Questions and Answers on Medical Assistance for Nursing Home Care

QUESTIONS AND ANSWERS

MEDICAL ASSISTANCE

FOR NURSING HOME CARE

Prepared by: Long Term Care Assistance Project,

Maryland Legal Aid

Updated January 2015

Medical Assistance is a government-funded program that pays for long-term health care

when personal funds have been exhausted. This leaflet answers the following questions

you may have about eligibility requirements and the application process:

What is Medical Assistance?

What are the financial eligibility rules for Medical Assistance for

Nursing Home Care?

What income can my spouse keep if I go into a nursing home and require

Medical Assistance?

What resources can my spouse keep if I go into a nursing home and require

Medical Assistance?

What resources are exempt (not counted) for Medical Assistance eligibility?

Can I transfer property or income to other people and still be eligible?

Will Medical Assistance place a lien on my real property or my estate?

What if I own my own house by a life estate deed?

WARNING: Medical Assistance eligibility rules are complicated. This is a general guide

and not legal advice. Further, this information is valid as of the date of this revision.

The rules change frequently. For legal advice about your own situation, you should talk to

a lawyer. Maryland Legal Aid or Legal Services Programs funded by your local office on

aging may be able to provide you with free legal advice and assistance.

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Question 1: WHAT IS MEDICAL

ASSISTANCE?

Medical Assistance is a government program

that pays for medical services, including

nursing home care. The rules of the program

are made by the Federal Government and the

Maryland Department of Health and Mental

Hygiene. You apply for Medical Assistance at

the local Department of Social Services in the

county where you live.

Medical Assistance coverage for nursing home

care has both financial and medical eligibility

rules. The medical eligibility rule is that you

must need health care services, above the level

of room and board, which can be made

available in a nursing facility. The financial

eligibility rules are discussed in the questions

below. This leaflet does not answer all the

possible questions about Medical Assistance

for nursing home care. If you will need to apply

for Medical Assistance, it may help to talk to a

lawyer or a legal services program for advice.

Each person’s situation is different, and the

result depends on the exact facts.

Common questions people ask about

Medical Assistance are:

Will the Nursing Home or the State take my

house?

•No. For some people, owning a house

means they are not eligible. In that case,

they may have to sell the house to pay for

nursing home care, but the State does not

take the house. See Questions 5 & 7. In

some cases, the person is still eligible

despite owning a house and Medical

Assistance pays for the care; however, the

State may put a lien on the house. See

Question 7. If you cannot pay the nursing

home, and you are not eligible for Medical

Assistance, the nursing home could

discharge you for nonpayment and sue you

for an unpaid bill. If the nursing home got

a court judgment for the unpaid bill, then

they could put a lien on your house and

could make you sell it.

Will we have to use my spouse’s income to pay

for my nursing home care?

•No. Medical Assistance does not count

your spouse’s income. If you are eligible,

then your spouse’s income need not be

used to pay for your care. In fact, your

spouse may even be allowed an allowance

from your income for his or her living

expenses. See Question 3.

Will my spouse and I have to spend all our

savings?

•No. The Medical Assistance rules

provide for a share of the assets you own

to be set aside for your spouse. The

amount of the assets that are protected is

set by federal law. See Question 4.

What if I disagree with the decision by

Medical Assistance?

•You have the right to file an appeal

from any decision by Medical Assistance.

You can appeal decisions about your

financial or medical eligibility, about the

amount of the allowance from your income

set aside for your spouse, or the amount of

your assets set aside for your spouse. If

you disagree with any decision or action

by Medical Assistance, you can see a

lawyer or a legal services program to seek

help with an appeal. See Questions 5 & 7.

Question 2: WHAT ARE THE

FINANCIAL ELIGIBILITY RULES FOR

MEDICAL ASSISTANCE FOR

NURSING HOME CARE?

Your income and your countable resources

must be within the limits set by law.

A. INCOME

To qualify for Medical Assistance, your

monthly income minus certain deductions must

be less than the basic monthly rate the nursing

home charges. Income includes such things as

Social Security, pensions, VA benefits, interest

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and dividends. Gross income from all sources

is counted. First, Medical Assistance totals all

of the income you receive in your name. Then,

they subtract the following amounts from your

total income in the following order:

• $76 a month for personal expenses

such as toiletries, clothing, and

newspapers.

• The monthly cost of health insurance

premiums you pay.

• An allowance, if deemed necessary &

applicable, to help support your

spouse. See Question 3.

• An allowance to help support any

dependent family members, if

applicable.

• A monthly allowance to maintain your

home if you live alone and have the

intention and ability to return home

within 6 months (according to your

doctor).

• The amount of unpaid medical

expenses (for example nursing home

or pharmacy bills) not covered by any

other health insurance and incurred

either during the 3 months prior to the

month of Medicaid application, or

during any month between the month

of application and the month when

Medicaid coverage begins.

• Part of the cost of other health related

items such as eyeglasses, dentures,

and hearing aids may sometimes also

be deducted.

If your income is less than the cost of your

nursing home care after these deductions, then

you are income eligible for Medical Assistance.

When you are eligible for Medical Assistance

nursing home coverage, your income will first

be used to pay the items listed above if they

apply. You must pay any remaining income to

the nursing home each month. Medical

Assistance pays the difference between your

available income and the nursing home’s bill.

If you transfer your right to income to another

person, or if you refuse to accept income you

have a right to, you may be disqualified from

Medical Assistance. See Question 6.

B. RESOURCES

You are not eligible if your countable resources

(assets or property) are worth more than

$2,500. Resources include such things as real

estate, bank accounts, some life insurance

policies, and stocks and bonds. Resources can

include anything that has value that you could

convert to cash. Some resources are “exempt”

and are not counted for eligibility. Exempt

resources are described in Question 5. The

definition of assets now includes promissory

notes, loans, mortgages and purchase of a life

estate in another individual’s home, unless the

purchaser lived in that home for at least one

year after purchase.

Medical Assistance uses the amount of

resources available as of the 1

moment of the

day of the month for which you apply. If

the total resources are over $2,500, you are not

eligible for the entire month. However, if the

amount of resources exceeds $2,500 by less

than the full cost of the next month's care, you

can pre-pay the amount over $2,500 before the

end of the month and become eligible on the

day the prepayment runs out. For example, if

you had $2,800 on the 29th of January, and the

nursing home costs $100 a day, by prepaying

$300 for three days of February, you would be

eligible as of February 4th. If you still had the

$2,800 on February 1, you would be ineligible

for all of February.

If you are married, there are special rules about

resources. These rules, which are explained in

Question 4, allow a spouse at home to keep

more resources.

If you, or your spouse, give away resources or

sell them for less than their fair market value

you may not be eligible for Medical Assistance.

See Question 6.

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If you have joint assets with another person,

such as a joint bank account or jointly owned

stocks or bonds, Medical Assistance counts the

full value as belonging to you unless you can

prove the other person is the real owner of

some or all of the asset. Because many people

use joint bank accounts to allow someone else

to handle their finances for them, this rule is

very important. The other person should never

mix their own money into that account. Also, if

that person withdraws any of the money, you

may be disqualified from Medical Assistance.

See Question 6. A better way to allow someone

else to handle your finances for you is to have a

durable power of attorney.

Question 3: WHAT INCOME CAN MY

SPOUSE KEEP IF I GO INTO A

NURSING HOME?

Your spouse’s income is not counted by

Medical Assistance, and it does not have to be

used for the cost of your nursing home care if

you are eligible for Medical Assistance. If your

spouse’s income is less than $1967 per month,

then your spouse can have an allowance from

your income. After the $76 personal needs

deduction and the deduction for health

insurance premiums from your income, your

spouse can keep as much of your monthly

income as needed to bring his or her income up

to $1967 per month.

If your spouse’s housing costs (rent or

mortgage, property taxes, homeowner’s

insurance, and utilities) are more than $590 per

month, the allowance can be increased by the

amount of housing expenses above $590, up to

$2,981. The allowable amount to be paid over

to your spouse for housing costs is reduced by

the personal income that your spouse receives.

In calculating the housing costs, the actual

costs for rent, mortgage, taxes, and insurance

are used. For utilities, however, a standard

figure of $245 or $402 per month, depending

on whether heat is included in the rent, is used.

If your spouse’s necessary living expenses are

more than the maximum of $2,981, the

allowance from your income may be increased

by a State Administrative Law Judge. Your

spouse would have to show significant

financial duress to get the allowance increased.

EXAMPLES:

1. Mr. Jones is in a nursing home. His income

is $600 per month. Mrs. Jones lives in their

house, and her income is $2,100 per month.

Only Mr. Jones’ own income is used for his

Medical Assistance eligibility, and Mrs. Jones

is free to use her income for her own expenses.

2. Mr. Jones is in a nursing home, and his

income is $2,100 per month. Mrs. Jones lives in

their home, and her income is $600 per month.

Only Mr. Jones’ income is used to determine

his Medical Assistance eligibility, and Mrs.

Jones gets an allowance of $1,367 per month to

bring her total income to $1,967. Mrs. Jones’

mortgage and other housing expenses are $620

per month, so her allowance is increased by

another $20 per month, to $1,387, raising her

total income to $ 1,987.

Question 4: WHAT RESOURCES

CAN MY SPOUSE KEEP IF I GO INTO

A NURSING HOME?

The following rule protects some resources for

the spouse who still lives in the community:

The spouse at home can keep all resources that

are “exempt” under the rules described in

Question 5.

All resources owned by either spouse are added

together to determine eligibility. It does not

matter which spouse owns the resources. This

includes resources owned jointly with someone

else unless you can prove the other person

actually owns the resources. (For example,

joint bank accounts owned with relatives are

counted in full.) The couple’s total resources as

of the date you go into a nursing home (called

the “snapshot date”) are added up. The spouse

at home is allowed to keep the larger of these

two amounts:

• a.) Up to $23,844 of the couple’s

combined, non-exempt resources; or,

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• b.) One-half of the couple’s non-

exempt resources, up to a maximum of

$119,220

On the date you apply for Medical Assistance,

the combined resources are added up again.

The “spousal share” from a) or b) is subtracted.

If the remaining resources are less than the

basic $2,500 resource limit, you are eligible for

Medical Assistance. Medical Assistance uses

the amount of resources available on the first

day of the month you apply for. If the total

remaining resources, minus the “spousal

share,” is over $2,500 at all, you are not

eligible for the entire month and will not be

eligible until you spend down to less than

$2,500 .

The rules allow your spouse to keep the

“spousal share,” but it is not guaranteed. If you

are over the resource limit, you must pay for

the nursing home care for that month yourself

even if your spouse then cannot keep the full

amount allowed. The best way to insure that

your spouse can keep the largest possible

amount of your combined resources is to ask

for the “spousal share” to be calculated as soon

as you go into a nursing home, even if you will

not be eligible for a long time. You can have

that calculation done any time after you enter a

nursing home by paying a $200 fee to the State

Medical Assistance Eligibility Office. Although

the calculation would be free when you filed a

Medical Assistance application, that might be

too late to insure that your spouse can keep the

largest possible amount of the resources. The

telephone number for the State Eligibility

Office is 410-767-1463 [Toll free: 1-800-492-

5231, extension 1463].

If your combined income is not enough to give

your spouse at home as much income as the

rules in Question 3 allow, your spouse may be

allowed to keep more of the resources than the

rules in this section allow. Your spouse can

keep more than the amount of resources

allowed only if a Court or a State

Administrative Law Judge orders Medical

Assistance to let your spouse keep more of the

resources.

If you or your spouse have questions or

problems about the amount of resources your

spouse is allowed to keep, you can talk to a

lawyer or a legal services program.

Question 5: WHAT RESOURCES

ARE EXEMPT (NOT COUNTED) FOR

MEDICAL ASSISTANCE

ELIGIBILITY?

A. WHAT ARE EXEMPT RESOURCES?

Some resources are “exempt,” and are not

counted toward the resource limit described in

Question 4. Exempt resources can include your

home, household goods and personal effects,

all vehicles, life insurance, most burial plots

and prepaid burial plans, and certain other

property and items used for self-support. Some

of these are described in more detail below.

B. WHEN IS A HOME EXEMPT?

Your home could be a house (including all

surrounding land), a condominium, a co-op

apartment, or a house trailer. It is your “home”

if it is where you lived before going into a

nursing home.

Your home is exempt, whatever its value, if

your spouse, minor children or certain

dependent or disabled relatives live in the

home.

Your home will be exempt no matter who lives

in it if you say on your Medical Assistance

application that you intend to return to it —

even if it is unlikely that you will be able to

return (as long as the equity value is less than

$536,000). Homes with an equity value

greater than $552,000 are not exempt under the

intent to return home rule. See Question 7,

about when the State will place a lien on a

house.

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Usually, Medical Assistance will not allow you

to use any of your income except rental income

from the home to pay taxes, insurance and

maintenance costs for the home. However, you

may be able to have up to $350 per month of

your income set aside for up to six months to

maintain your home while you are in a nursing

home. A physician must certify that you

probably can return home.

If you intend to return home, the proceeds from

the sale of an exempt home are also exempt to

the extent they are used to purchase a new

home within 3 months of the sale.

If your deed says that you have a “life estate,”

the rules about your house are different. See

Question 8 for more information.

C. WHEN IS LIFE INSURANCE

EXEMPT?

Term life insurance does not affect Medical

Assistance eligibility. Whole life, or other

forms of insurance with cash value, counts if

the combined face value of all your policies is

over $1,500. Life insurance is exempt if the

total face value (the amount payable at death)

of your policies is $1,500 or less. For couples,

each spouse may have $1,500 of life insurance.

If the face value of your life insurance is more

than $1,500, the entire cash surrender value

counts toward the resource limit. (The “cash

surrender value” is the amount the insurance

company will pay if the policy is cancelled).

If you irrevocably assign ownership of your

life insurance policies to a representative to

fund your funeral or burial and the

representative agrees in writing to use the

money from the policies solely for your funeral

or burial and this is permanent and can't be

changed then the policies are exempt. The life

insurance benefits can not exceed $10,000.

D. WHEN ARE BURIAL FUNDS AND

BURIAL SPACES EXEMPT?

A burial fund of $1,500 for an individual (and

an additional $1,500 for a spouse) is exempt if

it is designated for burial expenses. The test is

whether it was $1,500 or less when it was set

aside. It does not matter if the balance goes

over $1,500 because of interest paid. If you

also have life insurance or an “irrevocable

burial trust,” the $1,500 burial fund may not be

exempt, and you should get legal advice.

There is no limit on the amount that you can

put into a prepaid, irrevocable funeral trust with

one exception: a life insurance policy with a

face value exceeding $10,000.00 is a countable

resource, whether or not it is assigned to a

representative for the purpose of funding

funeral or burial expenses. Maryland funeral

directors have a form approved by the State for

setting up an exempt funeral trust. An

irrevocable funeral trust is usually a better

choice than the limited "burial fund" ($1,500

limit) described above.

Burial spaces for a Medical Assistance

recipient and for immediate family members

are exempt no matter how much they are worth.

“Burial spaces” include plots, crypts,

mausoleums, markers, caskets, vaults, and

grave opening and closing costs if these items

have been paid in full.

E. WHEN ARE HOUSEHOLD GOODS

AND PERSONAL EFFECTS EXEMPT?

If you intend to return home from the nursing

home, household goods necessary for the

maintenance, use, and occupancy of your home

are exempt regardless of value. Personal

effects, except some non-essential personal

effects such as furs and jewelry, are also

exempt.

If you do not intend to return home, only

household goods and personal effects in your

possession at the nursing home are exempt. If

your spouse is still living at home, the

household and personal property at home is

exempt.

F. What if I have assets that I cannot

sell or liquidate?

If you have assets that you cannot liquidate,

sell, or raise money on, you may be able to

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exclude those assets. The law counts assets

that are available; if there is a reason why you

truly cannot use the asset, or its value, to pay

for your care and your needs, then the asset

may not be countable at all. You would have to

prove that you could not use the asset, and why.

This is an issue that you may need legal help

with, and you may need to file an appeal.

Question 6: CAN I TRANSFER

PROPERTY OR INCOME TO OTHER

PEOPLE?

Transferring, giving away or selling resources

for less than fair market value is called a

"disposal of resources". Medical Assistance

looks back at the five years prior to your

application to see if you made any disposals.

For every $6800 disposed of you will be

disqualified for one month of Medical

Assistance coverage of your nursing home care.

The penalty period starts on the later of: the

first day of the month after which assets are

transferred for less than fair market value, or

the date on which you are eligible for Medical

Assistance—Long Term Care. If you give

away property or money on more than one

occasion, the second penalty does not begin to

run until the end of the first one. The length of

the disqualification depends on the value of the

resources transferred.

Refusing to accept income you are entitled to

receive, or transferring the right to receive it to

someone else also is a disposal, and can result

in severe penalties. NOTE: Inheritances are

lump sum income and are pro-rated as income

over the months remaining in the certification

period. If a nursing home resident's spouse

dies and the resident is not an heir under the

spouse's will, the resident must file a claim for

the elective share of the spouse's estate.

Failure to file a claim for the elective share is

treated as a disposal of an asset. Note: There

is a time limit for filing a claim for the elective

share. The deceased spouse's estate may have

to be probated. Call the Register of Wills

office or a lawyer for information.

The same rules apply to transfers by you, your

spouse, or someone acting for either of you.

This means that if you or your spouse give

away resources it may result in a period of

ineligibility for you.

There are special rules for creating “trusts”and

notes taken on property sold for FMV. In

addition, giving away property may have tax

consequences, so you should never give away

property or money without first getting legal

advice from an attorney who is familiar with

Medical Assisance rules. NOTE: It is very

important to have legal advice before

transferring any assets to someone else for less

than the full market value if you may need

Medical Assistance coverage to pay for nursing

home care in the future .

A. Rule for transfer to a spouse.

There is no Medical Assistance penalty if you

transfer property to your spouse. However, the

resources of both spouses are considered for

Medical Assistance eligibility. Therefore, any

countable resource you transferred to your

spouse still would be countable. See Question

4. Also, if you transfer a resource to your

spouse and he or she then gives it away, you

may be disqualified. See the discussion above

about penalties for disposal of resources.

B. Rules for transfers to people other

than your spouse.

(l) There is no penalty if you sell your property

for a fair price. However, the proceeds from the

sale would be a countable resource.

(2) There is no penalty if you transfer your

property to your child who is blind or disabled.

(3) Your home may be transferred without a

penalty only to:

• Your spouse,

• Your unmarried child under 21,

• Your blind or disabled child,

• Your child who has lived in the home

and provided care to you for at least

two years before you went into a

nursing home if that care permitted

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you to stay at home instead of going

into a nursing home sooner (doctor

must verify), or,

• Your brother or sister who has an

equity interest in the home and has

lived there at least the year before you

went into a nursing home.

C. Transfer was not to qualify for

Medical Assistance, or penalty would

cause hardship.

If you are disqualified from Medical Assistance

because of a disposal of a resource, the penalty

could be cancelled if you could prove that the

transfer was not made to qualify for Medical

Assistance. This is very difficult to show, and

you may need legal assistance for this problem.

The penalty also can be cancelled if you can

prove that it would cause undue hardship. To

prove undue hardship you would have to prove

that there is no way you can get the resource

back, and that there is no way for you to pay

for necessary medical care without Medical

Assistance. You should never assume that it is

safe to give away resources because of these

two exceptions.

Question 7: WILL MEDICAL

ASSISTANCE PLACE A LIEN ON MY

REAL PROPERTY OR MY ESTATE?

If your home is not exempt, you are not eligible

for Medical Assistance, so there would not be a

lien. If your house was excluded as a countable

resource because you said you intended to

return home, Medical Assistance places a lien

on it unless it is medically reasonable that you

will return home. The State may not place a

lien on your home if any of the following

persons live in it:

• Your spouse;

• Your unmarried child who is under

21;

• Your blind or disabled child; or,

• Your brother or sister who has an

equity interest in the home and has

lived there at least one year

immediately before you entered a

nursing home.

When the property is sold or if you die, the

State will usually attempt to collect on its lien.

However, the State cannot collect on a lien

imposed on your home if:

• You have a surviving spouse, a

surviving child who is unmarried and

under 21, or a child who is blind or

disabled;

• Your sibling has lived in your home

for at least one year immediately

before you went into a nursing home

and still lives in your home; or

• Your child lived in the home for at

least two years immediately before

you went into a nursing home, has

continued to reside there since then,

and provided you care that let you stay

in your home instead of a nursing

home.

When you die, if you do not have a surviving

spouse or a surviving child who is unmarried

and under 21 or is blind or disabled, the State

can recover from your estate what Medical

Assistance paid for your care after you turned

55.

If you are survived by a spouse, a child who is

unmarried and under 21, or a child who is blind

or disabled, the State cannot recover from your

estate until your surviving spouse dies and you

no longer have a surviving child who is

unmarried and under 21, who is blind, or who

is disabled. The State has no claim against the

estate of the surviving spouse or child.

Question 8: WHAT IF I OWN MY

HOUSE BY A LIFE ESTATE DEED?

A “life estate” deed means that although you

own the house during your lifetime, it

automatically belongs to a new owner when

you die. Some people use life estate deeds

because they do not want their house to go

through probate when they die. Some people

believe their heirs may avoid taxes on the

house if they use a life estate deed instead of

leaving the house to the heir in a will. Whether

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or not life estate deeds have value for estate

planning, they can be a problem for Medical

Assistance eligibility.

Life estate deeds come in two forms: with the

power to sell the house within your life, or

without the power to sell it.

Creating a life estate without the power to sell

the house is a disposal of a resource and may

disqualify you from Medical Assistance. See

Question 6, about the penalties for disposal of

resources. If a life estate deed without the

power to sell was created long enough ago that

there is no penalty, the house is a countable

resource but your life estate without the power

to sell has a market value of $0, so it would not

disqualify you from Medical Assistance.

Creating a life estate deed with the power to

sell the house is not a disposal, because you

still have the power to sell the house at any

time without anyone else’s permission.

However, the house could not be an exempt

resource based only on your saying you intend

to return home, because the State cannot put a

lien on a house owned this way. The market

value of the house would be counted as an

available resource. If the house would be

exempt for other reasons, such as because your

spouse or a dependent relative lives in it, then it

still would be exempt. See Question 5.

CONCLUSION

The Medical Assistance eligibility rules are

complicated. Before taking steps that may

affect your or your spouse’s Medical

Assistance eligibility, you may need legal

advice. If you have a lot of resources, you can

talk to a lawyer who specializes in estate

planning who also has expertise in Medical

Assistance--Long Term Care law. If your

resources after your spouse’s share is

subtracted will pay for only a few months of

nursing home care, you should talk to a lawyer

several months before you apply for Medical

Assistance. Maryland Legal Aid or Legal

Services Programs funded by your local office

on aging may be able to provide you with free

legal advice and help. Please remember that

this is general information, and it does not

cover all possible cases. It is intended as a

guide rather than a provision of complete

answers about Medical Assistance—Long

Term Care.