Medicaid Compliance & Eligibility

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1 Medicaid Compliance & Eligibility Presented by: Sarah Schwarcz of Senior Planning Services an affiliate company of LTC Consulting Services and Streamline HR Management

2 Topics We Will Cover: Filing the Medicaid application Understanding Resource limits & Spend Down What is a Medicaid Penalty Understanding Income guidelines Understanding Qualified Income Trusts (QITs) The paperwork nightmare The challenges of the Medicaid application Process What kind of Asset preservation can Medicaid applicants achieve in New Jersey? Spousal Scenarios Medicaid Danger Zones MLTSS

3 Resources/ Spendown Qualified Single applicants may keep $2,000 Applicants may not transfer assets for less than fair market value Medicaid has a five year look back period designed to determine whether transfers have occurred. This is one of the prime reasons why the application process can be so difficult Spend down represents the final money that needs to be spent prior to arriving at the Medicaid resource threshold Applicants must use spend down for their care or the needs of their spouse Applicants may use spend down to pay their bill at the facility Applicants may use spend down for an irrevocable pre-paid funeral Applicants may use spend down for help with filing the Medicaid application In order to qualify for Medicaid in NJ, resources must be spent down by the first of the month There is a financial risk to the applicant when spend down mishaps occur since being over the allowable resource limit will render applicants ineligible. Common examples include: Over the resource due to a previously unknown account Over the resource due to life insurance with cash value Over the resource due to previously unknown stock Most resources are countable. There is no distinction whether the applicant or the spouse owned the resource. In general terms (there are exceptions) the resources are countable

4 Some examples of countable resources include: Single applicants home when the applicant resides in a facility (there are exceptions to this rule) Banks accounts Stocks, bonds, annuities, life insurance policies with cash value (face value under $1,500) revocable funeral contracts Some examples of excludable resources include: Personal possessions Life insurance policies with a face value under $1,500 Special needs trust Transfers prior to the five year look back Home where community spouse resides A car valued below $4,500

5 Medicaid Penalties A Medicaid penalty will be assessed if an applicant transfers resources for less then fair market value. The penalty period is a calculated period of ineligibility based on the penalty devisor. The Medicaid penalty divisor is the method used by Medicaid agencies to calculate how long an otherwise eligible Medicaid applicant will not be covered by their Medicaid benefits. It is used only when the applicant has transferred assets for less than fair value, without adequate explanation, within five years preceding the Medicaid application. Current NJ Devisor is $ 10, per 30 days of care or $$ per day For example, if an applicant is found to have transferred $100,000: $100,000 /$10, = 9.88 months of care Penalties can be avoided or minimized with proper documentation Document gathering and Medicaid Failure to Present requested documents may result in a denial It is often very challenging for the responsible parties to properly gather all required information

6 Understanding Income guidelines: Income Recurs monthly (Social security, Pension etc.) Resources Assets owned by the applicant (money in a checking / savings account, stocks, bonds etc.) 2015 Income Limits GLOBAL OPTIONS WAIVER (Community / Assisted living Medicaid) *Income Cap - $2,199 (Gross monthly income) INSTITUTIONAL MEDICAID (Nursing home Medicaid) *Income cap - $2,199 Resource limit - $2,000 (Community, Assisted Living & Nursing Home)

7 *QUALIFIED INCOME TRUSTS (QIT) For those whose income exceeds $2,199 that would otherwise be eligible for Medicaid, Medicaid will allow the excess income to be placed into a Qualified Income Trust. A Qualified Income Trust (QIT), also known as a Miller Trust, allows a Medicaid applicant to place income above the Medicaid income threshold of $2,199 into a separate bank account each month. This excess income is then not counted towards the applicants Medicaid eligibility. To establish a QIT, designated trust paperwork will need to be completed, a separate bank account will need to be established and excess income will need to be deposited into the account each month. There are many strict guidelines that need to be met in order for the QIT to meet Medicaid eligibility guidelines.

8 Things to keep in mind when establishing a QIT: A QIT can only be set up by the applicant, Power of Attorney or legal Guardian. The QIT must be irrevocable. The QIT must have a trustee to take care of administrative obligations; this individual may not be the Medicaid applicant. The State of New Jersey must be the first remaining beneficiary of funds upon the death of the Medicaid recipient. Only the applicant s income may be deposited into a QIT. Assets or income from a spouse or other sources are not allowed. The applicant may not split a deposit from the same payment source (Social Security/pension). The QIT must be funded in the month of the desired eligibility date. The QIT needs to be established by the last day of the month that eligibility is needed; it is recommended that it be established in advance of that month as a precaution. Trust needs to be funded by the last day of the month each month that eligibility is needed. Maximum of funds that can be deposited into the trust to start the bank account is $ Any month that income is not deposited into the trust will cause ineligibility for that month.

9 What happens to the Medicaid applicant s income? Income is due to the facility with certain exemptions $35 PNA when residing in a skilled nursing facility $107 PNA for assisted living facilities residents Secondary insurance Premiums In certain instances income may be kept by spouse

10 What kind of Asset preservation can Medicaid applicants achieve in New Jersey? Transfers that have occurred prior to the look back period will not generate a Medicaid penalty Homes may be transferred if the community spouse resides there or if an immediate child resided there for two years and cared for the Medicaid applicant. When there is a special needs child assets may be transferred into a special needs trust Spousal scenarios allow for asset preservation in order to protect the community spouse

11 spousal scenarios Understanding how Medicaid guidelines change in spousal scenarios When a Medicaid applicant is married, Medicaid eligibility criteria is impacted in numerous ways Countable resources include that of both spouses (not just the applicants resources) The applicants income may be given to the spouse in certain instances Resources may be kept based on a defined formula The home may be transferred to the community spouse if it is the primary residence If the community spouse dies before the Medicaid applicant, assets may revert back to the Medicaid beneficiary (depending on the actions that were taken). Even if the will was modified and the facility spouse is no longer listed as an inheritor, the legal concept of elective share may result in a one third inheritance to the institutional spouse.

12 spousal scenarios-cont Income If the community spouse relies on income, he or she may be entitled to the spouse s income based on existing shelter related expenses. The minimum Monthly Maintenance needs allowance is $1, Resources A community spouse may keep resources based on the total value of resources on the snapshot date. The Minimum Community spouse resource allowance is $ 23, The Maximum Community resource allowance is $119,220.00

13 Medicaid Danger Zones Timely Spend down Document gathering Proper explanations for all transactions Potential penalties and transfers Cash withdrawals Rental agreement Family members providing care and charging for it Non agency care givers Loans Co-mingling of assets While pending Medicaid it is generally difficult to get admitted into a facility

14 MLTSS -Medicaid Managed Long Term Services and Supports After a Medicaid Approval has been granted/mltss NJ Family Care will send out a letter to an approved applicant to choose one of the following five MCOs/HMOs (Managed Care Organizations): Horizon NJ Health Amerigroup Wellcare Aetna United Healthcare Once an applicant is enrolled in an MCO, the facility that is administering services will contact the MCO to request an authorization number to bill for services. Generally, the authorization that is given over the phone will be short-term; often times, for 30 days. The facility will also request a nurse from the MCO to come down and do an evaluation and provide a Long- Term Care authorization number. If a nurse has not come down to do the evaluation, within the short-term authorization timeframe (30 days), the facility will need to request another short-term authorization until the evaluation is completed.

15 The Ultimate Dummies Guide of Medicaid Terms and Expressions. Income - refers to available funds coming in on a monthly basis. This includes social security, pensions, alimony, income from rental properties and the like. Assets - also known as resources- refers to anything the applicant owns to which a financial value can be assigned. Not all assets are counted when Medicaid is determining eligibility. Assets that are counted include: cash, checking accounts, savings accounts, CDs, IRAs 401(K)s, pension funds (if you have the ability to withdraw lump sums), securities, and the Cash Surrender Values (CSV) of life insurance policies. Excludable Assets - also referred to as non-countable assets or exempt assets -the term for assets that are not counted when Medicaid determines financial eligibility. Such assets include the home-if a spouse or dependent child is residing in it, any vehicle regardless of make or model, prepaid irrevocable funeral trusts, burial plots, promissory notes (until they are due, and they are then regarded as income). Excludable assets can vary by state, and many states impose an allowed maximum. Spend-down Refers to the process of spending ones assets in order to meet Medicaid's financial eligibility requirements. Gifting - is the term used for transferring or giving away assets that are less than fair market value. Simply handing off money or 'gifting' assets to meet the cap within the five-year look back period results in a gift penalty (see below). Gift Penalty- a penalty is a period of ineligibility for Medicaid coverage that corresponds to the amount of monies that were gifted or transferred below fair market value. Penalty Divisor Rate - is the rate used to calculate the length of the penalty period, which is the amount that was gifted, divided by the average cost of nursing home care in the area.

16 Take a test to see if you are vulnerable to the failures of Medicaid in NJ. 1. What amount must your income be below in order to achieve Medicaid in an assisted living facility? A. $2,000 B. $2,199 C. No Amount 2. What amount of monies are allowed to be gifted annually within the five year look-back period and not be assessed for a penalty? A. $2,000 B. 14,000 C. No Amount 3. What is the asset limit for Medicaid? A. $2,000 B. $4,000 C. $14, Fill in the blank: A life insurance policy with a face value of or less will be exempt from the Medicaid spend-down. A. $1,500 B. $14,000 C. $2, What is the most frequent reason for a Medicaid denial in the state of New Jersey? A. Assets in excess of the allowable amount B. Failure to provide necessary documentation within the allotted timeframe C. Significant gifting within the look-back period

17 The Ultimate Dummies Guide of Medicaid Terms and Expressions. (cont.) QIT-Qualified Income Trust - also known as a Miller Trust- is a trust that is established to help one meet the state specified income limits, and qualify for Medicaid coverage (assuming they are otherwise eligible). If one has any monthly surplus income (income above the threshold), they can allocate the difference to the Qualified Income Trust until they meet the income cap. For example, the state of New Jersey allows a monthly income of up to $2, If an applicant were to earn $3, a month, $ would need to be assigned to the qualified income trust to bring them down to the allowable limit. The monies in the trust are now non-countable and are no longer regarded as income. The money in the QIT is given to the Medicaid providers to help offset the cost of care Monthly Maintenance Needs Allowance - refers to a carefully calculated number that Medicaid determines is the minimum a community spouse can live on. If the community spouse's income is below the MMNA, the shortfall is supplemented with the institutionalized spouse's income. PNA - Personal Needs Allowance - Once on Medicaid, some states require that all income go toward the cost of care. They do, however allow the applicant to keep a PNA- a small sum that can be used to purchase personal items at the beneficiary's discretion. Prepaid Irrevocable Funeral Trust - refers to an irrevocable trust that is established for the express purpose of paying for a Medicaid applicant's funeral. Because it is irrevocable (it cannot be changed, dissolved, or reversed), the prepaid irrevocable funeral trust can be utilized as a technique to qualify for Medicaid. If one's assets are above the state specified asset threshold, they can prepay their funeral expenses to bring their assets down to the allowed limit.