In Maine, the Medicaid benefit is administered by the Department of Health and Human Services (DHHS). It is called MaineCare. MaineCare helps pay for long-term care services for medically and financially eligible individuals. The MaineCare rules regarding long-term care are complex.
- An asset limit for countable assets
- A five-year look-back period
- Transfer penalties for non-exempt transfers
- Medicaid estate recovery
Understanding the complex MaineCare eligibility rules is just the start. The MaineCare application process can be complex and confusing, especially to individuals and families attempting to complete the process on their own. It can often take several months of communicating with DHHS and providing additional financial document requests before a decision is made.
The MaineCare application is not something you can do proactively. Meaning that an application for MaineCare long-term care benefits should not be submitted before there is an immediate need medically and financially. There are steps that you can take now in anticipation of a potential, future MaineCare application.
1. Save Financial Statements
One step you can take now to prepare for a future MaineCare application is to save financial statements. These statements include monthly bank statements with check images, quarterly investment account statements, or yearly stock statements. When an application is submitted, DHHS requests all financial statements for all accounts within the look-back period, currently five years.
The request includes any account opened or closed during the look-back period. DHHS also requests verification of large transactions including check deposit and withdrawals and cash deposit and withdrawals, Generally over $500 or $1,000. Often, requesting the financial statements from various banks and financial institutions takes longer than the deadline DHHS provides.
Some banks charge per page to print the statements. Keeping your financial statements now could avoid a denial of benefits based on missing financial statements and save you money if you apply for MaineCare benefits in the future. If you receive a statement verifying your income or changes to your income, save these statements as well.
For example, each year Social Security sends you verification of your social security income and deductions from your income. This letter is titled Your New Benefits Amount. DHHS asks for proof of income when you apply for MaineCare. A tax return or a direct deposit into your bank account will not be enough.
Likewise, statements verifying your individual medical insurance premium will also be helpful to keep for a future MaineCare application. DHHS does not accept automatic withdrawals from a bank account or a statement showing both spouses’ premium payments as verification. Requesting this verification from the insurance company can take time and delay the MaineCare application process.
2. Keep a Paper Trail
Another step you can take now is to keep a paper trail of any large purchases or sales you make. Under the MaineCare rules, if you or your spouse sell or transfer an asset and do not receive fair market value in return, that transfer is subject to a transfer penalty.
DHHS requests verification of the sale, the fair market value, and where the proceeds from the sale went. Even if transactions are with cash, DHHS requires verification as to where the money went after a sale and where the money came from for a purchase.
For example, if you purchase a boat from your neighbor and paying them cash, get a receipt for your payment. If you sold your car to your neighbor and they paid you cash, get two statements establishing fair market value.
Keep a sales receipt for yourself or create a sales agreement. Having a receipt or sale agreement provides DHHS with verification of a large purchase or sale. It can prevent a transfer penalty on a future MaineCare application, especially if the sale or purchase was from a family member.
3. Document Agreements for Care & Rent
If you or your spouse pays a family member for caregiving services or for rent payments, create a personal service or room and board agreement. The MaineCare rules treat any payments to family members for caregiving as gifts subject to a transfer penalty. Unless the payments were made pursuant to a legally enforceable contract and services were approved by a healthcare provider as necessary to keep the individual in the community.
In the same way, enter into a room and board agreement before paying a family member rent. Even if you live in the home of that family member, DHHS may call the rent payments a transfer of assets thereby creating a transfer penalty. Document the arrangements with a room and board agreement or lease agreement.
4. Consult an Elder Law Professional Before Making Gifts or Other Transfers for Less than Fair Market Value
Before making a gift of money to a loved one or transferring your home or another asset to someone for less than fair market value, consult an elder law attorney or other professional specializing in elder issues.
The MaineCare long-term care rules regarding gifting are not the same as the IRS tax rules regarding gifting. Any gifts or transfers over $500 per calendar quarter may impact your future eligibility for MaineCare benefits.
5. Keep Your Estate Planning Documents Up-To-Date
Finally, keep your estate planning documents up-to-date for several reasons. First, updated estate planning documents can make a difference in your family successfully completing a MaineCare application. If you cannot request financial documentation, your family needs the authority to do so on your behalf.
If you do not have a legally effective financial power of attorney or advance healthcare directive, your family may need to go through the probate court process known as guardianship and conservatorship for that authority. Up-to-date estate planning documents can save your family time and money if you need MaineCare long-term care benefits in the future.
Second, legitimate strategies to hasten one’s eligibility for MaineCare benefits while protecting assets for a spouse or the next generation. These strategies can only be taken on your behalf if you have up-to-date, broad estate planning documents. Please note that being a spouse or a joint owner on an account does not permit you to take these steps without additional authorities in estate planning documents.
This article is intended to provide information of a general nature only. It does not provide or replace professional legal advice. It does not establish an attorney-client relationship with Rudman Winchell. Please consult an attorney for advice regarding your specific circumstances.