What is Medicaid?
Medicaid or "medical assistance" as it is known in Pennsylvania is a public welfare program, which provides health care for individuals who are financially unable to obtain it themselves. Medicaid, among other things, can help elderly individuals pay for long-term care, which, if paying out of pocket, can completely deplete a person's resources.
What are the income and resource limits for Medicaid?
The numbers change every year. For 2014, if an individual receives less than $2,163.00 per month in income, then they can keep up to $8,000.00 in assets. If an individual receives income of $2,163.00 or more per month, then they can keep up to $2,400.00 in assets.
Can't I just give away my money so I can qualify for Medicaid?
No. In Pennsylvania, the law imposes a penalty for every transfer that a Medicaid applicant has made within the last five years for which they don't receive fair value in exchange. In other words, if a Medicaid applicant makes a gift of more than $500.00 per month, within five years of applying for Medicaid, they will be ineligible for benefits.
For example: You have a car worth $10,000.00. You decide to give it to your son as a gift. One year later, you apply for Medicaid. Even if you are otherwise eligible, you have made a gift in the amount of $10,000.00 within five years of applying for Medicaid. You will be ineligible to receive Medicaid benefits for a certain period of time.
Here's another example. You have a car worth $10,000. You decide to sell it to your son for $10,000.00. You then spend that $10,000.00 on your medical needs. One year later, you apply for Medicaid. As long as you meet the resource requirements, you can qualify for Medicaid. Why is this different? Because, rather than giving the car away, you sold it for fair value then spent the money on your own needs. This is perfectly permissible.
If I go on Medicaid, will the government take my house?
The government will not take your house while you are alive. The estate recovery program controls what property must be paid to the government after an individual who has been on Medicaid passes away. Many clients are concerned that they will not be able to leave their house to their children. As is often the case, whether your house will be subject to estate recovery depends on a number of circumstances. If you own the house in your name only or own it with your spouse, there is a good chance that the government will have a claim to your house and other property after your death.
What happens to my spouse when I go on Medicaid? How can I spend all of my money when my wife will be living at home?
The law allows a married couple to set aside approximately half of their total funds for the spouse who is not in a nursing home. This person who remains at home is called the 'community spouse' and the amount they can keep is called the 'community spouse resource allowance.' There is a minimum amount and a maximum amount that a community spouse can keep.
There is also something called a minimum monthly needs allowance, which ensures that the community spouse has a stream of income to rely on to meet their needs. Just because a husband is going into a nursing home does not mean that his wife will be left broke. With proper planning, we can ensure that the wife lives comfortably at home while her husband receives the care he needs in a nursing home.