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The Medicaid program is the largest source of payment for long-term care in
Oregon. Medicaid is a joint Federal and State program. Medicaid covers the
full range of long-term care services, including skilled, intermediate and
custodial care, adult foster home, and in-home services. Medicaid eligibility is based upon a "service" (or
health-related) need and upon a financial need. To be eligible for Medicaid,
the applicant must meet three (3) criteria for eligibility: (a) a health need;
(b) an income need; and (c) an asset or resource need. Generally, individuals
with severe health issues, whose monthly incomes are at or below $2,022 (since
January 2009) and whose assets are below $2,000 for an individual and $21,912
(since January, 2009) for a couple will be eligible. Couples with assets above
$21,912 may be required to split their assets and spend down before eligibility.
1. Service or Health Need of Medicaid. Medicaid
benefits are available only to those persons who have severe health or disability
needs and require assistance. These are referred to by Medicaid as “service
needs.”
Medicaid evaluates applicants on a scale of 1-18 to determine
their service need. This has also been referred to as their "survivability" need
(in other words, the applicant’s ability to "survive" without
assistance).
Level 1 is the highest level. A Level 1 patient needs full
assistance with all of his or her "activities of daily living" (ADLs).
ADLs include mobility, eating, elimination, cognition, dressing, and bathing.
Level 18 is the lowest level on the scale. Level 18 patients are independent
and need little or no assistance, although they do require a structured environment.
Level 17 patients need assistance with dressing and bathing.
Medicaid is currently allowing eligibility for Level 1-13 applicants
only. Applicants in service levels 14-18 may not receive assistance.
No new applications for levels 14-18 are currently being accepted.
The Medicaid intake workers are trained to evaluate the
level of assistance an applicant requires in various activities of daily
living. This consists of the worker visiting the applicant and asking a number
of very personal questions. It is critical that the applicant answer honestly,
even if it is embarrassing. Eligibility for benefits may depend on the applicant’s
answers.
The service levels are briefly defined as set forth in items 1-18 below. For
a full description, see Oregon Administrative Rules at:
http://arcweb.sos.state.or.us/rules/OARS_400/OAR_411/411_015.html:
(1) Requires
full assistance in mobility, eating, elimination, and cognition.
(2) Requires
full assistance in mobility, eating, and cognition.
(3) Requires
full assistance in mobility, or cognition, or eating.
(4) Requires
full assistance in elimination.
(5) Requires
substantial assistance with mobility, assistance with elimination, and assistance
with eating.
(6) Requires
substantial assistance with mobility and assistance with eating.
(7) Requires
substantial assistance with mobility and assistance with elimination.
(8) Requires
minimal assistance with mobility and assistance with eating and elimination.
(9) Requires
assistance with eating and elimination.
(10) Requires
substantial assistance with mobility.
(11) Requires
minimal assistance with mobility and assistance with elimination.
(12) Requires
minimal assistance with mobility and assistance with eating.
(13) Requires
assistance with elimination.
(14) Requires
assistance with eating.
(15) Requires
minimal assistance with mobility.
(16) Requires
full assistance in bathing or dressing.
(17) Requires
assistance in bathing or dressing.
(18) Independent
in the above levels but requires structured living for supervision for complex
medical problems or a complex medication regimen.
Applicants who believe they are in the wrong service level need to request
hearings immediately and request that they receive aid pending their hearing.
Planning Note: It is crucial that clients maintain as much
flexibility as possible in their planning documents and also their financial
investments. It is virtually impossible at this time to plan for long-term
care with certainty. It does appear that the most impaired and vulnerable will
still be able to access services. However, those individuals who need a great
deal of care and have not met the service level will be refused services. An
individual may return home, worsen, and reapply - at which time the individual’s
declined health will qualify him or her for services.
2. Income Need for Medicaid.
a. Eligibility
Level: In 1991 (as a result of Ballot Measure 5 cutbacks), Oregon
changed Medicaid eligibility rules to require that an applicant's monthly income
be less than 300% of the SSI income standard, currently $1,911. Prior to July,
1991, Oregon's "Medically Needy" program covered nursing home residents
whose incomes were over this limit but were not enough to pay for their nursing
home expenses. Now, a Medicaid applicant whose monthly income is more than
$1,911 cannot qualify for Medicaid assistance for long-term care, no matter
how much the care costs are.
Income consists of such fixed items as Social Security, pensions, certain VA
benefits, workers compensation, fixed annuities, and real property contracts.
Only the income of the institutionalized spouse is considered. The community
spouse's income will not be counted when determining income eligibility.
b. Income
Cap Trust: A special trust, known in
Oregon as an "Income Cap Trust," is available to assist those individuals
over the Medicaid Income Level to obtain Medicaid eligibility. The Income Cap
Trust was created through a joint effort between elder law attorneys and the
State. Be sure to contact Fitzwater Meyer, LLP, for help from an experienced
elder law attorney if you are over the Medicaid income level.
3. Resources. An individual can have
up to $2,000 in cash or other non-exempt resources. An additional $1,500 can
be set aside in an interest-accumulating savings account dedicated as a "burial
fund."
Jointly held liquid assets, such as joint bank accounts, are considered available
to the Medicaid applicant. However, the State cannot force a co-owner to sell
a jointly held parcel of real property.
A life
estate interest in real property is an available asset. Value will be established
by considering the fair market value for the property and life expectancy of
the Medicaid applicant.
The value of a resource is determined by its "equity value." Equity
value is the fair market value of the resource minus encumbrances. "Fair
market value" is defined as "the amount a resource can be expected
to sell for on the open market." The State accepts valuation methods
such as county tax appraised value, professional appraisals and certified market
analysis for real property.
4. Exempt Resources. Certain resources are exempt
and not counted in determining eligibility for Medicaid benefits. These include
the person's home (see below), one motor vehicle, household items, personal
effects, medical equipment, "hardgoods" for burial (including burial
space, casket, liner, headstone), and a funeral or burial fund up to $1,500.
As of January, 2006, Medicaid will no longer consider a
home with an "equity
value" in excess of $500,000 to be an exempt asset. If you need to apply
for Medicaid and your home has equity at or near $500,000, contact Fitzwater
Meyer, LLP, for assistance with this rule.
5. Penalty for Transfer of Resources. The
Medicaid recipient may desire to give away or transfer property or other
assets to a (non-spouse) family member, friend, or charity as part of his
or her estate planning goals. Unfortunately, a very complex set of rules
governs a future Medicaid applicant’s ability to transfer property.
Simply put, a transfer of resources may make the Medicaid recipient or his
or her spouse ineligible for
Medicaid benefits for a period of time.
a. Period
of Ineligibility: The disposal of a resource for less than fair
market value, by the applicant or applicant’s spouse, will result in
a period of time in which both applicant and applicant’s
spouse are ineligible for Medicaid benefits. This period equals the time
during which the uncompensated value of the transferred asset could have
been used to pay for care at the average private pay rate in the State of
Oregon, currently $6,494 per month.
FOR EXAMPLE: A transfer of assets
worth $64,940 would result in 10 months of ineligibility. In other words, that
$64,940 could have been used to pay for care in a nursing facility for 10 months.
The State is allowed to ask a Medicaid applicant
about any transfer of assets made during a 60-month period before
applying for Medicaid (called the "look back period").
Beginning July, 2006, Medicaid rules regarding
transfers have added a requirement that the period of ineligibility for a transferred
asset can begin (a) on the date the asset was transferred
or (b) on the date the person applies for Medicaid and is otherwise eligible, whichever
date occurs later. Using the example above with a 10-month period
of ineligibility, the Medicaid applicant may be ineligible as long as 10 months from
the date the person actually applied for Medicaid. This is a substantial
change from old Medicaid law. Be sure to contact an attorney at Fitzwater Meyer,
LLP, before making transfers that could adversely affect your eligibility or
a family member’s eligibility for Medicaid.
b. Exempt
Transfers: There are transfers that are exempt from the above rules
and will not result in a period of Medicaid ineligibility. These include
transfers to a spouse, transfers to a blind or disabled child, and transfer
of the primary residence to a care giving son or daughter, or a sibling with
an equity interest (certain conditions must exist).
6. Protecting the Spouse who Remains at Home.
a. Spousal
Impoverishment Rules. The Medicare Catastrophic Coverage Act of
1988 ("MCCA") significantly changed previous Medicaid laws, providing
greater protection to the income and resources available for the maintenance
of the spouse who remains at home ("community spouse"). Prior to
MCCA, a spouse's eligibility for Medicaid often resulted in the impoverishment of
the community spouse.
b. Treatment
of Resources. The non-exempt assets ("available resources")
of both spouses are pooled together, regardless of how title is held. The
equity value of pooled resources are "deemed" available to the
institutionalized spouse subject to the spousal impoverishment rules discussed
below.
The community spouse is allowed to keep the
exempt assets and some of the non-exempt assets. The amount of non-exempt assets
which the community spouse is permitted to keep is subject to a limit referred
to as the "community spouse resource allowance" or "CSRA."
The community
spouse may retain one-half of the couple's combined assets. The value of the
assets is determined at the beginning of the "Continuous Period of Care." The
amount allowed to the community spouse is subject to a minimum of $21,912 and
a maximum of $109,560 (since January, 2009).
Once the community spouse's resource allowance
has been calculated, the excess resources must be spent down before
the institutionalized spouse can be eligible for Medicaid benefits.
IMPORTANT NOTE: Much is currently
being done by elder law attorneys to allow the community spouse to keep more
than one-half of the couple's assets. The process known as a "Revision
of the Community Spouse Resource Allowance" should be evaluated in every
case, before the spouse begins spending down the assets.
Once the institutionalized spouse has been determined
eligible for Medicaid benefits, there is no need for future assessment of the
community spouse's resources. The community spouse may accumulate additional
resources without affecting eligibility.
c. Treatment of Income. The institutionalized
spouse's monthly income (with two small deductions) determines the maximum
that he or she can be required to contribute to the cost of care. Therefore,
the community spouse's monthly income, regardless of the amount, will not increase
the amount the couple will pay to the nursing home.
Conversely, if the community spouse's monthly
income is low enough, it will reduce the amount the couple pays to the nursing
home. In other words, the community spouse has no duty to contribute his or
her monthly income, but has a statutorily defined right of support.
The Medicare Catastrophic Act of 1988 allows
the community spouse to receive a significantly larger share of the institutionalized
spouse’s income than previously allowed. The community spouse is entitled
to an amount sufficient to raise his or her monthly income to $1,750 (since
July, 2008). In determining the allowance, all of the community spouse's monthly
income, from all sources, will be considered. If all available income is less
than the allowance, the institutionalized spouse's income will be used to make
up the difference. (In addition, the community spouse is entitled to an additional
allowance for his or her shelter expenses.)
IMPORTANT NOTE: Elder law attorneys are currently using court
orders to increase the income allowance of the community spouse, above Medicaid
levels. Again, any spouse in this situation should contact Fitzwater Meyer,
LLP, to have an experienced elder law attorney review his or her income and
assets.
7. Estate Recovery – Recovery by State
of Oregon. The
State of Oregon may have a claim against the (expanded) estate of a deceased
Medicaid recipient. The claim cannot be collected until the death of the surviving
spouse. The claim is limited to those assets transferred to the surviving spouse
upon the death of the Medicaid recipient.
a. Law Governing Estate Recovery. OBRA
'93 requires each State to establish estate recovery programs. 42 USC 1396p.
Federal law defines "estate" to include all real and personal property
and other assets included within the individual's estate as determined under
State probate law. It also allows the States to expand the definition of estate
recovery to non-probate assets. (The State of Oregon has had an aggressive
estate recovery program in place for many years.) The estate recovery is for
nursing facility services, home and community-based services, and related hospital
and prescription drug services provided to individuals age 55 or older. If
there is a surviving spouse, the estate claim is not collected at the death
of the first spouse. If there is a minor or disabled child, the estate claim
is not collected. In addition, the State’s ability to recover may soon
expand to include the costs of institutionalized care received prior to the
recipient reaching age 55.
b. Hardship Provisions. OBRA '93 requires
the States to incorporate hardship provisions in their estate recovery programs.
Transmittal #64 issued by the Health Care Financing Administration (HCFA)[now
the Center for Medicare & Medicaid Services] in September, 1994, provides
for "special consideration of cases in which the estate subject to recovery
is (1) the sole income producing asset of survivors (where such income is limited),
such as a family farm or other family business; (2) a homestead of modest value;
(3) other compelling circumstances."
c. Expanded Estate Recovery Rules. In
1995, Oregon expanded the laws governing estate recovery. The new law expands
estate recovery to allow recovery against any real or personal property and
other assets in which the individual had any legal title or interest at the
time of death (to the extent of such interest), including but not limited to
property passing by joint tenancy, survivorship, Revocable Living Trust, or
other arrangement. The State of Oregon takes the position that the claim survives
and can be made against the estate of the surviving spouse if it can be traced
back to the estate of the recipient at the time of the recipient's death. Therefore,
if a recipient wishes to avoid a State claim, he/she should consider transferring
assets, such as the home, to the name of the surviving spouse.
8. Planning Strategies. Careful planning
can go a long way toward preserving the couple's resources and preventing the
impoverishment of the community spouse.
a. Spend Down. Often referred to as "split
and spend down," this planning approach combines the Community Spouse
Resource Allowance (discussed above) with spend down strategies to both prevent
the impoverishment of the community spouse and expedite Medicaid eligibility
for the institutionalized spouse.
The Resource Assessment is the beginning of
the planning process. This "snapshot" of the couple's combined resources
determines the amount the community spouse may have while the institutionalized
spouse qualifies for benefits. Generally, the community spouse is best off
with the highest possible allowance.
The Resource Assessment takes a snapshot of
the couple's available assets at the time the Continuous Period of
Care begins. Subsequent spend down or transfers will not change the
figures produced by the Resource Assessment.
Once the Resource Assessment is complete, the
community spouse may transfer "his share" or “her share” (the
community spouse's resource allowance) into his or her own name. The remaining
amount, "his share" or "her share," may be left in the
name of the institutionalized spouse, or preferably, their joint names. This
amount must then be spent down before the institutionalized spouse will be
eligible for Medicaid benefits.
b. Exempt Resources. Spend down often
begins by purchasing or maximizing exempt resources. Some
examples are:
(i) Purchasing a residence;
(ii) Repairing the existing residence;
(iii) Purchasing car (with long-term warranty);
(iv) Purchasing personal property (appliances,
clothing, home entertainment);
(v) Purchasing medical equipment;
(vi) Purchasing burial goods and merchandise;
and
(vii) Travel expenses.
c. Converting Resources Into Income. Monthly
income in the sole name of the community spouse is not considered available
to the institutionalized spouse. Therefore, the community spouse may convert
a non-exempt resource into an income source (i.e. real estate contract or loan)
or he or she may use non-exempt assets to purchase an irrevocable income source
(i.e. single premium, immediate annuity).
IMPORTANT NOTE: While an annuity can be
a very attractive planning tool, be sure it fits your particular circumstances.
Be sure to "run
the numbers." The extra income provided by the annuity may reduce the
amount of the community spouse's income allowance or bring his or her monthly
income over the income cap.
Also, beginning July, 2006, all annuities must be irrevocable, non-assignable,
and must contain a provision making the State of Oregon the first remainder
beneficiary of the annuity up to the full amount of medical assistance provided.
Therefore, it is highly recommended that you or your family member contact
an attorney from Fitzwater Meyer, LLP, before purchasing an annuity and applying
for Medicaid.
d. Transfers by Gift. The gifting
of assets should be considered a dramatic form of planning. While it may preserve
assets, it also can be a significant risk.
Gifts can be made to a community spouse with
no period of ineligibility for Medicaid. Gifts to individuals other than a
spouse will trigger the period of ineligibility discussed above. Again, there
is a 60-month look back period.
IMPORTANT NOTE: Remember,
gifts are irrevocable. If your client is relying upon the recipient to return
the funds (or portion thereof) if needed, consider what would happen if the
recipient were to die, divorce, or become indebted.
e. Transfers to Trust. In the past,
transferring assets to a specialized form of trust could protect some of the
assets. However, Congress changed the rules governing trusts when it passed
OBRA 1993, effective August, 1993. These new rules have substantially restricted
the use of trusts for long-term care planning purposes.
IMPORTANT NOTE: Special Needs Trusts. The trust rules changed by OBRA '93 are trusts funded with
assets owned or previously owned by the Medicaid applicant
or spouse. The rules governing trusts that are funded by assets owned by third
parties, with no legal duty of support (i.e. parents of adult children, children,
grandparents) were not changed. Therefore, the commonly used "Special
Needs Trust" established by a parent for the benefit of an adult disabled
child is still an available and effective estate planning tool.
f. Staying Off Medicaid. Finally,
the best plan may be to not apply for Medicaid benefits. Some disadvantages
to receiving Medicaid benefits include (a) discrimination against Medicaid
patients; (b) some facilities do not accept Medicaid; and (c) the impacts of
estate recovery upon the death of the surviving spouse. Long-term care insurance
may be the best way to prevent the need for Medicaid in the future.
DISCLAIMER: The information contained in this website is based on Oregon law and is subject to change. It should be used for general purposes only and should not be construed as specific legal advice by Fitzwater Meyer, LLP, or its attorneys. Neither this website nor use of its information creates an attorney-client relationship. If you have specific legal questions, consult with your own attorney or call us for an appointment.
(c) Fitzwater Meyer, LLP, 2003-2010
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