NEW MEDICAID ELIGIBILITY: DRA, SMART ACT + BEYOND

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1 1 NEW MEDICAID ELIGIBILITY: DRA, SMART ACT + BEYOND 2012 Governor s Conference on Aging John Spears HFS Bureau of Medical Eligibility & Special Programs

2 2 DEFICIT REDUCTION ACT (DRA) Overview Increased lookback period to 60 months Penalty period revised to allow partial months Penalty starts with month of Medicaid eligibility Annuities must be based on life expectancy and must include the State as remainder beneficiary Establishes a hardship definition Limits pooled trusts Limits the value of homestead property Allows for long term care partnership insurance

3 3 Saving Medicaid Access + Resources Together (SMART) Act Overview Limits the value of self-employment resources Reduces the amounts for spousal impoverishment Requires spousal cooperation Retroactive eligibility (backdating) is based on actual resources available for the month Limits some medical services

4 4 Basic Medicaid for the Aged, Blind + Disabled (AABD 91,92,93) Income less than $931 / month (+$25 disregard) Resources less than $2,000/month Spenddown if income or resources are over

5 5 Basic Medicaid for the Aged, Blind + Disabled (AABD 91,92,93) Income less than $931 / month (+$25 disregard) Resources less than $2,000/month Spenddown if income or resources are over Mark: $2, 500 in bank = $500 resource spenddown $1,030 Social Security Disability = $74 income spenddown

6 LTC with a Community Spouse Community spouse is allowed income and resources from the LTC spouse to maintain home $109,560 Community Spouse Resource Allowance $2,739 Community Spouse Maintenance Needs Allowance 6

7 LTC with a Community Spouse Community spouse is allowed income and resources from the LTC spouse to maintain home $109,560 Community Spouse Resource Allowance $2,739 Community Spouse Maintenance Needs Allowance Mary: $100,000 in bank $98,000 to spouse $3,200 retirement income $2,739 to spouse -2,739 + $30 $431 LTC Credit 7

8 8 Other Changes for Community Spouses Community Spouses must cooperate in reporting resources and verifying resources of both Community spouse must access all available income & resources Time to transfer resources increased from 90 days to 1 year Increased ability to collect more from wealthy spouses

9 9 Retroactive Eligibility (Medical Backdating) For medical backdating, individual must be income and resource eligible each month Example: Applies 7/1 with $1,900 in bank and wants backdating Review of resources shows: 4/1/12 - $4,600 5/1/12 - $3,400 6/1/12 - $2,500

10 10 Retroactive Eligibility (Medical Backdating) For medical backdating, individual must be income and resource eligible each month Example: Applies 7/1 with $1,900 in bank and wants backdating Review of resources shows: 4/1/12 - $4,600 $2,600 spenddown 5/1/12 - $3,400 $1,400 spenddown 6/1/12 - $2,500 $500 spenddown Only eligible for retroactive coverage with resource spenddown.

11 11 Resource Changes for LTC Cases Home value limited to $525,000 equity Loans, promissory notes, and contract for deed sales must: Show that regular payments are made (at least monthly) Payments based on life expectancy Make the State of Illinois the remainder beneficiary Pooled trusts cannot be opened or contributed to after age 65 Self-employment resources limited to $6,000 equity but must be producing at least 6% of value

12 12 Self-Employment Examples Josh has a home sales business. He earned $285 net last year. The value of his samples is $5,800. $5,800 x 6% =$348. The resources are not exempt.

13 13 Self-Employment Examples Josh has a home sales business. He earned $285 net last year. The value of his samples is $5,800. $5,800 x 6% =$348. The resources are not exempt. Mary has a farm that her son operates. The farmland is valued at $180,000 but is considered homestead. The equipment is worth $86,000. Her son paid her $15,000 in farm rent. $86,000 x 6% = $5,160. Up to $6,000 of the $86,000 is exempt

14 14 Transfers Transfer lookback period is now 60 months for all transfers on or after 1/1/07 All transfers must be reviewed Form 3654 must be completed for all LTC cases Transfers include income, resources or failing to accept income or resources by client or spouse Transfers include establishing an annuity, making a loan, selling contract for deed, personal care contracts, changing ownership, setting up a trust

15 15 Transfer Penalties Non-allowable transfers are added together and divided by the private pay rate. Penalties are now in months, days and partial days. Transfers totaling over $5,000 are referred to HFS Office of Inspector General (OIG) for investigation Transfers of $5,000 or less are investigated by DHS office Non-allowable transfers create a penalty period beginning with the application month

16 16 Transfer Example Mark applies for community care & medical assistance in July The lookback period is 8/2007-7/2012. In 9/2010, he gave his car worth $6,000 to his sister. In 11/2011, he deeded his house worth $80,000 to his brother.

17 17 Transfer Example Mark applies for medical assistance in July The lookback period is 8/2007-7/2012. In 9/2010, he gave his car worth $6,000 to his sister. In 11/2011, he deeded his house worth $80,000 to his brother. Mark has $86,000 in transfers and with a private payment rate of $5,430 per month is ineligible for months beginning with the first month he applies for medical.

18 18 Transfer Calculation 1. $86,000 / $2,200 = months days x.84 = 25.2 days 3. $5,430 / 30 = $181 daily rate x.2 = $36.20 Mark is ineligible for LTC services for: 15 months 25 days Becomes eligible on the 26th with $36.20 plus his normal income to contribute toward his care

19 19 Hardship Waivers After penalty is imposed, individual may apply for hardship waiver with HFS OIG within 10 days. Individual must prove they will be deprived of: Essential medical care, Food, Shelter, Clothing, or Other Necessities of life HFS OIG will review and notify the individual of the approval/denial

20 20 Changes to Prescription Coverage* Monthly prescriptions are limited to 4 Only 3 can be name brand Prior approval for more Exception for oncolytic, immunosuppressive, anti-retroviral, antibiotics, compounded, and over-the-counter Mark has 8 monthly medications. He works with his doctor and decides which are the most important to maintain his health He fills 4 prescriptions and requests prior approval for the 5th He replaces 2 others with over-the-counter substitutes *DOES NOT APPLY TO MEDICARE PART D INDIVIDUALS*

21 Additional Changes to Coverage Illinois Cares Rx ended Co-pays increased to $3.65 for most medical services Generic drugs now $2 OTC now $2 Name brand drugs now $3.65 Adult dental limited to emergency extractions Adult chiropractic ended Podiatry care limited to diabetics Eyeglasses limited to one pair every two years Reduced incontinence supplies 21

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