Jan Neal Law Firm, LLC

Alabama Estate, Elder and Special Needs Law

Category Archives: Medicaid


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Public Health Emergency Ends Soon – Protect Your Medicaid Benefits

Congress enacted the Families First Coronavirus Response Act (FFCRA) in March 2020. The FFCRA prohibits states from disenrolling Medicaid recipients until the public health emergency (PHE) ends. In addition to the ban on disenrollment, the FFCRA stopped the redetermination of eligibility. This kept more than 20 million people covered by health insurance during the COVID-19 pandemic.

The PHE has been extended several times. The latest extension expires on January 11, 2023.

When the PHE ends the FFCRA provisions that keep low-income people insured will end, leaving many people without benefits after the redetermination of eligibility resumes. During the PHE States could only disenroll people if they were no longer a state resident or if the recipient voluntarily left the program. But after the PHE ends procedures will return to pre-pandemic business as usual requiring people to renew their Medicaid coverage every year by confirming to state officials that they still meet income and other eligibility requirements. Change in income and/or resources could render some Medicaid recipients no longer eligible for benefits. Having an outdated address with Medicaid could also result in a loss of benefits if the person on benefits cannot be located for a redetermination. 

The Alabama Medicaid Agency warns that you need to have your current address on file with the agency in order to receive notice of changes in benefits. Otherwise recipients could show up at a doctor’s office or pharmacy to find out their coverage was cancelled because they did not complete their Medicaid renewal form.

Go to this publication for Alabama Medicaid’s notice of Planning for the COVID-19 PHE Unwinding:

https://medicaid.alabama.gov/documents/7.0_Providers/7.11_COVID-19_Information_For_Providers/7.11_Partner_Communications_COVID-19_PHE_Unwinding_7-28-22.pdf


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2023 Guidelines for Protecting Spouses of Medicaid Applicants

The Centers for Medicare & Medicaid Services (CMS) has released the 2023 federal guidelines for how much money the spouse of an institutionalized Medicaid recipient may keep to protect himself or herself when a spouse enters a nursing home and qualifies for Medicaid.

What Are Spousal Impoverishment Rules?

Spousal impoverishment is a concern for couples when there is one spouse who requires long-term care and applies for Medicaid. Before the federal government enacted spousal impoverishment protections, many healthy spouses faced poverty when their partners needed long-term care. The spousal impoverishment rules are based on the idea that spouses will provide for each other.

Community Spouse Resource Allowance

In 2023, the spouse of a Medicaid recipient living in a nursing home who is living at home (called the “community spouse”) may keep as much as $148,620 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care. That is an increase from 2022’s cap at $137,400.

Known as the community spouse resource allowance (CSRA), this is the most that a state may allow a community spouse to retain without a hearing or a court order. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2023 will be $29,724. That amount is up from 2022’s $27,480.

Monthly Maintenance Needs Allowance

Meanwhile, the maximum monthly maintenance needs allowance (MMMNA) for 2023 will be $3,715.50 (up from $$2289 in 2022). This is the amount of monthly income that a community spouse can bring his or her income up to by routing some of the institutionalize spouse’s income home for the use of the community spouse. That number will not go into effect until July 1, 2023.

According to Medicaid law, the community spouse may keep all their own income, even if it exceeds the maximum monthly maintenance needs allowance.

The new spousal impoverishment numbers (except for the minimum monthly maintenance needs allowance) take effect on January 1, 2023.

Home Equity Limits

In 2023, a Medicaid applicant’s principal residence will not be counted as an asset by Medicaid if the applicant’s equity interest in the home is less than $688,000. States have the option of raising this limit to $1,033,000. In 2022 that maximum equity interest limit is $955,000.


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Medicaid Estate Recovery Presentation

You can access the training presentation on Medicaid Estate Recovery in Alabama given today for the Middle Alabama Area Agency on Aging’s Take a Stand for Caregivers series at this web site. You can read or download the presentation.


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Medicaid Estate Recovery Training

I will be providing training on Alabama Medicaid Estate Recovery on Tuesday, 09/20/22, at 10:00 a.m. Central time. If you feel like you could benefit from information on this topic be sure to register with the Middle Alabama Area Agency on Aging. Free CEUs are being offered for social workers, nursing home administrators, occupational therapists and physical therapists.

We will be examining how estate recovery works in Alabama, and who is at risk for losing property to repay benefits Medicaid pays on their behalf.


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Medicaid Caregiver Child Transfer Exemption

When a person applies for Medicaid the agency looks back at transfers the applicant made during the previous five years to determine if any property was given away or transferred for less than the value assigned by Medicaid.  If so, a transfer penalty is incurred, and that means Medicaid will not pay for care for a length of time based on how much was transferred. 

There are some permissible transfers allowed by law resulting in no penalty being imposed. These include:

The home when a child under 21, blind or disabled lives there;
The home when a sibling with an equity interest was residing there for at least one year prior to the institutionalization;
The home when a son or daughter of such claimant who was residing in the applicant’s home for a period of at least two years immediately before the date of applicant’s admission to the medical institution or nursing facility, and who provided care to such claimant which permitted the applicant to reside at home rather than in an institution or facility (the caregiver exemption);

Transfers of money into a Special Needs Trust.

Looking more closely at the caregiver child exemption, you often see children who have lived with the parent for many years to keep them safe at home and out of a nursing home who are concerned about their own security when the parent applies for Medicaid.  If the child can meet the caregiver child standard, the home can be transferred to him or her without penalty, but often there is debt on the home preventing a transfer.  The lesson here is to pay off debt on the home as quickly as possible to be able to take advantage of the caregiver child permissible transfer.

If the transfer cannot be done, and the parent goes in a nursing home, the property counts as a resource.  But if the parent receives Home and Community Based Services through Medicaid the house does not count as a resource until the parent dies.  At that time Medicaid will claim what it paid for the parent through Medicaid Estate Recovery.  The only good news here is the estate recovery can be delayed until the caregiver child no longer lives in the home.    


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Avoid The Ultimate Co-mingling of Assets

It is standard advice to avoid co-mingle property of an older relative with your own money because it may be necessary to prove what belongs to each.  For instance, if your relative needs to apply for Medicaid it may be difficult to provide a clean trail of his or her assets and expenditures for five years prior to application as is required by Medicaid.

But the ultimate co-mingling is when families live on property owned by the older relative who never partitioned the property to deed individual parcels to the children or grandchildren. It is not unusual to see families who live and operate businesses off the property of an aging mother, father, or grandparent.  This can provide a great family support system and work for all parties involved.  Until it doesn’t. 

If the aging parent becomes sick enough to need nursing home placement and there are not enough liquid resources to pay for that, then the property will need to be liquidated to provide income to pay for nursing home care or to spend down assets before qualifying for Medicaid.  This leaves the relatives living on the property in a very precarious position.

If you are in this position, get legal advice now about what you can do to protect yourself and your aging relative before it becomes an emergency.     


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How Gift Giving Can Affect Medicaid

If you will need Medicaid to pay for long-term care for you or your spouse in the next five years, you need to be careful with gift giving because giving away money or property can interfere with your eligibility. 

Under federal Medicaid law, if you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time (called a transfer penalty), depending on how much money you transferred. Even small transfers can affect eligibility. While federal law allows individuals to gift up to $16,000 a year (in 2022) without having to pay a gift tax, Medicaid law still treats that gift as a transfer.  In fact, for every $6600 you give away you will incur a one month period of ineligibility for Medicaid. A month of penalty means Medicaid will not pay for your care, no matter how destitute you are.    

Medicaid reviews all bank records for five years prior to application. Any transfer that you make, however innocent, will come under scrutiny. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it could affect your Medicaid eligibility down the road. Similarly, gifts for Christmas, weddings, birthdays, and graduations can all cause a transfer penalty, however reasonable gifts are usually allowed. If you buy something for a friend or relative, this could also result in a transfer penalty.  Also selling property for less than the tax assessor’s appraised value is considered an uncompensated transfer of the amount for which you sold the property for less than the tax value.  You will need documentation showing that you received fair market value in return for a transferred asset to avoid incurring a penalty. Repaying a debt not supported by a promissory note will also be considered a transfer subject to a penalty.

While most transfers are penalized, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:

  • your spouse
  • a trust for the sole benefit of your child who is blind or permanently disabled
  • a special needs trust for the benefit of the Medicaid applicant

In addition, special exceptions apply to the transfer of a home. The Medicaid applicant’s home may be transferred to the following individuals without incurring a transfer penalty:

  • A spouse
  • A child who is under age 21
  • A child who is blind or disabled (the house does not have to be in a trust)
  • 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
  • A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.


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Medicaid Spousal Income Allowance Increase

Medicaid’s maximum monthly maintenance needs allowance (MMMNA) changes every July.  This is the most in monthly income that a spouse living at home (known as the community spouse) is allowed to have when his or her own income is not enough on which to live, allowing him or her to take some or all of the institutionalized spouse’s income. The minimum monthly maintenance needs allowance as of July 2022 for Alabama is $2289 (up from $2178)  As an example, a community spouse who has income of $1500 whose spouse entering the nursing home has $2200 in income, would be allowed to keep $789 of the institutionalized spouse’s income each month – enough to bring his or her income up to $2289.

As for resource limits established every January, in 2022 the community spouse may keep as much as $137,400 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care. Known as the community spouse resource allowance or CSRA, this is the most that a state may allow a community spouse to retain. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2022 is $27,480.  As of January 2022 Alabama allows the community spouse to keep one-half of the couple’s resources, not to exceed the maximum of $137,400.

If nursing home care is anticipated in the future it is important to calculate the income and resources of a couple to determine the financial impact long term care will have and to plan to retain as much as possible and still qualify for Medicaid coverage.     


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Supreme Court Rules Medicaid Can Recoup a Larger Share of Injury Settlements

If you are injured due to another person’s negligence and receive Medicaid benefits to pay for care, the state has a legal right to recover the funds it spends on your care from a personal injury settlement or award. Yet in a legal case involving a Floridian teen who was catastrophically injured more than a decade ago, the U.S. Supreme Court this week ruled that states have the right to recover funds that they may spend on future medical expenses, too. 

The decision affects anyone who receives medical care through Medicaid after suffering a disabling injury that results in a lawsuit.  

In 2008, a truck struck 13-year-old Gianinna Gallardo, leaving her in a vegetative state. The state’s Medicaid agency provided $862,688.77 in medical payments on Gallardo’s behalf. Her parents sued the parties responsible, and the case eventually settled for $800,000, of which about $35,000 represented payment for past medical expenses. The settlement also included funds for Gallardo’s future medical expenses, lost wages, and other damages. 

The state Medicaid agency claimed it was entitled to more than $300,000 in medical payments from this settlement, including money that had been specifically allocated for Gallardo’s future medical expenses. 

Gallardo’s parents then sued the agency in federal court, arguing that the state of Florida should be able to recover monies only from that portion of the settlement allocated for past medical expenses. 

When a U.S. district court ruled in favor of Gallardo, the Medicaid agency appealed. A court of appeals reversed the lower court’s decision. Ultimately, the U.S. Supreme Court agreed to hear the case to resolve the conflict. 

In a 7-2 decision, the Supreme Court agreed that the state is allowed to recover benefits for past — as well as future — medical care. Justice Clarence Thomas, who wrote the majority opinion, noted that Medicaid law “distinguishes only between medical and nonmedical care, not between past (paid) medical care payments and future (un-paid) medical care payments.”  

Justices Sonia Sotomayor and Stephen Breyer dissented. They argued that accepting Medicaid shouldn’t leave a beneficiary indebted to the state for future care that may or may not be needed. 

To read the full decision, click here.


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Medicaid Personal Liability

When Nursing Home Medicaid eligibility has been established there is an amount of income that the nursing home resident must pay directly to the nursing home.  After that amount is paid Medicaid picks up the difference in that personal liability and the nursing home Medicaid rate for room and board.    

Before paying the personal liability Medicaid will allow the resident to keep:

  • The personal needs allowance of $30 per month;
  • The spousal minimum monthly maintenance needs allowance (enough money to bring the income of the spouse at home up to $2178);
  • Family maintenance needs allowance (a similar allowance for minor or dependent adult child, a dependent parent or a dependent sibling of either spouse);
  • Costs of necessary medical or remedial care not covered by a third party (e.g. Medicare Part B premium).

These allowances are made to the extent the resident’s income can cover them.  It is entirely possible for the patient to exhaust his or her income before paying any personal liability at all to the nursing home.

It is important to remember that during the time a Medicaid application is pending the resident should pay the estimated personal liability or risk receiving a bill for this amount from the nursing home.  After eligibility is established Medicaid will publish the exact personal liability to use.

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