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When I was a young lawyer, life was relatively simple. A mortgage transaction consisted of a promise to repay the money and a document to record in the courthouse pledging the home as security.
And there was no such thing as Medicaid.
My, how things have changed.
I have four volumes of how to deal with Medicaid. There should be a course given by the local colleges on how to decipher it.
The person going to the home is called the applicant. The community spouse is the one who is not going into the home.
For instance, some of the things a potential applicant owns count toward their care, but other things do not. The ones that do are called “countable resources.” Everything that’s not countable is exempt. The exempt category includes the following items:
• Personal effects, clothing, jewelry and household items.
• Family residence if the applicant intends to return (with equity of less than $500,000 unless spouse, minor child or blind and disabled child resides therein). Always indicate that the applicant does intend to return.
• One automobile.
• Life insurance with total face values of less than $1,500 or less OR total cash values of $1,000 or less.
• Cemetery plots.
• Irrevocable funeral trust/burial reserve (figures vary by county). The average burial costs can be increased by 25 percent and still qualify as exempt. The average for Cambria County for the last year I have figures is $10,750, which adjusted for the additional allowance means that the figure of $13,437.50 would be the maximum allowable.
• Cash up to $2,400 for the applicant (or $8,000 if low income).
• Real or personal property used in a trade or business and essential to self-support.
• Non-business property essential to self-support, if such property used exclusively to produce items for home consumption – tools, equipment, uniforms.
• Community spouse’s IRA, 401k, 403b, KEOGH, etc.
• Community Spouse Resource Allowance (CSRA) – one half of assets up to a maximum of $109,560 and down to a minimum of $21,912 in 2010.
In order to be eligible for Medicaid, the applicant may have countable resources of no more than $2,400 (or $8,000 if the applicant has income of less than $2,022 in 2011) in addition to the exempt resources. It is possible to convert countable resources into exempt resources, which has no effect on Medicaid eligibility. However, the timing of the conversion is important because it later can affect calculations for the Community Spouse Resource Allowance. Converting countable resources into exempt resources may delay the start of Medicaid eligibility.
One word of caution for those who have elected to use a revocable trust instead of a will. If you put your home into the trust, it is no longer an exempt asset for Medicaid. It will be put into the countable assets category.
The world has not gotten more comprehensible over the years. When the members of Congress openly admit they haven’t read the text of the laws they voted on, there is bound to be confusion.
Thomas Young, a graduate of Pitt and Harvard Law School, has been a lawyer in Johnstown since 1958. He is a former professor of business law at Pitt-Johnstown. Readers may send questions to Young in care of The Tribune-Democrat. The opinions expressed in this column are general in nature and may not apply to your situation. Consult your attorney for advice on specific legal matters.
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