How to Qualify for Medicaid
Many seniors suddenly find themselves facing the need to qualify for Medicaid benefits after a lifetime of being covered by other insurance. The sudden need to qualify for Medicaid typically stems from the need for help covering the high cost of long-term care. If you are one of those seniors, you may be uncertain where to start, what the eligibility criteria are, or how to qualify for Medicaid in general. Moreover, you may find that your assets exceed the Medicaid eligibility guidelines, creating a bar to eligibility. Learning more about the Illinois Medicaid program and the program’s eligibility guidelines is a good place to start. Ultimately, however, you may need to consult with an experienced Illinois estate planning attorney about last minute Medicaid planning strategies that can help you qualify for Medicaid.
What Is Medicaid?
Medicaid is a federal healthcare program that is intended to provide health care benefits to low income individuals, families, the disabled, and the aged. Because Medicaid is administered by the individual states, the precise eligibility criteria and benefits available to participants will vary somewhat from one state to another. All states, however, employ income and asset limits when determining eligibility for Medicaid. The income limits are tied to the Federal Poverty Level (FPL) which changes on a yearly basis. The asset limit, however, is usually as low as $2,000 for an individual and $3,000 for a married couple.
Why Would I Need Medicaid Benefits?
If you have made it through your entire lifetime without ever needing to qualify for Medicaid, why would you need to now? The answer usually lies in the need for long-term care. Nationwide the cost of long-term care (LTC) runs about $80,000 a year and the average length of stay runs 2.5 years. Unfortunately, your basic health insurance policy will not likely cover LTC expenses unless you purchased a separate rider at an additional cost. Medicare also excludes LTC expenses except in the narrowest of circumstances, and even then only for a short period of time. The good news is that Medicaid will help pay for your LTC expenses, if you qualify for Medicaid benefits.
Why Would I Not Qualify for Medicaid Benefits?
With an asset, or “countable resources” limit as low as $2,000 it is easy to see how many seniors would not qualify for Medicaid benefits. Although some common assets are not included in your “countable resources,” such as a primary residence, it is still easy to see how you could have accumulated a nest egg valued at over $2,000-$3,000 over the course of your working lifetime. Simply transferring your assets to loved ones isn’t a viable solution to the countable resources problem either because Medicaid uses a five-year “look-back” period. The look-back period basically allows Medicaid to review your finances for the five-year period prior to applying for benefits. If any asset transfers were completed for less than fair market value, the value of the asset will effectively be included back into your estate for the purpose of determining your eligibility for benefits. If your assets exceed the program limit you will have to sit through a waiting period, during which time you are expected to rely on, or “spend-down”, your assets to the point where you will qualify for benefits.
Can Medicaid Planning Help?
Ideally, Medicaid planning is included in your estate plan years ahead of the time you will likely need to qualify for benefits. That does not mean, however, that last minute Medicaid planning strategies cannot help you because they may very well be able to help you get yourself in a position to qualify for Medicaid benefits. For example, you may be able to convert a non-exempt asset into an exempt asset by using cash or investments to pay off a mortgage on your primary residence.
If you have questions or concerns regarding how to qualify for Medicaid, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.