Elder Law Basics Series: Medicaid Eligibility

In a prior post in the Elder Law Basics post, I explained the difference between Medicaid and Medicare. For elder law purposes, the main distinction is that Medicaid pays for long term care services whereas Medicare provides traditional health insurance and only pays for short-term nursing home stays. In this post, I’m going to address what makes a person eligible for Medicaid, or as we call it in Minnesota, “Medical Assistance.”

First, it’s important to understand that there is a distinction between income-based Medical Assistance (MA) for low-income adults and MA for long term care (MA-LTC). Qualifying low-income adults and children may receive health insurance benefits through MA and there is no asset limit to qualify. But if you have a disability and need a nursing facility level of care either in a skilled nursing facility, assisted living facility, or at home, then income-based MA will not cover what you need. In that case, you need MA-LTC or what is referred to as a “waiver program.”

MA-LTC covers long term care services, which are skilled nursing services offered in a traditional nursing home setting. “Waiver programs” cover the same services, but in a community-based setting, such as assisted living facilities, memory care facilities, or at home. There are several different waiver programs offered in Minnesota for various needs, including the Community Access for Disability Inclusion (CADI) waiver for persons with disabilities under age 65 and the Elderly Waiver (EW) for disabled persons 65 and up. The financial eligibility rules for MA-LTC and all waiver programs are substantially the same even though each program is designed for people with different needs.

For MA-LTC and all waiver programs, there is an asset limit for both the person receiving benefits and their spouse, if they are married. For the person receiving benefits, the asset limit is $3,000. This figure has not changed in many years, and seems unlikely to change soon. For the person’s spouse, they are limited to $126,420, but unlike the MA recipient’s asset limit, the spousal asset limit is adjusted annually for inflation. Certain assets do not count toward either spouse’s asset limit, including their primary residence, one vehicle, and personal belongings (like clothing, electronics, furniture, etc.). All other property, however, does count toward the asset limit, including retirement accounts (IRAs, 401(k)s), most trust accounts, and all other real estate (farmland, cabins, etc.).

In addition, the MA recipient’s income is calculated and contributed toward the cost of their care, with certain limited exceptions, such as a personal needs allowance ($102 per month), and in some cases additional income may be given to the spouse to cover excess housing costs. The income calculation for waiver programs can be quite complicated, and some people may not qualify for a waiver program if their income exceeds their care costs. But the spouse of an MA recipient is not required to contribute their income for the MA recipient’s care, in other words, there is no “spousal income deeming” for MA. This makes possible certain asset protection strategies such as planning with Medicaid-compliant annuities.

In addition to the basic financial eligibility requirements, the MA applicant must meet additional criteria based on their needs. For example, they must require a nursing home level of care, which means they typically must be evaluated by a public health nurse as part of what is called the MNChoices Assessment. And for MA-LTC or MA-EW, they must be 65 and older; or, for CADI they must be under 65.

These are just the most basic elements of eligibility and because every person’s situation is different, even though you or your loved one may meet these basic criteria, there may be other considerations before you or your loved one should apply. For example, you may be ineligible for benefits if the applicant or their spouse gifted assets within the last five years. There are also special asset limit rules for families that own small businesses or farms. If you are looking for more information about qualifying for MA, please contact me to discuss your situation.

Elder Law Basics Series: Medicare vs. Medicaid

This post is the first in a series that I’m calling “Elder Law Basics.” The idea is to give a brief introduction to the essential elements of a law practice focused on serving the needs of the elders in our community, and to help readers understand what is meant by the term “elder law.” Elder law encompasses many things because the practice is focused on a population not on a distinct set of laws. But because the practice spans so many disciplines that we usually think of as separate — like estate planning and landlord-tenant and healthcare — it can be confusing to understand what an elder law attorney actually “does.” (By the way, “agriculture law” suffers from the same form of confusion. It too is interdisciplinary in scope and focuses on a population — farmers — rather than a particular legal discipline. What can I say, I like to wear a lot of different hats!)

I’d like to start out this first post by focusing on a health-law aspect of my elder law practice, and a topic that generates a lot of confusion and misinformation in the broader community. I’m talking about Medicare and Medicaid.

A lot of people confuse Medicare and Medicaid, but they are two separate healthcare insurance programs that originate with the federal government and involve some administration at the state level as well. Medicare is a health insurance program primarily for people over 65, although people who are permanently disabled or have certain diseases may also qualify for insurance coverage through Medicare. Medicare has four parts: Part A, which is known as “hospital insurance,” Part B, which is known as the “health insurance” part and covers some preventive care; Part C, which is “Medicare Advantage,” a sort of hybrid of Parts A and B; and finally, Part D, which is prescription coverage. Medicaid is also a health insurance program, but it pays for healthcare when a person can no longer afford to do so. A person may qualify for Medicaid if their income is too low, or if they’re over 65 or disabled and require long term care but cannot afford to pay for it. There are income and asset limits to qualify for Medicaid, and I’ll discuss those in a later post.

For now, I want to highlight some things about Medicare that most people aren’t aware of. First, you might not know that if you’re 65 and receiving Social Security, you’ll be automatically enrolled in Medicare Parts A & B. But what about people who are still working at 65? Do they need to enroll? The answer is that it depends. If you’re actively working and receiving health insurance through your employer (or your spouse’s employer), and if the company has more than 20 employees, you do not need to enroll in Medicare. But, if the employer has fewer than 20 employees, Medicare will still be considered the primary payer, and you should enroll to avoid a penalty. If you’re 65 and not collecting Social Security yet, it’s a good idea to talk with a professional about whether you should be enrolling or not so that you don’t lose coverage or have to pay a penalty.

In addition, Medicare Part A pays for hospital stays (up to 150 days), and skilled nursing facility stays that follow at least a 3-day inpatient hospital stay (up to 100 days). When it comes to skilled nursing care, many people are told by their healthcare provider that Medicare will stop paying for skilled nursing care if the patient does not show improvement. That is not true. According to a recent settlement agreement with the Centers for Medicare and Medicaid Services, there is no legal requirement that a patient demonstrate improvement for Medicare to continuing paying for care. Medicare must continue to pay for care so long as it is medically necessary for up to a maximum of 100 days.

Many people also need home health care due to age-related illnesses or after a hospital stay. Many people and care providers don’t realize, however, that Medicare Part A also pays for in-home care. So long as the care is ordered by a physician and the patient is “homebound,” which simply means they need assistance with moving (for example, a cane, walker, or wheelchair), Medicare will pay for up to 28 to 35 hours of in-home care per week, and there is no limit on how long the person can continue receiving care at home.

One big issue that has come up in Medicare cases over the years is something called “observational status.” In order to qualify for Part A coverage for a hospital stay or for skilled nursing care following a hospital stay, the patient must be considered in in-patient (not out-patient) care. Many hospitals are categorizing patients as out-patient by putting them on “observational status.” Hospitals may be afraid that they will lose money on Medicare patients, so they avoid this by making the patient’s hospital stay not qualify for Medicare coverage. Since most patients have no way of knowing whether they’ve been admitted as in-patient or whether they are on observational status, all patients are entitled to a “Medicare Outpatient Observation Notice” (MOON) within 36 hours of hospitalization. Patients on observational status can and should dispute their status with their care provider.

If you or a loved one have questions about Medicare or Medicaid, feel free to give me a call or contact my firm for more information.