Medicaid has strict rules regarding income and asset limits. In most states, program applicants and enrollees cannot exceed $2,000 in total personal assets or their benefits will be denied or revoked. This would be a disaster for Medicaid-eligible senior nursing home residents, as losing benefits would likely prevent them from paying their bills. Nursing homes would also suffer given an accrual of unpaid expenses and the tenuous prospect of an eviction. In other words, nobody wins when benefits are lost.
Now consider that federal COVID-19 stimulus assistance will soon, if not already, arrive for tens of millions of Americans, in the form of mailed checks or direct deposits. Congress recently passed the $2 trillion CARES Act to help individuals, families, and businesses cope with financial hardships caused by efforts to contain the disease. Stimulus checks will range from $1,200 for individuals making under $75,000 a year, to $2,400 for married couples making under $150,000 a year. Seniors who rely on Social Security also qualify.
While every bit of federal assistance may be needed, if a senior parent has roughly $800 or more in pre-stimulus countable assets then there is a legitimate risk their Medicaid eligibility could be compromised. Fortunately, there is a way adult children can help. To avoid denied, suspended, or revoked benefits, any stimulus funding should be spent quickly, and it must be spent on acceptable items. Medicaid takes asset transfers very seriously and provides specific guidance on “spending down.”
First, spending a stimulus check as soon as reasonably possible will prevent the cash support from sitting in a bank account for an extended period and potentially delay reentry into the program if the senior adult is penalized for breaching asset rules. Spending it on approved, non-countable items is critical, and this is where an elder law attorney can help.
Medicaid defines acceptable expenses as anything that would help an applicant or enrollee that does not increase his or her net worth. For example, spending a stimulus check on nursing expenses or future bills is well within program guidelines and it is exactly the type of expenditure for which the stimulus is intended. Pre-paying funeral expenses and purchasing medical equipment may also be allowed. Many items are not as clear cut and the downside risks of making a mistake could be severe.
Medicaid issues are complicated. Getting the right answers on these issues, however, is critical to maintaining Medicaid eligibility. Do not hesitate to ask for guidance. If you or someone you know is concerned about an elder parent losing his or her Medicaid eligibility, especially if this person is living in a nursing home, get in touch with our office today to schedule a meeting.