Top Ten Medicaid Eligibility Mistakes
Over the last 26 years of practicing elder law I have come to realize that most people have the same basic misconceptions and misunderstandings of Medicaid benefits, qualification and planning. I have produced a list below that highlights the most common mistakes people make. I hope this will help you avoid these all too frequent problems associated with obtaining Medicaid benefits to pay for the long-term care.
1. Medicaid Misinformation. Medicaid provides identical care at the same facilities at a much lower cost to the resident. The majority of nursing home patients receive financial protection from Medicaid. You do not need to be impoverished to receive benefits. A proper plan and implementation can preserve and protect almost any family’s nest egg.
2. Medicaid is state specific. There are major differences among the state laws regarding Medicaid planning rules. Florida law provides unique opportunities not available elsewhere. Also, rules change over time so it is important to have the most recent information.
3. Assuming it is too early or too late. Some basic advance planning can provide vital protection later, so you really can’t be too early. However, it is not too late to act even if a person is already in the nursing home.
4. Going it alone. Maximizing Medicaid planning opportunities is not something easily learned. No two situations are identical and strategies not implemented properly can cause benefit denial. Seek qualified, professional guidance.
5. Gifting. Changing title to the home, transferring cash or assets of any type without knowing or understanding the consequences of such transfers can cause disqualification. Most people mistakenly feel they can make limited transfers without consequence. These uninformed financial decisions may result in extended periods of ineligibility.
6. Unused options. Not taking advantage of all spend down, conversion, transfer and exemption funding opportunities. How can funds be properly transferred? Is there a mortgage that can be paid off? Are there home repairs that can be made? Are there items that can be pre-paid? Has an irrevocable funeral arraignment been created and funded?
7. Not considering the consequences of financial transactions. The movement of money often creates issues with penalties, taxes and estate planning. These issues must be considered and coordinated with your Medicaid plan.
8. Failing to take advantage of protections for the spouse. The law provides protections for the spouse of a Medicaid recipient. The spouse does not have to be impoverished, lose life savings or their home. Strategies are available to protect the spouse.
9. Assuming Medicaid caseworkers will help with planning. Except for some limited help with completion of the application, Medicaid employees are specifically instructed not to advise clients on asset protection strategies.
10. Stopping planning after approval. Not understanding post-Medicaid consequences. What will happen when the Medicaid recipient passes away? What happens when the community spouse passes away either after or before the recipient? What about the home? Most people feel Medicaid frequently takes your assets and although Medicaid is now more aggressively seeking repayment of benefits from beneficiary estates, proper planning protects most estates from this recovery.
I also frequently see the same questions being asked by people interested in using Medicaid to pay for the cost of long-term care. Below are some of those questions and answers:
Q. If you have too many assets to qualify, but need Medicaid now, can you still protect any assets?
A. Yes, you can still protect the assets. While you may have lost the opportunity to use some strategies, it is never too late to protect most if not all of the remaining assets.
Q. If you give assets away do you have to wait 36 months to qualify for Medicaid?
A. No. New rules effective in 2007 severely penalize you for making uncompensated transfers of assets. These rules extend the look-back period to 60 months.
Q. Is the home counted as an asset?
A. No. The first $560,000 in home value is a not counted as an asset so long as the owner has an intent to return.
Q. When you die does the state take the house?
A. No. But if the house does not qualify as the “homestead” as defined by Florida’s constitution it could be taken by the state to recover money spent on your care in the nursing home after you die.
Q. What about the money in the safety deposit box, do you have tell anyone about it when applying for benefits?
A. Yes. You must disclose to Medicaid all of your assets. Failure to do so is fraud. Always tell us about all the assets.
Q. Can your son take money out of your joint account without affecting eligibility?
A. No. Any transfer of assets from a joint account, regardless of who makes the transfer, will be considered a transfer.
Q. Can you still give $10,000.00 a year away?
A. No, not without it being considered a disqualifying transfer. Many people mistakenly believe that because you can give away $10,000.00 per person, per year, tax free, that this is the same case with Medicaid. Unfortunately, it is not and the gift may adversely affect your eligibility.
Q. Do you get to keep your income if you are on Medicaid?
A. No. You are required to pay to the nursing home your total monthly income, minus $105.00 for personal needs. But, if there is a spouse he or she keeps all of his or her income and may be entitled to some or all of the applicant’s income.
Q. Should you wait until you need Medicaid benefits before seeing an elder law attorney?
A. No. Many of the options available to protect your assets are dependent on time. Therefore, the sooner you begin planning before the need arises the more options you have to preserve the assets.
Q. Once you are in a nursing home are there still planning options available?
A. Yes. There are multiple options available to preserve and protect assets even after placement.
Q. Do you need to have an elder law attorney help you qualify for Medicaid benefits?
A. Only an elder law attorney can bring together the necessary Medicaid planning, estate planning and incapacity planning skills to comprehensively solve the issues presented by a prolonged stay in a nursing home.
Medicaid FAQ - 2017
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