How do Medicaid and Aid and Attendance Relate to Each Other?

If the person receiving Aid and Attendance Pension is also receiving home care, assisted living care or nursing home care then Medicaid may become part of the planning equation for receiving care. An understanding of Medicaid is needed.

A Basic Description of Medicaid

Medicaid was established as Title XIX of the 1965 Amendment to the Social Security Act while Medicare was established at the same time as Title XVIII of the Act. Medicaid is a health insurance program for certain low-income people. These include: certain low-income families with children; aged, (65 and older) blind, or disabled people on Supplemental Security Income; certain low-income pregnant women and children; and people who have very high medical bills.

Medicaid is funded and administered through a state-federal partnership. Although there are broad federal requirements for Medicaid, states have a wide degree of flexibility to design their programs. States have authority to establish eligibility standards, determine what benefits and services to cover, and set payment rates. All states, however, must cover these basic services: inpatient and outpatient hospital services, laboratory and X-ray services, skilled nursing and home health services, doctor's services, family planning, and periodic health checkups, diagnosis and treatment for children. Funds for Medicaid are provided jointly by the federal government and the states. On average, the federal government provides about 57% of Medicaid funds and the states provide the other 43%. The amount of shared funding varies from state to state depending on the per capita income in each state. States with low per capita income such as Mississippi receive up to 83% of their Medicaid funding from the federal government and the state provides the other 17%. On the other hand, states with high per capita income such as Connecticut share Medicaid funding with the federal government on a 50% to 50% basis.

Long-term care recipients of Medicaid come almost exclusively from the aged, blind and disabled group of eligible beneficiaries but very few of those are actually receiving SSI (Supplemental Security Income). SSI is a welfare payment for certain disabled or handicapped individuals who are unable to work, have no assets and have no extended family financial support. Certain provisions of the enabling Act, as well as congressional amendments since 1965 have allowed the aged, blind and disabled who don't qualify for SSI to receive Medicaid under an alternate set of eligibility rules.

Currently there are about 60 million people or 20% of the US population receiving Medicaid support. Most of these people are receiving various forms of health care services and are younger than age 65. Our interest lies with those Medicaid beneficiaries who need long term care and can receive help from Medicaid to pay those costs. In addition, we focus almost exclusively on aged long term care beneficiaries -- those over the age of 65.

Aged long term care Medicaid beneficiaries represent about 7% of the entire Medicaid population or about 4 million beneficiaries. Out of these long term care Medicaid beneficiaries, approximately 1 million are receiving various levels of Medicaid funding support in nursing homes and approximately 3 million are receiving some form of home-based or community-based Medicaid long term care support. Even though elderly long term care beneficiaries only represent about 7% of the Medicaid population they account for about 19% of all Medicaid spending. This is because long term care services are very expensive, particularly those funds used for nursing home care.

Medical Eligibility for Long Term Care

An individual must go through an evaluation with a state Medicaid assessment specialist in order to determine a need for care. If the individual fails to meet the minimum level of care needed to qualify for that State's Medicaid coverage, then no Medicaid help is forthcoming.

A need for skilled nursing care will automatically qualify a person in any state. It's also likely that a candidate already in a nursing home but not needing skilled care will still qualify. Skilled care must be needed on a frequent basis. Examples of skilled care might include the need for: frequent monitoring of vital signs, wound dressing changes, maintenance of mechanical ventilation equipment, maintenance of a catheter, help with elimination problems, maintenance of IV administrations, careful monitoring of medication usage, managing colostomy problems, careful supervision of severe diabetes, frequent injections, maintaining a feeding tube and many more problems requiring the skill of a nurse or doctor.

Medical eligibility for home and community-based services could be based on different criteria from those for nursing homes; but in some states, a person must qualify for Medicaid based on the nursing home eligibility standards in order to receive Medicaid services at home or in assisted living.

Eligible for Medicaid and Receiving Pension Aid and Attendance in a Nursing Home

A single beneficiary whether veteran or surviving spouse who is receiving aid and attendance Pension in a nursing home and is also eligible for Medicaid will have his or her benefit reduced to $90 a month.

This rule only applies to a single person in a nursing home. For example a married veteran in a nursing home receiving Pension and eligible for Medicaid can still receive the full amount of benefit he or she has always been entitled to.

A single person in assisted living and eligible for Medicaid or a single person at home and eligible for Medicaid home care waiver can still continue to receive the full Pension benefit to which he or she is entitled without a reduction to $90 a month.

Again, this rule only applies under the following conditions:


Medicaid Planning and the Look Back and Penalty for Aid and Attendance Pension

Some families engage in what is called Medicaid planning. This means they set up various trusts and gifting arrangements to preserve their assets from the five year look back rule under Medicaid. Anyone who has transferred assets under Medicaid planning also falls under the three-year look-back gifting rule for pension aid and attendance.

Unfortunately, the rules for gifting with Medicaid are somewhat different from the rules for gifting with VA. Anyone engaged in transferring assets to qualify for Pension or for Medicaid must know what he or she is doing to avoid a penalty from either program.

We recommend that if this sort of planning occurs, you talk to an attorney or someone else who is familiar with the rules for both programs so that you don't lose one or both of the benefits by doing it wrong.


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