In Minnesota, it is important to know which assets are excluded for Medicaid/Medical Assistance (MA) eligibility purposes when contemplating MA Long-Term Care benefits for individuals who are 65 years of age or older, blind, or disabled. This article focuses on excluded assets for MA eligibility purposes, and will not detail income requirements, asset allowances for a community spouse, or spend-down rules for an MA recipient.
Because MA is a means-tested program, the County determining eligibility looks at all of an applicant’s assets and income in order to determine financial eligibility. As outlined in Minn. Stat. § 256B.056, asset and income requirements differ for two types of applicants: for single applicants and for married applicants where one spouse is institutionalized and is receiving care while the other spouse remains in the community. Spousal impoverishment laws prevent married persons from spending all of their income and assets on long-term care. Instead, there are rules related to assets and income that provide for a community spouse.
The County will consider an asset to be “available” for MA purposes if the owner has both the legal authority and actual ability to use or to convert the asset to cash. However, there are certain assets that can be retained by an applicant, yet are excluded assets for MA eligibility purposes.
Generally, as of January 1, 2015, a homestead is excluded if an applicant still lives in the home or can be reasonably expected to return to the home so long as the home equity is at or below $552,000. The home equity limit increases annually based on the Consumer Price Index for All Urban Consumers (CPI-U). If a single MA applicant moves into and stays in a long-term care facility, then the homestead is excluded for six calendar months, after six months the applicant must either move back home or make reasonable efforts to sell the home. If the applicant is married, but no longer lives in the home, the homestead may still be excluded if it is used as a primary residence of any one of the following individuals:
- A minor child (under age 21),
- A disabled child who is certified disabled under the Social Security criteria,
- An adult child who resided in the home and provided care to the applicant that permitted him or her to reside in the home rather than an institution for at least two years immediately prior to the applicant’s admission to a long-term care facility (under the “caregiver rule”), or
- A sibling with an equity interest in the home that resided in the home for at least one year immediately prior to the applicant’s admission to a long-term care facility.
Other assets excluded for MA purposes, include:
- One vehicle of any value,
- Tangible person property (if it is not kept for investment purposes),
- Capital and operating assets of a trade or business that the County determines are necessary to the applicant’s ability to earn an income are not considered,
- Some trusts including Supplemental/Special Needs Trusts and Pooled Trusts,
- Pre-funded funeral and burials, and
- Liquid assets (bank account) worth $3,000 or less.
Recommendations Moving Forward
As part of the asset reduction phase of MA eligibility, it is often recommended that an applicant purchase excluded assets or spend down on improvements of excluded assets. Reduction of assets, including purchases of excluded assets, must take place before the month of application. Otherwise, the ability to purchase items is limited. Some of the recommended expenditures include: paying property taxes, maintenance on the home, home improvements, and paying off a mortgage. Putting money toward an excluded asset, like the homestead, in order to reduce assets, increases the value of an excluded asset that could be sold later after eligibility. In essence, an applicant is “preserving assets” as equity in the homestead which may be later sold, and the home proceeds can be retained by a community spouse or home owner (listed above).
The laws pertaining to Medical Assistance eligibility are extensive and ever changing. If you are planning for long-term care and possible MA benefits, or you are helping someone else plan, please seek advice from an elder law attorney. Recommendations for asset reduction may differ on a case-by-case basis depending on an individual’s health care need or goals, and based on their financial circumstances. An elder law attorney can assist you in planning for long-term care, MA benefits, and proper asset reduction.