If you have received a notice from the Medicaid agency saying you are ineligible because your resources are too high, you may be wondering what to do next. The answer will depend on your circumstances.
(This post describes Medicaid rules in Pennsylvania, where I practice. The rules differ somewhat in many other states.)
What are “excess resources?”
First, let’s explore the question of what it means to have excess resources.
When you apply for Medicaid, you need to report the assets you own. If you’re married, you need to include assets owned by your spouse. You need to include everything you own jointly with others, and even items that would need to be cashed in, such as savings bonds and the cash surrender value of life insurance.
Some assets will be exempt, such as your residence, household goods, one vehicle per household, and a pension fund (including an individual retirement account) if it’s owned by your spouse. The applicant can keep a small amount (no more than $8,000) of the non-exempt assets. The applicant’s spouse can keep a certain amount of assets known as a community spouse resource allowance (CSRA for short).
What remains is considered excess resources. You do not qualify until they are properly transferred or spent down.
Here is an example:
John and Jane Doe own the following:
Checking and savings $50,000
Investment account $200,000
Jane’s IRA $100,000
John’s IRA $150,000
John’s whole life policy $25,000 (both face value and cash surrender value)
If John enters a nursing home and applies for Medicaid, the following items are exempt: their house, Jane’s IRA, and $1,000 of John’s whole life policy. The rest are non-exempt items totaling $424,000. Of the non-exempt assets, Jane can keep the maximum CSRA of $126,420. Let’s assume John can keep $8,000.
The funds remaining — $295,100 — are the excess resources.
What do you do about a denial?
When you receive a denial from the County Assistance Office, you need to understand why you were denied in order to figure out your next step.
- If the agency made a mistake, appeal.
It could be that the agency counted your assets incorrectly, considered an exempt asset as non-exempt, or made some other mistake about your eligibility.
In that case, you should appeal the determination within 30 days of its mailing date. Follow the instructions for appeal on the determination you received.
- If you can easily qualify.
Another possibility is that the agency counted correctly, and your excess resources are modest enough that you can easily qualify. You may be able to qualify simply by buying an irrevocable burial reserve (or two if you have a spouse) or spending a modest amount on nursing care.
- If you applied before you were qualified, and can’t easily qualify.
Maybe you applied too soon and have resources far above the limits for eligibility, like John and Jane Doe in the example above.
Many nursing homes often insist that new residents file a Medicaid application soon after admission, regardless of the amount of excess resources. An application filed under those circumstances frequently produces a denial.
In that case, you will need a good spend-down strategy, making the best choices to achieve eligibility within the Medicaid rules. John and Jane Doe, for instance, may wish to consider buying irrevocable burial reserves, a new car for Jane, making other necessary purchases, or buying a Medicaid-compliant annuity for Jane (a topic we will discuss in an upcoming blog post).
An elder law attorney experienced in Medicaid law can help you find and implement your best strategy.