What About Medicaid?

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What About Medicaid

Medicaid is a welfare assistance program for low-income individuals. It is also one of the largest sources of funding for long-term care expenses. Medicaid pays for nursing home costs, home health care and prescription drugs. Two-thirds of all nursing home residents rely on this government program.

The federal and state governments jointly fund Medicaid. The primary responsibility for administering Medicaid, however, resides with each individual state. Therefore, rules governing benefits and eligibility will vary from state to state.

Generally, a person’s assets must be at or near poverty level to qualify. In most states, this means $2,000 to $3,000 of assets if the person is single. If the individual needing care is married, the assets of both are pooled and a higher amount of assets can be retained. This amount varies by state; many will use $80,760 in 1998. Check with your state for the exact assets a couple may keep and still qualify for Medicaid.

There are some assets that will not count against the married couple. For example, a couple may also retain a home, automobile, household and personal belongings and some other minor items. These assets can be kept in addition to the dollar amount allowed by the state.

In addition, a monthly allowance may be retained. For the single individual, this number is usually under $100/month. The married couple can retain a higher amount, not more than $2,000/month, but the amount varies greatly by state. Check your state for the specific amounts.

Some individuals have utilized some timely asset transfers to qualify for Medicaid without having to first spend assets. However, the Health Insurance Portability and Accountability Act (HIPAA) specifically outlawed this practice of divesting assets to appear "poor on paper". In addition, individual states have passed an "Estate Recovery Act" which allows the state to bill the next generation for Medicaid expenses of a parent. This bill collection is now being enforced. Thus, reliance on Medicaid should only be done as a last resort by those individuals who have few assets to protect.