Medicaid Planning: The Ins & Outs of MMMNA #6 – Snap Shot Dates

April 30, 2014

by David Zumpano with No Comment Asset Protection Legal Technical Medicaid

This will be the sixth and final installment in our Medicaid planning series on MMMNA, or the minimum monthly maintenance needs allowance, which is the minimum income allowance for the community (or well) spouse in a Medicaid claim. If you didn't see the first five posts, click on the links to find numbers One, Two, Three, Four and Five.

The one thing most people don’t understand when calculating MMMNA is determining the snap shot date, which is the date used to calculate the community spouse resource allowance (CSRA). On the snap shot date the Medicaid authorities will take a snap shot of all of the client’s assets, and that’s how they determine how many assets the applicant has to be divided by two.

Medicaid law says the snap shot date is the first day of the month that the Medicaid applicant is admitted to a healthcare facility for at least 30 continuous days. So what happens if the applicant is not admitted for 30 continuous days? That breaks the required continuity and you won’t have a snap shot date. What if the applicant went in on the 15^th of the month? If that was the first of 30 continuous days, the first day of that month would be the date that you calculate the CSRA. Not the 15^th of the month, but if the client went in on April 15 and stayed at least 30 days, then we have our continuous stay on the 15^th of April and the first day of that month would be April 1. That would be the date to use our community spouse resource allowance.

A couple of details are important in this calculation. For one, hospital and nursing home stays are considered continuous institutionalization. And that’s what we’d typically call this: the first day of continuous institutionalization, and hospitals and nursing homes piggyback. So, for example, if I have a client that goes into the hospital on November 15, and then goes into a nursing home on December 3, and then into your office on January 3, what’s the snap shot date?

The first question to ask yourself is, have there been 30 days of continuous institutionalization? Your answer is yes. The client went from the hospital to the nursing home, and those two piggyback, so there have been 30 days. The next question is, when did the continuous institutionalization begin? It began on November 15, so the snap shot date is November 1, the first day of the month of continuous institutionalization.

Let's consider a different example. The client went into the hospital on November 15 but was discharged on December 3 because there were no nursing home beds available. Then the client goes into a nursing home on December 5 and comes into your office on January 3. Well, we know that that interruption is OK because, under the Medicare rules, as long as you get admitted to a nursing home within 30 days of your discharge then Medicare will pay the first 20 days of your stay in a nursing home. Medicare will pay the first 20 days of nursing home care as long as you’re admitted to a nursing home within 30 days of being discharged from the hospital and you were in the hospital for at least three days.

But we’re not talking about Medicare – this is Medicaid. We're working on what the snap shot date would be. So the question is, have 30 continuous days occurred? The client went into the hospital on the November 15 and stayed until December 3, which is not 30 days. There was another stay from December 5 to January 3, so there is no continuous institutionalization yet. Assuming that the client stays in for another two days, then you will have had 30 days of continuous institutionalization. And since the first day of the continuous institutionalization was December 5, then the snap shot date will be December 1, and they will take a snap shot of all of the assets of the husband and wife on that date. That's all there is to calculating the snap shot date.

Now that I told you how the law works, be aware that most states do not do it that way. Instead, most states will use the date you apply, which is an advantage to you. You can control the date you apply, but you cannot control the date someone is institutionalized. So again, even though the federal law spells out the rule above to determine the snap shot date, only some states follow that rule. The rest will use the date you’re in the facility and apply for Medicaid.

So that’s how we deal with the snap shot date. And again, the significance of that date is that it is the date they take a snap shot of all assets to determine how many assets the husband has, how many assets the wife has and how much can be exempted under the CSRA.

If your interested in learning more about MMMNA, consider joining us for our Asset Protection, Medicaid Planning & VA Practice With Purpose program June 9-11th in Chicago. Click here to register or learn more.

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center

Medicaid Planning: The Ins & Outs of MMMNA #5 – Asset Tests

April 23, 2014

by David Zumpano with No Comment Asset Protection Estate Planning Drafting Software Legal Technical Medicaid

This post continues our Medicaid planning series with a deep dive into MMMNA, or the minimum monthly maintenance needs allowance, which is the minimum income allowance for the community (or well) spouse in a Medicaid claim. We've already covered some of the basics of determining MMMNA for your clients; If you didn't see the previous posts, click on the links to find numbers One, Two, Three and Four.

So, similar to the rules we covered on the individual income allowances, there’s also the asset test. Unlike the income allowances where you’re allowed $60 a month or $80 a month, under the asset test you’re allowed a certain amount of assets. The minimum is $1,500; by federal law they cannot allow you less than $1,500 of assets per month. About 80% of the states go beyond that, allowing $2,000 per month. And in a few states it's even higher. One day New York sent out a notice saying the state was increasing the individual resource allowance to $14,400, which was a windfall for our clients. There are also some states at $5,000 or other amounts, and about a dozen other states are at the $1,500 minimum.

When you see a state that has a $1,500 resource allowance, then you know it's a 239B state. What does that mean? Back in the '70s there was a code section 239B that raised the allowance from $1,500 to $2,000 federally. But some states complained, so under 239B of the statute they allowed the states to opt out of the increase. Remember, federal Medicaid laws allow the states to be less restrictive but not more restrictive. So you would think if a state allows a $1,500 resource allowance when the federal minimum is $2,000, such a state would run afoul of that standard. And you would be correct, unless that state filed an election under section 239B to maintain the $1,500 minimum resource allowance. So if your state’s minimum resource allowance is $1,500, you are a 239B state. It's a term worth knowing because you might hear it at CLEs and events of that nature.

So what about the community spouse? We know the individual can only have $1,500 to $14,400, depending on which state you’re in. The federal government addressed the community spouse question with the 1988 Medicare Catastrophic Coverage Act. The MCCA, attempting to avoid impoverishing community spouses, set a new federal minimum amount that a community spouse has to be allowed to keep. And what is that amount? Much like the federal government did with income limits, it set a minimum maximum and a maximum maximum. And for some reason, the minimum changes every July and the maximum changes every January. Last July the minimum was raised to $23,184, so the states cannot allow a community spouse less than that. If you’re in a max state, then your state will now allow the community spouse $115,920.

And again, similar to the income exercise, if the community spouse’s assets are more than the minimum but less than the maximum, then the community spouse resource allowance (CSRA) will be the amount of the community spouse’s assets. So, for example, if I were to say that a husband had $200,000 of assets and a wife had $10,000 of assets, we would first determine who went into the nursing home. If the husband went into the nursing home, the wife only has $10,000, so she would be able to take $13,184 of the husband’s excess assets and then the rest would have to be used toward his cost of care. If the wife went into the nursing home with her $10,000 of assets and the husband had $200,000, the most that the community spouse could have is $115,920, so the difference between the $115,920 and $200,000 would have to go toward the cost of care.

There are exceptions. We can keep some assets by utilizing some special exemptions. But generally speaking, the rule is very simple. The institutionalized spouse is allowed to have $1,500 to $14,400; the community spouse is allowed a minimum of $23,184 or a maximum of $115,920 if you’re in a range state, and if you’re in a max state the allowance is $115,920.

So now that you've seen how to calculate the CSRA, let's try a few examples. If a couple has $130,000 of total countable assets between the husband and wife at the snap shot date, then how much would the CSRA be? The couple lives in Connecticut, which is a range state. In a range state, how much would the community spouse be allowed to keep? Well, we know that half of $130,000 is $65,000. And according to range state rules, if x is greater than the max, then the CSRA equals the max. If x is less than the minimum, then the CSRA equals the minimum or the assets. If x is greater than the minimum but less than the max, then the CSRA equals x. So in this case, that’s what we would have. Connecticut’s a range state. And because $65,000 is below the maximum of $115,920 but above the minimum of $23,000, then the CSRA in Connecticut would be $65,000.

Now try another example: We’re in Florida, which is a max state. So even though half of the countable assets are $65,000, the CSRA cannot be less than $115,920 in a max state, so that is what the CSRA would be in this example.

How about a case in Kansas where one half of the countable assets come to $8,500? If you're asking yourself whether Kansas is a max state or a range state, well, it really doesn’t matter for this example, does it? The CSRA minimum is $23,184, so the CSRA cannot be more than the amount of assets they have. So in Kansas, which is a range state, the whole $17,000 would be exempt, but the additional $6,184 would also be exempt if that client came into additional assets.

And finally, if I’m in Arizona, which is a max state, I can never have more than the $115,920. So if the couple has $250,000, then half of that still exceeds the max. I can never have less than the minimum or greater than the max. If you’re in the middle, you get the range amount, and in this case you can keep $115,920, because there’s a total of $130,000 assets.

Hopefully these examples help you understand how this works. We will wrap up our MMMNA series with a post on snap shot dates, so check back soon.

Medicaid Planning: The Ins & Outs of MMMNA – Part 3

April 8, 2014

by David Zumpano with No Comment Asset Protection Legal Technical Medicaid

Income Allowance:

Thanks for coming back for another session of MMMNA school. There's a lot to this issue, and it can get a bit complex, but it's an important component in Medicaid planning.

This post is part three of our series on determining MMMNA, the minimum monthly maintenance needs allowance, which is the minimum income allowance for the community (or well) spouse in a Medicaid claim. If you didn't see the first post, you can find that here, and part two is here.

Our last post got into a few scenarios involving MMMNA, but there are some additional income allowances that we need to cover. The institutionalized spouse is allowed a personal needs allowance, which as we said, ranges from $30 to $106.50, depending on the state. The applicant is also given allowance to help pay for health insurance. So Medicaid basically says, we don’t want to get stuck being the primary insurance payer, so in addition to your personal needs allowance, we’re going to allow you enough money to pay your health insurance premium so your insurance company can be the insurance of first resort and Medicaid can be your backup.

To be clear, Medicaid only exempts the cost of health insurance for the institutionalized spouse, not the community spouse. So, only the institutionalized spouse gets the personal needs allowance and the health insurance allowance. The community spouse gets the MMMNA, which we’ve already talked about. In addition, about 25% of the states also have a housing and shelter allowance, and another 25% of the states have a heating and utility allowance. These allowances are a state specific issue. The federal law does permit it, but not all the states do it. And again, it's for the community spouses only, with the intent being to make sure that community spouses have sufficient income to stay in their homes.

So again, institutionalized spouses gets their personal needs allowance of somewhere between $30 and $106.50 and they get to keep the cost of their health insurance so they can continue to pay that. Medicaid will let them do that. And the community spouse gets the MMMNA that we reviewed previously. Also, the community spouse could get a housing and shelter allowance or a heat and utility allowance if the state permits it. That's it, period. If you’ve got that down, that’s all you’ve got to know; it’s never going to change. If you're confused, it's because you’re trying to make it do something else, but it's really that simple. You just have to apply the rule.

So, no matter what fact pattern is that you are looking at, the first thing you need to determine is whether you are looking at a max state or a range state, then follow the methodology we shared in the previous two posts. Next look at the income of the husband, then look at the income of the wife. Figure out which spouse is in the nursing home, and which spouse is in the community. Then you can calculate the MMMNA. And in addition to the MMMNA, you will possibly have the housing and shelter allowance and the heating utility allowance, depending on the state. Of course, if the applicant is not married, you don’t even have to worry about that MMMNA calculation. All of the income that a single applicant gets to keep is the personal needs allowance and the health insurance premium amount.

You are probably thinking, OK, that's not so tough. And you're right, but you're not through it yet. Our next post will cover the income cap rules that factor in, so check back soon for that.

Medicaid Terms of Art Glossary

January 22, 2014

by David Zumpano with No Comment Asset Protection Medicaid

Dave Zumpano used the below Terms of Art Glossary for the Your Legal Hour series on Medicaid Planning: Who Should Consider It. We've put them in a user friendly format for you to print and use as needed!

CS: Community Spouse: The Spouse of an institutionalized individual and does not reside in an institution.

IS: Institutionalized Spouse: The spouse that resides in an institution and is receiving chronic care (not custodial).

MA: Medicaid Applicant: Individual applying for Medicaid.

MR: Medicaid Recipient: Individual qualified for and who is receiving Medicaid benefits.

INDIVIDUAL RESOURCE ALLOWANCE: The amount of resources (assets) the Medicaid Applicant can retain and still be eligible for Medicaid benefits.

CSRA: Community Spouse Resource Allowance: Minimum and Maximum amount of resources (assets) the community spouse is entitled to retain and have the institutionalized spouse be eligible for Medicaid benefits.

MMMNA: Minimum Monthly Maintenance Needs Allowance: (“Triple M N A”): The minimum amount of income per month a “community spouse” is entitled to retain prior to being required to contribute toward the “institutional spouse’s” cost of care.

SNAP SHOT DATE: The date used to calculate the CSRA. The first day the Medicaid applicant is admitted to a health care facility for at least 30 continuous days and then applies for Medicaid benefits.

LOOK-BACK DATE: The first day of the month in which a MA resides in a health-care facility and applies for Medicaid benefits. (Can apply for benefits retroactively 3 months.)

LOOK-BACK PERIOD: The period of time Medicaid will look at all financial records of a MA. The Look Back Period begins on the Look Back Date.

SPEND DOWN: The method or process of transferring (or spending) MA’s income or assets to get applicant and/or community spouse to Medicaid qualifying levels.

COMPENSATED TRANSFER: A transfer or spending of MA or CS’s income or assets and MA or CS receives something of equal value in return.

UNCOMPENSATED TRANSFER: A transfer or spending of MA or CS income or assets and MA receives no value, or less than the value transferred in return.

MONTHLY DIVISOR: The average cost of one month of private pay nursing home costs in your region. (Must be revised annually by the state)

PENALTY PERIOD: The number of months an MA is ineligible for Medicaid Benefits because of an uncompensated transfer.