What's Involved in a Medicaid Application for Nursing Home Care
Nursing home residents who no longer have the resources to pay for the costs of nursing home care may apply for Medicaid through their local County Board of Social Services if they meet specified financial criteria. Timing is critical, as retroactive eligibility is limited to three months.
First, monthly income from all sources is examined. Examples of income are Social Security, Pensions, and monthly annuity payments that are received. In 2019, if income exceeds $2,313, the income will have to be routed through a Qualified Income Trust.
Next, the resources are divided into "countable" and "non-countable" categories. If the applicant is unmarried, the countable ("non-excluded") resources cannot exceed $2,000. The house is generally "non-countable" if it is listed for sale or if there is a spouse, a child, or a sibling co-owner living there. All resources that can be liquidated within 30 days are considered to be "countable" as long as they are also "available". There are certain exceptions for cases where assets are unavailable.
If the applicant is married, the house will be "non-countable" if the community spouse is living in it. One car and personal possessions are also non-countable. All of the rest of the marital resources are generally considered countable, whether owned by one member of the couple or jointly-owned. The general rule is that 401ks, IRAs, bank accounts, stocks & bonds, cashable life insurance policies, vacation property etc. are countable. The countable resources are added up as of the 1st day of the month of entry into institutional care, and then they must be reduced to a specific level. The community spouse may retain the lesser of one-half or $126,300 of these countable resources. This is called the CSRA, or Community Spouse Resource Allowance. There are certain exceptions for cases where the combined assets, or the community spouse's income, is very small.
The Medicaid application is filed after the assets have been reduced to the required level. A personal meeting with the caseworker at the County Board is required.
A complete Medicaid application will need to have three to five years of documentation and disclosure of every single financial transaction which took place with the individual's or couple's income and resources during the 5-year look-back period. Proof of citizenship or legal status, marital status, birthdate, insurance, and other items must be supplied. Accounts that are closed must be verified with proof of where the money went.
The Medicaid application will be scrutinized by the County Board to see if transactions were "gifts" or were payments for goods and services. All transactions during the look-back period that are categorized as gifts or "uncompensated transfers" (transfers made in the preceding 60 months) will result in a period of disqualification ("penalty period") starting when the nursing home Medicaid applicant is spent down, receiving care, and is "otherwise eligible" for Medicaid. Careful planning requires legal advice to avoid this problem and to be able to deal with it if it occurs.
Once the Medicaid application has been filed, the applicant is considered "Medicaid pending" and is protected against involuntary discharge. It can take many months for the Medicaid application to be processed, and often a great deal of follow-up is required. During that time, the applicant's income should be paid to the nursing home facility each month.