10. MYTH: “Due to the five-year lookback rule, I will not be able to protect my assets with Medicaid.”
TRUTH: It’s true that the asset transfers you have made in the last five years will be examined and some of those transfers could delay your eligibility for Medicaid. However, some transfers won’t cause you to have a penalty for Medicaid purposes. For example, if you transfer property to your spouse, that transfer will not result in a penalty.
9. MYTH: “The hospital social worker told me to apply for Medicaid immediately, so that’s what I need to do.”
TRUTH: Because hospital social workers are not experienced in completing Medicaid applications, it is important to consult with an experienced elder law attorney before making the decision to apply for Medicaid. If you apply too early and you have made gifts that affect your eligibility, applying before the lookback period has expired could result in long penalty periods that could delay your Medicaid benefits for years.
8. MYTH: “If my spouse is on Medicaid, I will not have any income.”
TRUTH: If you are a “community spouse” (the spouse living at home, while the other spouse is in a nursing home), you will not have to contribute any part of your income toward your spouse’s nursing home bill. In fact, in some cases it is possible for the income of the spouse living in the nursing home to be paid to the “community spouse.” That’s because the “community spouse” is entitled to a minimum monthly income ranging from $1,750 to $2,739 depending on the state.
7. MYTH: “Medicaid will only help me if I am in a nursing home.”
TRUTH: Medicaid can provide for a variety of services beyond nursing home care. This includes the cost of living in an assisted living facility, inpatient and outpatient hospital services, physician services, home health care, laboratory and x-ray services, and ambulatory services. Even if you believe that you will never need to live in a nursing home, Medicaid can help pay for services that you will almost certainly need access to as you become older.
6. MYTH: “Medicaid is only for the poor.”
TRUTH: Although many people view Medicaid as “welfare,” the fact is that every American who has worked has paid for his or her Medicaid benefit. It is true that Medicaid started out as a program similar to welfare, but throughout the years it has undergone several transformations and today it resembles a federal insurance program that Americans use to pay for long-term care.
Many people mistakenly believe that Medicaid is only for the poor because of the rule that your countable assets cannot exceed $2,000 in order for you to be eligible for Medicaid. However, there is a difference between countable assets and total assets – you can own lots of assets that may not be countable for Medicaid purposes.
5. MYTH: “I have money, so I can’t qualify for Medicaid.”
TRUTH: The middle class is one of the most prevalent users of Medicaid benefits. If you have some assets but not enough money to pay for long-term care out-of-pocket, Medicaid benefits will still be available to you after you use some qualifying techniques. For example, you may need to “spend down” some of your assets on things like nursing home care. Also, it may be possible to convert some countable assets to “exempt” assets, which are discussed below.
4. MYTH: “If my loved one is on Medicaid, they will receive substandard care.”
TRUTH: A majority of people in nursing homes – about 60% – receive financial assistance from Medicaid. It is simply not true that these people will receive lower-quality care than the other residents. In fact, it is a violation of federal law for a nursing home to discriminate against a resident because he or she is on Medicaid. In most cases, the only people who will know that you are on Medicaid are the people who work in the financial side of the nursing home. Nurses and other workers have no way of knowing whether a resident is on Medicaid.
3. MYTH: “Medicaid will take all of my money.”
TRUTH: Under Medicaid rules, some assets are “exempt” from being countable assets and owning them will not affect your eligibility for Medicaid. This means that you may keep these assets and still qualify for Medicaid benefits. These “exempt” assets include:
- up to $2,000 cash
- your home (if your equity interest in it is under $500,000)
- one car
- personal property (like furniture, electronics, jewelry, and clothing)
- funeral and burial funds (up to $1,500 in a bank account or trust, a pre-paid funeral or burial, or life insurance intended for burial expenses)
- property used in a trade or business (such as a working farm)
- some life insurance (up to $1,500 cash value; also, all term life insurance policies are “exempt”)
- some IRAs
- non-business property used for self-support: the first $6,000 of value is “exempt” if it generates at least a 6% return on the amount excluded
2. MYTH: “Medicaid will take my home.”
TRUTH: If you are single and you live in a house or condominium, your home is not “countable,” so long as your equity interest in the home does not exceed the state limit (usually $500,000). If the value of your equity interest is above the state limit, there are several options that will allow you to lower your equity interest: taking out a reverse mortgage, obtaining a home equity loan, or deeding a small percentage of your ownership interest to a family member.
1. MYTH: “I don’t need a lawyer’s help to apply for Medicaid. I’ll be fine on my own.”
TRUTH: Obviously, Medicaid rules can be complex and confusing. Making mistakes in transferring assets and not understanding the rules and requirements for applying for Medicaid can result in devastating penalty periods and delays in receiving financial assistance with long-term care. It is best to meet with an experienced elder law attorney who understands the rules in your state.