1800 Grindley Park Street
Suite #6
Dearborn, Michigan 48124
313.563.4900
9853 Old Perry Highway
Wexford, Pennsylvania 15090
412.364.8600
John B. Payne, Attorney
www.law-business.com
Nancy Rupert
www.elderadvice.com
Medicaid
• Federally subsidized grant-in-aid for low-income
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individuals and families; i.e., welfare
Varies from state-to-state
Covers medically necessary services and most
prescriptions
No cap on covered services
Stringent eligibility requirements
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Medicaid for Long-Term Care
 Financial eligibility criteria for MA
 Need for long-term care
 Not necessary to qualify for "skilled care,"
but must be verified that applicant cannot
be cared for in community
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Limits on Countable Assets
 No Community Spouse–$2,400
 $8,000, if income less than $2,022 in 2011
(three times SSI amount)
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2009-10 Community Spouse
Resource Allowance
 Calculate "total joint resources" on the day one
spouse enters long-term care--the "snapshot.“
 Half may be retained:
 Minimum $21,912
 maximum $109,560
 Maximum automatic in some states
 Once institutionalized, spouse is approved for
MA, community spouse's assets are no longer
counted.
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Community Spouse Spend Down
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Community Spouse Spend Down
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Community Spouse Spend Down
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Two Significant Dates
 Date institutionalized spouse enters LTC or a
hospital leading to long-term care
 Date community spouse spends down so resource
allowance is met
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Home is Exempt, but Planning is
Necessary to Avoid Estate
Recovery
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Household and Personal Goods
• Household goods
– Customarily found in home
– Used in conjunction with maintenance or
occupancy
• Personal goods
– Incidental items intended for personal use by a
household member
– Personal goods held for investment purposes not
excluded
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Motor Vehicle
 One motor vehicle of
any value excluded
 Most expensive
excluded
 Additional vehicle
also excluded if
homestead, or
necessary for selfsupport
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Income-Producing Real Property
and Assets Used in Trade or
Business
 Income producing real property (IPRP) and personal
property used in a trade or business may be excluded.
 The extent of this exclusion is unclear, but it should
apply if the property produces a reasonable rate of
return.
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Prepaid Funeral May be
Non-countable
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Funeral and Burial Arrangements
 No absolute limit but Agency may review amount to
determine whether it is “exorbitant for person’s situation.”
 Higher amount justified for:
 Transport of body.
 Priest, minister or rabbi who is close friend or relative to
conduct services with cost of travel, food, lodging and
honorarium to be paid from burial reserve.
 Reasonable gift to church or synagogue for facilities.
 Limits from $8,125 in Clinton County to $14,062.50 in
Bucks County.
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Other Types of Property Can be Used
to Preserve Assets and Still Qualify
Toys
Jewelry
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IRA Loophole (in some states)
 The Community
Spouse’s IRAs and
401(k)s are all
exempt!
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Jointly-Held Liquid Assets
 Totally available to MA applicant or recipient.
 If joint tenant for estate planning, but neither a
current claim of right nor unrestricted access,
unavailable and not counted.
 Considered divested when funds removed.
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Jointly Held
Real and Personal Property
 Unavailable if held jointly with rights of survivorship
 No sale not without consent of other owners and the
other owners do not consent
 Creation of joint tenancy divestment if client’s
ownership or control reduced
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Myth—You Can’t Give Anything
Away and Get Medicaid
 You can be disqualified for giving away
property--in some cases.
 What is given away?
 To whom?
 When?
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Permissible Transfers
 Disabled child
 Child who has lived in claimant’s home for two
years and provided care
 Sibling of claimant who has lived with claimant for
one year and has equity
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Conversion
 Exchange of asset for property of equal value
not divestment
 Example: purchase of $100,000 annuity for
$100,000
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Divestment
 Gifts subject to five-year look-back.
 Penalty begins when donor is otherwise eligible for
Medicaid.
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Example:
Rosco, a widower, is in good health when he gives
his grandson $25,000 for college. He keeps $75,000
in savings. Three years later, he suffers a stroke and
enters a nursing home at $6,500 per month. Four
years and three months after the gift, he runs out of
money. He cannot get assistance for a number of
months. Divide $25,000 gift by average cost of
private-pay care in a nursing home.
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Penalty Period
 Begins when patient is eligible but for the penalty
 After lapse of prior penalty
 Amount divested divided by state average daily private-
pay nursing home rate, $247.06 in 2010
 Length of disqualification measured in days
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Saving Rosco
 Vital to act on entering LTC
 Additional $25,000 gift
 Annuitize or loan remaining funds
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Protecting Assets through
Irrevocable Annuities
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Qualifying Annuities
 Irrevocable
 Unassignable
 No cash value
 Purchased at fair market value
 Commercially available
 All required payments must be paid within annuitant’s
actuarial life expectancy
 State must be named as beneficiary on death of
annuitant in the amount of Medicaid payments
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Two Prongs of Spousal Protection
 An individual shall not be ineligible for medical
assistance . . . to the extent that . . . assets were
transferred to the individual's spouse or to another for
the sole benefit of the individual's spouse, [or] were
transferred from the individual's spouse to another for
the sole benefit of the individual's spouse. §
1396p(c)(2)(B).
 No income of the community spouse shall be deemed
available to the institutionalized spouse. § 1396r5(b)(1).
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Sole-Benefit Test: Transmittal 64
 Annuities are “usually purchased to provide a source of
income for retirement.”
 “In order to avoid penalizing annuities purchased as
part of a retirement plan . . . . If the expected return on
the annuity is commensurate with a reasonable
estimate for the life expectancy of the beneficiary, the
annuity can be deemed actuarially sound.” State
Medicaid Manual § 3258.9(B).
http://www.cms.hhs.gov/Manuals/PBM/list.asp?listpage=2
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Contrary States
 States that place restrictions on the use of
Transmittal 64-compliant annuities--generally
limiting annuities to funds that are part of the CSRA:
Alabama
Connecticut
Minnesota
North Dakota
Wisconsin
Arkansas
Indiana
Nevada
Ohio
Colorado
Louisiana
New Jersey
Texas
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Protecting Assets through
Irrevocable Trusts
 Not in the U.S. Third Circuit
 New Jersey
 Pennsylvania
 Delaware
 Virgin Islands
 Check local Medicaid rules
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Strategies When Both Spouses Are
in Long-Term Care Facilities
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Defining Characteristics
 “Institutionalized spouse” means an individual who is
in an institution or, if there is a waiver needs nursing
care, and is married to a spouse who is not in a
medical institution or nursing facility. §1396r5(h)(1)(A).
 “Community spouse” means the spouse of an
institutionalized spouse. §1396r-5(h)(1)(B).
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Institutionalized Equals Single
 When a couple ceases to live together, the agency must
count only the income of the individual spouse in
determining his or her eligibility, beginning the first
month following the month the couple ceases to live
together. 42 CFR § 435.602(a)(3).
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Advantage: Couple
 In the case of eligible institutionalized spouses who
have shared the same room in a Medicaid institution,
the agency has the option of considering these couples
as eligible couples for purposes of counting income
and resources or as eligible individuals, whichever is
more advantageous to the couple. 42 CFR §
435.602(a)(4).
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Viable Devices to Preserve Assets:
 Divestment
 Investment in homestead
 Annuities
 Sole benefit trusts (except Third Circuit)
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2011 Pennsylvania Medicaid Limits
 Community Spouse Resource Allowance:
 Minimum: $21,912 Maximum: $ 109,560
 One-person Asset Limit: $2,400 ($8,000 low-income)
 Monthly Maintenance Needs Allowance:
 Minimum: $ 1,822 Maximum: $ 2,739
 Shelter Standard: $ 547
 Standard Utility Allowance: $ 524
 Monthly Personal Needs Allowance: $ 45
 Transfer Penalty Divisor : $259.76/day
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