What is Medicaid?
Medicaid is a health care program for the poor. It is authorized and partially funded by federal law, but administered by each state. Federal regulations sometimes limit states and frequently require minimum standards, but much of the implementation of the program is left to each state.
What is AHCCCS?
Arizona was the last state to adopt a Medicaid program. Concern about rising health care costs and the perception of widespread waste and abuse in Medicaid led Arizona’s legislature to create the first managed-care Medicaid program in the country. The Arizona program has been called the Arizona Health Care Cost Containment System (or AHCCCS) since its inception. A key element of the AHCCCS program can be understood from its name: Arizona’s approach has focused on containing the cost of Medicaid at least as much as on providing complete or quality care. Although the AHCCCS program was unique when created, it now represents a mainstream approach to Medicaid administration. Most AHCCCS rules will be similar to the rules for Medicaid programs in other states, though the answers to these questions have not been modified to reflect the laws, rules or practices in states other than Arizona.
What is ALTCS?
The AHCCCS program initially did not provide for (among other groups) impoverished individuals in nursing homes. Beginning in 1989 the federal government required AHCCCS to provide care to those populations not previously covered. The administrative entity created to handle the long term care component of AHCCCS is called the Arizona Long Term Care System, or ALTCS. For most purposes, ALTCS, AHCCCS and Medicaid are interchangeable terms, at least when referring to institutionalized patients. As with AHCCCS itself, most of the regulations governing the ALTCS program are set by federal law, and so residents of other states will see similar issues. The difference between states, however, can be both subtle and profound; the questions and answers here are specifically tailored to Arizona law and practice, and the answer to any given question may not be the same in another state.
What is the difference between Medicaid and Medicare?
Medicare is a purely federal program of health insurance for the elderly, blind and disabled. In order to receive Medicare benefits an individual must meet one of those categories AND have sufficient work history to qualify for Medicare coverage. Medicaid, although it is designed to benefit the same groups (the elderly, blind and disabled), is a welfare program and is available only to those who have insufficient assets or income to pay for their own care. Though it is fairly uncommon, some individuals will qualify for both Medicare and Medicaid benefits simultaneously. Generally speaking, Medicare’s benefits are much more generous in home care, hospice and outpatient care, while Medicaid covers prescription drugs (Medicare's "Part D" coverage requires co-payments and premiums) and long term care (Medicare’s benefit is very limited).
What benefits does Medicaid provide?
Medicaid benefits can be divided into two broad categories: acute care and long term care (there are also separate program rules for the developmentally disabled and the seriously mentally ill, but they are beyond the scope of this FAQ). Eligibility for each kind of benefit is different, though they are similar. One key difference: in Arizona (this rule is not the same in most other states) acute care AHCCCS eligibility is based only on income–available resources will not prevent general AHCCCS coverage. Eligibility for ALTCS, the long term care benefit, is usually much more difficult to establish, and is the focus of most Medicaid planning and advocacy work by elder law attorneys.
Does ALTCS/Medicaid pay for nursing home care?
Yes, ALTCS pays for nursing home care. In fact, the Medicaid program nationwide pays for over half of all nursing home costs (the next largest share comes from the personal income and savings of the nursing home residents). ALTCS is simply the Arizona program which handles those payments.
Will ALTCS/Medicaid provide care at home or in other settings?
Yes. In fact, about half of all recipients of ALTCS services in Southern Arizona now receive their services in settings other than a nursing home. Home care, adult care homes (also known as adult foster care) and assisted living have all benefited from this increase in non-institutional care, but the total amount of care provided to each individual outside the nursing home is much less than that provided to comparable individuals in institutions.
Does Medicaid cover prescription medications?
Yes, the Medicaid program pays for all prescription drugs. AHCCCS/Medicaid beneficiaries may receive their drugs through Medicare's Part D program, but the premiums and co-payments are paid by Medicaid.
Does the ALTCS/Medicaid recipient have to pay for any portion of his or her care?
An acute care patient covered by AHCCCS will not be required to contribute to his or her medical care (though some items may not be covered, requiring the patient to pay privately if he or she wants those particular items). The long term care component of AHCCCS, however, works differently. ALTCS does impose a "share of cost" calculation on long term care recipients. The patient’s ability to contribute to care will be determined by a formula, and that amount must be turned over to the nursing home each month. ALTCS is a subsidized long term care benefit, rather than being provided outright.
Will ALTCS place a lien against a recipient’s home or property?
Arizona has now adopted a legal mechanism for imposing liens against homes in most cases. Those liens may not be enforceable, and ALTCS may forego placing a lien or release the lien if provided with information indicating that the lien was not a legally available option. Perhaps more importantly (in most cases), on an ALTCS patient’s death the state will have a claim for reimbursement which it can assert against the recipient’s estate; if the ALTCS recipient owned a home which must go through the probate process to be transferred to successors, the ALTCS claim will need to be dealt with (and usually paid off) before heirs receive any portion of the home or estate. ALTCS may even pursue its claim against the patient's home if it was transferred outside the probate process, though the agency's recent practice in this area is inconsistent.
If the ALTCS recipient has (or is survived by) a spouse, a dependent minor child, or a disabled child, ALTCS is not permitted to enforce its lien or pursue any claim against the recipient’s estate. This is true even though the home may not have been left to the spouse or disabled child. Unfortunately, it often requires legal counsel and intervention to secure protection of the home in such circumstances.
Must an applicant’s home be sold to qualify for ALTCS/Medicaid?
No. An ALTCS recipient is entitled to retain his or her home, so long as he or she intends to return home. The intent to return home is established by simply checking the appropriate space on the ALTCS application, so only the uninformed are confronted with having to dispose of their homes in order to receive benefits. And if the ALTCS recipient has a spouse or disabled child living in the home, it is not even necessary to check the appropriate box on the application form. None of this guarantees the security of the home; the ALTCS beneficiary may not be permitted to retain enough income to pay for upkeep, repairs or even taxes on the home, and the state may have a claim for reimbursement after his or her death. Still, it can be of considerable comfort to an ALTCS applicant (and his or her spouse) to know that neither ALTCS nor the nursing home can compel the sale of the recipient’s home in order to qualify for benefits.
Is there any limit on the value of the home excluded from calculation of eligibility?
Yes. A home with a net equity (after deducting mortgage and other encumbrances) over $500,000 (some states, but not Arizona, increase that figure to as much as $750,000) will not be an exempt resource. For this calculation your home is valued at the County appraiser's assessed valuation.
What other assets can an ALTCS/Medicaid recipient retain?
In addition to the home, an ALTCS recipient is also permitted to retain an automobile (without any limitation on its value), household furniture and furnishings, prepaid funeral/burial benefits and a few other items. Other than those categories, an unmarried applicant’s total assets must be reduced to $2,000 in value.
What assets can a married couple retain and still have one spouse qualify for ALTCS/Medicaid benefits?
The rules are much more complicated for a married couple where only one spouse will be institutionalized (they become simple again–and very unforgiving–if both spouses are institutionalized). All assets available to either spouse (for these purposes, community property and other ownership rules are not considered) are added up, and the total divided in half. Total assets must then be reduced to the one-half figure (plus the $2,000 exemption available to an unmarried ALTCS applicant) before either spouse can qualify for ALTCS. To further complicate the calculation, the one-half figure is limited to a maximum of about $110,000 (the precise figure changes each year). There is also a minimum amount which can be retained, regardless of the total of available resources (about $22,000). These concepts, incidentally, are among the most variable from state to state–the Arizona approach may not apply in another state.
What is the CSRA (or CSRD)?
The calculation of half of a married couple’s available resources as described in the previous section is often referred to as the "snapshot" amount (since it is based on a "snapshot" of the assets as of the time of institutionalization). Its formal name is the Community Spouse Resource Allowance–the CSRA (or, in Arizona, the Community Spouse Resource Deduction or CSRD).
How much income can an ALTCS/Medicaid recipient have?
As with the calculation of the CSRA/CSRD, income rules are different in other states. Unlike the asset calculation method, however, there are really only two variations. Some states, like Arizona, apply an income limitation on Medicaid long term care eligibility. About half of the states have an "income cap." Arizona’s, like that in most states with an income cap, is set at 300% of the maximum federal SSI benefit. That means that an individual with gross income over about $2000 per month will not qualify for ALTCS (though it turns out that it is usually easy to overcome this limitation–see below).
What can an ALTCS/Medicaid applicant do if he or she has too much income to qualify for benefits?
An ALTCS applicant who has income over the "income cap" figure can benefit from an Income Cap Trust–usually referred to as a "Miller" trust after the name of the Colorado case establishing the concept. The rules governing Miller trusts are unnecessarily complex, but the result is simple: the applicant can qualify for ALTCS after the trust is properly established. Miller trusts are almost always a complete solution to the income cap problem, and only the uninformed need worry about being denied ALTCS eligibility for excess income. This does not mean, incidentally, that anyone contemplating long term care expenses should go ahead and establish a Miller trust just in case–there is no need to create the Miller trust in advance, and no benefit to creating one at all for those who do not have income above the monthly threshold amount.
How much of his or her income can an ALTCS/Medicaid recipient retain?
As previously noted, ALTCS requires the recipient to contribute to his or her own cost of care. The amount contributed is called the "share of cost," and calculating it is usually simple for a single person on ALTCS. The recipient is entitled to retain a monthly "personal needs allowance" amount fixed at 15% of the maximum federal SSI benefit (that means he or she keeps a little more than $100 per month), and all remaining income must be paid to the facility. If a recipient remains at home, there is no share of cost unless a Miller Trust is in place. The share of cost calculation does not consider the ALTCS beneficiary’s other bills, even including child support, spousal maintenance or other court-ordered amounts.
How much income can a married couple have and still qualify for ALTCS/Medicaid benefits?
As explained above, a single ALTCS applicant may have a little more than $2000 per month in income. If the applicant is married, the calculation is somewhat more complicated. The total gross income of the applicant is looked at first. If the applicant's income is below the income cap threshold then the applicant qualifies regardless of the amount of income the spouse receives. If the applicant's income exceeds that level ALTCS will look at the total income of both spouses. If the couple's combined income is less than twice the income cap figure, the applicant will qualify under the income standard. Once again, this calculation method varies somewhat from state to state; only Arizona’s method is described here.
How much of a couple’s income can be retained by the spouse who does not receive ALTCS/Medicaid benefits?
In addition to the personal needs allowance explained above, the ALTCS recipient’s spouse may be entitled to keep some or all of the applicant’s income to pay for his or her living expenses. The calculation of this amount, referred to as the Minimum Monthly Maintenance Needs Allowance, is complicated and will vary significantly in individual cases. One piece of simple (and good) news: the community spouse is not required to contribute any portion of the income in his or her name alone toward the "share of cost."
What is meant by the "lookback" period for ALTCS/Medicaid benefits?
When an ALTCS application is filed, eligibility workers will inquire about any gifts made by the applicant, the applicant’s spouse or anyone acting on behalf of either of them within the preceding 60 months. This five years before application is known as the "lookback" period–gifts made before that period will not affect eligibility. Gifts made during the "lookback" period will result in a period of ineligibility, and that disqualifying period will not start to run until the applicant has already spent down all of his or her assets and applied for ALTCS..
Can someone receive ALTCS/Medicaid benefits even if they have made gifts during the preceding five years?
If gifts have been made during the "lookback" period, the applicant will be ineligible for a number of months calculated from the date of application (NOT from the date of the gift). The ineligibility period is determined by dividing the value of the gift by a number intended to approximate the monthly cost of long term care in the community. That figure in Arizona depends on the county of residence and changes each year. The actual application of this penalty period is further complicated by multiple gifts, return of some or all of a gift and other factors; this overview must be reviewed with caution. As with many of the other principles described in this FAQ, the precise application of this calculation varies from state to state, and only Arizona calculations are explained here.
Can an ALTCS/Medicaid applicant purchase a new home, car, home furnishings or prepaid burial arrangements?
Yes. Available resources can easily be made unavailable by purchasing exempt assets. Of course, the applicant may then have difficulty paying the upkeep on a larger home, for example. Furthermore, the estate recovery program will result in the larger home being sold and the proceeds repaid to the ALTCS program in many cases. In other words, though eligibility may be easy to establish there may be additional problems with this simple approach. In some cases, however, such purchases can be very effective in establishing ALTCS/Medicaid eligibility.
How can annuities benefit ALTCS/Medicaid recipients?
In some limited circumstances (usually involving married couples), purchase of a commercial single-premium, immediate annuity may allow an ALTCS applicant to qualify for benefits more quickly. The effect of annuity planning can be dramatically beneficial, but depends entirely on the specific facts of each situation. Arizona’s ALTCS program does not permit the same favorable treatment for annuities created by private parties (children, for instance), annuities with lump-sum payouts, or annuities that can be converted to cash–even if a penalty is imposed. Annuity planning should be undertaken only with expert advice.
What other eligibility requirements are there for ALTCS/Medicaid benefits?
In addition to the financial eligibility rules described above, an ALTCS applicant must meet three other eligibility standards:
- He or she must be a U.S. citizen or a qualified alien
- He or she must be a resident of Arizona (this requirement is easy to meet, however, since it requires only that the applicant be physically present in Arizona and not have any intent to leave)
- He or she must need skilled nursing care (this is determined by evaluating the applicant’s medical chart as part of the PAS–the Pre-Admission Screening)
I don't live in Arizona. How are the rules different in my state?
We don't practice in any state other than Arizona, and the rules we describe here may not be the same for your state. Do not send us messages asking about your state eligibility rules -- we are not willing to practice law in your state even if we are pretty sure we know the answer. You should get competent legal advice from an elder law attorney licensed in your state. If you do not know an elder law attorney in your state, you might want to check out the list of Certified Elder Law Attorneys at the National Elder Law Foundation, or members of the National Academy of Elder Law Attorneys. If you live in one state, but are looking for information on behalf of a family member in another state, you should contact a qualified elder law attorney in the state where your family member resides.
Though the Medicaid program is a federal/state cooperative effort, the eligibility determinations and many of the eligibility rules are under the individual state's authority. While funding comes largely from the federal government, only broad outlines of the Medicaid program are established nationally.