Perhaps the most confusion about eligibility for Medicaid Long-Term Care is centered around the financial eligibility criteria. Generally, the financial criteria are broken down into two categories: Income and Assets.
The income test is relatively simple: the applicant’s available income must be less than the private pay cost of care. “Available income” is a term of art. It is calculated by adding the applicant’s gross income and then subtracting the allowable deductions. (Not all income deductions are allowable for Medicaid purposes. For example, income tax withholding is not an allowable deduction. Health insurance premiums, a personal needs allowance of $76.00 per month, spousal and family allowances, and the Medicare Part B premium are considered “allowable.”) Considering the average private pay cost of care in a nursing facility in Maryland is $8,000 to $10,000+ per month, most applicants have no problem meeting the income criteria. It is also important to note that the applicant’s spouse’s income is not factored into this equation—only the applicant’s income is used to determine the income eligibility.
The asset test is somewhat more complicated and is fraught with more terms of art.
An unmarried individual applicant can have no more than $2,500 in “countable resources” in his or her name as of the date of eligibility. To define countable resources, it is easier to itemize some of the resources that are excluded from consideration: the applicant’s principal residence, prepaid funeral expenses, life insurance with no cash value, and assets held in a properly drafted supplemental needs trust for the benefit of the applicant are all examples of excluded resources. The obvious resources are counted toward the $2,500 limit: deposit accounts, CDs, retirement accounts, savings bonds, annuities (sometimes), stocks, etc.
The asset limits applying to a married applicant are more complex. There are two important dates to consider for a married applicant: the first day of the first month that the applicant was admitted to a long-term care facility for 30 days or more (called the Spousal Resource Assessment (SRA) Date); the second important date is the eligibility date. Financial eligibility can only be established on the first day of the month. In other words, if the applicant is not below the applicable asset limit as of the first day of any given month, then the applicant is ineligible for the entire month and must spend down to establish eligibility the following month.
The total value of all countable resources—whether titled in the applicant’s name or the spouse’s name—is calculated as of the SRA date. That number is divided by 2 and must fall within an annually adjusted minimum and maximum resource standard. In 2014, the minimum resource standard is $23,448 and the maximum resource standard is $117,240.
For example, if the couple’s combined countable resources on the SRA Date are $200,000, then one-half would be $100,000, which falls within the limits. In order to establish financial eligibility, the couple would need to spend down from $200,000 to $100,000. If the SRA Date resources were $300,000, then they would be limited to the maximum of $117,420 and would need to spend down from $300,000 to $117,420.
Available Income < Cost of Care
Individual Countable Resources < $2,500
$23,448 < Spousal Countable Resources < $117,420
An elder law attorney can work with the applicant and the applicant’s family to develop asset protection strategies to preserve some portion of the assets to be spent down.
* * * * *
Shannon L. Hammond is a founding member of Hammond Law, LLC. She is a graduate of the University of Baltimore School of Law and is admitted to practice law in Maryland, the District of Columbia, and before the U.S. District Court for the District of Maryland. She is a member of the National Academy of Elder Law Attorneys (NAELA), the Coalition of Geriatric Services (COGS), and the Elder Law and Estates and Trusts Sections of the Maryland State Bar Association. She was named a Rising Star in the 2013 Maryland Super Lawyers list, published by Baltimore Magazine.
Shannon is a frequent lecturer on legal issues involving Medicaid, estate planning, and probate. She has taught “Strategic Planning for Aging and Asset Protection,” at the College of Notre Dame of Maryland Renaissance Institute and “Legal Issues and the Elderly,” at the Johns Hopkins University Odyssey Program. Shannon was also recently appointed to the Board of Directors for the Maryland non-profit organization “By Their Side“, which advocates for developmentally disabled Marylanders and their families.
Shannon has dedicated her career exclusively to the practice of Medicaid and estate planning. Shannon is deeply committed to assisting clients in great need and zealously advocates for those with diminished capacity.
Planning Solutions Group, LLC is not affiliated with Hammond Law, LLC and does not offer legal services.