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The
average cost of nursing home care in
North Carolina is $3,000 per month
($36,000 per year). Nursing home care
is the single largest out-of-pocket health
care expense for the elderly, far
exceeding their out-of-pocket expenses
for medical care. About half of all
nursing home costs are paid with private
funds. Private insurance pays a small
percentage. Government assistance
programs, primarily Medicaid, pay most
of the remainder. Medicare pays less
than two percent.
Medicaid defined |
Medicaid is a government program that is designed to provide comprehensive medical care, including nursing home care, to poor individuals who are aged, blind, disabled, or members of families with dependent children. Federal and state governments jointly fund the Medicaid program. Each state sets rules for eligibility, subject to federal guidelines. The rules may differ from state to state. This publication focuses on qualifying for Medicaid benefits to pay for nursing home care in North Carolina as of May 2001.
To be eligible for Medicaid nursing home benefits, the following requirements must be met.
Medicaid approved medical facilities include:
To the extent possible, a nursing home patient is expected to pay for his or her care. Medicaid benefits are available only to patients who have limited income and resources. To qualify, a nursing home patient must meet both an income test and an asset test.
If the patient's monthly allowable costs are greater than his or her countable monthly income, the patient meets the income test. Countable income includes wages, pension benefits, Social Security benefits, and interest on savings. The rules allow the patient to set aside some income for certain expenses other than nursing home costs. These expenses include the following.
If the patient does not have enough income to cover nursing home costs after deducting allowable expenses, he or she meets the income test.
The spouse in the nursing home is called the institutionalized spouse. The spouse who lives outside the nursing home is called the community spouse. How much income can the community spouse keep without disqualifying the institutionalized spouse for Medicaid benefits?
The community spouse may keep all income paid solely in his or her name. It is not attributed to the institutionalized spouse. All income paid solely in the name of the institutionalized spouse is counted toward the income test. If the income is paid to both spouses, one-half is counted for the institutionalized spouse, and the community spouse keeps the other half.
The community spouse also may qualify to receive an allowance from the institutionalized spouse's income, up to a maximum of $2,175 per month. The allowance is calculated using the established governmental poverty level, a reasonable amount necessary for living expenses (rent or mortgage, taxes, insurance, and utility charges), and the community spouse's income. Through an appeal, the community spouse may ask for additional income because of exceptional circumstances creating significant financial hardship. If the community spouse has sufficient income, no allowance will be granted from the institutionalized spouse's income.
Assets are either exempt or nonexempt for Medicaid purposes. Most of the patient's nonexempt assets must be used to pay for nursing home care or other allowable expenses before Medicaid benefits are available. The patient can keep up to $2,000 worth of nonexempt assets. The rest must be spent down or converted to exempt assets before the patient qualifies for Medicaid nursing home benefits. Exempt assets are not counted.
In addition to $2,000 worth of nonexempt assets, the patient may own exempt assets which include the following.
Homesite. The equity of the homesite that is used as the patient's principal place of residence (and all land contiguous to the homesite) is an exempt asset if any of the following conditions are met.
(Please note: If the Medicaid applicant or financially responsible person has no ownership interest in the principal place of residence, the tax value of contiguous property in excess of $12,000 is a countable resource.)
If the home does not qualify as an exempt asset, it must be spent down before the patient qualifies for Medicaid nursing home benefits.
Property used for certain purposes. If currently in use for certain purposes, property may be excluded.
If the property is not currently being used for one of these purposes, it may be exempt if the property has been in use within the past 12 months and the use will resume within 12 months.
Certain interests in land. Certain ownership interests in land are exempt: life estates, tenancies in common, and remainder interests if there is more than one remainder holder (married couples count as one).
Burial spaces. Burial spaces for the patient and the patient's spouse are exempt. Burial spaces for members of the immediate family also may be exempt.
Rights of use. Rights of use are tied to the land or the natural resources of land and may have countable value separate from the land. Rights of use include mineral rights, timber rights, and hunting or fishing rights. The value of the right of use, if owned separately by the Medicaid applicant, is exempt if it meets the six percent income producing criteria.
Tobacco allotment. Tobacco allotments provide the right to produce a certain number of pounds of tobacco for harvest. The value of a tobacco allotment is not counted, even if it is not being used. The land that is tied to the tobacco allotment may be exempt if certain requirements are met.
Uncleared land, woodlands, forests. If the property meets the six percent income producing test, it is exempt if
Property agreements/promissory notes. Any property agreement that is not legally negotiable (cannot be sold) is excluded.
Tangible personal property. Certain items of tangible personal property are exempt. Personal property is everything that is not land or part of the land. Jewelry, furniture, and cars are examples of tangible personal property. Exempt tangible personal property includes the following.
Liquid Assets. Liquid assets include cash, bank accounts, certificates of deposit, or any asset which can be converted to cash. Exempt liquid assets include the following.
Property that is not exempt must be spent down until the patient's nonexempt assets are valued at $2,000 or less before the patient qualifies for Medicaid benefits.
If the nursing home patient is married, the nonexempt assets of both spouses are counted. The community spouse is entitled to keep a portion of the nonexempt assets. The amount protected for the community spouse is calculated based on the value of nonexempt assets owned by the couple on the first day of the month that the ill spouse entered the nursing home for a continuous period. It may be months, or even years, between this date and the date the ill spouse applies for Medicaid benefits. If the value of the nonexempt assets increases by the date of application, the amount protected for the community spouse does not increase.
Within limits, the community spouse may keep one-half of all nonexempt assets, which is called the spousal share. If the spousal share is less than $17,400, the community spouse may keep up to $17,400. If the spousal share is greater than $87,000, the community spouse may keep no more than $87,000. (These are 2001 figures that are increased each year for inflation.) The institutionalized spouse may keep up to $2,000 worth of nonexempt assets. The remaining nonexempt assets must be spent down or converted to exempt assets before the institutionalized spouse qualifies for Medicaid benefits.
If the spouses own non-exempt assets valued at:
Assets acquired after eligibility by the community spouse are not counted, regardless of their value. Assets acquired by the institutionalized spouse after eligibility is determined will be counted and may disqualify the institutionalized spouse for benefits.
Example. Wife has been in a nursing home for the past two years. She qualified for Medicaid benefits six months after entering the home. She and Husband each inherit $20,000 cash when her brother dies. Husband's $20,000 cash is not counted to determine her Medicaid eligibility, but her inheritance will make her ineligible for Medicaid benefits. The Medicaid regulations suggest that Wife transfer her inheritance to Husband to avoid a period of ineligibility. There is no transfer penalty because a transfer between spouses is exempt.
Under the rules for estate recovery, the state must seek reimbursement from the estate of the deceased Medicaid recipient. Property that was exempt during the Medicaid recipient's lifetime is no longer exempt when the recipient dies.
In North Carolina, a claim will be filed against the estate of a deceased individual who
North Carolina waives estate recovery when:
Medicaid rules restrict giving away assets to prevent someone from qualifying for Medicaid when they have simply transferred their property to a family member or friend.
If an applicant, an applicant's spouse, or the legal representative of either transfers property within 36 months of applying for Medicaid, the applicant may be ineligible to receive Medicaid benefits for the number of months the transferred property would have covered nursing home costs. The ineligibility period is calculated using $3,000 per month for the cost of care. There is no cap on the number of months the applicant is ineligible. The look back period is extended to 60 months for transfers involving trusts and annuities.
The following transfers may be exempt from penalties.
For more information about the law of North Carolina, visit the Web site of the North Carolina General Assembly. For more information about Medicaid eligibility requirements, call the Department of Social Services in your county, or call the Medicaid Eligibility Unit of the North Carolina Division of Medical Assistance at (919) 857-4019. For an analysis of your rights under the Medicaid eligibility rules or of your estate planning needs, call your attorney. See, "How to Choose an Attorney."
Prepared by Carol A. Schwab, J.D., LL.M.,
Professor and Extension Specialist, NC State University.
This publication is provided as a public service and is designed to acquaint you with certain legal issues and concerns. It is not designed as a substitute for legal advice, nor does it tell you everything you may need to know about this subject. Future changes in the law cannot be predicted, and statements in this publication are based solely on the laws of North Carolina in force on the date of publication.
Date: July 2001
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