Many people want to know how to have the Medicaid Program cover nursing home costs that can run over $82,000 a year. At that rate it does not take long to lose all one’s savings. Long-term care insurance is not available if the person is already sick and it is too expensive for most older people. So, folks will ask friends and neighbors how to get Medicaid to pay so that they can hold on to precious dollars for other needs such as the at-home (community spouse’s) living expenses. Few lawyers know this area of the law. My goal in dispelling the “Medicaid Myths” is to help elders and their families arrive at the best long term care plan possible. Informed families can budget and allocate their resources towards alternatives to nursing home care such as caregiver aid, professional in-home care, and residential assisted living. With proper planning, if a nursing home placement is necessary, they will get the best care for their loved one.
Medicaid is a complicated area and should only be handled by an attorney who knows the law and local Medicaid office policies. A good, safe choice is an attorney who is certified as an Elder Law Attorney by the National Elder Law Foundation. The Foundation’s website is www.nelf.org. If the attorney is not certified ask how long the attorney has worked in this area, how many people he or she has advised about Medicaid, and what articles he or she has written about the Medicaid Program.
1. Myth: “Medicare will cover my nursing home bill.”
The Truth: Medicare pays for a maximum of 100 days of skilled care. The requirements for this post-hospital benefit are: 1) hospital admission; 2) for at least three days; and 3) discharge with a skilled care order. The benefit is not automatic. During the period the patient is evaluated for continuing need for skilled care. Many do not get the full 100 days. Premature terminations can be appealed. A $141.50 per day co-pay is usually picked up by Medigap supplemental insurance. After discharge from skilled care the nursing home resident may pay out of savings, by long-term care insurance, or Medicaid.
2. Myth: ”Only substandard nursing homes participate in Medicaid.”
The Truth: Only a few Michigan nursing homes do not have Medicaid certified beds. The vast majority do. Experiences teaches that nursing homes offering Medicaid certified beds are no different from any other. The true measure of good care is not the payment source but the people who provide care and the patient advocate who monitors care.
3. Myth: “I will get better care if I private pay.”
The Truth: It is illegal to give better care to private pay patients than to Medicaid recipients or to discriminate against Medicaid patients. There may be no “Medicaid wing” and no public identification of a “Medicaid bed.” Typically, the staff does not know which patient is a Medicaid recipient.
4. Myth: “If I enter a nursing home as a private pay resident, I must use my money to pay the nursing home before I can get Medicaid.”
The Truth: Some nursing homes try to make you believe that you must private pay for a period of time before applying for Medicaid. Such a requirement is against the law. The patient can use the money for any bill or purchase – provided it is not “divestment” of assets or gifting to others. He may apply for Medicaid as soon as he is eligible, which might even be the same month.
5. Myth: “I can only ‘spend-down’ my assets on medical or nursing home bills.”
The Truth: Medicaid requires the applicant to “spend down” assets to $2,000. The spending need not be on nursing home care. You do have spending and saving options. Informed people seek advice from an elder law attorney to decide if they wish to have Medicaid pay the bill before having spent a significant part of their assets.
6. Myth: “I can find out all I need to know about Medicaid from the nursing home or the Medicaid agency.”
The Truth: The Medicaid laws, rules and regulations are very complex and counter-intuitive. The Medicaid law was written by Congress, after all! The nursing homes and Medicaid agencies do not have lawyers to interpret the law in your favor. The workers’ job is to process the application, not give advice.
7. Myth: “I have to lose my home and everything I own to get Medicaid assistance.”
The Truth: A person is permitted to own “exempt property” and be eligible for Medicaid. This includes a home, even if return is unlikely, and a car, even if the patient will not drive. Some assets are simply not counted by Medicaid. In addition, the “community spouse” has the option of keeping all of the assets. Getting advice from an elder law attorney with knowledge about the Medicaid rules will enable you to make informed decisions. The bottom line is, you don’t need to lose everything to be Medicaid eligible.
8. Myth: “I can keep all of my separate property and my inherited property when my spouse gets Medicaid.”
The Truth: When a married person applies for Medicaid, the Medicaid agency considers assets owned individually, jointly by both spouses and assets owned by a spouse and another person. This includes second marriages, even where spouses have pre-nuptial agreements promising to keep assets separate and unavailable to each other. It also includes property not the result of marital enterprise, inherited property for example.
9. Myth: “If I put my property into my spouse’s name, I will be eligible for Medicaid.”
The Truth: All assets are counted, regardless of which spouse is “the owner.” If either spouse’s name is on the property, it is included. This includes, by way of example, IRAs, inheritances, property jointly owned with children, and insurance policies.
10. Myth: “I must spend half of our assets before I can get Medicaid for my spouse.”
The Truth: A community spouse can keep half, up to $109,560.00 (2011), in countable assets. Any more than that will either be spent or converted into non-countable assets. This is the “spend down” process. The community spouse can save the “spend down” by putting the excess assets in a “sole benefit trust” and the money will be available only for the community spouse’s financial security. Call us at 248-356-3500 for details.
11. Myth: “I can hide my assets and become eligible for Medicaid.”
The Truth: Intentional misrepresentation in a Medicaid application is a crime and can be costly. The IRS shares any information concerning income or assets you have with the Medicaid agency. These reports include interest income and the sale of stocks or bonds. You or whoever applied may have to pay Medicaid back to avoid prosecution.
12. Myth: “I can give away $10,000 per year under Medicaid rules.”
The Truth: This is a rule under federal gift tax law, which refers to how much per year a person may give to another without liability for gift tax. This figure used to be $10,00 per year. It is adjusted for inflation and it is $13,000 per year now. Since taxpayers have a $1 million lifetime exemption for the gift tax few need to be concerned about gift tax liability. The gift tax has nothing to do with Medicaid.
13. Myth: “I can’t give anything away and get Medicaid.”
The Truth: The Medicaid rules provide that a person can be disqualified for giving away property. It depends on what is given away, to whom, and when. So, again, it is complicated. Some asset transfers are not penalized under the Medicaid rules. Some Medicaid strategies involve giving away assets.
14. Myth: “I have to wait 5 years after giving anything away to get Medicaid.”
The Truth: Five years is the Medicaid “lookback” period. The applicant must disclose all asset transfers made within the lookback. Transfers of property, including sales for less than market value made during the lookback period may cause a divestment penalty period. During the penalty period Medicaid will not pay the nursing home even if the applicant has no money. The penalty period for a transfer could exceed 5 years. There is no disqualification or “penalty period” for some transfers Most divestment problems can be fixed or “cured.”
15. Myth: “My power-of-attorney automatically has the power to take property out of my name, if I ever need Medicaid.”
The Truth: Most powers of attorney do not grant such authority. A complete general durable power of attorney, made as a part of careful and considered planning in contemplation of Medicaid, will allow all needed action. Medicaid planning requires a broad and comprehensive grant of agent authority. Necessary powers include access to retirement accounts, creation or dissolution of a trust; sale or transfer assets from your name or your trust; purchase exempt or income producing assets; and to make gifts. Without these expanded powers, your agent is limited to spending your money on your bills and selling your assets to generate cash to pay your bills.
16. Myth: “My income may have to be used to pay my spouse’s nursing home bill.”
The Truth: The community spouse is not required to contribute any of his or her income to the cost of care and may be allowed some or all of the nursing home spouse’s income.
17. Myth: “Medicaid requires all of my spouse’s income must be used to pay the nursing home.”
The Truth: Medicaid allows the community spouse a minimum monthly income of $1,850.00 (2011). In addition to this allowance, the community spouse may be entitled to an “excess shelter allowance” if the cost of maintaining the home exceeds the “shelter standard.” Need more? The at-home spouse’s allowance may be increased by an administrative fair hearing or by an order of the probate court.
18. Myth: “I know about Medicaid because I put my mother in a nursing home years ago.”
The Truth: Medicaid rules change every year. There have been significant changes in 2007 and in 2011. One thing you can rely on is that the rules change and almost never for the better. You need advice from an attorney who is up to date.
19. Myth: “I can do nothing for my family, I have to spend it all.”
The Truth: Medicaid allows family members to be provided for as a part of “spend down.” For example, parents may arrange for the transfer of property to, or the creation of trusts for, disabled children. An applicant may transfer the home to a child live-in caregiver under specified circumstances. Children may be paid for commercially valuable services. These transfers are not “divestment.” There are other expenditures that benefit the family as well.
20. Myth: “All attorneys know the Medicaid law.”
The Truth: Most attorneys focus or specialize their practice on a few areas of the law. Very few are familiar with Medicaid. See your certified elder law attorney.
And one Extra, 21: “I can do it myself.”
The Truth: No matter how much research anybody does, including attorneys, their first application Always has mistakes. Mistakes run from what was done wrong before spend down, what was done wrong in spend down, what was done wrong on the application, what was not included with the application, taking too long to get the application in and finally not recognizing a mistake of an inadequately trained Medicaid worker.
There is a simple moral. Get good competent advice and save your time and money.
All the best,
Jim Schuster, Certified Elder Law Attorney
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