Medicaid Planning Basics

At some point in the future, it may be necessary for you or someone you care for to be admitted to a nursing home. The average cost of nursing home care for self-payer patients in New Hampshire is approximately $9,000 per month or $108,000 per year. One way to pay such costs is to qualify for Medicaid, which has both a financial eligibility requirement as well as a medical eligibility requirement. Medicare does not cover long-term costs for nursing home care.

Financial Eligibility

To determine eligibility for Medicaid’s long-term nursing facility coverage, Medicaid looks at both an individual’s monthly income as well as countable resources.

A. Income Eligibility

In New Hampshire, an individual in a nursing home will be income eligible for Medicaid if the individual’s income is lower than the Medicaid reimbursement rate for the particular nursing home in which the individual resides. The Medicaid reimbursement rate varies from facility to facility, and year to year. Currently the average rate is approximately $4,800 per month.

For couples, the income of the healthy spouse is not counted when determining the applicant’s income eligibility

B. Resource Eligibility

In order to be resource eligible for Medicaid, a single person can have no more than $2,500 in countable resources. A Medicaid applicant whose resources exceed $2,500 will not be eligible and will be required to spend his/her assets down to that level.

There are certain assets that are not countable when determining Medicaid eligibility. Most notably, for a single person, the principal residence is not a countable resource as long as it is not in trust and the equity value in the residence is less than $543,000. A lien may be placed on the house, however, and when the house is sold, the cost of the nursing home care will need to be reimbursed to the State from the net sale proceeds. Other assets not countable include, but are not limited to, an individual’s furniture, personal belongings, one motor vehicle, and other household items necessary for daily living.

There is an entirely different resource calculation when the individual applying for Medicaid is married. Currently New Hampshire permits the healthy spouse to retain effectively one-half of the marital assets up to a maximum of $117,240. Any excess amount over and above the amount permitted for the healthy spouse must be “spent down” before the applicant will be eligible for Medicaid.

In order to prevent individuals from purposefully impoverishing themselves in order to qualify for Medicaid, federal law requires the Department of Health and Human Services to review an applicant’s historical financial records to identify potentially disqualifying transfers that have occurred within the past five (5) years (i.e. the “five year look back”). Gifts or transfers made for less than fair market value are presumed to have been made to reduce countable resources to become Medicaid eligible. Gifts and transfers made for less than fair market value within the five (5) year look-back period result in a period of ineligibility for Medicaid. There are some exceptions to that rule, most notably, transfers of assets between spouses.

Medical Eligibility

To be eligible for Medicaid’s long-term nursing facility coverage, an individual must require 24 hour a day care for one or more of the following purposes:

(1) medical monitoring and nursing care which requires the skill of a licensed medical professional;

(2) restorative nursing or rehabilitative care with patient specific goals;

(3) medication administration; or

(4) assistance with two or more activities of daily living involving eating, toileting, transferring, bathing, dressing, and continence.

Alternative to Nursing Home Care

In addition to general nursing home care, Medicaid will also provide assistance for seniors and adults with chronic illnesses and disabilities that would otherwise qualify for nursing home care, but who desire to remain living in the community. Individuals seeking to obtain such services can qualify for the Home and Community Based Care, Choices for Independence Program (HCBC/CFI). Individuals may be eligible for HCBC/CFI services if they are New Hampshire residents, over the age of eighteen, financially eligible for Medicaid, and require “nursing facility level care.”

The HCBC/CFI program provides the following services: adult family care services; adult in-home care; adult medical daycare; residential care services; supportive housing services; environmental accessibility adaption; home delivered meals; home health aide services; homemaker services; skilled nursing services; personal care services; personal emergency response system; caregiver respite services; specialized medical equipment services; and non-medical transportation services.

There is a significant difference between nursing home Medicaid and HCBC/CFI with respect to the treatment of spousal resources in order to be financially eligible under this program. For nursing home Medicaid, all assets of both spouses are subject to the spouse resource allocation rules. Under HCBC/CFI, only assets in the Medicaid applicant’s name are counted.

Fiduciary Responsibility

Effective July 2, 2013, a new statute gives nursing homes and assisted living facilities the right to sue individuals who receive assets without paying fair market value from a person who applies for Medicaid within five years of the transfer. Some well-meaning individuals may be caught in this new statute. Also troubling, the new law gives nursing homes and assisted living facilities the right to sue fiduciaries or other persons who assist a person with their financial affairs and fail to file a Medicaid application within the short time period required, resulting in a period of disqualification from Medicaid. If found negligent, the fiduciary or other person may be liable to the nursing home or assisted living facility for the resident’s cost of care at the Medicaid reimbursement rate and for the legal costs incurred by the nursing home or assisted living facility in bringing the lawsuit. Given this new law, fiduciaries or people helping family members, friends, and neighbors will be well advised to consult with elder law counsel to make sure they are properly managing a person’s finances and keeping good records if Medicaid might be necessary in the future to pay for such person’s long-term care.