Frequently Asked Questions about Medicaid in Maryland

What is Medicaid?

Medicaid (Medical Assistance) is a health insurance program enacted in 1965, as part of the Social Security Act. Medicaid pays medical and long-term care benefits for individuals who meet non-financial and financial eligibility requirements.

What is covered by Medicaid?

Medicaid will cover health care services, room and board nursing services, prescription drug costs, and support services.

What are some non-financial eligibility standards?

Being a resident of the State of Maryland; a US citizen; reside in a or likely to reside a medical institution for more than thirty days.

What are some financial eligibility standards?

In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,500 in "countable" assets. The spouse of a nursing home resident--called the "community spouse" -- is limited to one half of the couple's joint assets up to $109,560 (in 2009) in "countable" assets. This figure changes each year to reflect inflation. In addition, the community spouse may keep the first $21,912 (in 2009), even if that is more than half of the couple's assets.

What are countable and non-countable assets?

All assets are countable unless the assets fall within the short list of "non-countable" assets.

Non countable assets include the following:

  • Personal possessions, such as clothing, furniture, and jewelry.
  • One motor vehicle is excluded, regardless of value, as long as it is used for transportation for your spouse.
  • The applicant's principal residence, provided it is in the same state in which the individual is applying for coverage and a reasonable likelihood of being able to return home. Under the Deficit Reduction Act of 2005 (DRA), principal residences may be deemed non-countable only to the extent their equity is less than $500,000 and applicant's spouse or another dependent relative lives there.
  • Prepaid funeral plans and a small amount of life insurance.

What is the look back period?

A person applying for Medicaid coverage of long-term care must disclose all financial transactions he or she was involved in during a set period of time--frequently called the "look-back period." The state Medicaid agency then determines whether the Medicaid applicant transferred any assets for less than fair market value during this period.

Medicaid's "look-back" period, was extended, for all asset transfers from three to five years. Previously, the agency reviewed transfers made within 36 months of the Medicaid application (60 if the transfer was to or from certain kinds of trusts). Now, the look back period for all transfers is 60 months. The extension of the look-back period will make the application process more difficult and could result in more applicants being denied for lack of documentation, given that they will need to produce five years worth of records instead of three.

Can I transfer assets, and why should I?

Transferring assets is not illegal and does not result in a permanent disqualification from Medicaid; it may result, however, in a finite period of ineligibility for the applicant.

You should transfer assets for the following reasons:

  • To reduce your assets to qualify for Medicaid.
  • To preserve assets to pay for benefits not covered by Medicaid.
  • To protect your assets for your spouse’s needs and for your heirs.

Do I have to pay all our income to the nursing home?

The basic Medicaid rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. The deductions include a $71-a-month personal needs allowance, a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance for the spouse who continues to live at home if he or she needs income support. A deduction may also be allowed for a dependent child living at home.

For Medicaid applicants who are married, the income of the community spouse is not counted in determining the Medicaid applicant's eligibility. Only income in the applicant's name is counted in determining his or her eligibility. Thus, even if the community spouse is still working and earning $3,000 a month, she will not have to contribute to the cost of caring for her spouse in a nursing home if he is covered by Medicaid.

Is Transferring Assets Against the Law?

No. You may have heard that transferring assets, or helping someone to transfer assets, to achieve Medicaid eligibility is a crime.