Medicaid exempt assets: What Federal and State Laws grant

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Medicaid, the State and Federal Government program pays for health services and nursing home care for the elderly in your home. This program has been designed for individuals with low income and if you have limited assets. An added advantage of Medicaid is that it also pays for some long-term care services at home.

How would you choose long-term care?

This is an important decision that you need to make. When choosing long-term care you need to plan out your health care needs in the future. How much you would pay for such care depends on the type of policy you buy. Experts say that if you have the savings for long term care you may not consider buying a policy. But, if you do not have then maybe you could consider buying one. The cost of treating chronic illness can be expensive and this is when a policy like this can be very advantageous.

Usually, LTC recipients of Medicaid are usually those who are aged or from the disabled group, but there are only a handful who receive SSI and yet opt for LTC.

What are the assets exempted under Medicaid and LTC?

There are certain Medicaid asset exemptions made by the Federal and state laws when determining eligibility. As an applicant you would first have to use all of your assets in excess of the exempt amount in order to pay the cost of nursing care facilities before you can qualify for Medicaid. If you are married, your spouse’s assets would also be combined to determine eligibility.

The following are Medicaid exempt assets:

A house but only when you (the applicant) are likely to return home. Your home may also be among Medicaid exemptions if your spouse, or a child under the age of 21 years or a child over the age of 21 years but disabled, or a brother/sister owning part of the house and having resided there for at least 1 year continues to live in that house.
Essential items like furniture, appliances etc.
Personal items like jewelry, clothing etc.
Burial plots
Funds for burial up to $1500 each in case you are married and $1200 if you are a single applicant.
A cash surrender value in a life insurance. This is possible only when the face value of the policies together is less than $1500. However, term life insurance does not have a cash surrender value and hence is totally exempt.

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Posted: Tue Apr 22, 2008 9:19 am Post subject: Medicaid exempt assets: What Federal and State Laws grant

Exempt assets from Medicaid with Long Term Care insurance. (LTCi)

There are 25 states with Long Term Care Partnership Programs.

This is significant legislation as a person can now LEGALLY exempt their assets from nursing home and Medicaid spend down by simply obtaining Long Term Care insurance.

Click HERE to read Florida Statute 409.9102.

Quote:

(b) Provide a mechanism to qualify for coverage of the costs of long-term care needs under Medicaid without first being required to substantially exhaust his or her assets, including a provision for the disregard of any assets in an amount equal to the insurance benefit payments that are made to or on behalf of an individual who is a beneficiary under the program.

(4) The Department of Children and Family Services, when determining eligibility for Medicaid long-term care services for an individual who is the beneficiary of an approved long-term care partnership program policy, shall reduce the total countable assets of the individual by an amount equal to the insurance benefit payments that are made to or on behalf of the individual.

States with Partnership Legislation:

Arkansas
Iowa
NorthDakota
Colorado
Maryland
Ohio
Florida
Massachusetts
Oklahoma
Georgia
Michigan
Pennsylvania
Hawaii
Missouri
Rhode Island
Idaho
Montana
Virginia
Illinois
Nebraska
Washington
New York
Indiana
Connecticut
California
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GarySpicuzza
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Posted: Mon Apr 28, 2008 3:55 pm Post subject:

Good info.Keep up the good work

fireyone
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Posted: Fri May 02, 2008 10:04 pm Post subject:

Add Oregon to the LTC Partnership states. They just got approved. WooHoo! InsTeacher

InsTeacher
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Posted: Mon Nov 30, 2009 2:37 am Post subject: exempt assets

is perf asa considered an exempt asset by medicaid and are other annuities considered exempt? _________________ Register Now to have your Insurance queries solved.

jwalkerpcpls
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Posted: Mon Nov 30, 2009 9:58 pm Post subject:

thanks for the information - what is the asset threshold for medicaid, does it vary from state to state? Good to know what is included and not included, but would also like to know the $ amount you need to be under to qualify. _________________ Get free insurance quotes or Purchase auto Insurance online in minutes.

heidrek
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Posted: Wed Dec 02, 2009 12:07 am Post subject:

Heidrek, since Medicaid is a state-run environment, each state has (slightly) different rules. Let me know what state you're concerned over and I can give you some specifics... InsTeacher

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Posted: Wed Mar 10, 2010 10:33 pm Post subject: NJ vs PA medicaid asset protection

Example: I have a LTC benefit of 400K, I have IRAs of 350K. Does the LTC partnership limit out of pocket expenses to nusing home to 400K? That would spend the 350K in IRAs and up to another 50K? (800K total to nursing home) Then Medicaid would kick in? Does Pennsylvania offer more protection of assets than New Jersey? _________________ Register Now to have your Insurance queries solved.

suburbamama
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Posted: Thu Mar 11, 2010 6:10 am Post subject:

Quote:

I have a LTC benefit of 400K, I have IRAs of 350K. Does the LTC partnership limit out of pocket expenses to nusing home to 400K? That would spend the 350K in IRAs and up to another 50K? (800K total to nursing home) Then Medicaid would kick in?

First off, I'm assuming we're still talking about a LTC Partnership Policy, so that's what I'll play with here.

First off, partnership policies must be tax-qualified and meet all of the requirements as laid out by each state, the Deficit Reduction Act and Section 7702(b) of the Internal Revenue Code. Bored yet?

Assuming the contract meets all of the metrics, here's the deal. The whole idea of partnership contracts is to deal with Medicaid paying for a person's LTC needs and protection of one's assets upon their death. Buying a partnership policy offers lots of protection here.

Your example cited a $400k LTC policy and $350,000 of assets held in IRAs. Since you didn't list any other "countable" assets, (IRAs are countable assets) we'll assume that the IRAs are all that this person owns, period. No house, no bank accounts, no car, no nothin'.

Now the need for LTC hits and the policy pays out it's max benefit of $400k and now the person looks to Medicaid to pay for his LTC needs. Medicaid is first going to determine eligibility by looking at the applicant's countable assets; those assets that will be added up to see how much the applicant owns in terms of value. Most of what people own is considered a countable asset. There are certain exceptions, but not many. When Medicaid looks at our example's assets when qualifying him for Medicaid benefits, another thing called "asset disregard" comes into play.

Asset disregard is simply this: When adding up your assets, certain assets are NOT counted, or "disregarded" in the total asset value. In terms of the partnership policy, part of what is disregarded is a dollar amount equal to the benefits paid under the private LTC partnership policy, in this case $400,000.

Here's the math: $350,000 (asset value) - $400,000 (LTC benefit) = $-50,000. In other words, the state will not count the first $400,000 of the applicant's assets...he's got a free ride into Medicaid with no......

"Estate Recovery" allowed by the state. The state, under an antique federal amendment to law (from Senator Henry Waxman out of California), is required to seek, from the dead LTC insured's estate, an amount equal to what it paid out in LTC costs for the insured through Medicaid. So, if our insured had NO partnership policy and Medicaid paid for his LTC care, they would be required to go after his assets upon his death to "recover" what Medicaid paid out in LTC costs.

Now....does this make any sense???? I just read it and I think it does, but I'm not sure.

InsTeacher Cool

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Posted: Sat Mar 27, 2010 4:40 pm Post subject: cars

if my mother was to buy me a car but put it in my name how would that affect my medicaid and what are the limits that the car can be worth? _________________ Register Now to have your Insurance queries solved.

abl
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Posted: Fri Apr 16, 2010 6:03 pm Post subject: Will I will have to pay a nursing home

M mom was admitted to a nursing home in Michgian in the middle of March under Medicaid and died 2 weeks later. She had 1,250 in her checking account when she was admitted. I used $1,200 of her monies to us towards the funeral home bill. I was told that I could do this. She only had a $1,000 life insurance policy and had no other money or assets. Will I be responsible to pay the nursing home since this money was from her social security and pension which were going to be her copay if she had lived? _________________ Register Now to have your Insurance queries solved.

Delilah
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Posted: Wed Apr 21, 2010 3:03 am Post subject:

It is not at all likely that you will be responsible for any of the charges, unless, of course, you do something like acknowledge responsibility for her debts.

Assuming she had little or no assets, as you describe, it would probably have been a free pass into the Medicaid system for her. Contact the nursing facility to see if they initiated a Medicaid claim on her behalf. If they did, it's their game, and you shouldn't have to worry about anything. If they didn't, they you can do that, and if she qualifies (prior to her death) Medicaid will pay the brief stay in the facility -- a few thousand dollars at most.

Quote:

"Estate Recovery" allowed by the state. The state, under an antique federal amendment to law (from Senator Henry Waxman out of California), is required to seek, from the dead LTC insured's estate, an amount equal to what it paid out in LTC costs for the insured through Medicaid. So, if our insured had NO partnership policy and Medicaid paid for his LTC care, they would be required to go after his assets upon his death to "recover" what Medicaid paid out in LTC costs.

Now....does this make any sense???? I just read it and I think it does, but I'm not sure.

Oh . . . yes . . . it absolutely makes sense. Beginning at age 55, all claims paid on a person's behalf (not only LTC) by Medicaid (we call it Medi-Cal here in CA) are subject to asset recovery. Effectively, the only thing they actually go after is the decedent's home. If a surviving spouse still lives in the home, they place a lien on the property and wait till he/she dies or tries to sell, then the state swoops in and demands satisfaction of the lien. But that's not to say they cannot or don't go after any and all remaining estate assets. They will if there are any worth grabbing.

And it doesn't just happen in California, it is required in all states.

In case you're not familiar with the concept, just do a search for "Medicaid Spend-Down Test" and see how onerous this bit of crap is (Waxman's law is known as the "Spousal Impoverishment Act" -- and that's exactly what it does, it impoverishes the spouse who didn't need the LTC). Or send me a PM and I'll email you a copy of a recent CA Asset Recovery Brochure.
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Posted: Wed May 26, 2010 5:18 pm Post subject: trust excludibility

what are rules re excluding trust _________________ Register Now to have your Insurance queries solved.

stephen kantz
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Posted: Wed May 26, 2010 11:47 pm Post subject:

To be able to exclude an asset from one's estate via a trust, it must be placed into some form of an "irrevocable" trust to demonstrate to the IRS that the former owner is giving up all "rights and incidents" of ownership. Doesn't mean he can't live in the property, but it's no longer "his" property. As far as Medicaid is concerned, the "lookback" period to find assets removed from a person's estate for the possible purpose of avoiding the spend-down test, the period is now 60 months. For estate tax purposes, the lookback period is only 36 months. _________________ California-licensed Property & Casualty Broker-Agent and Life & Health Agent. CA Insurance License #0596197. Send me your questions, and I'll send you my answers. I live, breathe, and teach insurance!

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Posted: Thu May 27, 2010 4:14 pm Post subject: death in nursing home

If a person lived and died in nursing home and had life insurance with named beneficaries. Are the benefits from the policy to be returned to the state? _________________ Register Now to have your Insurance queries solved.

rags
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Posted: Thu May 27, 2010 8:27 pm Post subject:

Proceeds payable to a named beneficiary are not subject to the claims of creditors of the decedent, nor are they subject to claims of the beneficiary's creditors prior to funds being distributed to the beneficiary. However, if policy proceeds end up in the decedent's estate, the state is third in line, behind employees (wages) and the federal government (taxes, penalties), to attack the estate for Medicaid asset recovery in addition to its own unpaid taxes and penalties. ALWAYS HAVE A NAMED BENEFICIARY ON A LIFE INSURANCE POLICY! _________________ California-licensed Property & Casualty Broker-Agent and Life & Health Agent. CA Insurance License #0596197. Send me your questions, and I'll send you my answers. I live, breathe, and teach insurance!

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Medicaid exempt assets: What Federal and State Laws grant

How would you choose long-term care?

What are the assets exempted under Medicaid and LTC?

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