In last week’s article, we introduced the concept of utilizing Medicaid to help pay for long-term care. Medicaid is a federally-funded program to provide assistance with long-term care costs to those in need. In Texas, Medicaid is administered by the Health and Human Services Commission (“HHSC”). In this article, we will focus on the most commonly utilized form of long-term care Medicaid, called Medicaid for the Elderly and People with Disabilities (“MEPD”), also sometimes referred to as “skilled nursing Medicaid.” MEPD offers long-term care services to older adults and people with disabilities who require significant amounts of assistance.

Eligibility Criteria for MEPD

To qualify for the MEPD program, an individual must meet specific eligibility criteria. These criteria include:

  1. Residency: The individual must be a United States citizen or hold a “green card” from United States Citizenship and Immigration Services. In addition, the individual must be a Texas resident, though there is no minimum length of residency required.
  2. Age or disability: The individual must be 65 years or older, be legally blind, or have an official disability determination, preferably by the Social Security Administration.
  3. Medical necessity: The individual must reside in a Medicaid-certified nursing facility and have a medical necessity for long-term care services. Medical necessity requires a level of care that can only be provided in a nursing facility due to a medical condition, disability, or cognitive impairment. Medical necessity is determined by a medical professional’s assessment.
  4. Income: The income limit for an individual for 2023 is $2,742 per month from all sources with very limited exceptions. Importantly, in spousal situations, only the Medicaid applicant’s income is considered.
  5. Assets: Officially referred to as “resources,” the monetary limit for an individual is $2,000. Countable resources, i.e., those resources to which the $2,000 limit applies, include bank accounts, investment accounts, stocks, bonds, the cash value of life insurance, mineral interests, and real estate. There are, however, some significant exceptions to countable resources. These include the equity value of an applicant’s primary residence up to a maximum of $688,000, an individual’s car, any personal property, pre-paid funeral or burial plans, and retirement accounts for those over 72.5 years old.

Planning for MEPD

A common misconception about Medicaid is that you cannot qualify for it if you have too much income or countable resources. Using various Medicaid-approved tools, an individual in either or both of those circumstances can restructure their finances to achieve eligibility. This is especially true in situations where the Medicaid applicant is married. However, to successfully navigate these waters, retaining a Medicaid planning expert is imperative to ensure that the planning process is done correctly. There are also simple but very effective strategies to employ that avoid having to repay MEPD benefits after the recipient passes away.

Pitfalls to avoid

Achieving MEPD eligibility can be a very confusing process and there are many traps for the unwary.  Principle among these are Medicaid’s rules concerning transfers of assets. MEPD has a five-year lookback period, meaning that any transfer of assets to anyone other than a spouse can have a devastating effect on future Medicaid eligibility. If your loved one anticipates the possibility of needing MEPD anytime in the upcoming five years, consulting with a Medicaid professional in advance of any asset transfers, including tax and/or charitable gifting, is imperative.

At Pyke & Associates, we have experienced Medicaid professionals that can provide a wide range of assistance to those in need of Medicaid. We offer free consultations and fixed-fee arrangements to provide comprehensive Medicaid services. Call, email or text us now to schedule an appointment.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.