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Medicaid Crisis Planning: Problems You Might Need Help to Solve

Posted by Daniel J. Eccher, Esq. | Apr 08, 2023

The end of the COVID-19 public health emergency has led to a return of Medicaid eligibility reviews nationwide. Medicaid (known in Maine as MaineCare), a state and federal program that helps people who are eligible pay for long-term and other medical care costs.

People often seek help with Medicaid planning in a health-care crisis – when they or a loved one become seriously ill or need nursing home care but can't afford it. According to Genworth, the average cost of a room in a nursing home in the Lewiston, Maine area is about $10,000 a month.

State laws and eligibility requirements for long-term care (LTC) may be hard to understand without advice. If you don't know what you're doing, you could make mistakes - and potentially waste tens of thousands of dollars! Experienced elder law attorneys, like those at LWP&E, can offer ways to qualify for Medicaid even while you protect your assets.

Common Medicaid Crisis Planning Problems Attorneys Can Resolve

Each state sets the maximum allowed income and assets for individuals and couples to qualify for Medicaid. Medicaid further separates assets as “countable” or “non-countable.” Countable assets include savings, retirement funds, and real estate other than a primary residence. Non-countable assets include household furnishings, two cars (one must be needed for a specific purpose, such as transportation to medical appointments), and a primary home. 

Beyond these categorizations and asset and income limits, Medicaid also explores how you've handled assets. For instance, Maine and other states have a five-year “look-back” period. This inquiry is when the Medicaid agency checks to ensure assets weren't transferred for less than fair market value. Medicaid assumes such transfers were made to become eligible and invokes a period of ineligibility for long-term care, called a "penalty period" - the length of which would be commensurate with the size of the gifts.

Based on whether the Medicaid enrollee is married or single, certain issues could arise over assets: 

  • Having too much money to qualify.
  • The potential need to avoid estate recovery for a home after the MaineCare recipient dies.

Some common scenarios that affect Medicaid eligibility:

  1. Gift-giving: Medicaid rules differ from tax laws. The MaineCare “look-back” regulations include assets given as gifts to persons other than one's spouse. For example, some parents consider giving cash to adult children before the parents need LTC. Depending on the size and number of gifts, the penalty could be significant. For some situations, Medicaid offers exceptions to these rules (for example, if the gift was given to a disabled person).
  2. Receiving an inheritance or other financial gifts: If your spouse or any disabled person gets Medicaid benefits and receives an inheritance, they could lose their coverage. To avoid penalties, depending on your situation, you may want to create a will that includes provisions for a Supplemental or Special Needs Trust (SNT). 
  3. Having too much money: You should be discerning about from whom you take advice about becoming "asset eligible" for Medicaid. Attorneys with knowledge of Medicaid eligibility rules can advise you on whether to “spend down” cash on non-countable assets or necessities, such as medical expenses or home improvements (if "aging in place" is possible). They can also guide you on how to pay a loved one for your care and still meet eligibility requirements. Keep careful records, such as receipts, to offer as proof that you followed the eligibility rules. 
  4. Homeownership: Estate recovery: In Maine, a primary residence is generally considered a non-countable asset, so long as the Medicaid applicant indicates that they have an "intent to return home." But Medicaid recipients who own homes lose that protection when they have no living spouse or dependents living in the home and they move into a facility permanently with no intent to return home. 

Once the owner dies, under federal law, the state must make a claim against the estate in what's called the "Estate Recovery" process. This process ends up having the effect of a lien on the home for the equivalent of the cost of Medicaid services the owner received. With the lien on the home, many families end up having to sell the home to pay the Estate Recovery claim. On the positive side, the State of Maine can't collect on an estate recovery claim if a surviving spouse, as a joint tenant, lives in the home (the state can attempt recovery in such cases after the surviving spouse dies). Another exception to the estate recovery process is if there is a disabled heir. 

There are many exceptions to these rules. Everyone's situation is different and requires a plan tailored to their needs. For legally sound strategies that shield your assets while you become eligible for MaineCare, consult a lawyer with knowledge of the rules. 

MaineCare Applications: Qualifying Before It's Too Late

From detailed forms to recording assets, the Medicaid application process can be complex. If you fail to meet the eligibility requirements or finish your application incorrectly, your benefits could be denied or delayed. 

In a health-care crisis, you or a loved one need medical attention as soon as possible. The best time to plan for LTC under Medicaid is more than five years before it's necessary. The second-best time is now. The sooner you work with an attorney, the faster you may qualify for benefits. Call (207) 377-6966 or contact us online

About the Author

Daniel J. Eccher, Esq.

Daniel J. Eccher, Esq. is the Managing Shareholder at Levey, Wagley, Putman & Eccher, P.A., in Winthrop, Maine. Dan's favorite problem to solve is helping clients figure out how to afford long-term care while having something left for their family.

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