Debunking Five Common Medicaid Myths
As an elder law attorney, I often meet with clients who do not fully understand the importance of long-term care planning. Even more frequently, I have conversations with clients about various misconceptions they have about Medicaid. Having an attorney who can readily address these misconceptions is important in navigating the long-term care process. Frequent misconceptions include the following:
- I do not need Medicaid because I have Medicare/TRICARE/Other Insurance.
These other insurances are acute care policies, and have limited coverage for nursing home level of care. Usually, these policies will cover rehabilitation and some respite days, but will not provide unlimited coverage for long-term nursing home care. As a result, people have to find other ways to cover these costs. We frequently assist clients in obtaining Medicaid benefits to cover the cost of long-term care.
2. I cannot have any assets to get Medicaid.
A Medicaid recipient cannot have more than $2,000 in countable assets; however, not all assets are countable. One car and a primary residence are not countable. Additionally, a Medicaid recipient may own some savings bonds, a prepaid burial, and other specific assets with very specific conditions. Additionally, the spouse may retain a portion of the marital assets. During a Medicaid spend down we develop a plan to establish eligibility while preserving assets, to the extent possible.
3. Medicaid will take my house.
Medicaid does not actually take your house. As long as the Medicaid recipient, or recipient’s spouse, resides in the recipient’s primary residence, the primary residence is a non-countable resource. If the recipient, or the recipient’s spouse, no longer resides in the residence then a “good faith effort to sell” may be required; however, there are exceptions that may allow us to transfer the residence or otherwise protect the asset. If the recipient dies still owning the residence, Medicaid may assert a lien to reclaim amounts paid on behalf of the recipient.
4. I made gifts to my kids, and now I need to wait 5 years.
Uncompensated transfers, often referred to as gifts, are penalized under the Medicaid system when made within 60-months of eligibility. This is often referred to as the “5-year look back period”. The penalty period is calculated by dividing the total transfers made during the look back period by the penalty divisor. However, not all uncompensated transfers are penalized. Some exceptions, such as transfers to spouses or disabled children, may apply.
5. I cannot keep my income if my spouse needs Medicaid.
Only the Medicaid recipient’s income will be applied towards any patient pay obligation. The recipient may get to keep a portion of their income to cover living and medical expenses. In some cases, a portion of the Medicaid’s recipient will be allocated to the recipient’s spouse as a spousal allowance. The spouse’s income will not be used in the calculation of the patient pay obligation beyond calculating a spousal allowance, which would result in additional funds for the spouse not less.
Medicaid planning is not a one-size-fits-all solution; an individual’s family and asset composition will directly impact what planning options may be available. To ensure the plan is comprehensive, your attorney should have an in-depth understanding of the available legal and financial tools, the tax implications of recommendations, and Medicaid policy. Hook Law Center has three Certified Elder Law Attorneys and two Certified Financial Planners to assist in the development of a comprehensive holistic long-term care plan for your unique circumstances.
Ask Kit Kat: Cats’ Memory
Hook Law Center: Kit Kat, what can you tell us about how much cats remember people?
Kat Kat: Well, I know cats have a reputation for not being as loyal or as affectionate as dogs, but a recent story may show that this is not true. Pamela Constable, a reporter for The Washington Post, had served a tour as its Afghanistan/Pakistan bureau chief, ending in 2019. While in Kabul, she fed a group of wild cats. One (a ginger shorthair), who survived a truck bomb attack, she took back to Virginia when her tour ended. Ms. Constable left food for the others with the guards there, but she was never sure how that arrangement worked out. She was sure that when she returned recently the clan of wild cats would not remember her. Was she wrong! A gray and white cat, who Ms. Constable remembers as being standoffish, was about to bolt upon seeing her, but then took a second look. When the cat realized who it was, one could see the delight in her eyes! Next, the cat let out a wail. To quote Ms. Constable, the cat “uttered a long, musical call, plaintive and surprised and slightly recriminating. I understood every word as clearly as if she had been speaking English. It’s you! You’re back! Where have you been? Why were you gone so long?” Next, she even followed Ms. Constable and rubbed against her legs like many cats do. The following morning a whole clan of cats appeared in the garden at Ms. Constable’s house. It was as if the gray and white had spread the word about their old friend’s return!
Ms. Constable has received many honors and recognition for her work in reporting in war zones. However, the look of recognition from that gray and white feral cat has been one of the most important she has received. She comments, “I have heard some politely appreciative words spoken about my work in war zones such as Afghanistan. But the look of unabashed welcome on that cat’s face, when she spied me coming down the alley, was all the recognition—and appreciation—I could ever want.” (Pamela Constable, “I looked after the alley cats of Kabul. Would they remember me when I returned?” The Washington Post, August 4, 2020)