The Medicaid System in Hawaii Update 2006
Introduction
Medicaid is a federally and state funded program that pays for certain health care benefits, including nursing home benefits for persons who qualify for the program. In Hawaii the program is called Med Quest and is administered by the Hawaii Department of Human Services (DHS). It is separate from Medicare, which is a Federal entitlement program. Medicare pays very little in the way of nursing home care. Medicare covers less than 2% of nursing home costs in the United States. Also, health insurance and health maintenance organizations do not pay for long-term care. Each state has different requirements and rules for the state Medicaid program. Do not assume that anything stated here will apply in a state other than Hawaii. Also, the rules change from time to time and it is best to consult an Elder Law attorney to be sure that information you receive is completely up to date.
The cost of long-term nursing home care in Hawaii today can run from $6000 to more than $10,000 a month. Personal income and assets can be quickly used up when extensive long-term care is needed at such a high cost to the individual and the family. More and more people are concerned about what will happen to them and their family if they need extensive long-term care.
Eligibility for Medicaid
Medicaid is not an entitlement program. There are special and complicated rules for qualification. Once a person is qualified for nursing home care under the Hawaii Medicaid program, nursing home, doctors, medications, supplies and many other health care services are covered by the program. Additionally, under State of Hawaii waiver programs, assisted living and care in the home may be covered.
For an individual to be eligible for Medicaid, that person must meet eligibility standards and eligibility is determined at the county level. If an individual qualifies medically and meets the citizenship and/or residency requirements, then that individual needs to meet income and asset requirements.
Income Limits for Nursing Home Medicaid
Hawaii will cover nursing home costs and related medical expenses for an individual whose income is insufficient to pay the costs, provided the asset requirements, discussed below, are met. Hawaii will require that the individual’s entire income be paid to the nursing home except for $30 a month for personal expenses. Additionally, if a person is married, the spouse who is not in the nursing home may keep all of his or her own income. If the community spouse’s income is less than $2,488.50 a month, the community spouse can access enough of the ill spouse’s income to have a total income of up to $2,488.50 a month. There are techniques available in Hawaii to convert assets to income streams and by so doing increase income without penalties
Asset Limits for Nursing Home Medicaid
A person must have minimal assets to qualify for nursing home Medicaid. Assets are divided into two categories. These categories are exempt assets and countable assets. Exempt assets include a personal residence (under certain circumstances) $2,000, a bona fide funeral and burial plan (no limit on value); a burial plot (no limit on value); no cash value in life insurance; automobiles(no limit on number or value); an engagement and wedding ring, and some other necessities. For the year 2006, if a person is married, the spouse who is still in the community may keep $99,540 of assets in addition to other countable assets. There are ways available in Hawaii to convert legally countable assets to exempt assets.
New federal legislation - the Deficit Reduction Act of 2006, signed into law February 8, 2006- changes much of the Medicaid law. Now if the equity in a home is more than $500,000the home may not be an exempt asset.
Transfer penalties
Often people want to give assets away to qualify for Medicaid. This must be done with a great deal of care and a clear knowledge of how the Medicaid system works in Hawaii. If transfers are made, they should be done in compliance with the Medicaid law. There is a 5 year look-back period during which transfers can trigger a penalty period, and during which a person will be disqualified for Medicaid, perhaps for a very long time. Also people can unknowingly put themselves at risk of not qualifying for Medicaid by making gifts and charitable contributions. Later, they may find themselves out of assets, and still unable to access Medicaid because the gifts and contributions were made during the 5 year look-back period. There are criminal penalties for making transfers that are found to be fraudulent.
Liens on residences
Although the individual’s home may be an exempt asset, the state under many circumstances, will place a lien on the home to collect for the Medicaid paid for the care of that individual. An Elder Law Attorney will know various ways that the home property can be protected from the lien. Homes held in a trust may not be considered an exempt asset. This is a recent change in rules and clear parameters have not been established.
Medicaid Denials
It is always best to plan in advance so that a Medicaid application will be successful. However, denials can be appealed. If you are denied Medicaid on an application, do not assume the denial is correct. Contact an Elder Law Attorney.
This information is provided by Judith Lee Sterling, Atty at Law, CPA, Certified Estate Planning Law Specialist. She is so certified by the American Bar Association (ABA) accredited Estate Law Specialist Board, Inc. and so certified by the Supreme Court of Hawaii. Certified Elder Law Attorney. She is so Certified by the ABA National Accredited National Elder Law Foundation and Certified as an Elder Law Specialist by the Supreme Court of Hawaii. The Supreme Court of Hawaii grants Hawaii certification only to lawyers in good standing who have successfully completed a specialty program accredited by the ABA. Judith Sterling can be reached at judy@sterlingandtucker.com or by telephone at (808) 531-5391.
Return to the Medicaid Planning Center
Legal Disclaimer
This information has been provided for informational purposes only. It does not constitute legal advice. The receipt of this information does not establish an attorney-client privilege. Proper legal advice can only be given upon consideration of all the relevant facts and laws. Therefore you should not act upon any of the information contained herein without seeking appropriate legal counsel.
Attorneys Judith Sterling and Michelle Tucker are both CPAs and licensed attorneys. They are the first two attorneys in Hawaii to be certified by the American Bar Association (ABA) accredited Estate Law Specialist Board, Inc., as Estate Planning Law Specialists, and are so certified by the Supreme Court of Hawaii. The Supreme Court of Hawaii grants Hawaii certification only to lawyers in good standing who have successfully completed a specialty program accredited by the ABA.
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