Last week, I met with a couple looking for answers to some very tough questions. Like so many couples in their 70’s, they were faced with the stark reality that long-term care was inevitable after the husband (Frank – not his true name) met with his doctor and was told he had Alzheimer’s Disease. They planned on facing this disease head-on and were planning, as best they could, to prepare for the health decline that would unfold before them. With the assistance of an adult son, they started gathering information and looking at alternatives for care, with the goal of Frank living at home for as long as possible, and hopefully for the rest of his lifetime.
They learned that nursing home costs are currently running around $6,000 – $8,000 or more per month in Idaho. They also discovered that these costs would be even higher if additional nursing services, therapies, or care were required.
Everyone they spoke with told them, “don’t worry because they could go on Medicaid.” They were frustrated and afraid to apply for Medicaid because they had heard so many stories from others and just didn’t know what was true and what wasn’t. They were uncertain about how to begin the process and wanted to talk with me to sort out fact from fiction.
I can’t tell you how often I’ve head this before. Seniors and their families come in to meet with me having heard a lot of information and (unfortunately) misinformation about the Medicaid program. And it is often the well-intentioned social worker, financial advisor or other professional who knows something about how Medicaid works, but not the whole story.
How Medicaid works, what it pays for, how it works after becoming eligible and after one dies is a huge source of confusion for seniors and their families. All too often, I am contacted to clear up misconceptions or fix problems when individuals act on the misinformation they are provided by others.
For this reason, I decided to start this blog and clear up some of the rumors I hear on a regular basis. I also wanted to alert seniors in Idaho, and those who love them, of other issues of importance that planning ahead can address. But back to Medicaid.
Here is a list of the statements I commonly hear from families who come in to meet with me for help:
1. “I have to spend all my assets in order to get Medicaid.”
The truth is that a person is permitted to own both exempt property as well as substantial non-exempt property and still be eligible for Medicaid. The “non-countable or exempt” property includes, but is not limited to, a vehicle, the marital home and associated personal belongings, and certain types of pre-paid burial contracts or policies. In addition, for a married couple, the non-Medicaid spouse is entitled to keep a share of the assets and income. Qualified retirement accounts may also be exempt (IRAs etc.)
I’ve written a more detailed piece called The Consumer’s Guide To Medicaid Planning that you can access for free on my website (www.IdahoElderLaw.com). This pamphlet contains the basic rules governing Medicaid. Please bear in mind – the most important point is to have your particular financial situation reviewed by someone who knows the Medicaid laws and can give you good advice about your options.
And Remember! You Do Have Options!! Everyone has options, even the folks who come to see me after one spouse is already in a nursing home. But you have more options the earlier you plan and if you are not paying for long-term care now, that’s the best time to plan.
2. “I have to wait 5 years after giving my money or assets away to qualify for Medicaid.” The penalty period isn’t always 5 years long, and sometimes a hardship exemption can be requested. There is a 5 year “lookback period” for asset transfers, gifts, and sales for less than fair market value. If you made gifts or transferred assets for less than fair market value, get some knowledgeable advice your options and how the Department of Health and Welfare will likely treat those gifts.
3. “If I put my property into my spouse’s name, I can become eligible for Medicaid.” Although Idaho is a community property state, both spouse’s assets are counted for purposes of qualifying one spouse for Medicaid, whether jointly held or not, and no matter whether one spouse has what can be characterized as truly separate property (this is a subject for another time). Post-eligibility (after Medicaid eligibility is attained for one spouse), however, most of the assets will have to be transferred into the name of the non-Medicaid spouse.
4. “I have to enter a nursing home in order to receive Medicaid benefits for long-term care.” In Idaho, Medicaid benefits are available to help pay for both assisted living and in-home health care costs. The financial eligibility criteria are essentially the same, however, as qualifying for coverage for nursing home stays. So planning is necessary to help protect all of the resources and income you are entitled to protect, but you can get help for in-home care and assisted living care.
5. “Medicare will pay my nursing home costs.” Many people are under the mistaken impression that Medicare pays for long-term care. Medicare cares for you if you have a heart attack, or some other acute health care issue, but it doesn’t care about you if you need long-term custodial care.
In general, Medicare pays only 20 days of full coverage, subject to restrictions. Another 80 days of partial coverage is available for skilled care, but again — “custodial care” is not covered at all. During this 80 day period there is a co-pay that may be covered by supplemental insurance. Without long-term care insurance, long-term stays must be covered by your private funds or you must qualify for Medicaid to cover those costs. Veteran’s benefits in the form of a non-service connected disability can increase a veteran’s income to help pay for long-term care costs. This benefit is also available for the surviving spouse of a veteran. To learn more about this important VA program, access the Nuts and Bolts Guide to Veteran’s Benefits at my website for free at www.IdahoElderLaw.com.
6. “I can only spend down my assets on medical or nursing home expenses.” This is not true. Of course you must pay your care provider’s bills until you qualify for Medicaid benefits that can help pay those bills. But you can spend money on a number of other items that benefit you or your spouse. There are a lot of options available to seniors and their families under the Medicaid laws for speeding up the Medicaid qualification process and protecting assets at the same time.
7. “I can just hide my money and then apply for Medicaid.” Intentionally providing false information on a Medicaid application is fraud, for which there are civil and criminal penalties. We handle Medicaid applications for our clients and their families. We insulate our client from having to deal with the government which is a huge peace of mind benefit. But whenever we file an application with the Department of Health and Welfare for Medicaid benefits, there is a duty of full disclosure. None of the legal planning involved in this area involves hiding anything from the government. Full and honest disclosure is crucial. In this technologically advanced society, it is quite easy (and legal) for the IRS, Social Security, Health and Welfare, and various other governmental agencies to obtain and share information about your property and assets. Don’t go into this planning thinking you’ll be able to “hide” money. The better way to approach things is to become motivated to get educated about your options and then take action by making decisions that benefit you!
8. “My income and my spouse’s income must be used to pay for my nursing home expenses.” In truth, the law allows the healthier spouse to retain her own income, and may even allow her to keep some or all of the Medicaid spouse’s income up to certain limits. Occasionally, these limits may be lifted or waived through an appeal process. You want to make sure you protect as much of your income as possible.
9. “I can give away $13,000 per year.” This is a common misconception that is actually a federal gift tax law that has nothing to do with Medicaid. Under current Idaho law, a person is disqualified from Medicaid eligibility for one month for each $6,145 given away within the lookback period. Under current laws, this penalty period doesn’t begin running until AFTER the applicant is otherwise eligible for benefits (already needing medical care and financially eligible for Medicaid.). Therefore, a $13,000 gift made within the lookback period will cause a period of Medicaid ineligibility for the Medicaid applicant. It does not matter that the IRS will not impose a gift tax on this gift.
10. “Once I have Medicaid, they will pay my full nursing home costs.” Health & Welfare will determine the Medicaid participant’s “Share of Cost,” which is the amount that person is required to pay monthly for care before Medicaid starts paying. Medicaid will then pay the remaining balance of the approved care. In some cases, this “Share of Cost” could be zero, but in general a single person will be required to pay most of their fixed monthly income (after insurance premiums and a small personal needs allowance) towards their care.
Folks living at home or in an assisted living facility have different “patient share of costs.”
Moral of the story: Don’t believe everything you hear! Medicaid is complicated, and consulting with a board certified elder law attorney who has expertise in this area is recommended for anyone facing long-term care costs with a home and/or assets of approximately $30,000. Even those with fewer assets may need expert assistance and advice if there is excess income (over $2,022/month), gifting issues, very low income (to protect additional assets for the healthy spouse), or complicated assets (annuities, mineral and gas rights, assets owned jointly with someone other than a spouse).
We’re here to help. Don’t hesitate to call on us.
