Illinois Seniors Face Tough New Reality
Doesn’t Medicare help pay for my nursing home care? Medicare does not pay for long-term care. Medicare covers necessary treatment for a limited period of time with the goal of returning the patient to a healthy and stable condition. It will only cover you for a very short time at the beginning of a nursing home stay. After that, the only program you can turn to for assistance is the Aged, Blind and Disabled program of Medicaid.
What is the “lookback period”? The 5 year period prior to applying for Medicaid assistance. The caseworker will review all financial records for the past 60 months, and will total up your disallowed transfers (any assets you may have given away or sold for less than fair market value).
What is considered to be an asset? Savings accounts, checking accounts, other bank accounts, CD’s, IRA’s, annuities, life insurance with cash value, stocks, bonds, real estate, and vehicles are among the items that are considered to be assets.
What is exempt? Your home, as long as you or your spouse and/or dependent children live there, but your equity in your home must be less than $750,000. Also, personal items and household goods, one vehicle for each spouse if needed for transportation or employment; prepaid funeral/burial funds up to certain amounts; property or equipment needed for income and self-support (up to $6,000 total equity value).
What is a “transfer of assets”? When a person or spouse buys, sells, gives away real or personal property, or changes the way property is held (such as changing from joint tenancy to tenancy in common). This may also include things like adding to the principal of an annuity, withdrawals from an annuity, or annuitizing the contract, and any action intended to make an annuity irrevocable or non-assignable is considered a transfer.
What is a “Disallowed Transfer”? Any gift that you gave or the transfer of an asset to someone else for less than fair market value. Under the rules, the caseworker is to presume that it was done to qualify for Medicaid assistance, unless convincing evidence is given to rebut that presumption.
What is “Fair Market Value”? An estimate of the value of asset based on the prevailing price at the time the asset was actually transferred. Prevailing price is what property would sell for on the open market between a willing buyer and willing seller with neither being required to act and both having a reasonable knowledge of the relevant facts.
What if I gave a gift to a family member? “Incidental” gifts to family members may be allowed, however, the State of Illinois will determine if a gift is incidental or a disallowed transfer. Gifts are not just tied to birthdays or anniversaries; money that you give to a family member who lost his job or has an illness is also considered a gift, as is helping a family member pay their mortgage or other bills.
What if I donated money to my church or to a charity? Charitable gifts with a documented, consistent pattern of giving may be allowed. The determination will be made by the State of Illinois.
What if I loaned money to someone? If you loan money to someone, you may be penalized unless the loan meets certain criteria, including that there must be a written instrument, signed and dated on the effective date of the loan; the repayment terms must be actuarially sound and in equal installments to be paid at least monthly with no deferral and no balloon payments,; the loan may not be cancellable upon the death of a lender; there is a tangible, verifiable record of consistent, timely payments (unpaid installments delinquent 3 months or more will result in the balance being treated as a non-allowable transfer); and the written instrument must provide for the assignment to the State of Illinois upon the death of the lender, up to the amount paid by the State.
How is the penalty period calculated? The applicant will not receive assistance for the period of time that could have been paid by the total of the disallowed transfers. The caseworker takes the total of all disallowed transfers over the 5 year lookback period, divided by the daily semi-private room rate times 30 (cost of care). If the total of disallowed transfers is $50,000 and the per-month cost of care is $5,000, the penalty period is 50,000 divided by 5,000, which equals 10 months.
When does the penalty period start? Under the new rules, the penalty period starts at the point that the applicant is Medicaid eligible, which means that you must meet both the financial and non-financial criteria. Basically, the penalty starts at the point that you are out of money and receiving institutional level care. If you apply for Medicaid assistance and have too much money, you will be put in a “spend-down”, which means you are not eligible until your assets have been reduced to the allowable levels. Your penalty period will not begin until your assets are reduced.
How much money does my spouse get to keep if I’m in nursing home and need Medicaid assistance? Your spouse also has to meet financial requirements in order for you to qualify for assistance. If you are married, you are able to keep $3,000, and your spouse is allowed to have $113,640. It is important to note that once that money is used, it cannot be replenished, even if it was used to pay for your care. If you are in a penalty period and your spouse must use her $113,640 to pay for your care during that penalty period, she is not allowed to replenish what was spent. Your spouse’s income is also restricted to $2,841 per month. Any income above that amount must be used to pay for the care of the institutionalized spouse.
I gave some money to my kids, and now I have a penalty. Will my penalty be reduced if I get some of the money back? It depends. If you are able to get back some of the money BEFORE you apply for Medicaid assistance, the caseworker will reduce the penalty period by the amount returned. But, once you apply for Medicaid and the penalty period has been imposed, it’s all or nothing. The full penalty period will still apply even if you get some of the money back. Once the penalty has been imposed, the only way to reduce the penalty period is to get back ALL of the money and assets you gave away. Every penny of every gift over the 5 year lookback period must be returned in order for the penalty to be eliminated.
What happens to my social security and pension if I’m receiving Medicaid assistance? Your monthly “income” will be assigned to the nursing home to pay for your care. You are allowed to keep a “personal needs allowance” of $30 per month.