family systems that function as non-compensated caregivers.

We help families plan for the possibility of needing long-term care, and how to pay for it. If you or a loved one would like to talk about your needs, we would be happy to help. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters.

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