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Medicaid FAQs « FAQs

We are teachers and advocates, and as a part of that process we frequently answer questions from our clients — so we started collecting our Frequently Asked Questions. We are collecting and sharing them with you by topic and hope these are helpful to you.

Please feel free to email Patti at pdudek@pekdadvocacy.com if you have a follow up question or comment. We'd also like you to let us know what you think of this new feature of our website.

KEEP IN MIND THESE ARE GENERAL QUESTIONS AND CANNOT BE CONSIDERED LEGAL ADVICE OR THE BEGINNING OF THE ATTORNEY-CLIENT RELATIONSHIP.

We have redacted names to protect the innocent! Sometimes they are posed in a give and take format because they were developed through an email exchange.  (Note: questions are not edited for spelling, grammar or content.)

FAQs about Medicaid from official Government websites

General Questions

Question: What is Medicaid?

Answer: Medicaid is a health insurance program that pays medical bills for eligible low-income families including pregnant women and women with breast or cervical cancer, foster and adoptive children and for eligible aged, blind and/or those who have disabilities whose income is insufficient to meet the cost of necessary medical services.

Question: Can I have both Medicaid and Medicare at the same time?

Answer: It depends.  If you receive Supplemental Security Income (SSI) from the Social Security Administration, you are automatically eligible for Medicaid and often receive Medicare as well.  If you receive both Medicaid and Medicare, Medicaid will pay your Medicare premium, co-payments and deductibles.  

Eligibility:

  • Question: We need to put my Mom in a nursing home. Before we do so, we need to make her medicaid eligible. She owns a home but my sister has lived there for years and acted as caregiver to my Mom. Does Medicaid require her to move out of the house and my Mom to see the house in those circumstances before my Mom can become eligible for medicaid assistance?

    Answer: Here is the answer to this – NO! The house is an exempt asset and your mom can qualify for Medicaid and get services in the house. Furthermore, depending on how long your sister has provided assistance to your mom, the home could be transferred to your sister as an exempt transfer. Last but not least, do not forget to do proper planning to minimize the impact of estate recovery on the home when mom passes away and to avoid probate if possible.
    Patricia E. Kefalas Dudek on Avvo.com

Application:

  • I have 2 issues pertaining to a recent Medicaid application:1) We applied for Medicaid for client in July, 2009. Client received a lawsuit settlement in June, 2007 of approximately $33,000.00 which we reported on the Medicaid application. Yesterday we received a Verification Checklist that read in part as follows, "you received a lawsuit settlement for $33,000. I need proof as to where the money was spent and what it was spent on."

    Question: a. How do I comply with this request? Client has used the proceeds to basically live on for the last two years. She had approximately $17,000 remaining in June that we have since "spent down" to get her under the $2,000 threshold for July, 2009. How can I possibly account for the $16,000 she spent on basic necessities/Christmas & birth day presents, etc?  Ideas on a response to DHS would be greatly appreciated.

    Answer: Is the client their own rep payee and do they handle their own money? If so, get them copies of the bank account statements and/or cancelled checks to show where the money went. If they do not have good records, have client file an affidavit instead of receipts. Summarize it to them in a cover letter when you submit this. Make sure they know that it was spent on fair market purchases.

    2) Client owns a trailer that we've claimed as her homestead (she does own it jointly with a daughter, but daughter has never lived in it and client has lived in the trailer by herself for the last 14 years). A potential buyer is interested in purchasing the trailer for $9,000 of which $4,500 would be allocated to client as her share of the net sale proceeds.

    Question: a. Should we wait to sell the trailer because of the pending Medicaid application?

    Answer: No.

    Question: b. If we do sell the trailer, I assume we'd want to do it early in a month to allow time to convert the proceeds into non-countable assets, correct?

    Answer: Sure, have her pay your bill, or prepay burial and funeral.

    Question: c. As part of our spend down, we prepaid 5 months of lot rent for the trailer ($400×5=$2,000). If we sell the trailer prior to the expiration of the 5 month period, I assume any refund of the prepaid rent would be returned and would have to be converted in other ways by the end of the month of the sale, correct?

    Answer: Or whenever you get the refund back.

    Question: 3) Any new and creative ways to spend down after the basics have been explored? Client is adamant about donating her body to science for research purposes so there is no chance of irrevocable funeral contract. Any other ideas?

    Answer: Sure: D 4 C trust; prepay cable tv; prepay advocacy or legal work; get a computer and pay for internet access; prepay for her to get her hair done every month. For more info, check out my List of Permissible Disbursements from a Special Needs Trust.
    Patricia E. Kefalas Dudek

Disclosures:

  • Question:  Dad made gifts to his adult children before in died in 2010. In 2011, Mom, the widow is applying for own Medicaid for her nursing home care.  Must Mom disclose her deceased husband's prior gifts?
     
  • Answer:  Yes. See 42 USCS Section 1396p(c)(1)(A).  Gifts of an institutionalized individual or the spouse within the 5-year look back are subject to penalty.

Nursing Home Request for Upfront Deposit:

  • Question:  We have a Medicaid application pending. The nursing home wants a deposit before taking him.  We are grateful the nursing home will take him, so want to cooperate. I'm thinking a modest deposit (1 month) would be acceptable, which will be a credit toward his patient pay amount. Is this reasonable and a common practice in your area?
  • Answer:  It is very reasonable because of how long these poor providers have to wait to get paid sometimes. I suggest sending them a copy of your cover letter to DHS that you sent with the Medicaid application so they have proof of the pending application. I usually also put in the cover letter what I have determined the patient pay amount to be so they know they will be getting that amount going forward. Last, but not least, if you do not get approved within the standard of reasonable promptness and have to appeal that, send the nursing home a copy. They appreciate knowing that you are doing whatever you can to secure payment for them on a timely basis.
    Patricia E. Kefalas Dudek

Qualifying:

  • Ask an Elder Law Attorney (2/5/10) (click for full answer)
    Question:  If a parent “spends down” to qualify for Medicaid, which will pay for nursing home care, can he or she still own a house?
    Answer: The short answer is yes, Mom can keep her house and be on Medicaid. A house is an “exempt resource.” But there are caveats. Most states set a $500,000 cap on the equity in her home. In a few (including California, Connecticut and New Mexico), it’s a $750,000 cap. She won’t qualify for Medicaid if her equity exceeds that, so she may need to borrow against the house to reduce her equity or to sell it.

Asset Protection Planning:

  • Question: I need advice on protecting my mother's home and farm in the event she is ever placed in a nursing home. I've read about "Medicare Asset Protection Plans" but the local Social Security representatives stated asset protection doesn't exist? Perhaps I can call you at your convenience to discuss further? Incidentally my mother has a will etc….Take care.

    Answer: You can't believe most of what the government employees tell you about asset protection. I am happy to meet with you to discuss this…my assistant can schedule a meeting and get you some materials to read on the subject until we can get together. My hourly rate is $300 an hour. We can meet, discuss options and then you can determine if and when you will need to proceed. I will need to see the estate planning documents and a snap shot of all assets and income to advise you appropriately. In the meantime, check out my web site, there is a wealth of information in there to start your research. I am sure a plan can be developed to meet your mom has access to the best possible services!
    Patricia E. Kefalas Dudek

Funeral Expenses

  • Question: Mother is a private pay patient in a nursing home but will need to apply for Medicaid soon.  Daughter recently passed away.  Can mother now pay for daughter's funeral and burial expenses?  It doesn't seem that anything in BEM 400 is applicable because mother is not holding assets to be used in the future for funeral and burial expenses. There does not appear to be an applicable exception in BEM 405, so it appears to me that mother cannot pay for the daughter's funeral and burial expenses. 
  • Answer:  While it doesn't specifically address a situation such as this, policy does infer that this meaning applies in BEM 400 page 29 when it says that a burial space is defined as:
  •  
    • Necessary and reasonable improvements or additions to or upon such spaces including:
    • Vaults
    • Headstones, markers or plaques
    • Burial containers
    • Opening and closing of the gravesite
    • Contracts for care and maintenance of the gravesite.

and it does not specifically say that the fiscal group member or specified relative must be alive (except in the instance of an exclusion for the spouse of one of those relatives, where the marriage and exclusion are considered ended at divorce OR death).

Pooled Account Trusts

  • Question: I am a 63 year old Medicaid beneficiary. I have an IRA worth about $70,000 that I inadvertently overlooked in the Medicaid application process. Would you be able to help me re-title the IRA so I can maintain my benefit? I have been receiving Medicaid for years. What can I do?

    Answer: A Pooled Trust Account (PAT) may be the right fit for this individual in order to preserve as much of the IRA as possible. She will likely have to cash in the IRA and pay the tax to protect it. Before this can happen it must be brought to Medicaid's attention through an Irrevocable Assignment to the PAT. Please see my page on Estate Planning – Pooled Account Trusts for more information.
    Patricia E. Kefalas Dudek

    For further information, see Letter from State of Maryland Office of Attorney General, Dept. of Health and Mental Hygiene (4/23/10). This letter clarifies the issue of permissibility of a disabled beneficiary 65 years of age and older transferring assets from his or her special needs trust into a pooled trust without penalty.

Divorce Matters

  • Question: I have been asked to help with a divorce case. I represent a 92 year old man who is divorcing his 73 year old wife. He has income of $1750 per month and the wife has income of $480 per month. He has been ordered to pay temporary spousal support of $450 per month. What effect, if any, will this spousal support have on the Husband's future application for Medicaid?

    Answer: It should NOT have any impact; they have to honor the order, just means his patient pay amount will be reduced.
    Patricia E. Kefalas Dudek

Principal Residence Exemption

  • Question: Wife is a Michigan resident claiming principal residence exemption for her home in MI. Husband is an Iowa resident. She files separate MI state tax return and he files separate Iowa state tax return. No exemption is claimed by either of them on any other property. Can they file a joint federal income tax return and she will still qualify for the exemption in Michigan?
     
  • Answer: From Chapter 2 of Guidelines for the Michigan Principal Residence Exemption Program (Michigan.gov)
     
  • Q: I have a home in Michigan and one in another state. May I claim an exemption on my Michigan home?
     
  • A: You may claim the homeowner’s principal residence exemption if you meet all of the criteria below:
    • A. You are a resident of the State of Michigan.
      B. You own and occupy the home as your principal residence.
      C. Neither you, nor your spouse if you file a joint income tax return, receive an exemption, deduction, or credit substantially similar to the Michigan Principal Residence Exemption on property you own in another state.
      D. You have not filed a non-resident Michigan income tax return.
      E. You have not filed a tax return as a resident of another state.

Special Needs Child Trustee of Mom's Trust?:

  • Question:  I have a client who has a daughter with special needs.  Do you see an issue with the daughter being the trustee of her mom's revocablr living trust?  When property passes to the daughter upon the mom's death, the daughter will not be trustee of her own share, but can she be the trustee of mom's share?
  • Answer:  Yes, there is an issue, and NO she should not be the Trustee if Medicaid or SSI is an issue or any needs based benefit like Section 8 it's not worth the fight with the governemental agencies.  They would likely assert that the assets are "available" to her (daugther).  If she only gets SSDI and Medicare then it may not matter.  Hope this helps!
    Patricia E. Kefalas Dudek