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Georgia Nursing Home Medicaid Law -- 2005

The costs of long term health care can be staggering. For many people, being prepared to meet them can be an even greater challenge. Although some persons have amassed the necessary resources or insurance to meet the challenge, many others have few choices but to rely upon Medicare and Medicaid, the two government programs that have been established to provide assistance. Since neither of these programs provides exhaustive or universal coverage, it is important to fully understand which services are, and more importantly, are not covered by these programs.

Medicare
Medicare is an employment related federal health insurance benefit which pays for limited long term recuperative care associated with an illness or injury (such as a broken hip). Under Medicare terminology, this is known as "convalescent" care and is limited to certain qualifying physician-prescribed home health care, and services received in nursing homes. Medicare payment for a nursing home stay is limited to a maximum of 100 days, although the typical payment is for far less. Under no circumstances does Medicare pay for long term institutional care on a long term ongoing basis.

Medicaid
Unlike Medicare, Medicaid is not employment related. Rather it is a jointly funded and administered state and federal welfare program that pays the qualifying medical expenses for those individuals whose financial resources fall below the program's established minimums. In 1993, Congress passed the "OBRA 93" legislation, making a number of sweeping changes to the Federal Medicaid law. Congress made many significant changes in 1996, and Georgia implemented several significant changes in summer 2004. Medicaid remains, however, the only government program that pays for ongoing long term care, albeit only for those persons deemed "medically needy." Even then, however, there are a number of ancillary items that Medicaid will not cover. While Medicaid also pays for some home health care services, as a practical matter those home health care providers who accept Medicaid often have long waiting lists, thus limiting the availability of the home health care option for many applicants.

2005 Qualification Criteria
To qualify for nursing home Medicaid in Georgia, an individual must be at least 65, or blind, or disabled, and must meet certain financial requirements. The financial criteria for 2005 are as follows:

• a single person can have no more than $2,000.00 in resources (assets) in his name (excluding his homeplace and certain other exempt resources);
• a married couple can have no more than $97,100.00 in resources in their names (excluding their homeplace and certain other exempt resources); and
• the applicant's income (e.g. Social Security, pension, investment income, etc.) is limited to a maximum of $1,737.00 per month. If the applicant's gross monthly income exceeds this limit, it will be necessary for the applicant, his agent under a Durable Financial Power of Attorney, or his Guardian to establish a Qualified Income Trust (also known as a Miller Trust).

Qualified Income Trust
Individuals whose gross monthly income exceeds $1,737.00 must establish an irrevocable Qualified Income Trust (QIT) before becoming eligible for Medicaid benefits. The individual's income funds the QIT, and distributions are made monthly from the QIT for medical care and other allowed expenses. It is crucial that the QIT be properly drafted, executed, and administered. As such, the advice of an Elder Law Attorney is invaluable in establishing a QIT in Georgia.

Spending
If an individual or married couple's includible resources exceed the limits outlined above and Medicaid qualification is the objective, those resources may be spent on anything desired, without penalty, in order to reach the limits. However, any spending which merely converts one form of includible resources to another (e.g. cash to stock) serves no purpose since the newly acquired asset is as includible as the original. Therefore, the only way to successfully "spend down" resources for eligibility purposes is to spend includible resources on those that are exempt for Medicaid purposes, such as paying off the mortgage on the homeplace, purchasing a vehicle (if it will be used for "medical transportation"), and purchasing burial spaces and funeral contracts.

Gifts and Penalties
While spending is one way to reduce resources, another is through the making of a gift. However, if a gift of resources is made to a person other than a spouse, Medicaid assesses a time period penalty which must elapse before the applicant can become eligible for Medicaid benefits. The penalty assessed is calculated to be the number of months the applicant otherwise could have paid for nursing home care had he kept the assets that were given away. The penalty period starts elapsing on the date the gift was made.

This does not mean, however, that a penalty will be assessed no matter how far in the past the gifts were made. Rather, under OBRA 93, Medicaid can only look back thirty-six months from the date that the Medicaid application is filed to see if any gifts have been made to individuals (sixty months for transfers to Trusts). This is called the "look back" period. If any gifts were made during that time, the penalty described above will be assessed, and the applicant cannot attain eligibility for Medicaid until it has elapsed. However, gifts made more than thirty-six months before the application is filed will not be cause a penalty to be incurred.

Beware, however, the provision in the new Estate Recovery regulations that allows for gifts made during this look back period to be voidable. These regulations may seriously impact the planning of anyone who is planning for future Medicaid qualification or who anticipates making any transfers for less than fair market value. A potential Georgia nursing home Medicaid applicant (or his spouse) should NOT transfer any asset without first consulting a qualified Elder Law Attorney regarding the impact of this new provision on his situation.

Estate Recovery
In Georgia, a Medicaid applicant is allowed to keep his homeplace for eligibility purposes, if he intends to return to it. However, under OBRA 93 Congress mandated a new program called "Estate Recovery." Under Estate Recovery the state is empowered to file a lien against the Medicaid recipient's estate (both real and personal property) as a means of recouping the Medicaid dollars spent on his behalf during his lifetime.

For eleven years Georgia chose not to implement an Estate Recovery program; however, effective August 1, 2004, Georgia does now have such a program in place. Some of the regulations, which were issued on July 14, 2004, will likely be litigated before we know with certainty how they will be applied. Any potential Georgia Medicaid applicant should seriously consider the implications of Estate Recovery in the planning process.

Trusts
A planning technique widely used in the past to shelter assets for Medicaid purposes has been the use of Trusts. Under OBRA 93 the use of both living and testamentary Trusts for Medicaid purposes was substantially limited, though Special Needs Trusts are specifically approved under the law for use by some individuals who presently are, or expect in the future to become, eligible for SSI or Medicaid benefits. As a result, if Medicaid is a consideration for an individual who is contemplating transferring his assets into a Trust, that person would be wise to consult with an attorney who is knowledgeable and experienced in this area. The risk exposure in not being fully apprised of the law in this area is that all Trust assets may need to be spent before the individual can qualify for Medicaid.

Consult an Expert
Finally, while the Medicaid law has become more restrictive and qualifying for Medicaid has become more difficult, a number of planning options remain for those who are practiced in applying the law. Therefore, as with all technical legal planning issues, it is best to consult an elder law attorney who practices regularly in the area of Medicaid law before initiating any activities on your own (such as transferring assets) to accomplish Medicaid qualification.