Illinois Medicaid Rules Modified as Lookback Increases to 5 Years

Molly Schlanker, 7/27/2012

Medicaid, the low-income health insurance for seniors, many times becomes a payment solution for those who need long-term nursing care.  Medicare is the health insurance program all seniors receive at age 65, but it does not pay for long-term care in a nursing home nor in the home (Medicare pays for short-term nursing home stays after a major medical incident, fully paying for up to 20 days and then partially paying for days 21 to 100).

Illinois has made changes to their Medicaid qualification and service offerings which will begin this month. Caregiverlist's elderlaw expert, Ben Neiburger, J.D., C.P.A., says changing the look-back period from 3 to 5 years is one of the most important rule changes. 

"One of the biggest changes to Medicaid is the lengthening of the look-back period from three years to five years.  Applicants will now need to come up with detailed account statements for every financial asset they have back five years from the date of application." says Neiburger.

Also, continues Mr. Neiburger, "Medicaid will look at every transaction over that five-year period to determine whether or not money was given away.  If money was given away, Medicaid will assess a penalty period during which it will not pay for care.  Generally, when a penalty period is imposed, there are no assets to pay for care.  Accordingly, families will now need to examine their finances in detail before they apply for Medicaid so that there are no surprises later.  This rule change greatly increases the burdens of recordkeeping to get Medicaid to pay for care."

Medicaid provides more services, actually, including medications and ongoing care for as many years as necessary in a nursing home.  As nursing home costs can be as much as $400 per day, it is possible for seniors who are on Medicare to "spend-down" their assets to then become a low-income senior qualifying for Medicaid.  Seniors with age-related illnesses, such a Alzheimer's disease, may require care for as many as 10 years or more,  It is possible to need around-the-clock services for some of these years which could easily drain a family's savings.

Caregiverlist's nursing home directory provides the daily costs of nursing homes in Illinois.  You may research the cost of a private room and shared room and also review which nursing homes accept both Medicare and Medicaid payments.  The quality of the care can be reviewed in the Caregiverlist star-ratings to find out what the nursing-aide-to-staff ratio is (the Certified Nursing Aide, or C.N.A. will provide the hands-on care which means it is important they do not have more residents to care for than they can get to each morning and evening).

Here is an overview of the Illinois Medicaid rules.

Why the change to the Illinois Medicaid qualifications?

Congress passed, in 2006, the Deficit Reduction Act of 2005, called the "DRA".  Under the DRA, Congress significantly tightened the Medicaid eligibility requirements effective February 8, 2006.  Illinois was required to adopt these changes no later than June 30, 2007.  Illinois failed to comply (Illinois was one of the last holdouts along with California).  Finally, with hammering out of issues between the Elder Law Bar and the Department of Human Services, the Illinois General Assembly approved the new negotiated rules to implement the DRA. Not sure if we should mention here that these are also two states with the worst state budget deficits and the most newsworthy governors, with the Illinois governor being impeached.  Medicaid is funded by a combination of state and federal funds.

When do the new Illinois Medicaid rules apply?

Any Medicaid applications submitted on or after January 1, 2012, will need to conform to the new rules.  The Medicaid 3-month application backdating provision will continue to apply.

What Medicaid services do these new rules apply to?

• Licensed Intermediate Care Facilities
• Licensed Skilled Nursing Facilities (nursing homes)
• Supportive Living Facilities
• Community Integrated Living Facilities

Rules for Back-Dating:  Income and Resource Limits Must be Met for Each of 3 Months Look-Back

Medicaid retains the 3-month application backdating provision, but with the provision that the 3-months prior must also meet the low-income Medicaid financial qualifications (the old-rule only required the financial qualifications to be for the current month of the application, not for the previous 3 months).

Spend-down to Qualify for Medicaid:  Money May Only Be Used for Medical Expenses:

Medicaid applicants who become eligible for Medicaid but have access to assets or income that are greater than what Medicaid eligibility rules provide will be enrolled in spend down. This is the same as the old rules. However, the rules now clarify that spend down can only be met through the payment of medical expenses. Medical expenses are first applied to the income spend down requirement, then to the resource (asset) spend downs.

DHS will not pay for covered medical services unless the spend down is met. A resource spend down is met by presenting allowable medical bills or receipts to DHS in an amount that equals or exceeds the amount of the person's nonexempt access resources. This rule tightens the guideline and will take away flexibility on how the money is spent, as supporting invoices will need to be provided.

What is the Financial Qualification for Medicaid in Illinois?

$908 for a Single Senior with Assets of $2,000 or Less

$1,226 for a Two-person Household with Assets of $3,000 or Less

Treatment of Income, Post Medicaid Eligibility:  All Income Must Apply to Care

 

Post-eligibility income rules address how a Medicaid recipient must use his or her income following Medicaid approval. Under the new rules, the Medicaid recipient must apply his or her total income following Medicaid approval to the cost of care, minus any applicable deductions. These deductions include:

• Certain SSI benefits for residents of Supportive Living Facilities,
• Personal needs allowances, per month:
  • Nursing homes - $30 per month ($60 for spouses residing together);
  • Supportive Living Facilities - $90
  • Community Integrated Living Arrangements - $50; and
  • Veterans receiving Veteran's Benefits - $90 (a person may not get both the $30 per month personal needs allowance and the $90 veterans allowance)
• Income transfers to Community Spouse (up to $2,739 per month);
• Family allowances under Medicaid standards (for dependent children under age 21, dependent adult children, dependent parents or siblings);
• Expenses for certain Medicare and health insurance cost sharing (including Medigap premiums);
• Payments for necessary medical care as ordered by a doctor or dentist. These include expenses incurred within six months prior to the month of application (medical expenses incurred during a penalty period do not count); and
• Certain amounts to maintain a residence in the community for up to six months when (1) there is no spouse or dependent children in the home, and (2) a physician certifies that the stay in the facility is temporary and the individual is expected to return home within six months.

Cooperation with DHS During Application Process Required

Applicants must cooperate with all requests from DHS regarding asset verification and applying for all financial benefits for which the applicant can apply.  The new rule means that DHS can simply deny an applicant if they are not cooperating with requests for information (it will not pay, in other words, if someone is being difficult to work with and does not submit information requested).

Real Estate as an Asset

New rules limit home equity to $750,000, with this amount considered the fair market value of the property less any encumbrance or mortgage on it.  It may be required for the home to be sold within 6 months if the resident cannot return to the home.  This new rule makes it clear that if someone has assets, even in their home, which can be liquidated to pay for their care, then they must use these assts before having the government pay for their care through Medicaid.

Transfer of Assets Timeline

The new Medicaid rules apply to the transfer of assets on or after January 1, 2007.  This is a full 5 years before the new rules take effect.  Any transfer of assets for less than fair market value within 60 months prior to the date of application will create a penalty period during which DHS will not pay for institutionalized care.  This means it is important for applicants to review all financial purchases and real estate records for 5 years prior to the application.  Placing homes in joint tenancy with children can be penalized alongwith transfers of assets to family or friends who have provided care for free in the past.  All transfers can now be considerd, not just transfers of $500 or more.

The Secretary of State's office of Illinois will publish the new Medicaid requirements in the November 14, 2011, issue of the Illinois Register.  You may want to consider talking to an eldercare law expert if you are considering qualifying for Medicaid.  You may also explore the senior care options in your area to understand the costs and services.