Asset Protection and Emergency Medicaid Qualification
We hear from senior attorney and previously featured author Samantha McCarthy as she takes a closer look at Medicaid emergency applications and assets relevant to their qualification.
To give a brief overview of this conversation, what is emergency Medicaid and what are its criteria in your jurisdiction?
Emergency Medicaid qualification is often sought when pre-planning has not been done, or when it has been done, but there are still assets considered available to pay for long-term care, associated with a a person who is in immediate need of long-term care due to an inability to reside safely at home. This often comes into play when a person has been hospitalized and then returned to a skilled nursing facility for rehabilitation (also known as “skilled care”), during which time the person was receiving occupational therapy or physical therapy.
Generally, Medicare or private health insurance will cover at least part of the cost of skilled care. However, after a certain period of time the person will be released from skilled care, depending on a number of factors including their level of improvement as well as the number of days of coverage available under their private insurance. Once a person is informed that they will be discharged from skilled care, there is very often a short period of time during which plans must be made to either return the person safely to the community or, alternatively, the transfer to an unqualified, long-term facility. long-term care at the nursing facility.
That’s where Medicaid comes in. Once a person is deemed to be receiving unskilled care, their Medicare or private health insurance will no longer contribute to the cost of long-term care. Therefore, people must look to their own assets to pay the cost of private care (estimated at $9,000 to $15,000 per month in Rhode Island) or, if their assets are insufficient to pay this cost of care, then they have to seek help to pay for care through Medicaid.
Once a person is deemed to be receiving unskilled care, their health insurance or private health insurance will no longer contribute to the cost of long-term care.
How do you determine if Medicaid emergency planning is needed?
Typically, when a person is to qualify for long-term care coverage through Medicaid, the first step is to assess all of the assets of the person needing care (the “claimant”) as well as those of his or her spouse (the ‘community spouse’), if applicable, and all the applicant’s sources of income.
Generally, a community spouse’s income is not available to pay for a claimant’s long-term care. However, all of the applicant’s income is considered available to pay for their long-term care, and the only deductions the applicant is allowed to make from their gross income before paying the nursing home are the cost of any private health insurance/ health insurance premiums, plus an allowance for personal needs, which in Rhode Island is $50 per month. The remaining income is called the patient’s share and must be paid into the nursing home to cover the monthly cost of care. If this income is insufficient to cover the full monthly cost of care, then the applicant must turn to their other available resources to pay for care, or alternatively, apply for Medicaid.
In Rhode Island, for an individual applicant, assets greater than $4,000 of the following are considered available:
- Chequing, savings and brokerage accounts
- CDs, stocks and bonds
- Real estate other than a principal residence
- Life insurance with a cash value greater than $4,000 for medically needy applicants
In Rhode Island, exempt assets for an individual plaintiff include the following:
- An irrevocable prepaid funeral package worth up to $15,000
- A funeral savings account worth up to $1,500
- A principal residence with a net worth of no more than $636,000.00 (as long as the applicant maintains the intention to return home)
- A principal residence of any equity if the community spouse, a child under 21, or a blind or disabled child of any age lives there
Although an applicant cannot be forced to sell their home while applying for or receiving Medicaid, it is important to remember that an applicant’s income cannot be used to support household expenses once Medicaid coverage applies. Additionally, while the home cannot be forcibly sold during the applicant’s lifetime, there may be a lien placed on the applicant’s probate estate upon death, which could force the sale of the real estate to be repaid. the lien equal to the sum of what Medicaid has paid for the applicant’s care during their lifetime. There are some limited exceptions to this rule and ways to protect a home in specific circumstances. An elder law attorney can help you determine if any of these situations apply to your particular situation.
Other Rhode Island exempt assets include:
- A vehicle
- Life insurance without cash value
- Life insurance with cash value if the cash value of all policies is less than or equal to $4,000 for medically needy applicants
- Retirement funds as long as a required minimum distribution is taken based on the life expectancy of the owner
It should also be noted that if the applicant has a community spouse, the available asset limits change based on the Community Spouse Resource Allowance, which currently ranges from $27,480 to $137,400.
In your experience, what methods are generally most effective in withdrawing liquid capital from an estate to meet the criteria for becoming eligible for Medicaid?
Generally, if an applicant (and spouse in the community, if applicable) has assets in excess of the allowable asset limits for Medicaid eligibility, then Medicaid contingency planning becomes a option.
It is important to remember that an applicant’s income cannot be used to support household expenses once Medicaid coverage applies.
If the applicant has a communal spouse, we often recommend a promissory note in an amount equal to the assets exceeding the permitted asset limits, with income via promissory note payments being returned to the communal spouse. If the applicant does not have a spouse in the community, we often recommend planning gifts and loans (also sometimes referred to as half-loaves) instead, which involves a carefully calculated and structured donation and promissory note to applicant’s name, with the promissory note installments being returned to the applicant as a source of income. Since ticket refunds are considered income, they must be paid for the cost of care, but once the ticket refund period is over, the donated funds will have been saved.
Another option, instead of a promissory note in any of the above situations, is a Medicaid-eligible annuity.
Why is it important to consult an elder law attorney when trying to qualify for emergency Medicaid?
It is important to consult with an elder law attorney when attempting to qualify for emergency Medicaid, as the rules and regulations governing qualification are extremely complex. Many people attempt to apply on their own, with the best of intentions, but without a thorough understanding of the rules and regulations.
Rules and regulations, when considered alongside specific care needs – as well as the income and assets of the claimant and spouse (if applicable) – may apply very differently depending on the claimant’s specific situation. . As a result, a simple miscalculation or misunderstanding of the rules can often cost a family tens of thousands of dollars (if not more) in penalties or nursing home payments during times when the applicant is unqualified. for often very nuanced reasons.
Additionally, due to Medicaid application processing times, applicants will often not be notified of errors they have made in the application or calculation of the eligibility process until at least three to six months after the application. submission of the request. Therefore, it may not be possible at that time to go back and correct the errors, resulting in a private payment at the full daily and monthly rate required for the period the applicant was waiting for the processing Medicaid application but was in fact ineligible due to miscalculation or misunderstanding of rules and regulations.
Samantha McCarthy, Founder
19 First Avenue, East Greenwich, RI 02818
Tel: +1 401-541-5540
Email: [email protected]
Samantha McCarthy founded McCarthy Law with the goal of having a meaningful impact on the lives of others. Currently residing in Smithfield, Rhode Island, and licensed to practice law in the state courts of Rhode Island and Massachusetts, she has been recognized by the Feinstein Center for Pro Bono & Experiential Education for her extensive legal work of interest. public and its commitment to public service. She prides herself on being approachable and compassionate, and believes in developing relationships with her clients that allow both parties to grow and learn.
McCarthy Law LLC is an estate planning and elder care law firm that helps clients create estate plans, advice on elder care issues, and assistance with long-term care and Medicaid planning. The firm’s goal is to build relationships with clients where they feel heard, understood and supported.