TennCare/Medicaid, Medicare and VA benefits can help to pay for nursing home care. Medicare will only pay for a limited period of time and only if the person needs Skilled Care (IV drugs, physical therapy, or occupational therapy.) VA benefits can pay towards long term nursing home care. However, VA benefits cap out at substantially less than the private pay cost of nursing home care. Only TennCare benefits can pay for nursing home care for longer periods of time.
Aside from citizenship and residency, there are three categories of qualification for TennCare: Financial, Income and Physical Need.
If your client is single, the financial picture is somewhat straightforward. The client can qualify as long as the client has less than $2,000.00 in countable assets. Their house is not countable. A vehicle that is used to go to medical care is not countable. Most burial arrangements are not countable. Special needs trusts are not countable. Most everything else is countable.
Couples are more complicated. The community spouse is the one staying home. The institutional spouse is in the nursing home. The institutional spouse must have less than $2,000.00. With a couple there is one more uncounted asset, community spouse tax deferred savings (IRA, Keogh, 401K.)
Everything countable is added together before dividing the whole into two equal parts. It does not matter who has title to the asset. Pre-nuptial agreements are not considered by TennCare in counting assets. Once the assets are divided each spouse has to spend their half down to acceptable levels. The institutional spouse has to spend down to less than $2,000.00. The community spouse can keep a minimum of $23,844.00 (assuming there is that much.) The community spouse may keep no more than $119,220.00.
When your client applies for TennCare your client must divulge any gifts during the last five years. This is called the lookback period. Normal birthday and holiday presents generally do not count. Gifts beyond that do even if the gift is not a taxable gift under the annual IRS gift exclusion ($14,000.00 this year.) That’s right, Medicaid and the IRS do not talk with each other. Gifts to qualified special needs trusts do not count, nor do gifts of the house to disabled children, or to children who have stayed in the house and cared for the institutional spouse for at least two years.
All of the countable gifts are added up and then divided by the average state reimbursement rate for nursing home care through TennCare. This years that amount is $5,472.00 per month. As many times as $5,472.00 goes into all the countable gifts made in the last five years is how long TennCare will not pay for the nursing home stay. Partial months count.
To illustrate, if I gave away $54,720.00 four years and eleven months before going into the nursing home, TennCare would not pay for the first 10 months of my stay. Private pay rates at nursing homes are generally a good deal more than $5,472.00 per month.
Income for the person seeking benefits is limited to $2,199.00 per month, or three times the federal poverty level. If the client has income beyond that you will need to draft a qualified income trust (QIT.) Simply putting income beyond $2,199.00 into the QIT makes the client eligible. In practice all of the client’s income should go into the QIT for ease of bookkeeping. Money from the QIT can only be used for nursing home care, hearing aids, dental work and eyeglasses.
Income from the institutional spouse can potentially be assigned to the community spouse if the community spouse gets below $2,003.00 per month. Income may also be paid to the community spouse up to a maximum of $2,981.00 per month as long as the community spouse “needs” the income according to housing cost estimates that may have last been accurate when the Beaver was being raised by June and Ward.
The final qualification standard for TennCare is medical need. In brief, you really have to be in bad shape to qualify for long term care benefits in a nursing home. There is a test, called the PAE (Pre Admission Evaluation) that determines whether or not the applicant qualifies. The PAE score must be at least a 9 to qualify. Private institutions like hospitals and nursing homes may do PAE tests. Those test results are reviewed and it is common for a nursing home 10 or 11 to be reduced to a 7 or 8 by the TennCare PAE reviewers.
Once the person qualifies for TennCare, that person pays all of their income, less $50.00 per month, to the nursing home. This is known as the Patient Liability. The State makes up the difference between the patient liability and the reimbursement rate for that institution. The $50 usually also goes to the institution to pay for things like hair and laundry.