Number One Provider of Medicaid Compliant Annuities

Excess Income During a Gifting/Short-Term Medicaid Compliant Annuity Plan

Question: What needs to happen to the monthly income generated by a Gifting/Short-Term Medicaid Compliant Annuity Plan when the individual unexpectedly goes to the hospital and re-enters the Medicare system for skilled nursing home care?  Assume that the individual has a Medicare supplemental insurance plan.

Answer: By the end of the month, a Medicaid applicant/recipient must find a way to spend-down the monthly income.  If the income is not properly spent-down, it converts to a resource by the 1st of the following month.  Then, if the Medicaid applicant/recipient accumulates more than
$2,000.00 in countable resources, he or she is no longer eligible to receive Medicaid benefits.

To accomplish the income spend-down goal, I usually recommend that the Medicaid applicant/recipient should pay past bills, finalize their pre-paid funeral arrangement, and purchase personal items - clothing, medical equipment, eyeglasses, hearing aids, dental work, etc.  Additionally, in those cases where it is expected that the children will need to advance funds to cover out of pocket nursing home expenses not budgeted within the Medicaid Plan, I have the Medicaid applicant/recipient pay off the obligation. 

The obligation is evidenced by a DRA Compliant Demand Promissory Note in favor of the children which states that any amounts advanced by the children are legal obligations of the Medicaid applicant/recipient.  The promissory note is executed at the beginning of the Medicaid Plan.

Also, if the Medicaid applicant/recipient does not have a $1,500.00 face value life insurance policy - exempt resource, I would have them purchase one - Krause Financial Services, LLC, offers a guaranteed issue product.  As a last resort, if funds still exist, I would have the Medicaid applicant/recipient purchase a Stand-Alone Medicaid Compliant Annuity.  The funds will be lost to the nursing home as part of the monthly co-pay amount or under the primary beneficiary designation, but the Medicaid applicant/recipient's Medicaid benefits will never be in jeopardy.

Another strategy is that the Medicaid applicant/recipient could irrevocably pre-pay the attorney for future Medicaid re-certifications - no refund is possible.  The Medicaid applicant/recipient's family will take comfort in knowing that an attorney is involved in the annual Medicaid renewals.

2009 Medicare Changes

Every year Medicare changes the allowances and requirements. Effective January 1, 2009, the following schedule of benefits, etc. will be applicable:

Medicare Part A Services and Supplies: During the first 60 days Medicare will pay all but $1,068. From the 61^st to the 90^th day, Medicare will pay all but $534 per day. Beyond the 150^th day of hospitalization, Medicare will pay nothing. It also will charge for blood after a 3 point deduction.

Skilled nursing Facility Care: Medicare requires a three day period of hospital stay before entering a skilled nursing facility and entrance must be made within 30 days following the hospital discharge. During the first 20 days Medicare pays 100% of all costs. From the 21^st to the 100^th day it will pay all but $133.50 per day. And Medicare will pay nothing beyond the 100^th day of a stay at a skilled nursing facility.

Medicare Part B Services and Supplies: As a general rule, Medicare pays 80% of all eligible expenses after $135 Part B deductible.

Medicare and Nursing Home Care

Many seniors mistakenly believe that Medicare covers nursing home stays. In fact, Medicare's coverage for nursing home care is quite limited. Medicare only provides up to 100 days of "skilled nursing care" per illness, and there are a number of requirements that must be met before the nursing home stay will be covered.

In order for a nursing home stay to be covered by Medicare, the individual must enter a Medicare approved "skilled nursing facility" or nursing home within 30 days of a hospital stay.  The hospital stay must have lasted at least three days, not including the date of discharge. The care in the nursing home must be for the same condition as the hospital stay. In addition, the individual must need "skilled care." This means a physician must order the treatment, and the treatment must be provided daily by a registered nurse, physical therapist, or licensed practical nurse. Finally, Medicare only covers "acute" care as opposed to custodial care. This means that Medicare only covers care for individuals who are likely to recover from their medical conditions, not care for individuals who only need assistance with activities of daily living, including: eating, bathing, continence, dressing, toileting, and transferring.

Once the individual is in a nursing facility, Medicare will cover the cost of a semi-private room, meals, skilled nursing and rehabilitative services, and medically necessary supplies.  For the first 20 days, Medicare covers 100 percent of the costs.  Beginning on day 21, the individual is responsible for a daily co-payment amount of $128.  This daily copayment amount may be covered by the individual’s Medicare supplemental insurance policy, assuming he or she already has one.  After the 100 days are up, Medicare nursing home benefits end, and the individual is then responsible for all costs moving forward.  At that point, many individuals will turn to Medicaid for assistance.