The Medicaid program provides medical benefits to people who are financially needy. This program is not primarily a program for people who are elderly. Rather, it is for people who are poor. It is not available to seniors under the age of 65, unless they are blind or disabled. However, Medicaid eligibility is important to seniors due to gaps in Medicare coverage. For example, as a result of Medicare's limited nursing home coverage, less than 10 percent of nursing home costs in Michigan are paid by the Medicare program. Due to the high cost of nursing home care, many seniors living in nursing homes need Medicaid to help pay for their care. Medicaid also pays for support services provided to people with disabilities through the Family Independence Agency and the local Community Mental Health system.
The Federal Department of Health and Human Services, the Michigan Department of Community Health and the Family Independence Agency administer Medicaid. The program uses both federal and state funds.
Some people mistakenly believe that any indigent person may qualify for Medicaid. The fact is, that to qualify for the Medicaid program, a person must pass 4 eligibility tests:
(1) Categorical Eligibility: blind, disabled, age 65 or older, SSI recipient, former SSI recipient;
(2) Non-financial Eligibility: Michigan resident, United States Citizen or Alien status, social security number;
(3) Financial Eligibility Requirements: asset poor; income poor;
(4) Procedural Requirements: complete and sign an application form, provide timely proof of eligibility, and report changes in circumstances.
To apply for Medicaid, contact your local Family Independence Agency. There is at least one office in every county. You can pick up an application form ahead of time if you wish. Application can be made at any time.
The financial eligibility requirements of this program are complex and confusing. Medicaid has specific limits on the amount of assets and income you are allowed to keep and still qualify for Medicaid nursing home coverage. Income includes any money or payments you receive such as Social Security benefits pensions, interest, dividends, rent from a tenant, or Veteran's benefits.
An asset is anything that you already own. Medicaid counts some assets toward your eligibility, and exempts others from affecting your eligibility. The most common countable assets are:
(1) cash, savings and checking accounts;
(2) certificates of deposit;
(3) U. S. Savings Bonds;
(4) individual retirement accounts and Keogh plans;
(5) nursing home trust funds;
(6) prepaid funeral contracts which can be cancelled;
(7) trusts (depending on the terms of the trusts);
(8) real estate, or land contracts or mortgages held on real estate;
(9) boats or recreational vehicles; and
(10) stocks, bonds and mutual funds.
A single person can have up to $2,000 in countable assets and still be eligible for Medicaid. In addition, a single person can have assets that are exempt from deter- mining their eligibility for Medicaid. The most common exempt assets are:
- Your home
- Personal belongings and household effects
- Your car
- Income-producing real estate (the annual income after expenses must equal at least 6% of your equity, and any income that equals more than 6% of your equity may be considered an asset)
- An irrevocable prepaid funeral contract
- Life insurance proceeds which are assigned for your funeral expenses (and the funeral expenses of your spouse). There is a limit to how much you can assign
- Burial space items and services for you, your spouse or members of your immediate family. This includes such items as a casket, burial plot, vault, head- stone and the opening and closing of the grave site
- A burial fund which is set aside for funeral expenses not covered by the burial space exclusion
- Up to $1,500 cash surrender value of life insurance
- Assets which you and your spouse do not have the legal right to use or dispose of
- Assets you and your spouse have been unable to sell. The asset(s) must have been up for sale for a least 30 days during the last 3 months. The asking price must not have been more than fair market value. You must not have received a reasonable purchase offer.
If you own an asset jointly with someone else, Medicaid will consider the entire asset to be yours (if the asset is cash, savings and checking accounts and other similar types of assets). If the asset is real estate, you and the other owner(s) will be considered to own equal shares of the property unless the deed states otherwise. Giving away or selling your assets for less than they are worth will affect your eligibility for Medicaid coverage. If you give away assets in order to become eligible for Medicaid, you may be ineligible for Medicaid coverage for a period of time (please note this may not apply if you receive SSI). The period of ineligibility is based on how long the assets could pay for private nursing home costs. This amount is often referred to as the divestment penalty divisor, and in 2003 that amount is $5,043.00. Transferring assets to your spouse or your blind or disabled children, and specific types of trusts will not affect your Medicaid eligibility. If you anticipate applying for Medicaid coverage, you should seek legal counsel before giving away or transferring any of your assets.
There are special asset rules that apply to a married couple when one spouse is in a nursing home (often referred to as the "institutionalized spouse"), and the other spouse is not (often referred to as the "community spouse"). These rules are triggered when a person with a community spouse begins a continuous period of care of at least thirty (30) consecutive days where they have been or are expected to be in a hospital; and or in a long-term care nursing home facility.
The first day of a continuous period of care is called the initial assessment date. At this time an Initial Asset Declaration form will be filled out for the married couple. All of the couple's countable assets will be added together to comprise the initial assessment amount. This amount is then divided by two to produce a "spousal share" upon which Medicaid eligibility is determined.
The community spouse may retain all exempt assets, plus the "community spouse protected resource allowance". This allowance is determined as of the date of the initial assessment. The community spouse resource allowance is generally the greater of the spousal share or $18,123.00, up to a maximum community spouse resource allowance of $90,660.00. These amounts are adjusted annually for inflation, and the numbers referenced here are the 2003 figures.
The spouse in the nursing home will be disqualified from receiving Medicaid until all non-exempt assets and income in excess of the community spouse resource allowance are spent down. Remember that you must also be considered income poor to qualify for Medicaid. Medicaid is intended to be a cost-sharing program; therefore a recipient must pay for a portion of their cost of care.
The amount of income the recipient is required to contribute is called the "patient-pay amount". Subject to the following deductions, all of the person's income must be spent towards the cost of medical and nursing home care:
(1) Payments for health insurance premiums;
(2) Guardianship/Conservatorship expenses up to a maximum of $60.00;
(3) A $30.00 monthly income allowance;
(4) Family and children's allowance which applies when there are other family members legally dependent on the Medicaid recipient; and
(5) The community spouse income allowance (discussed below).
Income from investments solely in the husband's name is considered available solely to the husband. Income from investments in the wife's name is considered available solely to the wife. Income from assets that are held jointly by the husband and wife are divided equally among the spouses. That means the community spouse will be able to keep half of the income from a joint investment. The other half will be used to calculate the patient pay amount.
The spouse in the nursing home can divert income to meet the needs of the community spouse.
This allows the couple to divert enough of the nursing home spouse's income to bring the community spouse's income to a minimum of $1,493.00, with a maximum of $2,267.00 in 2003.
The allowance may also be increased, if the community spouse does not have sufficient income to cover his or her housing costs.
This is only a brief overview of two important but complex programs. Further information on these topics can be obtained from the following sources:
(1) For information about Medicare, call (313) 225-8317 or 1-800-482-4045;
(2) For information about Medicaid call 1-800-642-3195;
(3) For information about both programs contact your local area agency on aging, or the Michigan Office of Services to the Aging at 1-800-MEDICAR.
Please keep in mind that if you disagree with a decision made in respect to your benefits you may request an appeal. The following resources are available to assist you with additional information, or requesting an appeal:
(1) Michigan's Medicare/Medicaid Assistance Program (MMAP): This is a state- wide health insurance education and counseling program. Direct counseling services are provided over the phone, at senior centers, or through home visits for those with mobility limitations. The telephone number is (517) 374-8230;
(2) The Legal Hot Line for Older Michiganians is available to all Michigan residents 60 years and older, regardless of income. Hot line attorneys determine if callers have a legal problem, give free legal information over the phone, and provide brief services. Problems that cannot be resolved by the hot line are referred to legal aid organizations, pro bono attorneys, or to attorneys in private practice who agree to charge reduced fees. The telephone number is 1-800-347-5297.
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