Medicaid Answers

The majority of nursing home patients receive government aid to pay for their nursing home care - mostly through Medicaid. For example, in Tennessee, 72 percent of the state’s long term care patients receive Medicaid benefits. Medicaid is a joint effort of the federal and state governments to provide health care for low-income individuals. The program originally was not designed to serve the elderly long term care population; however, currently it is the primary method of financing nursing home care for individuals who cannot afford to pay for it.

* THE QUALIFICATION PROCESS

Qualifying for Medicaid can be confusing and time-consuming. Though each case is different, the basic application process applies to all. Medicaid nursing home applicants must meet two requirements: 1) financial eligibility; and 2) medical eligibility.

Currently, an individual’s assets (excluding the home) must be less than $2,000 to qualify for Medicaid. If a couple is in the nursing home at the same time, that amount is $3,000. These amounts are subject to review by Congress, however, and could be changed at any time.

To establish financial need, applicants must collect and document the following information:

•  Income from all sources, including Social Security, retirement plans and pension programs, interest on bank accounts, rental property income, etc.
•  All Assets, including cash on hand, real and personal property, cars, savings accounts, certificates of deposit (CDs), cash value of life insurance policies, stocks and bonds, and any other investments.

In addition, they are required to submit their Social Security number and proof of citizenship.

Next, applicants must contact the county office of the Tennessee Department of Human Services to receive and file a Medicaid application.

*SPENDING DOWN

2005 Tennessee Medicaid Long-Term Care Eligibility Figures

Minimum Community Spouse Resource Allowance: $19,020

Maximum Community Spouse Resource Allowance: $95,100

MMMNA (Standard Maintenance Amount)*: $1562

Maximum Shelter Allowance (30% of MMMNA: $468.60

Maximum Community Spouse Income Allocation: $2378

Personal Needs Allowance: $40

Income Cap: $1737

Average Nursing Home Cost (Vendor Rate): $3394

*Changes on July 1, 2005. Source: Tenn. Dept. of Human Services
Seven out of every 10 nursing home patients in Tennessee are dependent on Medicaid. Many had too much money in savings, investments or other assets when first admitted to the nursing facility, but eventually spent this money on nursing home care and became financially eligible.

In the past, this “spending down” of personal assets often left the patient’s spouse destitute. Now, more liberal laws provide financial protection for the spouse who remains at home. For example, if a man is admitted to a nursing home, his wife may keep up to $2,378 a month of their combined income. The amount the spouse may keep usually increases annually. Federal and state laws allow the spouse to keep half of the couple’s assets at the time of nursing home admission, as well as their home and furnishings - unless that half is more than $95,100. This is the maximum amount that may be assigned in any case to the community spouse. If their half is less than $19,020, money from the other spouse’s half is shifted so that the remaining spouse at home will have the minimum of $19,020. If the couple’s combined assets are less than $19,020, the spouse at home may keep the entire amount, as well as their home and furnishings. These limits are for 2005.

*FRAUD PROHIBTION

While the law protects the spouse of a patient, it also protects the Medicaid system from fraud. The Health Insurance Portability and Accountability Account of 1996 imposes criminal liability on those who knowingly and willingly dispose of or transfer assets to become financially eligible for Medicaid.

When Medicaid application is made, the state examines the applicant’s financial information for the past five years. If within that time an asset was transferred for less than fair market value, Medicaid benefits will be denied. The period of ineligibility is determined by dividing the uncompensated value of the transfer by the state’s average monthly cost of nursing home care - $2,572 as of January 2001.

For example, if an applicant sold a piece of land valued at $20,000 to his daughter for only $1,000, he could be found ineligible for Medicaid until the cost of his nursing home care exceeds the $19,000 difference he should have received for sale of the property. Using the formula above, that means ineligibility for a little longer than seven months.

MARTHA ALLEN: A TYPICAL MEDICAID CASE

Martha Allen is a 70-year-old widow. She owns the home she and her husband bought in 1950. Her primary income is a monthly Social Security check of $480, but she also has $10,000 in savings and about $4,000 worth of stocks and bonds. She receives interest on the savings account and small dividends on the stocks and bonds. Last winter Ms. Allen suffered a stroke, which left her confined to a wheelchair and no longer able to take care of herself.

Although she has Medicare and other health insurance, she still owes about $5,000 for medical expenses not covered by her policy. Since being released from the hospital six months ago, she has been cared for by her family at home. But her condition has deteriorated, and her doctor has recommended a local nursing home that offers appropriate services for her needs.

Her family decides to place her in the nursing home, but is unsure how to pay for it. Ms. Allen has no long term care insurance and Medicare will not pay for her long term care because she does not need the skilled level of care. The facility her family has chosen charges $90 a day for the level of care Ms. Allen needs. Ms. Allen’s savings and investments will pay for only few months of care, so her family decides to apply for Medicaid. By calling the local Department of Human Services in the county where the nursing home is located, her family learns that Ms. Allen must meet the two eligibility requirements to be approved for Medicaid: medical need and financial need.

* MEDICAID ELIGIBILTY: PAE AND PASSAR-

Ms. Allen must have a Medicaid-approved examination called a Pre-Admission Evaluation (PAE) and a mental health screening (pre-admission screening and annual resident review, or PASSAR) to evaluate her medical eligibility for Medicaid. PAE determines the level of care a patient needs and whether the patient meets Medicaid’s medical criteria. PASARR determines whether Ms. Allen has any mental illness or mental retardation that require special treatment. If so, she cannot be admitted to a nursing home.

Ms. Allen’s personal doctor conducts a physical examination, completes the PAE form and sends it to the Department of Health. If approved, the PAE will certify that she is medically eligible for Medicaid coverage. The approved PAE is valid for 90 days.

* FROM PRIVATE PAY TO MEDICAID

Ms. Allen applies to the county office of the Department of Human Services and it is determined that the value of Ms. Allen’s assets is too great for her to qualify for Medicaid at this time. He family admits her to the nursing home as a private pay patient at a rate of $90 per day, using funds from her savings account and from the sale of her stocks and bonds.

From her savings, $5,000 is also used to pay off past medical bills, and she sets aside $5,000 for burial expenses and purchases an irrevocable burial trust. Within one month of her admission, Ms. Allen has spent her resources down below the $2,000 level, and also meets the monthly income limit for institutionalized patients. She then is declared financially eligible for Medicaid.

* INCOME CONTRIBUTION

As a nursing home patient covered by Medicaid, all of Ms. Allen’s monthly income is contributed to the cost of her care, with a few exceptions: the cost of a health insurance premium, the cost of certain medical services not covered by Medicaid (such as limited podiatry services, for example), and $40 for personal needs. The personal needs allowance may be used for goods and services not covered by Medicaid, such as personal items, telephone bills and beauty shop. The remainder of her income is contributed to the cost of her care.

**This information and example applies only to the State of Tennessee. Most other states are very similar, but you need to contact your State Department of Human Services to verify coverage requirements for your state.