What happened?

Until recently, if someone had one dollar over the $2,000 asset limit, they would not qualify for Medicaid in Illinois. Most states have a similar asset limit. However, seemingly out of the blue, word recently began to spread around the Elder Law community that Illinois was raising this asset limit to $17,500. While $17,500 may not sound like a large sum, this change significantly impacts how much an Illinois resident is allowed to keep while remaining eligible for Medicaid to cover a portion of their long-term care costs.

To qualify for Medicaid in Illinois, a person must meet a number of specific requirements: medical need and financial need which is comprised of income limit and asset limit. 

Medical need

To qualify for “regular Medicaid,” also known as aid to the aged, blind or disabled or “ABD Medicaid,” an individual must require the help of another person. Medicaid uses the term ADLs or “activities of daily living.” To pass the medical need test, a person must require assistance with at least three ADLs, such as bathing, toileting, eating, etc. If the person resides in a nursing home, it is presumed they meet the medical need requirement.

Income Limit

Generally a single Medicaid applicant’s income must be below $1,215 per month. Note that someone can still qualify if their income exceeds this amount, but, in Illinois, it typically requires the person to “spend down” their excess income on medical costs, which is not difficult if someone is paying $7,000 – $13,000 per month to reside in a long-term care facility. Other states allow the use of a special type of trust called a QIT or “Qualifying Income Trust,” also known as a “Miller Trust.” 

Asset Limit

A single person generally can keep no more than $2,000 in “countable” assets. Most assets are considered countable, e.g., checking/savings accounts, IRAs, brokerage accounts, life insurance policies that contain cash value, etc. A limited number of assets may qualify as exempt, or “non-countable,” including a pre-paid funeral contract, often acquired through a life insurance policy that is then irrevocably assigned to a funeral home, and in certain circumstances, one vehicle if it is used to take the Medicaid recipient to his/her medical appointments. A married couple is allowed to keep $2,000 plus an additional $120,780 in the healthy spouse’s name, the “community spouse.” This also reflects a recent update to the law, which formerly capped the community spouse’s allowance at approximately $109,000. Additionally, the community spouse gets to keep one house and one car as exempt assets. 

Where Do We Stand Now? 

As of the date this article is being published, uncertainty remains regarding the increased asset limit. Colleagues across the state have reported that the Illinois Department of Human Services has begun using the new increased limit in recent Medicaid cases. Elder Law practitioners have been cautious, however, as the law “on the books” still reflects an asset limit of $2,000. 

Takeaway

Generally, elder law attorneys approve of this asset limit increase for single individuals. Firstly, keeping assets under $2,000 can often be challenging, especially when the Medicaid claimant is incapacitated, often relying on a child or other trusted person to handle their finances. Increasing the asset limit will help prevent unfair disqualification for someone who slightly, perhaps inadvertently, allows his/her assets to rise above $2,000. Secondly, $2,000 does not give someone much wiggle room should they want or need something that Medicaid will not cover, for example, a new recliner for their room or a new cell phone. Thirdly, increasing the asset limit generally will not negatively impact the State of Illinois, as any assets remaining in the Medicaid recipient’s name at his/her death go to the State of Illinois to repay the state up to the full amount of Medicaid benefits paid out on behalf of the recipient during his/her lifetime.