Generally, Medicaid or Aid to the Aged, Blind, and Disabled (AABD) is a state-sponsored medical insurance program for certain individuals with disabilities based on financial need. One major benefit to Medicaid is that it covers long-term care costs including group homes, which can cost in excess of $100,000 per year for individuals needing degree constant supervision. To qualify for Medicaid, you must meet specific medical requirements and a strict income and asset limit set by your state.
Until recently, if you owned more than $2,000 in non-exempt assets in Illinois, you were ineligible for regular Medicaid benefits. Most other states have similar asset limits for their Medicaid programs. However, Illinois recently has significantly increased the non-exempt asset limit for Medicaid eligibility from $2,000 to $17,500. The state verified this increase in an update to its Cash, SNAP, and Medical Manual, located at WAG 25-03-02: Standards and Allowances Overviews, AABD Medical/Medicare Savings Programs/HBWD.
Exempt and Non-Exempt Assets for the Purposes of Medicaid Eligibility
Some assets are exempt from this asset limit, including:
- Your home;
- Your personal belongings and household goods of a reasonable value;
- Certain resources that you use to earn an income;
- Pre-paid funeral contracts (often funded by life insurance policies that individuals have irrevocably assigned to funeral homes);
- One vehicle, regardless of value (if required to transport the Medicaid recipient to and from medical appointments, used by a household member to get to work, modified for a person with disabilities, or necessary to provide transportation in a remote area);
- Life insurance policies with a face value of $1,500 or less and all term life insurance policies;
- Burial spaces for the Medicaid recipient, their spouse, or an immediate family member, regardless of value; and
- ABLE accounts or tax-exempt savings accounts for disability-related expenses to benefit individuals who became disabled before age 26.
In contrast, non-exempt or countable assets include many different types of assets, such as cash, bank accounts, IRAs, and life insurance policies with cash value. An experienced special needs attorney can help you determine which of your assets are exempt and non-exempt.
Benefits of the Increased Medicaid Asset Limit
This welcome increase in the Medicaid asset limit will make it much easier for more individuals with disabilities to meet the eligibility requirements for Medicaid coverage, including the often crucial and highly expensive long-term care costs. The shift also will allow individuals who may have inadvertently allowed their assets to rise above the very low $2,000 to continue to qualify for Medicaid benefits without worry. Even more importantly, individuals can set larger sums aside to save for more costly purchases without fear of running afoul of the Medicaid asset limits.
Medicaid Estate Recovery After Death Remains
Regardless of the increase in the Medicaid asset limit, Illinois will still recover any assets from the estate of the Medicaid recipient following their death. The state has a right to pursue these assets to reimburse it for providing Medicaid coverage to the individual, up to the full amount of Medicaid benefits they received during their lifetime. Estate recovery is a condition that individuals must agree to when they receive Medicaid benefits.
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