Are you a taxpayer who has purchased long-term care insurance? Take note of your policy details and your premium amount, as you may be able to deduct the cost - or at least part of it - from your 2023 income.
Medicaid and Medicare Nursing Home Basics
[This article was originally published on January 7, 2005. The links were updated on July 12, 2018.]
Dana B. Perry is an estate planning and elder law attorney with the firm of Chambliss, Bahner & Stophel, P.C., in Chattanooga. To visit Attorney Perry's home page, click here.
Consult a professional well in advance of when the loved one needs to enter a nursing home. MEDICAID AND MEDICARE RULES ARE EXTREMELY COMPLEX. Additionally, various allowances and figures are updated frequently and the figures shown in this article may be out of date.
I. Scope: Tennessee Medicaid Guidelines for Nursing Home Care and Equivalents.
Contrast: Medicaid/ “TennCare” (hereafter Medicaid) is a joint state and federal program that may pay some of the costs of nursing home (and equivalent) custodial care for people with limited income and assets. Medicare covers skilled nursing home care (and some home health care) for very limited periods.
Primarily Nursing Home Coverage.Medicaid primarily pays for nursing home care provided in a facility certified by the government to provide service to Medicaid recipients. Medicaid funding is not available in Tennessee to cover care in assisted living facilities.
The PACE program (Program of All-inclusive Care for the Elderly) provides care for a limited number of Medicaid eligible persons in Southeast Tennessee. PACE is a non-profit program combining Medicare and Medicaid funds to provide comprehensive health and social services in the home, in the PACE community day care center, and in the nursing home. Note: for a patient to be accepted in PACE, in addition to meeting Medicaid qualification rules, the patient must be able to live safely in the community.
Tennessee recently initiated a program to expand the availability of at-home care to Medicaid recipients through home and community based services. The Home and Community Based Services (HCBS) Waiver program was approved in May 2002 to serve approximately 2,871 elderly and disabled individuals. AAAD will be administering the program in Southeast Tennessee. .
II. Qualifying for Medicaid Nursing Home Coverage “Medically Needy” Test
A person who applies for Medicaid must establish that he meets the medical requirements for eligibility for Medicaid coverage.
III. Qualifying for Tennessee Medicaid Nursing Home Coverage Income and Asset Tests
A. Income Rules.
The applicant's monthly income is adjusted downward for personal needs allowance ($30), allocation to eligible dependants at home, health insurance premiums, and the applicant's medical or remedial care expenses not paid by insurance or any other source. The remaining “net income” figure must be less than the Medicaid reimbursement rate for the long-term care being provided. The maximum is approximately $2,700 per month. ($88.60 per day).
A Medicaid recipient may keep only $30 per month of his or her monthly income for personal expenses. Any remaining income goes to the nursing home, unless the income is needed for health insurance premiums or unreimbursed medical care or is apportioned to the recipient's spouse at home.
A Medicaid recipient's spouse who is at home may keep enough income from the Medicaid recipient to bring the at home spouse's income up to approximately $1,561.25 per month. (This figure is adjusted each year in July.)
An additional amount is allowed if shelter costs (such as rent, mortgage, taxes, insurance, utilities, or maintenance fee for a condominium) exceed approximately $468.60. The total allocation to the community spouse generally may not be more than about $2,377.50.
The community spouse may keep all income directed solely to him or her.
THE MEDICAID INCOME RULES CAN BE TRICKY, ESPECIALLY DETERMINING THE PROPER ALLOCATION TO THE COMMUNITY SPOUSE. PLEASE CONSULT A QUALIFIED ATTORNEY.
B. Asset Rules.
A Medicaid recipient may keep assets such as cash and investments totaling $2,000.
Assets that are not counted toward this $2,000 limit (exempt assets) include:
- The recipient's home (if there is an intent to return home or a spouse or dependent relative living in the home)
- Life insurance policies with a total FACE value in the aggregate of $1500
- One motor vehicle, with certain limitations as set forth in the Tennessee regs
- Tangible personal effects and household goods worth $2000 or less
- Certain income-producing property
- Burial space for self, spouse and immediate family members (and headstone according to at least one commentator)
- Certain irrevocable burial funds
- Other resources deemed to be unavailable due to circumstances beyond the control of the applicant
Non-exempt assets include (this list is not all-inclusive):
- Investments (mutual funds, stocks, etc.)
- Retirement accounts (but the community spouse's retirement account is exempt)
- Cash value of life insurance policies with a face value above $1,500
- Real property other than the home and certain income-producing property
- Most property which belongs to applicant and child as joint owner
Special Asset Rules if There is a Spouse at Home. If the Medicaid recipient is married and has non-exempt assets in excess of $2,000, some assets may be allocated to the at-home spouse and thereby protected.
In Tennessee, the asset minimum that the spouse at home can keep is approximately $19,020 (even if ½ is less) and the maximum is approximately $95,100 (even if ½ is more). (This figure is adjusted each year effective January 1).
Please note that an amount greater than the maximum listed above may be allowed in certain circumstances.
THE RULES SURROUNDING EXEMPT AND NON-EXEMPT ASSETS AND ESPECIALLY THE SPOUSAL EXEMPTION ARE COMPLICATED. PLEASE CONSULT WITH A QUALIFIED ELDER LAW ATTORNEY.
IV. Transfer Penalties
The Medicaid program looks back 36 months from the date of the Medicaid application to see if assets have been transferred for less than fair market value, and 60 months if a trust is involved.
If a transfer was made within this period, the applicant may be ineligible for Medicaid coverage for a number of months equal to the amount of the gift portion of the transfer divided by a figure set by the state known as the “average cost of nursing home care”. The average cost of nursing home care figure is $3,394 for Tennessee.
Watch out for impact of Tennessee Gift Tax if any asset transfers are contemplated.
There are several exceptions and permutations to the transfer rules; PLEASE CONSULT A QUALIFIED ELDER LAW ATTORNEY FOR ADDITIONAL INFORMATION.
V. Liens at Death
Federal law requires the states to seek recovery of Medicaid payments from the “estate” of a deceased Medicaid recipient. One effect is that the home, which may be exempt while the recipient is living, could be subject to a Medicaid lien upon death.
Under the Tennessee statute [T.C.A. §71-5-116.], the individual must have been over 55 years of age when the individual received Medicaid assistance; the individual must not have a surviving spouse; and there must be no surviving child under 18 or blind or disabled.
Tennessee currently does not seek recovery from non-probate assets, only the “probate estate,” but nothing in the federal law or T.C.A. provision limits recovery to just the “probate estate,” and federal law allows states to go after other assets in which the decedent had an interest at death, including joint assets, assets held in a living trust, and assets with a beneficiary designation.
A Tenn Care release is now required to be filed to close a probate estate in Tennessee.
VI. Medicaid “Planning”
There are numerous Medicaid planning techniques. A description of the techniques is beyond the scope of these materials, AND ANY PLANNING OF THIS NATURE SHOULD BE DONE WELL IN ADVANCE OF NEED AND WITH THE ADVICE OF A QUALIFIED ELDER LAW ATTORNEY.
Medicare Benefits for Long Term Care Services
Skilled Nursing Home Care Coverage for each “spell of illness”
Days 1 – 20 All costs at 100%
Days 21 – 100 All costs above $99.00 per day, which you must pay out-of-pocket, or your Medigap policy may pay
After day 100 Medicare pays nothing
- Care must be at the skilled level on a daily basis.
- There are also additional technical requirements.
Some Home Health Care Services
Medicare Hospice (palliativeas opposed to curative) care benefits (terminally ill patients) may be available, depending on the health status and (lack of) life expectancy for the patient. To qualify, the applicant must be expected to die within 6 months or less, but coverage may be extended beyond 6 months.
© 2005 Chambliss Bahner & Stophel, P.C. All rights reserved.