Medicare v. MaineCare and Long Term Care Planning

Many of you have heard of Medicare, particularly if you are near or over age 65. Most of you have also heard of MaineCare. But do you really understand the difference? Let me try to help you.

Medicare is a federal program of health benefits. It is designed for the elderly and the disabled, and their dependents. It is to take care of injuries and illnesses, not to provide the care a person needs for their activities of daily living. Medicare is health insurance for the elderly and disabled, without regard to income or assets. MaineCare, on the other hand, is a program for the poor. It is a state run program that is funded with both state and federal monies. The federal program is generically known as Medicaid. Each state has its own version, and Maine calls its version MaineCare. It provides medical benefits to children and families who would otherwise not be able to afford health insurance. One particular part of MaineCare provides coverage for long term care. When we speak of long term care, that means people who need assistance to do many of the activities of daily living. Many people refer to it as nursing home care, but the regulations talk about a number of different levels of care. Simply put, Medicare is health insurance for the elderly, MaineCare is health insurance for the poor.

Some elderly people qualify for both Medicare and MaineCare. That is important, because for people over 55, MaineCare pays for nursing home care. But how do you qualify? There are complicated rules that are set forth in a document called “MaineCare Eligibility Manual.” It lays out the rules for the type of medical conditions necessary, the assets that one can have, and the income that one can have. I am going to leave the medical conditions to the medical folks to explain, and I will concentrate on the income and asset eligibility rules.

Income rules are relatively straight forward for an individual. Income must be equal to or less than the amount set forth in the rules. As of 9/1/11, this limit amount is $7,667/month. (This amount is reviewed and generally goes up every year.) For a couple, it becomes more complicated. The rules talk about the institutionalized spouse and the community spouse. The community spouse can keep all income in his/her name, plus sufficient income of the institutionalized spouse to bring his/her income up to $1,750/month, but no more than $2,739/month. At that point, the institutionalized spouse would be reviewed to see if he or she has less than $7,667/month so as to become eligible. Most elderly people will have income of less than $85,000/ year, so income qualification is not the big issue.

The big issue is asset qualification. The institutionalized party can have up to $2000 of “countable” assets, and up to $8,000 in a savings account. Important non-countable assets are:

1. Primary home and real estate
2. Prepaid funeral, up to $12,000
3. 1 car of unlimited value
4. Personal belongings and furnishings

Under the rules, the community spouse can keep $109,560 in countable assets in his or her name. Gifts from the institutionalized spouse to the community spouse are permitted to qualify the institutionalized spouse, but must be made within 12 months. There are rules for having a hearing to increase the Community Spouse asset allowance, particularly where it is necessary to have assets so as to generate the community spouse’s income allowance.

Transferring assets can be a useful tool in order to qualify for MaineCare, but one must be very careful. MaineCare rules now “look back” at all asset transfers that have occurred in the 5 years prior to application for MaineCare. This is true for both the applicant and the applicant’s spouse. There are certain exempt transfers which will not affect MaineCare eligibility. If one of the exemptions is not met, then a penalty is imposed as to when MaineCare eligibility begins. The penalty is a number of months equal to the value of the transferred asset divided by $7,667. Thus if a $75,000 parcel of real estate is given away that does not qualify, the MaineCare will not begin for 10 months.

Now, even if one successfully qualifies for MaineCare, the other shoe can drop after the individual dies. If the decedent who was over 55 was on MaineCare, DHHS will make a claim against their estate for the amounts it paid on their behalf while on MaineCare. This is called “Estate Recovery.” Usually, since a person has spent most of their liquid assets before qualifying for MaineCare, it means that the family home (which was a non-countable asset) is going to be the source to pay the DHHS claim. This is where the tension between making a gift of the home and not making a gift of the home ocurs. If the gift is made 5 years before application, there is no problem. If not, an applicant will run the risk of it being used as a penalty. Or if you keep the home, it becomes the asset that goes to the state upon the death of the elderly person. Every situation is different, every family is different, and everyone or couple must make their own decisions. You should seek competent legal advice when making these decisions.

This article is meant to be informative only, and is not intended to be legal advice for any person. It cannot be relied upon for any specific situation. You should consult with an attorney and describe the facts of your particular situation and obtain his or her advice before taking action in a specific case.

Ronald G. Aseltine, Esq., practices law at 42 Main Street, Livermore Falls, ME. He also has an office in Wilton.