Back to Basics: Ohio and Kentucky Medicaid

With a record number of people above retirement age in the United States, many children are now facing the challenge of deciding long-term care and medical options for their parents. A large part of the process is dealing with Medicare and Medicaid. However, most people do not truly understand what Medicaid is or how the program works. This article reviews the basics of Medicaid and how it may affect your planning process.

What is Medicaid?

Medicaid is government insurance for older individuals who have very little money, which covers medical costs for things like in-home care and nursing home care. Medicaid is a joint program between the federal and state governments – the federal government sets broad guidelines and the states each set their own rules within those parameters.

Who Qualifies for Medicaid?

In broad terms, to qualify for Medicaid in Ohio or Kentucky, you must be both medically and financially eligible. Medically, a level of care assessment is administered to determine whether you need assistance with certain daily activities, such as: bathing, grooming, eating, dressing, etc. Financially, your income must be less than your medical costs, and your resources must be at a certain level depending on your financial and marital situation. However, certain assets like your home, car, personal belongings, and a few other exceptions do not count towards resource eligibility. If you fall just above the qualifications for Medicaid but do not have enough to cover all of your medical expenses, Medicaid sometimes will cover the difference in your costs.

Medicaid does not count the value of a home towards Medicaid eligibility; however, a parent, spouse, or dependent, or other family member must remain living in the home, subject to certain restrictions. If the Medicaid participant was the only person living in the home at the time he or she moved into the long-term care facility, then the house must be sold (within 6 months in Kentucky or within 13 months in Ohio) to help recoup some of the medical expenses.

Asset Protection for Medicaid

Most states’ Medicaid rules have done a very good job at protecting spouses of Medicaid participants and will shield the spouse from going broke just because their loved one is on Medicaid. The spouse will be allowed to keep the family home as well as up to one-half of the couple’s resources (a minimum amount of $23,448 and a maximum amount of $117,240 in both Ohio and Kentucky).

One common method of asset protection for Medicaid is known as “spending down.” This involves spending money on items that Medicaid does not consider countable assets. These items include buying a house, car, personal belongings, prepaid funeral expenses, house repairs or renovations, or payments to homemakers or aides.

You can protect some of your assets from Medicaid, but this type of planning needs to be done sooner rather than later. Almost every state has complex rules regarding asset protection, and Ohio and Kentucky both use a five year look-back period. This means that Medicaid is allowed to review the last five years of your financial records and note anything that you may have gifted, transferred for less than market value, or placed into an irrevocable trust during that time. If you have done so, Medicaid will calculate a penalty period where you will not receive Medicaid benefits unless the transfer is reversed. A Medicaid applicant will thereby be forced to privately pay for their own costs of care for the duration of the penalty period before Medicaid will kick in.

Cincinnati and Northern Kentucky Medicaid Planning Attorneys

Understanding the complexities of the Medicaid planning process is difficult and confusing. If you or a loved one is beginning the elder law or Medicaid planning process in the Greater Cincinnati/Northern Kentucky area, let Bill Hesch help.

Bill Hesch is a CPA, PFS (Personal Financial Specialist), and an attorney licensed in Ohio and Kentucky who helps clients with their financial and estate planning. He also practices elder law, corporate law, Medicaid planning, tax law, and probate in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky. Contact Bill if you wish to review your assets and your estate plan.