MEDICAID PLANNING 

Medicaid planning consists of actions taken to reposition assets in an effort to protect the well spouse and the family and to promote the independence and quality of life for the Medicaid beneficiary. Mr. Siebert helps seniors and their families prepare a comprehensive plan to deal with long term care while maximizing the financial resources available to community spouse and family.

Older Americans remain concerned about financing long term health care and nursing home stays.  The concern is understandable, as the annual cost for nursing home care continues to rise.  The average monthly cost in the Chicago land area for a nursing home is $4,000 - $7,000, which translates to $48,000 - $84,000 annually.  A potential long term illness can quickly devastate an individual's or couple's life savings.

Medicaid is a joint federal-state welfare program that will pay for an individual's nursing home care, if the eligibility requirements set forth in the statutes and regulations are met by the individual. You must meet the income and resource guidelines in your state. Income is money you get from Social Security, a job, pension, or other sources. Resources are things you own, such as savings. But Medicaid doesn’t count everything.

Generally, a Medicaid recipient's income, except for the exclusions must be paid to the nursing home to contribute to the cost of his/her care.  (Exclusions are:  Medical insurance premiums, medical bills not paid by Medicaid, a personal needs allowance ($30), dependent spouse and child allowances, and ongoing medical expenses for medical necessities not paid for by Medicaid.  A single recipient may also be entitled to a 6 month  "Community Home Maintenance Allowance.")   Further an individual is only allowed $2,000.00 of non-exempt assets.  Since there is a limit of $2,000.00 in non-exempt assets individuals frequently must "spend down" their life savings prior to qualifying for Medicaid.

The rules are slightly different for married applicants.  The spouse of a Medicaid applicant is known as the community spouse.  In addition to the applicant's assets, the applicant's resident spouse can have or receive from the applicant, an amount of non-exempt assets known as the Community Spouse Asset Allowance (CSAA) without affecting the applicant's eligibility.  The amount of the CSAA in 2008 is set at $104,400.00.  In addition, this figure does not include the value of exempt assets.

In addition, the community spouse is entitled to a contribution of monthly income from the resident spouse to bring the community spouse's monthly income up to $2,610.00 in 2008 .  The amount of monthly income to which the community spouse is entitled is known as the Community Spouse Monthly Maintenance Needs Allowance (CSMNA).  If the community spouse's income exceeds this amount, IDHS will require that a support payment be made on behalf of the resident.  Typically the CSAA and CSMNA are adjusted annually.  Since Medicaid is a government benefit program, neither the applicant nor the applicant's spouse may give away their assets to avoid the spend down requirements.  Asset transfers for less than fair market value during the "look-back" period preceding an application for Medicaid, by an applicant or spouse, will result in an ineligibility period.  The law regarding Medicaid Eligibility was dramatically changed with the enactment of the Deficit Reduction Act (“DRA”).The DRA significantly changed rules governing the treatment of asset transfers. For transfers made prior to enactment of the DRA on February 8, 2006, state Medicaid officials will look only at transfers made within the 36 months prior to the Medicaid application (or 60 months if the transfer was made to or from certain kinds of trusts). But for transfers made after passage of the DRA the so-called “lookback” period for all transfers is 60 months. Another significant change in the treatment of transfers made by the DRA has to do with when the penalty period created by the transfer begins. Under the prior law, any penalty period created by a transfer would begin either on the first day of the month during which the transfer occurred, or on the first day of the following month, depending on the state. Under the DRA, the penalty period will not begin until (1) the transferor has moved to a nursing home; (2) he has spent down to the asset limit for Medicaid eligibility, (3) has applied for Medicaid coverage, and (4) has been approved for coverage but for the transfer. There have been several lawsuits filed challenging the DRA, including one by several members of the United States House of Representatives, alleging that it is unconstitutional in it’s present form. This creates certain uncertainty when doing any Medicaid planning as to whether the old law or the new law will apply in an individual’s case. Mr. Siebert can help his clients address this uncertainty when doing there Medicaid Planning.

Transfers of assets include any changes in the way an asset is held, including but not limited to:  adding a name to a house deed, creating a trust, or closing a savings account.  Thus, a transfer of assets made during the "look-back" period will result in a period of ineligibility equal to the number of months the individual could have paid for his/her own care at the private pay rate of the applicant's nursing home.  (Period of Ineligibility = Uncompensated Value Transfer / Private Pay Rate).

The Illinois Medicaid rules hold that certain types of assets and property held under certain forms of ownership are not to be counted against an applicant or community spouse's asset limit.  The first step in long term care planning is to maximize the benefit of exempt assets and transfers.  For a variety of reasons, most importantly the avoidance of spousal impoverishment, the government has designated certain assets and or transfers as exempt and therefore not included in the community spouse asset allowance.  Further, certain asset transfers are allowed during the look back period.  These transfers include, among others, transfers to the community spouse of exempt assets and transfers for fair market value. It is through the planned use of allowable transfers maximizing exempt assets and other Medicaid procedural rules that Mr. Siebert in working with his clients is able to plan to maximize the family’s financial future while assuring the Medicaid applicants quality of life.

FOR MORE INFORMATION ON THIS SUBJECT OR TO SCHEDULE AN APPOINTMENT WITH MR. SIEBERT TO DISCUSS THIS OR ANY OTHER MATTER CONTACTMR. SIEBERT’S OFFICE.

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