1. APPLYING FOR MEDICAID –

THE FOUR ELIGIBILITY REQUIREMENTS

  1. Medicaid Eligibility

The Needs Assessment

 

            There are three levels of TennCare payment for services other than medical services.  These are called the CHOICES levels.  It might be instructive to read what TennCare has to say about the levels in TennCare speak:

To qualify for enrollment into CHOICES Group 1, an applicant must:

  1. Have completed the Pre –Admission Screening and Resident Review (PASRR) process and

be determined appropriate for NF placement;

  1. Have an approved, unexpired PAE for NF LOC;
  2. Be approved financially for TennCare reimbursement of NF services;
  3. Be admitted to a NF; and
  4. Have a Medicaid Only Payer Date.

Medicaid Only Payer Date (MOPD): TennCare must have received notification from the NF

that Medicaid reimbursement is requested for the effective date of CHOICES enrollment (i.e.,

the individual is no longer privately paying for NF services and Medicare payment of NF

services is not available). Enrollment into CHOICES Group 1 (and payment of a capitation

payment to an MCO for LTSS) cannot begin until the MCO will be responsible for payment of

NF services.

To qualify for enrollment into CHOICES Group 2:

  1. An applicant must have an approved, unexpired PAE for NF LOC; 2.
  2. An applicant must be approved financially for TennCare reimbursement of LTSS as an SSI

recipient or in an institutional category (i.e., as Members of the CHOICES 217-Like

demonstration population);

  1. An applicant must be in the target population;
  2. TennCare must have received a determination by the MCO or AAAD that the applicant’s

needs can be safely and appropriately met in the community, and at a cost that does not exceed

the Individual Cost Neutrality Cap; and

  1. There must be capacity within the established Enrollment Target to enroll the applicant.

To qualify for enrollment into CHOICES Group 3:

  1. An applicant must have an approved unexpired PAE for at risk LOC;
  2. An applicant must be approved financially for TennCare reimbursement of LTSS as an SSI

recipient;

  1. An applicant must be in one of the target populations (age 65 and older OR age 21 and older

with a physical disability as defined by TennCare);

  1. An applicant must be able and willing to begin receiving HCBS; and
  2. TennCare must have received a determination by the MCO or AAAD that the individual’s

needs can be safely and appropriately met in the community, and at a cost that does not exceed

the Expenditure Cap.

TennCare Long Term Services and Supports:

A Guide to Pre Admission Evaluation Applications

https://tn.gov/assets/entities/tenncare/attachments/PAEManual.pdf

 

In English, Choices 1 is nursing home care.  Choices 2 is care in the “community” meaning at a lesser level of care facility like an independent living center or an assisted living center.  Group 3 care is essentially home care where some amount of assistance is provided.

The needs assessment process is the same for all three groups.  Many hospitals have the ability to perform a PASRR (the evaluation), as do most nursing homes.  To be able to perform a PASRR the hospital or nursing home must have someone undergo training and generally have an approved computer program for generating the PAE (Pre Admission Evaluation) that is the result of the PASRR process.  There are also various approved third party agencies that perform PASRR’s like the Area Agency on Aging and Disability that is part of the Greater Nashville Regional Council.  No matter who performs the PASSR, a group of nurses within TennCare itself will review the PAE.  It is usually the case that the PAE score is reduced a few points by TennCare.

The PAE score is critical.  In order to be eligible for Group 1 care the applicant must have at least a 9 on the PAE.  Categories of the evaluation include things like being able to take their own medication and feed themselves.  Whereas you might think that having to hand the person their pills and observe the person taking their pills and swallowing means unable to take medication, this is not the case.  As long as the person can get the pill from hand to mouth they are considered able to take their own medication by TennCare.  The same goes for food.

PAE scores can be appealed.

An alternative to an abilities PAE is known is a Safety PAE.  People who would not qualify for TennCare benefits because they can get around mostly on their own, can feed themselves and so on may qualify for benefits because they are a threat to themselves or others.

  1. Resource Eligibility

Exempt vs. Countable Assets

 

Most assets are countable.  Some that are not countable may end up being more of a headache than a countable asset may be.  Below are some examples of exempt assets:

A vehicle that is used to take the applicant to and from medical care, or to work, is an exempt asset no matter what the value might be.  Otherwise, a vehicle with a value up to an equity of $4,600.00 is not counted.  Vehicles modified for handicap access are not counted as well.

Property necessary to a business is not countable according to TennCare up to a value of $6,000.00.  This interpretation is potentially wrong.  Keep in mind that people applying for TennCare have very little money to sponsor theoretical appeals.  Personal property like tools required by an employer are not countable no matter the value.

Life insurance policies up to a cumulative case value of $1,500.00.  This generally means that term life insurance is not countable as it generally has no cash value.

Certain annuities are not countable as long as they meet several non-negotiable standards.  Generally, the requirements are designed to prevent the use of annuities to pass along wealth post mortem.  One of the restrictions that can cause issues is that TennCare requires that the income from the annuity to the community spouse (see below) not exceed the CSRA (see below.)

Notes are not countable as a resource, although the income from the note is calculated.  The note has to be payable during the applicant’s expected lifetime and cannot be forgiven.  While there may be notes already existing before application, my general use of them is to avoid transfer penalties by providing a way for the relative who got money to pay it back in a relatively affordable way.

Burial plots for self and immediate family are not countable.  Burial pre need arrangements are generally not countable as long as they meet certain technical qualifications.  It is a good idea to check what state the pre need arrangements came from as other states have significant variances on what the technical requirements are.

Where the applicant is married, the community spouse’s tax deferred savings are not a countable resource.

A home and surrounding property is not countable up until the equity exceeds $500,000.00.  It can happen.  In Nashville and surrounding area it may not be uncommon for a couple that owned a small farm that barely kept them afloat finding that their farm land is now a prime spot for development.

The problem with an exempt house is what to do with it if no one is living there.  The amount of money a recipient of TennCare long term care benefits gets to use for personal expenses per month is $50.00, if they are not on SSI.  SSI recipients have $30.00 per month to spend.  This is not enough to pay insurance, taxes, utilities, yard care, etc.  If the house is rented out it will be treated as a countable asset by TennCare.  Pooled special needs trusts are not generally interested in having real property as an asset.  Even if it is somehow kept up and ownership survives the applicant and spouse, TennCare will cause the house to be sold when the estate is probated.  Placing the house in an individual trust and then renting it out is an option – assuming the five year lookback period is met – but the need for the trust to absorb income means an effective 39% tax rate on the net rental income.

Special needs trust are also not a countable resource, as are non special needs trusts that are drawn up and administered properly.

  1. Income Eligibility

 

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.

  1. Transfer Eligibility
  2. The Lookback Periods

 

            When a person makes an application for TennCare benefits they are obliged to reveal any transfers made for less than fair market compensation during the last 5 years.  This is called the lookback period.  There used to be different lookback periods for different transfers.  Those variances are no longer relevant.

  1. Transfers and Penalty Periods
  2. Transfer Penalty

The Transfer Penalty is calculated according to how much was given away during 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.  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.

  1. Penalty Beginning Date

            The penalty period begins when the applicant is “otherwise eligible.”  This means the applicant is in the nursing home and has less than $2,000.00 in countable assets.

  1. Partial Months

Partial months count.  If I gave away $55,800.00 TennCare would not pay for 10 months and 6 days.

  1. Monthly Maintenance Needs Allowance for the Community Spouse

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.  i.e.  Shelter Standard (paying to stay somewhere, or house payments and insurance) is $600.75 per month.  The Utility allowance is $308.00 per month.

  1. Annuity Transfer Rules and Tactics

The basic idea of an annuity is a transfer.  If an annuity qualifies as a non countable asset, it means the income from the annuity gets counted.  It also means that whatever remains in the annuity at the death of the holder is susceptible to TennCare Estate Collection as that is a qualification for the annuity.  So, if you buy an annuity for yourself you have spent down an asset, but you do not get the benefit of the income because the income simply adds to the patient liability.

If you transfer the annuity to the community spouse you have spent down assets that must be spent down to qualify for assistance and provided income for your spouse.  It used to be that any amount of income could be assigned to the community spouse through an annuity.  TennCare noticed this and now requires that the income assigned to the spouse be within minimum to maximum maintenance needs allowance rules because they care.  You might sometime slip in income to equal the maximum monthly maintenance needs allowance.  The problem with this is if it is challenged you have a mess on your hands as you have an annuity they will claim does not qualify and then you may have a penalty when the annuity is cashed in.

  1. Estate Recovery Rules

Following is TennCare’s discussion on the topic of estate recovery:

TennCare may not have to get the money back from the estate if:

  • Your care did not cost much
  • The things you left can’t be used to pay people you owe through probate court. An example is life insurance money.

But these times do not happen by themselves. The person handling your things after you die must get a “Release” from TennCare. It says you don’t owe TennCare money. If your things have to go through Probate court, the Release must be filed there.

Sometimes TennCare must let your money or property stay in the family longer.

These times are if you leave your money or property to:

  • Your surviving husband or wife
  • Your child who is under age 21 when you die
  • Your child of any age who is blind or permanently and totally disabled

TennCare won’t try to get repaid until this family member dies or the child turns age 21. But the person who handles your things must file the TennCare Release in Probate Court.

Sometimes TennCare must let just your HOME stay in the family longer.

This happens when one of these family members lives in the home when you die:

  • Your surviving husband or wife
  • Your child who is under age 21 when you die
  • Your child of any age who is blind or permanently and totally disabled
  • Your child who lived in the home and took care of you if this care kept you out of a nursing home or home care for 2 years
  • Or your brother or sister who helped make the house payments if they lived there for a year before you got nursing home or home care.

By law, TennCare should not take the house until these family members die or the child turns 21. But the person who handles your things must file the TennCare Release in Probate Court.

TennCare may leave your money and property in the family because of undue hardship.

But the State does not do this very often. The family must prove that losing the money or property in your estate will cause an undue hardship. For example, if your property is a family farm and the family’s only income, then the person handling your things can ask the State not to take the property. The State may or may not agree.

 

This is a well done discussion of TennCare estate recovery.  The other thing to keep in mind is the statute of limitation for estate recovery:  There is probably one and we are not all that certain about what it might be.  It is over one year and might be two years.  Or, maybe more.  Or, because of a quirk in the wording of the statute when the Tanner case was decided, it might be one year or two years.  Other than that, it is quite clear.

  1. Affordable Care Act and PACE Program and Eligibility

From Medicare.gov:

The Programs of All-Inclusive Care for the Elderly (PACE) provides comprehensive medical and social services to certain frail, community-dwelling elderly individuals, most of whom are dually eligible for Medicare and Medicaid benefits . An interdisciplinary team of health professionals provides PACE participants with coordinated care. For most participants, the comprehensive service package enables them to remain in the community  rather than receive care in a nursing home. Financing for the program is capped, which allows providers to deliver all services participants need rather than only those reimbursable under Medicare and Medicaid fee-for-service plans. PACE is a program under Medicare, and states can elect to provide PACE services to Medicaid beneficiaries as an optional Medicaid benefit. The PACE program becomes the sole source of Medicaid and Medicare benefits for PACE participants.

Financing for the program is capped, which allows providers to deliver all services participants need rather than limit them to those reimbursable under Medicare and Medicaid fee-for-service plans. The PACE model of care is established as a provider in the Medicare program and as enables states to provide PACE services to Medicaid beneficiaries as state option.

PACE Eligibility

Individuals can join PACE if they meet certain conditions:

  • Age 55 or older
  • Live in the service area of a PACE organization
  • Eligible for nursing home care
  • Be able to live safely in the community

The PACE program becomes the sole source of services for Medicare and Medicaid eligible enrollees. Individuals can leave the program at any time.