Many families find themselves facing the following scenario: your spouse or your parent has a sudden stroke, injury, accident, or illness that creates an unexpected need for long-term residential care in a skilled nursing facility (nursing home). Just the process of finding a place for your loved one and figuring out how to pay for it can be overwhelming. Medicaid, called TennCare in Tennessee, can help many families pay for long-term care. In many cases, Tenncare will cover all or most of the expenses of long-term care once a person qualifies. The nursing home social worker tells you she can fill out the Tenncare application for your loved one, which seems like such a burden lifted from your shoulders.
However, the social worker isn't an attorney who is educated in Tenncare qualification, rather, she is working for the nursing home, trying to fill a bed and have it paid for. Applying before the patient qualifies for Tenncare assistance leads to lengthy delays in coverage, which means your family pays out of pocket until qualification. At an average of about $7,800 per month in Tennessee for nursing home costs, this is a huge burden on any family's finances.
There are strict rules for applying and qualifying for TennCare due to limits placed on the amount of income and assets a person is allowed to have to qualify for TennCare. Trying to navigate the process yourself, or with the help of someone who isn't fully educated in the process, can be risky because denial can mean a delay in coverage or a loss of assets which could have been avoided by contacting Nina.
When Should We Apply for Tenncare
The short answer is: Do not apply unless you are certain the patient qualifies! It is best to consult with an elder law attorney before applying for TennCare if you have any doubts about whether the applicant will qualify. We can often take steps prior to application to ensure qualification and prevent or minimize a lengthy period of disqualification, and even protect some assets for the at-home spouse and/or other lover ones, which will save the family thousands of dollars.
Medicaid Spend Down
To qualify for TennCare, an applicant may only have a certain amount of liquid assets such as cash or money in a checking or savings account, usually around $2,000 depending on state rules. TennCare applicants who have more than this amount will need to spend down their assets on medical care or exempt assets before they can be eligible for TennCare.
Some of an applicant's liquid assets may be spent down on certain items that are exempt from counting toward the amount of assets an applicant is allowed to have. A TennCare applicant will be allowed to keep certain possessions, e.g., a home or vehicle. The money spent down for purposes of qualifying for TennCare can be spent on
- home improvements;
- personal items, like clothing and wedding rings; and
- a pre-paid funeral or burial plot.
Transfer Penalty Rules
When transferring assets to others to qualify for TennCare, simply giving assets away can cause the applicant to incur penalties. There is a 5-year look-back period in most states, including Tennessee (2.5 years in California), for asset transfers for TennCare applicants. The value of the assets that have been transferred can delay the amount of time that TennCare will begin paying for residential care.
For example, if the TennCare applicant gifted $10,944 to a relative over the last 5 years and the "divestment penalty divisor" (as determined by the state Medicaid authority) at the time is $5,472, there will be a two-month delay from the time that an applicant would have been otherwise eligible for Medicaid and when payments begin. This penalty can be avoided if the assets that were transferred are paid back to the applicant.
Community Spouse Exception
If a TennCare applicant has a spouse who still lives in the community, the application process is more complicated. In 2021, the maximum amount of total countable resources a spouse who remains in the community can have (called the Community Spouse Resource Allowance or CSRA) is $130,380. Even if the couple's assets total less than that amount, the applicant spouse's share will need to be spent down for the applicant spouse to qualify for TennCare.
For example, if the couple has $100,000 in a joint bank account, half of which is considered to belong to the applicant spouse, then $50,000 of that amount will need to be spent down until the applicant's total assets meet the TennCare asset requirements.
When a spouse will remain in the community, it is especially important to make sure that any liquid assets are spent carefully on items that are exempt from the TennCare transfer penalty. A significant portion of a couple's life savings may need to be spent down for the TennCare applicant to qualify. However, it may be possible to save many liquid assets that would have otherwise been paid to the long-term care facility when liquid assets are spent on items that are exempt from counting toward the total amount of assets the applicant is allowed to keep.
It may be possible to transmute the applicant spouse's share of the couple's assets to be the non-applicant spouse in order to make full use of the CSRA, but only if either (a) the applicant spouse has the mental capacity to make such a gift (which is most often not the case), or (b) the applicant spouse has done the right type of advance planning, usually with the assistance of legal counsel, to permit this kind of last-minute gifting.
Contact a Knowledgeable TennCare Crisis Planning Attorney
If you have questions about trust administration or need assistance with estate planning, contact attorney Nina Whitehurst at Cumberland Legacy Law, located in Crossville, Tennessee, and also serving Fairfield Glade, Sparta, Cookeville and surrounding areas. You can use our online form to schedule a consultation or call us at (931) 250-8585.