Item

Before 1/1/2012

After 1/1/2012

Eligibility

$2,000 for single person, $3000 for couple if still living at home. If spouses are living in a facility, each is treated as a single person and would each be able to have $2000 in allowable assets. All available income (social security, pension, etc) will go to the facility, except for a personal needs allowance of $30 for skilled care or $90 for supportive living. 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.

No change. If you have assets exceeding the allowable limits, you will not be eligible for assistance until your assets have been spent on ALLOWABLE items. You are not allowed to give away assets or sell your assets for less than fair market value to reduce your assets to the allowable level. Any gifts of assets and sales of assets for less than fair market value over the lookback period will incur a penalty period of Medicaid ineligibility.

Look-back Period

The caseworker will review all financial records for the 36 month period prior to applying for Medicaid assistance

Starting January 1, 2012, the caseworker will review the applicant s financial records for the 60 month period prior to applying for Medicaid assistance. Any assets you have given away or sold for less than fair market value over the past 5 years will incur a penalty period.

Exempt Assets

Your home, subject to certain limitations (see below); personal items and household goods; property or equipment needed for income or self-support (up to $6,000 total equity value); one vehicle for each spouse if needed for transportation or employment; prepaid funeral/burial funds.

Same, with additional definition of  homestead property . Non-homestead property for sale remains exempt for 6 months, subject to extension while good faith efforts to sell continue. Income producing farmland property and personal property used to farm the land (such as vehicles and equipment) is also exempt. Prepaid funeral contracts are subject to limits. Life insurance with cash value less than $1500; certain annuities (must be irrevocable, non-assignable and meet other strict criteria).

Home Equity Limit

Not specified

$750,000, adjusted annually for inflation. If your equity in your home is higher than $750,000, the additional equity is considered an available asset.

Calculation of Penalty Period

Amount of time you could have paid for your care if transferred assets were kept; calculated by dividing amount of transfer by the monthly cost of care (based on the cost of a semi-private bed in the facility). Each disallowed transfer incurs a separate penalty period, which may be rounded down to the nearest whole month.

Calculation is based on the total of all gifts and disallowed transfers over the 5 year lookback period divided by monthly cost of care (based on a semi-private bed in the facility). The penalty period must be calculated to the day and will not be rounded down.

Start of Penalty Period

Begins in the month in which disallowed transfer was made.

Mary gave her granddaughter $20,000 for tuition in January 2010. A year later, Mary has a stroke, enters a facility and is able to pay for her care for several months. She runs out of money and applies for assistance in January 2012. Her cost of care is $5,000 per month, so she receives a 4 month penalty for the $20,000 tuition gift.

The 4 month penalty period started in January 2010 and has run its course before Mary is out of money in January 2012. Mary receives immediate assistance when she runs out of money in January 2012.

Penalty does not begin to run until the applicant is receiving institutional-level care and meets the financial criteria for Medicaid eligibility.

Using the example to the left, Mary s 4 month penalty period does not start until she has run out of money and applies for assistance in January 2012.

If the gift of tuition is the only disallowed transfer she made, Mary will not receive assistance for January, February, March or April 2012. But, remember that ALL disallowed transfers are used to calculate the penalty period. If Mary made other disallowed transfers during the 5 year lookback period, the caseworker must use the total from all 5 years to calculate Mary s penalty.

See Disallowed Transfers and Gifts to Family, Church or Charity below.

Disallowed Transfers/gifts

Allowed for reasons other than Medicaid planning; any transfer or gift for less than fair market value is presumed to be Medicaid planning unless satisfactory showing is otherwise made.

Same but CONVINCING evidence is required to rebut presumption of Medicaid planning.

Gifts to Family, Church or Charity

Small gifts and transfers of income are allowed for reasons other than to qualify for Medicaid.

In addition to the tuition gift, Mary decides to give each of her 4 children $500 and each of her 12 grandchildren $200 last Christmas. Under the current rules, the gifts are allowed and are not counted by the caseworker.

Incidental gifts to family, and charitable gifts with a documented, consistent pattern of giving may be allowed. Determination of whether or not a gift was  incidental is left to the State.

Mary’s penalty period is calculated using the $20,000 gift of tuition plus all other disallowed transfers as determined by the caseworker. The caseworker will decide if Mary s Christmas gifts of $500 to each of her 4 children and $200 to each of her 12 grandchildren were  incidental. If the gifts are unallowable transfers, Mary s penalty will be based on the $20,000 tuition gift plus $4,400 for Christmas gifts, plus any other gifts Mary gave that are determined to be disallowed transfers.

Partial Returns of Gifts to reduce the penalty period

The penalty period is reduced by amount returned. Mary gave her granddaughter $20,000 for tuition and receives a 4 month penalty. Mary’s granddaughter is able to return $10,000 to Mary. Mary s penalty is based on $10,000 rather than $20,000, and her penalty period is reduced to 2 months.

A penalty period will be reduced only if the partial return is received before the penalty period starts. Once the penalty period is imposed, it will not be reduced unless the applicant is able to retrieve ALL of the assets transferred during the 60 month lookback period.

See below for example.

Partial Return of a gift to reduce the penalty period

(continued)

Mary gives her granddaughter $20,000 for tuition. She has also given her 4 children $1,000 each every Christmas for the past 5 years.

The caseworker decides that the Christmas gifts were not incidental. Mary’s penalty is calculated using the $20,000 tuition gift PLUS $20,000 for the 5 years of Christmas gifts to her children.

$40,000 divided by $5,000 per month cost of care =8 months penalty period.

Mary’s granddaughter returns $10,000. 3 of her 4 children are able to return the $5,000 they received over 5 years. The other child has lost his job and can’t return his gifts.

The return of half of the tuition gift and almost all of the other gifts will not reduce the penalty period. Mary must get back the entire $20,000 AND all of the disallowed gifts she gave during the lookback period.

Once the penalty is imposed, it is all or nothing. All of the gifts must be returned or Mary s penalty period remains the same.

Annuities

Purchase of an annuity during the 3 year lookback period is permitted if the annuity pays out in approximately equal period payments over a term that is  actuarially sound (based on the life expectance of the beneficiary).

Allowed only if the annuity meets tough criteria, including that it must be irrevocable, non-assignable, actuarially sound and paid out in equal installments, or purchased with certain retirement funds. Ownership or purchase of ANY annuity must be disclosed and the State of Illinois must be named as the remainder beneficiary up to the amount the State paid toward the person’s care.

Loans, mortgages or promissory notes given� by the applicant to other persons

Not addressed

The terms of the loan must be in writing with an actuarially sound repayment term, equal payments, and the debt must not be cancelable upon the death of the lender. A history of consistent repayments by the borrower is required. Any loan balance remaining at the death of the lender must be assigned to the State of Illinois, up to the amount paid by the State for the person’s care.

If you do not have the required documentation and the loan does not meet the criteria, the loan will be considered a disallowed transfer and will be used to calculate the penalty period.

Payments to relatives or friends in return for care

Not addressed

Services, care or accommodations provided by a friend or relative are presumed to be gratuitous and without expectation of compensation. Proof of a written agreement predating the delivery of care, records of services rendered or other documentation is required to rebut this presumption. If you have paid someone for care without the required documentation, the total of your payments over the 5 year lookback will be counted as a disallowed transfer and used to calculate the penalty period.

Entrance Fees to Continuing Care Retirement Communities

Not addressed in current rules

Entrance fees are treated as an available asset if you can access the money to pay for care; if the fee is refundable upon death or the departure from the community; or if the fee does not confer an ownership interest.

If you paid an entrance fee to a retirement community which is considered  available, the caseworker will include that fee as part of your available assets, even if you cannot access the fee until the unit is reoccupied.

Hardship Waiver

Granted if the application of the penalty period will cause undue hardship.

In order to receive a hardship waiver, the applicant has the burden of proving that actual, not just potential hardship exists. Evidence of fraud or elder abuse, or being forced to move or be separated from a spouse may constitute evidence of undue hardship.