NOVEMBER 1999 - Medicaid Limits On Assets And Income For Public Retirees - Unfortunately, some of our members face the prospect of nursing home care either for themselves or their loved ones. One major consideration is how to pay for this care which currently averages between $40,000 to $65,000 annually.

Here are some of the basic financial requirements that a retiree must satisfy in order to obtain Medicaid coverage while in a nursing home. This is not an exhaustive review, but highlights what we think are the major features and their implications for public retirees.

To be eligible, a retiree can only have $2,000 in assets. If you have more than that, you must "spend down" the value of the assets until all you have is $2,000. You can set aside an additional amount of $1,500 in a separate bank account, or an unlimited amount in an irrevocable contract, for funeral and burial expenses.

To make the calculation, Medicaid considers the assets of the applicant but also those of their spouse. The spouse, who remains at home, is entitled to one-half of their combined assets, going up to a maximum cap of $81,960 which is adjusted annually.

Frequently, we are asked whether the pensioner’s group life insurance is included in the calculations. The answer is no. And the same holds true for his contributions under an Option B pension. Those contributions are excluded.

What could be included is a pensioner’s home. If you or your spouse continue to live there, the home is normally excluded from the calculations. Also, a home may not be included if the specific conditions, involving either a minor or dependent child, sibling or "supportive"child, can be met.

Be advised that all the money which you may have in the Mass. Deferred Compensation Plan will be included in the calculation of assets. The fact that your spouse (and not you) is applying for Medicaid assistance does not alter that requirement.

One must remember that Medicaid does review an applicant’s bank and financial records for the previous 36 months. Please note that assets, held in a trust, are subject to separate rules.

Therefore, any large withdrawal or transfer within that period, which cannot be "justified" (i.e., to repay a loan) may disqualify the applicant. Transferring a large amount of money to one’s child or children just won’t wash. Planning well in advance of the 36-month Medicaid review period could prove crucial.

In addition to the $81,960 cap imposed upon the combined assets to be given to the applicant’s spouse, the Medicaid program does set limits, based on a formula, on the amount of the monthly income allowance for the applicant’s spouse. From their own income, the spouse is entitled to keep a minimum of $1,357 and a maximum cap of $2,049 each month.

If the "at-home" spouse’s income is less than the allowance, they can receive a portion of the applicant’s income in order to bring them up to the allowance. One can also receive an allowance greater than the minimum and maximum limits, upon a showing of "significant financial duress" (hardship).

After the deduction for their spouse, the balance of their income is attributed to the nursing home applicant and used to pay for their care. The applicant will be allowed to keep a small amount each month ($60) as a personal needs allowance and also money to pay for their group health insurance from either the Commonwealth or a municipality.

What this means is that your pension is subject to Medicaid’s income restrictions even when your spouse is seeking assistance. Unfortunately, there is no exemption from this requirement under the state’s retirement law.

Remember, we have highlighted only some of the major financial conditions to qualify for Medicaid. If you need a more detailed review of your individual circumstances, we suggest you seek advice from an expert in this area.