TITLE 19/MEDICAID CHANGES ENACTED!

On February 8, 2006 President Bush signed into law the Deficit Reduction Act of 2005. This law places severe restrictions on a person's ability to transfer assets before qualifying for Title 19/Medicaid coverage. These changes are fully effective in Wisconsin as of January 1, 2009. There is still much confusion regarding the impact of this new law and how Wisconsin is applying the law. If you are considering any asset transfers in connection with Title 19/Medicaid planning, please contact us immediately. Please note, however, that we will not provide consultations over the telephone regarding this complicated area of law.

ELIGIBILITY FOR TITLE 19
(MEDICAL ASSISTANCE)
FOR NURSING HOME CARE IN WISCONSIN
Title 19 is a joint federal-state welfare program. Title 19 is also called Medical Assistance or Medicaid. Rules vary from state to state and are very complex. It is very important to get professional advice based on your personal situation. There are both asset and income limits which determine Title 19 eligibility. Spousal impoverishment protection refers to provisions which protect the spouse not entering the nursing home.

Asset Limits

The law requires an asset assessment or "snapshot" as of the day an individual enters a medical institution. For a single person, the asset limit is $2,000 in "countable" assets. Spousal impoverishment allows a couple to keep part of their countable assets and still be eligible for Title 19.  For 2009, the Title 19 asset limit for a couple will be $2,000 plus one-half of the "snapshot" assets, but no less than $50,000 and no more than $109,560.  A married person with "snapshot" assets between $0 and $52,000 when he or she enters an institution will be Title 19 eligible immediately. A married person with "snapshot" assets between $52,000 and $100,000 will be Title 19 eligible when countable assets are at $52,000. A married person with "snapshot" assets between $100,000 and $219,120 will be eligible when countable assets are below one-half the value of the "snapshot" assets plus $2,000. A married person with "snapshot" assets of $219,120 and higher will be Title 19 eligible when countable assets are below $109,560.

Exempt Assets

Certain assets are exempt, or not treated as "countable" assets. The most common are:

1. Homestead: A homestead of any value, if a spouse, minor children or "dependent relative" lives in it, or if the individual entering the nursing home intends to return home.  The home equity exemption is limited, however, to $750,000.  The limitation does not apply if the community spouse, a minor child or a blind or disabled adult child is "lawfully residing" in the home.
2. Car: There is a maximum equity value of $4,500 for a single person with some exceptions. However, there is no limit on value for a married person.
3. Household and personal possessions: Reasonable value for single person; no limit on value for married person.
4. Burial arrangements: Irrevocable burial trust (up to $3,000) plus prepayment of casket, vault, opening and closing of grave, etc., up to any value, or an insurance-funded burial contract up to any value. If married, both spouses may own burial arrangements.
5. Life Insurance: $1,500 face value policy. If married, each spouse may own $1,500 face value life insurance. If face value is above $1,500, cash value is treated as a countable asset.

* Certain other assets are not counted either temporarily or permanently, because they are "unavailable", i.e., can't be converted into cash.

Income Limits

For a single person on Title 19, all of his or her income, except a $45 per month "personal allowance" and enough money to pay for private health insurance will usually be paid to the nursing home for care. An exception is if a doctor certifies that the person is likely to return home; in this case, a limited amount of income may be kept to maintain the home.

A married person may allocate income to the spouse still residing in the community to bring his or her income up to the lesser of $2,739.00 or $2,333.33 plus "excess shelter allowance." "Excess shelter allowance" means shelter expenses (rent, mortgage principal and interest, taxes and insurance for residence, maintenance fee and food stamp standard utility allowance) over $700.00 per month.

A married person may allocate income to a dependent child (i.e., a child under 18 or claimed as a dependent on taxes) or other dependent family member to bring his or her income up to $583.33 per month.

For married people, a hearing officer may increase the amount of assets the community spouse may have if those assets are necessary to generate income to bring the community spouse's income up to the income allocation limit.

After the institutionalized spouse is on Title 19, the community spouse may accumulate assets above the asset limit. He or she may save, sell exempt assets, inherit money, etc. without affecting the institutionalized spouse's eligibility.

Planning Options

Long-term care insurance is appropriate advance planning for some, as is "advance benefit" life insurance. A thorough General Durable Power of Attorney is essential. This should be prepared by an attorney.

Some gifts may be made. If gifts are made within 36 months (or 60 months under the new laws when implemented) of application for Title 19, they must be disclosed. A formula is used to determine if gifts cause Title 19 ineligibility and, if so, for how long.

Some transfers cause no Title 19 ineligibility because they are specifically allowed under Title 19 rules. These include:

1. All transfers to or for the sole benefit of a spouse.
2. All transfers to or for the sole benefit of a disabled child.
3. Transfer of a home to:
   • a child under 21.
   • a child of any age who has lived there for two years and has provided care which delayed institutionalization.
   • a sibling who has lived there for one year and has an equity interest.

There are risks in all planning for Title 19. It is important to get personal, professional advice before any gifts or transfers are made, and to review all of the above options.

Liens and Claims Against Estates

The state may put a lien on the homestead property of a nursing home Title 19 recipient, but only if it is not occupied by a spouse, disabled child or child under 21 years of age, or sibling with an ownership interest who has lived there for 12 months.

The state may make a claim against the probate estate of a nursing home Title 19 recipient.

LIMITATIONS AND DISCLAIMER

THIS BROCHURE IS IN NO WAY INTENDED TO BE A COMPLETE EXPLANATION OF THE LAWS AFFECTING TITLE 19. THE LAWS OFTEN CHANGE AND EACH INDIVIDUAL'S SITUATION IS UNIQUE. THE ASSET AND INCOME LIMITS CHANGE EACH YEAR. THIS BROCHURE WILL PROVIDE AN INITIAL UNDERSTANDING OF THE BASIC CONCEPTS. YOU SHOULD CAREFULLY EVALUATE YOUR PARTICULAR SITUATION AND CONSULT THE APPROPRIATE LEGAL ADVISOR PRIOR TO TAKING ANY ACTION.