Who pays for long term care in Michigan? Is it covered by Medicare or Medicaid?
For all practical purposes, in the United States the only “insurance ” plan for long-term institutional care is Medicaid. Medicare only pays for approximately 20 percent of skilled nursing care in the United States. Private insurance pays substantially less. The result is that most people pay out of their own pockets for long term care until they become eligible for Medicaid. Medicare typically covers only the first 20-100 days of a nursing home stay, While Medicare is an entitlement program, Medicaid is a form of welfare—or at least that’s how it began. So to be eligible, you must become “impoverished ” under the program’s guidelines.
What are the disadvantages and advantages to privately paying for long term care and for using Medicaid?
Despite the costs, there are advantages to paying privately for nursing home care. The foremost is that by paying privately an individual is more likely to gain entrance to a better quality facility. The other advantage is that care can be provided on a “continuum” of increasingly intensive supervision and assistance instead of just in a nursing home setting. The obvious disadvantage is the expense; in Michigan, nursing home fees average $9,560 a month while a less-intensive assisted living facility might charge anywhere from $3,000-5,000 per month. To address the inflexibility of traditional nursing home long term care, and to save on the high cost of nursing home care, Michigan operates two programs, the Program for All Inclusive Care for the Elderly (“PACE”), and the MI Choice Waiver Program to provide Medicaid-covered care either at-home or in alternative facilities.
Is there anything I can do to plan for needing long term care or to protect my savings from the cost of long term care?
Without proper planning nursing home residents can lose the bulk of their savings. For individuals who are still healthy but anticipate the need for long term care, long term care insurance should be considered. Additionally, certain legal actions can be taken to protect assets and allow the individual to qualify for Medicaid without unnecessarily depleting their savings. At the very least, powers of attorney for both healthcare and financial matters and a method to devise assets outside of probate should be in place. Additional steps should be considered depending upon the individual’s health and level of care. To determine the best course of action, an elder law attorney needs a comprehensive picture of the individual’s health, family, and financial situation. Every action has advantages and disadvantages, and there are no one-size-fits-all solutions in this process.
For most individuals, the object of long-term care planning is to protect savings (by avoiding paying them to a nursing home) while simultaneously qualifying for nursing home Medicaid benefits.
Who administers the Medicaid long term care program in Michigan?
In Michigan, Medicaid is administered by the Michigan Department of Health and Human Services (the “MDHHS “). However, in order to qualify for federal reimbursement, the state program must comply with applicable federal statutes and regulations.
How much of my property am I allowed to keep while still being eligible for Medicaid?
The basic rule of nursing home Medicaid eligibility is that an applicant, whether single or married, may have no more than $ 2,000 in “countable ” assets in his or her name. “Countable ” assets generally include all belongings except for (1) personal possessions, such as clothing, furniture, and jewelry, (2) one motor vehicle, (3) the applicant’s principal residence (if it is in Michigan), and (4) assets that are considered inaccessible for one reason or another.
Am I allowed to keep my home while still qualifying for Medicaid?
A home is not considered a countable asset and, therefore, will not be counted against the asset limits for Medicaid eligibility purposes as long as the nursing home resident intends to return home or his or her spouse or other dependent relatives live there. It does not matter if it does not appear likely that the nursing home resident will ever be able to return home; the intent to return home by itself preserves the property’s character as the person’s principal place of residence and thus as a noncountable resource. As a result, for all practical purposes nursing home residents do not have to sell their homes in order to qualify for Medicaid.
In Michigan, the home must have an equity value of less than $500,000 (indexed for inflation, currently $636,000 in 2022).
Are Medicaid applicants punished for making gifts?
Another major rule of Medicaid eligibility is the divestment penalty for transferring assets for less than fair market value (either making a gift or selling something for less than its fair market value). If an applicant (or his or her spouse) transfers assets, he or she will be ineligible for Medicaid for a period of time based on the amount of the transfer. The actual number of months of ineligibility is determined by dividing the amount transferred by $9,560, which is the amount MDHHS considers the average monthly cost of nursing home care in Michigan. For example, if an applicant made gifts totaling $19,020, he or she would be ineligible for Medicaid for two (2) months ($ 19020 ÷ $ 9,560= 2). Another way to look at this is that for every $ 9,560 transferred, an applicant will be ineligible for nursing home Medicaid benefits for one month.
How is the divestment penalty assessed?
The catch with the divestment penalty is that the penalty period does not begin until the person making the transfer is otherwise eligible for Medicaid benefits but for the application of the penalty period. In other words, the penalty period begins when the applicant is in the nursing home or has applied for MI Choice, Home Help, or Home Health; meets the medical eligibility requirements and all of the financial eligibility requirements; but is precluded from qualifying for Medicaid Long-Term-Care benefits only by the imposition of the divestment penalty. For instance, an individual who transfers assets causing a 10-month penalty period on June 1, 2015, who moves to a nursing home on June 1, 2016, and spends down his other savings by June 1, 2017, will be ineligible for Medicaid coverage until April 1, 2018. This is because the 10-month penalty period for the transfer will not begin until June 1, 2017.
Are there exceptions to the divestment penalty?
Transferring assets to certain recipients will not trigger a period of Medicaid ineligibility. These exempt recipients include:
(1) A spouse (or anyone else for the spouse’s benefit);
(2) A blind or disabled child;
(3) A trust for the benefit of a blind or disabled child; or
(4) A trust for the benefit of a disabled individual under age 65 (even for the benefit of the applicant under certain circumstances).
Special rules apply with respect to the transfer of a home. In addition to being able to make the transfers without penalty to one’s spouse or blind or disabled child, or into trust for other disabled beneficiaries, the applicant may freely transfer his or her home to:
(1) A child under age 21;
(2) A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home; or
(3) A “caretaker child, ” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided such care that the applicant did not need to move to a nursing home.
Will MDHHS put a lien on my home for Medicaid expenses? How does MDHHS seek reimbursement?
In Michigan, the state has the right to recover whatever benefits it paid for the care of the Medicaid recipient from his or her probate estate. Under current Michigan law, MDHHS cannot place a lien on your home while you are still living. Instead, MDHHS will seek reimbursement as the creditor of a probate estate. Property that is jointly owned, in a life estate, or in a trust, is not included in the probate estate and thus escapes estate recovery. The law also provides exceptions to estate recovery when hardship can be proven and will delay estate recovery if a surviving spouse or other dependent relative is living in the house.
Is a Medicaid long term care applicant allowed to keep their income?
When a nursing home resident becomes eligible for Medicaid, all of his or her income, less certain deductions, must be paid to the nursing home. The deductions include a $60-a-month personal needs allowance, a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance he or she must pay to the spouse that continues to live at home.
My spouse is going in to a nursing home, will I be allowed to keep any of their income and assets?
Medicaid law provides for special protections for the spouse of a nursing home resident, known in the law as the “community ” spouse. Under the general rule, the spouse of a married applicant is permitted to keep one-half of the couple’s combined countable assets (“CSRA”) (as of the date of institutionalization)up to $137,400 (in 2022). In addition, there is a minimum resource allowance for the community spouse of $27,480 (in 2022).
So, for example, if a couple owns $90,000 in countable assets on the date the applicant enters the hospital, he or she will be eligible for Medicaid once their assets have been reduced to a combined figure of $47,000—$2,000 for the applicant and $45,000 (one-half of $90,000) for the at-home spouse. If the couple owned $250,000 in assets, the spouse in need of care would not become eligible until their savings were reduced to $121,200 ($2,000 for the nursing home spouse plus a maximum of $137,400 for the community spouse).
The determination of the level of the couple’s assets is made as of the date of institutionalization of the nursing home spouse. That date is the day on which he or she enters either a hospital or a long-term care facility in which he or she then stays for at least 30 days. It is advantageous for the couple to try to maximize their countable assets on that date so that the amount the community spouse is allowed to keep will be as high as possible.
If the amount of countable assets exceeds twice the maximum CSRA, a number of techniques can be used to qualify the nursing home spouse while preserving those assets for the community spouse. Most of these strategies involve recharacterizing assets as income, and are beyond the scope of this FAQ. These techniques should only be done with the guidance of an experienced elder law attorney.
In all circumstances, the income of the community spouse will continue undisturbed; he or she will not have to use his or her income to support the nursing home spouse receiving Medicaid benefits. In some cases, the community spouse is also entitled to share in all or a portion of the monthly income of the nursing home spouse. The MDHHS determines an income floor for the community spouse, known as the minimum monthly maintenance needs allowance, or MMMNA, which, under a complicated formula, is calculated for each community spouse based on his or her housing costs. (Where the community spouse can show hardship, the MDHHS may award a larger MMMNA, but only after an appeal to fair hearing.) The MMMNA may range from a low of $2,177 (in 2022) to a high of $3,435 (in 2022) a month. If the community spouse’s own income falls below his or her MMMNA, the shortfall can be made up from the nursing home spouse’s income.
Those community spouses whose own income is less than their MMMNA have an alternative to receiving the shortfall from the nursing home spouse. Instead, they may petition the probate court or request an administrative hearing for an increase in the standard resource allowance so that these additional funds may be invested in order to generate income to make up the shortfall. Given current low rates of return, this often can permit the community spouse to retain a substantial level of savings. In some instances, even with the award of the higher resource allowance the community spouse will need to draw on the nursing home spouse’s income to some extent. Unfortunately, MDHHS may not award an increased resource allowance upon application. The intake worker must award the standard allowance described above and the applicant must appeal the determination to a fair hearing.
How do I apply for Medicaid’s long term care benefit? What do I need to include in my application?
Applying for Medicaid is cumbersome and tedious. Every fact asserted in the application must be verified by documentation. The application process can drag on for several months as the MDHHS demands more and more verifications regarding such issues as the amount of assets and dates of transfers. If the applicant does not comply with these requests and deadlines on a timely basis, MDHHS will deny the application. In addition, after Medicaid eligibility is achieved, it must be redetermined every year.