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MEDICAID

Medicaid is a joint federal-state program that provides health insurance coverage to low-income children, seniors and people with disabilities. In addition, it covers care in a nursing home for those who qualify. In the absence of any other public program covering long-term nursing home care, Medicaid has become the default nursing home insurance of the middle class.  In 2005, President Bush signed the Federal Deficit Reduction Act of 2005 causing some changes in the way Medicaid looks at an applicant's assets and determines ineligibility periods.

In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in "countable" assets.  The spouse of a nursing home resident--called the 'community spouse'-- is limited to one half of the couple's joint assets up to $101,640 (in 2007) in "countable" assets. The $101,640 figure changes each year to reflect inflation. In addition, the community spouse may keep the first $20,328, even if that is more than half of the couple's assets. This figure varies depending on the state.

All assets are counted against these limits unless the assets fall within the short list of "non-countable" assets. These include:

• Personal possessions, such as clothing, furniture, and jewelry;
• One motor vehicle, valued up to $4,500 for unmarried recipients and of any value for the healthy (community) spouse;
• The applicant's principal residence, provided it is in the same state in which the individual is applying for coverage (the states vary in whether the Medicaid applicant must prove a reasonable likelihood of being able to return home);
• Prepaid funeral plans and a small amount of life insurance; and
• Assets that are considered "inaccessible" for one reason or another

In some states, nursing home residents do not have to sell their homes in order to qualify for Medicaid. Depending on the state, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home.  In other states, the nursing home resident must prove a likelihood of returning home. In all states, the house may be kept if the Medicaid applicant's spouse or another dependent relative lives there.

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