Medicaid in Alabama Nursing Homes
This article provides basic information about a very complicated program. It is not intended as legal advice for individual situations. Individual circumstance can affect what rules apply and how they are applied.
Basic care. Medicaid is a program that provides basic health care to individuals with very limited income and resources. It also helps those medically in need of nursing home care who have limited incomes and resources.
Changes in the future? Included in the current health care debate are proposals to expand coverage of Medicaid to individuals whose incomes are much higher than the present rate. Even if such a change is included in any health care reform that might be passed, it's not likely to take effect immediately. This outline addresses today's basic rules.
Complicated rules, especially about transferring property. Medicaid rules have always been complicated. New laws effective in 2006 made them more complex, with rules about transferring property even harsher than before. Do not transfer property to another person without getting advice from someone who works with Medicaid regularly! Bad "advice" about Medicaid can and often does create terrible problems.
The new rule is that if you make a non-exempt transfer of property for less than fair market value within five years prior to filing a Medicaid application, the transfer will be penalized. The transfer will disqualify you from receiving Medicaid assistance for the duration of the penalty period.
Medicaid in Nursing Homes
Eligibility. For a person to be eligible for Medicaid assistance in a nursing home, (s)he may have only limited income and resources, must be medically determined to need that level of care, and must be a legal resident of Alabama. The income limit is higher than for community Medicaid, and so is the burial allowance.
2009 Income Limit: $ 2,022 (There's a way to deal
with excess income. Most
problems occur because
of excess resources.)
2009 Resource limit : $ 2,000
Countable and non-countable assets. Some assets are not counted: Household goods and personal effects; one vehicle if used for transportation to medical care; pre-paid burial items and up to $5,000 in burial policies or special, dedicated burial funds (or cash value in life insurance if the total face value of all policies is under $1,500).
Home. An individual's home worth up to $250,000 is only exempt if (s)he reasonably intends to return to it. Get advice from a knowledgeable attorney about how intent is established and when to assert it. If it is not possible to establish an intent to return, and there is no one to whom the home can be transferred without incurring a penalty, the home must be put on the market promptly. Any proceeds must be used to provide care for the owner
Transfers can be troublesome. Very few transfers are exempt. Do not transfer any asset without advice from someone who deals regularly with Medicaid.
Joint Owner. Generally, if the home is jointly owned with another person, that person may live in the home for his or her lifetime and the home will be exempt for that period. (Also see special rules for spouses, below.)
Child who moves in to provide care. If a child left his or her own home and moved in with Mom in order to prevent her from having to go to a nursing home, and lived with and cared for her for two years, Mom can transfer the home to Child after the two-year period. (Get the treating doctor's statement that Child's presence prevented Mom form going to nursing home.) Mom could also transfer a home to a disabled child in some circumstances.
Special rules for married couples: The following are exempt: The home (up to a $500,000) is exempt so long as the spouse lives there; one vehicle if it is needed for basic transportation (to doctor, etc.); furnishings and personal effects of both. The spouse may keep enough of the nursing home spouse's income to build the at-home spouse's income up to $1,822. The at-home spouse may also retain a minimum of $25,000 of the couple's joint assets, or a maximum of one-half of the couple's assets up to a joint total of $219,120, or $109,560 for the at-home spouse.
Ex. Couple has $180,000 in countable assets plus home, furnishings and car. Spouse at home may keep home and furnishings, car, and $90,000; the nursing home spouse must spend down his or her half of the assets to $2,000.
Ex. Couple has $22,000 in countable assets plus home and car. At-home spouse keeps $20,000 and applicant retains $2,000. Home is exempt as long as spouse lives in it. Car is exempt if it provides necessary transportation
Ex: Penalized transfer. Mom gives $46,000 CD to son, immediately applies for Medicaid assistance in nursing home. The penalty begins to run on the later of the date of transfer or the date of the Medicaid application. The penalty period is calculated by dividing the value of the asset by the average monthly cost of nursing home care in Alabama at the time of application. In 2009, that is $4,600 a month. Divide $46,000 by 4,600 = penalty period is ten months. Unless son returns the $46,000, Mom will be denied Medicaid until the ten-month penalty has run.
Medicaid in the Community
Eligibility. If you receive SSI you are eligible for Medicaid. SSI recipients must be legal residents of Alabama, be age 65 or over, or disabled, and have very limited income and resources. For someone under 65 to be considered disabled and qualify for SSI, her medically-determinable condition must prevent her not only from doing work she has done in the past, but any other work that is available. The disability must be expected to last at least a year, or result in death.
Income Limit for 2009:
$ 694 for individuals ($674 plus $20 disregarded income)
$ 1,031 for couples ($1,011 plus
$20 disregarded income)
Almost every kind of income is counted. The value of food stamps and other assistance provided by a government or non-profit agency based on need are not counted, but food and shelter provided by someone else are counted.
Resource limit 2009
$2,000 for individuals
$3,000 for couples.
The home, a vehicle, burial plot, paid-for burial items such as casket or urn, plus $1,500 in insurance are not counted.
Things that can cause problems
In addition to transfers of property in order to qualify for Medicaid, other things often cause problems.
While a joint account can be convenient, adding another person to an account in which your money is deposited allows that person to withdraw all of the funds in the account. Even so, for purposes of Medicaid eligibility it will be assumed that all the funds belong to the applicant, unless the joint owner can prove that (s)he deposited some of it. Remember that making another person a joint owner also makes that account liable for the other person's debts.
Annuities. Some states allow purchase of certain kinds of annuities to shield assets from Medicaid. Alabama does not. Do not buy an annuity with the idea that it will protect the money in it from Medicaid scrutiny.
Living Trusts do not shield assets from Medicaid. There may be a reason to have a living trust, but assets in the trust are considered in the same way as any other asset you own.
Annual gifts of $12,000. The IRS allows an individual to give $12,000 to any number of people, without paying gift tax on it. It is a good way of removing money from the estate of a person who might otherwise have to pay taxes at death. It has nothing to do with Medicaid. These gifts would be treated like any other gift, and they would be penalized by Medicaid.
Applying for SSI and Medicaid.
Apply for SSI at the Social Security Administration,
1-800-772-1213, or online at www.ssa.gov. Apply for Medicaid at the Alabama Medicaid Agency, 1-334 -242-5000, or get application online and find information about local district offices at www.medicaid.state.al.us.
Contact your local Area Agency on Aging legal service provider for legal assistance.
These are only a few of the issues that might come up in connection with Medicaid. Get good advice before you take any action.