Have you heard of Medicaid crisis? Long Term Care Medicaid is a joint federal-state insurance program that helps eligible Virginians pay for nursing home-level of care, often in a nursing home facility, but sometimes in a PACE facility, or in a private home. Medicaid is not, however, a handout. To the contrary, Long Term Care Medicaid applicants must meet strict income and asset limits to qualify for assistance.
Strict financial eligibility criteria often lead to a “Medicaid crisis.” For example, Linda, a 70-year old widow, has experienced steady health decline such that she has now reached the point where she can no longer be cared for safely in her home and must be admitted to a nursing home as soon as possible. She can pay for a month or two from her meager savings, but cannot afford to pay for her care beyond that. Linda meets the Medicaid medical requirements for her nursing home care to be covered, but Linda currently has more than $2,000 in countable resources and is “too rich” to qualify for assistance. As a result, Linda faces a financial crisis where she is unable to either pay for nursing home care or receive Medicaid assistance.
What Are Virginia Long Term Care Medicaid’s Income and Asset Limits?
In many crisis scenarios like the one described above, the answer that comes immediately to most people’s mind is for Linda to spend what little assets she has paying for her nursing home care until she becomes “broke” enough to qualify for Medicaid. But there is another option–advanced Medicaid crisis planning.
To understand Long Term Care Medicaid planning, let’s review the financial eligibility requirements imposed by Virginia’s Long Term Care Medicaid rules, which encompass both income and countable resources. The income limit, which applies more for community-based care and not inpatient nursing home care, tends to increase a little each year and is currently $2,349 per month. The countable resource limit is $2,000 for the applicant; a spouse who is not also applying for Long Term Care Medicaid can keep additional countable resources.
For Linda to qualify for Long Term Care Medicaid, her countable resources cannot exceed $2,000, and if she wants to receive care at home, her gross income should not exceed $2,349 per month. If Linda receives care in a nursing home, Virginia’s rules only allow her to keep $40 of her income to pay for all of her personal needs: haircuts, new clothes, books, toiletries, and the like. If she receives care a home, she can keep a higher, though still limited, amount to assist with food and housing related costs.
If Linda is married rather than single/widowed, and her spouse will not require nursing home care, then Linda’s spouse can keep additional countable resources over and above the $2,000 Linda herself is allowed to keep.
Beware Virginia Long Term Care Medicaid’s “Look-Back” Period
When a crisis hits, Linda may be tempted to quickly get rid of her excess assets–such as by giving them away to family members–in the hopes that will help her more quickly and easily meet the Long Term Care Medicaid financial limits. The flaw with this approach is that Virginia’s Long Term Care Medicaid has a 5-year “look-back” period, which means that any gifts Linda makes to someone who is not her spouse or other limited classes of people or any below-market sales of Linda’s assets made in the 60 months before she applies for Long Term Care Medicaid will result in a penalty wherein Linda, who is otherwise eligible for Long Term Care Medicaid benefits, will not receive them.
Proper Long Term Care Medicaid crisis planning could have saved Linda a significant amount of money. It may have made sense to delay her Long Term Care Medicaid application a few months until earlier gifts no longer fell within the look-back period. Alternatively, it may be possible to convert some of Linda’s assets into a type that will provide her with ongoing cash flow to pay for her care during the penalty period while simultaneously not counting against her $2,000 countable resource limit.
Contact Us for Help with Medicaid Crisis Planning
If you would like to learn more about Medicaid crisis planning and how it can help protect your family, please call Promise Law today at (757) 690-2470, contact us here or register to attend one of our upcoming estate planning workshops.