1. Myth: Medicare and Private Insurance will cover the cost of long term care when I go into a nursing home.
In addition to the lump sum protection of the CSRA, the community spouse is generally entitled to retain all of her monthly income. If her monthly income is less than $2,003.00, she is entitled to a supplement from the ill spouse’s income to make up the difference. If she is paying rent or a mortgage, under certain conditions she is entitled to up to $2,980.00 per month in income (this is known as the Minimum Monthly Maintenance Needs Allowance, or MMMNA).
3. Myth: If my spouse needs long term care and qualifies for Medicaid, the state will take my house after his death.
It is true that Kentucky has the an aggressive policy of estate recovery (taking assets from the estate of a deceased Medicaid beneficiary) permitted under the federal law. However, estate recovery is permitted against the estate of the beneficiary, not the spouse of the beneficiary. As long as the home (and other assets) are titled in the name of the wife (at the time the spouse begins receiving Medicaid benefits), the state cannot take it to satisfy its claim for him.
Suppose the wife dies first? If the home was jointly owned with her husband, then it will immediately become his sole property. In most cases, this will cause the husband to be made ineligible for Medicaid, and cause him to sell the house to pay for his nursing home bills. Any funds left from the sale at the time of his death will be subjected to estate recovery. To avoid this outcome, the home could have been transferred to the wife, and her will written to leave her assets in a way that does not cause the assets to be “counted” in determining her husband’s eligibility.
4. Myth: I could go to jail if I give away assets to become eligible for Medicaid.
In 1996 Congress made it a crime to transfer assets to qualify for Medicaid if the transfer triggered ineligibility for Medicaid benefits. In 1997, following criticism of this “Granny Goes To Jail” statute, Congress changed the law to eliminate any criminal penalty for these transfers. Under the changed version, only persons who for a fee counsel or assist in transferring assets when the transfer results in a period of ineligibility may be prosecuted. The “Granny’s Lawyer Goes To Jail” law, as it has come to be known, was ruled unconstitutional in a federal case in New York, and the Justice Department (which admitted the law violated the Constitution) has been enjoined from enforcing it.
There are several ways in which a person entering a nursing home can lawfully transfer assets without becoming ineligible for Medicaid benefits. An applicant for Medicaid paid long term care can transfer any assets to a spouse, a dependent child, a disabled child of any age, or to a trust for a disabled person under the age of 65. In addition, he may transfer his home to a brother or sister who has lived in the home with the applicant for at least a year (and owns any interest in the home), or to a child who cared for the parent for two years immediately before the parent entered the nursing home, when the care kept the parent out of the nursing home for those two years.
5. Myth: I have to be in a nursing home before I can receive long term care
benefits under Medicaid.
When a person needs nursing home care but wishes to remain at home, if the care can be delivered to the person in a cost effective, safe manner, he may qualify for benefits under the Community Based Care Medicaid Waiver program. This permits the resident to remain in her home with assistance provided by community based nurses. However, the funding of Community Based Waiver Programs in Kentucky is very limited making them all but impossible to receive. Very specific groups, such as those with development illness or acquired brain injury, do receive waiver benefits regularly.
6. Myth: No matter how much property I give away, I have to wait at least 3 years before applying for Medicaid.
The “lookback” period for all transfers is now five years. If there are any circumstances under which the trustee may deliver assets to the trust maker and funder, even when the trust was created more than five years before applying, Medicaid can attribute the assets or income that could be distributed to the creator or funder, even if the trustee does not actually distribute anything! These rules do not apply when the funder is disabled and under 65 and the trust is a “special needs trust” in which he has an interest, or when the creator / funder is not the beneficiary of the trust created and the beneficiary is disabled and under 65, or is a disabled child of any age. In these cases, the “lookback” period does not apply.
These Myths persist because Medicaid planning is ever changing and extremely complicated. Information you find on the internet may be out of date. New rules are published regularly, Court decision change the how the agency applies the rules, and the overall Medicaid program is governed by Federal Law interpreted and applied through State rules, laws and agencies. We highly recommend that you seek the counsel of a skilled Elder Law Attorney before making any choices, transferring assets, or applying for Medicaid. This is why we offer consultations, free of charge to help you determine if you can benefit from our guidance.
What to do?
The Federal rules governing Medicaid provide substantial options for you to preserve your assets, prevent impoverishment of you spouse, and care for you loved ones as well as yourself. Passing assets that you have worked for all of your life to the next generation is possible with careful planning. It is essential that you work with someone that is skilled and thoroughly knowledgeable in this area of law. To learn more about service that our Law Firm offers in these areas click here.