As an example of the complexity of the Medicaid application, monthly financial statements are required for every account in which the applicant had an interest for the past five years and an explanation for any deposit or withdrawal over $500 — information not readily attainable or recollected.

Applicants then learn of the “deeming rule” whereby all of the resources of both spouses are countable on the application for either spouse, even spouses from second marriages. The deeming rule divides spousal assets 50/50 to determine the amount of spend-down for the infirm spouse before Medicaid eligibility; however, the 50 percent share allowed to the healthier (community) spouse cannot exceed $124,000. Any amount beyond that is added to the applicant spouse’s spend-down before Medicaid eligibility. Next there is a monthly income allowance for the community spouse of $2,250 to $3,200. An experienced CELA may counsel an applicant to increase these limits.

Other little known, yet adverse, Medicaid application facts:

The cash value of life insurance policies beyond $1,500 face value is considered an available resource countable by Medicaid. Often Medicaid will advise an applicant that he or she must liquidate the policy for its cash value. That is not correct! If a $10,000 policy has a cash value today of $5,000, then cashing in forfeits $5,000 of the death value! This is not required. Once an applicant is Medicaid-eligible, all income must be signed over to Medicaid (less possible spousal allowance from the applicant’s income for a community spouse). Both spouses’ IRAs and their home (unless the community spouse lives there) are countable Medicaid resources that must be liquidated and spent down before eligibility. An experienced certified elder law attorney (CELA) can soften the impact or avoid these harsh rules.

For a free initial consultation regarding Medicaid applications, call our East Hanover, New Jersey, lawyers at 973-577-6010 or click here to contact us online.