Reed: Medicaid lookback rules delay benefits

Sandra W. Reed
Special to the Reporter

Three years ago, Jacob and Rebecca transferred 50 acres worth $100,000 to their son, Benjamin. Their income is limited to Social Security monthly benefits of $2,100 to Jacob and $800 to Rebecca. Their savings were wiped out in 2008.

Their only assets are their homestead with its surrounding acreage and a 2015 Honda Pilot. The property is worth approximately $500,000. Rebecca has just placed Jacob in a nursing home. Can he qualify for Medicaid?

Sandra Reed

Income and asset limitations

Jacob’s monthly income is below the $2,382 allowed by Medicaid. Medicaid considers only the applicant’s income. Rebecca’s income isn’t counted.

Countable assets

The homestead is below the equity cutoff of $603,000 to make it a noncountable asset under Medicaid guidelines. Also, non-countable is one vehicle of any value. Since Jacob has no countable assets, he qualifies on that score. So, Jacob meets the asset criteria of no more than $2,000 in countable assets.

Gifting within the lookback period

Medicaid applies a penalty for transfers at less than fair market value made during the five-year period prior to applying for Medicaid. The penalty is a delay in qualifying for benefits calculated by dividing the gift by $213.71, the amount Medicaid currently applies as the average private pay daily cost of nursing home care in Texas. In this case, the delay is 468 days. Jacob must private pay the $6,000 a month charged by the nursing home until the penalty expires. However, since Medicaid recalculates the delay period for each month that payments are made to the nursing home, instead of waiting approximately 15 months, Jacob will qualify in approximately 10 months.

Paying for care during the waiting period

How will Jacob and Rebecca pay for his care during the waiting period? They might sell enough land to raise the $60,000 needed. If Benjamin has sufficient funds to pay this monthly amount, he can do that. Or he can sell a portion of the land he was given. Whatever method is followed, essentially $40,000 of the gifted amount will have been preserved given how Medicaid calculates the waiting period.

Consulting an elder law attorney regarding protection of at-home spouse

Jacob and Rebecca should consult an Elder Law attorney regarding other protections available under Medicaid rules designed to prevent impoverishment of the stay-at-home spouse.

Sandra W. Reed practices Elder Law in Somervell County, handling probating of estates, drafting of wills, trusts, powers of attorney and deeds as well as estate and Medicaid planning.  She lives on beautiful Chalk Mountain and can be reached at 254.797.0211; 817.946.2809 or at sreed@kbzlaw.com.