The primary event today was spending some time with the Social Services director at the Caribou County Hospital in Soda Springs. The burning question was if dad has to go into the nursing home at some point in the future, how do we pay for it? What happens to mother? And her question: What happens to my house?
We did get some answers and also found that this is a complicated question. Maybe that’s just part of any program put together by compromise in Congress, later tweaked by Congress, with the rule making done by a bureaucracy. It’s probably too much to ask for it to be straight forward.
Long-term custodial nursing home stays can be paid by Medicaid for those who qualify. There are three specific tests to determine who qualifies: A Medical Necessity Test, an Income Test, and an Asset Test. To qualify the applicant must meet all three tests.
The Medical Necessity Test seems to be straight forward. A trained health care professional administers a Uniform Assessment Instrument. Based on that interview, the medical necessity is determined, which is a yes / no answer. There seem to be no shades of gray.
The Income Test is used to determine whether or not the person needing custodial care is capable of paying for that care themselves. Medicaid was intended to be the payer of last resort.
Finally, the Asset Test is used to determine whether or not sufficient assets are available to pay for the custodial care.
DISCLAIMERS: Medicaid, while a federal program, is administered by the states under the rules set up by the states. Consequently, the program in one state may be different than the program in another state. This description applies to the State of Idaho. Your mileage may vary. Further, I’m not a lawyer, let alone one skilled in Elder Law. What I describe may have no validity.
A few years ago Congress modified the Medicaid program to protect the spouse who does not need custodial care from being impoverished by the cost of a nursing home (I’ll call that spouse the Unimpaired Spouse and the spouse needing custodial nursing care the Impaired Spouse). The protection comes in the form of income protection and asset protection. During the Income Test, all income streams that are specific to each spouse are segregated from each other. For instance, social security pays a sum of money to the wage earner and a different sum of money to the wager earner’s spouse. Other incomes, however, may be in both of their names and are divided equally between the spouses.
The Unimpaired Spouse is guaranteed a monthly income. The actual guaranteed income will range from a floor of around $1,700 to about $2,400 depending on a rather convoluted formula. If the actual income stream for that spouse, after dividing up all the incomes, falls below the floor, income is subtracted from the Impaired Spouse’s ledger and added to the Unimpaired Spouse’s ledger. However, the Unimpaired Spouse’s income can never exceed the total income that they had.
Assets are treated in a similar way. Some assets are exempted, such as home equity up to $750,000, one car, necessary household furnishings, $1,500 in life insurance, irrevocable funeral trusts, and some other minor assets. Everything else, such as bank accounts, savings accounts, CD’s, savings bonds, stocks and bonds, gets divided between the spouses.
It was interesting to me that life insurance policies were very important. The State of Idaho wants to be reimbursed for their Medicaid expenses and doesn’t want life insurance being paid after the recipient has died.
So, the income is divided up between the Impaired and the Unimpaired Spouse and the assets are also divided up in a similar manner. If the Impaired Spouse has income of less than $1,913 (in Idaho), and meets the Medical Necessity Test, then that spouse qualifies for Medicaid. If the Impaired Spouse has $2,000 or less in assets, than that person qualifies immediately.
If there are more than $2,000 in assets, then those assets have to be used first to pay for the custodial nursing care and Medicaid payments are delayed until the assets are used up.
If the Impaired Spouse has more than $1,913 in income, then a “miller trust” has to be set up and all income over $1,913 has to go into that trust. The trust is liquidated upon the Impaired Spouse’s death. The difference between what the nursing home cost and what the Impaired Spouse paid is taken from the trust to reimburse the state. Any excess is then paid into the estate.
While this is only a summary and I’m sure there is still a lot of devil in the detail, we were quite relieved at what we learned today. Dad will definitely have less than $1,913 in income and with mother’s income protected at $1,700 or more, she’ll be able to live comfortably. Half their savings and bank accounts are also protected, so she also has a cushion.
The last question was the house. While the Medicaid legislation exempts the home equity up to $750,000 from the Asset Test, it doesn’t protect the house in the end. When the Impaired Spouse dies, the State of Idaho is required by 1993 Congress legislation to recover as much of the Medicaid expenditure as possible from the estate of the deceased.
They do that by placing a lien on the house to the amount of money that Medicaid has paid for the custodial nursing care. When the house is sold, the lien is satisfied first and any excess can go into the estate. With appropriate wills, the house doesn’t go into probate until both spouses are either deceased or not living in the home. So, in the end the house is probably lost, but not while either spouse is alive, and that is goodness.
We’re starting the next steps with my dad. We’ll gather the data for the Income and Asset Tests and be prepared for that activity. We’re thinking that we should do whatever repairs on the house are needed and spend some of their savings in that manner rather than having to pay them down to the nursing home.
Suggestions are welcome! Please leave your comments.