Medicaid is the largest health insurance program in the United States, covering about one-in-five low-income Americans or about 73 million people.
Before you’re tempted to say the program can’t help you because you think you earn too much or own too many assets, you may be surprised, or even shocked, by what you’re about to learn.
Did you know, for instance, that you may still be able to receive long-term nursing care assistance paid for by Medicaid even if you own an expensive home with a Maserati parked out front?
And on the topic of Medicare, did you know that about 10 million Americans now receive both Medicare and Medicaid? For these dual-eligible seniors, Medicaid pays for any services Medicare doesn’t pick up.
Who is eligible for Medicaid?
In addition to meeting certain financial criteria, you must belong to one of Medicaid’s designated eligible groups: seniors, adults with dependent children, people with disabilities, children, and pregnant women (roughly half of all births are covered by Medicaid). Although older adults and people with disabilities make up just one-in-four enrollees, they account for two-thirds of Medicaid spending.
In 2014, states were given the opportunity through the Affordable Care Act (ACA) to expand Medicaid eligibility (based on income, not categories as those listed above) to adults under age 65 with income up to 133% of the federal poverty level. To date, 36 states and the District of Columbia have expanded their coverage to include adults.
What kinds of services are covered in Medicaid?
Mandatory covered services include inpatient and outpatient hospital bills, prescriptions, lab fees, long-term care services, transportation to and from medical care, and vision and dental care for children. States also have the prerogative to offer additional services for things like glasses, hearing aids, physical therapy, mental health services, and hospice care.
Medically necessary services also are covered, but the federal government has left it to each state to define “medical necessity.” Limiting elective treatments and procedures is a cost-containment measure by Medicaid, which spent $557 billion in the fiscal year 2017, with 62 percent paid by the federal government and 38 percent financed by states, according to the Kaiser Family Foundation.
What documentation is necessary to show I meet my state’s requirements for Medicaid?
This documentation may include:
- Your birth certificate or driver’s license to serve as proof of age and citizenship (yes, you have to be a citizen, but again there are exemptions for certain medical conditions)
- Copies of bank statements
- Proof of address, which could include a lease, utility bill statements or a copy of your mortgage
- Medical records to serve as proof of disability
States have 45 days to process your Medicaid application or 90 days if eligibility is tied to a disability.
How are the services provided?
After qualifying, you’ll receive a medical card and benefits that you can use in much the same way as health insurance coverage through any other insurer.
In some states, private health insurance companies administer the Medicaid benefits, while other states pay providers (doctors, clinics, and hospitals) directly.
Typically, Medicaid recipients don’t have to pay a monthly premium for the benefits. In some cases, however, if someone is receiving Social Security benefits, a nominal deduction may be made from those benefits, depending on total resources and income, to help supplement the cost of Medicaid coverage. Otherwise, Medicaid provides 100 percent coverage for most medical expenses and does not require payment of premiums or deductibles.
How does Supplemental Security Income or SSI impact Medicaid?
If you have already qualified for SSI, you automatically become eligible for Medicaid.
What is the difference between Medicare and Medicaid?
Medicare is a federal program that provides health coverage if you are 65-plus or under 65 and have a disability, no matter your income. Medicaid is a state and federal program that provides health coverage if you have a very low income. About 10 million Americans are provided benefits by both programs.
How does Medicaid impact Medicare?
If you have Medicare or any type of private health care coverage, Medicaid will always be the secondary payer. Healthcare providers will bill the primary payer first, and Medicaid will then consider the claim and may pay any balance due after the primary payer has paid.
Medicare doesn’t cover long-term nursing care or in-home care, but I understand Medicaid may?
This is correct. When applying for long-term senior care under Medicaid, you must — in addition to meeting certain income thresholds — also must certain asset or resource tests. Furthermore, asset limitations are based on whether or not you have an at-home spouse. Persons with an at-home spouse cannot have. Married persons with an at-home spouse cannot have combined countable assets that exceed a certain amount per month. However, the Medicaid applicant is allowed to receive a specified amount of income per month.
Assets that are typically exempted include the applicant’s home (up to a certain equity interest in the home) a single car (yes, even a Maserati), IRAs, pensions and insurance policies (again, there are limits), and wedding and engagement rings. You have to live in the home as your primary residence and your automobile must be used for transportation. It can’t be a second car that you showcase at classic car shows, in other words.
Is Medicaid affected by reverse mortgage loan proceeds?
While a reverse mortgage does not affect Social Security or Medicare benefits, it can affect need-based programs such as Medicaid and SSI. These two programs are mentioned here because most states base their Medicaid asset and income guidelines on the federal SSI guidelines.
Here’s an example of how a reverse mortgage could impact Medicaid:
A reverse mortgage is considered a loan, not income, so in that regard it won’t be viewed as a countable asset under SSI or Medicaid guidelines. Yet, if some portion of your reverse mortgage loan proceeds goes unused at the end of any month, this amount could now be considered a countable asset. If the asset pushes you over the government’s asset limit, you could lose your eligibility SSI or Medicaid eligibility.
Therefore, if you’re now receiving SSI or Medicaid and are considering a reverse mortgage for any reason (to improve cash flow, pay outstanding medical bills, etc.), please consult your SSI and Medicaid administrators first so you can be certain that you are in compliance with all programs.
To avoid exceeding the asset limits, couldn’t I just transfer my assets?
The government anticipated this reaction, human nature being what it is. In response, your state’s Medicaid agency examines your financial records from the past five years (called the look-back period), starting with the date your Medicaid application was submitted. Certain transfers may be acceptable, such as a transfer to your spouse or to your child who is either under 21 years old, disabled, or living at home and caring for you.
The look-back period is not treated the same as the penalty period, in the event your transfer is found to violate the rule. For example, if you improperly transferred your $100,000 RV inside the five-year period and the cost of nursing care in your area was $5,000 a month, you would not be able to apply for Medicaid for 20 months ($100,000 / $5,000 = 20).
Again, this is tricky turf to negotiate, so please consult an elder care or Medicaid expert so you know what you can and cannot legally transfer so as not to jeopardize your Medicaid eligibility for long-term nursing or in-home care.
Should I apply even if I think I my income or assets exceed Medicaid’s qualifying limits?
Yes. With any government-administered program, there often are many gray areas. Plus, you may have income and assets that don’t count toward the limit. Household size also greatly impacts eligibility.
Your Modified Adjusted Gross Income or (MAGI) is the primary tool the government uses to determine your eligibility for Medicaid or subsidized health insurance through the Health Insurance Marketplace. This calculation can be significantly different from your gross income, especially if you qualify for a variety of deductions, such as educator expenses, health savings account deductions, IRA contributions, medical expenses, moving expenses, self-employed health insurance deductions, self-employment taxes, and student loan interest on your tax returns.
Another reason to apply is in the event you were laid off from your job. It might take months to find another. And if you don’t qualify for unemployment, or your unemployment compensation is not enough to cover your living and medical expenses, your reduced income could qualify you for Medicaid.
There’s no harm in applying, but there could be a great deal of health and healing, not to mention financial relief ahead, in the event you do qualify. It doesn’t hurt to apply, and as the saying goes, “You’ll never know if you don’t try.”