Medicare recipients may also qualify for Medicaid if their income is below the threshold for eligibility in their state. However, the process for determining this eligibility may require you to share several types of financial documents with the agency in your state that manages this needs-based program.
What Counts as Income and Assets?
When Medicaid-assigned eligibility specialists review an application for assistance for Medicare recipients, they consider both financial and non-financial criteria. Although Medicaid is a federal program, the income and asset limits are set by each state, so you should check with your state’s agency when you’re ready to apply. These limits can also change each year.
Generally, any earned and unearned income will always count towards your income limit. If you receive child support for a child in the home, the support amount is typically not counted as part of a Medicare recipient’s income for Medicaid-related purposes.
Assets are defined as money held in a savings or checking account, plus any investment or retirement accounts. Some real estate holdings may also count towards an asset limit, but usually not the primary residence. Other high-value possessions can potentially qualify as a countable asset, such as a second car or a boat.
Other common exemptions from the asset limit include household items, marital jewelry, and burial funds up to a certain amount per person. Some states do not have an asset limit for their needs-based healthcare programs, but all of them do set income limits.
Spend Down and Look-Back Periods
If an applicant is over the income or asset limits for their state, they may be able to “spend down” a portion of their income or assets in order to qualify. These funds must be spent on qualifying expenses to avoid a penalty that delays their eligibility for Medicaid.
With income, qualifying medical expenses can be used to spend down or lower the countable amount of income each month. This may include premiums for insurance, copayments for prescription medications, visits to the doctor, and other health-related bills.
Physical assets can be sold, but there may be a penalty if they are sold for less than what they are worth by a significant amount. There can also be a penalty that delays eligibility if assets are given away. An agency representative can help you understand what kind of spend-down choices are allowed or may receive a penalty when it comes to reducing assets or income in order to qualify.
For recipients in need of long term care assistance, agencies will also conduct a look-back period that examines the financial transactions during a certain number of years prior to the application date. Most states will look at the last 5 years, but it could be shorter in others.
This process looks for any disqualifying transactions, such as excessive cash gifts, transfers or sales of countable assets, that may have been made in order to become eligible. The penalty for any violation results in a delay of coverage from the needs-based program, although Medicare coverage is not impacted. No additional fees will be charged.
Financial Disclosure and Release of Records
Funding for a needs-based program draws from taxes on the federal, state and local level in order to help people with low or no income. In an effort to prevent fraud, abuse and waste, the managing agency will request personal and financial information from applicants to make sure they are eligible to receive this kind of assistance.
Although some agencies will ask you to sign a release form during your application process that allows them the ability to request records from your bank, this may only be done in instances where fraud has been reported or suspected. During the determination process, the agency will usually ask you to provide official financial statements from your bank for the time period your state’s policies require.