Families faced with having to pay for nursing home care for a loved one usually get a crash course in the limitations of Medicare and private health insurance. What they find is that Medicare will only pay for a certain amount of nursing home care and private health insurance doesn’t cover it either. If the nursing home resident had long term care insurance, the burden of covering the extremely high cost of a nursing home is lessened but most people do not have long term care insurance due to the cost. This leaves people with the reality that Medicaid is the only government program that covers the cost of a nursing home. Unfortunately, there a lot of myths dealing with how Medicaid is obtained and its effect on people’s assets. These myths, or misinformation, often get people into trouble or result in the loss of money and assets that could have been preserved. This misinformation can be spread by well-intentioned friends, family members, nursing home staff and even attorneys. The qualification rules for nursing home Medicaid are very complicated and not everyone understands the intricacies of the rules. Here, we will begin laying out some of the most common “myths” and give you the actual facts to rebut the myth. This will be covered in multiple posts. Please keep in mind that we are providing general information and not legal advice, as that cannot be given without knowing everything about your particular situation and often, what would appear to be a similar situation may warrant a completely different plan of action.
“My friend/family member/Facebook buddy has the same situation as me so I know exactly what to do.”
Medicaid rules are not set in stone. In fact, the rules change regularly and certain things change annually. This means that the rules that applied when your friend went into a nursing home are likely to have changed in some manner. Additionally, the devil is in the details. While you may think your situation is identical to someone else’s situation, and even if it is (highly unlikely), what worked for your friend may not work for you or may not be best for you. Numerous considerations go into deciding what works best for a particular person or family so it is critical that your situation be evaluated by an attorney knowledgeable in the area of nursing home Medicaid and estate planning.
“If I, or a family member is going into a nursing home, then we need to cash out all the accounts and give the money away or hide it.”
Making transactions in this situation without the guidance of a knowledgeable attorney can cause more harm than good. For example, without guidance, it is likely that nearly all of thetransactions will either have to be undone or cause Medicaid to issue a transfer penalty. You must remember that Medicaid is going to know about everything you do with assets and money during a certain period of time and will request documentation to support all transactions. The Medicaid application is just the starting point – the case worker will analyze everything and begin asking questions and requesting documents. If you intentionally omit things from the Medicaid application to hide assets then you are committing a crime, which most certainly will not help with your nursing home expenses. If benefits were obtained as a result of a misrepresentation, then those benefits will likely have to be repaid. An attorney with experience in the nursing home Medicaid area can guide you by crafting a plan to address assets to get you qualified for benefits at the earliest possible date and will make sure that the application is prepared properly.
“Medicaid will only allow me to give away a certain amount of assets each year.”
This is a very common concern that is based not on Medcaid rules, but on federal gift tax regulations. The Internal Revenue Service allows individuals to make gifts each year that do not have to be accounted for in a gift tax return. The limits are adjusted annually and only mean that you may have to file a gift tax return if gifts are made in excess of the limit. These rules are unrelated to Medicaid. Medicaid is concerned about gifts made during a certain time period and certain gifts will result in a transfer penalty being imposed, but there is no annual limit imposed by Medicaid. When entering a nursing home is in the near future, large gifts should be done under the guidance of an attorney knowledgeable in the area of nursing home Medicaid. Even if a nursing home is not in the picture, proper estate planning can minimize or eliminate most gift tax issues.
“In order to get Medicaid to help pay for a nursing home, I am not allowed to have any assets or money.”
Medicaid qualification is based upon certain health related factors as well as income and resource limitations. Mississippi has an income limit that a person must be below to qualify but there are techniques to address income that is too high. The main issue that causes people problems with getting qualified is the amount of “resources” they own or have access to. Generally, resources must be below $4,000 to be qualified, but all assets are not counted as resources. Understanding what is countable toward the limit and what is not countable is critical and an attorney knowledgeable in nursing home Medicaid can craft a plan to address excess resources by using a variety of techniques to change the character of the available resources to uncountable resources.
Medicaid Myths are numerous and for each myth, there are many variations. Future articles will address more Medicaid Myths and hopefully address some of the questions you may have about nursing home Medicaid, whether based on truth or myth, by giving you the facts.