Many people start making plans for their future healthcare needs, including the need to apply for Medicaid, long before they actually qualify. If you plan to apply for Medicaid in North Carolina, understanding the look-back period is essential to preparing yourself financially and recognizing the resource limits you must adhere to in order to qualify. In North Carolina, that means knowing that Medicaid has a look-back period of 60 months prior to your application. A Medicaid planning lawyer can help make sure your Medicaid eligibility is not impacted.
Medicaid is health insurance available to low-income individuals and families in North Carolina. In order to receive coverage under Medicaid, however, you must fit several limits, including both income limits and asset limits.
In order to qualify for Medicaid in North Carolina as a single person and enter into a nursing home, for example, you must make less than Medicaid would pay for a nursing home each month and have less than $2,000 in available assets. As a married person, with both spouses applying for Medicaid coverage, both spouses combined must have less income than the cost of the nursing home, and may have less than $3,000 in assets.
Qualifying assets may include a variety of investments, funds, and available cash. For Medicaid eligibility, the state will look at:
If the value of those assets exceeds the Medicaid asset requirements, based on whether you have a spouse or other family relying on your income or support, you may not qualify for Medicaid.
While many of your assets, including available cash, may count toward your total asset valuation for Medicaid purposes, there are several assets that may not qualify.
Most of the time, your primary residence is also exempt from Medicaid asset calculations. However, in order to be exempt, the value of the home equity must be less than $636,000, and you must also either live in the home or plan to return to the home at some point. The home is also exempt if you have a spouse who is not applying for Medicaid support, and who lives in the home.
Many people, when they realize that they will need to apply for Medicaid support within the next few years, will try to “spend down” qualifying assets so that they can use them according to their wishes or distribute them according to their needs. Some individuals will try to get around the asset requirements by giving large gifts to family members, or passing on an “inheritance” prior to their death in an effort to leave something behind or offer some benefit to loved ones while still qualifying for Medicaid.
Spending down assets excessively, however, is fraud, and fraudulent use of your assets could result in Medicaid disqualification. There are some ways that you can legitimately spend down your assets in order to qualify for Medicaid, including:
When looking over spending during the look-back period, Medicaid will look into illicit spending, including gifts to friends and family members or deliberately purchasing unnecessary items. For example, under the United States Federal Gift Tax Rule, you can gift up to $16,000 to qualifying family members without that family member incurring taxes on the gift. However, that gift would not be considered a legitimate use of funds under the Medicaid look-back regulations, and could result in disqualification for Medicaid.
If it is assumed that you made a disqualifying transfer with the intent of spending down your assets, Medicaid may assign a “penalty period” under which you will not qualify for Medicaid benefits because of that disqualifying transfer. In North Carolina, the penalty period is approximately $313 per day or $9,522 per month. The penalty period is based on the amount of long-term care you would have been able to afford, had you not transferred or spent those assets in a disqualifying way.
If you need Medicaid services in order to quality for much-needed healthcare, but do not qualify based on your current income or assets, a lawyer can help. Working with a lawyer can help you understand legitimate spend-down efforts and how you can best ensure that you qualify for Medicaid when the time comes. Contact us for a free consultation.