By: Lisa Dillman, JD and Registered Mediator
"*Originally published in the Indiana Lawyer*"
On January 31, 2020, the Secretary of the U.S. Department of Health and Human Services (HHS) declared the COVID-19 Public Health Emergency. This declaration provided states with additional flexibility and resources to respond to the COVID-19 pandemic, and specifically, to Medicaid members.
During the public health emergency, Centers for Medicare and Medicaid Services (CMS) were able to waive certain requirements and regulations that might impede access to care. This allowed Medicaid beneficiaries to keep their benefit and have access to the care and resources they needed to stay healthy during the pandemic.
However, as of April 1, 2023, the COVID-19 Federal Public Health Emergency has ended, and Indiana Medicaid is returning to normal operations over the course of the next twelve months.
So what does this mean for Medicaid members?
Every year, Medicaid enrollees must go through a redetermination, or renewal process, where the Family and Social Services Administration (FSSA) will review the enrollee’s information to verify that they still meet the eligibility requirements. For example, the FSSA will look at income or residency status, and they may request additional information or documentation to support the enrollee’s eligibility. If they do not meet eligibility requirements, their coverage could be terminated.
During the public health emergency, most enrollees were automatically renewed for coverage, so many enrollees were not paying close attention to whether they met eligibility requirements. Now that the public health emergency has ended, though, people who no longer meet eligibility requirements, even by just a small amount, could lose coverage.
For many of my clients, losing coverage could mean tens of thousands of dollars per month that they would have to pay out of pocket for long-term care costs. As you can imagine, this could be devastating to many people.
Over the next year, Indiana will be conducting redeterminations with normal processes. In fact, in my practice, I have already seen an influx of questions and concerns from Medicaid members who have received notices in the mail from the FSSA requesting supporting documentation to verify they’re eligible for benefits. If you have clients currently enrolled in Medicaid, continue to spread the word and encourage them to take action early.
The FSSA suggests making sure the enrollee has provided current and correct contact information to the FSSA, and to watch for and respond to any request for information the FSSA sends them. Medicaid members can update their contact information and report changes on the Benefit Portal at www.FSSABenefits.IN.gov or by calling 800-403-0864 for assistance. It’s important to note that the FSSA will not discontinue coverage for a Medicaid member without giving them the chance to provide new and updated information, so it’s important for your clients to act quickly.
If your client feels overwhelmed at addressing any changes or requests for information on their own, encourage them to seek the help of an elder law attorney, or attorney specializing in Medicaid benefits. Perhaps no federal and state program is more misunderstood than Medicaid, and misconceptions about this complex program's eligibility requirements, especially as they relate to long-term nursing home care, abound.
For example, a common misconception is that clients need to spend down all of their assets in order to qualify for long-term care Medicaid, but this is not true. Many people do not know that Medicaid’s spousal impoverishment law, 42 USC 1396r-5, protects couples from diminishing their assets by enabling 100% of their assets to be preserved for the healthy spouse.
For a single applicant, Medicaid provision allows at least 50% of assets to be preserved, but often, 70-75% can be preserved. What’s more, with proper planning done ahead of time, 100% of a single person’s assets can be fully protected.
Another common misconception is that clients will lose their home if they accept Medicaid benefits. The fear of losing one’s home most often stems from the belief that once the applicant dies, the state will use estate recovery to put a lien on his or her house, sell it, and thus be reimbursed for the cost of care received. There are several exceptions to lifetime liens on property, but for estate recovery, there are only deferrals for surviving spouses and hardship waivers. Planning techniques used by an elder law attorney can greatly reduce the threat of estate recovery by the state.
Also note that Medicaid deems a primary residence (with equity under a certain amount) to be an exempt asset. Other assets exempt from loss due to Medicaid spend down rules include personal effects, household goods, one car, term life insurance, prepaid funeral expenses (up to a specific value), property directly connected to the applicant’s self-support, and income-producing property (with some restrictions). Each state’s Medicaid program has the final say-so on which assets are exempt and to what degree – and this determination occurs on an individual-applicant basis.
People also often think that giving away their assets, say to their children or a friend, will qualify them for Medicaid. However, Medicaid has a five-year look-back period on asset transfers. This means any transfers your client makes within five years of wanting to apply for Medicaid nursing home benefits must be reported to Medicaid. A penalty may be assessed. Thus, hastily giving money away to meet eligibility requirements does not work – plus it can cause harsh tax consequences.
An elder law attorney with in-depth Medicaid experience can explain the options and which ones make the most sense in your client’s situation. A penalty period would mean your client has to manage the spend-down process correctly to become eligible and start receiving benefits. The do’s and don’ts of a Medicaid spend-down add a layer of extreme complexity to the process because both federal and state requirements must be met. It is easy to do something wrong without realizing it, especially given how frequently the rules can change. If your client is overwhelmed managing their finances, it may be beneficial for them to seek help from an adult child or professional who can assist in managing their finances.
It's easy to see how quickly a Medicaid application or renewal can go wrong. Every applicant’s situation is different, and it’s a complex and overwhelming system. If you have a client who is up for redetermination, have them consult with an attorney proficient in Medicaid. Or, if you have a client who is looking at applying for Medicaid benefits in the future, press them to plan as early as possible. To protect 100% of assets, it’s important that they begin planning at least five years in advance of needing care.
The more you know, and the sooner you know it, the better your client’s chances are of making the most of early planning or of a difficult situation, especially as it relates to their Medicaid redetermination of benefits in a post-pandemic world. Taking action early and consulting with a trusted advisor if necessary, will ensure they keep their coverage moving forward.
Lisa Dillman is an attorney at Applegate & Dillman Elder Law. The firm specializes in elder law and Life Care Planning, a holistic approach to deal with legal, financial, medical and emotional issues involved in growing older. The firm has offices in Indianapolis, Carmel and Zionsville. Find out more at www.applegate-dillman.com