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About Medicaid in Washington State | WA Medicaid |
The thought of all one's assets being wiped out if nursing home care becomes necessary is frightening. It is important to be informed regarding the rules that apply when the State helps pay for nursing home care. By knowing those rules, one can plan ahead. Medicaid applies an "asset test" before a person can qualify for Medicaid paying for nursing home care as follows:
a) A single person is allowed $2,000, plus one car is exempt, no matter how much it is worth, if it is used for transportation for the Medicaid recipient or a member of the recipient’s household; a $1,500 burial fund or life insurance with a face value of $1,500 (or various combinations thereof) or an irrevocable prepaid burial plan; a burial plot; a home if the equity interest is not greater than $500,000 (however, the home will be subject to a Medicaid lien) and household furnishings and personal effects.
b) A
married couple, where one spouse is "institutionalized" on or after
August 1, 2003, is allowed: a) $2,000 plus b) the greater of $45,104 or
½ their assets on the first day of "institutionalization"** up to a
maximum of $104,400. In addition they are allowed at least one car, a
home and household furnishings and personal effects. Each spouse is
allowed a burial plot plus a $1,500 burial fund or life insurance with a
face value of $1,500 (or various combinations thereof) or an irrevocable
prepaid burial plan. The exemption for the home does not apply if the
equity interest is greater than $500,000 unless one of a few exceptions
apply. One of the exceptions is that the Medicaid recipient’s spouse
resides in the home. If nursing home care suddenly becomes necessary, many people immediately think, "I'll transfer my assets to my family so I can meet the Medicaid limits on resources." The problem is gifts*** made within 60 months of applying for Medicaid and (with a few exceptions) made to someone other than one's spouse will disqualify the applicant. This is called the 60-month "look-back" period. The period of disqualification before one can qualify for Medicaid is calculated by dividing the total gifts made in a month by the average daily cost of nursing home care (which as of 10/08 is $217 per day) and rounding down to the next whole number and the result is the number of days one will have to wait after one would be otherwise eligible for Medicaid to pay for long term care services based on an application approved by the Department of Social and Health Services.
The following are some options, other than dissolution of marriage, that a married couple has when nursing home care becomes necessary and the couple's assets exceed Medicaid's limits:
a) Many couples in this situation consider the purchase and annuitization of an annuity. This does not need to be done until shortly before application, but one needs to check the rules carefully. Some, but not all, of the requirements are that the annuity must be irrevocable, non-transferable, have no cash surrender value, and the payout term cannot exceed the life expectancy of the Medicaid applicant or spouse. If done correctly, the annuity will count as "income" and not as a "resource". On February 8, 2006, Congress made changes to the law on annuities including the possibility of the state needing to be a beneficiary of the annuity. It will not be clear until the state adopts its rules what the exact requirements will be.
b) Strategies involving the home are important. Options include paying off the mortgage, repairing and remodeling the home, or buying a larger home to protect excess assets. In addition, excess assets can be used to purchase household furnishings, appliances and a new car.
Once a spouse is on Medicaid, it is vital to review whether the couple still wants to use a Community Property Agreement. Most people will not want all assets to go to the institutionalized spouse (thus disqualifying him or her for Medicaid) if the healthy spouse dies first. Often, the healthy spouse will prefer to have a special needs trust in his or her will to take care of the Medicaid spouse. The couple also needs to consider whether transferring the home to the healthy spouse so that the State does not impose a lien is a strategy they wish to pursue.
Prior to one being in crisis, one should consider whether long-term care insurance is appropriate. Also, everyone should review whether their powers of attorney grant gift-giving powers, since that can be very helpful in dealing with Medicaid issues.
The rules regarding Medicaid disqualification are continuously changing**** and it is important to be as well informed as possible to be able to take advantage of the planning options that continue to be available.
Elizabeth A. Perry is a shareholder in the Vancouver law firm of Landerholm, Memovich, Lansverk & Whitesides, Inc., P.S. and has been helping Clark County residents since 1976. Her practice emphasizes estate planning, guardianships, probate and Medicaid planning. 805 Broadway, Suite 1000, Vancouver, WA 98660 (360) 816-2485
(The above should not be construed as specific legal advice and is intended for general information purposes only. Also, because Medicaid laws change constantly, review the status of the law at the time you take any action. This is especially important during the time prior to Washington State adopting its new rules.) _________________________________________
*President Bush signed new federal Medicaid legislation on February 8, 2006. The state of Washington is writing rules to implement Congress’ changes in Washington state. Those rules have not all been adopted yet. It makes planning prior to the adoption of the rules problematic. ** As defined by DSHS ***Gifts made prior to May 1, 2006 are subject to a different analysis. ****This article was last revised to reflect Medicaid rules for October 1, 2008.
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