Understanding the Language of Medicaid Coverage
Medicaid coverage can be difficult to understand. Part of the difficulty is that it has a language of its own, full of technical terms that have very specific meanings. In this post, we’ll define some of the more common terms you may come across as you learn more about Medicaid (also called Medical Assistance).
If you are investigating the resources available to pay for long-term care of a senior or disabled relative, you will need to know these terms.
Asset: In order to qualify for Medicaid, your income must fall below a certain level and your assets cannot exceed a certain value. Assets that are counted toward that maximum value include money in checking and savings, stocks, bonds and mutual funds, CDs, personal property, art and collectibles.
Assets that are generally NOT considered when determining Medicaid eligibility include a home, a burial plot, life insurance, long-term care insurance, the value of income-producing properties, and special needs/Medicaid trusts.
Categorically Needy: These are groups of people who qualify for basic Medicaid benefits, including low-income Medicare beneficiaries and disabled persons.
Community Spouse: This is the term sometimes used to describe the spouse who does not need institutional care.
Community Spouse Resource Allowance: In order to avoid spousal impoverishment, Medicaid allows a healthy spouse to keep certain assets and income while still allowing the medically needy spouse to qualify for Medicaid benefits. The community spouse can keep one-half of the assets of the couple, up to a predetermined maximum. Exempt property is not included in the calculation of assets so, for example, a community spouse will be able to keep the family home regardless of value. The community spouse is also entitled to a “minimum monthly maintenance needs allowance.”
Dual Eligibles/Dual Eligibility: Some people qualify for both Medicare and Medicaid coverage. If you have dual eligibility, your state Medicaid program may pay for some services not covered by Medicare including nursing home services, and payment of Medicare premiums, deductibles and co-insurance.
Exempt Property: Assets whose value will not be considered when determining whether you qualify for Medicaid. You do not need to “spend-down” these assets.
Financial Eligibility: Financial eligibility requirements set limits on the amount of income and assets a person can have and still qualify for coverage. You may need to “spend down” assets before you can qualify for assistance.
Medicaid Eligibility: A person is eligible for Medicaid if he or she has a monthly income of $1,073 or less (if you are “medically needy,” there is no maximum income), have limited assets ($3,000 for Medicaid or $6,000 for the medically needy program), and have medical need.
Medicaid Spend-Down: This is the process of reducing your assets so that you will qualify for Medicaid eligibility. You do not need to spend down all assets. Some are exempt, such as a family home or car. (However, if you are a single person and you are moving into a nursing home, the state of New Jersey will consider your home a non-exempt asset if you do not return to it within six months.)
Disposal of assets does not mean you must spend those assets outright. You can use non-exempt assets to make purchases or investments that ARE exempt. For example, you can buy a burial plot and pre-pay funeral expenses. You can put money into a Medicaid Trust/Special Needs Trust, the income of which can then be used to pay for expenses incurred in the nursing home.
It is important to know that gifts or purchases at less than fair-market-value to transfer assets to friends and family members can result in penalties from Medicaid. You can become ineligible for Medicaid benefits for a period of time.
Medicaid Trust: Also called a Special Needs Trust, this is a legal tool that may allow a person to benefit from payments from a Trust while still qualifying for financial assistance from Medicaid. It is created by the beneficiary (or a spouse, guardian or legal representative) in advance of applying for Medicaid. It can be used to pay for medical expenses or living expenses incurred in long-term care.
Medically Needy: A person who qualifies for Medicaid eligibility because of high medical expenses even though their income is too high for them to qualify as “categorically need.”
- Co-payment: A fixed amount paid to the medical provider at the time service is received.
- Deductible: The amount of money you must pay before the insurer will begin to pay. Medicaid does not have a deductible, but if you are covered by Medicare or a private insurance plan, you may have a deductible.
Special Needs Trust (see Medicaid Trust)
Snapshot Date: The date when an analysis of your assets is performed by Medicaid to determine if you are eligible for coverage. Usually this is the day a person enters a hospital or nursing home, but if it is done at a later time, it will refer back to the date of admission.
If you anticipate that you or a family member will need long-term care, the time to plan is now – before you have to enter the nursing home. Talk to Matthew Dopkin about Medicaid planning to ensure that you have protected your family and your assets appropriately, while ensuring you are Medicaid eligible when you need it.
Dopkin Law Firm advises clients on the intricacies of business and tax law matters. To discuss these or other issues with attorney and CPA Matt Dopkin, contact us at 215-519-4269 or via email at firstname.lastname@example.org.
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This Alert is published by Dopkin Law Firm. It is provided solely as legal information, not legal advice. Legal advice depends, to a large extent, upon the particular facts of a matter. For legal advice, contact your legal advisor.