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The cost of long term nursing home care is out of reach for many. Therefore, it’s common for elders who need ongoing residential care to use Arizona State health insurance to help cover the cost. 

While this funding method may seem quite simple, this can change if the resident receives a settlement following a case of abuse or neglect.

You may be wondering if Arizona State health insurance can ask for a repayment should a family member receive a settlement. Or if there’s a limit to the amount your health insurance provider can ask for. This article seeks to clarify these answers for you.

Arizona’s State Health Insurance System Explained

Arizona provides state health insurance through a Medicaid program called the Arizona Health Care Cost Containment System (AHCCCS).

AHCCCS offers a wide range of care for individuals in Arizona, including nursing home care. In Arizona, they fund this via the Arizona Long Term Care System (ALTCS).

Individuals who have a limited income or cash reserves may be eligible for health care funding from ALTCS. Funding means nursing home care and community services are offered at no or minimal cost provided the resident receiving the care meets financial and medical criteria.

As determined by Arizona law, care providers must accept the payments from AHCCCS as payment in full. 

Financial Limitations for Receiving ALTCS

To qualify for Medicaid, you must have a limited amount of countable resources available to you. In Arizona, this limit is set at $2,000 for Institutional Nursing Home Medicaid and Home and Community-based services. Married couples can have $4,000 of cash reserves.

What is a countable resource?

Medicaid will count the following as ‘countable resources’:

  • Bank and credit union accounts
  • Investments like stocks, shares, bonds, etc.
  • A second home
  • Some life insurance policies
  • Non-exempt vehicles

Assets that Medicaid don’t consider in their assessment include:

  • Your residential home
  • One car
  • Burial plots and some burial plans
  • Household items
  • Personal belongings

Income:

In addition to your countable resources, you can also have a monthly income of up to $2,349. Medicaid will count the following as income:

  • Wages
  • Pensions
  • Social Security
  • Supplementary Security Income
  •  Disability Pensions
  • Other payments

From 2020, married couples are permitted a $4,698 monthly income. If you exceed the financial threshold, you can spend down. However, the guidelines on what you can own and still be eligible for Medicaid are complex. Therefore you may benefit from speaking to a lawyer.

The impact of a nursing home settlement on your Medicaid payments

A settlement in a negligence claim could impact any Medicaid funding. Negligence occurs when:

  • A person or company has a duty of care
  • Someone fails in their duty of care
  • A person can prove that they suffered an injury due to the failure in the duty of care.
  • An individual suffers losses or an injury that they can receive compensation for.

One example is if your father is prone to wandering and the home failed to monitor him. If your father suffered a fall while he was wandering and suffered an injury, like a broken hip or ankle, then he could file a personal injury suit.

However, receiving this settlement means that your father may be over the income limits for Medicaid.

What happens when you are over the Medicaid limit?

One issue that arises is individuals who are over the limit for medicaid. When you receive a settlement it may push you over the financial threshold and affect your eligibility for Medicaid. There are several approaches you can take to resolve this. Including

Spending down Medicaid assistance

To continue to receive Medicaid one approach is to ‘spend down’ the assets. Medicaid permits recipients to spend down through

  • Covering funeral expenses
  • Settling any debts (mortgages, loans, credit etc)
  • Purchasing items for your personal needs like clothing
  • Caregiving agreements

However, spending down may not always be the best approach. There are other options available if your father wants to hold on to more of his money. These include

Setting up Special Treatment Trusts

Under ALTCS, a special treatment trust may be a possibility. These Trusts allow some people to qualify for Medicaid even though they are over the financial limits. However, when the customer dies, can recover these costs through the trust. There are three types of Trusts:

  • Income only Trust: Also referred to as the Miller Trust. It’s open to elders who have over the maximum income limits, but less than $7,253.13. However, these income levels vary in Arizona depending on the county.
  • Disabled Individual Under 65 Trust: Also called a First Party Special Treatment Trust. These trusts are set up by a trustee or a court and they can be used for settlements, inheritances and other financial assets. 
  • Pooled Trusts: They holds funds and pools the money into a joint investment account. Each member of the pool will have their own account.

Each trust has its own set of rules. However, any money taken out of a Special Treatment Trust, must be for the customer’s benefit and in accordance with A.R.S. §36-2934.01.

You can read ALTCS policies for setting up these trusts online.

Community Spouse Rules

If your father is legally married to a spouse that still lives at home or outside of a medical facility, then community spouse rules may apply.

If applicable, then this would mean that your father would then qualify for a Community Spouse Resource Deduction (CSRD). The rules allow a married spouse to keep some financial resources for their personal needs. These rules can also let a community spouse keep some of their partner’s income.

An ALTCS Eligibility worker will calculate the CSRD level at application. If your circumstances change because of a settlement, these ALTCS may need to review the calculation.

You can see ALTCS policies for CSRD online. However, as the rules are complex and may or may not apply to your individual case, speak to a lawyer for advice.

Understanding Medicaid rules for medical treatment

If you’ve received medical treatment because of your personal injury while getting Medicaid, they can ask for reimbursement. These costs include:

  • Medical care
  • Doctor’s visits
  • Treatment

Medicaid do this by putting a Lien against the settlement.

Understanding Liens

A lien is: 

 “the right of a healthcare provider, doctor, or hospital to assert an interest in personal injury recoveries of its patients,”

Medicare and Medicaid liens apply when a patient receives treatment for a personal injury. If the patient later receives a personal injury settlement, the insurance provider can put a lien on the award to reimburse them. 

What is Hospital Balance Billing?

It has been a practice of some Arizona hospitals to bill patients for more money after the patient receives a court settlement, even though the bills have been covered by Medicaid. 

As of 2020, this practice, which is called ‘balance billing’ is now unenforceable in Arizona. Arizona State law had allowed this, but the Supreme Court ruled that Federal laws superseded it.

You can read more about the practice of balance billing and medical liens on our blog.

Can Medicaid take everything?

This is a common concern, but when it comes to medical billing, these state-run programs can only take what is owed in medical costs. This was brought into as part of President Trump’s  2018 budget.

As detailed above, Arizona hospitals can no longer use balance billing for medical bills. However, as highlighted throughout this article, a settlement can affect your ongoing  eligibility for Medicaid or Medicare nursing home funding. If you have questions about this, speak to your insurance provider, or seek legal advice.

Frequently Asked Questions

Do I need to notify Medicaid if I get a settlement?

Yes, you should notify Medicaid of any settlement. If you don’t, Medicaid will get automatically notified, anyway. Failure to report a settlement can result in hefty fines, so you should do this as soon as possible.

Are there reductions?

Federal law means liens are stringent. Therefore, it’s not usually possible to negotiate reductions. However, it may make an exception for lawyer fees, as these will usually come out directly from your settlement.

How do I report a settlement?

Medicare allows you to report any settlements online

You’ll need to provide some personal information, including your Medicaid number. Next, you’ll be asked for details of the accident, such as:

  • Date and description of injury
  • The type of claim
  • Your insurers name and address.

For Medicaid, contact them directly to report your settlement as soon as possible.

Are their future costs I need to consider?

Should your personal injury require future medical treatment, Medicaid can ask for these costs to be reimbursed later.

How long do I have to pay a Lien?

You have sixty days to pay a lien. If a lawyer negotiates the bill down, you have thirty days from the final invoice.

Do these rules apply to Medicare?

Just like Medicaid, Medicare will ask for reimbursement of medical care if you receive a settlement.

How much will Medicare take?

This varies on the value of the settlement. If the settlement is relatively small ($5,000 or below) they fix the percentage at 25 percent.

How a lawyer can help

Before you do anything else, the first thing you should do is speak to a lawyer. They can help by:

  •  Explaining the various options in full, how they apply to your specific situation, and the advantages and disadvantages.
  • Setting up a Special Treatment Trust, if your father qualifie,
  • Checking any Medicaid bills for extra costs they have charged you for.
  • Securing a reduction for lawyer’s fees taken from your settlement

Sometimes, a demand for Medicaid reimbursement is an unwelcome outcome of a settlement in Arizona. If this happens to you, the first thing you should do is talk to a lawyer. They can advise you of the options available to you and how to move forward.

To find out more about how the Thompson Law Firm may be able to limit your liabilities, contact us today.

Our experienced attorneys offer comprehensive guidance on all personal injury matters by phone or video conference call.

Our team of lawyers work closely with their injury clients across Arizona, communicating clearly whilst offering reassurance and empathy through an often very difficult and emotional process. During the free consultation, our lawyers will discuss your concerns before creating a comprehensive plan for you, while also assessing the strength of your claim.

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