The Impact Of The Medically Needy Program On Long-Term Care Funding
by: Thomas D. Begley, Jr.
Prepared for The Medicaid Long Term CareFunding Advisory Council
by Thomas D. Begley, Jr.
The Independence, Dignity and Choice in Long-Term Care Act1 has a stated goal of rebalancing state long-term care programs and budgets so that more older adults and persons with disabilities live in their homes and communities.2 The Act acknowledges that it is easier for adults and persons with disabilities to qualify for Medicaid long-term care coverage if they are admitted to a nursing home than if they seek to obtain services through one of the Medicaid home and community-based long-term care options.3 Many of the long-term care options, including Community Care Program for the Elder and Disabled (CCPED) and assisted living, are subject to income caps of $1,869 per month. Executive Order No. 100 established a global long-term care budgeting process to move Medicaid recipients into an appropriate level of care based on their individual needs.4 Executive Order No. 31 established a “money follows the person” pilot program for home and community-based long-term care.5 There may be a significant problem in achieving the goals of the Act, because of language that “eligibility for home and community-based long-term care services under Medicaid should be based upon the same income and asset standards as those used to determine eligibility for long-term care in an institutional setting.”6
The Commissioner of Human Services, with the approval of the Commissioner of Heath and Senior Services, shall apply to the federal Centers for Medicare and Medicaid Services for any waiver of federal requirements, or for any state plan amendments or home and community-based service waiver amendments, which may be necessary to obtain federal financial participation for state Medicaid expenditures in order to effectuate the purposes of this Act.7
2. THE NEW JERSEY MEDICALLY NEEDY PROGRAM
The regulations for the New Jersey Medically Needy Program are found at N.J.AC. 10:70.
The purpose of the Medically Needy Program is to provide Medicaid benefits for persons whose income exceeds the Medicaid Program’s standards.8 Two groups of persons are eligible for Medically Needy. They are AFDC-related and SSI-related. For our purposes, we will focus on SSI-related since the population we are addressing seems to fall into that category. SSI-related covers persons who are:
- 65 years of age or older
Retroactive eligibility for the Medically Needy Program is available beginning with the third month prior to the date of application.10
2.2. Non-Financial Eligibility Factors
The regulations spell out the non-financial eligibility factors. These include:
The regulations define eligibility group criteria as being AFDC-related and SSI-related.13 The definition of disability tracks the definition used by the Social Security Administration.14
2.3. Budget Unit
The regulations define the term “budget unit” to mean those persons whose income and resources are counted in the determination of eligibility for persons applying for or eligible for the Medically Needy Program. Incurred medical expenses of all members of the budget unit are applied in meeting spend down liability.15 For SSI-related persons, the budget unit shall be constituted as follows:
- There is a budget unit of one, if the aged, blind or disabled person is not living with his or her spouse, regardless of the number of other persons living in the household.
- There is a budget unit of two, if the aged, blind or disabled person is living with his or her spouse, regardless of other persons living in the same household.
- If there is a blind or disabled child under age 21, the budget unit consists of the child, but parental income is deemed to any child under age 18.16
3. INCOME ELIGIBILITY
3.1. Medically Needy Income Levels
If the income of the budget unit is less than the Medically Needy Income Level (MNIL), eligibility is established. If the income of the budget unit exceeds the MNIL, eligibility must be established through a medical spend down.17 The MNILs are tied to AFDC allowance standards.
For 2007, the MNIL for a single person is $367 and for a married couple $434.
3.2. Eligibility Periods
There is a retroactive eligibility period of three months immediately preceding the month in which the application for benefits is made.18
The prospective eligibility period is the six calendar months beginning with the month of application.19
3.3. Countable Income
Medicaid Only rules are used to determine countable income.20 It is significant that income of an ineligible spouse is deemed to the eligible spouse if they are residing in the same household.21
4. RESOURCE ELIGIBILITY
4.1. Resource Limit
For Medically Needy there is a resource eligibility limit of $4,000 for a single individual and $6,000 for a budget unit of two.22 In determining what are countable assets, Medicaid Only rules are followed.23 Medicaid Only deeming of resources rules are also followed.24
4.2. Transfer of Resources
The same transfer of resources rules apply to the Medically Need Program as applied to the Medicaid Only Program.
5. MEDICAL SPEND DOWN
A person otherwise eligible for the Medically Needy Program may establish income eligibility through a medical spend down.25 This is a process whereby the excess countable income of a budget unit is offset by the allowable incurred medical expenses of the budget unit.26 Except for retroactive eligibility, income eligibility is determined using a six-month prospective eligibility period. A six-month spend down liability is established.27
5.1. Allowance Expenses
Allowable medical expenses are those:
- incurred by a member of the budget unit having an express obligation for payment28
- for necessary medical or remedial services provided, prescribed or recommended by a qualified and appropriate licensed medical practitioner29
- to the extent that payment of any bill for medical services is the responsibility of a third party, such as an insurance company, the expense shall not be allowed30
Any medical expenses in excess of those required to meet the spend down liability for a budget period may be applied against spend down liability of a future budget period.31
5.3. The Issues
There are several issues that need to be addresses.
The income limits for Medically Needy are extremely low. It is difficult to imagine a married couple living in the community and spending all of their income down to $434 per month to obtain Medically Needy eligibility and have anything left over for food and shelter let alone any other living expenses. One issue is whether this limit is too low. Very few people are likely to qualify for the program. Unless these income limits are raised significantly, it is unlikely that community spouses will elect to bring their loved ones home from a nursing home.
5.3.2. Overall Spending
The goal of the Independence, Dignity and Choice in Long-Term Care Act is to rebalance the long-term care program so that fewer people are residents of nursing homes and more people are provided care in the homes and communities. Clearly, a significant percentage of nursing home residents are receiving only custodial care that could be delivered in a home or community-based setting. As a practical matter, it is likely that the person requiring care would need to live with a spouse or other family member. While some persons with disabilities could live at home with 24/7 care, that would still be less expensive than nursing home care. Would it be wise for this program to begin by providing that option to dementia patients, for example?
5.3.3. Spending Per Single Individual
One question is how to control the gross amount of money to be spent on home and community-based programs. This can be accomplished through slots as with current home and community-based waiver programs. Another questions is how much will the state be willing to spend on one person requiring care. It is understood that the average reimbursement rate for nursing homes likely exceeds $6,000 per month. It is also understood that the funding provided under the global budgeting in Atlantic County cannot exceed roughly $2,400 per month. Is this too great a disparity?
5.3.4. Spousal Impoverishment
If the person requiring care is receiving care in the community under programs forming part of the global budget, will the spousal impoverishment provisions of MCCA apply? If the family of two living in the community can have only $6,000 of assets, then few people are likely to become eligible. Unless spousal impoverishment provisions are a part of the program, it is unlikely that many community spouses will be able to afford to bring their loved ones home from a nursing home.
5.3.5. Program/Income Cap
Can consideration be given to removing the current income caps from existing programs such as CCPED? The number of people participating in the programs would then have to be limited by limiting the number of slots. Some people would have great difficulty ever meeting these income caps. Public sector workers generally have fairly good pensions. They almost always exceed the income caps, but are too low to pay for home care or assisted living on a private pay basis.