Please note: Guardianships, conservatorships and special needs

Please note: Guardianships, conservatorships and special needs trusts are complex matters. The laws, rules and regulations change frequently. Please seek advice from a knowledgeable attorney.

An individual attempting to qualify for Medicaid assistance must be age 65 or over (DSSR 8.110.31d)(or under 65 if he or she is receiving Social Security disability or meets the SSI definition of disability or blindness (DSSR 8.110.32b)); be "categorically needy,” that is, require nursing home care, home-based care or assisted living (DSSR 8.110.51); and meet two “tests"--one an income test and the other an asset test.

An individual's income must not exceed $1,809. Interest income, some Veterans' benefits, annuity payments, dividends, pensions (including Civil Service), and Social Security are all counted as part of income. Even the Medicare Part B insurance premium of $88.50 for 2006 is included in the income calculation. (DSSR 8.110.31d). If monthly income exceeds $1,809 but is less than $5,182, it is possible to qualify for Medicaid assistance by use of an income trust.

Certain resources are considered as exempt and are not considered when attempting to qualify for Medicaid. Exempt assets are:

1. The home (personal residence of applicant) of any value, including the land on which it sits and adjoining property (DSSR 3.220.23), so long as the following criteria are met: Equity in the home does not exceed $500,000. The Medicaid recipient intends to return home. A person's intent to return home is a subjective, not an objective, intent. Thus, it is irrelevant if returning home is not medically realistic. The intent to return home should be expressed either by the Medicaid recipient or that recipient's legal representative in writing. This intent to return home applies to the home the Medicaid recipient or spouse was living in prior to institutionalization or a replacement home, so long as the spouse or a dependent relative continues to live in the home.

2. Household goods and personal effects with a value up to $2,000 (DSSR 3.220.22). Note, however, that the local Department of Social Services does not currently inventory a person's personal property to determine value; rather, there is a presumption that the average person's personal property is worth $2,000 or less, unless the Medicaid applicant owns property that is intrinsically valuable such as jewelry. The Medicaid application, however, asks the applicant to list items of personal property worth more than $1,000 in value;

5. One motor vehicle of any value, if it is used to obtain medical treatment, is equipped for a handicapped person, or is used for employment; if not, only $4,500.00 of fair market value is exempt and the remaining value is a countable resource (DSSR 3.220.21);

6. Value of any burial space (burial spaces are defined as conventional gravesites, crypts, mausoleums, urns and include grave markers) (DSSR 8.110.55A);

7. Straight-Life Annuities (a number of restrictions apply). Individuals who purchase annuities, either revocable or irrevocable, having a value greater than $100,000, which purchase is made within 60 months prior to the medicaid application, must name the State of Colorado as the remainder beneficiary for the amount of Medicaid benefits received, unless the beneficiary is a spouse, minor child, or disabled child. The State is required to notify the issuer of the annuity about the change in beneficiary. States may also require the issuer to notify the state if significant withdrawals are made from the annuity;

8. Value of any irrevocable prepaid funeral and burial/cremation plan, if it is irrevocable; if it is not irrevocable, a burial plan of $1,500 (DSSR 3.220.51 and 3.220.52);

9. Life insurance if the total face value is $1,500 or less, regardless of the cash surrender value. If, however, the aggregate face value of all policies exceeds $1,500,, then the total cash surrender value of all policies is counted toward the $2,000 limit. Term life insurance is exempt inasmuch as it has no cash surrender value (DSSR 8.110.56B);

10. Part or all of the value of property essential to the self-support of the applicant may be exempt. Examples include property used in a trade or business, property which is used by the individual as an employee, nonbusiness property used to produce goods or services for the individual's daily activities or certain nonbusiness, income-producing property.

11. Certain narrowly construed "unavailable" assets (i.e., those which the applicant cannot access for support and maintenance).

12. $2,000 cash (DSSR 8.110.53A);

13. Property owned with other individual(s), if the co-owner uses the property as the principal place of residence and would be forced to move, if the property were sold (DSSR 3.210.15d);

14. Property which cannot be sold for two-thirds of its actual value, provided reasonable efforts to sell the property are continued (DSSR 3.210.15e).

Certain resources are considered countable and basically include all other assets such as cash, other real property besides the home, promissory notes, second cars, stocks, bonds and other securities, self-funded retirement accounts, money market funds (DSSR 3.220.1), assets transferred to a third party within the past 36 months without fair consideration (gifts)(DSSR 8.110.54B3), etc.

Self-funded retirement accounts, such as an IRA, Keogh Plan, 401(k), 403(b), in the name of the applicant are countable as a resource to the applicant. Self-funded retirement accounts in the name of the applicant’s spouse who is living with the applicant are exempt in determining eligibility for the applicant, subject to the following qualification. Self-funded retirement accounts in the name of a community spouse who is married to an applicant who is applying for long-term care in a nursing facility, HCBS or PACE, are countable as a resource to the applicant and may be included in the Community Spouse Resource Allowance (CSRA) up to the maximum amount allowable (DSSR 8.110.51).

When a married person becomes institutionalized, the assets of the married couple are reviewed jointly, regardless of who owns the assets and how they are titled. (DSSR 8.112.12) Exempt assets are not considered in this calculation. (DSSR 8.112.13B) The non-institutionalized (community) spouse can retain one-half of the countable assets up to $74,820 (from July 1994 through June 1995)(DSSR 8.112.13A1). This is known as the "community spouse resource allowance" or "CSRA"). Under new regulations, applicable where the first continuous stay is on or after July 1, 1995, the community spouse is entitled to retain a portion of the couple's total countable resources ranging from a minimum of $19,030 up to the maximum of $99,540.00 for 2006. As before, however, any amounts in excess of $99,540 in combined countable resources must be spent down to the $2000 maximum resource allowance before Medicaid eligibility may be obtained. (DSSR 8.112.13(B)).

It is permissible to shift (convert) countable assets to exempt assets, such as making improvements to the home, purchasing a vehicle with a greater value and selling the old one, etc. (DSSR 3.200.34).

Any assets "given away" within 60 months prior to the date of application for Medicaid may be considered as countable resources and may make one ineligible for medicaid assistance for an unlimited period of time. The penalty period of ineligibility is calculated by taking the fair market value of the transferred assets divided by the average nursing home private pay rate in Colorado at the time of application. The average cost figure for the year 2006 is $5,092.00. The penalty period begins running on date of application for Medicaid. It is, therefore, usually not permissible to give assets away to a third party and immediately qualify for medicaid assistance. (DSSR 8.110.54B3; 3.210.31)

Income of a married couple is also reviewed jointly when one spouse becomes institutionalized. The community spouse is permitted to retain at least $1,604.00 (effective July 1, 2005, through June 30, 2006) of the total income of the parties and may be able to retain a higher amount up to $2,377.50 (DSSR 8.112.2), if the community spouse’s shelter expenses (mortgage, rent, homeowner’s insurance, utilities, etc.) exceed 30% of the minimum monthly maintenance needs allowance amount.

Finally, the State of Colorado is entitled to place a “recovery lien” on any assets held in the name of a Medicaid recipient, which lien may be enforced only upon the death of the recipient (or, in some cases, the death of the recipient’s spouse, whichever is later).

THE ABOVE INFORMATION IS NOT INTENDED TO BE USED AS LEGAL ADVICE. LAWS, RULES AND REGULATIONS MAY CHANGE. LONG-TERM CARE PLANNING CAN BE TECHNICAL AND COMPLEX AND SHOULD NOT BE UNDERTAKEN WITHOUT THE ADVICE OF LEGAL COUNSEL.

(References to DSSR are to the Department of Social Services Staff Manual.)