Loveridge Law Firm LLC
David R. Loveridge, Attorney At Law
If an applicant has enough income to pay for the cost of his or her care, the applicant is not eligible for Medicaid. However, the spouse is not required to use his or her income to help pay the applicant’s nursing home bill. Indeed, if the spouse’s income is low enough, Medicaid may allow the applicant to transfer income to the spouse! In addition to possible transfers of income to the spouse, Medicaid allows certain deductions such as Medicare and Medicare Supplement premiums and a “personal needs allowance.” If, after making these deductions, the applicant’s income is not enough to pay for the cost of the nursing home, the “income” test is satisfied..
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A common reason people are ineligible for Medicaid is that their “countable” assets are too high. Usually, applicants may keep only $2,000.00 of “countable assets” in their own name. However, a married applicant is often permitted to transfer a significant amount of assets to the healthy spouse, without penalty. Fortunately, certain assets don’t count. In many cases, it is possible to use excess assets to purchase assets that don’t interfere with Medicaid eligibility.
If there are too many assets to “spend down,” it may be necessary to give some of the excess away. Certain gifts come within Medicaid’s guidelines, and are not penalized. Other gifts may result in a period of ineligibility. The length of this period varies, depending upon the amount of the gift, and when it was made.
If an individual has too many assets to qualify for Medicaid nursing home benefits, it may be possible to “spend” those assets on assets that don’t count against eligibility. Common examples include the purchase of a more expensive automobile (perhaps one that already belongs to a child) and making sensible home improvements.
After an elderly Medicaid recipient dies, Medicaid sometimes attempts to “recover” the benefits paid from the recipient’s estate. In many cases, the only asset available for recovery is the individual’s home. However, state law limits or exempts recovery against the home in many situations.
In planning for Medicaid eligibility, there are three “tests” to consider:
(1) the “Income” test; (2) the “Asset” test; and (3) the “Gift” test.
In some instances, “Spending Down” can help expedite eligibility. Also, it is important to be aware of the possibility of “Estate Recovery.” This page will provide a general discussion of each of these topics. Please realize, however, that this is a general discussion only. There are numerous details that might help – or hurt – in one’s particular situation. In addition, Medicaid rules change frequently, sometimes without warning. For these reasons, it is important to consult a qualified professional prior to taking any steps designed to expedite your eligibility for Medicaid.