Medicaid Eligibility Planning FAQ
In Ohio, Medicaid is administered by the Department of Job and Family Services (the DJFS). However, in order to qualify for federal reimbursement, the state program must comply with applicable federal statutes and regulations. So the following explanation includes both Ohio and federal law as applicable. The basic rule of nursing home Medicaid eligibility is that an unmarried applicant may have no more than $2,000 in “countable” assets in his or her name. “Countable” assets generally include all belongings except for (1) personal possessions, such as clothing, furniture, and jewelry, (2) one motor vehicle, (3) the applicant’s principal residence (if it is in Ohio), and (4) assets that are considered inaccessible for one reason or another. Prior to applying for Medicaid, an applicant can spend down “countable” assets by purchasing items or services for his or her benefit, such as clothing, a television or furnishings for the nursing home room, medical appliances not routinely covered by Medicaid or only covered at a minimal level (such as hearing aides, dental care), an irrevocable pre-need burial plan, care coordination, legal services, etc. [Top of Page]
A major rule of Medicaid eligibility is the penalty for transferring assets. There is a five-year “look-back” period from the time a Medicaid application is filed. [Top of Page]
Transferring assets to certain recipients will not trigger a period of Medicaid ineligibility. These exempt recipients include:
- A spouse (or anyone else for the spouse’s benefit);
- A blind or disabled child;
- A trust solely for the benefit of a blind or disabled child; or
- A trust solely for the benefit of a disabled individual under age 65 (even for the benefit of the applicant under certain circumstances).
Special rules apply with respect to the transfer of a home. In addition to being able to make the transfer without penalty to one’s spouse or blind or disabled child, or into trust for other disabled beneficiaries, the applicant may freely transfer his or her home to:
- A child under age 21; or
- A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home; or
- A child of the applicant who lived in the home for at least two years preceding the applicant’s institutionalization, and who provided hands-on care that allowed the applicant to remain in the home rather than be institutionalized.
Recently enacted legislation provides a very important escape hatch concerning the transfer penalty. A transfer can be cured by the return of the transferred asset in its entirety. The law is a bit murky on what happens if less than the original gift is returned. It may or may not cause a partial cure. [Top of Page]
Applying for Medicaid is cumbersome and tedious. Every fact asserted in the application must be verified by documentation. The application process can drag on for several months as the DJFS demands more and more verifications regarding such issues as the amount of assets and dates of transfers. If the applicant does not comply with these requests and deadlines on a timely basis, DJFS will deny the application. In addition, after Medicaid eligibility is achieved, it must be redetermined every year. This may require attendance at an interview with the DJFS Eligibility Specialist, at which time documentation of the Medicaid recipient’s current income and assets will be requested. It is essential that the Medicaid applicant’s total countable resources fall under $2,000 by the end of each month in order to maintain Medicaid eligibility. [Top of Page]
The state has the right to recover whatever benefits it paid for the care of the Medicaid recipient from any assets owned at his or her death. Given the rules for Medicaid eligibility, the only property of substantial value that a Medicaid recipient is likely to own at death is a home. Estate recovery is delayed if the Medicaid recipient is survived by a spouse or permanently disabled child of any age.
In addition, Ohio does not seek recovery against the estates of those decedents who owned long term care insurance when they entered the nursing home, provided the policy was an individual policy approved by the Division of Insurance and the Medicaid beneficiary states that he or she has no intent to return home. The law also provides exceptions to estate recovery when hardship can be proven. [Top of Page]