Public benefits laws and policies are very complex and applying for these programs is often daunting and time-consuming for people unfamiliar with the rules. The rules differ between programs because the purpose of each program is different. Our firm has extensive experience in this area and can help clients with preserving assets while qualifying for government assistance.
The different types of public benefits explained:
Medicare is a federal health insurance program under Title XVIII of the Social Security Act for individuals who are elderly or disabled. Unlike Medicaid, Medicare eligibility is not based on financial need. Generally, U.S. citizens and lawful permanent residents may be eligible to receive Medicare at age 65 if they worked at least ten years and paid Medicare taxes while employed, even if their full Social Security retirement age is after age 65. Generally, an individual with disabilities may be eligible for Medicare 25 months after being determined disabled by the Social Security Administration. Individuals with end stage renal disease or ALS (Lou Gehrig’s Disease) may be eligible for Medicare without a waiting period under certain circumstances. An individual whose disability began prior to age 18 may be eligible for Medicare based on a parent’s work record as early as age 20, if that parent is retired or deceased. Most individuals who have Medicare are required to pay premiums, deductibles, coinsurance, and co-payments, just like individuals with private insurance (but Medicare costs are generally much lower than private insurance). Medicare is administered by the Social Security Administration.
Medicaid is a needs-based federal medical assistance program under Title XIX of the Social Security Act. Many eligibility categories exist under the Medicaid umbrella, but generally are based on two main categories: (1) disability-related and (2) family-related. The disability-related category includes individuals who are age 65 or older, blind or disabled. The family-related category includes individuals who are under age 19, pregnant or a caretaker relative for a child under age 19 deprived of parental support (i.e. one or both of the child’s parents is absent, unemployed or underemployed). Individuals who do not fit into any of those categories may be eligible for expanded Medicaid coverage under the Affordable Care Act. Each subcategory of Medicaid has its own income limits and some also have resource limits. Individuals covered by Medicaid do not pay premiums, coinsurance, or deductibles, and have very low co-payments ($1 for doctor’s visits and $5 for emergency room visits) that must be waived if the individual tells the provider they do not have the money to pay. Essentially, Medicaid is a welfare program that provides health insurance. Arizona’s Medicaid programs are administered by the Arizona Health Care Cost Containment System (AHCCCS).
Arizona Long Term Care System (ALTCS) is a division of the Arizona Health Care Cost Containment System (AHCCCS), the agency that administers Arizona’s Medicaid and other health insurance programs. ALTCS is Arizona’s Medicaid long term care assistance program. ALTCS was implemented in 1989 and offers long term care, acute care, and home and community based services to Arizona residents who are elderly, physically disabled or developmentally disabled.
ALTCS, like other AHCCCS programs, works like an HMO, so ALTCS will only pay for providers that are contracted with them. ALTCS services are received through a “program contractor,” which is an insurance company that is contracted with ALTCS to provide medical services and is paid by ALTCS at a set monthly rate called the “capitation rate.” If a service provider is on the program contractor’s provider list and the service is one that ALTCS covers, the program contractor will cover the service. For example, in Yavapai County, United Healthcare is the ALTCS program contractor. ALTCS pays United Healthcare and the recipients receive medical services from providers contracted with the United Healthcare LTC Community Plan. Basically, you use it like you would use private health insurance, except that ALTCS is paying the premiums instead of you.
What are the eligibility requirements for ALTCS?
There are both medical and financial eligibility requirements for ALTCS
Medical Eligibility: To be medically eligible, an applicant must have a medical need for long term care services and be at risk of institutionalization. This means that the applicant must be in need of long term care at a level comparable to that provided in a nursing facility, but at a level which is below that of an acute care setting (hospitalization or intense rehabilitation) and above the level of care of a supervisory/personal care setting (intermittent outpatient medical intervention or benevolent oversight.) An individual who meets ALTCS criteria will present with one or more of the following needs and impairments:
- Requires nursing care by or under the supervision of a nurse on a daily basis
- Requires regular medical monitoring
- Exhibits impaired cognitive functioning
- Exhibits impaired self-care with activities of daily living
- Exhibits impaired continence
- Displays psychosocial deficits
Financial Eligibility: ALTCS looks at both the income and the resources of an applicant. For a single person, their gross income cannot exceed $2,205 per month (in 2017; $2,250 in 2018). For a married couple, either (a) the total income of both spouses cannot exceed $4,410 per month ($4,500 in 2018), OR, (b) the total income received by the applicant under their name as well as half of the income received in checks made out jointly in both names cannot exceed $2,205 ($2,250 in 2018). ALTCS counts the total income before any deductions are taken out (e.g. for health insurance premiums, life insurance premiums, state and federal taxes, etc.), so the amount that ALTCS counts may not match the amount that the person actually receives in their check or direct deposit. The ALTCS resource limit for a single person in $2,000. For a married couple, the applicant’s spouse may retain half of the countable resources of both spouses, except the half retained cannot exceed the maximum of $120,900 (in 2017; $123,600 in 2018), and the spouse may keep a minimum of $23,844, even if half is less than $24,180 (in 2017; $24,720 in 2018). In addition to the half that the spouse retains, the applicant is still permitted to retain $2,000. Under most circumstances, if both spouses in a marriage are applicants, then each is limited to $2,000 in resources.The resources and income for both spouses are considered, regardless of community property laws, prenuptial agreements, or the nature of the ownership of the asset. Certain resources, such as your home and one car, are not counted for eligibility purposes. Under certain circumstances, all or a portion of your home equity may be counted.
For more detailed information about ALTCS eligibility requirements, see our 2018 ALTCS Summary.
Do I have to requalify every year?
Yes. Every twelve months, ALTCS re-determines financial eligibility for the program. This process is called the renewal. Under most circumstances, ALTCS does not require annual medical reassessments. Medical reassessments may be completed at any time if there is a question about whether the person has a continuing need for long term care services.
Will ALTCS take the recipient's Social Security income while they are receiving benefits?
Many people believe once someone is eligible for ALTCS, the state becomes the payee of their Social Security check. This is not the case; however, if someone is determined eligible for ALTCS, they must pay an amount towards the cost of their long term care expenses. The portion that they pay is called either “Share of Cost” or “Room and Board” depending on the type of facility where they are living. Share of Cost and Room and Board are based upon the client’s income. ALTCS allows certain expenses to be deducted from Share of Cost. The ALTCS recipient continues to receive their Social Security check as usual and then every month may have to write a check to the nursing home or facility for their Share of Cost or Room and Board if it is required. People who live at home are not required to pay share of cost or room and board.
Can the ALTCS recipient keep their private health insurance?
Yes. ALTCS is the payer of last resort, which means that ALTCS will bill your private health insurance and Medicare for the cost of your care before paying for a covered service. For this reason, the recipient gets a deduction from the Share of Cost or Room and Board for the amount they pay for health insurance premiums, including dental and vision insurance premiums. The recipient is not penalized by ALTCS for dropping their private health insurance coverage, though. Deciding whether to keep the private coverage is a personal choice and many factors are involved in that decision, including the cost of the private coverage, whether it covers additional services, providers or medications that ALTCS does not, whether the recipient is at home or in a facility, the likelihood that the recipient will remain eligible for ALTCS, etc.
If the proposed recipient receives ALTCS benefits, will ALTCS take the recipient's house after he/she dies?
The state of Arizona is federally mandated to recover the cost it paid on behalf of an ALTCS recipient who was 55 years of age or older when the recipient received ALTCS nursing home or home and community based services. The assets against which recovery is sought must be part of the probate estate if it is required to be administered through a court process. ALTCS will only recover against the probate estate as defined by Arizona law and will not recover against joint tenancy property, life insurance proceeds or designated beneficiaries on pension plans or IRAs. Additionally, if the recipient’s spouse or certain other family members reside in the home, the state will not initiate a recovery. Under certain circumstances, an undue hardship waiver can be requested. However, if someone is in a nursing facility for 90 days are more and is not expected to return home, the state may place a lien on their home for the amount paid for the recipient’s care. There are available planning strategies that are utilized by elder law attorneys to try to protect the family home from estate recovery and liens by ALTCS.
Can the applicant give away all of their assets in order to qualify for ALTCS?
An applicant for ALTCS must disclose all uncompensated transfers (gifts) that have been made during the 60 months prior to the date of application. ALTCS then calculates a period of ineligibility by dividing the total amount transferred by the average monthly cost of care in the county. The resulting figure represents the months of ineligibility for series. The remaining fraction is then multiplied by 30. The resulting figure represents the additional number of days of ineligibility. The period of ineligibility runs from the date of the transfer. Transfers are treated differently depending on the date the transfer was made and when the ALTCS application is filed.
Strategies for Preserving Assets
Strategies for preserving assets include creation of an “income only trust” which allows an individual whose income exceeds the monthly ALTCS limit to still quality for the program.
A trust for a person under the age of 65 who has disabilities can protect that person’s assets while ensuring eligibility for ALTCS or SSI benefits. An ABLE account may be utilized for a person whose disability began prior to age 26. For adults over the age of 65, transfers can be made to an irrevocable trust, which permits eligibility after a waiting period.
The purchase of a single premium annuity can be an effective strategy for preserving assets while qualifying for ALTCS benefits, particularly for a married applicant.
A beneficiary deed or life estate may protect the home from estate and lien recovery. A beneficiary deed is a transfer-on-death designation for your house. A life estate conveys the right to live in the home until death and designates the individuals who will have full title to the property after the life estate ends.
These strategies may not be appropriate for everyone and should not be attempted without legal advice from an experienced Medicaid planning attorney.
While our firm does not prepare applications for Supplemental Security Income, we are knowledgeable about the program and its links to other public benefits. Supplemental Security Income (SSI) is a needs-based cash assistance benefit from the Social Security Administration. As with Social Security Retirement and Disability Insurance, the applicant must be aged 65 or older or blind or disabled and unable to engage in substantial gainful employment. In addition, though, the applicant must meet the income and resource limits. The resource limit is $2,000 for a single person and $3,000 for a married couple. The SSI resource limits have not changed since 1989. Resources are calculated as of the first moment of the first day of each month. The income limit is $735 per month for a single applicant (in 2017; $750 in 2018) and $1,103 per month for a married couple (in 2017; $1,125 in 2018).
Generally, SSI calculates total income using the gross amount of the payments and subtracting certain statutory deductions, then comparing the result to the income limit, which is also the maximum SSI payment amount. If eligible, the applicant will receive a payment equal to the difference between the maximum SSI payment and the countable income after the statutory deductions. For example, if the applicant’s countable income after the statutory deductions is $300, the applicant would receive SSI payments of $435.
How does SSI affect eligibility for other public benefits?
An individual receiving SSI is automatically financially eligible for AHCCCS Medical Insurance (i.e. Medicaid acute care) and Nutrition Assistance (formerly known as food stamps). SSI recipients are also automatically financially eligible for ALTCS (i.e. Medicaid long term care), but must also meet the medical eligibility requirements to receive ALTCS benefits.
Why does SSI count payments by someone else for your food or shelter as income?
As with ALTCS, certain resources and income are not counted toward the limits, with one major difference: SSI counts as income payments made by third parties for the applicant’s food and shelter. SSI counts this as income because the purpose of the SSI payment is to provide the recipient with cash so they can pay for their own food and shelter. Payment of these expenses is called “In Kind Support and Maintenance” (ISM) by SSI and will likely result in the SSI payment going down by a maximum of 1/3 plus $20 under SSI’s Presumed Maximum Value (PMV) rule or Value of the One-Third Reduction (VTR) rule. Although both rules use the same amount to reduce the SSI payment ($245 for a single person and $367.66 for a married couple in 2017; $250 and $375 in 2018), plus $20, they apply it differently. The VTR rule is used when the applicant receives both food and shelter from the third party within the same money. The VTR rule dictates that the SSI payment will be reduced by $245 (or $367.66) in 2017, plus $20, regardless of whether the total value of the food and shelter provided are less than that amount. For example, if the third party paid $100 toward the applicant’s rent and bought $50 in food, the SSI payment would be reduced by $265, even though the total food and shelter paid was only $150.
Under the PMV rule, however, if the actual value of the food, clothing, or shelter received is proven to be less than the PMV, the SSI payment would be reduced by the actual value instead of the presumed maximum. For example, if the third party buys $100 in food for a month, the SSI payment would be reduced by $100 instead of the entire PMV of $245 plus $20 as long as proof of the actual amount spent is provided to SSI. If instead the third party pays $300 toward the beneficiary’s rent and the applicant is receiving $735 per month from SSI, their SSI payment would be reduced by $245 in 2017, plus $20, and they would only receive $470 from SSI for that month.
What happens if SSI overpays the recipient?
SSI recipients are required to report changes in income and resources within ten days of the change. Failure to report changes in a timely manner may cause the recipient to receive SSI benefits for which they are not eligible. SSI will seek to recover these overpayments after notice to the recipient. The recipient has the right to request reconsideration of the decision, but the reconsideration process is lengthy and the recipient’s benefits will still be reduced or in nonpayment status during that process. SSI will first look to recover from future SSI payments, if the recipient is still eligible, which could leave the recipient with no money to live on. If the recipient is in non-pay status, SSI will generally refer the overpayment for collection through the Recovery and Collection of Overpayments Process (RECOOP). If collection efforts are unsuccessful and the overpayments total more than $3,000 (or $5,000 in cases involving a deceased recipient’s estate), SSI may refer the case to the Department of Justice for recovery in a civil suit.
What happens when the SSI recipient receives an inheritance or personal injury award?
Depending on the amount received, if the SSI recipient directly inherits money or property, they may no longer meet the financial eligibility criteria for SSI. If SSI discontinues their benefits, the recipient will also lose their Medicaid SSI recipients under age 65 who receive direct inheritances or personal injury settlements or awards may still be eligible through the creation of a first-party special needs trust or pooled trust to hold the funds. Such trusts must meet certain criteria to qualify as an excluded resource for SSI purposes. ABLE accounts are also a good planning tool for those whose disability manifested prior to age 26, but contributions to an ABLE account are limited to $14,000 per year (in 2017). Any funds not deposited to a special treatment trust must be spent down.
Can the recipient give away money to remain eligible for SSI?
At the initial SSI application, SSI will look back 36 months for any transfers without adequate compensation. SSI also asks about transfers at the annual redeterminations. If funds are given away or sold for less than full market value, SSI will assess a penalty period by dividing the amount transferred by the Federal Benefit Rate (i.e. the maximum SSI payment amount, in 2017, $735 for a single person and $1,103 for a married couple). The result is the number of months of ineligibility, subject to a maximum of 36 months of ineligibility.
The Veterans Administration (VA) is able to assist certain veterans or unremarried surviving spouses of deceased wartime veterans in the form of a pension to help with costs incurred for care at assisted living facilities or for care provided to them in their own homes. This pension is referred to as the Improved Disability Pension when paid to the veteran, or the Improved Death Pension if it is paid to the surviving unremarried spouse of the veteran.
A veteran who is aged 65 or older, or permanently and totally disabled, or his/her unremarried surviving spouse of any age, may be eligible for the Improved Pension if the veteran:
- Served at least 90 days of active military service with at least one day of active service during a wartime period, or if he/she entered active duty after September 7, 1980, generally he/she must have served at least 24 months or the full period for which called or ordered to active duty. (There are exceptions to this rule.) Serving in combat is not a requirement, AND
- Was discharged from service under conditions other than dishonorable.
In addition, individual must meet both income and net worth requirements. Countable income includes income received by the veteran and his/her dependents from most sources, except those sources specifically excluded by federal statute. Income limits vary based on the claimant’s medical need and household size (see chart below). Currently, there is no “official” set limit on how much net worth a veteran and his dependents can have, but net worth cannot be “excessive.” The decision as to whether a claimant’s net worth is excessive depends on the facts of each individual case, including the household income, family expenses, the claimant’s life expectancy and the liquidity of assets owned by the veteran and spouse. The VA currently presumes that a single person can have up to $50,000 and a married couple can have up to $80,000.
Currently, VA imposes no penalty for transfers or gifts of property so advance planning is not generally needed for VA. When transfers or gifts are made to people residing in the same household as the applicant those funds will still be counted towards the applicant’s net worth, unless it is clear that the grantor has relinquished all rights of ownership, including the right of control of the property.
In January 2015, VA proposed new rules that include:
- establishing a clear net worth limit that would match the maximum Medicaid Community Spouse Resource Deduction (CSRD), currently $119,220, and
- imposing a penalty period of ineligibility of up to ten years for asset transfers that occur within three years prior to submitting a pension claim, with the penalty period beginning the month after the transfer occurred.
These rules are still in the public comment stage, however, and have not yet been approved or implemented.
For more information about eligibility for the VA Improved Pension, see our VA Improved Pension Summary.
VA Improved Pension Eligibility: Housebound Allowance and Aid and Attendance
Housebound Allowance and Aid and Attendance payments assist with long-term care expenses for individuals who meet certain disability requirements. Claimants who have unreimbursed medical expenses and a higher need for care are usually medically eligible for Housebound Allowance or A&A benefits.
To qualify for the Housebound Allowance, the claimant must have unreimbursed medical expenses and a disability that could be rated at 60% incapacitating, or be “permanently housebound.” An individual is considered “permanently housebound” when he/she is substantially confined to his or her home (or care facility), or the immediate premises of the home or care facility, by reason of disability, if it is reasonably certain that the disability will continue throughout the claimant’s lifetime.
Medical eligibility for A&A is established when the claimant provides proof that he/she is:
- Totally blind, or so nearly blind as to have corrected visual acuity of 5/200 in both eyes or concentric contraction of the visual field to five degrees or less, OR
- Living in a nursing home or assisted living due to mental or physical incapacity, OR
- Unable perform one or more activities of daily living (mobility, toileting, dressing, grooming, transferring, and bathing), OR
- Incapacitated by a mental or physical condition to the extent he/she requires the aid and attendance of a third-party for his/her safety.
Amounts paid by the veteran or spouse for unreimbursed qualified medical expenses that are expected to occur within the next 12 months from when you apply for pension benefits are deducted, regardless of when the cost was incurred. Qualifying medical expenses that may be allowed as a deduction include, but are not limited to:
- Over the counter drugs
- Acupuncture services
- Whirlpool baths for medical purposes
- Lodging incurred in conjunction with out-of-town travel for treatment (to be determined on a case-by-case basis)
- Transportation expenses for medical purposes (23 cents per mile effective January 1, 2015, plus parking and tolls or actual fares for taxi, buses)
- Lip reading lessons designed to overcome a disability
- Seeing-Eye dog and maintenance
- Payments to a family member for caregiving as an in-home attendant, if s/he is actually being paid
The VA proposed rule mentioned above also includes changes to deductible qualified medical expenses, but in general these changes have little impact on individuals who need Aid and Attendance or are Housebound.
Normally, the VA deducts medical expenses from income only based on the claimant’s report of expenses already paid by the claimant during the first 12 months a client is eligible for pension benefits. However, the VA may allow anticipated future medical expenses to be deducted in the calculation of countable income received if the claimant is paying recurring nursing home fees or other “reasonably predictable” medical expenses. The allowed deductible future medical expense are based on the expenses projected to be incurred beginning with the month after the month in which the medical expenses are first paid.
The unreimbursed medical expenses can only be deducted to the extent they exceed five percent of the applicable maximum annual pension rate (MAPR). (This is also called the “five percent deductible.”)