6 Medicaid Myths Debunked
Are you anxious that you or a senior loved one might not be able to qualify for Medicaid unless you sell all you have and become broke? Maybe you heard someone say that you won’t be eligible since you own an expensive home. Or, maybe you depend on the government to make the decision for you and your family?
Relying on your family and friends for Medicaid advice and information probably is the reason why you’re misinformed today. Today we will discuss the six most common Medicaid myths and how it affects you.
6 Medicaid Myths
Having misconceptions about Medicaid is extremely common according to Abigail Wolf, a law attorney from the Elder & Disability Law Center in Washington, D.C.
This is because Medicaid rules are very complicated making people confused about where to start. Wolf also shared that:
“Even when we get other attorneys here as clients, it’s hard for them,” says Wolf. “For the average person… there’s a lot of information to learn about and digest, and it’s usually an emotional time on top of everything else.
Here are the six common Medicaid myths you need to know about and how it affects you:
1. “Penalty periods are the same length as my state’s look-back period”
Applying for Medicaid benefits usually require a look-back period wherein Medicaid reviews assets like the statement of accounts, deeds and tax returns, and other cash transfers of non-exempt resources that also include gifts to others. When applying to Medicaid, the government makes sure that you didn’t give away assets or money that could potentially pay for skilled nursing care and other services alike. If you did transfer cash or non-exempt property and exceeded your state’s limit, a penalty period will be imposed by Medicaid that wouldn’t allow you to receive any of its benefits.
Jeffrey Asher, an elder law attorney in New York, shared that people mostly believe that the five-year look-back period is the same a five-year penalty, which is in this event, not the same.
He also added that the look-back period is just the amount of time counted while Medicaid reviews the statement of accounts and other proofs of ownership the applicant has while applying for nursing home care, which is not the same as the penalty period. The penalty period, on the other hand, is the period of time wherein you are disqualified from receiving Medicaid benefits as a result of the look-back period.
When computing for the penalty period, what happens is Medicaid will divide the amount of non-exempt assets the applicants transferred or gave away during the look-back period by the average rate of a skilled nursing home near you. Asher also reiterated that:
“The penalty period could be five years if the amount you gave away or transferred divided by the average cost of skilled nursing residence care equals five years, but the penalty could also be as little as a few months, depending on the amount”.
2. “I cannot keep my income if my spouse is receiving Medicaid for nursing home and its costs”
According to Wolf, even if the spouse’s assets (the properties they own and their money) count toward your spouse’s Medicaid eligibility, your income is still treated separately. Most states follow the “name on the check” rule which carries the applicant spouse’s income toward eligibility only. Income also includes social security and pension.
Wolf also shares that the bulk of the applicant’s spouse’s income will be used as a contribution to the cost of care in the nursing home. Some cases, a non-applicant spouse can qualify for income allowance coming from the applicant spouse’s income.
3. “I don’t need to worry about planning for Medicaid”
Consulting an elder law attorney can give you a full financial picture on how you or a loved one can Help you understand your options that will make the most out of your countable assets. This will also save you from potential spending on nursing homes later in your life.
Wolf says that people should go to them earlier for them to have a better understanding of options they have, as well as realize how costly possible long-term care can be. “As soon as they qualify for Medicaid, the better the chances for us to protect their money”, she added.
4. “My friend’s experience is all that I need to know about Medicaid”
False. If your friend resides in another state, he/she is subject to different state-specific Medicaid rules. Even asking your neighbor about it can still give you different information since you don’t share the same experience and case.
Asher shared that people usually tell him that they hear from a neighbor that their father or husband isn’t qualified so they don’t go for Medicaid. “The uninformed neighbor is the (Medicaid) applicant’s worst enemy” Asher added.
He also said that the qualification for Medicaid benefits varies for each person. It will depend on age, income, level of care needed, assets they possess, where they are living, and also whether they are married or not. These are all factors when planning since individual experiences vary from each person and family.
5. “Must I get rid of all assets to receive Medicaid?”
This is not necessary since, in most states, you must not have assets more than $2000 to qualify for Medicaid, but all you own is not measured for eligibility. Wolf says most people think they have to get rid of their assets to be eligible for Medicaid. What they don’t know is that exemptions are available for certain assets that they can retain while still qualifying for it.
Although, asset exemptions vary by state for Medicaid. For most states, your house is exempted if your spouse still resides in it. Other resources can be exempted if these could be converted to cash, like business properties, personal properties, household furnishings, burial spaces, and pre-paid funeral arrangements, and one car to name a few. Moreover, the spouse is allowed to retain a portion of the couple’s countable assets which is referred to as the Community Spouse Resource Allowance.
6. “Is it too late to start Medicaid planning since I’m in a skilled nursing residence already?”
Just because you or your loved one is already residing in a skilled nursing facility, doesn’t mean you cannot consult for Medicaid planning with an elder law attorney. Wolf says that it is still possible to save your remaining funds even if money has already been spent on the nursing facility.
To know more about Medicaid, you can visit their website at Medicaid.gov.