What is Medicaid Coverage? How does Medicaid Insurance work?
Medicaid Coverage is a needs based or entitlement program. If you meet the financial and other requirements, you are entitled to be in the program. It is both a Federal and a State program; the Federal government laid the foundation and pays part of the bills, and each State built their own program on the foundation. Thus, the Medicaid insurance regulations vary from State to State. We will confine this discussion to Kentucky. In Kentucky, the Federal government pays about 70% of the cost of the program.
Medicaid is the payor of last resort – Medicaid pays when there is no one else left to pay.
Medicaid’s basic philosophy is that the Nursing Home resident, and his or her spouse, should pay for the resident’s Nursing Home before the taxpayers should pay for the resident’s Nursing Home. On the surface, this seems eminently logical. However, looking deeper, one finds that if you have never worked, never paid taxes and spent a lifetime on public assistance, you qualify for Medicaid immediately. But if you have worked your entire life, supported the Medicaid system through your taxes, lived frugally, saved money and played by the rules, Medicaid views it as wrong if you attempt to salvage any of your money in order to leave at least a modest legacy to your family as tangible evidence of your lifetime on this earth.
Federal law does not require such a harsh outcome. Unfortunately, the State administrators of the program interpret rules in ways they were never meant to be read, ignore the Federal law that they are required to follow, or just make up regulations beyond the scope of their authority. Local Medicaid offices also make up regulations that do not exist.
In Kentucky, Nursing Home residents only make up 3% of the Medicaid population.
What are the qualifications to receive Medicaid?
There are certain preliminary requirements to obtain Medicaid eligibility for some or all of Nursing Home monthly charges. You need to be in Nursing Home, not in Assisted Living or Independent Living or Personal Care. You also need to require the level of care called skilled or intermediate nursing care and you need to be in a Medicaid bed. The State allows each Nursing Home to have a certain number of Medicaid eligible beds – if the Nursing Home already has its quota of Medicaid residents, you will not get Medicaid coverage even though you are personally Medicaid eligible.
The last qualification for Medicaid Insurance is financial. Medicaid breaks financial qualifications into two large categories – married with a Community Spouse, and single. Married with a Community Spouse is where one spouse is in a Nursing Home and one is not; the spouse who lives in the community and is called the Community Spouse. Medicaid does not want to totally impoverish the Community Spouse, because if they did, the State would have to pay welfare for the Community Spouse to survive.
Medicaid defines singles as never married, widowed, divorced, or married where both spouses are in a Nursing Home. When both spouses are in a Nursing Home the State does not have to worry about impoverishing the spouse. For Medicaid purposes, each spouse is considered to be a single individual.
Medicaid calls assets, resources. Medicaid allows some resources to be “exempt” or to not count towards what the State expects to be paid to the Nursing Home. The exempt resources differ when there is a Community Spouse and when there is no Community Spouse.
Medicaid looks at all the non-exempt resources and expects some or most of these resources to be “spent down” prior to Medicaid paying for the Nursing Home. More of the countable resources [non-exempt] may be retained when there is a Community Spouse. Almost nothing may be retained when there is no Community Spouse.
Medicaid does not allow a person to give away his or her assets and then come in and claim he or she is poor. In addition, Medicaid is smart enough to know that some parents would call a gift to a child a “loan” – not a gift. In order to qualify as a loan under Medicaid terms, certain formal requirements need to be met.
Medicaid has the legal right to look back through five years of financial records of the Nursing Home resident and spouse. This is done to see if resources have been gifted or transferred for less than fair market value. Medicaid workers examine financial records very carefully as some folks try to hide things. When you apply for Medicaid you have to sign a form that what you have told them is the truth – lying and hiding assets is called fraud.
Medicaid regulations change often and change without any warning. Regulations are complex and are often interpreted differently by different offices.
We stay current on all that is happening with regard to Medicaid in Kentucky.
Medicaid’s attitude was recently expressed to us by a Medicaid supervisor when asked where the public could find changes in the regulations the public is required to follow: “The public has no right to know.”
Many folks have listened to advice heard from well meaning friends, financial advisors, banks, funeral homes, CPAs, attorneys and social workers in the Nursing Home who do not go to the Medicaid office, who do not know what the regulations really are and what can be done to preserve assets. Much of this information is just plain wrong. We have even had instances where someone has gone to a Medicaid office on their own and been given completely wrong information from a State Medicaid worker, and made very expensive mistakes. The State will acknowledge these errors but will not reimburse you for their errors.
We help folks with Medicaid planning to preserve and protect assets within the Medicaid regulations. We call this estate planning for folks who have obtained their money the hard way – by earning it. Please see the section on Medicaid Planning and Asset Preservation.
What is Medicaid Spend Down?
Medicaid requires resources, over the allowed amount to be “spent down.”
Medicaid spend down may only be spent on the Nursing Home resident or his or her spouse.
Medicaid cannot tell folks what they may spend on themselves, but does not allow folks to spend their money on other people, and then come in to apply for Medicaid claiming “I am poor.”
If you have questions or would like to schedule a free consultation with an elder law attorney, please feel free to contact us at our Louisville office, we’re here to help. Click here to see what people are saying about our services.