| A caution: Medicaid is a complicated program written by a committee - it has something in it for everybody. That committee is the US Congress, the same folks who brought you the tax code. The reader should not take this guide as full advice of options, deductions, allowances and other "loopholes." Legal advice by an experienced elder law attorney is essential to avoid the ruinous cost of long term care. In addition you will have the peace of mind knowing that the bills are paid, that money was not spent needlessly, and you have avoided the frustration of dealing with an over-worked uncaring bureaucracy. And finally please note this guide cannot be considered as the last word given the uncertainties of the Medicaid rules at time of application and how the agency applies those rules, rightly or wrongly, to your facts and circumstances surrounding your application.
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What's the Difference Between Medicare and Medicaid?
When it comes to long term nursing home care there is only one governmental program that will cover the cost and that is Medicaid. The other program, Medicare is a uniform federal program that only covers post-hospital "skilled care" in a nursing home. That benefit that requires a three day inpatient hospital stay, a discharge with order for skilled care and the maximum benefit is 100 days. Medicaid is a joint federal-state program that covers long term nursing home for people who need a nursing home level of care, are aged or disabled, and, satisfy the financial resources test. The latter requires income be insufficient to pay the monthly bill and "countable" assets be $2,000 or less. Most people satisfy the income test since in 2011 the average monthly cost of nursing home care in Michigan is $6,816 per month. One must apply for Medicaid and that is just the beginning.
Ten Requirements of a Successful Medicaid Application
1. Have authority to apply for the nursing home resident.
Unless you have a power of attorney that authorizes application for government benefits or are the trustee of a trust, you may have to be appointed the resident's guardian and conservator by the probate court. When it comes to maximizing the savings allowed by Medicaid's "loopholes" probate court can be both unfriendly and very expensive.
2. Be Able to Prove What You Say
Get a copy of the Medicaid application and be sure you have written proof for virtually everything you write down. Failure to provide adequate documentation will result in dismissal of the application.
Medicaid requires proof of all income.
Medicaid requires proof of all assets, whether they be countable or otherwise. A rule of thumb is that countable assets are those that must be spend down to $2,000. Exempt assets need not be spent down. These include homestead (to a maximum equity value of $500,000 unless there is a spouse), one vehicle, prepaid funeral arrangements for the applicant, within limits, and life insurance limited to a face value of $1,500.
Medicaid requires proof of all insurance.
Medicaid requires proof of all divestment of assets and income.
3. Disclose and Document Divestment
Prepare to report any transfer of assets. If any asset - property, accounts, vehicles, etc. - have been divested within the five year look back, the transfer must be reported. The same is true of income. If assets have been transferred within the five years get proof of the asset, its value and the facts surrounding the transfer. Tax returns and bank accounts should be investigated for missing assets. A rule of thumb is that if assets have been "divested" to anyone other than a spouse or disabled child Medicaid will impose a penalty period during which Medicaid will not pay for nursing home care.
4. Plan to Apply Timely
An application can be presented too early or too late. If it is too late Medicaid will not pay all the bills. Applying too early is more complicated. Application processing by the Department of Human Services often takes months. It can take weeks just for the application to be assigned. If the applicant has excess assets, technically even a dollar over, the application will be denied. That means that a nursing home may be owed three to five months and Medicaid will not pay. Do not apply before spend down is complete. An application can also be too early if the applicant divested assets within the five year lookback. Let's say the applicant feared nursing home placement and so transferred $100,000 to his son, who was out of work and facing foreclosure. Four years later he had a stroke and he was in a nursing home. It might be better to wait until five years has passed and then apply for benefits. Never apply when there has been divestment until an experienced elder law has been consulted
5. Calculate the Community Spouse Asset and Income Allowance
The spouse of a nursing home resident is permitted to retain half of the couple's "assets up to $109,560 (in 2011) in "countable" assets. The minimum asset allowance is $21,912. This is called the Community Spouse Resource Allowance ("CSRA"). the Community Spouse is permitted to keep all of his or her own income, which may be supplemented by the nursing home spouse's income. The spouse's minimum income allowance is $1,822 per month. If the spouse has excess "shelter expenses" it can rise to a maximum of $2,739 per month. Medicaid rules are subject to change. See an experienced elder law attorney for timely advice on special rules that allow the spouse to retain all assets
6. Spend Down: Do Not Divest Assets
In 2011 Michigan Medicaid assesses a full month penalty period for each $6,816 divested in the five years prior to application. This penalty does not begin to run until the applicant has qualified for Medicaid by being in a nursing home and has no more than $2,000 in countable assets. As a general rule spend down is allowed for any bill for and purchase of property for the applicant or spouse. Keep documentation of spend down. 7. Make a Good and Complete Application
If you are doing the application yourself for the first time, you are strongly advised to have somebody with experience review it. You may have a nursing home employee or some other volunteer review the complete application you wish to submit. Understand that they do not work for you and are, in general, not responsible for mistakes in the application or for not telling options you do not know about such as community spouse allowance. If you hire an elder law attorney to completely prepare the application then the lawyer is legally responsible for mistakes he or she may make, and you should expect to save more than the lawyer cost.
As noted in paragraph 2 above, have and submit all proof documentation. Keep a separate and complete copy for your records. Have all additional and current financial information, not submitted with the application, organized and at hand so that you can immediately respond to a Medicaid demand for information.
8. Appeal Denial of Application
If you are handling the Medicaid application yourself, plan for a denial and re-application. If the Michigan Medicaid Department denies an application, the applicant may appeal. This is done through a fair hearing, which is an informal proceeding before an administrative law judge. These hearings are limited to the question whether the Medicaid department followed its rules. The hearing is not a forum to complain about rude and inconsiderate workers or the unfairness or outrageousness of the rules. These hearings take months to schedule. Delays longer than half a year are not unusual. During the application and appeal process the nursing home is not getting paid and the nursing home may begin discharge procedures. Consultation with and representation by an experienced elder law attorney will no longer be optional.
9. Plan beyond Medicaid - Estate Recovery
The federal Medicaid law allows the government to take the recipient's home and other property after death to reimburse the government for the bills it paid. This is called "Medicaid estate recovery." Currently Michigan's estate recovery claim is made through probate proceedings. The claim can be avoided by timely action to avoid probate, which may be before or after the application. Once again consultation with an experienced elder law attorney is imperative.
10. Get Advice of an Experienced Elder Law Attorney
An experienced elder law attorney can make sure that you meet the qualifications, preserve as much of your assets as possible, and get the application approved as quickly as possible. Please note that any attorney can claim to be an elder law attorney even if the attorney has no experience. A Medicaid nursing home application is not to be undertaken by somebody who is uninformed. Tens of thousands of dollars are at stake. It is ironic that many seniors will pay to have their taxes done to save a few dollars but will not seek competent assistance when their home and life savings are at risk. A prudent person will not rely upon the advice of a volunteer who has no risk if mistaken. An attorney who has taken years of law school, sat for and passed a grueling bar examination and who must take on additional study to be competent in Medicaid must be right in his or her advice lest he be liable for malpractice.
All the best,
Jim Schuster |
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