MEDICAID For Nursing Home Residents

The rising cost of long-term nursing care has increasingly become a concern for older Americans. Despite the promulgation of long-term care policies, many Americans continue to lack resources to privately finance their care. Many clients look to their attorneys for counsel to prepare for this eventuality. Our government has responded to the impending influx of baby boomers into long-term care facilities by limiting eligibility for the Medicaid program. On February 8, 2006, the Deficit Reconciliation Act was signed into law by President George W. Bush. This Act significantly alters qualification for the Medicaid program. The rules create harsh rules for family gifting plans which may be a part of common estate plans. Currently, Illinois is working to implement the new rules from this change in law.



Medicaid is a joint federal-state welfare program. One portion of the program pays for nursing home care if eligibility requirements set forth in statue and regulations are met by the applicant. The program is governed by both federal and state law and regulations. Individual state eligibility rules may vary. In Illinois, it is the Department of Healthcare and Family Services which runs the program through local Pubic Aid offices.

Am I eligible for MEDICAID?

In order to qualify for Medicaid while you are in a nursing home, you must meet the following criteria:

  1. You must be a resident of Illinois.
  2. You must be a United States citizen or a non-citizen living in the United States with a specific type of Immigration and Naturalization status
  3. You must be 65 or older, OR blind, OR disabled.
  4. You must be residing in the nursing home at the time of application.
  5. Your income must be less than the private pay rate of the nursing home.

How much money can I have and qualify for MEDICAID?

You are allowed $2,000.00 or less in non-exempt assets. This does not include a car (up to $4,500.00 in value) or your personal belongings.

What if I own a home or other real estate with someone else?

The Department determines your share of jointly-held real property based on the number of owners of the property. For example, if you are one of four owners are listed on a property, your share is determined to be ¼. If owners have been recently added, there may be additional restrictions.

What if my son/daughter are listed on my bank accounts? Can I give them their share?

The Department considers that the entire account is owned by you unless you can prove that the money in the account came from the separate assets or income of your child.

Will I be able to keep my life insurance policy?

Usually, you will cash in your life insurance policy and use the funds to purchase a burial or funeral plan. However, if you have a term life insurance policy or group insurance policy owned by your employer with no cash value or if the face value is less than $1,500.00, you may be able to keep the policy.

I have a trust. Doesn’t this keep my money protected?

No, most trusts do not protect your assets in any way.

I gave some money away to my children. Is this a problem?

Yes! Currently, your eligibility for Medicaid is affected for five (5) years after you have made any gift.

Is there anyone I can give my home to and still qualify?

Yes. Even though you have just be placed at a nursing home, you may still give your home away to the following people, without any penalty:

  1. Your spouse;
  2. Your child under 21 years of age;
  3. Your child, if blind or disabled;
  4. Your brother or sister, if they also are an owner on your home and have lived with you for one year before you went to the nursing home;
  5. Your son or daughter if they have lived with you two years before you went to the nursing home and they provided care to you

What happens to my income when I am in a nursing home?

You must pay all income to your nursing home less the following deductions:

  1. One month of medical insurance premium
  2. $30.00

I am married. What will happen to my spouse?

Once you are in a nursing home, your spouse is allowed to keep the following assets:

  1. Your home
  2. One car
  3. Your personal effects
  4. Your household goods and furnishings
  5. Any additional assets up to $109,560.00
  6. Up to $2,739.00 in joint income

Is there anything else I can do?

Yes, there are often other planning ideas that may help based on your particular situation. You should make an appointment to meet with an attorney to discuss all your options.
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