Elder & Disability Law Office, Ltd., John Belconis
350 South Northwest Highway, Suite 300
Park Ridge, IL 60068
(847) 430-3652  

Critical Illinois Medicaid Law Changes Impact Seniors

Illinois Medicaid laws are constantly changing. Whenever the Medicaid laws change people typically find the changes confusing. Let’s take a look at some of the important questions that have come up during our recent presentations.

Q: Is it true that if a financial gift was made within five years of applying for Medicaid, the application will automatically be denied?
A: No. There are a number of actions that can be taken to gain approval on an application when gifts have been made within the “five year look back period.” One example would be to produce credible evidence that the applicant made the gift with no reason to believe that a Medicaid payment for long term care services might be needed. The sudden onset of a disabling condition such as a stroke or Alzheimer’s disease may provide convincing evidence. Another example would be if the gift was made prior to November 1, 2011 and proper action is taken by the applicant, then a hardship waiver may be granted and the application can be approved. Understanding whether you qualify for one of the exceptions may be critical in gaining approval for Medicaid benefits.
Q: Is $14,000 per year the maximum an individual can give away if they are going to apply for Medicaid?
A: No. The $14,000 per year gift people ask about when discussing Medicaid Planning is a tax law figure and not relevant with respect to Medicaid’s specific asset transfer rules. Medicaid applies their own rules to gifts made by the applicant to determine when the applicant qualifies for benefits. Any gifts or transfers for less than fair market value during that time period may cause a delay in an applicant’s eligibility. Gifts are possible, but require precise calculations to be successful.

Q: Is a married couple (in year 2016) always required to spend down to $109,560 before qualifying for Medicaid?
A: No. Although there are income and asset criteria a couple must meet before one of them qualifies for benefits, federal and state laws were written to protect individuals from becoming impoverished if their spouse needs nursing home care. For example, if a couple is over the limits in assets, but is under the income limits, then it may be possible to convert some of the excess assets into income and avoid having to spend down assets to qualify for Medicaid while retaining all of the income.

Q: A Medicaid applicant’s house is considered “exempt” under Medicaid laws. Can an applicant give their house away without incurring penalties?
A: In most cases “no.” Generally real estate which is given away is considered a gift. If an applicant gives their house away, the state will assess a penalty based on the fair market value of the house at the time it was transferred. However, there are exceptions to the general rule where the state does allow transferring the home to a qualified individual …such as a transfer of the home to a care taker child that has been living in the home for at least two years prior to filing the application or a transfer of the home to a disabled child.

Q: If one spouse enters a nursing home and the other spouse remains living at home is it a good idea to pay for home repairs, pay down credit card debt or pay down a mortgage before applying for Medicaid?
A: Yes. These may be great ideas depending on the circumstances. If the applicant can lower their total countable assets that Medicaid considers when determining their eligibility, then the applicant may have less to spend before qualifying for Medicaid.

There are many steps a Medicaid applicant can take to preserve their assets. What you need to remember is that the laws are constantly changing and the planning your neighbor did for their mother six months ago may not be proper for your mother tomorrow. Consult a knowledgeable elder law attorney for advice.

If you or your patients/clients are facing any of these situations and have questions, do not hesitate to call us at (847) 430-3652.

Disclaimer-This newsletter does not constitute legal advice. This information is provided for educational and informational purposes only. Nothing is meant or intended to create an attorney client relationship. For specific legal advice relating to your situation contact a competent attorney in your jurisdiction.