Looking for help paying for nursing home care? Consider Medicaid as the payor of last resort.
What is Medicaid in context of nursing home care and how do I qualify?
Medicaid is a government-funded health insurance program that provides coverage to people with low income and limited resources. In the context of nursing home care, Medicaid may cover the costs of long-term care for eligible individuals.
To qualify for Medicaid coverage of nursing home care, you must meet certain eligibility criteria, including income and asset limits. These limits vary by state, but in general, you must have limited income and assets to be eligible for Medicaid.
In addition, you must also have a medical need for nursing home care, as determined by a doctor or other healthcare professional. This means that you must require a certain level of care and assistance with activities of daily living, such as bathing, dressing, and eating, that can only be provided in a nursing home setting.
To apply for Medicaid coverage of nursing home care, you will need to apply and provide documentation of your income, assets, and medical need. You may also be required to undergo a financial assessment and meet with a Medicaid caseworker to determine your eligibility.
What are the Financial Eligibility requirements?
In Maryland, the financial eligibility requirements for Medical Assistance (Medicaid) long-term care are as follows:
Income Requirements: For Medicaid long-term care, an individual’s gross monthly income cannot exceed $2,382 (as of 2023). If the individual’s income exceeds this amount, they may be required to set up a Qualified Income Trust (QIT) to establish eligibility.
Asset Requirements: The asset limits for Medicaid long-term care are based on a complex set of rules that consider the individual’s income, living arrangements, and other factors. In general, an individual’s countable assets cannot exceed $2,000. Countable assets include cash, bank accounts, stocks, bonds, mutual funds, and some types of real estate.
There are also certain assets that are exempt from the countable asset limit, including a primary residence (up to a certain value), one vehicle, personal property, burial expenses, and some types of income-producing property.
Look-Back Period: Medicaid also has a “look-back” period of five years, which means that any gifts or transfers of assets made within the five years prior to the individual’s Medicaid application will be scrutinized. Any gifts or transfers made during this time may result in a period of Medicaid ineligibility, called a penalty period.
Spousal Impoverishment: If a married individual applies for Medicaid long-term care, their spouse’s assets and income will also be taken into consideration. Maryland has a “spousal impoverishment” rule, which means that the spouse who remains in the community (i.e. not in a nursing home) is entitled to a certain amount of the couple’s combined income and assets. This is intended to prevent the healthy spouse from being left without resources while their partner receives long-term care.
Primary Residence: In Maryland, the primary residence may be temporarily exempt from Medicaid if it is lived in by a spouse, disabled child, financially or medically dependent relative, or if the owner plans to return to the home at some point. However, this exemption is essentially nullified by the state’s use of Medicaid liens to recover the cost of care from the sale of the former home, unless it is still occupied by a spouse or disabled child. Maryland also has an effective estate recovery program, but it may not be practical for out-of-state homes.
Deeds that convey real property with a “life estate with full powers,” also known as “lady bird deeds,” may be used in Maryland to avoid liens and estate recovery for married individuals. However, they cannot be used when “intent to return” is the only basis for exempting the home, which is typically the case.
Community Spouse Resource Allowance: When one spouse is institutionalized, the couple’s countable assets are divided equally, with one half allocated to the institutionalized spouse and the other half allocated to the community spouse. The community spouse is allowed to retain these assets up to the maximum Community Spouse Resource Allowance. The Institutionalized spouse must spend down (or protect) their half of the countable assets until only the Individual Resource Allowance remains to qualify for Medicaid. With the help of an elder law attorney, married couples can often protect their assets through various Medicaid asset protection strategies.
The community spouse may also be allowed to retain a portion of the institutionalized spouse’s income, known as the Community Spouse Monthly Income Allowance, if their income is less than the designated minimum monthly maintenance needs allowance (MMMNA). This amount is increased by the excess shelter allowance, which is based on the difference between the community spouse’s household related expenses and the designated shelter standard. However, the community spouse’s income, including the Community Spouse Monthly Income Allowance, cannot exceed the maximum monthly maintenance needs allowance, which is designated annually.
Estate Recovery: If the Medicaid beneficiary in Maryland is not expected to return home within six months, the state may place a lien on their residence. The state will enforce the lien if the property is sold while the beneficiary is alive or from their estate after their passing. However, the state may not assert the lien if the beneficiary’s spouse or disabled child resides in the property, or if the state approves a claim of hardship.
Additionally, the state may recover payments for long-term care services from the Medicaid beneficiary’s estate. Estate recovery only applies to individuals aged 55 and above who received Medicaid.
Unfortunately, it is nearly impossible to avoid estate recovery in Maryland, making the state a less attractive option for nursing home care regarding Medicaid Asset Protection.
The State of Maryland DOES provide temporary exemptions for the primary residence if it is lived in by a spouse, disabled child, financially or medically dependent relative, or if the institutionalized owner “intends to return” home. However, the state can still recover any Medicaid expenses paid for the person’s care by placing a lien on the home when it is sold. Maryland also has an estate recovery program, but it is not very effective on out-of-state former homes. Maryland allows the use of “life estate with full powers” deeds to avoid liens and estate recovery for married individuals, except when “intent to return” is the only basis for exempting the home.
Maryland has a robust estate recovery program, which means that they will make every effort to recover the amount they spent on Medicaid from the beneficiary’s estate. This includes any assets that pass through probate, such as bank accounts, investment accounts, and real estate. However, certain assets may be exempt from estate recovery, such as assets held in a living trust or assets that pass directly to a surviving spouse or minor or disabled child.
It is important to note that estate recovery only applies to Medicaid beneficiaries who are age 55 or older or who received long-term care services in a nursing home or other institutional setting. For Medicaid beneficiaries who received only non-institutional services, such as home health care, there is no estate recovery.
In summary, the treatment of the primary residence and protections for the community spouse can be complex in Maryland Medicaid planning. It is important to work with an experienced elder law attorney to ensure that you understand your options and can make informed decisions to protect your assets and plan for your future.
Conclusion: Navigating Medicaid in Maryland can be complex and confusing, but with the help of an experienced elder law attorney, you can protect your assets and ensure that you receive the care you need. Whether you are seeking Medicaid for yourself or a loved one, it is important to start planning as soon as possible and to explore all your options for asset protection and care.
–Jeffrey D. Katz, Esq., Managing Partner
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