The Medicaid
Thicket II
Bob Mason
Originally
published in Coastal Senior
(April 2007)
In the
last issue we began
discussing Medicaid . . .
specifically the program
that will pay nursing home
costs for qualified
beneficiaries. For those
seniors who cannot afford
$50,000 or more annually for
a nursing home, and for
those who do not have any
long term care insurance,
Medicaid is likely the only
route. Last month I promised
more on the amount and sorts
of assets seniors may own
and qualify for Medicaid.
South Carolina readers
remember, this is a Georgia
discussion and the rules on
your side of the river may
be different, but I can
promise they’re similar.
Married
couples and others are
treated somewhat
differently. First let’s
look at a single applicant
whom I’ll call Gladys. When
Gladys goes into a nursing
home and anticipates needing
Medicaid sometime in the
future, and if she has
transferred (gifted) assets
in the last few years, she
should go ahead and apply
for Medicaid to determine
where she is financially and
to perhaps start the clock
running on any Medicaid
transfer penalty she may
have triggered with the
earlier transfer.
First
the Department of Family &
Children Services (DFACS)
case worker will ask for
information enabling him to
compile an inventory of all
of Gladys’ assets. He will
classify those assets into
countable and noncountable
assets. A countable asset is
one that will be recognized
as available to Gladys to
help pay for nursing home
costs. Gladys may have an
unlimited amount of
noncountable assets, but she
may not have more than
$2,000 in countable
assets.
Obviously, not all assets
are countable. A home with
equity of less than $500,000
is not countable. One
vehicle, personal property
such as clothing and
jewelry, certain life
insurance policies, home
furnishings, certain burial
policies and certain types
of real estate interests
also will not count. I wrote
“certain” three times in the
preceding sentence because
it is certain that the rules
are certainly complex.
So what
to do if countable assets
exceed $2,000? An easy, but
not really attractive,
option is simply spend it
all at the nursing home.
Sometimes the trick is to
convert countable assets to
noncountable assets. If you
have enough countable assets
to be concerned, a visit
with a knowledgeable lawyer
is worth the cost. There is
no way to cover the nuances
in a single newspaper
column.
Once
the DFACS caseworker
accounts for all assets and
classifies them as either
countable or noncountable,
he will ask if there have
been any transfers of assets
within the past three years.
Under the new rules, the
lookback period will be five
years for transfers after
February 8, 2006, but that
won’t cause the caseworker
to lookback more than three
years until February 9,
2009.
Here’s
where it gets interesting.
Once transfers have been
identified the caseworker
will divide the value of
transfers before February 8,
2006, by $4,257.60 (that is
the average monthly cost of
nursing home care in
Georgia). The caseworker
will round down to the next
lowest whole number and the
result will be the number of
months of ineligibility for
Medicaid starting with the
first of the month in which
the transfer was made. There
is a good likelihood that
pre-February 8, 2006
transfers will not cause any
difficulty.
If a
transfer was made on or
after February 8, 2006,
things could be dicey. The
caseworker will calculate
the transfer penalty in much
the same way (no rounding
down, however). This is the
important part: The penalty
period will not begin until
Gladys is both in the
nursing home and otherwise
financially qualified (under
$2,000 countable assets).
There
are hardship provisions to
try to set aside the
penalty, but I think they
are called “hardship”
provisions because they will
be really “hard”. It will be
the job of Gladys (or her
lawyer) to prove that the
transfers had nothing at all
to do with Medicaid
planning.
What if
Gladys is married to Henry?
Most of the rules are the
same. But there is one major
difference: Henry may keep
up to $101,640 of countable
assets. Georgia is one of
the more liberal states in
that regard. In North
Carolina, for example, Henry
would be able to keep just
half that amount.
Finally, the important thing
to remember is that many of
the noncountable assets
retained by Henry are
subject to estate recovery
upon the death of the
survivor of Gladys and
Henry. Estate recovery is
the program the Department
of Community Health uses to
seize previously
noncountable assets to help
offset the Medicaid benefits
paid on behalf of Gladys.
There was quite a stir about
estate recovery last summer
as Georgia became one of the
last states to implement
such measures.
So, tune in next month for:
Estate Recovery!
