Long Term Care (LTC) Colorado Medicaid
The following information for Medicaid services for Colorado is limited to long term care of the Elderly, Blind and Disabled (EBD). Care is provided through Home and Community Based Services (HCBS), Program for All Inclusive Care of the Elderly (PACE), and Medicaid long-term care. HCBS and PACE are referred to as EBD waiver programs. An applicant must be eligible medically, as well as qualify on the basis of income and resources, for participation in one of these care programs.
Waiver benefits are delivered in your home or community, have special program rules and can have waitlists. They also provide all Colorado Medicaid covered services except nursing facility and long-term hospital care.
Medical Eligibility for Medicaid Long Term Care
To be eligible for Medicaid long-term care or HCBS benefits, an applicant must be over age 65, blind or disabled and must also require a nursing home level of care. The applicant must be assessed functionally by the Colorado DHCPF Single Entry Point assessment contractor. The applicant must be found by the contractor to be unable to perform two Activities of Daily Living (ADL) or have a very significant need for supervision. The activities of daily living are dressing, transferring, mobility, bathing, eating, and toileting.
Financial Eligibility for Medicaid Long Term Care
To be financially eligible, an individual must have income of less than $2,199 per month and less than $2,000 in countable resources. If an individual has more than $2,199 but less than the 2015 Gross Income Cap of $8,039 per month in the six-county Denver metropolitan area, they may become eligible by creating an Income Trust, also known as a Miller Trust. Only certain types of incomes are excluded, everything else in gross income is counted.
Income of the individual’s spouse is not counted in determining their eligibility for HCBS, PACE, or Long Term Care Medicaid. For eligibility purposes, income is assigned to whoever’s name is on the check or account. Reverse mortgage payments, VA Aid and Attendance and Unreimbursed Medical Expenses payments are not considered income in the month received. However they are considered a resource or asset in the month following.
Resources must be less $2,000 if they are countable for eligibility purposes. A primary residence is generally excluded for eligibility purposes but is subject to recovery for payments made by Medicaid on behalf of the applicant. The applicant may have one vehicle regardless of value. Life insurance is limited to $1,500 in face value unless the life insurance is irrevocable. Personal property is generally exempt.
Treatment of Assets: The Income and Resource Tests
Assets are considered income in the month they are received. Assets held beyond the month in which they are received are considered resources.
Income and resources are either considered available if they are actually received; or if the Medicaid recipient has a legal interest in the income or resource and the recipient has the actual ability to make the income or resource available for maintenance and support. Otherwise, the income or resource is considered unavailable and is not counted in determining Medicaid eligibility.
Available income and resources are either considered countable or exempt. Generally, all available income and resources are considered countable, unless they fit into one of the specific exempt categories provided under the law.
The Income Test
For Medicaid long-term care or HCBS benefits, the income cap applicable to an individual beneficiary is $2,199 per month in 2015. The income of the individual’s spouse is not counted in determining the individual’s eligibility for Medicaid long term care or HCBS. Reverse mortgage payments are not counted as income, but may be considered resources if they are held over to the month after they are received. Payments to the nursing home from long term care insurance policies are also not counted as income.
If the individual’s monthly income exceeds $2,199 per month, but is still less than the state’s applicable average monthly cost of nursing home care, he or she can still qualify for Medicaid in Colorado by using an “Income Trust.” All of the individual’s current monthly income will need to go into an Income Trust each month. From the trust, the trustee can pay the individual’s monthly income allowance (usually $75); any monthly amount payable to the community spouse under applicable spousal impoverishment protection regulations; trust administration costs of no more than $20; and pre-approved Post Eligibility Treatment of Income (PETI) deductions (if any). The balance of the individual’s current monthly income will be paid from the Income Trust to the nursing home as the individual’s monthly patient contribution amount. The balance of the individual’s covered nursing home costs for the month will be paid by Medicaid.
Normally, when a person qualifies for Medicaid in the nursing home or for HCBS, that person also will be entitled to full Medicaid coverage for hospitalizations, doctor visits and other expenses not necessarily associated with long term care. However, if a person’s income exceeds the income cap for long term care benefits or HCBS and the individual must use an Income Trust to qualify, Medicaid will only cover that individual’s long term care or HCBS expenses. If, for example, that person needs to go into the hospital, those additional expenses would not be covered by Medicaid.
For individuals who qualify for both Medicare and Medicaid, Medicaid will no longer pay for prescription medications covered under Medicare Part D. This is true, even if the individual elects not to enroll in Medicare Part D!
Individuals who qualify for Medicare and who will require an Income Trust to qualify for Medicaid long term care or HCBS benefits should maintain their coverage under Medicare Part A and Part B to cover other medical expenses; and these individuals should enroll in and maintain their coverage under Medicare Part D to cover their prescription medications. Further, if any individuals have a Medicare supplemental, or “Medigap” policy, or access to coverage under a group health plan, they should continue to pay the premiums to keep those policies in effect, even after they go on Medicaid. Otherwise, a hospital visit, a routine doctor’s visits outside the nursing home or the need for prescription medications could present an unexpected and significant expense that Medicaid will not cover.
The Resource Test
The general rule regarding resource eligibility is that a Medicaid recipient cannot have “countable” resources of more than $2,000. This figure may seem unrealistically low, but please keep in mind that the following are not countable resources:
Primary Residence. The Medicaid recipient’s equity in his or her home is considered an exempt resource if that equity is valued at less than $525,000 or the recipient’s spouse or minor, blind or disabled child continues to live there; and if the home was the Medicaid recipient’s principal residence; and (a) the recipient (or spouse) actually lived in the home immediately prior to being institutionalized and a spouse or dependent relative continues to live there; or (b) the recipient (or spouse) left the home before being institutionalized, but the recipient intends to return home.
Vehicles. The Medicaid recipient is entitled to one vehicle, regardless of its value.
Personal Property. Personal property is exempt, regardless of its value, so long as it is not property held for investment purposes.
Life Insurance. If the total face value of all life insurance policies the Medicaid recipient owns does not exceed $1,500, then the policies are exempt regardless of their cash surrender value. If the face value of all policies exceeds $1,500, then the total amount of the cash surrender value is countable toward the $2,000 resource limit. Term life insurance policies are always exempt, regardless of face value.
Burial Insurance. Irrevocable burial insurance is exempt
regardless of its dollar value. Revocable burial insurance is
exempt to a maximum of $1,500, but this exemption is reduced on a dollar for dollar basis to the extent that the person has life insurance, other than term life insurance, that was exempt under the rule described above. Also, the value of burial spaces and grave markers for the applicant and immediate family are exempt.
Retirement Accounts. Self-funded retirement accounts of the Medicaid recipient and the recipient’s spouse are countable, but may be reduced for taxes that will be charged upon withdrawing the funds.
Annuities. A commercial, irrevocable and non-assignable,actuarially sound annuity that pays substantially equal payments over the annuitant’s lifetime (i.e., an immediate annuity) is considered an available resource until it is annuitized. Once annuitized, payments from the annuity are considered income in the month received. The use of a “Medicaid friendly” annuity is an important technique to convert an “available resource” to an income stream that can protect a large amount of cash through a “half-a-loaf ” gifting plan. Colorado’s state regulations provide that such an annuity may be considered a transfer without fair consideration under certain circumstances when the annuitant is the community spouse.
The Deficit Reduction Act (DRA) provides that entry fees paid to a Continuing Care Retirement Community (CCRC) are now considered countable resources to the extent that these fees ( a.) are refundable upon death or the termination of the CCRC contract, (b.) are available to pay for the resident’s care when his or her other resources are no longer sufficient, or (c.) do not confer an ownership interest in the CCRC.
To become eligible for Medicaid, an individual must eliminate any resources in excess of resource-eligibility levels. This can be accomplished by “spending down” these excess resources, by making gifts of these excess resources or by a combination of the two.
Typically, an individual planning for Medicaid eligibility will want to preserve as many resources as possible, either for his or her family and loved ones or for his or her own supplemental needs once Medicaid benefits begin. Therefore, most Medicaid planning has traditionally involved making gifts.
Making gifts for purposes of becoming eligible for Medicaid can be potentially disastrous under the new laws. Medicaid planning has now become more difficult and dangerous, but it is not impossible.
A strategy is needed which will allow the penalty period to start running as soon as the individual enters the nursing home while, at the same time, providing a means of private payment for the duration of the penalty period and preserving a portion of the applicant’s resources that satisfies the applicant’s planning goals.
In many cases, an annuity, long-term care insurance or a reverse mortgage may provide a perfect solution. However, all of these strategies will not work in every situation. This is why it is so important that an individualized Medicaid plan be formulated on a case-by-case basis to fit the exact circumstances of each individual and that each individual’s own Medicaid plan be followed exactly as designed.
Our Certified Medicaid Planners can provide successful asset-protection and Medicaid planning. Please contact us at 000-000-0000 for more information or to start your Medicaid application process.