Medicaid planning is an important consideration for many people as they age. Questions often arise as to how one will pay for long term care if needed, or whether their home will be “taken” by the State or a nursing home if they cannot afford nursing home care. Medicaid Laws are complex, but with the right strategic planning, it is possible to protect some of your assets while allowing for Medicaid eligibility.
What Is Medicaid
New Hampshire Medicaid (Medical Assistance) is a federal and state funded health care program that covers individuals and families meeting certain eligibility requirements. The Department of Health and Human Services is the state agency overseeing and administering Medicaid services. If deemed eligible, New Hampshire Medicaid will cover the cost of long-term care in a nursing home for eligible New Hampshire residents who require nursing home facility level of care. Nursing home coverage includes payment for room and board, as well as all necessary medical and non-medical goods and services.
Medicaid Planning
Medicaid planning involves structuring your finances in such a way that allows you to qualify for Medicaid to cover long-term healthcare costs without depleting all your assets. There is a delicate balance between meeting Medicaid’s strict eligibility criteria and maintaining enough resources to support your spouse or family’s ongoing living expenses.
Nursing Home Medicaid Eligibility
In New Hampshire, to meet Medicaid eligibility requirements for long-term nursing home care, you must meet certain non-financial and financial criteria. The non-financial criteria for seniors in need of long term care are straightforward: (1) you must be age 65 or older; (2) you must be a resident of New Hampshire; and (3) you must attest to US Citizenship or acceptable immigration status.
The financial criteria are more complex and consist of limits on your income and resources, each factor considered separately. An individual who meets the income requirements is deemed income-eligible. An individual who meets the resource requirements is deemed resource-eligible. To be financially eligible for Medicaid benefits, you must meet both income and resource requirements.
Income Limits
In New Hampshire, an individual is considered income eligible for long term nursing home Medicaid coverage if his or her gross income is lower than the Medicaid reimbursement rate for their nursing home facility. If married, the community spouse’s income is not considered when determining the applicant’s (institutionalized spouse’s) income eligibility. The applicant is entitled to certain deductions, to include, court ordered alimony and child support, student loans, personal loans, business loans and debt owed to the IRS.
In some cases, the institutionalized spouse is allowed to allocate some of his or her income to their community spouse, provided the community spouse's income is insufficient to maintain their living expenses. An allocation of income to the community spouse is allowed if the institutionalized spouse meets all the following criteria:
- Is married or legally separated, with the spouse residing in the community;
- Voluntarily agrees to make their income available to the community spouse;
- Is likely to be institutionalized 30 consecutive days or more; and
- Resides in an institution that:
- is either a hospital, skilled nursing, or intermediate care facility;
- provides medical care, including nursing and convalescent care; and
- is authorized under state law to provide medical care.
An institutionalized spouse is also allowed to allocate income to their dependents if they reside with the community spouse under certain conditions.
Resource Limits
To be deemed resource eligible for Medicaid nursing home coverage in New Hampshire, an individual can only have a certain amount of “countable resources.” A single Medicaid applicant whose resources exceed the allowable resource amount is not eligible until they “spend-down” their resources.
For married applicants, all assets are counted for both spouses, regardless of the identity of the owner, form of ownership, or whether the applicant is subject to a prenuptial or postnuptial agreement. As a result, the community spouse’s “separate” assets are deemed available to the institutionalized spouse, for purposes of determining resource eligibility.
Currently, New Hampshire law allows the community spouse to retain one-half of the couple’s countable assets, up to a certain amount. This amount is scheduled to increase each January in accordance with increases in the federal consumer price index (CPI). For married couples with countable assets above the resource limit, the law requires that all but the amount allowed to be retained by the community spouse, plus the institutionalized spouse’s permitted resource limit, be spent before the institutionalized spouse can obtain Medicaid coverage for nursing home care.
Countable resources for purposes of determining Medicaid eligibility include, but are not limited to, checking and savings accounts, certificates of deposit, NOW accounts, credit union accounts, nursing home patient accounts, automatically reinvested dividends, IRAs, Keogh plans, life insurance, stocks, and most trust accounts. Nonrecurring or lumpsum payments including inheritance, lottery winnings and insurance claim proceeds are also considered.
Noncountable assets for purposes of determining Medicaid eligibility include, income producing property not occupied by either spouse, the primary residence of the applicant’s spouse, or blind, disabled or minor child, provided the residence is not in a Trust, jointly owned real estate when the co-owner refuses to sell, items necessary for everyday living, to include furniture, furnishings, appliances, clothing and jewelry, one motor vehicle, and tools, equipment, farm machinery, livestock.
For single applicants owning real estate, if otherwise eligible for Medicaid, but for owning their home, Medicaid benefits would be immediately available, but the applicant would be required to sell the property within six (6) months. The net proceeds of the sale would then become a countable resource, rendering the applicant ineligible for Medicaid until the proceeds are spent down.
Transfer Of Assets Rules
An individual seeking Medicaid coverage cannot simply transfer or gift their assets to avoid resource ineligibility. Upon applying for Medicaid, the Department of Health and Human Services will consider all transactions made up to 60 months (the “look-back period”) prior to the application for Medicaid. Assets cannot be given away or sold for less than fair market value during this 60-month period and if they are, a penalty period of Medicaid ineligibility will be imposed. The length of the penalty period is based on the amount a Medicaid applicant (or their spouse) gifted / sold under fair market value and the average cost of privately paid nursing home care. Essentially, the penalty is equal to the length of time one would have been able to pay for long-term care had money not been gifted or assets sold under fair market value.
What Does It Mean To “Spend-Down” Resources?”
There are several available methods to meet the Medicaid spend down requirement, other than simply privately paying for nursing home expenses until your excess resources have been depleted. Resources can be used for purchasing, remodeling or repairing a home for the community spouse, acquiring a new vehicle, paying off a mortgage, purchasing new furniture or appliances for the home or the nursing home, buying new clothes, or setting up a prepaid irrevocable funeral plan.
The Importance Of A Resource Assessment
An important first step for married couples faced with one spouse’s requirement for nursing home placement is to request a resource assessment or inventory of the couple’s assets at the Department of Health and Human Services. The request for the resource assessment should be made at the beginning of either spouse’s “first continuous period of institutionalization”. The resource assessment calculates the total value of the couple’s assets and each spouse’s share. It is an extremely important planning tool which can prevent the couple from spending down more assets than necessary or protecting less of their resources than the law allows.
After this “snapshot” of the assets is taken, the excess assets, if any, must be spent down before Medicaid eligibility is established. The community spouse’s resource allowance and the spend down amount should be calculated before the couple begins to deplete their assets by paying nursing home bills thereby protecting as much of the assets at the law allows. Medicaid laws presume that transfers made for less than adequate consideration, or fair market value, were made for the purpose of qualifying for Medicaid, and thus will be deemed disqualifying transfers.
Applying For Medicaid
Applying for Medicaid in New Hampshire can be complicated, particularly since there are several programs relevant to aging seniors. It is important that an applicant is certain that all eligibility requirements are met prior to beginning the application process. Not meeting the criteria can result in a denial or delay of Medicaid benefits. For seniors who are uncertain of their eligibility status or know whether their financial means exceed the income and / or asset limits, Medicaid planning is important.
When To Seek Professional Guidance
An elder law attorney can play a vital role in Medicaid planning and can provide expert guidance based on your unique financial situation and goals. The attorney can help structure your assets to meet eligibility requirements without compromising your family’s financial future. This might include setting up trusts, converting countable assets into exempt assets, and making appropriate transfers. Finally, the attorney can complete Medicaid applications which can be complex and tedious. Knowing that an experienced professional is handling your Medicaid planning provides reassurance that your case is managed correctly, allowing you to focus on your health and your family.