Medicaid Basics and Planning

Medicaid is a public program that pays for medical services and nursing services for people who can qualify technically, medically, and financially for the program. The state of Tennessee and the federal government pay for this program. Under Medicaid, for aged persons, there are two programs: 1) an institutional program and 2) a home and community based services (HCBS) program.

The first program is typical long term care in a skilled nursing facility (SNF) or intermediate care facility (ICF). If an applicant is placed into a nursing home and qualifies for Medicaid to pay for his long term care, all of his medical needs will be paid for by the program. He also will keep $40 per month as a personal needs allowance. And, under a typical approach, will retain no property in his name other than $2,000. All of the applicant's income will be applied to his patient liability - that is, toward his nursing home bill.

The second option under Medicaid is called the Home and Community Based Services waiver program (HCBS) for the Elderly or Disabled. Under the HCBS, Medicaid pays for home health care and works with the family to provide needed support. The premise is that care in the home is more beneficial and more economical than care in a facility. The rules for qualifying for HCBS are essentially the same as for traditional long term care under Medicaid. However, benefits under this program are capped at $50,000 per year. If the applicant's needs exceed this amount, the HCBS program is not available to him. Under this program, the family will obtain care through a home health agency that is approved via this program. Instead of billing the family, the home health agency bills Medicaid directly and is paid by them directly. This is a somewhat new program. According to the Department of Human Services website, Services the HCBS pays for include:

Adult Day Care - A place where you can go during the day to spend time with others.
Assisted Living* - A place where you can go live that will help you with personal care needs, homemaker services, and taking your medicines correctly. *Medicaid cannot pay for your room and board.
Assistive Technology - Certain devices that help you with activities of daily living, such as grabbers or big handled eating utensils.
Case Management - A case manager to visit you at least once a month to be sure you get the care you need.
Home Delivered Meals - One healthy meal per day delivered to your home.
Homemaker - Someone to help with household chores or errands like laundry, sweeping or grocery shopping.
In-Home Respite - Someone to come and stay with you in your home for a short time so your caregiver can get some rest.
Inpatient Respite - Short stay in a nursing home or assisted care living facility so your caregiver can get some rest.
Minor Home Modifications - Certain devices or changes to your home to make it easier and safer for you to be in your home, such as ramps or grab-bars.
Personal Care Attendant - Someone to help with activities of daily living for longer periods of time or to go with you to doctor's visits or other appointments.
Personal Care Services - Someone to help with activities of daily living such as bathing, dressing, preparing and eating meals, toileting or transfers.
Personal Emergency Response System (PERS) - A call button you wear that works through your telephone so you can call for help in an emergency.
Pest Control - Someone to come to your home a few times a year to spray for bugs or get rid of mice and rats.

To qualify for Medicaid, a person must be a resident of Tennessee and in a nursing home or expect to reside in a nursing home for thirty (30) days consecutively and meet the other requirements medically and financially. Once approved, Medicaid may pay for care up to 90 days before the approval date.

The medical requirements are met by having your doctor or the nursing home doctor certify on a pre-admission evaluation (PAE) that the person needs daily nursing services.

The financial requirements are met by having a representative, usually spouse or adult child, go to the local Department of Human Services office and make an application. Sometimes hospitals have workers that assist in processing applications, and, applications may be submitted on-line at the Tn.gov Department of Human Services, TennCare website.

A written or on-line application is followed by an in-person interview with the county Department of Human Services Office case worker assigned to your application. Documentation about finances for the last five years for the applicant may be required. Current expenses, utility bills, proof of citizenship, etc. may be required. A list of items needed for this application can be obtained from the above website and we have attached a list to this plan.

Financial eligibility is established in two areas: assets and income.

Income. An applicant cannot have more than $2022 per month in income in 2009. If the applicant has more than this amount of income, we will need to do some additional planning in the form of a Qualified Income Trust or "Miller Trust." For married couples, the Community Spouse (the spouse that is healthy and living at home) gets to keep up to $1,750 of the couple's income every month to help meet her expenses. The maximum DHS can allow the Community Spouse to keep per month is $2,739.

Assets. When a person gives away assets that could be used to pay for nursing home care, a Medicaid penalty may apply. A person can be charged with a crime for failing to disclose assets or transfers of assets when making an application for Medicaid.

In Tennessee, the DHS allows the healthy or "Community Spouse" to keep certain assets while Medicaid pays for the long term custodial or nursing home care for an ill spouse, whom DHS refers to as the "Institutionalized Spouse." The Community Spouse is not required to spend all the available assets to obtain care for the Institutionalized Spouse. DHS and the law recognize that the Community Spouse will have needs for her care and upkeep, health and maintenance in the community. Therefore, the Community Spouse is allowed to keep a minimum of $21,912 in 2009. If the couple's countable assets exceed that amount, the community Spouse may keep one-half of the "countable" assets up to but not exceeding a total of $109,560, plus the "exempt assets." Countable assets are all assets that do no fall into the category of exempt assets. Exempt assets include:

The primary residence or "homestead" and all the land that immediately touches the home, so long as the total equity value is less than $500,000. The applicant must either intend to return to the homestead to live (realistically or not) or the home place must be occupied by a spouse, dependent child, or disabled child;
One car (typically of any value if it is used for transportation to and from work or to and from medical appointments);
Prepaid burial or funeral plan (either itemized or irrevocable and limited to $6,000 per person); and life insurance not exceeding a cash value of $1,500;
Typically, non-liquid property (such as rental property) is not countable if the property is creating income that can assist in paying for care;
Property essential for self-support;
Real property that cannot be sold, is "unavailable," or has a cloud on the title may not be countable;
Household goods or personalty (unless of unusual value);
Jointly owned real estate if the joint owner resides there or it can't be divided easily for sale;
Some trusts.

The Institutionalized Spouse is permitted to maintain $2,000 in his name and $40 per month of his income.

At McDonald Levy we appreciate the opportunity to review your options for obtaining and paying for long term care with you. Medicaid is one avenue to pursue but we will also talk with you about other options that may be available, such as Veterans' Benefits, Aid and Attendance, Long Term Care insurance, Medicare, hospice, and private pay arrangements.