Medical Assistance (“MA”) is Minnesota’s Medicaid program* that is funded by state and federal dollars. MA is an extremely complex area of the law and one that gives many individuals great pause when thinking about his or her future and the aging process.
An individual’s eligibility for MA is based on several factors. However, his or her personal and financial situation can invariably change their eligibility status. To be eligible for MA, an individual must:
- Be a Minnesota resident,
- Meet category requirements, such as children under the age of 21, parents or relative caretakers of dependent children, pregnant women, people over the age of 65 and people who have a certified disability, and
- Satisfy the income and asset rules.
For an individual 65 years or older, or an individual who is blind or disabled, the monthly income limit for one person is $903 (effective through June 30, 2011). Sources of income include, but are not limited to, wages, self-employment, unemployment insurance, and Social Security benefits. Again, for an individual 65 years or older, or an individual who is blind or disabled, the asset limit for one person is $3,000 (effective through June 30, 2011).
Factors to Consider
Individuals should consider certain planning techniques if they know they will require long-term care in years to come and especially if they think they will seek MA. A person’s marital status, age and health are all factors to consider, but married couples should also assess whether both spouses may need MA. This is important because of the asset limitation. If only one spouse will require MA, the non-MA seeking spouse (also called the “community spouse”) will be able to retain half of the marital assets (in 2010 the maximum amount is $109,560 and the minimum amount is $31,094) plus excluded assets. Depending on a person’s full financial situation, it may be wise to make certain purchases and/or transfers of assets to meet the asset limitation requirement. However, again careful planning needs to take place as MA has a 60-month (5 years) look-back period in which assets can still be considered “available” to that individual if transferred within 60 months of applying for MA, possibly causing that person to become ineligible for MA.
A comprehensive review of all assets will be necessary to determine what assets can be excluded from the limiting asset calculation. Certain items may also be purchased before the application is submitted that remain excluded from the final calculation. For instance, the homestead is considered excluded if it is the primary residence of a non-MA recipient spouse and/or minor or disabled child of the MA recipient. In addition, household and personal items and one vehicle are considered excluded assets, as well as certain prepaid funeral plans.
However, there may be some assets that individuals assume would be classified as excluded when in fact under the MA rules that asset is not excluded. When meeting with your financial advisor and/or attorney to discuss planning for your future, it is important to disclose all assets owned by you and/or your spouse, such as securities, retirement accounts, recreational vehicles and equipment, additional real estate properties, business interests and insurance policies. If you are contemplating the need to apply for medical assistance, it is essential that you discuss with your attorney how gifts that you give away will affect your MA application.
Long-Term Care Insurance
Long-term care insurance can be an option for people to consider when assessing their future plans and potential costs. While long-term care insurance may not be suitable for everyone, it can be appropriate for individuals who have a predisposition to certain diseases or illnesses, or for individuals who have a substantial amount of financial assets. To determine if long-term care insurance is appropriate for you and/or your spouse, contact a financial advisor or insurance agent to discuss your individual situation.
A person can neither predict the future nor determine what, if any, medical care they will require as they get older. Nevertheless, by keeping abreast of your financial and medical situation and communicating it with your legal and financial advisors, you can establish a strategic plan to ensure you are cared for in the later years of your life.
*Each state has its own Medicaid program and the rules and regulations associated with each program vary state to state. If you are not a Minnesota resident, you should contact a local attorney or your state’s Department of Health and Human Services to find out the rules associated with your state’s medical assistance program.