Medicaid is a federally regulated, state-managed healthcare program.
Medicaid (known as "Medi-Cal" in California and "Mass-Health" in Massachusetts) is a joint federal/state health insurance program for seniors, people with disabilities, and children in low-income families. The federal government establishes rules under which Medicaid operates, but because Medicaid is managed by the states, programs will differ somewhat from state to state. Since President George W. Bush signed into law the Deficit Reduction Act of 2005 (DRA), cutting $40 billion from the Medicaid budget, more severe eligibility restrictions have been put into place.
Income Limits
Medicaid eligibilty income limits are linked to the Federal Poverty Level.
Eligibility income standards for Medicaid are based upon the Federal Poverty Level. In some circumstances, where medical expenses are exceptionally high, a person whose income exceeds the income limits can qualify for Medicaid as "medically needy." People in this group contribute part of their income to their medical care in the form of a deductible.
Nursing Home Residents' Eligibility
Value of assets is a factor in determining eligibility for Medicaid.
For a nursing home resident to be eligible for Medicaid, she must have less than $2,000 in "countable assets." Countable assets do not include personal possessions, the home of residence (although some states have equity limits), one car (regardless of value), one additional car (if needed for health or self-support reasons), prepaid funeral plans (and some life insurance) and assets that are considered "inaccessible" for one reason or another.
Transfer Penalty
Transferring assets between husband and wife will not penalize eligibility. for Medicaid.
To prevent people from entering a nursing home on Monday, giving all their money away to a relative (or anyone else) on Tuesday and filing for Medicaid on Wednesday, the law includes a penalty for transferring assets without receiving fair value in return. For example, if medical care costs $5,000 per month and the Medicaid applicant had just transferred assets worth $100,000, the applicant will be ineligible for Medicaid benefits for 20 months (100,000/5,000 = 20). However, there are exceptions, such as transfers between spouses and/or between a parent and child.
Look Back Rules
Look-back periods are strict and calculated to the day.
Look-Back rules relate to the transfer penalty and apply to transfers made to anyone other than a spouse. It works like a "statute of limitations" on giving away or transferring assets. The look-back period for outright gifts (regardless of value) is three years; for transfers into a trust, the period is five years. If a person applies for Medicaid after the look-back period has expired, she will be eligible for Medicaid immediately.
However, if the application is made even one day shy of the look-back period, the entire penalty will apply. For example, if medical care costs are estimated at $5,000 per month and the Medicaid applicant gave a home valued at $300,000 to her niece, and it is determined that the Medicaid application was made two years and 364 days after the "transfer date," the applicant would have to wait out a transfer penalty of an additional five years (300,000/5,000 = 60 months = 5 years).
