Pennsylvania Medicaid Planning Guide
- An Overview of Long-Term Care Funding and Care Options
- Determining eligibility and accelerating the process of applying for Medical Assistance
- Ten Steps to Success with Medicaid in Pennsylvania
- 1. Elder law experience matters!
- 2. If a hospital stay comes before skilled nursing care, understand what “admission” means.
- 3. Skilled nursing facilities may not discriminate on the basis of how patients pay.
- 4. There is no such thing as a “Medicaid bed” or a “private pay bed.”
- 5. Don’t trust the skilled nursing facility to decide when to apply for Medical Assistance.
- 6. Seek advice from an elder law attorney about MA application status.
- 7. Your hard-earned savings can be preserved for your family!
- 8. Beware of gifts before applying for Medical Assistance!
- 9. Preserve your home.
- 10. Know how trusts work (or don’t work) for long-term care planning.
- Additional Resources
An Overview of Long-Term Care Funding and Care Options
This article provides information you need to know to get government assistance to pay for long-term care in Pennsylvania. The focus is on how to accelerate Medicaid eligibility to pay for long-term care in a nursing home. Before getting into details of how Medicaid works in relation to Pennsylvania’s nursing homes, we will first provide a background of government funding for nursing home care, and touch on other governmental options that could be useful for long-term care when nursing home care is not an option.
Nursing home residents from America’s “Greatest Generation,” most of whom had been productive employees and taxpayers, and many of whom continued to be proud homeowners, found it difficult to accept financial assistance from the Department of Public Welfare (DPW) to provide necessary care and support for themselves or families. In recognition that there is no alternative other than Medicaid to help the middle class to pay for long-term care in a nursing home, Pennsylvania did as most other states across the country have done and rebranded the state agency that offers financial assistance to provide care and support to vulnerable individuals and families. DPW is now known as the Department of Human Services (DHS), and Medicaid is no longer thought of as “welfare,” but is referred to in Pennsylvania as Medical Assistance or “MA.”
You may have heard about the VA’s Aid & Attendance pension. The best source for information about VA programs and eligibility requirements is from a county-funded Veterans Affairs Office near you. The VA’s Aid & Attendance pension may be useful for wartime veterans or their widows to provide up to a couple thousand dollars per month when financial assistance is needed to help pay for care when a person needs help with at least two activities of daily living (ADLs). However, when a person who has financially qualified for the VA pension enters a nursing home, that person should be able to qualify for MA from DHS, in which event the VA pension will be reduced to a maximum of $90 per month.
Home and Community Based Programs
Various home-and-community-based services are available through the DHS Office of Long-Term Living when nursing home care is either not available or not a viable option. DHS recently has outsourced eligibility determinations and enrollment services about various “Waiver” services to private contractors known as Independent Enrollment Brokers (IEBs). DHS is hoping to transform its Waiver services programs into a new model called Community Health Choices, again involving IEBs in eligibility and enrollment. There are “growing pains” with IEBs, which, fortunately, are not typically involved with processing the use of MA to pay for nursing home care.
Given a choice, most individuals would prefer to receive care in their home rather than in a facility. However, for practical reasons related to the cost, availability of caregiving support from multiple family members, and other factors, when an individual has been evaluated medically as being Nursing Facility Clinically Eligible (NFCE), placement in a nursing home usually is the most viable care option.
One option that can be available for an individual with NFCE status who lives with family, and does not require constant medical care or supervision, can be the Living Independence for the Elderly Program (LIFE).LIFE is a program funded by MA which is free to any applicant whose gross income is less than three times the poverty limit (which total is presently $2,349 per month).LIFE is a comprehensive program which provides medical care, adult day services, home care, and therapy services for participants living in specific geographic areas. LIFE is a rebranding of the federal Program of All-inclusive Care for the Elderly (PACE).
When is a facility a “Nursing Home”?
To this point, we have referred to a nursing home in the context of the facility being licensed as a skilled nursing facility (SNF). The terms by which various facilities are known and licensed are important, especially in understanding whether or not MA may be obtained. Most, but not all, SNFs cooperate with the MA program. However, currently in Pennsylvania, a facility that is not licensed as a SNF does not qualify as a place for a resident to receive MA as a source of payment for room and board. SNFs have more medical supervision and staffing than other licensed facilities.
In Pennsylvania, 93% of all care facilities that are not licensed as SNFs are licensed as Personal Care Homes (PCH) under Section 55Pa. Code Chapter 2600. The remaining small percentage of facilities are licensed as Assisted Living Residences (ALR) under Section 55 Pa. Code Chapter 2800. Presently, there are few noticeable differences between the levels of care that are provided under these two licensing categories. When the ALR category was created in 2011 it was expected that MA would be available under some circumstances to pay for room and board in an ALR. However, Pennsylvania has never authorized MA to pay for care in an ALR or PCH.
Only a person who is determined to be “nursing facility clinically eligible” (NFCE) may receive MA to pay for long-term care provided in a skilled nursing facility. This need is documented by a one-page “MA-51” form signed by a physician. That determination is verified and supported by a level of care assessment completed by the Area Agency on Aging.
A person who has dementia, which causes a pattern of unsafe wandering, might be desperately in need of full-time, secured, custodial care. If such a person is otherwise in comparably good medical and physical condition, then he or she might not qualify technically for a NFCE determination. The out-of-pocket cost of $4,500 to $7,500 per month for care in a secure PCH or ALR dementia facility could exceed the available resources of many households.
In practical terms, if a person needs help with three or more of the ADLs, the person will almost certainly be determined to be NFCE. Also, if a person cannot safely get out of bed without assistance and is unable to manage continence, those issues will usually require a SNF level of care and supervision and result in an NFCE determination.
Optional Care Facilities which are not Skilled Nursing
Usually someone who is not NFCE, but who has care needs which cannot be met at home, is in a facility that is licensed as a PCH or ALR. It is also possible that a person may reside in an unlicensed independent living facility, which is much like an extended-stay hotel with small apartments and dining facilities, but has no licensed medical professional on staff or under contract. Assistance with care can be privately arranged through a third-party home care agency .For many reasons, it is not a good idea to move into an unlicensed independent living community when a need for supplemental home care is already evident.
A person who has dementia that causes excessive activity which needs constant supervision might be able to perform all ADLs with prompting and supervision. Often, such a person will not qualify as NFCE to receive MA in a SNF. If the person has no surviving spouse or other live-in family caregiver, or if the need for constant supervision has threatened the health of the companion spouse, placement in a PCH-licensed facility designed to provide secure dementia care might be necessary.
When a resident needs a staff person’s help to transfer safely from a bed to a wheelchair, that resident’s care needs probably exceed the level of care for which a PCH or ALR has been licensed, and placement in SNF care is probably warranted. This can be done seamlessly if the resident is receiving care from a Continuing Care Retirement Community (CCRC), which is a facility that offers both SNF care and either ALR or PCH.
However, when a resident is receiving PCH or ALR care at a “retirement community,” there might not be an affiliated SNF. Perhaps entry to the retirement community occurred years before when the resident moved from suburban isolation to live independently in an apartment with access to meals and activities. The immediate future access to supplemental PCH or ALR care if needed was then viewed as an attractive bonus; but at the time of entry, the comparably healthy resident probably never contemplated a future need for SNF care.
Especially if they have long-term care insurance (LTCI), such long-time residents of a retirement community probably do not want to give up their familiarity with the staff, amenities, and neighbors, many of whom have become close friends. As long as the PCH or ALR has a staffing plan which satisfies a resident’s family members and the needs of their residents, including the ability to vacate all residents safely in the event of fire, it is unlikely that a governmental regulator will demand that such a person must be moved to a SNF.
At the end of this article is a link to the Keystone Elder Law website, which has a library of hundreds of original articles. That on-line library of articles provides in-depth information about ADLs, the VA, PCHs, ALRs, SNFs, CCRCs, LTCI and other long-term care issues. You can also be linked to Pennsylvania’s county-by-county limits on prepaid funeral and burial accounts, and other financial numbers that are currently applicable in relation to MA eligibility.
Determining eligibility and accelerating the process of applying for Medical Assistance
There are three elements to being determined eligible to receive MA to help to pay for SNF care in Pennsylvania, where the average daily cost of care in a SNF was $352.86 per day in 2019. We have already explained the NFCE status, which determines an actual medical need. The remaining two elements relate to a financial need.
The first financial hurdle is to determine if an applicant’s monthly income is less than the monthly cost of SNF care. Since the focus is on an applicant’s income only and does not include income of the applicant’s spouse, this requirement can be met for most persons. Few individuals have a monthly income of more than $10,000, especially if the applicant’s IRA or 401(k) has been depleted, as must occur at the beginning of the MA application process.
The final consideration is whether an applicant is “over-resourced.” A single person who is an applicant may have not more than $2,400 in cash value of all resources, unless the individual’s income is less than three times the federal poverty rate (presently $2,349, which changes annually), in which event the applicant may have up to $8,000 in cash value of resources.
The resource limits for a married MA applicant remain the same, but there are also restrictions on the amount of resources that the other spouse may retain. The other spouse, who is known as the “Community Spouse (CS),” may retain the lesser of $128,640 or fifty percent of the total countable resources of both spouses, but not less than $25,728. This amount is known as the Community Spouse Resource Allowance (CSRA). DHS requires that a Resource Assessment (Form PA 1572) be submitted as the first step in an eligibility determination when an applicant is married to determine how many assets must be spent down to reach the CSRA before MA may be provided for the applicant. Resource limits change annually, usually on January 1st.
DHS also permits the CS to have a Minimum Monthly Maintenance Needs Allowance (MMMNA) of $2,155, which is adjusted annually. If a review of the CS’s housing expenses indicates that the household expenses are more than the “shelter standard” and “utility allowance,” the MMMNA may be increased to a maximum MMMNA of $3,216. The MMMNA funds are provided by permitting the CS to withhold income from the Institutionalized Spouse (IS), whose income must otherwise be paid to the SNF as the MA applicant’s personal contribution towards the cost of SNF care. A MA recipient may routinely withhold a $45 per month personal needs allowance, as well as the amount actually paid for Medicare and supplemental health insurance.
Resources are counted as of “the snapshot date,” which is the earlier of the date that the MA applicant has been admitted to a SNF or otherwise been designated as NFCE. Certain resources are excluded when determining the total “countable” resources. Excluded resources include home equity up to $595,000, one car, irrevocable burial accounts, life insurance policies with a face value of up to $1,500 or less for each person, and the IRA or 401(k) of the CS. Also excluded is real estate or business property that is used to provide income to support the CS.
Since no MA will be provided until “the spend down” has been completed, it is important to complete the Resource Assessment and begin the spend down immediately. Spend down options include debt elimination, buying a new car for the CS, making household repairs, prepaying funerals for both spouses, paying medical expenses including room and board for long-term care or home care, and paying legal fees. The rationale for some of the allowed expenses is to enable the CS to remain independent in the family home. However, completing the spend down by doing all of these things can take months.
A knowledgeable attorney can use a Medicaid-compliant Single Premium Immediate Annuity (SPIA) to complete the spend down immediately after the snapshot date by recharacterizing “excess resources” as additional income in the name of the CS. Usually, if the gross income of a CS including the annuity proceeds does not exceed the monthly cost of SNF care, the annuity may be justified. A Medicaid-compliant annuity may also be used for a single individual to accelerate a spend-down and offset a gifting penalty in a process commonly known as the “half a loaf” strategy.
There are both written regulations and unwritten policies that DHS uses to oversee the approval of such strategies. The use of a Medicaid-compliant annuity is not straightforward, should not be used as a preventive tool before the snapshot date, and should be attempted only with the supervision and support of an attorney who is experienced, such as an attorney who is a member of the Pennsylvania Association of Elder Law Attorneys (PAELA) could be.
Whenever the terms “gifting” or “annuity” arise in the process of preparing to submit an application for MA, experienced legal help is needed. Without proper legal supervision and direction, an applicant may be found to have been “otherwise eligible” but for a penalty period that has been imposed for months or years because of an uncompensated transfer of resources. During a time of penalty, the applicant must find a way to pay privately; and Pennsylvania’s filial support laws may obligate an adult biological child to pay on a penalized parent’s behalf.
DHS will penalize any transfer of resources which totals greater than $500 per month within sixty months preceding the submission of a MA application. There are statutory exceptions to provide resources for minor children and special needs children; and adult children or siblings who have been sacrificial caregivers for the applicant may benefit from a “caregiver exception” to receive ownership of the applicant’s home without incurring a penalty. Not all CAOs or caseworkers have the same viewpoint about gifts for birthdays, Christmas, graduation, anniversaries, regular church offerings or charitable donations.
There is also an exception when an applicant shows “convincing evidence that the resource was transferred solely for some purpose other than to qualify for MA". Making that determination is an art form which may be accomplished by an experienced attorney whose integrity is respected by DHS staff.
On the date that the spend down has been completed, the MA applicant has become MA-pending and an application (PA form 600L) should be submitted to the DHS CAO. DHS will require that applications be well documented with a variety of required evidence, including five years of tax statements and at least two years of statements from bank accounts.
Ten Steps to Success with Medicaid in Pennsylvania
1. Elder law experience matters!
The Department of Human Services (DHS) has many County Assistance Offices (CAOs) which have somewhat different review procedures and expectations. An attorney with successful experience with a particular CAO is best able to manage the Medical Assistance (MA) application submission and approval process, especially for cases which require an aggressive or creative strategy. Retain an attorney who is a member of the Pennsylvania Association of Elder Law Attorneys (PAELA) and who has submitted a significant number of MA applications to the specific CAO office that serves the nursing home that is providing the applicant’s care. If there are multiple such attorneys, evaluate their websites or call for information before making your decision. PAELA attorneys have a network to share information with one another on an ongoing basis, and meet multiple times per year to discuss issues.
2. If a hospital stay comes before skilled nursing care, understand what “admission” means.
Understand the hospital admission and discharge process. Medicare will pay for up to 100 days of skilled care if the patient first spent three days “admitted” to a hospital. But even if a patient stays overnight in the hospital, the patient may be in “observation” status and not “admitted.” The hospital is required by federal law to provide the patient with a written Medicare Outpatient Observation Notice (MOON), which indicates whether the patient is admitted or under observation. Hospital discharge is often sudden and completed under pressure, which can result in the patient being sent to a facility that might not be the best strategic option. Make sure that the facility to which the patient is discharged for Medicare-funded rehabilitation has long-term care beds available and will accept MA as a source of payment after Medicare Part A stops paying, which normally occurs between 20 and 100 days after hospital discharge.
3. Skilled nursing facilities may not discriminate on the basis of how patients pay.
There is no law that requires that all long-term care facilities must accept MA, but if a nursing home does accept MA then the facility may not place a limit on how many MA residents it will accept, and must provide the same level of care to each resident without regard to the source of payment.
4. There is no such thing as a “Medicaid bed” or a “private pay bed.”
If the rehabilitation facility has any beds available and accepts MA as funding for any beds, then after a patient has been admitted for rehabilitation, any quota that limits or distinguishes whether the facility’s available bed is for short-term care or long-term care, or may be accessed by a Medicaid-funded patient or is available only for a private pay patient, may be contested as a violation of federal regulations.
5. Don’t trust the skilled nursing facility to decide when to apply for Medical Assistance.
Because the MA funding from DHS can be less than two-thirds of what a nursing home might get from a patient who is paying with private funds, and a nursing home therefore might lose up to $50,000 per year in revenue to serve a MA resident in comparison to a private pay resident, the nursing home has no incentive to encourage that a resident’s spend-down should be completed with a sense of urgency to accelerate submission of a MA application.
6. Seek advice from an elder law attorney about MA application status.
The mere fact that a nursing home staff person reassures a family member not to worry because MA will pay should not in itself relieve concern or lead to a time of inaction. The status of “MA-pending” refers to a patient for whom a determination that MA eligibility has already started, and suggests that an application process is well underway towards the ultimate approval by DHS. The nursing home will claim no liability with respect to a resident who was wrongly told by a staff member that the resident is MA-pending, so the family does need to be concerned and get independent legal advice.
7. Your hard-earned savings can be preserved for your family!
There is a way that an experienced PAELA lawyer can immediately re-allocate excess resources and attain MA eligibility through use of a Medicaid-compliant annuity. This is true both for when a nursing home resident is married and when a nursing home resident is a single person. When the nursing home resident has a spouse, the excess resources may be converted to income for the spouse. When the nursing home resident is a single person, at least half of the remaining assets may be saved by making a well-timed gift along with a Medicaid-compliant annuity.
8. Beware of gifts before applying for Medical Assistance!
When a total of more than $500 has been transferred except in exchange for a fair market value service or commodity in any of the 60 months preceding an application for MA, such a transfer is nearly always contrary to MA regulations and will result in DHS imposing a penalty period that can be shocking and expensive for the applicant’s family. Rather than to hope that the illegal gift will be undetected or that the DHS or nursing home will be sympathetic or forgive it when it is discovered, the best solution to a gifting issue usually occurs when an experienced PAELA attorney addresses the issue immediately to minimize or avoid any adversity, which may include personal financial liability for the adult children because of Pennsylvania’s unique and harsh filial responsibility law.
9. Preserve your home.
Neither the nursing home nor DHS will “take your house;” however, DHS will attempt to put a lien against the house after the death of the MA recipient to recover the amount of MA spent on care. In most cases, a home that is jointly owned by the MA applicant and a spouse can be protected from a future DHS estate recovery lien. It is best to take certain steps to implement such a legal strategy after the time that a spouse enters a nursing home but before an MA application has been submitted.
10. Know how trusts work (or don’t work) for long-term care planning.
Due to the sixty-month lookback rules, unless a plan to save a house or other resources has been implemented by transferring ownership or such resources to an irrevocable trust at least five years in advance of a nursing home admission, use of a trust to save assets is usually not effective. People who have reached Medicare age, who want to preserve assets in case they might need nursing home care in the future, should have a Durable Power of Attorney with specific language which carefully provides for “unlimited gifting.” The trust that makes the most sense, and should be essential for most married couples of Medicare age, is a testamentary trust in each spouse’s Will which would prevent the loss of family wealth if the CS dies before the IS.
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