Medicaid Update:
The Good News
 Individuals in need of home care or nursing
home care should understand that despite
recent changes made in the Medicaid
eligibility rules they do not have to spend
down their savings or income in all instances
to qualify for Medicaid services. The Deficit
Reduction Act of 2005 burdens the Medicaid
laws with new complexities, however, a
number of valuable planning options have
been left in place and they are outlined here..
Home Care & Assisted Living
Although those persons receiving Medicaid
home care services are permitted to have no
more than $4,200 in savings, there continues
to be no penalty period for transferring
assets to become eligible for the services.
The Medicaid program includes home care;
adult day care; private-duty nursing; the
Consumer Directed Personal Assistance
Program; community managed long-term
care; the Assisted Living Program and more.
Nursing Home Care
Under the old and new law an individual
who transfers assets to qualify for Medicaid
institutional services may incur a penalty
period during which time the individual
will not qualify for Medicaid coverage in a
nursing home. However, it is never too late
to conserve lifetime savings. An individual
who has resources in excess of the Medicaid
limits and faces immediate placement in a
nursing home, or who is already a resident
there, may still protect a substantial portion
of his resources and ultimately qualify for
Medicaid. In this instance, a legal instrument
such as an annuity may be used to avoid
the spending down. Note also that there is
no penalty period for Medicaid eligibility
if assets are transferred to a spouse; the
individual’s child under age 21; a blind or
disabled child of any age; or a trust established for the sole benefit of any
disabled person under the age of 65.
The Home
An individual’s home—a house, cooperative
or condominium apartment—is an exempt
asset, that is, it is not counted by Medicaid,
regardless of the value of the home, as long as
the individual’s spouse, child under 21, blind
child or disabled child lives there. If an
individual does not live with any of the above
individuals, but lives in the home or is a
resident of a nursing home and expresses an
intent to return home, the individual’s home
is exempt as long as the home’s value—
minus any outstanding mortgage or loan on
the home—is worth $750,000 or less.
Medicaid may, under some circumstances, be
able to impose a lien on the home or otherwise
be able to recover the sales proceeds
of the property for all it spent on behalf of
the Medicaid recipient. However, in some
instances, this outcome may be often avoided
through the use of life estates, trusts and other
planning options. Note that the transfer of
the home will not incur a penalty period for
nursing-home eligibility if the transfer is
made to a spouse; a child who is blind,
disabled or under age 21; a brother or sister
who has an equity interest in the house and
resided there for at least one year before the
individual was institutionalized; a ”caretaker”
child who resided in the home for at least
two years before the person was institutionalized
and provided care to maintain the
person at home.
Supplemental Needs Trusts
A disabled individual under 65 years of age
with savings in excess of the amount
permitted under the Medicaid rules may
transfer his own savings to a supplemental
needs trust without jeopardizing his eligibility for Medicaid services in the
community or in a nursing
home. The money in the trust
may be used to pay for luxuries
and necessities. Similarly, a relative
or friend may establish a
supplemental needs trust and use
the funds in the trust for the
benefit of the disabled person of
any age while that individual
continues to receive Medicaid
benefits in the community or in
a nursing home.
Pooled Income Trusts
By participating in a pooledincome
trust, disabled persons
of any age who are receiving
community Medicaid including
home care, adult-day-care and
other non-institutional services
may continue to use virtually all
their income to cover their
living expenses. After joining the
trust they will qualify for
Medicaid without having to
give over to Medicaid that
portion of their income which is
in excess of the Medicaid
allowed limit of $720 per month.
— Aytan Y. Bellin, Esq.
Aytan Y. Bellin, Esq.,
is a partner in the
law firm of Petroff
& Bellin, LLP, which
concentrates on
elder law, trusts
and estates,
and guardianships.
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