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PAYING FOR LONG-TERM CARE: MEDICAID IN ILLINOIS Unlike Medicare, Medicaid is a government program which pays medical costs and long-term care costs. Medicaid is designed as a payor of last resort, however, and to qualify you must meet strict financial and other eligibility requirements. The rules governing Medicaid are complex, and frequently change, requiring great care in the planning and application for benefits. In fact, On February 8, 2006, the federal Deficit Reduction Act was signed, significantly changing the rules governing Medicaid eligibility. However, Illinois has not yet adopted these rules.
An individual applying for Medicaid in a nursing home can have only $2,000 in total assets, plus an irrevocable burial fund of any reasonable amount and certain exempt assets (a car, clothing, etc.). Income must also be contributed toward the cost of care, and an individual in a nursing home is entitled to keep only a $30.00 per month allowance. If the individual owns a home that is occupied by his or her child who is under the age of 21, or certified blind or disabled, the home is not included in the total asset calculation and is not subject to a Medicaid lien. If the Medicaid applicant is married, and enters a nursing home while the other spouse remains in the community, the “community spouse” may keep $109,560 in addition to the home. The spouse in the nursing home is entitled to keep only a $30.00 per month allowance while the “community spouse” is allowed a minimum income of $2,739.00 per month, with adjustments for certain items. Without proper planning, all assets and income above these levels must be spent on care or on exempt items before Medicaid will pick up the tab.
Individuals seeking to obtain Long-Term Care services outside a nursing home must navigate a different set of Medicaid eligibility for rules, depending on the type of services required. One of the primary goals expressed by our clients is to remain in their own homes or at least in the most independent setting possible. Navigating the maze of community care requires an in-depth knowledge of the services available in the home, and in adult homes and assisted living facilities, and an ability to manage income and resources to maximize their value, while utilizing Medicaid services wherever available to supplement the care provided by the individual and their family.
What if an individual gives assets away in order to qualify? As you might expect, there are rules governing such transfers. When one gives money or property away, that individual and their spouse will be ineligible for “institutional” Medicaid for a certain number of months, known as a “penalty period.” Exceptions are made for transfers to a spouse or a disabled child and for certain transfers of the home to siblings or caretaker children. The transfer of asset rules does not currently apply to Community Based Medicaid, leaving open the possibility of transferring assets and qualifying for Medicaid immediately; however, if the individual later needs “institutional” Medicaid, the prior transfers may cause a penalty period for such Medicaid services. How far back does Medicaid look to find asset transfers, or what is the “look-back” period? When applying for Medicaid, the Illinois Department of Human services will ask for financial records, bank statements, tax returns, etc. for the past 36 months, or 60 months for transfers to trusts, and would question transactions within that time frame. A thorough analysis of all transactions within the look-back period must be undertaken prior to filing for Medicaid. How is the penalty period calculated? When does the penalty period begin to run in Illinois? The penalty begins to run from the date of a nonexempt transfer of assets. Note, however, that if Illinois adopts the new Federal rules, the penalty period would begin to run from the date of Medicaid application.
How does Medicaid treat Trusts? Decisions regarding the use of a trust as part of a Medicaid plan require careful review of an individual’s circumstances. Can Medicaid recover from a beneficiary’s estate? States are required to seek recovery of benefits paid to a Medicaid recipient from his or her estate. It has been left to each individual state to determine what assets will be included in the “Medicaid estate,” which could conceivably include assets held in trust, and other partial transfers, such as deeds with retained life estates. Can Medicaid recover from a community spouse’s estate? If assets are held by a community spouse, the state may have rights to recover for Medicaid paid on behalf of the applicant spouse. These rules are evolving, and must be analyzed in each case. At Kaufman Law Group in Northbrook, Illinois, we follow the changes in Medicaid rules very closely. With decades of experience in estate planning and helping clients with long-term care planning, we can help you navigate through these complex rules. Our estate planning team has counseled clients in Arlington Heights, Buffalo Grove, Deerfield, Des Plaines, Elk Grove Village, Evanston, Glenview, Gurnee, Highland Park, Lake Forest, Libertyville, Lincolnshire, Niles, Northbrook, Oak Brook, Palatine, Schaumburg, Skokie, Waukegan, Wheeling, Winnetka, Wheeling, and all cities within Cook County, DuPage County (Wheaton, Naperville), Lake County, Kane County (Geneva, Aurora, Elgin), and McHenry County. |
