Medicaid is the single largest government benefit available to help pay for long term care costs, such as assisted living and nursing home care. However, it is also a poverty program and you will not qualify if your assets exceed $2,000. Medicaid also requires that an applicant for benefits disclose any gifts or transfers made within five (5) years of the application. These are facts. Unfortunately, there are many misconceptions when it comes to Medicaid and how to qualify for Medicaid benefits. Here are our top Six Medicaid Myths, demystified:
1.“I’m too old to plan. Now, it’s too late.”
It is never too late to consider long term care and asset protection planning. This is true even after you, or your loved one, requires care—even if that care is in an institutional setting. The type of planning we might consider for you will depend upon the size of your estate, the cost of your care, whether or not you have a spouse, and your goals and objectives. Certainly, proactive planning is preferred because it gives us the greatest ability to help protect assets and ensure the best care in the least restrictive environment, but, it’s never too late.
2.“Medicaid only covers nursing home care.”
False. In New Jersey, we have Medicaid programs that can assist with care costs at home and both in assisted living and skilled nursing facilities. Eligible persons can qualify for benefits at any level of care. (Unfortunately, for our Pennsylvania residents, Medicaid is only available for skilled nursing home expenses.)
3.“All transfers made within five years of applying for Medicaid will result in a penalty.”
As stated above, Medicaid requires disclosure of any and all gifts (or uncompensated transfers) made within five (5) years of applying for benefits. Those gifts often trigger a penalty by Medicaid (namely, a period of time that Medicaid will not cover benefits after which the applicant is already spent down to below $2,000). However, certain transfers are allowable and do not jeopardize Medicaid eligibility. Specifically, transfers between spouses—regardless of the reason or the amount—are not penalized for Medicaid purposes. Also, transfers to a minor, blind or disabled child who is under 65 (or to a Special Needs Trust for the sole benefit of a disabled child) are permissible. There is also an exception for transfers made to a “caretaker child,” provided certain requirements are met, and certain (limited) transfers to a sibling.
4. “I gave away money to my son last year. Now, I’ll never qualify for Medicaid.”
If you give away an asset within five years of applying for Medicaid benefits, you will need to disclose the gift on the Medicaid application and a penalty period will be assessed. However, it may be worth applying for benefits, disclosing the gift, and starting the penalty. For example, if Mom gave away $20,000 to Son a year ago, the resulting penalty period would be approximately 2 months ($20,000 gift / the Medicaid penalty divisor which is currently $10,315 = 1.93). Thus, if Mom applied for Medicaid and was otherwise eligible, after the 2-month penalty period, Medicaid would begin coverage. The larger the gift, the bigger the penalty period, of course. Accordingly, where gifts have been made, it is important to consult with an elder law attorney before applying for benefits.
5. “Mom should run out of money in six months, so I’d better apply for Medicaid benefits for her now.
It matters when you file an application for Medicaid benefits. If you file too early, before the assets are appropriately spent down, the application will be denied for being over-resourced. The Board of Social Services will not keep an application open indefinitely while assets are spent down. But, applying too late is problematic too because you might not receive all of the benefits to which you/your loved one should be entitled. Also, if you think you may need to apply for Medicaid benefits for a loved one within the next six months, it is important that you have Medicaid determine that your loved one qualifies clinically for Medicaid assistance. That is done by requesting a PAS (Pre-Admission Screening), which is an evaluation conducted by a Long-Term Care Field Office counselor.
6. “I don’t need a law firm to fill out a Medicaid application.”
True, you do not. There is no magic to the Medicaid application itself. BUT, a Medicaid application is a complex process that most people deal with only once in their lives, if at all. At Fendrick Morgan, LLC, our attorneys work with you to gather the necessary information. We then prepare and submit the application on behalf of your loved one. Once the application is submitted, our attorneys will interface with the reviewing caseworker at the Board of Social Services until a determination is received, in many cases this process takes in excess of six months from the time the application is filed. The submission of a Medicaid application is a complicated and, often, very stressful process where tens or hundreds of thousands of dollars of benefits are at stake. We strongly encourage you to consult with an elder law attorney before submitting an application for Medicaid benefits; preferably six (6) months to a year in advance of needing Medicaid assistance.
