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When we consider Medicaid eligibility, we are looking at several factors. Among them are technical criteria (e.g., is the applicant a U.S. citizen or legally admitted alien), medical criteria (does the applicant "need" the level of care covered by the application), and financial criteria. Most planning focuses on financial criteria and involves persons applying for nursing home Medicaid.
What we call "financial criteria" is broken into two elements: income and assets. Medicaid never treats money as money - although it's all green and it all spends the same way, Medicaid always classifies it as either income or as an asset. Knowing which classification applies helps us understand whether the money (or other item) will impact eligibility.
Another concept that may appear obvious, but we talk about it anyway, is that your circumstance in life (whether or not you're married, and whether or not you have minor or disabled children) matters. If you are single and have no dependents, then no one else needs your "stuff." On the other hand, if the applicant is married to someone who is healthy and living in the community (a "Community Spouse") or has minor children or disabled children, then planning may help to protect those dependants. For example, although a single individual applying for nursing home Medicaid can only keep $2,000 in countable assets, the Community Spouse of a married applicant can keep substantially more (the amount varies from State-to-State within certain parameters imposed by federal law). This protection related to assets and is known as the Community Spouse Resource Allowance.
Where income is concerned, ordinarily, all of the applicant's monthly income is paid toward the cost of care before Medicaid pays a dime - keep in mind that Medicaid is a "cost share" program. Once the applicant's income is exhausted, and if the applicant meets other eligibility criteria, then Medicaid will pay the balance of the bill. However, the rule changes where there is a Community Spouse. For starters, all income paid to the Community Spouse (often the wife) is hers to keep regardless of the amount. In addition, if her income is below a certain amount (again, the amount varies from State-to-State within federal law parameters), then she may also be entitled to keep some of the applicant's income. This is called the Minimum Monthly Maintenance Needs Allowance.
Certain assets are exempt and are not counted. Among them are the homeplace, pre-paid irrevocable funeral contracts, funeral plots, personal items such as clothing and the like. While the list of exempt assets will vary from State-to-State, in general terms, it is the same list that applies when someone seeks eligibility for Supplemental Security Income. Most of these exempt assets are listed on the SSI website.
What can planning do for you? Well, the answer is that most Elder Law Attorneys know the eligibility rules and can help you avoid eligibility pitfalls. They can help you plan to protect the maximum income and amount of assets for the purpose of enhancing the quality of life for a Medicaid applicant, or to protect dependants. Planning is like having a map when you travel somewhere you've never been before. Without a map, you may get lost on the way but with one, you will arrive where you need to be when you need to be there.
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