Medicaid: Worried About Long-Term Care?

Posted by Brian O'Donnell on August 08, 2017 in Uncategorized tagged with

Test your knowledge about the valuable but complicated benefits of Medicaid for nursing home care.  Medicaid can cover the cost if you or a loved one face the need for long-term nursing home care. You might be surprised to discover that you have certain misconceptions about Medicaid benefits. To learn more, please take a few moments to take the following quiz:

Assume you need care in a nursing home:

  1. T or F: Medicaid takes your property. False.  Medicaid does not take your property to qualify for benefits.  Rather, you must prove that you meet the eligibility requirements and then Medicaid will provide benefits.  If you have too much valuable property, they simply deny benefits.
  1. T or F: Medicare pays for long-term care. True – sometimes.  Medicare will pay for 100 days of nursing home care or rehab after a qualifying three-day hospitalization.  Medicare pays the first 20 days entirely.  Days 21 through 100 have a daily co-pay of $164.50.  Without a qualifying hospitalization, Medicare pays for nothing.  Medicaid, on the other hand, will pay for care indefinitely.
  1. T or F: Medicaid penalizes gifts to your church.True-generally.  Medicaid looks back five years into your financial history for any “improper transfers.”  These are any transfers where you basically gave away assets, even if you had regularly made contributions to your church for years.  Medicaid doesn’t care if you gave them away for a charitable purpose.  If an asset could have been used to pay for your care, Medicaid, in effect, penalizes your gift.  The penalty is in the form of a period of time where Medicaid will provide no benefits after you would have otherwise qualified for benefits (i.e. met the applicable spend down for financial eligibility).  That period is the number of months Medicaid calculates you could have paid for your care with the resources you gave away.
  1. T or F: You can give assets to your children instead of paying for care. True.  Just as gifts to charity, you can give assets to children and these gifts do count generally as improper transfers.  However, with proper planning, we can implement gifts to children and still apply for benefits and successfully save money from being spent on long-term care.  That doesn’t mean we can save everything.  But we can generally save a meaningful amount.  More so, if there is a disabled family member, Medicaid has an exception where it applies no penalty for an improper transfer for the benefit of that disabled individual.
  1. T or F: You have long-term care insurance so you won’t need Medicaid. False – generally.  Most long-term care insurance policies do not pay an unlimited amount indefinitely.  Most are capped at a dollar amount per day or will pay for a set number of years, or both.  At a certain point, the insurance is likely to run out if you have a truly “long” term ailment such as dementia.  In that case, you may need Medicaid benefits to cover the cost of care.

Assume you are married, need care in a nursing home, and apply for Medicaid:

  1. T or F: Your spouse keeps his or her assets and you have to spend yours. False.  Married couples do not get to keep individual assets.  Rather Medicaid combines all marital resources and divides by two.  Medicaid provides the spouse-remaining-at-home (in Medicaid terminology, this is the “Community Spouse”) with one half of those resources subject to a cap of approximately $121,000.  The rest must be spent down before the other spouse needing long-term care (in Medicaid terminology, this is the “Institutional Spouse”) can qualify for benefits.
  1. T or F: Your spouse can keep the home.True.  As long as the Community Spouse resides at home, Medicaid allows the Community Spouse to retain title to the home and to continue to reside there.  However, Medicaid has an equity limit for the home of $560,000.
  1. T or F: Your spouse can buy a Ferrari.True.  Oddly enough, Medicaid places no equity limit on the ONE automobile the Community Spouse keeps.  In fact, the Community Spouse can purchase a new car (such as that Ferrari) with the money that has to be spent down to qualify the Institutional Spouse for benefits.
  1. T or F: Your spouse can keep your income. False.  Generally, the Institutional Spouse must pay his or her income to the facility and Medicaid pays the balance of the bill.  The Community Spouse keeps his or her own income.  In situations where the Community Spouse has too little income to successfully live in the community, Medicaid allows an adjustment to shift some (or all in certain circumstances) of the Institutional Spouse’s income to the Community Spouse.
  1. T or F: There is nothing you could have planned in advance to protect assets.False.  There are many options available.  If we are planning well in advance of any long-term care issue, we can set up a trust to hold assets to protect them from long-term care costs.  In crisis planning – where we have no notice regarding the immediate need for long-term care services – we can look at implementing specialized annuities or coordinated gift planning to try to preserve family wealth.

There are exceptions to most of the foregoing questions that might otherwise change the answers which is why Medicaid planning can be so difficult.  Wegman Law attorney Allan Sweet spends a great deal of time staying abreast of the applicable Medicaid rules so that he can help our clients navigate this complex area.  If you would like to discuss any of these issues and how it may relate to your family, please contact us to see how Wegman Law can help.

If you have any questions or concerns regarding Medicaid planning, please contact Allan P. Sweet, Esq. at apsweet@wegmanlaw.com.