The Documentation Required to Verify Financial Eligibility for Long-Term Care Medicaid

Last updated: March 02, 2020

 

For long-term care Medicaid eligibility, there are income and asset limits. Generally speaking, for a single senior applicant, the income limit in 2020 is $2,349 per month and the asset limit is $2,000. (Medicaid eligibility does vary by state, program, and marital status. To see specific state-by-state financial eligibility criteria, along with other Medicaid eligibility criteria, click here). But, how, you might be wondering, does Medicaid know if my income and assets are really under Medicaid’s financial eligibility requirements?

 

How Medicaid Verifies Income

Generally speaking, the state Medicaid agency places the burden of proof of monthly income on the applicant. What this means is that Medicaid requires an applicant to provide all requested and necessary documentation to verify what is written in the application. In this case, the applicant must provide proof (documentation) that his / her income, both earned and unearned, is equal to what he / she has indicated on the application form. As mentioned above, in most states, in 2020, the income limit for long-term care Medicaid is $2,349 / month.

Documentation of income might include any of the following: Most current pay stubs, award letter for Social Security, SSI, Railroad Retirement, or VA, pension statement, alimony checks, dividend checks, a written statement from one’s employer or from a family member who is providing support, an income tax return, or a self-declaration of income form provided by the state Medicaid agency (for when there is no other way to prove income).

Some states use a computerized system to cross reference a Medicaid applicant’s reported income to verify the applicant is being truthful. For instance, in California, the Income Eligibility Verification System (IEVS) is an electronic database that matches the income information provided by the applicant to other databases to verify it is accurate. The databases in which income may be verified are Disability Insurance Benefits, California State Employment Development Department wages, State welfare information files, California State Franchise Tax Board interest and dividend files, Social Security Administration, and Medicare benefit files.

  It is vital that seniors receiving Medicaid benefits report any change in income or assets, such as an inheritance or increase in Veterans benefits, to their state’s Medicaid agency. This is because Medicaid will have to redetermine eligibility based on the new information. Failure to report these changes can carry consequences, such as termination of Medicaid benefits, being fined, having to reimburse Medicaid for expenses paid, and prosecution. Please note that Medicaid limits the amount of time in which a Medicaid recipient has to report any changes. Often, this time is limited to 10 – 30 days.

 

How Medicaid Verifies Assets

Like with income, states commonly require proof of assets for Medicaid eligibility to be the responsibility of the applicant. As mentioned previously, in 2020, most states limit a long-term care Medicaid applicant’s assets to $2,000. However, prior to going into an explanation of how the state verifies assets, it is important to mention that not all assets are counted towards Medicaid’s asset limit. In other words, they are exempt. Generally speaking, this includes an applicant’s primary home, household items and appliances, personal effects, a motor vehicle, burial plots, term life insurance, and in some cases, retirement benefits.

Required documentation to be provided by the applicant to verify assets might include checking, savings, money market, credit union, and certificates of deposit (CD) account statements, life insurance policies, deeds or appraisals for one’s home and other real estate, copies of stocks and bonds, deeds to burial plots, and copies of pre-paid funeral arrangements, annuities, IRAs, and 401k retirement accounts.
Some states use electronic databases to verify, or cross verify, assets and ensure all assets were revealed on the application. For example, New York has an Asset Verification System (AVS) that electronically verifies an aged, blind and disabled Medicaid applicant’s financial accounts and real estate by exchanging information with local and national financial institutions and public records databases. (An individual in the aged, blind and disabled category could be applying for the state’s regular Medicaid program, long-term home and community based services, or nursing home Medicaid). The system also considers Medicaid’s 5-year look-back period (relevant information can be found in the next paragraph) and looks for financial accounts that were closed during the 5 years immediately preceding the date of one’s application. Furthermore, AVS searches for possible transfer of assets that were in violation of the look-back period. This includes searching for the sale or transfer of any real estate.

Please note; relevant to assets, all states have a Medicaid look-back period in which the state agency that governs the Medicaid program reviews all past transfers within 60-months (30-months in California) from the date of one’s Medicaid application. During this timeframe, which immediately precedes one’s Medicaid application date, Medicaid scrutinizes all asset transfers to ensure no assets were given away or sold for less than market value with the intention of meeting Medicaid’s asset limit. (Violating this rule can result in a delay or denial of Medicaid benefits). Therefore, for the purposes of the look book rule, a long-term Medicaid applicant will be required to provide financial documentation for the past 5 years (2.5 years in California).

 

What if My Income or Assets Are Higher than I Reported?

To begin, Medicaid applicants should never knowingly report income and / or assets as lower than they are. Doing so is a serious offense, and in fact, is illegal. In addition to potentially being convicted of a felony charge, there are several other possible consequences to lying on a Medicaid application. Persons can be punished with jail time, receive a significant fine, be required to repay Medicaid for the medical / long-term care expenses in which it paid, lose their Medicaid benefits, and never be able to qualify for Medicaid again.

 

Do My Income and Assets Have to Be Verified Again for Redetermination?

Yes, income and assets have to be verified again for redetermination, which after initial acceptance into the Medicaid program, is generally every 12 months. The redetermination process is meant to ensure the senior Medicaid beneficiary still meets the eligibility criteria, such as income and assets. In some cases, electronic verification systems may be used during annual redeterminations to ensure that the requirements are still being met, and in other cases, the beneficiary may be required to provide documentation of proof.

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