The Future of Medicaid
It is a question I am being asked with increasing frequency when people call our office about needing Medicaid now or planning for the possibility of needing it in the future. “Will there even be Medicaid coverage if and when I need it?” Specifically, I am talking about the Medicaid programs that cover long term care. My answer is that I don’t have an answer - meaning that it is impossible to predict the future - what will change or won’t change about Medicaid. What I tell people is what I know- that I have guided clients for 30 years under the current system which has yet changed in a major way. That’s not to say that over the years there haven’t been some changes. For example, the last substantive changes to Medicaid coverage occurred 20 years ago. That’s when the look back was extended from 3 years to 5 years and the method of calculating the Medicaid penalty was altered. While the subject of Medicaid cuts - along with other federal budget cuts - has ramped up with a new presidential administration and Congress, there are very few details about how this might be accomplished. Because Medicaid is a combination federal and state program but administered at the
Medicaid Spend Down – More Involved than First Meets the Eye (Part 5)
In this fifth blog post of five, I finish up with Mary’s call to our office about qualifying her mom for Medicaid. Mary thought her mom had very few assets left which could then be transferred to a special needs trust (SNT). Unfortunately, as I have explained in my past 4 posts, Mary was misinformed on a number of issues. Her mother’s life insurance policy has $150,000 in cash value. That money must be spent down. She cannot transfer it to the SNT which was set up for the benefit of her brother because he has not been deemed disabled by Social Security or the State of New Jersey. Similarly, the mobile home that he lives in but which Mom owns is a countable asset for Medicaid purposes and cannot be transferred to the SNT. Finally, the annuity that her mom purchased can be sold if someone is willing to purchase it. That cash would then also be considered an asset. So Mary then asked me, “where do I go from here”? There are a few possible options. If she thinks that her brother can qualify as disabled then Mom could transfer assets to him or to a trust for his benefit, although the SNT she created years ago is not the
Medicaid Spend Down – More Involved than First Meets the Eye (Part 4)
In this week’s blog post I continue with Mary’s call to our office about qualifying her mom for Medicaid. In my post 3 week’s ago I told you that Mary thought her mom would be able to transfer her remaining assets to a special needs trust for Mary’s brother. I explained that for a couple of reasons that transfer is not exempted from Medicaid’s transfer penalty rules. Last week I explained that Mom actually has $150,000 in cash value from a life insurance policy. This money must be spent down before qualifying for Medicaid. This week I will examine the annuity which Mary told me her mom purchased years ago and which provides monthly income. The question, however, is whether Medicaid will consider it to be an asset or income. If it is an asset then we must determine the value, which must then be counted towards the $2000 asset limit. So, what makes something an asset for Medicaid purposes? The key is whether that annuity can be converted to cash - can it be sold or surrendered? For that I needed Mary to provide me with the annuity contract. Annuities come in many different “shapes and sizes”. In this case, I saw that Mary’s mom had purchased a lifetime annuity with a
Medicaid Spend Down – More Involved than First Meets the Eye (Part 3)
In this week’s blog post I continue with the story about Mary’s call to our office concerning Medicaid eligibility for her mom. Mary was seeking confirmation that Mom was ready to apply and that the home she purchased for her son 15 years ago could be transferred to the special needs trust (SNT) she established 10 years ago. Mary also believed that Mom’s life insurance policy which named the trust as the death beneficiary would provide enough cash to help her brother pay the expenses of the home and other living expenses. As I explained last week, unfortunately Mary was mistaken. Her brother was never deemed disabled so any transfer of Mom’s assets to the SNT now carries a Medicaid penalty or waiting period for benefits. The more money transferred the greater the penalty, which is based on a mathematical calculation. The home, however, is not the only asset Mom has. Mom’s life insurance policy is not a term policy but rather a whole life policy. It has $150,000 of cash value which Mom has the ability to withdraw. This is a countable asset for Medicaid eligibility purposes. She can either withdraw the cash value by taking it as a loan or surrender the policy and receive the cash. Surrendering the
Medicaid Spend down – More Involved than First Meets the Eye – Part 2
In my blog post last week, I told you about a call we received from Mary concerning Medicaid. As is often the case, Mary initially disclosed what she thought were relevant questions about her mom’s potential eligibility. She was seeking confirmation that the answers she had arrived at were correct and that getting Medicaid would be relatively simple and straightforward. Unfortunately, she was mistaken. As I mentioned last week, Mary described her brother as “disabled”. He has a relatively low IQ but is able to work a minimum wage job. He is on Medicaid for health insurance and also qualifies for food stamps. Mary explained that 10 years earlier, Mom had set up a special needs trust (SNT) for him. Mary’s belief was that she could now transfer to that SNT the home he lives in which she had purchased 15 years ago. Once Mary told me that her brother was working, I knew he hadn’t been deemed disabled by Social Security and sure enough she confirmed that her parents had never pursued any diagnosis or designation. I explained that transfers to a disabled child or a trust for the benefit of a disabled child did not result in a Medicaid penalty, but her brother had not been deemed disabled. Mary
Medicaid Spend Down – More Involved Than First Meets the Eye – Part 1
In this week’s post I return to Medicaid and a call we received a few weeks ago. Mary called concerning her mother who is in a nursing facility. Her long term care policy will be exhausted in a couple of months and Mary said she has no other assets. Her reason for calling was to explore getting Mom on Medicaid. As with any potential new matter that comes to our office, in order to evaluate whether Medicaid is appropriate or even possible, we need answers to many questions that callers haven’t even considered. We started to ask those questions and from the answers we received, I quickly realized this case was more complicated than initially presented. For example, we learned that Mom had purchased a home in which her “disabled” son lives, although the son works a job that pays a bit more than minimum wage. Mom has helped him out by paying much of the housing expenses. Although Mary said Mom had only a few thousand dollars in the bank, she did mention a life insurance policy. I learned that it is a whole life policy which has accumulated a cash surrender value of $150,000. I also learned that Mom has what Mary called a lifetime annuity paying her $1500