Created in 1965, Medicaid is a joint program of both the state and federal governments created to provide health insurance to low income children, senior citizens, nursing home residents, and to people with certain disabilities. Although the framework for the Medicaid program is the same throughout the country, each state is responsible for administering its’ program, and therefore Medicaid rules may vary somewhat from state to state.
The basic criterion for eligibility is that the individual be considered “low-income”. The amount for this may vary in states, but generally is considered at or below the poverty level. Medicaid rules also consider property ownership as another determining factor for eligibility.
Medicaid rules are sometimes difficult to understand, but there are some points that must be considered. Federal regulations state that in order for a nursing home resident to receive Medicaid benefits, he or she must have no more than $2,000 in “countable assets”. All assets are considered “countable” except for a short list, which includes:
- Personal possessions including clothing, jewelry, and furniture
- One motor vehicle (regardless of value) providing that the vehicle is used by the application or a member of his or her household
- The applicant’s primary residence, as long as it is in the same state in which the benefits are sought
- Small amounts of life insurance
- Prepaid funeral plans
- Assets that are inaccessible to the applicant (for whatever reason)
In some states, nursing home residents are not required to sell their homes in order to qualify for Medicaid benefits. State Medicaid rules differ on the amount of equity to consider when determining if the home is considered “countable” or “not countable”. All states agree that if the applicant’s spouse or other dependant relative resides in the home, there can be no equity limit.
Another important Medicaid rule concerns the transferring of assets. The government does not intend for patients to enter nursing homes, immediately transfer all of their assets, and then apply for Medicaid. To deter this, penalties have been imposed on those would transfer assets without receiving fair value.
There are exceptions to this penalty. The government exempts certain individuals from this penalty. Those individuals include:
- The applicant’s spouse
- The applicant’s blind or otherwise disabled child
- A trust established for the benefit of a blind or otherwise disabled child
The transfer of a home is allowed in certain situations. Medicaid rules state that an applicant may freely transfer his or her home, without penalty to:
- The spouse of an applicant
- A child, under the age of 21, who is blind or otherwise disabled
- The applicant’s sibling, when that sibling has resided in the home for at least two years preceding the applicant’s confinement to the nursing home.
- A child of the applicant who has resided in the home for at least two years preceding the applicant’s confinement to a nursing home, providing that the child has acted as caretaker of the applicant
Another important Medicaid rule deals with income. For nursing home residents, the general rule is that all of the resident’s income (minus certain deductions) must be paid to the nursing home. When considering a married applicant, an allowance for the spouse who continues to reside in the home is provided when he or she needs income support. A deduction may also be allowed for a dependent child living at home.
For married Medicaid applicants, the income of the spouse is not counted when determining the applicant’s eligibility. Only the income in the applicant’s name is counted. This means that even if the spouse is employed, he or she will not be required to contribute to the cost of caring for the spouse in a nursing home if the spouse is covered by Medicaid.
The list of Medicaid rules is long, and sometimes complex. The state Medicaid administration office can provide answers to most questions. Sometimes, however, an attorney specializing in Medicaid or elder law may be the person best qualified to provide answers.