Because the cost of nursing home care in Arkansas averages over $5,000.00 per month, most people cannot afford to pay for a stay in a nursing home on their own. They usually need assistance in order to help pay for the cost. The top provider of assistance for the cost of nursing home care is the Medicaid Long-Term Care program. Medicaid is a joint program of both the state and federal government. Therefore, both Congress and the State of Arkansas have laws and rules for eligibility requirements and how the program is run.
Who is Eligible for Medicaid Long-Term Care?
In order to be eligible to receive Medicaid Long-Term Care to pay for nursing home care you must meet both income limits and asset limits. As of 2019, the Arkansas income limit for Medicaid Long-Term Care is $2,313.00 per month for an individual. Income includes not only wages, but benefits from Social Security, the Veterans Administration, Railroad Retirement, annuities, stock dividends, rental income and traditional retirement accounts, such as pensions, IRAs and 401(k)s. If an individual does not qualify for Medicaid Long-Term Care benefits because they are over the monthly income limit, they may still be able to qualify by setting up a special trust (known as a Miller Trust or Income Only Trust).
The asset limit to qualify for Medicaid Long-Term Care is $2000 for an individual. All assets are counted against these limits unless the assets fall within a list of “non-countable” assets. These include the following:
- Personal possessions, such as clothing, furniture, and jewelry;
- One motor vehicle, regardless of value, as long as it is used for transportation of the applicant or a household member;
- The applicant’s principal residence, provided it is in the same state in which the individual is applying for coverage and the individual entering the nursing home intends to return home. (The residence does have to have a total value of less than $585,000 as of 2019);
- Prepaid funeral plans and a small amount of life insurance;
- Assets that are considered “inaccessible” for one reason or another (such as assets placed in an irrevocable trust or real-property held jointly with another where the co-owner refuses to sell the property).
If someone is over the asset limit they will not be eligible for Medicaid Long-Term Care until they spend their assets down to an acceptable level.
Can I Qualify for Medicaid LTC if I Give my Stuff Away?
Someone cannot simply give away or transfer their assets in order to qualify for Medicaid Log-Term Care (there are a few exceptions to the transfer rule as I point out below). Assets that are transferred by the individual needing nursing home care to someone else for less than fair market value are still counted against the individual for the value of the asset. For instance, if you own a piece of real-estate worth $100,000.00 and you give it to your son and then apply for Medicaid Long-Term Care you will be ineligible for benefits until you have spent down the $100,000 value of the land that you gave away.
Exceptions to the Transfer Rule
Not all asset transfers will disqualify someone from Medicaid ineligibility. Emptions from the asset transfer rule include transfers to the spouse of the Medicaid recipient, a blind or disabled child of the recipient, or a special needs trust. There are also exceptions to the transfer rule that apply to the transfer of a home. A Medicaid applicant may transfer their home to the following without incurring a penalty to their Medicaid eligibility: a spouse; a child who is under twenty-one, blind or disabled; a special needs trust; a sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home; or a child who lived in the home for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.
In next week’s article I will discuss the “five year look back period” as well as Medicaid estate recovery.
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If you have questions regarding Medicaid long-term care or if you need assistance with an estate plan, feel free to click here or call our firm at (501) 960-6060 for a free consultation.