What is Medicaid?
Medicaid is a federal health insurance program, which is administered by the States. In certain cases, Medicaid pays medical bills for those with limited income and/or resources. In Connecticut, the State Department of Social Services (DSS) administers the Medicaid program.
Qualifying for Medicaid can be extremely complicated. Special rules exist for people who are:
- 65 or older,
- under 21, or
- in nursing homes.
Many individuals confuse Medicaid with Medicare, but the programs provide different coverage. Medicare typically only offers very limited coverage for care in a nursing home or home-based care (up to 100 days), whereas Medicaid offers significant coverage for both long term nursing home and home-based care. Qualifying for Medicare is not dependent upon your assets and income, whereas qualifying for Medicaid is dependent upon your income and/or assets.
Many individuals who require nursing home care or significant home-based care look to Medicaid for help in paying for caregiving services. In Connecticut, you can generally qualify for Medicaid if you have less than $1,600 in cash, bank accounts, stocks, bonds and other countable assets. In addition, you are allowed to have a burial plot, prepaid funeral contract ($5,400 in irrevocable agreement, plus a burial space agreement), term life insurance of any amount (with no cash surrender value), and cash value whole life insurance provided total value is $1,500 or less.
If you live at home or have a spouse that lives at home (a Community Spouse), then additional assets can be retained, including your home and a car. In other limited situations, when you have a child under 21 years living in the home, a disable child of any age lives in the home, or a sibling that has lived in the home for at least a year and co-owns it, the home can also be exempt. In addition, your Community Spouse is allowed a certain amount of income should a need exist, as well as a minimum amount of assets to provide for the Community Spouse. In 2014, the Community Spouse is permitted to retain a minimum amount of $23,449.80 and a maximum amount of $117,240.00 in assets beyond the home, car, prepaid funeral contracts and $1,500 in whole life insurance. However, the calculation is based upon the total non-exempt assets being equally divided. So if a couple has $100,000 in non-exempt assets, only $50,000 can be retained by the Community Spouse as part of the determination. Fortunately, there are additional ways to protect these monies. The couple could spend down on care, improvements to the home, prepaid funeral contracts (subject to the limit of $5,400 in an irrevocable prepaid funeral contract plus a burial space agreement) and other goods and services. The couple could also consider a special form of annuity for the Community Spouse to exempt the unprotected assets. The rules for qualifying the annuity as an exempt asset are complex and not satisfying the conditions could result in significant penalties. In certain situations, transfers of assets, including your home, can be made. However, if a transfer is made within five years of applying for Medicaid, a penalty may be imposed.
It is important to talk to a qualified Elder Law attorney prior to giving away any money or property, and prior to applying for Medicaid. Many planning opportunities exist to help you and your loved ones protect your assets and properly provide for your care should the need arise.
Written by Simon J. Lebo, Esq., a partner with Brown, Paindiris & Scott, LLP, concentrating his practice areas in Elder Law, Estate Planning and Probate Administration. Attorney Lebo is available to meet with you in conveniently located offices in Bristol, East Hampton, Glastonbury, and Hartford. Attorney Lebo can be reached at 860-659-0700.