*This information is provided for informational purposes only. By distributing this article, Elder Law Attorney Koren Martin is not rendering any legal or professional advice. This is an area of the law that changes quickly. If legal advice is necessary, the reader should consult an Elder Law Attorney. Medicaid should not be confused with Medicare benefits. This FAQ only addresses potential Medicaid eligibility.
The average cost of a semi-private room in a nursing home is $4,940 per month (as per the daily average rate of $162.41 established by Texas Health and Human Services Commission) with costs ranging from about $4,200 per month in small communities to over $6,000 per month in metropolitan areas. However, the cost of round-the-clock in-home care runs about $17-$22 per hour translating to a monthly cost of about $12,500 to $16,000. Thus, unless a person is independently wealthy or has long term care insurance, about the only other method of paying for nursing home costs is through the Medicaid program.
An applicant must:
In order to qualify for Medicaid nursing home care (and the Star Plus Waiver benefit) the applicant must have a medical condition that requires specialized supervision by a licensed nurse for services ordered by a physician according to a documented medical condition. For example, could an unskilled individual provide sufficient care for the applicant. If so, then the applicant does not meet the medical necessity requirement. Generally, a person suffering from dementia or Alzheimers disease who takes prescription medications will meet the medical necessity requirement.
Not all nursing homes accept Medicaid benefits. Of those nursing homes that do, the nursing home may only accept a limited number of Medicaid recipients. Additionally, the Medicaid "bed" generally is in a semi-private room.
A Medicaid applicant must receive an income less than $2,205 in 2017. The Medicaid Agency only looks at the applicant's income (not the spouse's). The Medicaid Agency looks to the name on the check to determine which spouse to attribute a particular item of income.
If the applicant otherwise qualifies for Medical long-term nursing home benefits, the applicant (or the applicant's spouse or other representative) may create a Qualified Income Trust or "Miller Trust." This trust allows the applicant to transfer his/her income into the trust and then qualify for Medicaid long term nursing home care benefits.
Among other provisions, the trust must provide that upon the death of the beneficiary/applicant, the State of Texas will be reimbursed for all expenditures made on the applicant's behalf. If the applicant is married, the benefits will be paid out of the trust as follows:
NOTE: The deductions noted above are given to all institutionalized Medicaid recipients when calculating the co-payment to the nursing home. The Miller Trust puts the budget under very careful scrutiny for compliance.
No. A Miller Trust is ONLY used to overcome the income cap issue. A Miller Trust is NOT a trust used to protect assets (resources).
To qualify for Medicaid, the applicant's countable assets (resources) cannot exceed $2,000.
If both spouses are applying for long term care nursing home benefits, then their combined countable resources generally cannot exceed $3,000.00.
If only one spouse is applying for Medicaid benefits, the community spouse may keep more than $2,000.00 in assets. When the Medicaid application is made, all available non-exempt resources of both spouses will be counted as resources, regardless of whether the property is classified as community or separate property. One-half of the couple's resources will be set aside for the spouse not applying for Medicaid benefits, with a minimum set aside amount of $24,180.00 and $120,900.00 maximum in 2017. (Pre-marital and post-marital agreements are irrelevant to the Medicaid application.)
There may be ways to increase the maximum amount that can be set aside for the spouse staying at home but the strategies can be complex and should be discussed with attorney Koren Martin.
Spending down before or after the application is not the key. The Medicaid Agency gives you credit for all monies spent after you enter a medical facility and ultimately stay for 30 consecutive days or more. For example, Wife has a stroke and goes into the hospital in September 18. On October 4, she is moved into a nursing facility and continues to reside there. Her husband makes application for Medicaid benefits for her in December.
The Medicaid Agency will determine what their assets were on September 1 and again on December 1 to see if they have already spent funds to meet any spend down. When only one spouse is applying for Medicaid, it is best to "spend down" AFTER a person has spent 30 consecutive days or more in a medical facility. When an individual with no spouse is applying for Medicaid, the applicant can have only $2,000 in countable assets so any spend down should be accomplished after entry into the nursing home but before eligibility.
No. The following assets are exempt from being included as a countable resource:
Additionally, the Medicaid Agency will also exempt funds held in an IRA, 401k or other similar tax device that are invested in an annuity product. (I do not make investment recommendations. However, I will work with your financial planner to explain the effect your investments might have on a Medicaid application.)
If a nursing home applicant makes a transfer of resources for less than fair market value (a “gift”) in order to qualify for Medicaid benefits, the applicant will be penalized for the gift by being ineligible for Medicaid nursing home payment for a calculated period of time (the “transfer penalty”)(Currently the gift will disqualify the applicant for the in-home Star Plus Waiver benefit). The Medicaid Agency has determined that the average private pay cost for nursing home care is $162.41 per day (beginning September 1, 2013 through August 31, 2017). To determine the number of months of ineligibility for any gift, the Medicaid Agency will divide the amount of the gift by $162.41. The resulting quotient is the number of days of ineligibility for benefits.
If a gift is made, the presumption is that it was made in order to qualify for Medicaid benefits. To avoid a penalty, the Applicant would have to prove that the gift was made for a totally different reason, which is a very difficult burden of proof. Under Federal and State law, the Medicaid Agency could "look back" for 60 months to determine if an individual made any gifts.
Congress allows a person who is disabled (according to the Social Security definition of disability) under the age of 65 to transfer assets to a Supplemental Needs Trust or a pooled Trust (e.g. the Arc of Texas, Master Pooled Trust) without transfer penalties. Both of these trusts require that upon the death of the applicant/beneficiary, all Medicaid expenditures are paid back to the State out of the remaining trust funds. These trusts are generally irrevocable.
When spouses transfer their assets into a living trust, the Medicaid Agency takes the position that so long as the trust is revocable, it is as if the parties still own the assets–because the parties can revoke the trust at any time and get their assets back. There is no transfer penalty so long as the spouses can recover the property from the trust.
A Medicaid applicant/recipient cannot claim an exemption for the homestead if the homestead is owned in a revocable trust. Additionally, owning assets in a Revocable Trust can result in complications for Medicaid eligibility. When the first spouse dies, if the trust requires that the deceased spouse’s property must pass into a trust for the surviving spouse, such a transfer could result in a Medicaid disqualifying transfer penalty applied against the surviving spouse (even if the decedent’s trust for the surviving spouse had supplemental needs language).
These rules are complex so before creating a trust with the intent of applying for Medicaid, you should consult with Koren Martin.
The answer is most often, no.
An annuity that allows a person to access the cash assets (similar to a savings account) is a countable asset except in the case of an IRA, 401k or other similar investment If the annuity is “annuitized,” the annuity will be paying monthly payments and the fund cannot be cashed out. If your annuity is paying monthly income with no ability to cash out the annuity, then you may have to name the State of Texas as either the secondary beneficiary with a spouse or minor child as the primary beneficiary OR name the State as the primary beneficiary. Upon the death of the annuity owner, the funds must pay to the surviving spouse, a minor child, or reimburse the state for all Medicaid expenditures made on behalf of the annuity owner.
Because an annuity contract could contain significant surrender penalties (over and above the tax issues), you should contact attorney Koren Martin to determine the pros and cons of investing in annuities.
Once you have supplied me with all of the necessary documentation and any prerequisite spend-down or estate planning strategies have been implemented, I will submit the completed application to the Texas Health and Human Services Commission (the "Medicaid Agency"). The Medicaid Agency has 45 days to complete the Medicaid application review and can obtain a 45 day extension to complete the application review for a total of 90 days. Once a Medicaid Application is filed, the only nursing home payment required is the applicant’s income.
If the application is not complete, the Medicaid Agency can deny eligibility. An application can be supplemented during the application process. If the Medicaid caseworker requests additional information required on Form 1200 (the Medicaid application), it is wise to respond quickly to avoid a denial of benefits. However, if there is a deliberate misrepresentation or willful withholding of information for the purpose of obtaining public assistance, the agency can refer the application to the Office of Inspector General for a fraud investigation.
Absolutely. An applicant can appeal a denial of eligibility within 90 days of the denial date. However, it is wise to appeal as soon as the denial is made if the applicant believes that the denial of eligibility was wrong.
While the State will not “take” the homestead as reimbursement for Medicaid payments, when there is no surviving spouse or other exemptions, your executor may have to sell your homestead and your family heirlooms after you die if you accept Medicaid assistance. The following is a brief overview of the Medicaid Estate Recovery rules.
It is important to note that, effective September 1, 2003, the Texas Legislature passed a law requiring the implementation of a Medicaid estate recovery statute based on the federal requirement to attempt to recover certain State Medicaid expenditures from the estate of a deceased Medicaid recipient. The program is called the Medicaid Estate Recovery Program (“MERP”). The rules were effective as of March 1, 2005. According to the rules, there will be no estate recovery, ever, when the deceased Medicaid recipient has a surviving spouse, minor children, disabled child (of any age). There is an additional exemption when an unmarried adult child lived in the homestead at least one year immediately prior to death. This is not a lien statute so the state will not “take” the homestead. The statute makes the State a creditor just like a doctor or ambulance company and just like any creditor, if there are no exemptions or waivers from collection, the creditor can require the executor to sell estate assets to pay the debt.
Before paying Medicaid Estate Recovery, I urge you to have your Certified Elder Law Attorney review the claim to make sure it is a valid claim.
First you must determine if the power of attorney authorizes the agent to make gifts. As noted above, gifting can create a period of ineligibility for Medicaid long term care benefit. Elder Law Attorney Koren Martin advises against gifting for a number of reasons, including but not limited to:
While gifting is difficult, it may be allowable. Any concerns about gifting should be discussed with an Elder Law Attorney.
There is a Texas law that says:
“‘Exploitation’ means the illegal or improper act or process of a caretaker, family member, or other individual who has an ongoing relationship with the elderly or disabled person using the resources of an elderly or disabled person for monetary or personal benefit, profit, or gain without the informed consent of the elderly or disabled person.” Texas Human Resources Code §48.002(3)
If Adult Protective Services (referred to as “APS”) finds that a person used a power of attorney (or any other means) to transfer the Applicant’s money for the benefit, profit or personal gain of someone else (“made a gift”) without the Applicant’s informed consent, then APS could find that the person making the transfer has EXPLOITED the Applicant. APS can refer its findings to the District Attorney. Transfer of funds as small as $500 can result in a state jail felony charge. Therefore, it is imperative that if an elderly person intends to make gifts and may want to use the Medicaid program to help pay for care, then prior to the gifting, the elderly person or his/her family should consult with an Elder Law Attorney.
The internet is not your friend. Since each state has the ability to promulgate its own regulations for Medicaid program eligibility, any other state or a federal website would not provide accurate information. Additionally, regulations and the policy enforcing those regulations change. Therefore, a 2015 website will probably not have the most current statements of regulation and policy. Even if the website has a 2017 publication date, if the site is being published by a stakeholder that is selling a produce, you may not receive the rest of the story.
Therefore, it is my advice that when trying to create a Medicaid plan, it is best to contact an Elder Law Attorney, like Koren Martin. When asking a legal question about the Medicaid program or any other legal issue, it is imperative that a person obtain advice from a competent attorney.
Texas Law prohibits non-attorneys from advising persons about Medicaid qualification and charging a fee: