Medicaid is a government health payment plan for needy individuals. If an individual qualifies for Medicaid benefits, Medicaid will pay for many of the costs associated with long-term care.
If an individual qualifies for Medicaid benefits, Medicaid will pay for care in a nursing home, an assisted living residence, or at home. At home, Medicaid will pay for a home health aide or an adult day care center.
When you apply for Medicaid benefits, you can elect to receive benefits up to three months prior to the date of your application; however, in order to receive benefits during this three-month retroactive period (the period of time three months prior the date of your application for benefits), you must have been eligible for Medicaid during those three months.
In other words, in order to qualify for Medicaid, an individual must have less than $2,000 in assets. If he seeks benefits during the three-month retroactive period, then he must have had less than $2,000 in assets during those three months. If he had, say, $10,000 in assets during the three-month retroactive period, then he will not qualify for retroactive benefits because his assets were over the limit during that period of time.
In addition, a person can only qualify for retroactive benefits if he were residing in a nursing home or an assisted living residence. There are no retroactive benefits for people seeking Medicaid at home; Medicaid will only pay for benefits on a prospective basis for those individuals who reside at home.
If an applicant resides in a nursing home or assisted living residence and was ineligible during the three-month retroactive period and if he has unpaid bills during that three-month period of time, he might still qualify for another program that will enable him to pay his unpaid nursing home bills. The program is called “pre-eligibility medical expenses” or PEME.
When a Medicaid beneficiary resides in a nursing facility, all of his income less certain deductions is payable to the facility as his cost share. For instance, if Mr. Smith resides in a nursing home and has $2,250 a month in income, he can retain $50 as a personal needs allowance. If his health insurance premium were $200, then Medicaid would permit him to pay the monthly premium from his income. The remainder of his income, or $2,000 in this example, would be payable to the nursing home.
The $2,000 that Mr. Smith pays to the nursing home reduces what Medicaid pays the nursing home. So, if Medicaid would have paid the nursing home $6,800 a month, which is a typically Medicaid reimbursement rate for a nursing home, then Medicaid would only pay $4,800, and Mr. Smith would pay $2,000.
If Mr. Smith owes the nursing home for the three months prior to the date of his application but was otherwise ineligible for Medicaid benefits, for instance because he owned too many assets, then the Medicaid office will permit Mr. Smith to use his $2,000 of available income to pay the nursing home for the bill he owes; however, the bill can only be paid at the Medicaid rate, not the private-pay rate, and the diversion of income can only occur if Mr. Smith did not give away any assets during the Medicaid five-year lookback period.
The request for PEME is typically filed by the nursing home or assisted living residence in which Mr. Smith resides. The ability to make a PEME request is an important tool that an applicant should bear in mind, as applicants frequently have unpaid medical bills.