Own Your Future, Texas

Resources for LTC Insurance Professionals

Texas Medicaid Eligibility and the Long-Term Care Partnership

Disclaimer

The purpose of this document is to provide a general understanding of the rules relating to eligibility for Medicaid payment of long-term care services in Texas and the interaction between Medicaid eligibility and the Long-Term Care Partnership.

This document is intended to serve as a resource for providers developing a training curriculum for individuals wishing to sell policies that qualify for resource disregard according to Long-Term Care Partnership standards. Course outlines and curriculum for long-term care insurance training related to the partnership must be approved by the Texas Department of Insurance in accordance with its rules, which are located at 28 TAC §§19.1001 – 19.1023. These rules also address provider and licensee training requirements related to the Long-Term Care Partnership.

Policy governing Medicaid for people who are elderly and people with disabilities is very complex and has many exceptions and special rules for various situations. For this reason Medicaid eligibility, including resource disregard, is determined on a case-by-case basis by staff with the Texas Health and Human Services Commission (HHSC). Resource disregard for estate recovery purposes are determined by staff at the Texas Department of Aging and Disability Services (DADS), the state’s agency for administering long-term care and the Medicaid Estate Recovery Program.

Insurance agents are not to determine Medicaid eligibility or guarantee specific resource disregards. They should direct potential policyholders to HHSC for questions on eligibility and to DADS for questions on the Medicaid Estate Recovery Program.

If there are questions about a person’s status in Medicaid, those questions must be asked by that person or that person’s authorized representative. Questions about how Medicaid for people who are elderly or people with disabilities policy would be applied to a specific person’s circumstances cannot be provided in advance of that person filing an application and providing the information necessary to determine eligibility. Both HHSC and DADS staff may explain policy relating to these issues but will not give advice.

Policy information is available through the Medicaid Eligibility Handbook and on the Medicaid Estate Recovery Program website.

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Introduction

Medicaid provides a full range of benefits to people who qualify. Medicaid services include but are not limited to some services in each of the following categories:

  • Inpatient and outpatient hospital and clinic services.
  • Emergency hospital services.
  • Laboratory and x-ray services.
  • Physician services.
  • Prescription drugs.
  • Long-term care services such as home health, hospice, adult daycare, assisted living or nursing facility care.

Medicaid long-term care provider information is available through the DADS Quality Reporting System.

Medicaid programs are operated by each state but overseen by the federal government through the Centers for Medicare and Medicaid Services (CMS).

The Long-Term Care Partnership is a joint effort between private long-term care insurers and Texas state agencies. The partnership encourages people to plan for their long-term care needs. Specifically, the partnership involves collaboration among private long-term care insurers, agents authorized to sell long-term care policies the Texas Department of Insurance, HHSC, and DADS.

A qualified Long-Term Care Partnership policy must meet all the rules set out by the Texas Department of Insurance and must include a specific amount of inflation protection based on the person’s age at the time he or she purchases the policy.

Owning a qualified Long-Term Care Partnership policy does not guarantee access to Medicaid, even if the policyholder exhausts his or her policy benefits. A person must still meet all Medicaid eligibility requirements to be determined eligible for Medicaid. In those situations, the value of a Long-Term Care Partnership policy emerges when a policyholder applies for Medicaid. In that process, the policyholder’s countable resources may be “disregarded” in an amount equal to the value of benefits paid through the Long-Term Care Partnership policy.

If the policyholder then needs to rely on Medicaid for payment of long-term care services, the person may qualify for various Medicaid long-term care programs and still own countable resources in excess of the statutory resource limit. Additionally, when the policyholder dies, resources that were disregarded in the Medicaid eligibility process will not be subject to recovery by Medicaid for the policyholder’s Medicaid costs.

This resource document will provide you with:

  • A discussion of the general eligibility criteria for Medicaid payment of long-term care services.
  • An explanation of the interaction between the Medicaid eligibility and the Long-Term Care Partnership.
  • Information about how people can apply for Medicaid.

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A. General Eligibility Criteria for Medicaid Payment for Long-Term Care Services

1. Texas Residency

  • Texas Medicaid follows the federal Medicaid residency rules, which require that a person must be a Texas resident at the time of application and must intend to remain in Texas. There is no time requirement for living in Texas to establish residency.

2. Citizenship and Immigration Status

  • To be eligible for Medicaid a person must be either a U.S. citizen or a non-citizen with a qualified immigration status.

3. Medicaid Eligibility Group

  • To be eligible for Medicaid a person must qualify under a group authorized for coverage under the federal Medicaid rules and covered by Texas Medicaid.

4. Third Party Resource (TPR)

  • Medicaid is typically the payer of last resort.

A person with other health care coverage or who has another party liable for the medical expenses must have medical costs paid by those sources before Medicaid pays claims. A person is required to cooperate with providing information regarding other payment sources.

5. Specific Requirements for Medicaid Payment of Long-Term Care Services

A person must:

  • Have a medical necessity designation requiring a level of care provided in a long-term care facility such as a nursing facility or an Intermediate Care Facility for Persons with Mental Retardation. The medical necessity designation also determines if the person qualifies to receive home and community-based services through a Medicaid home and community-based waiver program.
  • Meet functional assessment criteria for personal care services.
  • Be a resident of a long-term care facility or qualify to receive home and community-based services under one of the Medicaid waiver programs.
  • Not have home equity in excess of $500,000.
  • Not be in a penalty period for an uncompensated transfer of income or resources.
    • Penalty periods are assessed when a person or the person’s spouse make an uncompensated transfer during a specified period of time (called the look-back period) prior to a person requesting Medicaid payment of long-term care services or anytime while the person is receiving Medicaid payment of long-term care services.
    • The look back period is currently 36 months but was increased to 60 months in the federal Deficit Reduction Act of 2005 (DRA). The 60 month look-back period will be phased in. Beginning February 2009 the look-back period will increase by one month each month through January 2011 at which time it will reach 60 months.
    • The penalty period is calculated by dividing the value of the uncompensated transfer by the Statewide Average Daily Rate for Nursing Care in effect at the time a person requests Medicaid payment for long-term care services. This calculation results in a number of days during which the person is ineligible for Medicaid payment for long-term care services.

    For uncompensated transfers made prior to Oct. 1, 2006, the penalty period begins in the month in which the transfer occurred; for uncompensated transfers made on or after Oct. 1, 2006 the penalty period begins with the date the person applies for Medicaid and would otherwise be eligible for Medicaid payment for long-term care services.

  • Disclose any annuity interest, and if married, annuity interest of a spouse and name the State of Texas as a remainder beneficiary of any annuity owned by the person or person’s spouse.

Note: Home equity in excess of $500,000 or a transfer penalty applied to long-term care services does not restrict payment for Medicaid services other than for long-term care services. This means an applicant with excess home equity or on whom a transfer penalty has been applied, may still qualify for Medicaid coverage of benefits other than long-term care.

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B. Financial Eligibility Criteria for People Requesting Medicaid Payment for Long-Term Care Services

1. Income

  • General

Medicaid income eligibility is based on countable income. The rules for determining countable income vary by eligibility group. Policy rules for each group determine the specific types of income that are excluded, which family members’ income is counted toward another family members’ eligibility, and which deductions are subtracted from gross income.

People with countable income equal to or less than the income limit of the person’s eligibility group are income eligible for Medicaid.

  • Payment for the Cost of Long-Term Care

When a person is determined income eligible for Medicaid long-term care services, a separate income calculation is made to determine how much of the person’s income must be paid toward the cost of Medicaid long-term care services. The amount of the person’s contribution (copayment) is the income left after allowable deductions. Deductions vary based on the type of long-term care and the person’s circumstances. The copayment is generally made to the long-term care facility or to the waiver service provider.

2. Resources

  • Resource limit

Texas limits the amounts of resources people can own in order to be eligible for Medicaid coverage. The Medicaid eligibility specialist determines if the person has countable resources at or below the Medicaid resource limit. Currently the resource limit for a single person is $2,000 and $3,000 for couples applying for long-term care services.

  • Resource treatment for certain married couples

A special set of rules, called spousal impoverishment rules, apply to a married person requesting Medicaid payment for long-term care services. Married couples may complete the resource assessment (Spousal Protected Resource Assessment (SPRA)) as soon as possible when one spouse requires long-term care services that are anticipated to last for more than 30 days, even though they may not be requesting Medicaid payment. This allows the married couple to know when the spouse receiving long-term care services may be eligible to receive Medicaid payment for long-term care services. The actual amount of resources that can be kept by the spouse not receiving Medicaid services is determined by HHSC’s Medicaid eligibility specialist.

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C. Interaction between the Long-Term Care Partnership and Medicaid Payment of Long-Term Care Services.

1. How Resource Protection works Under the Long-Term Care Partnership

A person with a qualified Long-Term Care Partnership policy may designate countable resources for a dollar-for-dollar disregard in an amount equal to the value of benefits paid out by the policy.

Once the countable resource is designated, Medicaid:

  • Disregards the value of the designated countable resource in the resource limit calculation.
  • Allows the person to transfer the designated countable resource without penalty.

However, Medicaid will not pay for long-term care services until these same benefits paid under the person’s Long-Term Care Partnership policy have been exhausted. This is consistent with federal law that Medicaid is the payer of last resort.

The policyholder must provide a written resource designation and must verify the value of the designated resources.

  • Once the countable resources are designated, the policyholder must:
    • Report any sale, transfer or conversion of designated resources and verify the value of the designated resources as of the date the reported transaction took place.
    • Document and verify any designated resources still owned by the person at the time of each Medicaid redetermination. (Special reviews may be performed periodically prior to each annual redetermination.)

Note: If a designated resource is expended, no additional resource designation is allowed, nor may any otherwise excluded resource be substituted in its place.

People receiving Medicaid payments for long-term care services who secure additional resources and have not designated resources up to the amount of benefits paid by the Long-Term Care Partnership policy may then designate additional countable resources up to the amount of benefits paid by the policy.

2. Policy Concepts for Resource Disregards

Under Medicaid long-term care policy, certain resources such as a person’s home may not be included when determining a person’s statutory countable resource limit. For this reason, only countable resources may be designated for the disregard when determining Medicaid eligibility for those with qualified Long-Term Care Partnership policies.

If a designated resource declines in value, additional countable resources may be designated up to the amount of benefit paid under the Long-Term Care Partnership policy.

A person may expend a designated countable resource, however no additional disregard is allowed in this circumstance.

Transferred countable resources may be designated for the disregard.

The countable resource disregard may not be applied to home equity value in excess of $500,000.

The countable resource disregard is applicable only to the person who has received benefits under the Long-Term Care Partnership policy.

When a policyholder has fewer countable resources than the Long-Term Care Partnership policy has paid, the unused disregard balance will be protected after the policyholder dies and Medicaid Estate Recovery becomes applicable.

Texas intends to participate in reciprocal recognition with other states with Long-Term Care Partnerships.

D. How to Apply for Texas Medicaid Programs

A person may do one of the following to apply for Texas Medicaid:

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Updated: December 3, 2008