The issue of pushing the costs of Medicaid from the Federal government to the states is picking up new steam. Instead of being treated as an entitlement program (i.e. if you are eligible then you will be covered), the block grant system will change Medicaid (i.e. Medical Assistance in Maryland) to a program that is funded if the state can afford it. The bottom line is that less funds would be available for each state, Maryland included, which would mean potentially drastic cuts for Medical Assistance and likely large scale changes to determine who is eligible (i.e. based on stricter criteria). It will also likely mean that even if a person qualifies, there may not be coverage because there are not enough funds to pay for coverage. At this point in time, there is great uncertainty as to exactly what changes will occur. But, there is no question that change is going to occur and that change will mean different more stringent criteria and likely denial of benefits because there are no remaining funds to pay for said services. As there are new developments and clarity on the issue, I will place additional updates.
One of the various changes proposed by candidate Trump was the idea of shifting Medicaid responsibility from the Federal Government to the States. The rational proposed by Trump was that such a move would “maximize flexibility to states via block grants so that local leaders can design innovative Medicaid programs that will better serve their low-income citizens.” As it currently runs, States, like Maryland, really heavily on Federal government support for Medicaid benefits for at risk groups, including seniors in nursing homes. This proposal is not a new one. It was first proposed by New Gingrich in 1995, then in 2003 by President George W. Bush and by House Republicans in 2011. The practical effect to the States would be to reduce Federal funding and shift the payment responsibilities to the States. The States in turn will either have to dramatically increase taxes to carry the extra burden or reduce reimburse rates to nursing homes, reduce what is covered under Medical Assistance, or likely restrict Medical Assistance eligibility.
As of right now, this is just a proposal. If this proposal moves forward, I will continue to post the practical impact this will have on Maryland at-risk seniors.
Medicaid Medical Assistance Rules About Countable Assets
Medicaid Medical Assistance rules clearly indicate that:
- Income is converted at the beginning of the next month to a countable asset.
- Applicants can have no more than $2,500 in countable assets.
Applicants whose incomes are deposited at the beginning or middle of the month usually have no issues with these rules. However, applicants whose incomes happen to arrive at the end of the month can be disqualified.
Disqualified Because of End-of-Month Income
Let’s suppose an applicant receives a pension income of $3,000 that arrives on the 30th of each month. In that case, the income hits the account on the last possible day. The first of the month rolls around, and then, by no fault of the applicant, that $3,000 worth of income is now a countable asset. The individual is disqualified from Medical Assistance since the countable assets are over-limit. It seems to be a worse case scenario of never being able to qualify for Medical Assistance. Unfortunately, the Maryland Medical Assistance Manual is not clear on this point.
Administrative Law Judge Ruled for Grace Period
However, this issue was addressed in an administrative law hearing, and the ALJ ruled that income does not automatically convert to an asset as of the first of the month. Rather, income that hits at the end of the month is allowed a grace period before it converts (if unspent) to a countable asset. That opinion is posted here: ALJ Opinon on Income at the End of the Month.
Filing for Medicaid
Filing for Medicaid (called Medical Assistance in Maryland) is a very paper intensive process. Often times it is the children of the parent who ends up trying to gather the mountain of information needed for the application process. Given the five year look back requirement, the burden is often high on that family member.
Medical Assistance Penalty Transfers
Because of the strict rules governing Medical Assistance penalty transfers, those transactions that occurred that were innocent at the time could be devastating for eligibility now. It is very common for an aging parent to live with her child and their family. It is also very common for that parent to co-mingle her social security income and pension income to the child’s bank account to help pay for the house expenses. But, in the eyes of Medical Assistance, that transfer from mom’s account to her son’s account will be treated as a Medical Assistance penalized transfer. This can be a real mess if this type of transfer was routine and had occurred over the course of several years.
The Cost of Transferring Money
A penalized transfer is a penalty imposed by Medical Assistance that provides that for every $6,800 transferred or gifted out of mom’s account it will result in one month of Medical Assistance eligibility which will start only when you file for benefits. So, in this case, assume that mom’s social security income was $1,500 a month and this arrangement of her giving her income to her son for the family’s expenses occurred over every month over the last 4 years. That’s $72,000 worth of transfers! Those transfers will result in approximately 10 1/2 months of Medical Assistance ineligibility.
Medical Assistance: Application Processing Time
That penalty start date will not even start until you file for Medical Assistance (at a time when the parent cannot have more than $2,500 worth of assets). Given that a Medical Assistance application may take many months to process, you could receive a denial notice 5 months after you apply. In the meantime, the nursing home bills are accumulating at $11,000 a month. Once that application is denied, the nursing home will expect payment in full or threaten to start the discharge process. They will also take a hard look at who signed the nursing contract and if there was a child who signed the contract they will put pressure on that child to pay the outstanding balance. It is a mess.
Detangling the Medicaid Mess
Our office can help a family unwind and get rid of this mess. Medical Assistance rules are complicated and harsh. However, our office is good at taking complex Medical Assistance “messes” and getting Medical Assistance eligibility. We recently handled a case with facts very similar to the facts mentioned above and obtaining full Medical Assistance eligibility with a determination of zero penalized transfers. Naturally, the client was pleased.