Medicaid

The eligibility rules for nursing home Medicaid are said to be, for the most part, uniform throughout the country. Medicaid is, afterall, a federal program with laws issued by Congress and the federal agency overseeing the program (CMS).
However, states may implement laws that are more generous than the federal system. The federal system allows a Medicaid applicant to keep only $2,000 in assets. One such generous benefit accorded South Carolina residents is the protection given to the family home- .i.e., the “homestead”. Under this rule, one need not sell the “homestead” to qualify for nursing home Medicaid as long as the value of the home is less than $500,000.

This is a very generous rule not allowed in many other states. In New Jersey, for example, as long as all other assets are reduced to $2,000, you will be granted temporary Medicaid and given 6 months to sell the homestead. Once sold, you lose Medicaid and must start paying the private rate for nursing home care. There is no homestead protection in NJ.

The South Carolina law, which allows you to keep the homestead, is a bit deceiving though. SC has a a system for recouping the money it pays for nursing home costs through use the Medicaid lien. So when the State of SC says you don’t have to liquidate the homestead, what the really mean is that you can get an interest free loan for the nursing home costs it pays for you, but, when you die, the State can collect on the loan by placing a lien on the homestead. This lien ensures that the State of SC will be repaid for its costs on your behalf, before the homestead and be sold or passed on to heirs of your estate.

It doesn’t take long after a family member enters a nursing home facility for a lifetime of savings to be depleted to pay for the costs of long-term care.   

And, when assets are spent-down to $2,000, MediCAID can kick in and start paying the bill. But, once a MediCAID beneficiary spends down to $2,000, assets must stay below $2,000 or else, if they rise again to exceed $2,000, eligibility is lost.

One of the most frequent questions asked of an Elder Law attorneys is: 

Q. What is the 5 year look-back rule for Medicaid?

A. There is no 5 year look-back rule yet. The Deficit Reduction Act of 2005 which increased look-back from 3 years to 5 years will not be fully implemented until February, 2011.

Huh? Talk about a brain twister. Let's start from the beginning.

The Medicaid Program

Medicaid is a jointly funded (federal and state government) program intended to provide health care for the poor that has also become the major source of financing for nursing home care. Nursing-home residents must spend virtually all of their assets, down to as little as $2,000, before they may qualify. Married couples have higher asset allowances when one spouse is healthy enough to remain at home.

Medicaid planning, always a sensitive subject, became even more sensitive when  Congress enacted new rules to restrict planning strategies when it passed the Deficit Reduction Act of 2005, made into law on February 8, 2006.

Medicaid planning occurs when individuals use a very arcane set of Medicaid laws to protect their assets in order to reduce them to the $2,000 level and qualify for Medicaid help sooner.

The "DRA of 2005"

For a married couple, the cost of a nursing home care for one of them can rapidly deplete assets that have been saved over a lifetime of careful planning. An entire nest egg can be extinguished.  The Medicaid program, however, will pay for the nursing home costs of disabled spouse when the couple’s joint assets are reduced to a specific level. This level, or amount of protected assets, is known in Medicaid planning parlance as the CSRA. The amount of the CSRA for 2009 is $109,560. (see: http://info.dhhs.state.nc.us/olm/manuals/dma/abd/chg/MA_CN04-09.htm#P34_1689).

Fortunately, two recent decisions by federal courts (one in NJ and one in Pa.) ruled that the purchase of a single premium, irrevocable and non-assignable, immediate annuity is a permissible use of the amount that exceeds the CSRA.

As an example, suppose a married couple, who have not engaged in any advanced planning, have a home and $200,000 in savings. One spouse becomes disabled and is admitted to a nursing home. Assume the nursing home expenses are $5,000 per month. The $200,000 must be spent-down at $5,000 per month until the healthy spouse at home has $109,560 left ( and can also keep the home, it need not be sold). Thus, $90,440 must be spent on nursing home care before Mediciad will kick-in to start paying the bill.                            READ MORE BELOW

USA Today and our own local Island Packet newspapers have strories on the results of the latest 5 star ranking system employed by the federal Center for Medicaid and Medicare Services.

Two local nursing homes received top ratings. According to the packet:

"TidePointe's Broad Creek Care Center and the Preston Health Center at the Cypress of Hilton Head Island received five stars. The Seabrook's Fraser Health Center earned four stars. The Life Care Center of Hilton Head had one star."      

Kudos to the unnamed director of a top ranked facility to mention how imperfect this ranking sytem is. The Life Care Center, which received a 1 star rating, is the only home mentioned that accepts MediCAID as a payment source where the the others are primarily private pay for long-term stays. The Medicaid re-imbursement system hinders the Life Care Center in providing all of the same  services as the others. And, as Lt. Governer A. Bauer notes correctly, there is no substitute for a first hand visit to a nursing home before deciding on its acceptability.

Also interesting is how the USA Today story notes that not-for-profit nursing homes generally ranked higher than for-profits across the country.  Not-for profit homes usually accept MediCAID as source of payment and it is often a misconception that MediCAID nursing homes are automatically inferior to private pay homes. 

Dec. 9, 2008-  Well, I wish my first substantive blogging topic was a little sexier...But I don't write the rules, the State of South Carolina Dept. of Health and Human Services (DHHS) does. And they have some new ones that may result in hardships upon families seeking to qualify for Mediciad to pay for nursing home costs. A Medicaid applicant now needs to, more than ever, make sure all documentation has been gathered and attached to the initial application because the new  DHHS deadlines allow only 10 days to provide missing documents! A Medicaid application is only several pages. But the documents that must be attached to it can be hundreds of pages. An applicant must supply at least 3 years of bank statements for every account owned within the 3 year "look-back" period. You need closing documents if a house sold, income tax returns, sales reciepts for  any and all stock transactions.  It is a paperwork nightmare for the average person. Imagine an adult child caregiver who is unfamilar with mom's finances who must gather all of mom's financial records for the past three years (and mom uses the covered shoebox filing system). READ MORE BELOW