How to Navigate Medicaid Eligibility for Elders in Kentucky

Two in three nursing home residents in Kentucky come to rely on Medicaid. CPAs and financial advisors in Kentucky will almost certainly work with clients who are or who could become eligible for Medicaid. Medicaid is especially valuable for seniors who require long-term care in a nursing facility, which is not covered by Medicare. 

The cost of care during aging can quickly deplete seniors’ savings and assets. Currently, the average monthly cost of a private room in a nursing facility in Kentucky ranges from $12,000 to $14,000 per month.

With complex regulations, changing rules, and strict eligibility requirements, proactive planning is important. Medicaid planning or asset preservation planning adds value for clients by supporting asset protection and access to long-term care. Unlike Medicare, not all elderly citizens and permanent residents are eligible for Medicaid immediately; they must meet financial criteria as well. 

Long-Term Care Medicaid Program and Eligibility Requirements

Medicaid is a joint federal and state program authorized under Title XIX of the Social Security Act. It provides health insurance coverage to over 72 million people in the United States. Medicaid benefits and eligibility requirements differ from state to state, within federal guidelines.

General Eligibility Requirements for Medicaid in Kentucky

1. Live in Kentucky and be a US citizen or a qualified immigrant
2. Reach age 65 or older (for applications based on age)
3. Not exceed set limits on income or assets
4. Meet functional criteria for the respected program, encompassing mental and physical health. 

Skilled Nursing Home Medicaid 

Previously called “Institutional Medicaid,” this Medicaid program covers the cost of skilled nursing care for seniors, either in a nursing home or at home through the Waiver program. Medicaid will cover costs immediately for eligible individuals, but there may still be a waiting list for available nursing home beds. To benefit from Nursing Home Medicaid, an individual must have a “Nursing Facility Level of Care” based on their need for assistance with daily activities like bathing and dressing. They also consider cognitive or behavioral issues like dementia.

Kentucky Medicaid Income and Asset Limits: Nursing Home Medicaid

These limits are subject to change. Refer to the Kentucky Cabinet for Health and Family Services for the most up-to-date information. 

Home and Community-Based Services (HCBS) Waivers: 

This Medicaid program covers long-term care outside of nursing homes. Services may include housekeeping, and assistance with the Activities of Daily Living, such as dressing and bathing, and more. HCBS services have limited enrollment and may have a significant waitlist. Applicants must also reach a Nursing Facility Level of Care to be eligible.

The income and asset requirements for HCBS Waivers are the same as the Nursing Home Medicaid requirements listed above. 

Kentucky provides these programs to support elderly individuals at home:

• Home and Community (HCB) Waiver, which includes the opportunity to pay caregivers.
• Money Follows the Person, for transitioning out of a nursing facility into the home or community.
• Program of All-Inclusive Care for the Elderly (PACE), which combines Medicare and Medicaid program benefits.
  

1. Financial Strategies for Medicaid Eligibility

With the high cost of healthcare and nursing facilities, establishing eligibility for Medicaid sooner, rather than later, can safeguard seniors’ savings and assets while accessing care in their later years. Financial professionals can benefit their clients by consulting with an elder law attorney about how to protect assets while meeting Medicaid eligibility requirements. If done early enough, this will not require liquidation or investments.  

Nuanced rules and regulations determine whether particular assets are exempt, for Medicaid eligibility purposes. For example, there are specific rules around homes, IRAs, and 401Ks, and the treatment of assets put in trusts, such as irrevocable Medicaid Asset Preservation Trusts. Consultation with an elder law attorney for guidance is essential.

Two in three nursing home residents in Kentucky receive Medicaid funding. Many seniors deplete their hard-earned savings without realizing they may qualify for Medicaid. As mentioned before, the cost of nursing home care in Kentucky can reach $150,000 or more annually. 

Proactive planning for long-term care allows seniors to minimize negative estate impact while supporting their long-term care. Look-Back Period: Penalties for Gifts and Transfers

Seniors who wish to become eligible for Medicaid may consider gifting cash, property, or assets in order to qualify for benefits. This can cause a multitude of problems. First, the gifting of assets can cause tax problems for the recipient and the parent who is doing the gifting.  For example, the gifted assets may lose the step-up in basis they would have received if transferred in trust or through a will.  The law penalizes individuals who gift or sell assets at rates below fair market value within five years of applying for Medicaid. Violating the Look-Back Period can result in a ‘Penalty Period’ of Medicaid ineligibility. The Look-Back Period applies to the Nursing Home Medicaid or a Medicaid Waiver. Establishing a Medicaid-compliant irrevocable Asset Preservation Trust can allow a client to establish Medicaid eligibility and protect assets if done more than five years in advance.  

An elder law attorney can help you determine if gifts or transfers are likely to violate the Look-Back Period and discuss a better option to both preserve assets and get Medicaid eligible.

The Role of Elder Law Attorneys in Medicaid Planning

Medicaid laws and requirements are complex and ever-changing. There are currently multiple proposed Medicaid regulations under review in the Kentucky legislature. 

Elder law attorneys can bridge the gap with legal guidance on structuring assets, trusts, and estate plans to protect wealth and help individuals qualify for Medicaid when needed. It is important to balance potential Medicaid planning with the client’s broader financial portfolio.

Elder law attorneys can offer advice based on experience with Medicaid planning, spend-down rules, and asset protection for long-term care. 

An elder law attorney can:

• Identify potential issues with Medicaid eligibility
• Offer strategies for client portfolio management
• Assist in the application process
• Advocate on behalf of clients if an application is denied

The elder law attorneys at Kentucky ElderLaw offer strategic and holistic planning solutions to help seniors in Kentucky. We apply legal knowledge and experience to help seniors make well-informed and smart financial and healthcare decisions. Medicaid eligibility planning is a complex but crucial part of financial and estate planning for seniors. At Kentucky ElderLaw, we have extensive experience in asset protection and Medicaid Planning.

If you would like to consult an elder law attorney, contact Kentucky ElderLaw today.

Contact Kentucky ElderLaw

Sources

MedicareLongTermCare.org Source

American Council on Aging. Source

Medicaid.gov. Source

Kaiser Family Foundation – Medicaid in Kentucky.Source

U.S. Department of Health and Human Services. Source

Social Security Act CFR §§ 1902(a)(10)(A)(ii)(X), 1902(m)(1). Source

MemoryCare.com. Source

Kentucky General Assembly – Title 907 – Cabinet for Health and Family Services – Department for Medicaid Services. Source.

Kentucky Cabinet for Health and Family Services. Source

kynect benefits. Source

Kentucky Administrative Regulations, Title 900 – Kentucky Legislative Research Commission. Source

DISCLAIMER:  This article is for informational purposes only and does not constitute legal advice. Medicaid eligibility rules are complex, and professional legal guidance is recommended.

¹ Statistics; Keiser Family Foundation