Can You Be Disqualified from Medicaid Coverage?

As Elder Law attorneys, one of the most common questions we receive from our clients about Medicaid is if (and how) you can be disqualified from receiving Medicaid coverage. The short answer is yes, you can be disqualified from Medicaid coverage based on factors such as assets, savings and more.

At SSR Law Office, we believe that adequate healthcare is not just a right—it is a necessity. Our commitment to helping our clients plan and qualify for adequate Medicaid coverage to ensure that every patient has the healthcare that they deserve when they need it most.

What Disqualifies My Spouse or Me from Medicaid Coverage?

The most common reasons for Medicaid disqualification have to do with personal finances. These reasons may include a person’s income, too many assets held by an individual or married couple, or too much “gift giving” in the five years prior to one’s Medicaid application.

While Medicaid eligibility is calculated differently for individuals than it is for married couples, the reasons for disqualification are generally the same for both parties:

Perhaps your income needs to be “spent down” in order to qualify for long-term Medicaid coverage, or you possess savings and assets which exceed the general allowance of $2,000 per person. In any case, being disqualified for Medicaid can come at a high stress—and high cost—for those who count on receiving coverage for life-saving care and treatments.

Is My Application Automatically Disqualified if My Assets Exceed the Allowances?

Medicaid allows potentially eligible individuals to apply for coverage proactively, even if their assets or income currently exceeds the value allotted per person, through what is known as “spending down.” For example, if an individual’s income is higher than what typically qualifies for Medicaid, they may still apply for nursing home Medicaid benefits so long as their excess income is used for treatment-related costs.

In this case, an applicant’s spendable assets must be used to fund healthcare and long-term care costs directly until they qualify for Medicaid coverage, at which point Medicaid will start covering without delay. Because of this, Medicaid pre-planning is highly recommended to ensure you will have coverage as soon as you need it most—and when you don’t have the time to wait.

Is It True I Have to Have Nothing to Qualify for Medicaid?

While there are misconceptions that a person must have absolutely nothing to qualify for Medicaid, this is not true at all; in fact, an individual or couple have certain assets excluded from consideration of their Medicaid eligibility. These include:

  • Small amounts of cash or savings (not to exceed $2,000 per person)*;
  • A house (not to exceed $572,000 in value);
  • One car;
  • Funeral and burial funds: (Either An irrevocable prepaid funeral contract not exceeding $11,393 and/or one revocable account not exceeding $1,500 in value)

* In Michigan, a non-qualifying community spouse can keep half of their partner’s assets (up to $123,600) without disqualifying their partner from Medicaid coverage, also known as a Community Spouse Resource Allowance (CSRA). They may also keep at least $24,720 for themselves as their spouse receives care under Medicaid.

What is the “Look Back” Period I’ve Heard About?

When determining Medicaid eligibility, Michigan “looks back” at an individual’s assets over the prior five years to determine if assets were liquidated, transferred, or otherwise “gifted away” to friends and relatives in order to qualify for Medicaid. Unsanctioned “gifts” can serious affect your Medicaid eligibility, and may outright temporarily disqualify you from Medicaid coverage if they are found to exceed a certain amount.

In Michigan, the average cost of nursing home care in 2018 is $8,261. No matter how small of a gift is given, any asset that could have been used during a spend down that was instead transferred to another individual will count as a penalty towards ineligibility. Another way of putting this is that if you were found to have given away $82,610 in assets during the five years prior to your application, you would be disqualified from Medicaid coverage for 10 months (8,261 x 10 = 82,610) after the point you would have normally qualified for coverage.

Exceptions to this “gift transfer” penalties include:

  • A spouse (or a transfer to anyone else as long as it is for the spouse’s benefit)
  • A blind or disabled child
  • A trust for the benefit of a blind or disabled child
  • A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances).

Contact an Experienced Medicaid Planning Attorney

As beneficial as it is to have healthcare, preventing yourself from being disqualified from Medicaid coverage can seem like an incredibly daunting task, even if you already have a financial plan in motion. Schock Solaiman Ramdayal, PLLC has the experience and the expertise needed to help you and your spouse avoid the financial ruin associated with the high cost of long-term care, and we are dedicated to helping you receive the healthcare that you deserve.

Contact us today for any assistance you and your spouse may need in understanding Medicaid eligibility, implementing a Medicaid plan, and starting the application process.