Are there Assets that can Disqualify an Applicant from Medicaid Eligibility?
The simple answer is an unequivocal “No.” There are no specific assets that can disqualify an applicant from Medicaid eligibility.
There are, however, assets that many families overlook when determining whether or not a Medicaid application will be approved. That is the essence of Medicaid planning (done every day here at QMC); make an early assessment of ALL of the assets well before the Medicaid application is necessary. If family members take the time to spend down assets strategically, there are no surprises at that critical moment.
Of course, bank accounts, iras, savings accounts, etc. are all countable assets under all Medicaid eligibility criteria. Some of the assets that family members should be aware of that do count towards all Medicaid assets limits, but may be overlooked or can cause stress in the liquidation process, are:
Whole Life life Insurance Policies: Some life insurance policies are not exempt assets for Medicaid eligibility purposes. Specifically, whole life policies do count towards the non-exempt asset limits that a nursing home resident possesses. Whole life insurance policies contain life surrender values; these values are the amount that can be returned to the policy owner if that owner terminates the policy. Since whole life insurance policies can be converted to cash, then they are considered countable assets for long-term care Medicaid purposes. Fortunately, the face value of the policy is not the amount that is considered a countable asset.
Real Property other than Primary Residence: Family members and potential long-term care recipients often overlook other real estate when adding up countable assets. Joint ownership, perhaps with siblings, of a deceased parents’ former home is a very common overlooked countable asset under all Medicaid programs. Also, family farms, perhaps held for generations, are also non-exempt assets. Fair market value of building lots, never developed, in vacation home locations, are also countable assets. The bottom line is that the equity interest in almost any piece of real property outside of home equity in a primary residence must be analyzed to determine whether or not the real estate value is considered a non-countable asset for Medicaid asset limit purposes.
Annuities: Any annuities that can be surrendered for cash surrender value are considered countable assets for Medicaid program eligibility purposes. Annuities are often purchased to bolster low income, and can be important tax savers or monthly budget components for a family. However, if the annuity can be converted to cash, in almost all cases, the cash surrender value is considered a countable asset for Medicaid coverage purposes.
Valuable Personal Property: In most cases, normal personal property is ignored for financial eligibility purposes. However, personal property of high value must be reported during the application process and can be considered countable assets. A common example is classic automobiles or expensive sports cars. Often it is important to the family to preserve those types of assets for future generations. This is an area for very early Medicaid planning, perhaps transferring that asset to another family member early enough to avoid any look back period or Medicaid penalty and ensuring asset protection. Otherwise, that highly personal asset may need to be sold and used for spend down to meet Medicaid eligibility requirements.
Married Couples: Unfortunately, in almost all cases, there is no Medicaid advantage to ownership of assets by the community spouse. Assets held by one spouse are typically considered held by both for Medicaid long-term care purposes. However, it is important to analyze each factual situation separately for the best path for the family, particularly for married couples, allowing the applicant spouse to qualify while ensuring asset protection for the community spouse. Divisions of Assets can be used to soften this harsh rule, while also avoiding any estate recovery. And this is the area that QMC specializes in.
The answer to all of these circumstances is early Medicaid planning. While some of the rules may appear harsh, in almost all cases they can be dealt with if a family will begin the process early, perhaps even before any medical need, health care need, Medicare rehabilitation or other early warning that long-term care and Medicaid benefits may be necessary.
And standard estate planning is not enough; qualifying for Medicaid at the earliest possible time requires the expertise of professionals that deal exclusively in this field. QMC can assist you no matter your circumstance.