Medicaid is a state and federal program that provides health insurance for millions of Americans, including low-income adults, children, pregnant women, elderly adults and people with disabilities. States administer Medicaid to eligible individuals, according to federal requirements. The program is a state- and federally-funded program.
When reviewing a Medicaid enrollment or renewal application there will be several terms that will be crucial to understanding how an individual may be eligible for Medicaid services. The terms, “resources,” “income,” “’set aside’ costs,” and “spousal refusal,” are defined below and should be utilized as a resource for those seeking Medicaid eligibility and renewal.
What are resources?
Resources are an important factor in determining whether or not an individual may be eligible for Medicaid services. In terms of Medicaid eligibility, resources are all financial assets that an individual owns, or has the right, authority or power to convert to cash, and are legally available for the Medicaid applicant or beneficiary’s support and maintenance.
When determining Medicaid eligibility, there will be some assets that are countable resources and others that may be excluded. Retirement accounts are considered exempt resources so long as the applicant is receiving a monthly distribution. Retirement accounts are any qualified account (IRAs, 401(k), 403(b), Thrift Savings Plans, etc.) wherein the applicant put money away before paying income taxes. Even though Roth IRAs are funded with after tax dollars, for Medicaid purposes they are still considered retirement benefits.
When reviewing assets, consider everything from real estate, cash value in life insurance policies (not the death benefit), certificates of deposit, savings accounts, bonds, checking accounts, non-qualified annuities and business interests.
What is income?
All income is considered for Medicaid eligibility purposes, both earned and unearned.
Earned income is earnings that is received as a result of work activity including wages, salaries, tips, commissions and income received from self-employment. Unearned income is earnings which is paid because of obligation rather that for services performed including pensions, interest or dividends.
What costs can be “set aside?”
Costs that can be set aside are certain items of income that can be set aside for Medicaid eligibility purposes. This means that a Medicaid applicant or beneficiary can pay for certain items and not have those costs be considered as part of their available income. “Set aside” costs can include an individual’s costs of health insurance and medical prescriptions.
What is spousal refusal?
After shifting excess assets into the name of the community spouse, he or she would sign a document called a spousal refusal. Spousal refusal is a document filed with the Human Resource Department/ Department of Social Services (HRA/DSS) that indicates that the refusing spouse refuses to contribute their income and assets to the care of their partner as they need to utilize their income and assets for the support and maintenance of their own care and well-being.
Once the community spouse invokes their right to spousal refusal, and all requirements of the Medicaid application are met, the state Medicaid program must pay for the care of the institutionalized spouse.
After Medicaid has been granted, the DSS/HRA may institute a lawsuit to seek the recovery of the cost of care from the refusing spouse. However even in the light of this risk, there are a few reasons why spousal refusal may be the optimal option. Firstly, that the DSS/HRA may never pursue the lawsuit. Secondly, these lawsuits are often settled for significantly less than the costs of the care provided. Thirdly, the payment to the county can sometimes be deferred until the community spouse passes away. Finally, even though the individuals’ county may seek recovery, it would only be for the Medicaid reimbursement rate and not for the private payer rate. For example, if the private payer rate is $18,000 per month for home-health aide services rendered, the amount Medicaid pays is a fraction of this cost. Instead of the paying the $18,000 per month private payer rate, the Medicaid-covered cost rate may only be $11,000 to $9,000 per month. The county may only pursue the individual for the amount they actually paid, not the private payer rate amount.
The Medicaid eligibility, application and renewal terminology can be confusing. It is important to seek out the guidance of an experienced Medicaid planning attorney who can answer your questions about planning for Medicaid and will assist you along the way. The knowledgeable New Jersey Medicaid planning lawyers at the Law Offices of Hunziker, Jones, and Sweeney are experienced in helping individuals prepare for eligibility and applications of Medicaid, while taking full advantage of programs and planning options to help protect an individual’s or family’s income and assets. To schedule a consultation, call call the firm at (973) 256-0456 or fill out our contact form.