POSTED IN MEDICARE & MEDICAID BY LAWYERS.COM
Despite what many people think, the government health care program for the elderly, Medicare, covers very few nursing home costs. Medicaid is the largest source of government funding for nursing home care. But getting Medicaid benefits isn’t always easy because the rules can be complicated. So, there are all kinds of myths out there about who qualifies for assistance.
Knowing the truth about these myths is the key to getting the assistance you or a loved one may need. Here are some of the common myths you may hear about.
1. I have to give away everything I own to get Medicaid.
In fact, you don’t have to be completely destitute to get Medicaid. If your spouse or dependent children, for example, live in your home, you don’t have to sell the home. You can also keep personal items, a car and some life insurance.
2. If I give away assets to family or friends, I won’t qualify for Medicaid.
It’s true that some transfers of property or assets disqualify you from getting Medicaid. The value of the assets determines how long you’ll be disqualified. However, certain transfers won’t disqualify you. Sometimes it depends on who receives the assets; other times, it depends on the type of property you’re transferring.
For instance, you typically won’t be penalized for transferring property to your spouse. You can even transfer your house to your child who’s under 21 years old or who cared for you in that home for two years or more. The point is, not all transfers cause problems with getting Medicaid – ask your lawyer what applies in your state.
3. I have to wait five years after giving anything away to get Medicaid.
Yes, Medicaid rules do penalize some transfers of property, and your state’s Medicaid agency will examine your financial records for the five years just before you applied for benefits. However, you may not have to wait five years before qualifying for assistance.
How long you have to wait is based on the value of the property and the average monthly cost of nursing home care in your area. For example, if you transfer $75,000 and the average cost of nursing care in your area is $3,000 per month, your ineligibility period is 25 months ($75,000 / $3,000 per month = 25). The waiting period begins to run on the date you apply for Medicaid.
4. I can keep all our marital property and my inherited property when my spouse gets Medicaid.
You may be able to keep some of these assets. It depends on how your state’s Medicaid agency “counts” your and your spouse’s assets. There are some protections for at-home spouses like you, and it can be very complicated. It’s important to talk to your attorney about this when planning for your spouse’s Medicaid needs.
5. If I put my property in my spouse’s name, I won’t be eligible for Medicaid.
No. As a general rule, you can transfer assets and property to your spouse without jeopardizing your eligibility for Medicaid.
6. Medicaid rules that applied to my neighbor will also apply to me.
This depends on many factors, but none is more important than when your neighbor applied for Medicaid. There were major changes to the Medicaid rules in 2005, one was changing the look-back period from three to five years. So, you may have a longer look-back period than your neighbor had.
7. As a “private pay” nursing resident, I must use up my assets before I can get Medicaid and can only “spend down” my assets on medical or nursing home bills.
This is wrong for several reasons. First, you may qualify for Medicaid long before you spend or use up all of your assets. Also:
- You’re allowed to keep certain property
- You may be able to buy “non-countable assets,” like a car or life insurance
- You may be able to transfer assets to your spouse or family members
Don’t believe for one moment that you have to $0 and no assets to get Medicaid. Also, it’s against the law for a nursing home that’s Medicaid-certified to tell you that you have to stay “private pay” until your personal assets are gone. Sadly, some nursing homes push this myth to keep residents as “private pay” because those rates usually are higher than Medicaid reimbursement rates.
Contact your state’s Medicaid agency immediately if a nursing home violates this rule.
8. My power of attorney automatically has the power to take property out of my name, if I ever need Medicaid.
Most state laws require that you specifically include a “gifting power” for your agent under the power of attorney to be able to retitle your property. If you want your agent to be able to transfer assets to provide more for your spouse and/or children, in particular, you should say so in your power of attorney.
9. I can only give away $13,000 per year under Medicaid rules.
This is a federal gift tax rule; it has nothing to do with Medicaid law. You can give $13,000 to any one person, one time each year and you won’t have to pay any gift taxes. For Medicaid purposes, however, that same gift may trigger a penalty when the look-back period is examined by your state’s Medicaid agency.
Knowing the truth about these myths should help you with your Medicaid planning. It’s important to remember, though, that there are other pitfalls and myths in the Medicaid process, and the rules may be different in your state. Talk to an experienced attorney long before the time you actually need Medicaid to make sure you protect your assets and get the assistance you need.
Questions for Your Attorney
- What information do you need from me to help me plan for my future Medicaid needs?
- How often can I apply for Medicaid?
- Can I sell my home and still be eligible for Medicaid?
For more information, contact The Kabb Law Firm 216.991.5222 or www.kabblaw.com