Connecticut Medicaid Eligibility

Exempt Assets
Income Protection for the Community Spouse
Asset Protection for the Community Spouse
Transfer of Assets
Trust Issues
Annuities

To be eligible to receive Medicaid benefits that pay for nursing home care, an individual must become impoverished. In Connecticut, “impoverished” means that a single individual can own no more than $1,600 in certain assets. However, with careful planning, an individual can often protect a portion of his or her life savings without disqualifying themselves for receipt of Medicaid benefits.

For a married couple, the spouse who is not in a nursing home (the “community spouse”) can keep a portion of the couple’s assets. The institutionalized spouse can own assets worth no more than $1,600. The community spouse’s protected amount is determined by a calculation of the couple’s assets as of the time that one spouse enters an institution or applies for the Connecticut Homecare for Elders Program. Any assets over the amount of the community spouse’s protected amount must be “spent down” in order to qualify the institutionalized spouse for Medicaid.

The application process for Medicaid can be both difficult and time-consuming. The application may take more than six months to finalize. The Department of Social Services requires verification of financial transactions for a period of five years.  If any one of the state deadlines is missed, your application may be denied.

When you have the support of an elder law attorney, you gain the advice required to protect your assets as well as the benefit of an attorney with an in-depth understanding of the Medicaid law required to navigate the process. With the proper timing of the asset spend-down and transfers, and an understanding of how to make Medicaid rules and regulations work for you, it is possible to receive Medicaid and maintain some of the assets you’ve worked a lifetime to accumulate.

I. EXEMPT ASSETS – These assets are not counted in determining Medicaid eligibility:
A. Real Estate:
1. Residence is exempt if applicant is living in the home (DRA ’06 limits home equity to 500,000).

2. Residence will remain protected so long as
    a. the applicant’s physician will verify that he or she may be able to return home within 6 months of initial institutionalization, or;
    
    b. value of primary residence is not limited if the applicant has certain family members living there:
          - Spouse
          - Child under age 21
          - Blind or permanently disabled child
          - Joint-owner sibling who has lived there for at least one year before the applicant
             was institutionalized.

B. Automobile:
1. One motor vehicle of any value is exempt if one spouse is in a nursing home and one spouse is institutionalized.

2. One motor vehicle of any value is exempt if
    a. the spouse needs the auto for employment purposes; or
    b. the vehicle has been modified to be handicap-accessible

3. If no vehicle is totally excluded, then up to $4,500 of the fair market value of one vehicle is excluded.

C. Household belongings- Furniture, appliances, etc.

D. Personal possessions- Jewelry, clothing, toys, etc.

E. Business property essential to self-support- provided that the business produces income sufficient to justify possession of the business assets (equipment and supplies, inventory, cash on hand).

F. Non-business property essential to self-support.

G. Burial costs- within certain limits (see definition of “burial plot” in section H, below):

1. Irrevocable burial contract – up to $5,400.

2. Revocable burial contract – up to $1,200. The value must be reduced by the cash value of any life insurance policies, and if used in addition to the $5,400, must be designated as a burial space or container cost.

H. Burial plot for the applicant and his/her immediate family.

1. The term “burial plot” includes the purchase or prepayment of the following items:
    a. A gravesite
    b. Opening and closing of a gravesite
    c. Cremation urn
    d. Casket
    e. Outer burial container
    f. Headstone or marker

I. Cash surrender value of life insurance- provided the total face values do not exceed $1,500.

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II. INCOME PROTECTION FOR THE COMMUNITY SPOUSE

A. Community spouse’s income is protected.

B. The Monthly Maintenance Needs Allowance (MMNA) – Medicaid permits a monthly allowance for the community spouse from a diversion of a portion of the institutionalized spouse’s income as follows:

1. 150% of the federal poverty level for a two-person household ($1,650.00 on 7/1/06); plus

2. An excess shelter allowance if shelter costs exceed 30% of (1) ($495.00 as of 7/1/06);

3. The total of (1) and (2), however, cannot exceed $2,541.00, as of 1/1/07, unless approved by court order or a fair hearing.


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III. ASSET PROTECTION FOR THE COMMUNITY SPOUSE

III. ASSET PROTECTION FOR THE COMMUNITY SPOUSE

Accessible assets of both spouses (regardless of ownership) are “pooled” as of the first day of continuous institutionalization of the applicant spouse (not the date of application for Medicaid).

A. “Pooled” Assets – the community spouse can retain the Community Spouse Protected Amount (CSPA) which equals the greater of $20,328* or one-half of the resources, but no more than $101,640* (*adjusted every January 1).

B. Assets- any assets over the CSPA must be “spent-down” for Medicaid eligibility.

C. Exception – The CSPA ceiling can be increased by if income of the community spouse and income of institutionalized spouse is insufficient to meet MMNA as calculated above.  This requires:
1. court order, or

2. a fair hearing, to show that a larger CSPA is necessary to generate income to meet the monthly maintenance needs allowance.

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IV. TRANSFERS OF ASSETS

IV. TRANSFERS OF ASSETS

A. “Look-Back Period” – All financial transactions for 5 years before the date of the application will be audited by the State.

B. Transfers of Assets Between Spouses – These transfers are not presumed to be for the purpose of establishing Medicaid eligibility. No disqualification period will be triggered.

C. Transfers of Assets for Less Than Fair Market Value to a Non-Spouse and a Non-Disabled Child

– These transfers will be presumed to be for the purpose of establishing Medicaid eligibility. The period of ineligibility will be calculated and determined by the State using the average monthly cost of a Connecticut Long-Term Care Facility.  Federal regulation enacted on February 8, 2006 drastically changes the way that the penalty period for transfers is imposed.  Consult your Elder Law Attorney.

D. Exempt Transfers – A period of ineligibility will not be triggered by the uncompensated value of a transfer if the home is transferred to a:

1. community spouse;

2. child under age 21;

3. disabled child (must meet SSI criteria);

4. sibling with an equity interest who has resided there for one year prior to the applicant’s institutionalization; or

5. child caretaker who has resided there for at least two years prior to the applicant’s institutionalization and provided care to the patient which avoided the need of institutionalizing him or her during those two years; or

6. assets transferred to or for the benefit of the spouse, provided that said spouse does NOT re-transfer the resources for less than fair market value.

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VI. TRUST ISSUES

A. The “look back period” for trusts is 60 months.

B. Connecticut has an anti-Medicaid trust statute which destroys irrevocable trusts established or funded within 60 months of the Medicaid application.

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VII. ANNUITIES

The purchase of an annuity may cause the denial of Medicaid eligibility if it is deemed to be a “transfer of assets.”
A. Annuity as an Available Asset
1. All annuities must be evaluated as a potential asset. Annuitization does not protect against assignability.
a. An annuity may be assignable, even if it is sold for a reduced amount to a third party for a lump sum.
b. Specific contract language may render the funds unassignable, and therefore unavailable to the applicant.
B. Annuity as a Transfer of Assets
1. If an annuity is actuarially sound and based on life use tables, the expected returns should not be treated as transfers for less than fair market value. However, this issue will be challenged by the State on a case-by-case basis.

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