By: Carol Applegate, Attorney, Applegate & Dillman Elder Law
Many of my clients come into the office knowing a little about Medicaid, but also having some myths and misconceptions about the program. Medicaid is a federal program, administered by the State of Indiana, that is designed to help lower-income and older Hoosiers cover health care expenses. Here are some common misconceptions and the actual facts about the Medicaid program.
Myth 1: I won’t qualify for Medicaid because I own my house.
Most states exempt a primary residence from an applicant’s countable resources when determining eligibility when one spouse is still living in the home and the other is in a nursing home or long-term care facility. If both are in a facility or there is an unmarried person applying, then the house is not exempt.
It’s also important to know that the Medicaid Estate Recovery Program (MERP) can file a claim against your estate after your death to seek reimbursement for expenses paid on your behalf while you were alive – which could put your house at risk after you die. However, careful planning with an elder law attorney may prevent this scenario.
Myth 2: I have Medicare, so I don’t need Medicaid.
Most Americans become eligible for Medicare to cover their health care expenses at the age of 65. However, Medicare usually does NOT cover long-term care or assisted living expenses. Unless you have a long-term care insurance policy, it is likely you will need Medicaid to help with the huge costs of long-term care if you ever require it.
Myth 3: My spouse and children will be left with nothing if I go on Medicaid.
The Medicaid program does require that you spend down any financial resources you have at the time of application in order to receive benefits. However, it is possible to transfer those assets into a trust in the years before you may need Medicaid in order to protect them. The time to consult an elderly law attorney to protect your assets for your heirs is well BEFORE you may need long-term care.
There are also Spousal Impoverishment Rules in effect that allow the spouse of a nursing home resident to retain half of a couples countable resources up to a maximum value, all of his or her own income, and even some of the applying spouse’s income if needed to maintain basic standards of living. The rules mean the spouse not in a nursing home can keep the residence and its contents, a vehicle and their half of other assets.
Myth 4: I’ll just transfer my assets to my kids in order to qualify.
There was a time when this was a valid strategy to reduce a Medicaid applicant’s assets so they could qualify for the program. That time is long gone. Medicaid now uses a five-year look back period that prevents asset transfers in anticipation of the need to qualify for benefits. Your finances will be reviewed by the Medicaid program at the time of application. Any transfers made in the past five years for less than fair market value will likely be added back into your net worth for the purpose of determining your eligibility for benefits. Also, any transfer of assets within the five-year look back period may result in a penalty period. That means the individual would have to pay privately, from their own funds during that time frame. Many people just don’t have the private funds to pay for care during that penalty period. This is why it is so important to incorporate Medicaid planning into your estate plan sooner, rather than later.
The Medicaid rules are incredibly complicated and it’s better to consult a qualified elder law attorney than listen to the myths and misconceptions that your friends and family may have about the program. This is one case where you shouldn’t try to wing it. Seek professional help before you think you may need it.