Understanding Medicaid

Medicaid is a government benefits program which pays for room, board and medical assistance in a skilled nursing facility (SNF) or supportive living facility (SLF). Medicaid does not pay for services in an assisted living or independent living community.

Medicaid is a government BENEFIT program for individuals who qualify, both medically and financially, for the program. It is not a right, like Medicare, wherein individuals "pay into" Medicare to use the benefits when they are needed in the future.

The most important thing to note about Medicaid benefits is that it is never too early or too late to consult with an elder law attorney to discuss qualification and your options.

In order to qualify for Medicaid benefits in either a SNF or SLF, the applicant must qualify from a medical perspective. Medicaid requires that an applicant be evaluated and obtain a Determination of Need (DON) score. Based on this score, the Department of Human Services, which manages the Medicaid program in Illinois, determines whether the individual qualifies for Medicaid.

In order to qualify for Medicaid in the State of Illinois, an applicant must be an Illinois resident and a U.S. Citizen, or a non-Citizen who meets certain requirements. Additionally, the applicant must be over age 65, blind, or disabled as defined by the Social Security Administration.

In order for a single applicant to qualify for Medicaid, he or she must have no more than $2,000.00 in his/her name as of the date of application. This is known as the applicant’s asset allowance. The applicant is also allowed to keep a car if it is necessary to allow the applicant to go to the doctor or perform essential daily activities. Additionally, an applicant is allowed to keep $30.00 a month from his or her income if the applicant resides in a SNF. The remainder, minus certain health care insurance premiums, must be paid to the SNF or SLF as the patient liability amount. If an applicant resides in a SLF, the applicant can keep $90.00 a month from his or her income. If the applicant was receiving VA Aid and Attendance benefits from the Veteran's Administration and lives in a SNF, the VA benefits are reduced to $90.00, which the applicant is allowed to keep. Note that the applicant is not allowed to retain real estate or a principal residence if the applicant is living in a SNF or SLF with no intention to return home.

For an applicant who has a spouse living in the family home or "the community" (i.e. some other living arrangement) and not entering a SNF or SLF, the "community" spouse is allowed to keep income up to $2,739per month. If the community spouse's income is less than $2,739 per month, the community spouse can retain some or all of the applicant's income up to that amount. If the community spouse's income is more than $2,739, the community spouse may be asked to pay a portion of that income to help pay for the applicant's care. Additionally, the community spouse can keep up to $109,560 in assets in his or her name, excluding a house and a car, which he/she is allowed to keep in addition to this amount. Any assets over that amount are expected to help pay for the applicant’s care.

Certain assets are considered exempt assets for both the applicant and the spouse, like prepaid burial plans, as long as they meet certain requirements.

Medicaid uses a five-year, or 60 month, look back period to determine whether transfers made by the applicant and/or his or her spouse will result in a penalty period being assessed. If an applicant or his or her spouse transfers assets for less than fair market value or makes gifts during the 60 months preceding the Medicaid application, the Department of Human Services can impose a penalty period against the applicant. The penalty period is calculated by taking the total amount of all gifts or transfers for less than fair market value and dividing that amount by the average monthly cost of long term care services at the private rate in the community in which the person is institutionalized at the time of application. This usually results in several months or years in which the applicant is not eligible for Medicaid benefits for long term care.

The Medicaid rules and eligibility requirements can be unforgiving and make qualifying for the benefit very difficult for many people. Consulting with an elder law attorney can help eliminate barriers to qualification and can, in some cases, provide alternative solutions to your long term care problem.

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