Medicaid is complicated.
The following case study should help you sort through the maze to better understand Medicaid eligibility and how you might proceed.
Mary S. is 86 years old and lives alone in her own home. Her family tells me she now needs 24-hour care at home, but they think she cannot qualify for benefits because she (a) owns a house; (b) has money in the bank; (c) has an IRA; and (d) collects a pension. They also understand that there is some five-year look back period so even if there is some possibility of help, they cannot wait five years.
Her financial picture looks like this:
She has these assets:
Home: $350,000 (value)
And the following monthly income:
Social Security: $1,200
IRA Distribution: $555
There is a difference in determining eligibility for Community Medicaid (care at home) as compared to Institutional Medicaid (care in a nursing home). The dreaded five-year look back period is for nursing home care only. This means that for in-home care, there is no penalty and no look back period for assets transferred out of Mary’s name for her to qualify for Community Medicaid.
On the matter of assets (property and bank accounts) regarding eligibility for Community Medicaid, Mary’s house is exempt if she continues to live in it. Since New York has estate recovery for Medicaid recipients, the state can come after the house after she passes away (or if she moves out of the house) unless some further planning is done. Typically, people transfer the home into a trust with the help of a qualified Elder Law attorney, thereby eliminating the estate recovery issue.
Mary’s IRA principal is also exempt as long as she takes the minimum required distribution. Since most IRAs have direct beneficiaries (passing to the heirs), the principal here is also protected.
Mary can keep up to $14,850 in her name to qualify for Medicaid so if she transfers $60,150 of her $75,000 in countable assets, either to a trust or to her children, she is in effect eligible for Community Medicaid.
Then there is the issue of her Income. With $3,355 in monthly income, she is $2,510 above Medicaid’s monthly limit of $845 per month. But she can still qualify for Medicaid by either (a) paying Medicaid the $2,510 each month or (b) setting up a Pooled Income Trust to protect this excess income.
How does a Pooled Trust work? In this scenario, the $2,510 of excess income is transferred from Mary’s account to a Pooled Trust account each month. Then she or her family can request this money be paid to her various creditors (electric, phone, cable, food, home maintenance, etc.). Bills must bear Mary’s name, cannot be medical in nature and funds cannot be used for gifts to others. The trust can be used only to pay for Mary’s non-medical living expenses. Except for the monthly fees associated with a pooled trust, she has access to all her income each month. And she maintains control over the money in the trust. She tells them whom to pay, how much to pay and when to pay it.
Once Medicaid is established, we can pursue home care services, day care, transportation and so forth to meet Mary’s needs and allow her to potentially remain at home for the rest of her life. Ideally, this enables her to avoid any long-term nursing home placement.
Clearly, all this information can feel overwhelming and getting assistance from a qualified professional is essential to navigating this process efficiently and effectively.