Today Is World Parkinson’s Awareness Day: Medicaid Planning

As I have previously discussed, Medicaid could be a possible source of income for long-term health care planning. To qualify for Medicaid, a person needs to show that they have less than the disqualifying number of assets and income. Unfortunately, this determination is often complex “and varies from state to state.” Generally, to qualify, a person needs to be over the age of 65, show that they cannot afford the care they need, and show that they “have not made a non-allowable transfer of assets during a certain period of time before your application.”

One of the more important considerations that a person needs to make is that Medicaid is both a federal and state run program; therefore, many of the services that are offered can vary from state to state. Additionally, this means that qualifications for Medicaid also vary from state to state. Most states have adopted the simple rule that if a person’s “net income after adjustment for certain allowable deductions — is less than the cost of your care, you will be eligible for Medicaid.” Generally, a person cannot have more than $2000 in a bank account, but that person can still have their home, as long as its their Homestead property, personal effects, a burial plot, and any automobile worth $4,500 or less. A person can also have “an asset allowance for [their] spouse.”

Another important consideration is that there are techniques that exist that allow person to protect assets without losing that person’s Medicaid eligibility. In terms of transferring assets without losing a person’s eligibility, the requirements have become stricter with the passage of recent laws. For example, a person now has to report what they have done with their assets over the past 5 years. The general rule here is that people may not give away their assets to become Medicaid eligible. A person can still make normal transfers, but it cannot be done for the purpose of becoming Medicaid eligible. The rules say that a person can make transfers to benefit a disabled person directly or to a trust that benefits a disabled person. This exemption also includes transfers of homestead property. There are also certain types of trusts, OBRA Trusts, that allow a person to transfer their assets to the trust to qualify for Medicaid. However, the trust must be irrevocable, and the trust will need to reimburse Medicaid if the beneficiary of the trust passes away.

See Janna Dutton, Medicaid For Long-Term Care, Parkinson’s Disease Foundation, Spring 2011.

Special thanks to Cara Brewer (Texas Tech University School of Law, J.D. Candidate 2013) for bringing this article to my attention.