Our own Michael Steinberg was featured in a Huffington Post article earlier this month. He offers information and advice on the two eligibility categories related to Medicaid applications: clinical eligibility and financial eligibility.

Clinical Eligibility

Clinical or medical Medicaid eligibility and reimbursable services are determined by individual state criteria. Michael explains that proof of clinical eligibility is not a complicated process.

Financial Eligibility

On the other hand, proving an individual qualifies for Medicaid services based on their financial standing is a daunting task. Applicants must gather financial documentation for five years – which is known as the five year look back. Every cash-value asset must be reported to show proof of financial eligibility.

The Problem faced by Skilled Nursing Facilities

What does this mean to skilled nursing facilities? If a patient is having trouble obtaining Medicaid approval, the facility is no doubt having trouble getting paid. About 55 percent of nursing home patients are on Medicaid, delays in reimbursements based on eligibility could be a big financial hardship to the nursing home business.

Michael advises that the best way to prepare for what’s ahead is to be well versed in Medicaid rules and guidelines. An even better idea is to leave it to the experts, such as the team at Senior Planning Services.

Read Michael Steinberg’s entire Huffington Post Interview Here.

The amount of the Medicaid lien corresponds to the amount of money Medicaid had paid for the care and needs of the deceased Medicaid recipient during their lifetime.

Below we’ve provided an example to better illustrate the way it would play out in real life circumstances.

Say a deceased Medicaid recipient owned a property with $100,000 of equity. If the Medicaid recipient resided in a skilled nursing facility for 11 months, Medicaid would have paid approximately $110,000 with the average monthly Medicaid rate at nearly $10,000 a month. With this situation Medicaid would acquire full ownership of the property since they have paid more than the $100,000 of equity in the home to recover some of their losses.

If the Medicaid recipient was in a skilled nursing facility for approximately three months in which Medicaid paid out about $30,000, Medicaid would place a lien on the property for $30,000 and recover the money once the property sold. The remaining $70,000 would be left to the heirs.

Heirs may sell the home and use the proceeds to satisfy the Medicaid lien or if the wish to keep the home, they may payoff the lien with their own personal funds.

The answer is a resounding Yes.

Medicare is health insurance that pays for doctor’s visits, hospitalizations, certain medical equipment and short term rehab. Medicare is available to individuals who are over the age of 65, and younger people who are disabled. Medicare also requires that the individual be a resident of the United States for a minimum of at least 5 years. Medicare is not dependent on one’s income. There are some scenarios in which an individual may not be eligible if the applicant or their spouse never worked or paid taxes.

Medicaid is a need based program in that eligibility is dependent on one’s income and assets and sometimes their Medical condition. Medicaid is available to cover ones long term care services either in a care facility setting or for services in one’s home. There is an extensive application process in which applicants may be required to submit documentation about their medical and financial circumstances. Once the necessary information has been gathered and submitted to Medicaid, a county caseworker will review and determine whether or not the individual meets Medicaid’s eligibility guidelines.

To illustrate the differences between Medicare and Medicaid coverage, I’ll share with you a story about Ann. Ann was an active elderly woman who had all her wits about her. She walked to the grocery down the block weekly to purchase her produce and hopped on the city bus to do her monthly shopping at Shop Rite. This past winter, after a really big snow storm, Ann walked out of her apartment building, slipped on ice and broke her hip. She was admitted to a hospital for a week all while Medicare was being billed for the services provided there. She was then discharged to a nursing home for rehab. She was receiving rehab for about 20 days while Medicare was covering the full cost with no co-pays or insurance. A Medicare nurse evaluated Ann and informed her that she was eligible for more rehab, another 80 days but now it wasn’t free of charge and Ann was required to pay a copy of $157.50 a day until the 100 days were up. Ann had thought once she would reach her 100 days she will be well enough to return home. The diagnosis wasn’t looking positive and Ann would need to stay at the facility long term. Medicare will not cover Ann’s stay after 100 days. Medicare views more than a 100 days as long term services and therefore Ann would either be required to pay the nursing home the private monthly rate or apply for Medicaid. Ann was in no position to cover the private monthly rate of $10,000.00. Luckily, the skilled nursing facility informed Ann about Senior Planning Services who helped Ann secure the Medicaid coverage she so desperately needed. Medicaid then covered the nursing home bill in full.

Understanding Life Insurance Policies And How They Relate To Medicaid

When an individual is applying for Medicaid and has assets that exceed Medicaid’s resource limit, a Medicaid spend-down is necessary. Assets in excess of the allowable amount must be spent down in order to achieve financial eligibility. Some kinds of life insurance policies are included in the spend-down with a few exceptions. Below is a breakdown of what needs to be liquidated in order to be eligible for Medicaid.

There are two popular types of life insurance policies that have different effects on the Medicaid application process.

Term Life Insurance Policies:

Term Life Insurance Policies have premiums that increase as the individual’s age increases. These policies only carry a death benefit. They are also referred to as protection policies; their purpose is to assist the beneficiaries in the event of the policy holder’s sudden death. Since there is no current cash value in term policies they are not considered an asset according to NJ Medicaid guidelines. These policies may remain active and will not impede one’s Medicaid eligibility. Once an individual is on Medicaid he/she will have minimal assets and may not have the money to cover the monthly premiums. Some beneficiaries choose to cover the monthly premiums so that they can ultimately benefit from the death benefit once the Medicaid recipient passes.

Whole Life Insurance Policies:

Whole Life insurance policies generally have fixed premiums, death benefit and cash value reserves. These policies may be liquidated at any time. Being that they carry a current cash value, they are not exempt from the Medicaid spend-down and must be liquidated in order to meet Medicaid’s financial eligibility requirements. There is one exception to the rule! If the Whole Life Policy has a face value of less than $1,500.00, regardless of the cash surrender value, it is exempt from the Medicaid spend down and may remain open and active. “Face Value” is the original death benefit amount on the day the policy was purchased, prior to the policy holder making monthly premiums. While the policy is active it will accumulate cash value from the premiums as well as dividends from reinvestment money. The cash value may exceed the original death benefit (or Face Value). Once the policyholder passes, the beneficiaries will then be able to claim the total death benefit from the policy.