Fong Law Group

Medicaid's Attempt to Ensure the Healthy Spouse Has Enough Income: The MMMNA

When most of a couple's income is in the name of the spouse who is receiving Medicaid, the spouse remaining in the community may wonder what he or she will live on. Medicaid has created some protections for the community spouse.

Although Medicaid limits the assets that the spouse of a Medicaid applicant can retain, the income of the “community spouse” is not counted in determining the Medicaid applicant’s eligibility. Only income in the applicant’s name is counted. Thus, even if the community spouse is still working and earning, say, $5,000 a month, he or she will not have to contribute to the cost of caring for a spouse in a nursing home if the spouse is covered by Medicaid. In some states, however, if the community spouse’s income exceeds certain levels, he or she does have to make a monetary contribution towards the cost of the institutionalized spouse’s care. The community spouse’s income is not considered in determining eligibility, but there is a subsequent contribution requirement.

But what if most of the couple's income is in the name of the institutionalized spouse and the community spouse's income is not enough to live on? In such cases, the community spouse is entitled to some or all of the monthly income of the institutionalized spouse. How much the community spouse is entitled to depends on what the local Medicaid agency determines to be a minimum income level for the community spouse. This figure, known as the minimum monthly maintenance needs allowance or MMMNA, is calculated for each community spouse according to a complicated formula based on his or her housing costs. The MMMNA may range from a low of $2,177.50 to a high of $3,259.50 a month (in 2021). If the community spouse's own income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse's income.

Example: Joe and Sally Smith have a joint income of $2,600 a month, $1,900 of which is in Mr. Smith's name and $700 is in Ms. Smith's name. Mr. Smith enters a nursing home and applies for Medicaid. The Medicaid agency determines that Ms. Smith's MMMNA is $2,200 (based on her housing costs). Since Ms. Smith's own income is only $700 a month, the Medicaid agency allocates $1,500 of Mr. Smith's income to her support. Since Mr. Smith also may keep a $60-a-month personal needs allowance, his obligation to pay the nursing home is only $340 a month ($1,900 - $1,500 - $60 = $340).

In exceptional circumstances, community spouses may seek an increase in their MMMNAs either by appealing to the state Medicaid agency or by obtaining a court order of spousal support. Contact your attorney to find out about these options.

Medicaid's Home Care Waivers Can Help You Avoid a Nursing Home, But the Line May Be Long

Medicaid long-term care benefits traditionally pay mainly for nursing home care, but the federal government can grant “waivers” to states allowing them to expand Medicaid to include home and community-based services. The downside is that receiving care in a nursing home is an entitlement, while getting care at home is not.  

Medicaid is a joint federal-state program that provides health insurance coverage to low-income children, seniors, and people with disabilities. In addition, it covers care in a nursing home for those who qualify. Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive federal money, which pays for about half the state's Medicaid costs. (The state picks up the rest of the tab.) A Medicaid waiver allows states to waive some of the federal rules with the intention of providing services to individuals who wouldn’t normally be covered by Medicaid. The waiver must be approved by the federal government. 

The most common type of Medicaid waiver expands Medicaid to cover home care to individuals who need a high level of care, but who would like to remain at home rather than enter a nursing home. Care that may be provided by a waiver includes personal attendants, home health aides, medical supplies and equipment, respite care, counseling services, transportation, homemaking services, hot meal delivery, and more. 

Each state sets up its own waiver program, so the rules and requirements vary widely. Usually, to qualify an applicant must need a level of care similar to what is needed to qualify for Medicaid coverage in a nursing home. The point of the waiver is to allow an individual who would normally need nursing home care to remain at home, which is typically a far less costly form of care. States may also target different health conditions, such as HIV, Alzheimer’s disease, diabetes, cystic fibrosis, among others. Each state also sets its own income and asset levels for its waiver programs, which may vary from state to state, and may be different from the income and asset levels used for Medicaid coverage of nursing home care. 

The downside of state waiver programs is that waivers are not an entitlement, meaning that states are allowed to limit the number of people who qualify for services under a waiver. Just because an applicant meets the criteria for eligibility does not mean the applicant will be approved for the services. As a result, waitlists for filled programs can run for months or years. 

To find out your Medicaid home care options, you should check with your elder law attorney. 

To find and apply for a waiver program in your state, contact your state Medicaid office.  

Supreme Court to Hear Case That Could Increase the Bite That Medicaid Takes Out of Settlements

The U.S. Supreme Court has agreed to hear a case disputing how much states can recoup from Medicaid recipients’ settlements in personal injury cases. The decision has the potential to affect anyone who receives government assistance with their medical care following a disabling injury that results in a lawsuit.  

If you are injured due to another person's negligence and you receive care through your state's Medicaid program, the state has a legal right to recover funds it spent on your care from your personal injury settlement or award. The question is, how much of the settlement or award is the state entitled to, versus how much may you keep to help compensate for your injury and maintain your quality of life?

Here are the facts of the case the High Court will decide: In 2008, a truck struck and seriously injured 13-year-old Gianinna Gallardo in Florida. The state’s Medicaid agency provided $862,688.77 in medical payments on Gianinna's behalf. Her parents sued the parities responsible, and the case eventually settled for $800,000, of which $35,367.52 represented payment for past medical expenses. The settlement also included funds for future medical expenses, lost wages, and other damages. 

Under the formula used by the state to calculate reimbursement, the Medicaid agency claimed it was entitled to $323,508.29 in medical payments from Gianinna's settlement. The state’s formula included money in the settlement that was specifically allocated for future medical expenses. 

Gianinna’s parents sued the state Medicaid agency in federal court, arguing that Florida’s reimbursement formula violates federal law because the state should only be able to recover from that portion of her settlement allocated to past medical expenses. The Medicaid agency countered that it was entitled to satisfy its lien from the portion of the settlement representing compensation for both past and future medical expenses. 

When a U.S. district court ruled in favor of Gianinna, the Medicaid agency appealed. The U.S. Court of Appeals for the 11th Circuit reversed the lower court’s decision, ruling that federal law does not “prohibit the agency from seeking reimbursement from settlement monies for medical care allocated to future care.” (Gallardo v. Dudek, 11th Cir., No. 17-13693, June 26, 2020) The 11th Circuit’s decision in Gallardo directly conflicts with a 2018 decision by the Florida Supreme Court that decided that federal Medicaid law preempts Florida law and requires that the state only seek reimbursement from settlement amounts attributable to past medical expenses. Other state and federal courts have also differed on this question. 

The U.S. Supreme Court has agreed to hear the case to resolve the dispute among the lower courts. The decision will likely come during the Court’s 2021-2022 term.

How Much Money Can You Have and Still Qualify for Medicaid?

In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in "countable" assets (the figure may be somewhat higher in some states). Note that Medicaid is a state-run program, so the rules are somewhat different in each state, although there are federal guidelines.

The spouse of a nursing home resident--called the "community spouse" -- is limited to one half of the couple's joint assets up to $130,380 (in 2021) in "countable" assets. This figure changes each year to reflect inflation. Called the "community spouse resource allowance," this is the most that a state may allow a community spouse to retain without a hearing or a court order. The least that a state may allow a community spouse to retain is $26,076 (in 2021).

Example: If a couple has $100,000 in countable assets on the date the applicant enters a nursing home, he or she will be eligible for Medicaid once the couple's assets have been reduced to a combined figure of $52,000 -- $2,000 for the applicant and $50,000 for the community spouse.

Some states, however, are more generous toward the community spouse. In these states, the community spouse may keep up to $130,380 (in 2021), regardless of whether or not this represents half the couple's assets. For example, if the couple had $100,000 in countable assets on the "snapshot" date, the community spouse could keep the entire amount, instead of being limited to half. 

All assets are counted against these limits unless the assets fall within the short list of "noncountable" assets. These include the following:

• Personal possessions, such as clothing, furniture, and jewelry
• One motor vehicle, regardless of value, as long as it is used for transportation of the applicant or a household member. The value of an additional automobile may be excluded if needed for health or self-support reasons (check your state's rules).
• The applicant's principal residence, provided it is in the same state in which the individual is applying for coverage. In some states, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home; in other states, the nursing home resident must prove a likelihood of returning home. Under the Deficit Reduction Act of 2005 (DRA), principal residences may be deemed noncountable only to the extent their equity is less than $603,000 (in 2021), with the states having the option of raising this limit to $906,000 (in 2021). In all states and under the DRA, the house may be kept with no equity limit if the Medicaid applicant's spouse or another dependent relative lives there
• Prepaid funeral plans and a small amount of life insurance
• Assets that are considered "inaccessible" for one reason or another

Careful planning, whether in advance or in response to an unanticipated need for care, can help protect your estate while still meeting Medicaid's strict asset limits. To learn more, consult with your elder law attorney.

Can Life Insurance Affect Your Medicaid Eligibility?

casWhen applying for Medicaid many people often forget about life insurance. But depending on the type of life insurance and the value of the policy, it can count as an asset. 

In order to qualify for Medicaid, you can't have more than $2,000 in assets (in most states). Life insurance policies are usually either "term" life insurance or "whole" life insurance. If a Medicaid applicant has term life insurance, it doesn’t count as an asset and won't affect Medicaid eligibility because this form of life insurance does not have an accumulated cash value. On the other hand, whole life insurance accumulates a cash value that the owner can access, so it can be counted as an asset.

That said, Medicaid law exempts small whole life insurance policies from the calculation of assets. If the policy's face value is less than $1,500, then it won't count as an asset for Medicaid eligibility purposes. However, if the policy’s face value is more than $1,500, the cash surrender value becomes an available asset.

For example, suppose a Medicaid applicant has a whole life insurance policy with a $1,500 death benefit and a $700 cash surrender value (the amount you would get if you cash in the policy before death). The policy is exempt and won't be used to determine the applicant's eligibility for Medicaid. However, if the death benefit is $1,750 and the cash value is $700, the cash surrender value will be counted toward the $2,000 asset limit.

If you have a life insurance policy that may disqualify you from Medicaid, you have a few options:

• Surrender the policy and spend down the cash value.
• Transfer ownership of the policy to your spouse or to a special needs trust. If you transfer the policy to your spouse, the cash value would then be part of the spouse's community resource allowance.
• Transfer ownership of the policy to a funeral home. The policy can be used to pay for your funeral expenses, which is an exempt asset.
• Take out a loan on the cash value. This reduces the cash value and the death benefit, but keeps the policy in place.

Before taking any actions with a life insurance policy, you should talk to your attorney to find out what is the best strategy for you. 

President Biden Proposes Billions in Increased Funding for Home Health Care

President Biden has introduced a plan to spend $400 billion over eight years on home and community-based care for the elderly and people with disabilities. The money would go to expand access to care and support higher-paying caregiving jobs. 

As the elderly population grows, our long-term care system is becoming increasingly strained. The AARP found that in 2020, more than one out of every five Americans -- 21.3 percent -- were acting as caregivers, either caring for a relative or a close friend. Many women have had to drop out of the workforce to care for aging family members. In the meantime, paid caregivers are typically underpaid and overworked, with one in six paid caregivers living in poverty. And our elderly population is only expected to grow: By 2030, one in five Americans is projected to be over 65.

Recognizing that the United States is “in the midst of a caregiving crisis,” President Biden has proposed boosting funding for home and community based long-term care as part of his $2 trillion American Jobs Plan. While the plan does not have specifics, it proposes to expand access to long-term care services under Medicaid that help people stay at home and avoid care in an institution. Currently, only nursing home care is mandated under Medicaid, with states providing care at home or in the community at their discretion. Waiting lists for home and community-based services under state Medicaid programs can stretch on for years, and only a small fraction of those who need care receive these services, according to Kaiser Health News.

Among other things, President Biden wants to extend the Money Follows the Person program, which is a federal initiative designed to move people out of nursing homes and into home-based care. The program provides grants to states to create innovative home and community-based programs. 

President Biden is also proposing that money be put toward creating well-paying caregiving jobs and that home health care workers be able to join a union and engage in collective bargaining. The White House states that this “will improve wages and quality of life for essential home health workers and yield significant economic benefits for low-income communities and communities of color.”

President Biden’s plan does not provide details, leaving It up to Congress to fill in the particulars when drafting its legislation. It is unclear how much of Biden’s proposed funding will make it into a final bill. 

To read about the American Jobs Plan, click here.  

For more about the home health care proposal, click here and here.

Finding the Right Hospital Bed Rental

If you are caring for a loved one at home, you may need to rent a hospital bed. Here are the ins and outs of hospital bed rentals. 

The benefit of a hospital bed is that it adjusts to allow people with limited mobility to more easily get in and out of the bed. The adjustable features include the raising and lowering the head and foot of the bed as well as changing the bed’s height. The beds usually have the option to add side rails to keep patients from falling out of bed. The following are the main types of hospital beds:

• Manual. A manual hospital bed is the cheapest type of bed. It adjusts with a hand crank, and requires a certain amount of physical strength to adjust. 
• Semi-electric. A semi-electric hospital bed uses electric controls to adjust some components (for example, raising the bed’s head and foot) and a manual crank to adjust other components (for example, the height of the bed). 
• Electric. A full electric hospital bed has all electric controls. The patient has the ability to control all the adjustable features with a remote control. 
• Special beds. There are also beds that serve special purposes. A bariatric bed is a hospital bed that is specially designed to be sturdier and more comfortable for heavier patients. A low bed is set closer to the floor to prevent falling out of bed. A Trendelenburg bed provides even more adjustable features than a regular hospital bed, including the ability to stand straight up or turn into a chair. 

Hospital beds can be rented from medical supply companies and usually cost $200 to $500 a month to rent. There are a variety of ways to pay for rentals, including: 

• Insurance. Most private insurance policies cover hospital bed rentals. You will need to check your insurance policy to see how much is covered and under what circumstances. You will likely need a doctor’s prescription in order to get coverage. 
• Medicare. Medicare covers durable medical equipment, including hospital beds. Medicare will pay 80 percent of the cost of the bed rental. In order to get coverage, you must be enrolled in Medicare Part B, have a prescription from a Medicare-enrolled physician saying that the bed is medically necessary, and rent the bed from Medicare-enrolled medical equipment supplier. Medicare will cover hospital beds with variable height functions or electric functions only if deemed medically necessary.
• Veterans benefits. Health benefits from the Veterans Administration also cover medical equipment like hospital beds. Again, a doctor must prescribe the bed as medically necessary. 

Medicaid. If you are eligible for Medicaid home care services, Medicaid may pay for a hospital bed rental. Because Medicaid is a joint federal and state-run program, the rules vary depending on the state.

Can an IRA Affect Medicaid Eligibility?

For many Medicaid applicants, individual retirement accounts (IRAs) are one of their biggest assets. If you do not plan properly, IRAs can count as an available asset and affect Medicaid eligibility.

Medicaid applicants can have only a small amount of assets in order to be eligible to receive benefits ($2,000 in most states). Certain assets -- i.e., a house, car, and burial plot -- are exempt from eligibility determinations. Whether your IRA counts as an exempt asset depends on whether it is in "payout status" or not.

At age 72 (or if you turned 70 ½ in 2019 or before), individuals must begin taking required minimum distributions from their IRAs, which means the IRA is in payout status. You may also be able to choose to put your IRA in payout status as young as age 59 ½ if you elect to take regular, periodic distributions based on life expectancy tables. If an IRA is in payout status, depending on your state, it may not count as an available asset for the purposes of Medicaid eligibility, but the payments you receive will count as income. Medicaid recipients are allowed to keep a tiny amount of income for personal use and the rest will go to the nursing home. 

If the IRA is not in payout status, the IRA is a non-exempt asset, which means the total amount in the IRA will probably be counted as an asset, affecting your Medicaid eligibility. In order to qualify for Medicaid, you will need to cash out your IRA and spend down the assets. Alternatively, you could transfer the money to your spouse or someone else, although there will likely be an income tax penalty for doing this. (Roth IRAs have no required minimum distributions and cannot be put in payout status, but they are usually counted as assets.)

The rules for a 401(k) are similar to an IRA. If the 401(k) is not in payout status, Medicaid may count as an asset any funds you are eligible to withdraw from the 401(k)--even if you have to pay a tax penalty to withdraw the funds. 

Note that the rules for a Roth IRA may be different. If you have a Roth IRA, depending on the rules in your state, it may not be exempt at all because Roth IRAs do not require minimum distributions.

The rules regarding IRAs and Medicaid are complicated and vary from state to state. You should talk to your attorney about your IRA to determine the best course of action for you.

Medicaid Recipients Have a Little More Time to Spend Down Their Stimulus Money

The one-year deadline for nursing home residents on Medicaid to spend down their first round of stimulus checks is here, but they may have a little extra time. 

In March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act authorized $1,200 stimulus checks to most Americans, including Medicaid recipients. Another round of $600 checks was authorized in December 2020, and $1,400 checks were ordered in February 2021. The stimulus checks are not considered income for Medicaid recipients, and the payments have been excluded from Medicaid’s strict resource limits for 12 months. 

While the one-year deadline for spending down the first round of checks is here, another COVID-19 bill gives beneficiaries more time. The Families First Coronavirus Response Act passed in March 2020 provides that if you were enrolled in Medicaid as of March 18, 2020, the state cannot terminate a recipient’s benefits even if there is a change in circumstances that would normally cause the benefits to be stopped. The law states that the recipient’s Medicaid coverage must continue through the end of the month in which the Secretary of Health and Human Services declares that the public health emergency has ended. The public health emergency is set to end April 20, 2021, but it will likely be extended. 

While Medicaid recipients may have a little extra time, they shouldn’t delay too long in spending down the money if it has pushed them over the resource limit, which is $2,000 in most states. The following are examples of what a Medicaid recipient may be able to spend the money on without affecting their eligibility:

• Make a payment toward paying off debt.
• Make small repairs around the house. 
• Update personal effects. Buy household goods or personal comfort items. Buy a new wardrobe, electronics, or furniture.
• Buy needed medical equipment, see a dentist or get eyes checked if those items aren't covered by insurance.

While Medicaid recipients usually cannot gift money or assets and remain eligible for benefits, recipients in at least some states should be able to make gifts from the stimulus money during the first 12 months following receipt. If you have questions about how you or a family member in a nursing home can spend the money, contact your attorney.

Medicaid's Coverage of Nursing Home Care

For better and for worse, Medicaid is the primary method of paying for nursing home care in the United States. But navigating the Medicaid system is complicated and confusing. Here are the basics. 

Medicaid (sometimes called by other names, such as "Medi-Cal" in California, "MassHealth" in Massachusetts, and "TennCare" in Tennessee) is a joint federal-state program that provides health insurance coverage to low-income children, seniors, and people with disabilities. In addition, it covers long-term care for those who qualify. This coverage has traditionally meant care in a nursing home, although coverage of care in an assisted living facility or at home are possible (see below). 

In the absence of any other public program covering long-term care (Medicare provides only limited nursing home coverage), Medicaid has become the default nursing home insurance of the middle class. Lacking access to alternatives such as paying privately or being covered by a long-term care insurance policy, most people pay out of their own pockets for long-term care until they become eligible for Medicaid. 

Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive federal money, which pays for about half the state's Medicaid costs. (The state picks up the rest of the tab.) This complicates matters, since the Medicaid eligibility rules are somewhat different from state to state and they keep changing. To be certain of your rights, consult an elder law attorney in your state who can guide you through the complicated rules of the different programs and help you plan ahead. 

While the majority of nursing homes accept Medicaid patients, there are some that do not. Even nursing homes that accept Medicaid recipients may only have a limited number of Medicaid beds available. Nursing homes must be certified by the state in order to accept Medicaid payments. Check with the facility before applying for admittance. 

To qualify for coverage, applicants must have limited assets and income. You typically cannot have more than $2,000 in assets; the figure may be slightly higher in some states. To lower your assets, you need to spend them down by paying for things that benefit the Medicaid applicant. You cannot simply give away your resources in order to qualify for Medicaid. Income limits vary by state. In some states you can keep excess income in trust; in other states you must pay your excess income to the nursing home. 

In addition to the strict income and asset limits, you must meet level of care requirements in order to qualify for nursing home coverage. Each state sets its own level of care criteria and the criteria is not always clear. The state looks at an applicants’ functional, medical, and cognitive abilities to determine if they need care in a nursing home. You are usually determined to need long-term care if you need help with two or more “activities of daily living” (such as bathing, dressing, eating, moving, and going to the bathroom). But to need a nursing home level of care, you may also need frequent medical care, such as assistance with medication, injections, IVs, or other medical treatment. The state may also consider your cognitive abilities—i.e., whether you have the ability to make decisions on your own. 

Once you qualify for Medicaid, the program pays for all your basic expenses, but nursing home residents may be charged extra for certain amenities, like a private room, comfort items, or specially prepared food. 

In addition to nursing home care, Medicaid generally covers care in an assisted living facility as well as some home care services. Home care is typically provided through home- and community-based services "waiver" programs to individuals who need a high level of care, but who would like to remain at home. States vary widely on how to qualify and what is covered. Almost all state Medicaid programs will cover at least some assisted living costs for eligible residents.

To apply for Medicaid, contact your local Medicaid office. An elder law attorney can help you navigate the Medicaid process.