If you plan on Medicaid footing your nursing home bill in Indiana, be very careful when completing the Indiana Application for Health Care Coverage to avoid getting denied. Medicaid is a government program which provides healthcare benefits including long term care to low income individuals who qualify. However, all too often people have their Medicaid applications completed and submitted by health facility personnel, family members or others who might not be aware of Medicaid pitfalls or strategies to protect your assets. This could be a disaster waiting to happen – one which could result in your ineligibility for Medicaid and lead to large out of pocket nursing home costs. Here’s a brief rundown of some important things to consider before filing a Medicaid application in Indiana so that you can avoid Medicaid eligibility problems including delays or denials.
Causing A Penalty By Gifting Assets
Although the gift you made to your children years ago was a heartfelt gesture, it is something that Medicaid might look at negatively when determining your eligibility. Namely, Medicaid reviews five years’ worth of your financial transactions to see if you made certain gifts or transfers for less than fair market value. Significantly, gifts to individuals including your own children that are made within five years of your Medicaid application could result in Medicaid’s refusal to provide you coverage for long term care. You determine the number of months of ineligibility by dividing the sum of unapproved gifts by $6,527.
Not surprisingly, one way of avoiding Medicaid penalties is to steer clear of making gifts and transfers for less than fair market value within five years of applying for Medicaid. However, if you already gifted assets to someone or you transferred your assets to a trust within the last five years and plan to turn to Medicaid, you should carefully consider the timing of your application and discuss any potentially disqualifying transfers with an attorney as it might be possible for you to avoid or mitigate the effect of those transfers.
Incorrectly Reporting Assets And Income On The Medicaid Application
In the Medicaid application, you have to disclose your resources (assets) and income for purposes of Medicaid not only determining your eligibility but also establishing the amount that you have to pay, if any, for your long term care. In order for you to qualify, you cannot have more than $2,000 in assets ($3,000 if both you and your spouse need long term care and Medicaid help to pay for the care). Any assets in excess of that amount places you at risk of Medicaid ineligibility. However, not all assets count or need to be disclosed to Medicaid, so be careful what you say on the application.
For example, your checking and savings accounts are countable assets in Medicaid’s view. But suppose that you have a retirement account? Depending on the situation, this could count as an asset or income. Perhaps you have a life insurance policy. This policy’s cash value is a countable asset to Medicaid. Or maybe you deeded an investment property to your children ten years ago but have retained a life estate – which is an asset. In that situation, the value of that life estate is what matters for Medicaid purposes, not simply the fair market value of the property. Failing to properly document your assets and income can be a big problem and can cause your application to be rejected.
Failing To Place Extra Income, Assets Into A Trust
Another mistake that might be made in connection with a Medicaid application in Indiana is the failure to put the portion of your income which exceeds Medicaid’s monthly income limit ($1,485 for one person household) into a Miller Trust (also referred to as a Qualified Income Trust).
If you are in a situation where your income exceeds Medicaid’s monthly income limit, then you could make use of a Miller Trust to store your excess income, in effect bringing your monthly income under the eligibility limit. This is considered acceptable to Medicaid because unlike a typical trust, Medicaid is listed as a beneficiary of the Miller Trust and can be reimbursed for the benefits it provides you. In order to obtain a Miller Trust, you should consult with an elder law attorney.
Not Taking Into Account Family Relationships
With Medicaid, certain benefits are available based on whether you are married and have a family. Namely, if you are married, your spouse’s financial situation could be significantly different than yours which could necessitate a closer review of eligibility. For example, in Indiana, the spouse not going into the nursing home – called the community spouse – can have between $2,155 and 3,216 a month through a Minimum Monthly Maintenance Needs Allowance. Not only that, but the community spouse is entitled to as much as $128,640 in countable assets through a Community Spouse Resource Allowance. Finally, Medicaid could consider your home to be an excluded asset by virtue of your spouse or any blind or disabled child continuing to reside there.
Other Information In The Medicaid Application
Another thing that you need to take into account is the benefits that you have received in the past and at the present time. You might be receiving benefits such as social security or veterans’ benefits. Remember that Medicaid benefits can be affected by your other benefits, so it is important to review each type of public benefit you have to see how this impacts your eligibility.
Hiring An Elder Law Attorney In Indiana For Medicaid
One seemingly minor mistake on a Medicaid application can result in a denied claim resulting in hefty out of pocket nursing home costs for you. In Indiana, Medicaid applications are processed by Family and Social Services Administration (FSSA) who might take up to 90 days to determine eligibility. This means that it can take months to overcome a mistake made in a Medicaid application.
If you rely on getting your Medicaid application done by a health facility person, family member or another person or company that doesn’t know the ins and outs of Medicaid, then your application could be riddled with errors. Fortunately, the way in which your income and assets are classified could potentially be changed while still conforming to Medicaid’s laws and guidelines. You also might have an opportunity to preserve more of your assets for yourself, your family and other loved ones versus having to watch it all vanish at the nursing home.
When filing an application for Medicaid in Indiana, it makes a lot of sense to consult with an elder law attorney who is well versed in the areas of Medicaid. This is someone who can help ensure that you have taken advantage of ways to protect your assets while also helping you get Medicaid to pay for your long term care. Hawkins Elder Law has helped countless clients with Medicaid by protecting and preserving their assets while helping them get the care they need. Founders Jennifer J. Hawkins and Jeff R. Hawkins are Board Certified Indiana Trust & Estate Lawyers, certified by the Trust & Estate Specialty Board. If you or a loved one is thinking of Medicaid to cover nursing home costs whether it is now or in the future, feel free to reach out to Hawkins Elder Law at (812) 268-8777 for a consultation today.
About the Authors
Jeff R. Hawkins and Jennifer J. Hawkins co-author the Hawkins Elder Law blog with Thomas E. Hynes, a lawyer who is admitted in Pennsylvania, New Jersey and Florida with a background in estate planning and elder law.
Jeff and Jennifer Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers. They are also active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois.
Jeff is a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation. He is also a member of the Illinois State Bar Association and he served as the 2014-15 President of the Indiana State Bar Association.
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