How do you determine if emergency Medicaid planning is necessary? Typically, when a person needs to qualify for long-term care coverage through Medicaid, the first step is to evaluate all assets of the person in need of care (the ‘applicant’) as well as those of their spouse (the ‘community spouse’), if any, and all income sources for the applicant. As a general rule, the income of a community spouse is not available to pay for an applicant’s long-term care. However, all income of the applicant is considered available to pay for their long-term care, and the only deductions the applicant is allowed to make from their gross income before paying the nursing home is the cost of any private health insurance/Medicare premiums, plus a personal needs allowance, which in Rhode Island is $50 per month. The remaining income is what is known as the patient share and must be paid to the nursing home towards the monthly cost of care. If this income is insufficient to cover the total monthly cost of care, the applicant must then look to their other available resources to pay for the care, or alternatively, apply for Medicaid. In Rhode Island, for an individual applicant, assets in excess of $4,000 from the following are considered available: • Checking, savings, and brokerage accounts • CDs, stocks, and bonds • Real property other than a primary residence • Life insurance with cash value in excess of $4,000 for medically needy applicants In Rhode Island, exempt assets for an individual applicant, include the following: - $4,000 - An irrevocable prepaid funeral plan up to $15,000 in value - A burial savings account up to $1,500 in value - A primary residence with an equity value not in excess of $636,000.00 (so long as the applicant maintains an intent to return home) - A primary residence of any equity value if the community spouse, a child under age 21, or a blind or disabled child of any age lives there While an applicant cannot be forced to sell their home while applying for or receiving Medicaid, it is important to remember that an applicant’s income cannot be used to support the household expenditures once Medicaid coverage applies. Additionally, while the home cannot be forced to be sold during the applicant’s lifetime, there may be a lien placed upon the probate estate of the applicant upon passing, which could force the sale of the real estate to pay off the lien equal to the sum of what Medicaid paid out for the care of the applicant during his or her lifetime. There are some limited exceptions to this rule and ways that a house can be protected in specific circumstances. An elder law attorney can help determine if any of those situations apply to your specific situation. Other exempt assets in Rhode Island include: • One vehicle • Life insurance with no cash value • Life insurance with cash value if the cash value of all policies is less than or equal to $4,000 for medically needy applicants • Retirement funds so long as a required minimum distribution is being taken based upon the life expectancy of the owner It is also worth noting, if the applicant has a community spouse then the available asset limits change based on the Community Spouse Resource Allowance, which currently ranges from $27,480 to $137,400. In your experience, what methods are typically most effective for removing liquid capital from an estate in order to reach the requisite criteria to become Medicaid eligible? Typically, if an applicant (and his or her Once a person is deemed to be receiving unskilled care, their Medicare or private health insurance will no longer contribute to the cost of long-term care. 80 LAWYERMONTHLYOCTOBER 2022
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