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Published in The Times-Reporter, New Philadelphia, July 13, 2008
As we continue to live longer, the probability of entering a nursing home to live out the last months or years of our lives increases. Thus, it is important for families to know what the rules are and what options they have regarding paying for a loved one permanent nursing homestay. This article will explain those rules and discuss those options.
The average cost for skilled nursing home care in Ohio is $5,200 per month. Two main options exist for paying this cost: (1) private pay and (2) qualifying for the Medicaid program. The simplest way is to privately pay until the individual has less than $1500 of assets remaining. At that point, the individual will apply for and be qualified for Medicaid assistance. However, not all assets need to be spent on the monthly nursing home costs in order to qualify for Medicaid. This is especially true for married couples where one individual is in a nursing home and the other individual is living at home.
Four components must be examined and satisfied in order to qualify for Medicaid. Those components are the medical component, the income component, the resource component, and penalty period component.
In order for an individual to be eligible for Medicaid from a medical standpoint, the care must be medically necessary. Medical eligibility for nursing facility services is determined based on a comprehensive needs assessment which demonstrates that the recipient requires nursing home services. Nursing home residents are dependent on others in several activities of daily living such as walking and standing by oneself, feeding oneself, dressing oneself, bathing oneself, toileting, and continence. Each separate activity of daily living may be classified as either independent (requiring some assistance) or being totally dependent. In order to qualify under the medical portion of the Medicaid test, an individual must need hands-on assistance with 2 out of 6 of the activities of daily living.
With regards to the income test, if countable income is less than the nursing home costs, the nursing home patient would meet the income test.
For the asset portion of the test, as a general rule, Medicaid will not begin to pay nursing home bills until the assets of the nursing home resident are below $1,500. However, certain assets are excluded for purposes of determining Medicaid eligibility. The exempt assets for a single individual include irrevocable prepaid burial contracts, one automobile, and household and personal effects. For married individuals, these exempt assets also include an individual’s home if the nursing home resident’s spouse(“community spouse”) is residing in that home. In addition, for married individuals, a nursing home resident’s spouse may keep one-half of all non-exempt assets up to a maximum of $104,400 and a minimum of at least $20,880. This amount is determined by adding up the value of all non-exempt assets on the first day one spouse is institutionalized for a period of 30 consecutive days. It does not matter which spouse owns the asset. All assets are included in this calculation.
In addition, there is a 60-month lookback period for all transfers. This means that on the date of application for Medicaid benefits if there have been any transfers made to an individual(other than the community spouse) or to a trust within the previous 60 months, a penalty period will be imposed even if the applicant would otherwise qualify for Medicaid benefits. This penalty period begins when the person enters a nursing home, a Medicaid application has been filed, and the person would otherwise be eligible for Medicaid benefits. For example, if an individual had given away $52,000 of assets within the last 5 years, then there would be a penalty period of 10 months from the time the individual entered the nursing home and was otherwise qualified for Medicaid benefits.
The Medicaid qualification process can be very confusing. I have seen numerous situations where married couples have spent their entire life savings, including the proceeds from the sale of their residence, because they were not aware that certain assets are exempt or that a community spouse can generally keep one-half of the non-exempt assets.
Since the placement of a loved one in a nursing home is often a traumatic event for a family, you have the following options in order to alleviate those anxieties:
- Preplan by retaining a qualified elder law attorney who can assist you by explaining the various rules and regulations regarding qualification for Medicaid benefits as well as to develop an asset protection plan which should be reviewed as your personal situation changes.
- Purchase a long-term care policy from a reputable insurance company with the assistance of a local insurance agent.
- If you have failed to use either of the above two mentioned plans, then make sure that you contact a qualified elder law attorney when it appears that a loved one may need to be placed into a nursing home. This individual will be able to explain the various rules and regulations regarding Medicaid qualification and develop an asset protection plan which may potentially save a significant portion of the family’s assets and still obtain Medicaid qualification for the nursing home resident.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.