The basics of Medicaid planning

Of the political issues at the forefront of the national discourse over the last five years, none has been as impassioned, polarizing and confusing as the debate about health care. Terms like Medicare, Obamacare and Medicaid play a key role in the discussion and are often confusing. This article will explain Medicaid, what it is, eligibility for Medicaid, and how individuals and families can plan for Medicaid and apply for the benefit.

What Is Medicaid?

Medicaid is a combined federal and state program that can help pay for medical, custodial or long-term care for people with limited income or resources. Medicaid is not a new program, in fact, it was created in 1965. Medicaid is often confused with Medicare, which is a federal insurance program paid out of Social Security deductions. Medicaid provides benefits not covered by Medicare, such as nursing home care and personal care services. One of the key components of the Patient Protection and Affordable Care Act, commonly known as Obamacare, was Medicaid expansion, allowing individuals to qualify whose income is up to 133% of the poverty line. However, the Supreme Court ruled in 2012 that states could opt-out of the extended Medicaid coverage. In Utah, for example, the state is still trying to decide whether to opt out—three years later.

Who is eligible for Medicaid?

Medicaid is designed to provide health coverage to seniors, individuals with disabilities, pregnant women and children. Medicaid eligibility is available to all U.S. citizens (and some groups of non-U.S. citizens). Income proportional to family size is the primary way the government determines eligibility.

Who qualifies for Medicaid?

Every year, the federal government publishes numbers on the federal poverty guidelines.  Income and family size largely determine Medicaid qualifications. The percentage of poverty level needed to qualify for Medicaid varies from state to state. The Children’s Health Insurance Plan, or CHIP, has higher income allowances than other Medicaid programs. Seniors applying for Medicaid coverage of nursing home, often called Medicaid Long Term, fill out a Long-term Care Addendum to the Medicaid application which looks at money given away over the last five years and a more comprehensive required disclosure of income and assets.

What Is Medicaid spend down?

Some individuals and families are otherwise eligible for Medicaid benefits, but have too much income to qualify. They may qualify if they spend excess income on qualifying medical expenses, such as medical bills. Eligibility for spend down programs vary from state to state. In some states, only children, seniors or the blind or disabled are eligible for spend down. In other states, the spend down program is available to almost all applicants. Medical expenses that qualify for spend down also vary from state to state, but generally include most medical bills.

Why is the application process so complicated?

Health care costs increase each year, making Medicaid an expensive program for both the federal government and the states. Because Medicaid is expensive, the government wants to make sure only qualified applicants receive the benefit. Medicaid requirements are intentionally stringent and the application process is complex, in part to deter more people from applying.

Penalties for abuse

There are strict civil and criminal penalties for Medicaid fraud. When applying for Medicaid, it is extremely important to be truthful and accurate, to avoid the harsh penalties in place for abuse. In fact, the Internal Revenue Service (IRS) posts a “wall of shame” of health care fraud cases each year. Most of these involve large-scale fraud for reimbursement or identity theft. However, state attorneys general actively investigate and prosecute individual Medicaid fraud cases.

How can an attorney help with Medicaid planning?

An attorney can advise applicants on the status of the law and the proper way to submit the Medicaid application. An attorney can also cut through some of the red tape and bureaucracy in a state Medicaid office. With long-term care Medicaid, an attorney can be especially valuable in helping form and execute Medicaid planning strategies to preserve assets. An attorney can also advocate for an applicant who is denied Medicaid eligibility at a hearing and may be able to help reverse an adverse decision.

If you have questions about Medicaid or need help with Medicaid planning, you can speak to an attorney through the LegalZoom legal plan for help.