Medicaid Planning

Introduction

Many people have preconceived notions concerning the Medicaid program in Missouri. Other people have no idea how the Medicaid system works so they ask friends and neighbors what they know. Unfortunately, Medicaid qualification is a very complex process with intricate rules. The fact of the matter is that most attorneys don’t understand the system, unless their practice deals with mature clients on a regular basis. 

What follows are the most common myths or “conventional wisdom” concerning Medicaid qualification in Missouri. As is often the case, conventional wisdom in this area is usually wrong.

The best advice anyone can give to someone who is anxious or concerned with the possibility that an extended stay in a nursing home is to consult with an attorney qualified to give such advice. So, if in speaking with anyone concerning Medicaid qualification, if you hear them spout any of these myths, know that any advice you receive from them is fraught with danger, because they just don’t know what they are talking about.



Myth #1

“Medicare will cover the costs of nursing home care.”

Medicare only covers a very small portion of a nursing home stay, and then in only limited circumstances. Each year, Medicare will cover up to 20 days in a nursing home if you go there directly from a hospital after at least 3 days of inpatient care, and are receiving skilled care (usually for rehabilitation purposes). After that Medicare will provide a one time total of 80 additional days of partial coverage. After that Medicare pays nothing of the cost of a nursing home stay.

Myth #2

“I have to give away everything I own in order to qualify for Medicaid”

An individual can own certain property and still qualify for Medicaid. Under the law certain assets are “countable”, that is, ownership of them will count against the total amount of assets one is allowed to have and still qualify for Medicaid. However, there are a goodly number of assets that are non- countable”. Non-countable assets do not count against the value amount you are allowed to own and still qualify. The trick is knowing which assets are which.
Myth #3

“I can’t give anything away and get Medicaid.”

Medicaid laws provide that if a person gives away assets within a certain time period
of making application for Medicaid, a period of disqualification can be assessed. However, how long the disqualification period, if one is imposed, might last depends on a variety of factors, including the type and value of asset given away, to whom it is given and when.



Myth #4

“I have to wait 3 or 5 years after giving anything away to get Medicaid.”

Since the adoption of the Deficit Reduction Act of 2005, the look back period for potential disqualification is 5 years. However, the actual period of disqualification may not be nearly so long, if disqualified at all.
The “look back period” is the period of time prior to filing a Medicaid Application that the state will look at to determine if there have been any disqualifying transfers. However, the look back period is not the disqualification period. The disqualification period is determined by the value of each disqualifying transfer and when each occurred within the five year period. Proper planning in many instances can substantially reduce any disqualification period, sometimes eradicating it entirely.

Myth #5

“I can keep all of our marital property and my separate property if my spouse requires care, and can still qualify.”

When a spouse applies for Medicaid, virtually all countable assets are initially included in determining whether the disabled spouse will qualify for Medicaid. The title or marital acquisition is irrelevant. However, in the case of married couples, a non-disabled spouse is not required to be rendered penniless before the disabled spouse can qualify for Medicaid. This is because many assets won’t be countable so that the non disabled spouse will be allowed to continue to own these assets without disqualifying the disabled spouse from Medicaid.


Myth #6

“If I transfer everything to my spouse, I can immediately qualify for Medicaid.”

Remember, for married couples, how title is held between them is irrelevant for Medicaid qualification purposes. However, because the non-disabled spouse is allowed to own substantial assets on his own and not disqualify the disabled spouse, the law allows re-allocation of assets between spouses after the Medicaid application is filed.


Myth # 7

“If I enter a nursing home as a private pay patient, I must expend all of my assets on the cost of nursing home before Medicaid will pay.”

The law does not require that assets be used exclusively for the private cost of a nursing home. If you ask a nursing home, it may tell you differently but that is because there is usually a difference between the amount a nursing home charges for a private pay bed and a Medicaid subsidized bed. Since it can charge more for a private pay resident, many unscrupulous nursing homes want you to believe that you have to spend every dime you have with it before you qualify for Medicaid; but such is not the case.

Myth # 8

“I can only spend down assets on the direct cost of a nursing home care.”

See the previous discussion after Myth #7. By the way, it is against the law for a nursing home to tell you this but it does happen.

Myth # 9

“My durable power of attorney will allow my attorney to gift away assets if need arises in order to qualify for Medicaid.”

In Missouri, a Power of Attorney only grants the ability to make gifts or other transfers for less than full consideration, if that power is expressly stated. In many powers of attorney such power is not granted. Make sure that your Power of Attorney contains a gifting power, but make sure that your attorney is required to consult a qualified attorney before making gifts.

Myth # 10

“Any asset transfer will disqualify me from Medicaid.”

See Myth # 3. 






Myth # 11

“I can only give away $10,000 per year and still qualify for Medicaid.”

Limits on annual gifting have to do with gift tax laws, not Medicaid qualification. Gift taxation is really only a concern to those with more than a Million dollars of asset value. However, the act of making a gift, its timing and value are important to the determination of Medicaid qualification because each such gift can start a new computation of the “look back” period.

Myth # 12

“My separate income will have to be used to pay my spouse’s nursing home bill.”

Income is treated separately and differently than assets for purposes of Medicaid qualification. So, while, in general, separate title has little to do with qualification when the subject is assets, a totally different answer can result when one is discussing income.

Myth #13

“All of my spouse’s income has to be used to defray the cost of nursing home care if my spouse has qualified for Medicaid.”

If the non-disabled spouse’s income is low enough, a disabled spouse’s income can be applied for the benefit of the non-disabled spouse. Further, if your home maintenance requires additional income or if there are additional needs (as determined by an administrative judge) additional income can be shifted over to the non-disabled spouse.

Myth # 14

“I can hide assets and thereby become eligible for Medicaid.”

Intentional misrepresentation of one’s assets can not only result in disqualification from Medicaid; it can also result in imprisonment. Medicaid fraud is a serious crime punishable by imprisonment.

Myth # 15

“Whatever happened to my neighbor will happen to me.”

Medicaid qualification laws change constantly. What may have been the rules when your neighbor applied may not be the rules now. This is particularly the case now because a major change in the law occurred in February, 2006. This changed the whole process of Medicaid qualification planning. So, even if your neighbor is willing to show you what he did to qualify, you cannot take it for granted that, even if it did work in the past, that it will work now.

The only way that you can be certain to properly qualify for Medicaid without having to spend substantially all you own is to develop a qualification plan with the aid of an attorney who understands Medicaid qualification law and procedures, including the most recent changes just enacted this year.

If you would like to learn more, contact me for a no charge initial consultation to review your family’s specific situation.