As many know and as we have covered here, nursing homes and long-term care facilities can choose to accept certain insurance from private companies. They can also accept insurance from government programs. Medicare and Medicaid are two such programs, which are administered by the Centers for Medicare and Medicaid Services under the authority of the United States Department of Health and Human Services.
This federal agency can promulgate rules that nursing homes and other medical providers follow if they accept reimbursements from these government programs to cover medical care costs for patients and residents. Medicare and Medicaid have state components as well, though, in that states have offices that largely administer these programs, as the funds are actually provided to the states to then disburse, along with the state’s own funds depending on how much is allocated, to the qualifying and eligible providers and programs. Each state uses a specific formula, including based on federal requirements, to determine who may qualify for Medicaid reimbursement. This takes into account of course income and assets which signify one’s ability to pay.
Possible Changes in Neighboring State
In nearby Michigan, there have been developments as relates to how Medicaid is disbursed to qualifying people and providers. In fact, the Patient Protection and Affordable Care Act (ACA), otherwise colloquially known as “Obamacare,” expanded eligibility for Medicaid, an expansion which took effect this past year. It changed the federal eligibility threshold to a household income and assets of 133% the poverty level. This means that it is the poverty level plus a third of that value. As the Medicaid website indicates, as of 2014, 133% of the poverty level was $31,720 for a family of four, or $15,521 for an individual (for all states plus the District of Columbia, but excluding Alaska and Hawaii). (The ACA also provided for three months of retroactivity to apply Medicaid coverage.) Applicants must also demonstrate eligibility by meeting certain residency requirements and citizenship requirements. In considering assets, Medicaid will consider the value of trusts set up for a Medicaid applicant who is the beneficiary of that trust.
In Michigan, irrevocable trusts rose to prominence in the state in the mid-1990s. They are also called “Solely for Benefit Of” trusts, and the purpose of such trusts were to benefit the spouse of a nursing home resident so that the spouse would have an income. Now, as recently reported, the state has been factoring in such trust incomes into the overall family/household income when calculating for Medicaid eligibility. Thus such trusts can no longer act as an untouchable or uninhibited source of income for a person whose husband or wife is in a nursing home.
Lawyers and those affected have noted about how the change went into effect without anyone being told. And those already approved for Medicaid can now have such trusts considered when they are reassessed for Medicaid eligibility each year. The ultimate determination came on the interpretation of federal law and policy that such trust benefits must count as income. This is particularly sensitive given that federal dollars funding Medicare and Medicaid are taxpayer dollars, and thus the job of the state government is to ensure that only an appropriate amount of tax dollars is used toward funding these health care policies.
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