In Part 1 of this series, we described the most common ways to pay for long term care in a nursing home, namely long term care insurance, personal income/savings, and Medicaid. According to a policy brief published by the University of Pittsburgh in 2013*, the Pennsylvania Medicaid (or Medical Assistance) program currently carries the burden of 65% of the total cost of nursing home care provide in the state. Each state administers its own Medicaid program and has its own unique eligibility rules in order to qualify. The basic eligibility guidelines for Pennsylvania (in 2015) are described below:
- A person must meet ALL financial and non-financial eligibility requirements in order to obtain Medicaid benefits for nursing home care.
- The 4 basic Non-Financial Eligibility Requirements are: 1) A doctor must complete a form attesting to the fact that you have a medical need for long term care, 2) You must be a U.S. citizen or a qualified non-citizen, 3) You must be a resident of Pennsylvania, and 4) You must have a Social Security number.
- Financial Eligibility is based on an analysis of two things: Income and Resources. In a nutshell, if BOTH your income AND resources fall below a certain threshold, and you meet the all of the other applicable eligibility criteria, then Medicaid will cover the cost of nursing home care above and beyond what you can pay on your own.
- How is income counted?
- Most income is counted, including Social Security, pensions, investment income, IRA withdrawals, etc.
- Income Limits: For a single person, if your monthly income is below 300% of the Federal Benefit Rate you are automatically income qualified. Currently, that amount is $2,163/month. If your monthly income is higher than that, you may still be considered Medicaid eligible if your medical expenses offset your income to bring it down to a limit of $2,550 (currently). Many people with higher incomes are still able to qualify for Medicaid because the cost of care in a nursing home is considered a deductible medical expense, thus bringing them below the income eligibility threshold. Different rules apply for married applicants, which will be discussed in a later blog post.
- How are resources counted?
- Examples of resources counted for eligibility purposes include bank accounts, stocks, IRA accounts, vacation property, and the cash value of life insurance. Examples of resources which are NOT counted include the value of your home if it is less than a certain amount and you intend to return home or your spouse lives there, one motor vehicle, all burial spaces/plots, and burial reserves subject to specified limits.
- Resource Limits: If your income is $2,163/month or lower, you currently are allowed to retain up to $8,000 in resources. If your income is higher than $2,163 (regardless of medical expenses), you are only permitted to retain $2,400 in resources. Many people pay privately for long term care until their resources fall below the limits, and then apply for Medicaid.
- The Look-Back Period – At the time you apply for Medicaid you must report any assets that you transferred, sold or gave away within the past 5 years/60 months. If the Department of Public Welfare determines that you gave that asset away for less than Fair Market Value, your application may still be approved, but a “penalty period” will be assessed before your benefits can begin. This can be devastating to both the applicant and/or their family because often times the asset which was given away is now depleted or unavailable, leaving no cash to cover the private cost of nursing home care until the penalty period ends.
How the Medicaid application process works for married applicants will be discussed in subsequent posts in this series, as well as how to preserve assets without running afoul of the Look-Back Period. If you would like more information in the meantime, contact Yardley Estate Planning, LLC where you can come in for an elder care consultation, explore your options and develop a prudent plan for paying for care.
This blog post was originally created by Joellen Meckley while she served in an “Of Counsel” position in our firm. While she no longer does that, we do maintain a professional relationship and if you have any Elder Law needs, I’d recommend you reach out to her firm Meckley Law. If you need Estate Planning, please reach out to us.