Table of Contents

Medicaid Eligibility in Idaho
Medical Need
Income
Resources (Assets)

Share of Cost
Transfer of Assets
Estate Recovery

Ten common errors or misunderstandings
1. The State immediately takes all my assets if I apply for Medicaid
2. I should get divorced to protect my assets
3. I need to divide our resources since my spouse may need care
4. Spending down resources before the assessment date
5. A Miller Trust (or Qualified Income Trust) can protect my assets
6. Failing to plan early
7, I can give $15,000 to each child each year without penalty
8. Failing to change the will of the community spouse
9. Failing to take advantage of transfer exceptions
10. Failing to apply for Medicaid

Ten Planning Strategies
1. Upward revision of resource allowance
2. Buy irrevocable burial plans
3. Pay off debts
4. Make home improvements
5. Buy a vehicle
6. Make exempt transfers of assets
7. Purchase a Medicaid compliant annually
8. Life insurance policy planning
9, Listing excess resources for sale
10. Pre-existing medical expense deduction

The gross income limit for all long-term care Medicaid programs is $2,349.00 in 2020. There is a $20.00 disregard of unearned income which increases the limit to $2,369.00. Gross income is the income prior to any deductions for taxes, insurance, Medicare premiums, and other deductions. The income limit is adjusted annually. Idaho is an income cap state which means that if the applicant’s income is even a penny over the limit then he or she is not eligible for Medicaid. However, there are two ways around the income limit. If the applicant is married, then one can choose to use the community property method of counting income. This allows the couple to combine their income and if half of the combined income is under the income limit, then the spouse applying for Medicaid is income-eligible. The other option is to establish a Qualified Income Trust, which is also commonly known as a Miller Trust, to receive that part of the applicant’s income that is over the income limit. A Qualified Income Trust must be established and receive the income in the month of application and every month thereafter. An account must be established at a bank or credit union to receive the funds. It is not necessary to have funds directly deposited into the account for the Trust. The funds must just be transferred from an account receiving income to the account owned by the Trust each month. Most banks and credit unions will establish accounts for a Qualified Income Trust. As a result of these two options, it is never a problem to establish income eligibility for Medicaid.

For married couples where one spouse is in need of long term care, the rules allow an additional exclusion of resources for the spouse who is not in need of long term care, commonly referred to as the community spouse. In addition to the resources mentioned above, an additional vehicle is excluded for the community spouse, and resources determined through a Resource Assessment. The Assessment is essentially a snap shot of the couples countable resources as of the date the one needing care was admitted to a nursing home for an expected 30 days or more or was determined to meet nursing home level of care as defined by the rules. Establishing the date that one meets nursing home level of care when not admitted to a nursing home is accomplished by having her or his physician review the rules and certify the date that the individual met nursing home level of care for 30 consecutive days or more. After determining the total countable resources as of the date nursing home level of care was met, the community spouse is allowed to keep one-half of those countable resources or a minimum of $25,728.00, which ever number is greater, or to keep one-half of the countable resources or a maximum of $128,640.00, which ever number is lesser. The minimum and maximum resource allowances for the community spouse above are for 2020. The numbers are adjusted annually based on an inflation factor.

Share of Cost

Once one becomes eligible for Medicaid, generally all of her or his income, less some specific deductions for health insurance and out of pocket medical costs and a personal needs allowance, must be paid to the nursing home or assisted living facility as a share of cost or essentially a co-pay. Even if some funds are transferred to a Qualified Income Trust, the total gross income is used in calculating the share of cost. The Trust is just a pass-through trust and funds generally do not accumulate in the Trust. For married couples there may also be an allowance for the community spouse, depending on his or her income. For applicants living at home and receiving long term care, the personal needs allowance is much higher. The personal needs allowance for a nursing home resident is $40.00, for an assisted living resident  it is $107.00, adjusted annually. The share of cost for someone at home is $783.00 if not responsible for shelter expenses, or $1,410.00 if responsible for shelter expenses, both of which are adjusted annually.

Transfer of Assets

There are rules that penalize or restrict ones ability to obtain Medicaid for long term care services if income or resources are transferred within five years of applying for Medicaid. Transfers cause a period of ineligibility based on the amount transferred divided by the average cost of nursing home care in Idaho. The divisor representing the average monthly cost of nursing home care for 2020 is $8,458.00. This number is adjusted annually based on a survey of nursing home costs throughout the state. There are a number of exceptions to the transfer rules.

The State of Idaho aggressively seeks recovery of Medicaid benefits paid on behalf of anyone who receives benefits after reaching age 55. The State can recover any assets in the estate of the Medicaid recipient or his or her spouse. In addition, the State has adopted an expanded definition of estate to include all assets included in the estate under the probate law and assets in which the individual had any legal title or interest at the time of death, including assets conveyed to a survivor, heir, or assign of the individual through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement. The State has defined “other arrangement” very broadly. The State can only recover the amount actually paid on behalf of the Medicaid recipient and cannot seek recovery from children or heirs if the amount paid exceed the assets of the estate. The State cannot make recovery if there is a surviving spouse, minor child, or an adult child who is disabled as defined in the Social Security rules. There are additional exceptions to recovery. A couple of notable exceptions are life insurance paid to a named beneficiary and property of a spouse who did not receive Medicaid benefits that is truly separate property, in other words property the spouse brought into the marriage or received by gift or inheritance that was not converted to community property during the marriage. Property made separate property by means of a marriage settlement agreement as part of the transfer of resources to the community spouse for his or her resource allowance is subject to recovery. The State of Idaho also has power to make voidable transfers made by a Medicaid recipient or his or her spouse within the five year look back period and set aside the transfers for purposes of recovery.

Ten Common Errors or Misunderstandings

1. The State immediately takes all my assets if I apply for Medicaid

While it is true that the State will seek recovery of assets of a Medicaid recipient and his or her spouse, that action is not until after the death of the recipient and, if married, his or her spouse, minor children, and adult disabled children. There are other exceptions to recovery and one should seek competent legal advice regarding the exceptions. It is true that a single person has to reduce the countable assets to the resource limit before receiving Medicaid, but the State is not taking excess assets. One has the choice of how to spend or reposition those assets or to gift them, within the transfer exceptions. Again, competent legal advice is recommended in making those decisions. Finally, it is true that the State may not allow you to pass your assets to your heirs, but the rules allow resources to be preserved for a community spouse and decisions about spending or repositioning assets for the benefit of the community spouse are possible.

2. I should get divorced to protect my assets

It is true that divorce may be a way to preserve assets for future generations, but it is rarely the best way to preserve the maximum assets for the community spouse, the one who does not currently need long-term care. In most instances, the resources preserved for the benefit of the community spouse under the Medicaid rules exceed the resources that would be preserved in an equitable division of the property under divorce law. In addition, often the emotional and other non-financial consequences of divorce are greater than the financial gain.

3. I need to divide our resources since my spouse may need care

Dividing resources between spouses through a marriage settlement agreement or property division prior to establishing the resource assessment date will not help at all if the couple is still married. There is no reason to divide the resources of the couple until after Medicaid is approved.

4. Spending down resources before the assessment date

If resources are spent down or repositioned before the assessment date, then the amount of resources that may be kept by the community spouse will be less. One-half of a greater amount of resources is more than one-half of a lesser amount of resources. Timing the spend down may be critical to maximizing the resources of the community spouse.

5. A Miller Trust (or Qualified Income Trust) can protect my assets

As explained above the Miller Trust or Qualified Income Trust is simply a tool that can create income eligibility for a Medicaid applicant. It is true that the funds in the Miller Trust are not counted as a resource, but the only funds that the Trust can receive are the income of the Medicaid recipient.

6. Failing to plan early

While it is true that there may not be many options to plan Medicaid eligibility, there may be options to consider in advance. One may want to consider long term care insurance options. There may be options for transferring assets to an irrevocable trust or gifting assets, although there a number of issues that may not make those options attractive. Simply understanding how the Medicaid rules work before it is a crisis generally allows for some planning that may avoid errors and allow full advantage of any possible planning options.

7. I can give $15,000.00 to each child each year without penalty

One can gift $15,000.00 per person per year without incurring any gift tax liability. However, that gift tax rule has no application under the Medicaid rules. Any gift made within five years of applying for Medicaid, even if excluded under the gift tax rules, will result in a period of ineligibility for Medicaid. Giving away any property may cause ineligibility and other adverse consequences without careful planning and competent legal advice.

8. Failing to change the will of the community spouse

When one spouse is receiving Medicaid benefits, it is generally advisable to change the will of the community spouse. While Idaho cases have established that leaving the community property to children or heirs will not avoid estate recovery of those assets, the community spouse can leave the assets to a testamentary supplemental care trust for the benefit of the spouse that needs long term care. The assets in the trust will not be counted as a resource to the spouse needing care and will help make that spouse’s life more comfortable while maintaining Medicaid eligibility. Although not common, the community spouse may die first, and this is a way to maintain assets to benefit the spouse needing care. The State will seek recovery from the trust upon the death of the spouse that is the beneficiary of the trust, but the trust allows the beneficiary to benefit from the assets of the community spouse and the Medicaid benefits. In many situations the amount that Medicaid has paid in Medicaid benefits is less than the total assets so that leveraging the Medicaid benefits may preserve some assets for heirs.

9. Failing to take advantage of transfer exceptions

Many times, the exceptions to the transfer rules are not used when available. Generally, this is due to failure to plan and failure to understand the exceptions.

10. Failing to apply for Medicaid for one spouse when both are in assisted living

When a couple is moved to assisted living, the default plan is just to pay for both until the resources are exhausted and then apply for Medicaid. However, applying for Medicaid for the spouse that has the greatest need, will leverage the Medicaid benefit for the spouse with higher need and allow the other spouse to keep more resources, which will benefit both spouses. In such a situation, it is often possible to obtain an upward revision of the resource allowance which is described below.

Ten Planning Strategies

The rules allow the community spouse to keep more than one-half of the countable resources and more than the maximum resource allowance if those resources are necessary to generate the income needed to bring the community spouse’s income to a specified need standard. This option is often available for a couple with low combined monthly income, but high resources. In addition, if the Medicaid application is made while the spouse in need of care is still home the higher personal needs allowance often allows those with moderate income to obtain an upward revision. Also, if the community spouse has a mortgage and other shelter expenses or even assisted living shelter expenses, then it may be possible to increase the resource allowance for the community spouse because the income need standard for the community spouse is higher. The process for increasing the resource allowance requires applying for Medicaid, receiving a denial, and then appealing the denial. The hearing is almost always resolved by a stipulated agreement with the Department of Health and Welfare since the facts are generally not in dispute. This strategy has resulted in a community spouse being able to retain countable resources of several hundred thousand dollars.

2. Buy irrevocable burial plans

Irrevocable burial plans are not counted as resources. Irrevocable plans can be purchased for the Medicaid recipient and his or her spouse, if married. The plans must be only for the amount of the planned services and headstone. An irrevocable plan should not generally name any other beneficiaries than the funeral home. It is also possible to purchase an irrevocable plan for a disabled child because of the transfer of asset exception. Burial plots for the applicant, his spouse, and other members of the applicant’s immediate family may also be purchased.

3. Pay off debts

Any debts against vehicles, credit cards, home, or other personal debts can be paid in full or in part. As mentioned above, the debts should be paid off after the assessment date. If it is possible to plan far enough in advance, it may be possible to borrow money to increase the amount of cash in the bank accounts prior to the spouse meeting nursing home level of care, and then, after meeting level of care and establishing the assessment date, pay off the debt as part of the spend down of the increased resources. This is not a strategy that is easy to implement.

4. Make home improvements

Paying for home improvements and repairs repositions countable resources to the excluded resource. This makes most sense if the applicant or her or his spouse is living in the home. Modifications may be necessary to make the home accessible for the one needing care so that she or he can remain at home. The one problem is that lining up contractors and completing the work in a timely manner may be difficult. If you sincerely trust the contractor to complete the work, it may be possible to pay for the work up front to speed up the spend down process.

5. Buy a vehicle

Many times, trading in an older vehicle for a newer one that is more reliable and not likely to need as much repair is a good way to reposition assets. Since two vehicles are excluded for a married couple, it may be possible to purchase two new vehicles if married.

6. Make exempt transfers of assets

There are many exceptions to the transfer rules. Some may require early planning such as transferring the home to a child who has lived with the Medicaid applicant for at least two years and provided nursing facility level of care during that time. It is necessary to have a physician certify the level of care needed by the applicant and that the care was provided by the child. Others such as transferring the home or other assets to, or in trust for the benefit of, a minor or disabled child may be accomplished even in crises situations. Assets can also be transferred to a trust for the sole benefit of any disabled individual, such as a grandchild or other relative, provided the disabled individual is under age 65. There are other exceptions that may also be applicable.

7. Purchase of a Medicaid compliant annuity

The purchase of an immediate annuity is a transfer of an asset unless the annuity meets certain restrictions. The annuity must be purchased by the Medicaid applicant or her or his spouse, be irrevocable and non-assignable, pay out in equal monthly payments within the life expectancy of the annuitant, and name the State as the beneficiary of the annuity after the death of the annuitant. The monthly payments from the annuity are income to the beneficiary of the annuity and must be considered for income eligibility and share of cost.

8. Life insurance policy planning

If it is possible to maintain a life insurance policy because it is term insurance, employer sponsored group term insurance, or the cash value is such that the community spouse can keep it as part of her or his resource allowance, it may be advisable to name the children as beneficiaries. Insurance paid to named beneficiaries is not subject to estate recovery. Thus, the children may receive something. Depending on the policy, the children may be able to assist with premium payments to maintain the future benefit. In some situations, it may be possible to borrow the cash value of the policy and, since the policy then has little or no cash value, transfer ownership to a child or children. The children can then name themselves as beneficiaries, pay the premiums, and receive the net proceeds of the policy upon the death of the insured. This requires careful planning and careful consideration of the insurance contract.

9. Listing excess resources for sale

Excess resources may be listed for sale which may exclude the resources and allow receipt of conditional Medicaid benefits. Real property can be excluded as a resource for an indefinite time if it is listed for sale and good faith efforts are being made to sell the property. Non-liquid personal property listed for sale is only excluded for three months, with a possible three month extension. For a married couple there must be some informal assignment of the resources such that the spouse needing care is nominally designated as owner of the property listed for sale and slightly over $2,000.00 of liquid, countable resources. This requires a careful assessment of the value of the property you plan to list for sale and the other countable resources. The advantage of this plan for a married couple is that after the applicant spouse is approved for Medicaid, then under the Idaho rules, the sale proceeds can be transferred to the community spouse who can retain the proceeds from the sale of the resources even if it increases her or his resources over the resource allowance.

10. Pre-existing medical expense deduction

For single Medicaid applicants or a married couple whose countable resources are below the minimum resource allowance, a pre-existing medical expense deduction may allow for payment of medical expenses incurred in the three months prior to obtaining Medicaid eligibility. This may be due to failing to establish a Miller Trust in a timely fashion or having some minimal excess resources that prevent eligibility in those prior months. If the services were medically necessary and the nursing home or other medical provider agrees in writing to accept monthly payments on the past due debt, then the monthly payment can be deducted from the share of cost for as many months as it takes to repay the debt. The Medicaid recipient must have a share of cost for this plan to work and the repayment agreement must be equally to or less than the share of cost. Since there is no share of cost for the first two months of nursing home care in Idaho, the repayment agreement should not start until there is a share of cost. Pre-existing medical expenses due to the imposition of a transfer penalty may not be deducted from the share of cost.

A knowledgeable professional advisor can also be invaluable when it comes to preparing for changes such as moving out of state or when there is an increase or decrease in family financial resources. They will be able to provide guidance on how best to handle those circumstances without compromising eligibility for Medicaid long-term care assistance. Additionally, a qualified advisor will be up-to-date on all current changes in the law so that you don’t miss any important opportunities or make any errors that could cost you money down the line.

Finally, a professional advisor may be able to identify unique strategies and approaches not commonly known among individuals attempting to go it alone. Furthermore, they can use their expertise and experience to analyze individual circumstances like asset ownership structure and past transactions in order to determine which steps are appropriate under those specific conditions. In addition, they can explain why certain actions might be beneficial so that clients better understand their options going forward.

Overall, working with a knowledgeable professional counselor or attorney who specializes in Medicaid long-term care planning is an excellent way of ensuring that your finances are secure while at the same time providing yourself or loved ones with quality care in times of need. With the proper help from an experienced specialist, families will likely feel much more confident about securing their financial future while still receiving all the necessary assistance old age demands.

Quicker Eligibility

Our team of experienced professionals will work with you to ensure that you obtain Medicaid eligibility as quickly as possible. We will help you create a plan that is tailored to your individual needs and goals, and take the necessary steps to secure Medicaid eligibility. With our guidance and expertise, you can rest assured that you will receive the professional assistance you need to expedite your eligibility.

Long-Term Care Planning

When it comes to long-term care planning, working with a professional offers a number of clear benefits. First and foremost, having an experienced advisor on your side can help you navigate the complex and constantly changing rules and regulations associated with Medicaid. This can ensure that you have access to all the available options and are taking advantage of every opportunity to preserve your assets while still obtaining the necessary level of long-term care. Professional advisors also come equipped with deep knowledge of local laws, which increases your chances of success in obtaining eligibility quickly and accurately. Additionally, they can provide expert advice on how best to structure your estate plan in order to maximize the benefits available through Medicaid.