What your residents need to know when applying for Medicaid for assisted living

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Ben Mandelbaum
Ben Mandelbaum

Medicaid for assisted living is part of the home- and community-based services program. The program's intent is to allow for individuals to receive the funds they need to remain at home or in an assisted living community instead of moving straight to nursing home care. Through the HCBS waiver program, eligible individuals can receive funding for the appropriate care that will allow them to age in the community, be it in the comfort of their own homes or in an assisted living community.

Senior Planning Services, a company specializing in helping seniors with Medicaid planning, would like to share some Medicaid eligibility guidelines for assisted living. This information can act as a refresher for those working in senior living, and providers also can share this information with residents and prospective residents.

Medical eligibility guidelines. Most states define their eligibility guidelines for senior Medicaid simply: the senior citizen must be aged more than 65 years and in need of services. If the individual doesn't receive services outside the home, then to qualify for assisted living or home care services, he or she must be able to prove that he or she would be medically unable to remain at home without them, that is, that the senior otherwise would be transitioned to a nursing home.

Financial eligibility guidelines. Financial qualifications for Medicaid vary from state to state and generally are very strict. As an example, applicable across several states: To qualify for nursing home care paid for by Medicaid, an elderly individual can have no more than $2,000 in assets and a monthly income of no more than $2,199. Again, however, qualifications vary by state.

Assets that count. Most cash resources count toward the Medicaid asset limit. These resources include cash, checking and savings accounts, loans, mutual funds, promissory notes, stocks and bonds, and time deposits. Rental properties or other properties owned by the individual, but where they are not in residence, also count toward the Medicaid asset limit. Extra vehicles also count as assets, as well as life insurance policies with face values of $1,500 or more.

Assets that are excluded. Several assets do not qualify toward the Medicaid asset count. These include the primary residence if the elderly individual intends to return to the home, or if a spouse or dependent lives there, or if a joint owner of the property is in residence. Also not counting are a single car for the individual or individual and spouse, burial space items, a burial fund, a life insurance policy with no cash value or a face value of less than $1,500, and household goods and personal items. Personal items may include jewelry, paintings and other valuable items; no evaluation of those items will be done to determine eligibility.

Spending down to qualify for Medicaid. Elderly individuals who have assets exceeding the $2,000 limit may find themselves in an uncomfortable position. They need Medicaid assistance, but they have too much money to qualify. Spending down is a legitimate way to reduce these expenses. Excess assets can be spent on home repairs, vehicle upgrades or maintenance, or personal effects. Starting a burial fund or pre-paying for burial arrangements also are acceptable spending options.

Look-back and how it affects Medicaid qualification. Historically, many elderly individuals chose to give out their children's inheritance early so that they would be able to qualify for Medicaid without spending those funds. Unfortunately, that's no longer possible. Medicaid now has a look-back program that checks on the movement of a senior's funds for five years before his or her Medicaid application. Excessive gifts will be noted and can make that individual ineligible for help for a period of time, depending on the size of the gift and how long ago it was given.

Spousal impoverishment protection. Medicaid does not require that a healthy spouse who is ineligible for Medicaid impoverish himself or herself in order for the other spouse to qualify. Because of this, special waivers and provisions are in place to ensure that the healthy spouse isn't forced to spend down alongside the one who is ill. Typically, Medicaid will split all the assets, and the community-dwelling spouse will receive half of the total up to a maximum decided by each individual state (for instance, $117,240 in New Jersey).

So for example, if the total is $100,000, then the community-dwelling spouse will get $50,000; $2,000 will be given to the senior living resident as a monthly allowance, and the remaining $48,000 of the resident's portion can be spent down in order for the applicant to achieve Medicaid eligibility.

Future Medicaid claims against the estate. Depending on the assets that were kept, the state may hold a claim against the estate of the senior individual following death, to repay the state for funds spent on the senior's care. Medicaid will not seize a home that is occupied by a spouse, but it can request repayment from the estate following the death of the spouse.

Planning is key to experiencing the golden retirement years that many seniors long for. Seniors should be prepared for what they'll do if they do experience a need for long-term care, and they should prepare their assets and ensure that they'll be eligible for Medicaid when and if they need it. With proper planning and preparation, it's possible for seniors to receive the funds that will enable the care they need.

Ben Mandelbaum is chief operating officer of LTC Consulting Services and Senior Planning Services, with offices in New Jersey, New York, Pennsylvania and Connecticut.

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