Asset Protection for Unmarried Persons (as of 08.01.17)

Tests for Medicaid Eligibility [1]

There are six principal tests for Virginia Medicaid eligibility for long-term care assistance:

1. Residency and Citizenship:  Generally, Virginia residency and citizenship must exist at the time of application without any specific time requirement.

2. Covered Group:  The applicant must be a member of a covered group (aged 65 or older, blind or disabled ("ABD") or medically needy.

3. Medical and functional eligibility: The applicant must meet functional and medical criteria, and consideration is given to the activities of daily living as defined by Medicaid ("ADLs").

  • Bathing
  • Dressing
  • Toileting
  • Transferring
  • Bowel functioning (Continence)
  • Bladder functioning (Continence)
  • Eating/Feeding

The applicant is also evaluated for behavior pattern and orientation, mobility, medication administration, and joint motion. The need for a protected environment can be a factor.

12 Va. Admin. Code § 30-60-303.

To be eligible for Medicaid nursing home care, an individual must require assistance with at least two of the ADLs. The assessment also looks at functioning and the degree of help which is needed. For individuals residing outside a nursing home, a representative from the Department of Social Services actually visits the individual to determine whether this requirement is met. For individuals over the age 65 residing in a nursing home for a period exceeding 30 days, no screening is required. Medicaid Manual § M1420.400.

Individuals over age 65 are presumed to be disabled upon being institutionalized for a period of 30 days or longer. Medicaid Manual § 1460.530. However, individuals under age 65 are not considered presumptively disabled when continuously institutionalized for a period of thirty days or longer.  Such individuals, if not otherwise deemed disabled, must receive a disability determination by the Department of Social Services before they can be eligible for Medicaid long-term care benefits.

4. Income eligibility: The applicant must meet the income eligibility standards.

  • Medicaid regulations require that the applicant have income less than three times the maximum SSI benefit to be categorically eligible. This number changes annually, and is currently set at $2,205 per month in 2017.  Some states not including Virginia require individuals over the income threshold to establish a trust that is commonly referred to as a Miller Trust; such a trust requires an additional layer of complication for applicants in those other states with income of more than $2,205. On the other hand, in Virginia, individuals with more than three times the maximum SSI benefit can be income eligible as long as the medical expenses exceed their income on a monthly basis as Medically Needy recipients. This window in our Medicaid regulations provides in effect, an income cap that is effectively equal to the monthly cost of care, such that almost any applicant with an income less than the cost of care can be income eligible for Medicaid long-term care benefits. The definitions of income, along with the classifications of categorically eligible individuals as well as medically needed individuals are outlined in Medicaid Manual § M1460.201B.
  • Medicaid generally pays much less than the private pay rate at most facilities. The Medicaid reimbursement rate is typically 50-75% of the private pay rate and varies from each facility.  Medicaid Manual § M1460.100B.9. Each Medicaid-participating nursing home has a unique reimbursement rate. This consideration is relevant when the applicant has income that falls between the Medicaid reimbursement rate and the private pay rate. For these individuals, especially those that have other medical expenses in addition to the nursing home room and board rate, they could technically not be eligible for Medicaid benefits in months where the applicant’s income is more than the Medicaid reimbursement rate. For example, if an applicant had $3,400 per month income and the Medicaid reimbursement rate was $4,000 per month, it is possible that the individual would not be eligible for benefits. However, in lieu of being Medicaid eligible, the applicant pays to the nursing home the Medicaid reimbursement rate. The particular situation to determine eligibility and patient pay for high-income recipients is addressed in Medicaid Manual § M1460.410. The practical result of this wrinkle in disparate reimbursement rates is more work for the Department of Social Services and the applicant to prove ongoing medical expenses for applicants with relatively high monthly income. A beginning point is to determine the client’s income versus the private pay rate in the nursing where the applicant is likely to stay on a long-term basis.
  • When performing the income vs. private pay rate analysis, it is important to understand how the applicant’s monthly income relates to Medicaid eligibility. When an applicant is deemed eligible for Medicaid long-term care services, he or she can keep only $40 per month income, as well as maintain supplemental health insurance policies. Medicaid Manual § M1470.200. Therefore, a thorough analysis of the income criteria takes the final patient pay into consideration.  An individual seeking Medicaid long-term care eligibility needs to understand, if the application is successful, what the total out-of-pocket cost will be. For married individuals, the patient pay and community spouse income protections are discussed further in a separate article on this website.

5. Resource eligibility standards.  The resource criteria is usually the criteria that is the most complicated for applicants.  The resource limit of an applicant is strict: the limit is $2,000 in countable resources, as measured at the first day of the month of application and the first of each following month. See Medicaid Manual § 1460. Medicaid eligibility cannot be obtained until the institutionalized individual can prove that the Medicaid financial criteria is met. Financial criteria is determined by reviewing all countable resources, including substantiation for every assertion.

a. Non-countable/Exempt Assets. Many assets are non-countable for Virginia Medicaid purposes, including, for example, the following:

(1) personal possessions, such as clothing, furniture, and jewelry,

(2) one motor vehicle without regard to value,

(3) the applicant’s principal residence (subject to a $560,000 home equity limit) for six months after institutionalization, or longer if “good faith efforts to sell” (as defined by Medicaid) are being made, except the house is exempt if the applicant’s spouse or another qualified person is living there.

(4) property used in a trade or business,

(5) certain cemetery plots and irrevocable prepaid burial arrangements,

(6) term life insurance policies; also other policies provided face value of all policies with cash value does not exceed $1,500 total.

(7) qualifying annuities,

(8) certain life estates in real property,

(9) property essential to self-support (Business property)

(10) certain Trusts created pursuant to 42 U.S.C.  1396p.d(4)(a) and d(4)(c) , and

(11) assets that are considered inaccessible for one reason or another. Medicaid Manual § M1130 et seq. For example, certain I and EE U.S. Savings Bonds.

b. Generally, most assets that are not listed above are countable resources for Medicaid eligibility purposes. The basic rule of nursing home Medicaid eligibility is that a single applicant may have no more than $2,000 in "countable" assets in his or her name. The list of countable resources is vast, and even includes jointly-held property, with jointly-titled bank accounts presumptively all owned by the institutionalized person, cash values of life insurance policies, IRAs, annuities, 401(k)s, etc.  Any asset that is not listed as non-countable must be included in the Medicaid estate.

6. Transfer Eligibility:

A. Transfers for Less than Fair Market Value

                Individuals who would otherwise be eligible may not be eligible for Medicaid long term care services for a period of time if they or their spouses have in the last sixty (60) months transferred assets for less than fair market value without receiving adequate compensation. Types of asset transfers can include giving away property, selling property for less than fair market value, placing assets in trust, disclaiming an inheritance, or other similar activities. See M1450.

B. Lookback Period

                Applicants for Medicaid long term care coverage must disclose on their application asset transfers made in the five (5) years (60 months) immediately prior to the application. The Medicaid application specifically asks about transfers during this period of time.

C. Exempt Transfers

                Certain transfers are exempt, such as:

  • transfers between spouses or to a qualified individual
  • personal effects and household items
  • automobiles worth $4,500 or less
  • term life insurance policies
  • transfers to a Revocable Living Trust (however the trust assets are still considered as being resources of the applicant) MM 1450.550

[1] Rules are always subject to change, and serious efforts are underway in Congress in 2017 to drastically change Medicaid.