Protecting Your Loved Ones and Their Assets

What Is the Effect of Income-Producing Property on Medicaid Eligibility in Georgia?

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Medicaid is program funded jointly by the State of Georgia and the federal government that may benefit senior residents needing long-term care. The eligibility rules for Medicaid are extremely complicated. One particular issue that arises with some frequency concerns the effect of income-producing property on Medicaid eligibility in Georgia.

In our elder law and Medicaid planning practice at Asset Protection & Elder Law of Georgia, we help clients with questions like this one on a regular basis. To lay the groundwork for addressing the questions surrounding income-producing property in the context of Medicaid eligibility, we start with a general overview of the basic elements of Medicaid eligibility.

Medicaid Eligibility Basics for Seniors

Medicaid programs have specific, complex eligibility requirements. The eligibility rules include limitations for both income and assets.

For example, the Georgia eligibility limits for institutional or nursing home Medicaid benefits for an individual in 2019 are set at an income limit of $2,323 per month and assets of $2,000. The limits are different if two spouses apply at the same time. If only one spouse applies, the income of the non-applying spouse is not considered, but there is an asset limit of $126,420 for the non-applicant spouse. There are additional rules as well.

To complicate matters even more, Medicaid eligibility rules are very specific about what counts as income and what counts as an asset. There are assets that are exempt or non-countable. Asset exemptions include:

  • Personal belongings
  • Household goods
  • Primary home under the value of $585,000
  • Personal automobile
  • Designated burial expenses up to $10,000 and burial plots
  • Certain retirement funds distributed in periodic payments that include principal
  • Term life insurance policies
  • Certain income-producing property

With regard to assets, Georgia Medicaid has a “look back” period of five years (60 months) from the Medicaid application date. If any assets are sold or transferred for less than fair market value within that look-back period, the applicant may be found in violation of the look-back provision and be ineligible for Medicaid for a period of time.

Effect of Income-Producing Property on Medicaid Eligibility in Georgia

Within the overall setting of Medicaid eligibility determined on the basis of income and asset limitations, income-producing property affects Medicaid eligibility in two ways. Importantly, the revenue from income-producing property does count as income in determining whether the eligibility income limitation is satisfied.

The issue of whether the value of the income-producing property qualifies for the allowable exemption as an asset is a completely different question. Specific requirements must be met. If the applicant owns income-producing property like a rental house or farm, the property is excluded from the Medicaid asset calculation in Georgia if:

  • The applicant’s ownership equity interest is less than $6,000; and
  • The property yields at least 6 percent net per year of the amount being excluded.

There is another exclusion closely related to the rental exclusion. If property of an active business or non-business property is used to produce goods or services for the applicant’s home consumption or use, that property is exempt up to $6,000 in value, regardless of the annual rate of return. This type of property may include items like a farm tractor or boat.

Like all the other rules that apply in determining eligibility under Medicaid income and asset requirements, the rules relating to income-producing property are complex. Applying them to a specific situation requires detailed analysis and calculations.

Role of Medicaid Planning in Meeting Medicaid Eligibility Requirements

If you are in the process of determining your eligibility for Medicaid — or if you are helping an elder family member determine Medicaid eligibility — the best approach is to consult with a knowledgeable Medicaid planning professional. There are numerous rules that apply. The only way to ensure you apply them correctly is talking with someone who knows all the rules and has experience applying them to individual situations.

Individuals who own income-producing property that seems to put them over the limits for Medicaid eligibility — or anyone who thinks they may be over the income or asset limitations for other reasons — also should talk with a qualified Medicaid planning professional. Even when an individual appears to be over the eligibility limits, a number of strategies may be available to help the individual become Medicaid eligible, including Qualified Income Trusts (QITs), also called Miller Trusts, for persons over the income limit who still are not able to afford the cost of long-term care.

Especially because of the Medicaid five-year look-back period, it is never too soon to explore Medicaid planning. When an individual gets professional assistance at least five years in advance of the need for care, chances are excellent that many assets can be protected in the process of becoming eligible for Medicaid.

The look-back period exists to prevent fraud, not to impoverish families truly in need of Medicaid financial assistance. Exemptions and exclusions like the one for income-producing property help those families to some degree. There are also tools available like asset-conversion plans, specialized trusts, and Medicaid-compliant annuities that may be available, depending on the specific circumstances.

Talk With an Elder Law and Medicaid Planning Professional About Whether Your Income-Producing Property Affects Your Medicaid Eligibility in Georgia

In our Cartersville elder law practice at Asset Protection & Elder Law of Georgia, Medicaid planning is an essential part of our services for many clients. If you have questions about your income-producing property or other questions about Medicaid eligibility in Georgia, we can answer your questions and help you make the right decisions.

We provide elder law and Medicaid planning services to clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County and Paulding County. Call us at (770) 382-0984 or contact us through our online form.

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