What is Medicaid Planning? Financial planning - basic eligibility requirements Advice regarding nursing home placement Assistance with spend-down Division of assets for married couples Rules designed to prevent spousal impoverishment Estate recovery issues Advice regarding transfer penalties - calculating and curing transfer penalties Use of Medicaid annuities as planning strategy

Medicaid Myths

How to pay for nursing home care has become a critical issue in the lives of many people. Paying privately for a year's stay in a nursing home can easily run close to $50,000. As a result, it does not take long to lose all of one's savings. Medicaid can provide significant assistance to those needing help in funding the cost of nursing home care. This is a complex area of the law and should only be handled by an attorney who knows the Medicaid laws.

Below are ten of the most common myths surrounding the Medicaid Laws:

1. Myth: I have to give away everything I own to get Medicaid
   
   Truth: Basically, a person is permitted to own some property, and still be eligible for Medicaid. The trick comes in knowing what is "countable' and what is non-countable" under the Medicaid rules. Whether you are married or not, certain types of prepaid burial contracts are non-countable. There are many other types of "non-countable property."
   
   
2. Myth: I Can't Give Anything Away And Get Medicaid
   
   Truth: The Medicaid rules provide that a person can be disqualified for giving away property, in some cases. But, a lot depends on what is given away, to whom, and when. Some asset transfers are not penalized under the Medicaid rules.
   
   
3. Myth: I have to wait 5 years after giving anything away, to get Medicaid.
   
   Truth: This rule changed with the passage of the new federal Medicaid laws in February, 2006, from 3 years to 5 years. However, the disqualification isn't always 5 years long and sometimes there is no disqualification at all. True, there is a 5-year "look-back" for some asset transfers under the Medicaid rules. This means that the Medicaid agency will look back at all transfers of property, including sales for less than market value. However, the rules penalizing transfers do not apply to all transfers.
   
   
4. Myth: I can keep all our marital property and my inherited property when my spouse gets Medicaid.
   
   Truth: When a married person applies for Medicaid, assets in either or both spouse's name are considered by the Medicaid agency. However, some assets won't be 'countable' and you may keep some as an asset allowance if your spouse enters a nursing home.
   
   
5. Myth: If I put my property into my spouse's name, I will be eligible for Medicaid.
   
   Truth: Assets are counted regardless of which spouse's name they are in. However, the healthy spouse will be given several months to re-title assets from the name of the spouse in the nursing home, into the name of the healthy spouse. The Medicaid agency explains these rules when the sick spouse gets into the Medicaid program.
   
   
6. Myth: If I enter a nursing home as a private pay resident, I must use up my assets before I can get Medicaid.
   
   Truth: You are not required to use your assets to private pay for the nursing home care. However, some nursing homes might try to make you believe that you do have to do this. They are paid less under the Medicaid program than they collect from private pay patients. Some people seek advice from an elder law attorney to find out how they can become Medicaid eligible before having spent a significant part of their assets on the private pay rate.
   
   
7. Myth: I cannot receive therapy services because Medicaid does not cover therapy.
   
   Truth: The United States Code of the Federal Regulations (Section 42) provides that therapy services must be provided even when the services are not specifically enumerated in the State Medicaid plan. Additionally, it may be possible for a nursing facility to receive additional Medicaid reimbursement for therapy services provided to a resident.
   
   
8. Myth: All of my spouse's income must be used to pay the bill if my spouse is on Medicaid in a nursing home.
   
   Truth: The law allows you, in some cases, to keep a portion of your spouse's income if your income is below certain limits. In addition to this allowance, you may be entitled to a greater allowance if the cost of maintaining your home exceeds a certain amount or if a state hearing officer or a judge orders a greater allowance.
   
   
9. Myth: I can hide my assets and become eligible for Medicaid.
   
   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 county department of social services. You or whomever applied may have to pay Medicaid back to avoid prosecution.
   
   
10. Myth: My Power of Attorney automatically has the power to take property out of my name, if I ever need Medicaid.
    
    Truth: Your best tool to be able to plan for Medicaid eligibility, is to sign a Durable Power of Attorney that includes a "gifting" power. Your agent under the Power of Attorney will only be able to re-title your assets if your Power of Attorney contains a "power to make gifts."
    
    
11. Myth: I can give $12,000 to a person without incurring a penalty period for Medicaid.
    
    Truth: There is a distinction between Medicaid gifting rules and the IRS gifting rules. With the passage of the new federal Medicaid laws which became effective in February, 2006, gifting sums of money to deplete assets is no longer an allowable strategy for meeting Medicaid eligibility. However, for IRS gift tax purposes, when an individual makes a gift of more than $12,000 per person, per year (for 2006), one is required to file a gift tax return with the IRS. If an individual has gifted more than the $12,000 per person, per year, the amount in excess of the $12,000 is deducted from the individual's estate tax exemption, which for 2006 is $2,000,000.00.
    
    
12. Myth: People receive inferior care in the nursing home if they are on Medicaid.
    
    Truth: Typically, the nurses and other personnel at the nursing homes are not aware of which beds are designated as Medicaid beds. The state of Missouri has certified a certain number of beds at a particular facility because the state needs to know how many residents potentially may be covered under the Medicaid benefit. However, these certified beds could be anywhere in the facility. Sometimes facilities designate a certain wing to be Medicaid certified, so that the facility can be sure that it does not over-certify the facility. Otherwise, though, there is no distinction between Medicaid-certified beds and non-Medicaid certified beds.
    
    
13. Myth: You have to pay two years before you can get a Medicaid bed.
    
    Truth: If a facility requires a certain number of months or years of private pay (before Medicaid can be obtained), this is that particular facility's policy, and it is not Missouri law. Accordingly, if a facility has a Medicaid bed available, and the individual applying to the nursing home is Medicaid pending, the facility must offer the Medicaid bed to that individual. If the facility does not have a Medicaid bed available, the potential resident can ask to be placed on a waiting list.
    
    
14. Myth: Medicaid cannot take your house until you die.
    
    Truth: Missouri estate recovery rules do not allow the State of Missouri to interfere with ownership of real estate until the applicant (if single) has passed away, or the applicant and the applicant's spouse (if married) have both passed away. However, a TEFRA lien may be placed on property as security for payment of a debt, while the applicant is still living. The TEFRA lien does not change the ownership of the property, but the debt must be satisfied before the property is sold, transferred or leased.
    
    

Oelbaum, Brown & Alsop, LLC will consult with you to answer your questions and explain the Medicaid myths and the general process. We also provide Medicaid Planning to obtain benefits and preserve your assets. We also assist with Medicaid Applications and with Medicaid Hearings, if benefits have been denied.