To qualify for Medicaid, you must pass some fairly strict tests on the amount of assets you can keep.
To understand how Medicaid works, we first need to review what are known as exempt and non-exempt (or countable) assets.
Exempt assets are those that Medicaid will not include in the asset total to determine eligibility. In Georgia, the following are the primary exempt assets:
- Home Place: The applicant’s house and all adjoining land and all buildings on the property are excluded from resources if the equity value of the home is $525,000 or less.
- Household Goods: Household items including furniture, decorations, art, and appliances are excluded.
- Burial Exclusion: The applicant and his/her spouse can each have up to $10,000 designated for burial expenses. This can consist of a prepaid funeral contract with a funeral home or funds designated for burial in a bank account. The face value of life insurance is applied toward the burial exclusion amount first.
- Burial Space Items: Burial plots for the applicant and immediate family are excluded as well as certain other items at the burial site. There is no dollar limit on the cost or value of the burial space items.
- Life Estate Interests: The applicant’s life estate interests are excluded.
- Automobiles: One automobile is excluded regardless of value and whether or not it is in use. Note that junked or recreational vehicles are counted as resources.
- Personal Items: Personal items such as clothing and jewelry are excluded.
- Retirement Funds: Retirement funds such as IRAs, 401(k)s, and pensions are excludable resources if they are being distributed in periodic payments that include a portion of principal. These payments are counted as income in the month received.
- Non‐marketable Assets: Assets are excluded while the applicant is making a bona fide effort to sell the asset. A bona fide effort may be evidenced by an advertisement in the newspaper or a listing with a real estate agent. The property must be listed for no more than its current value, and the applicant must accept an offer if it is at least 2/3 of the current value.
Basically, all money and property and any item that can be valued and turned into cash, is a countable asset unless it is one of those assets listed above as exempt. This includes the following:
- Life Insurance Policies: The cash value of whole life or other life insurance policies is counted as a resource if the burial exclusion maximum has been reached with other assets.
- Investments: Stocks, bonds, mutual funds
- Checking Accounts
- Savings Accounts
- Certificates of Deposit
- Money Market Accounts
While the Medicaid rules themselves are complicated and tricky, for a single person it is safe to say that he or she will qualify for Medicaid so long as the total assets are either exempt and/or are less than $2,000 (the current limit in Georgia).
Some Common Questions:
I’ve added my kids’ names to our bank account. Do they still count?
Yes. The entire amount is counted unless you can prove that some or all of the money was contributed by the other person who is on the account. This rule applies to cash assets such as:
• Savings and checking accounts
• Credit union share and draft accounts
• Certificates of deposit
• U.S. Savings Bonds
Can’t I Just Give My Assets Away?
Giving may be possible; however, it is critically important that you have the advice of an elder care attorney well versed in Medicaid rules.
The law has severe penalties for people who simply give away their assets to create Medicaid eligibility. There is a look‐back period of five years. In Georgia, for example, every $5,627.08 (as of 2014) given away during the look‐back period prior to a Medicaid application creates a one‐month period of ineligibility.
Medicaid Planning For Married Couples
In Georgia, the at‐home or community spouse is allowed to keep all countable assets up to $117,240 (as of 2014). The amount of the countable assets which the at‐home spouse gets to keep is called the Community Spouse Resource Allowance (CSRA).
Each state also establishes a monthly income floor for the at‐home spouse. This is called the Community Spouse Maintenance Needs Standard (CSMNS). This permits the community spouse to keep a minimum monthly income of up to $2,931 (as of 2014).
If the community spouse does not have at least $2,931 in income, then he or she is allowed to take the income of the nursing home spouse in an amount large enough to reach the CSMNS (i.e., up to $2,931/mo). The nursing home spouse’s remaining income goes to the nursing home. This avoids the necessity (hopefully) for the community spouse to dip into savings each month, which would result in gradual impoverishment.
To illustrate, let’s assume the community spouse receives $800 per month in Social Security. Let’s also assume that her spouse who is a nursing home resident has an income of $2,500 per month from Social Security and his pension.
|$800.00||community spouse’s income|
|$2,131.00||amount to be diverted to community spouse|
In this case, the community spouse will receive $2,131 per month from the nursing home spouse’s Social Security and pension and the rest of the nursing home spouse’s income will then go to pay for the cost of his care. The nursing home spouse does get to keep a monthly personal needs allowance: a whopping $50!
Once again, this does not mean that there are not other planning alternatives that the couple can pursue.
Consider the following case studies.