FAQ on Qualifying for Alabama Medicaid Without Going Broke
In this article we want to go through many of the “frequently asked questions” or FAQs on using Alabama Medicaid to pay for long term nursing home care without the family having to go broke in the process. There is so much “mis” information out there and we wanted to give you good information as you begin your journey to understand your options.
What is Alabama Medicaid?
Alabama Medicaid is a government program that pays for long term care (nursing home) for Alabama residents who qualify.
What is the difference in Medicare and Alabama Medicaid?
Medicare is a federal program that pays for certain medical care for eligible people. Medicare does not pay for long term care such as nursing home care. It can pay for temporary care in a rehabilitation/long term nursing home facility but the benefits quickly run out.
Alabama Medicaid, on the other hand, will pay for all of the cost of nursing home for those who qualify as will be discussed below.
How does Alabama Medicaid help pay for long term care?
If you qualify, you will need to contribute some or all of your income to the nursing home but Alabama Medicaid will pay for the rest of the monthly bill. This is tremendously important and valuable as very few of us make the money, when needing nursing home care, or have the resources to pay $5,000 a month for any length of period.
What are the medical requirements to qualify for Alabama Medicaid?
You must be in need of nursing home care. This is normally not an issue as no one goes into a nursing home “voluntarily” — instead we go into nursing homes when this is the last resort. If you are in this position, or your loved one is, then the medical requirement has normally been satisfied.
What are the income requirements to qualify for Medicaid in Alabama?
Basically the person going on Medicaid needs to have an income of around $2000 or less. If the income is higher than this, then what is known as a “Miller Trust” or “Qualified Income Trust” can be set up that puts the excess money (over $2,000) towards the cost of care. This is so someone who makes, for example, $3,000 a month, will still be able to qualify for Alabama Medicaid.
What are the asset requirements to qualify for Alabama Medicaid?
Assets are either considered “available resources” or “exempt.”
Exempt assets don’t count towards the total assets you can have and still qualify for Medicaid in Alabama.
But the other resources do and as a threshold matter, the person going into a nursing home can only have $2,000 in assets.
But there are many exceptions to this rule, particularly if you are married.
Will I be forced to lose my home if I apply for Medicaid?
Normally not. We understand why this question comes up so often — a person’s home is often their most valuable asset and is something that most folks want to pass along to their children. Either literally the house or at least for it to be sold and the proceeds divided among the children.
The house itself is normally exempt or “excluded” from being counted as an asset — sometimes you will see it referred to as an “unavailable asset” which is simply another way of saying Alabama Medicaid can’t count the house when it figures up your available assets.
Now do keep in mind that when Alabama Medicaid pays out money on your behalf that it can often put a lien on the house for the amount of the benefits paid. There are exceptions involved when there is a spouse still living there or a disabled child living there, etc. We will be happy to discuss with you but the main point of this answer is you don’t have to sell your house (and often this is a bad idea as it converts a non countable asset into countable money) and even after you pass away Medicaid may not be able to put a lien or force a sale of your home through what is called “estate recovery.”
I’ve heard that I can give away a certain amount each year ($14,000) to my children or others and this is ok to do. Is this right for Medicaid?
This is perhaps one of the most common mis-conceptions people hold about Medicaid.
It is true that under the Federal tax law that a person can gift away to another person $14,000 and this will not ultimately reduce your tax exempt portion of your estate which is 5.5 million dollars. For 99% of Alabamians this has no meaning as we will never have an estate of over 5.5 million dollars.
If you give away more than $14,000 per year, then a gift return has to be filed but again, as a practical matter this means nothing.
But all of the above has to do with gift taxes under federal law — it has NOTHING to do with how Alabama Medicaid views the situation. Medicaid says that any gift — whether approved by the IRS or anyone else — for any purpose — can create a penalty period if it occurs within the 5 years (60 months) prior to you applying for Alabama Medicaid. Assuming you are otherwise eligible or qualified.
So you have to be sick — in a nursing home — and you have to have your “countable” assets down to the required level ($2,000 for the one applying) when you apply. At that moment, Medicaid looks back the 60 months to look for any gifts.
So is making a gift illegal? Will I or my children go to prison for making or receiving a gift?
No — it is not illegal to make a gift. No one goes to jail for making or receiving a gift unless there was fraud involved.
Where people can go to prison is when they lie to Alabama Medicaid about transferring property and making gifts. When a family applies for Medicaid — asks for the enormous help Medicaid provides — then the family has the legal obligation to be truthful.
Same as your taxes — people get into trouble for lying on their taxes. You need to be just as open and honest with Alabama Medicaid as you are with the IRS.
So if gifting is not illegal, then why have I heard I should be careful about giving away assets to my kids?
If you make a gift within the 60 month “look back period” described above, then you will receive a penalty from Alabama Medicaid.
As a practical matter, here is how the penalty period works.
Medicaid totals up all of your gifts within the last 60 months and this gives us the gift number. Let’s say it is $54,000.
Then Medicaid divides the gift number by $5,400 which is what Alabama Medicaid says is the average amount of a nursing home bill in Alabama. (Note: this is low, which makes the penalty worse).
So in our example of $54,000 divided by $5,400, this gives us 10. But 10 what?
10 months of penalty.
10 months where the family must pay the nursing home bill — even if the bill is $8,000 or $10,000 a month. So that “gift” of $54,000 can cost much more than the original $54,000.
Before you make any gifts, or before you decide when to apply for Medicaid, it is critical to consult with an Alabama elder law lawyer so your family will not have unpleasant surprises but instead can make the best decisions to get the best care and preserved the family resources to the maximum amount allowed under the law.
If I want to know more, what should I do?
You are welcome to contact us through this website or, even easier, pick up the phone and call us at 205-879-2447 and tell the receptionist you have questions about Alabama Medicaid and ask to be connected with either Randi Curb or Carolyn Allcorn who can take down your information and then set up a meeting or phone call with us so we can help you understand your options.
My mother has assets of #320,000. We have to put her in a nursing home. She will be private pay. Can we hire a companion sitter out of her money to sit with her at the nursing home….or can Medicaid penalize us somewhere down the line, if we need to apply?
Thank you for the comment — I’m out of town at a conference so just saw this comment.
It really depends on where you are — do you live in Alabama?
The general rule is if you are paying for something — not a gift but paying fair market value — then it is ok. Now is NOT the time for an informal agreement or anything like this. Instead make sure you have a formal contract with the sitter.
There are things that can be done with her assets where the money won’t be “lost” to Medicaid.
If you would like to, I’ll be back on Tuesday and will be happy to set up a meeting with you to discuss options so you can get a roadmap of where to go. If you are interested, call my office at 205-879-2447 and tell Carolyn you would like to set up a meeting with me. Be happy to do this and we don’t charge for the initial meeting — the purpose is to get an idea of where you are and what the options are going forward.
Is there a certain length of time a person has to be a resident of Alabama to qualify for Medicaid? My mother is in assisted living in North Carolina, but we desperately need to move her here to admit her to a nursing home. How, exactly, does that work? She is on Medcaid in North Caroline and DEFINITELY qualifies for the income part.
It really has to do with intent — if she intends to live here then that normally is fine. It is common for children to move their parents closer to home.
Give my office a call or I’ll email you and we can go over some of the details but I don’t think you are going to have any trouble with the residency requirement.
I am helping a friend whose husband has severe dementia and will be required to enter a nursing facility within next few days. It appears he will qualify for Alabama Medicaid. About 3.5 years ago they deeded their home to their children. Will this create a problem. The children are willing to deed it back. She has consulted attorneys and got two different answers. She needs process to proceed quickly.
Medical emergency puts Mom in nursing home in Alabama. Mom has income <$2000/month but still has cash of $85K. Mom has also gifted $100K in past 5 years to children. Children have used funds and do not have resources to pay penalty.
What happens to Mom? Do they kick her out of the nursing home?
My mother is unable to care for herself, but lives alone. She refuses to let anyone live with her and refuses to live with any of us. She has been diagnosed with dementia by two doctors. They say she can not admitted into nursing home unless admitted into a hospital for three days with some type of infection. Is this true? Is this an Alabama medicaid law?
If someone refuses to go to a nursing home and you know they need to be, that becomes very challenging. Usually the solution is to go to protective services and/or Probate Court if someone cannot take care of themselves any longer.
I don’t do that type of work but you are welcome to call the office at 205-879-2447 and we can give you some names and some general thoughts.
Sorry you are in this very challenging situation.
I am in the process of spending down the rest of my MIL’s money before the end of this month. We live in Alabama and I will begin the Medicaid application process in July. I have DPOA for her. My question is this; We were told that we could keep her car, 97 Ford Crown Victoria. I use the car to go back and forth to the nursing home twice sometimes three times per day to take care of her. I also use it to pick up items that she needs etc. we live approx. eleven miles from the nursing home. I was told that I could spend down some of her money on car maintenance. The car really needs new tires, do you know if this is allowable?
I suspect that will be fine — since it is a relatively small amount of money I would ask Medicaid to bless this. The case worker should be able to tell you this is fine.
The general rule is it is fine to keep a car, especially if it is for her benefit. As long as you are paying fair market value for the repairs (i.e. not using your brother) then you should be OK.
Best wishes and hopefully you will have someone at Medicaid who can tell you specifically about what you are wanting to do.
If I am on an account with a parent and I sign checks to buy medications/groceries for him, will this count against him if we have to file for Medicaid in the next 60 months?
It all depends on the circumstances but in Alabama if you are buying medications/groceries for your parent, then that should NOT be viewed as a gift. A gift is where you are giving away money or paying more than something is worth to give away money.
Example — the medication bill is $100 but you pay your pharmacist sister $200 for it. Silly example but Medicaid would view that as a gift.
Do keep up with what you are spending so you can explain it to Medicaid — receipts, etc.
Bottom line is if you are paying the correct amount for groceries, medicine, etc. then Medicaid should not view that as a gift.
Do get with an elder law attorney to get specific advice but hopefully, this general information is helpful to you.
My mother is in a nursing home in Alabama under medicaid. The first month she exceeded the $2000 amount by approximately $64. What might happen?
Once my parent has used all private-pay funds to pay the nursing home, how many years does Medicaid go back into the financial history? Is it 5 years or 7 years?
The starting point is when your parent applies for and is qualified for Medicaid. To see if there is a “penalty period” going forward in time, Medicaid looks back in time 5 years.
Hope that helps — you might also want to check out this article for a few more details — https://alabamaelderla.wpengine.com/2017/04/alabama-medicaid-look-back-period/
Thanks for your question!
My 89-year-old mother-in-law’s physical and mental condition is deteriorating rapidly. She is currently living by herself, but it doesn’t seem that she’ll be able to do that much longer. She owns a 2002 Nissan Altima, a 1994 double-wide mobile home (but not the land on which it sits), and an old, site-built house that is used as a rental. If she should need to be admitted to a nursing home, will all of that be confiscated by Medicaid, or will all of that prohibit her from even being eligible to receive Medicaid? Her income isn’t high enough to cover the total cost of a nursing home as a private payer. She will be eligible for some VA benefits due to my late father-in-law’s military service, but we’re afraid that won’t be much help, either. If her car, mobile home and rental house are sold, can the money received from the sales be put into a trust to pay for her nursing home care?
I’ll answer based on Alabama law — if you are somewhere else the rules may be much different. And you definitely need to talk to a lawyer as all sorts of exceptions and I don’t know all the details. But hopefully this gets you started.
If she is single (widowed) then she can have $2,000 in assets or she has too much to qualify.
So you spend down or give away the excess. If give it away, then you deal with penalty periods.
So let’s say you sell everything and put it in a trust — that is a gift as you get nothing back for it.
Medicaid would penalize and not pay for a certain number of months based on the size of the gift. Then the beneficiaries (you or whoever is set up but not your mom) can pull money out and pay for the nursing home.
There are a number of different strategies to use — definitely get with an elder law lawyer to get some ideas.
If you are in Alabama feel free to call me at 205-879-2447 thanks!
Is a mobile home considered as a monthly resource that goes towards your 2,000 you are able to have?
It depends — if it is considered real estate then it would not be if that’s where you live.
But if not attached to the ground so it is not “real property” then it would like a second car, etc.
Hope that helps!