Medicaid was designed to allow people who are disabled or 65 and over with little or no assets, to obtain long-term care. For many middle-income families, Medicaid is a frightening concept. If the family does not have long-term care insurance and one spouse needs to apply, many questions and concerns are raised. Will the family home have to be sold? Will all of the family’s assets have to be spent down to qualify?
Investopedia’s recent article, “How to Qualify for Medicaid: Tips and Eligibility Requirements,” explains that while Medicaid is federally funded, it’s administered at the state level. Each state also has its own set of rules and regulations for the program. If you’re single, you typically can’t have more than $2,000 worth of cash or other assets outside of your personal residence, vehicle, and other necessary items. If you’re married and your spouse is still able to live independently (known as a “community spouse”), he or she is allowed to keep up to 50% of your joint assets. Your single or joint income usually can’t exceed 133% of the federal poverty level, but several states have thresholds above this.
You’ll also have to prove medically you’re disabled in most cases, although certain exceptions apply. And you must also be either a U.S. citizen or have a green card and prove your residency within the state. However, if your assets or income exceed the state thresholds, you’ll need to reduce your estate. This is known as “spending down.” You might also be able to create a spend-down trust. However, this is non-enforceable by you—and you may lose assets permanently, if the party you gift them to gets into financial trouble.
A frequent reason for people to be denied Medicaid coverage, is incomplete information on the application. Before you start, collect these documents to submit:
- Birth certificate or driver license (to prove your age);
- Proof of citizenship;
- Assets and income documentation;
- Copies of your mortgage, lease, rent payment receipts, utility bills, or other documents that prove where you live;
- Medical records showing your disability; and
- Information about any other health insurance coverage you may have.
You state may require different or additional documentation.
You cannot simply gift your assets or belongings to your children or a reliable friend to use them on your behalf. Before or during the Medicaid application process, consider consulting with attorney who specializes in elder law and thoroughly understands the Medicaid laws in your state. He or she can help you with creating a Medicaid trust or other legal gifting moves that you may be able to make.
An experienced elder law attorney will be able to explain the process of filing for Medicaid and what needs to happen to your assets, before the application can be filed. Understand that planning may include reducing your estate significantly to meet the eligibility thresholds, as set by your state.
Reference: Investopedia (October 6, 2018) “How to Qualify for Medicaid: Tips and Eligibility Requirements”