Like many other government programs, Medicaid can be a complex and confusing benefits system. Many Americans know it only as a program that provides health care coverage to low-income families, but it’s much more than that. In fact, Medicaid has an incredibly important role in ensuring that many seniors receive the long-term care they need when they cannot afford nursing home expenses on their own. In fact, the program is currently the single largest payment provider for U.S. nursing homes. Despite its critical role in helping to cover the nation’s senior long-term care costs, many people still have misconceptions about Medicaid’s services. For better insight into the program, it’s important to understand how those Medicaid myths measure up to the reality of Medicaid law.
Myth: Seniors must give away all their assets to qualify for Medicaid benefits.
Under the law, you don’t have to become destitute to qualify for the benefits you need. While there is a $2,000 asset limit that you must meet, certain types of property are exempt from that calculation. For example, you can retain your home, one vehicle, a prepaid burial plan, and personal belongings. The rules can be complicated, so consult with an attorney to figure out how you should proceed.
Myth: You can give all your property to your spouse when you apply for Medicaid.
You can certainly place all your assets in your spouse’s name before you apply for benefits, but recognize that this won’t impact the calculation for eligibility. Medicaid counts not only your assets but those in your spouse’s name when it determines whether you qualify for program benefits.
Myth: Giving away assets to qualify for Medicaid can make you guilty of a crime.
It is not a crime to give away your assets and then apply for Medicaid, if you report all such transfers when asked to do so during the application process. If those transfers were made within the program’s five-year look-back period, then you may be penalized with a period of ineligibility. That penalty is not related to any crime, however. On the other hand, if you made those transfers and then tried to hide them from Medicaid during your application effort, that would be a violation of the law.
Myth: You can only use spend-down techniques on nursing home bills or other medical expenses.
This myth is one that you probably won’t hear from nursing home personnel, since they are not allowed to dispense legal advice. Still, you may hear it from friends or others who have misconceptions about how the program works. The spend-down rules allow you much greater freedom than that, however. You can spend down your assets on a variety of things that include home improvements, a new car, a burial plan, and other non-countable expenditures. Never take advice from anyone who lacks legal training when it comes to meeting the asset limits. Instead, seek the counsel of an experienced Medicaid planning attorney.
Myth: All Medicaid planning must be started before you enter a nursing home.
Seniors who believe this myth often end up spending their entire nest-egg on care before they ever seek Medicaid. The fact is, however, that you can start Medicaid planning at any time – including after you’re already in a nursing home. If you’re a late-planner, you may not be able to preserve all your assets by using planning techniques, but you can often save half or more of your wealth. It’s never too late to start!
Myth: Assets in a living trust are shielded from Medicaid eligibility considerations.
That depends upon whether those assets are in a revocable or irrevocable trust. With a revocable trust, the government considers assets to still be part of your estate. It counts them when it calculates your eligibility for program benefits, since your ability to revoke the trust means that those assets remain accessible to you. An irrevocable trust, on the other hand, can typically shield your assets from being counted for eligibility purposes – though asset transfers into that trust could still trigger a penalty if they are made within the five-year look-back period.
Myth: Medicaid will only let you give away $14,000 in any given year.
A great many people believe this one, but they shouldn’t. The fact is that the $14,000 gift rule has nothing to do with Medicaid. It’s actually a feature of federal tax law, and defines the amount of money that you can give away to any individual person each year without needing to file a gift tax return. You can give larger gifts as part of your Medicaid planning efforts – though your gift might force you to file a gift tax return.
Myth: You can handle the Medicaid application process on your own.
It would be nice to imagine that this one was true, since most of us would like to believe that our government is responsive enough to make application processes as simple as possible. Medicaid law is complex, though, and the application process can sometimes feel a little bit like an audit from the tax authorities. There may be questions about asset transfers and other complex matters, and your nursing home is unlikely to provide the type of help you may need. After all, the payment rates for self-paying residents provide more income for the facility than Medicaid payments.
To get the right answers and ensure that your application process is as smooth as possible, you need the professional assistance that only an experienced Medicaid planning attorney can provide. The good news is that we’re here to help! At Robert J. Kulas, P.A., Medicaid & Estate Planning Attorneys, our team of Medicaid planning experts can help you to better understand how Medicaid law applies to your situation, while dispelling many of the most common Medicaid myths. We’ll work with you to preserve your assets, secure the benefits you need, and assist you with any questions that you might have. If you’d like to learn more about how professional Medicaid planning can help you with your nursing home benefits needs, contact us online or call us today at (772) 398-0720.
