As an elder care attorney with a law office in the Rochester Hills area, I get asked a lot of questions about the Medicaid application process for patients in Michigan nursing homes. The “Assets Declaration” form is a common source of questions, so I thought I would write about the purpose of this form.
In general, a patient in a nursing home cannot qualify for Medicaid unless the patient owns just a home, car, household furnishings, certain funeral plans, a limited amount of life insurance, and $2,000 or less of all other assets. The $2,000 limit is in reference to “countable assets” and a patient receiving Medicaid benefits will not qualify until they have $2,000 or less of countable assets. What are the countable assets? They include, but are not limited to, real estate other than the home, bank accounts, stocks, bonds, mutual funds, and annuities. Until the early 1990’s, this $2,000 countable asset limit was the rule for both single patients applying for nursing home benefits and married couples. That meant if the husband needed nursing home care and the wife was still living at home in the community, this “community spouse” would become impoverished paying what was then $3,000 to $4,000 a month in nursing home costs. (Note that the statewide average nursing home cost in Michigan in 2012 is now $7,032 per month so the risk of spousal impoverishment is even greater).
In the early 1990’s, Congress recognized that people were living longer and that many people needed a great deal of care in that stage of their life, care that, at that time, could be provided in a nursing home. As such, Congress updated the Medicaid laws, that were first created in the 1960’s, to address this problem of the community spouse becoming poor due to the nursing home spouse’s care costs. Congress created a few levels of protection and then gave the states some discretion on how they implement these protections for the spouse of a nursing home resident.
First, instead of having to spend all of the money down to $2,000 before the patient would qualify for Medicaid, Congress created the Community Spouse Resource Allowance, which in Michigan is called the “Protected Spousal Amount.” This means the spouse in the nursing home can qualify for Medicaid when he or she has $2,000 or less in countable assets and the community spouse can keep half of the other assets titled in their name, but no more than $113,640. That’s the amount for 2012 and it is periodically adjusted upward.
Here’s an example of how this first level of protection for the community spouse works. Larry and Ruth are in their late 70’s and have a home and about $300,000 in certificates of deposit and money market accounts in various banks. Larry has had a series of strokes in recent years that have greatly reduced his ability to care for himself and he can no longer walk. Ruth has cared for him at home as long as possible but now, after his 3rd hospitalization this year, she has finally decided that his care needs can best be met in a nursing home.
If Ruth applies for Medicaid, she will have to complete an Assets Declaration form and submit it to the Michigan Department of Human Services (“DHS”). With $300,000 in countable assets, DHS would determine that Larry can keep $2,000, Ruth can keep $113,640 and the remaining $184,360 either needs to be spent down, or otherwise protected, before Larry would qualify for Medicaid. In this case, it just so happens that Ruth gets to keep the maximum protected spousal amount. As such, the purpose of the Assets Declaration form is to determine what the protected spousal amount should be. When completing the form, Ruth would need to list all of her and Larry’s countable assets as of a special date, called the “initial asset assessment” date, which is also sometimes referred to as the snapshot date. This initial asset assessment date is the first day of a “continuous period of care” that began after September 30, 1989. By “continuous period of care,” DHS means a period of at least 30 consecutive days when the spouse who needs nursing home care was in a hospital or nursing home for 30 consecutive days.
In our example, Larry’s initial asset assessment date was March 30, 2009 because on that date he was hospitalized for 10 days after his second stroke and the discharged to a nursing home, where he stayed for 55 days of physical therapy under Medicare. Since this was a continuous period of care for 30 days, the first day of it is his asset assessment date. Ruth will need to document what their assets were on that date so that the protected spousal amount can be determined.
What if Larry and Ruth only had $24,000 in countable assets? In that case, Larry might qualify immediately because there is a minimum protected spousal amount too, which is $22,728 in 2012. As such, if they just have $24,000 in savings, Larry would get to keep $2,000 and Ruth would get to keep the other $22,000. Since this amount is below the $22,728 minimum, Larry should qualify for Medicaid, assuming he made no transfers or gifts within 5 years of applying for Medicaid.
After reading this, applying for Medicaid may seem complicated. It is and a lot is at risk. If the nursing home bill is $7,000 a month and the Medicaid application is not completed correctly and is then later denied, the patient may owe for 2 or 3 months of care that could have otherwise been covered by Medicaid. At $7,000 per month, $14,000 to $21,000 could be lost. That is why I tell people that applying for Medicaid is not a do-it-yourself project.
Note that DHS will only tell Ruth about this first level of protection for the community spouse, the protected spousal amount. DHS will not tell her about other safe harbors Congress created for the spouse of a patient of a nursing home, which will be the subject of my next post.