General MaineCare Information:
MaineCare is administered by the Maine Department of Human Services (DHS), a state agency. MaineCare has different benefit packages from full benefits to prescription drug discounts, depending on age, disability, income (and assets, in most cases).
Unlike Medicare, you do not need to have the work history required for the Social Security retirement and disability programs. MaineCare covers more services, at less cost, than Medicare. Full benefit MaineCare provides comprehensive health coverage, with no deductibles or premiums and small co-payments. You must have low income and limited assets to be eligible. Adults, age 21 and over, with income up to 100% of the federal poverty level (after allowable deductions), who meet the assets test and other requirements, will be eligible for full benefit MaineCare.
Becoming Eligible For MaineCare:
You must first qualify medically for MaineCare by requiring assistance with at least three “activities of daily living” or having dementia. This is assessed for DHS by a private contractor named Goold Health Systems, which does all of the DHS medical eligibility assessments. DHS orders a medical assessment when a senior files a MaineCare application, but the individual or family may also request Goold to do an assessment earlier as part of preparing to apply for MaineCare benefits.
In order to qualify financially for MaineCare there are several income and asset requirements that you should be aware of. Currently, a person will qualify for MaineCare only if they have “countable” assets valued under $2,000. However, there are a number of excluded assets (e.g. the family home, a vehicle and up to $8,000 in additional savings accounts). While an individual receives MaineCare, his or her monthly income is paid to the nursing home except for a few deductions and a personal needs allowance of $40 per month.
In the case of married individuals, if only one spouse is in a nursing home, but the other lives at home, then federal law and MaineCare rules allow higher countable asset limits to avoid spousal impoverishment. This spouse is permitted to possess countable assets up to the Community Spouse Resource Allowance, a number that generally changes annually. That number in 2010 was $109,560.
Some MaineCare packages require that, upon the death of the patient, the estate recovery unit of MaineCare must file a claim against the patient’s estate for any money paid to care for the patient. This claim generally arises from MaineCare benefits provided by the state for individuals at or over the age of 55. Any probate assets that the decedent has in his/her estate is subject to this claim and must be used to satisfy that claim. Federal law allows, but does not require, states to pursue recovery from non-probate assets (e.g. assets with joint tenants, certain trusts, beneficiary designations, etc.). Maine’s estate recovery law provides full authority to pursue estate recovery from all probate and non-probate assets of the decedent.
MaineCare Myths and Strategies to Attain MaineCare Eligibility and Preserve Assets.
1.) "The State (or nursing home) will take my house and other property if I go into a nursing home, so I should deed it to my children now to avoid that."
This statement is not necessarily true. Many individuals have been told by their friends or advisers to transfer or gift their property (many times real estate) to their children or other family members to prevent it from being "taken" by the State of Maine or their nursing home. However, there is currently a five-year look back period on any transfers or gifts (this used to be a three-year look back period). If an individual makes a gift or transfer and applies for MaineCare at any point within the following five years, DHHS may assess a penalty as a result. You could be seriously jeopardizing your financial security, personal health and safety by making any transfers without seeking legal advice first.
2.) "The only downside to transferring my property away is the 5-year lookback period and penalty."
Again, that is not necessarily true. In fact, there may be even worse consequences in making these transfers. Once you have transferred your property away, you have relinquished control of the property and it is now subject to the liabilities of the person(s) who you transferred it to. This may even result in your eviction and the loss of your home.
There are also tax considerations when gifting property to your loved ones. Inheriting property at a “stepped-up” tax basis is much more beneficial to the recipient than receiving the “gift” basis in property. In other words, if you gift any real estate or cash to an individual, and then that individual chooses to sell it, he or she may have to pay a capital gains tax (based upon the appreciation in value since you purchased or received the property). On the other hand, if you leave the property to that individual upon your death, and then that individual chooses to sell it, he or she may only have to pay the capital gains tax based upon the fair market value on the date of your death.
Given the substantial changes to the MaineCare rules—and particularly the expanded 5-year look back and delayed penalty start date—it has become increasingly complex to determine how to preserve assets when long term care is needed. It is critical for you to understand the balance between the goals of protecting your assets from depletion in the event a long term care need arises against the risk to your personal well being from giving assets to any individuals.
If you have any questions regarding MaineCare eligibility and asset preservation, please do not hesitate to make an appointment to meet with me.