Nursing home residents who qualify for Medicaid benefits to pay for their care are obliged to turn over their monthly income, typically Social Security and pension benefits, to the facility where they reside. This is the Medicaid recipient’s “patient-pay” obligation. Medicaid pays the rest.
But there are a few exceptions to this patient-pay requirement. One such exception is a $45 monthly personal needs allowance. Another exception is any medical expense that is not covered by either Medicare or Medicaid. This expense can be paid off the top before paying over the balance to the nursing home. Insurance premiums for Medicare supplemental health insurance or for prescription drugs are examples of such expenses. A family member should never allow a Medicaid recipient’s private health insurance coverage to lapse. It can remain in force at no cost to family. A third exception to a Medicaid recipient’s monthly patient-pay obligation is the $90 Aid & Attendance benefit received by qualified veterans. Yet another exception is the ability to divert all or part of one’s income for the support of a low-income community spouse.
What Happens If Funds Accumulate Beyond One’s resource limit?
In order to qualify and remain eligible for Medicaid, an applicant/recipient may not have countable assets worth more than the $8,000 (or in some cases $2,400) resource limit. That sometimes occurs if personal needs allowances accumulate unspent or if other funds, such as refunds, are received. Eligibility will be forfeited and the excess will need to be spent down, usually via extra payment to the nursing home, before benefits are reinstated. The excess can’t simply be gifted away because that will incur a penalty in the form of a period of ineligibility for benefits, same as happens with persons trying to qualify for benefits. Fortunately, in Pennsylvania, a Medicaid recipient can gift away up to $500 total in any one month without incurring a transfer penalty. Also note that if excess resources are accumulated because of a federal income tax refund, Medicaid will not be terminated if the refund is spent or gifted within one year.
Who Manages the Funds?
A recipient may continue to maintain a bank account or instead, authorize the Nursing home to directly receive Social Security and pension payments and manage the funds. Doing so will relieve the recipient’s family from having to annually prepare and submit a re-certification form to establish continued Medicaid eligibility. The nursing home takes up that obligation instead.
If the facility where the recipient resides manages the funds, the facility must provide an accounting for how it spent the money. Medicaid prohibits the nursing home from using the money on anything that Medicaid provides.
What Happens If an Inheritance or Other Large Amount Is Received?
If a Medicaid recipient receives an inheritance or other windfall, benefits will be terminated due to having “excess resources”. One would expect that these excess funds would need to be paid over as reimbursement for Medicaid benefits previously paid out. But actually, that’s not the case. Persons who received Medicaid and whose decedent estates, after death, acquired assets, have a reimbursement obligation. But live persons are not obliged to reimburse Medicaid. Those excess resources can instead be protected for loved ones. Contact the lawyers at Vasiliadis Pappas for help.