| Myth: My spouse and I must be poor to qualify for Medicaid to pay my nursing home bill. |
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Medicaid has financial eligibility guidelines that strictly limit the amount of income and assets a Medicaid recipient living in a nursing home may keep. However, Medicaid does not count all assets. For example, rental property producing a net income is not counted, although the net income may affect the amount owed to the nursing home. Purchasers of a qualified long term care insurance policy may keep considerable assets under the Indiana Long Term Care Program. Married couples may keep a great deal, if not all, of their assets for the spouse remaining at home. These are just a few examples. |
| Myth: Medicaid will take my house. |
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You will NOT have to turn your house over to Medicaid to qualify for help. Medicaid may get a lien against your house if you enter a nursing home permanently. However, there are several exceptions to this. If you or your spouse or certain others live in the house, Medicaid will not count your house as a resource to you. If you can no longer live there and none of the other specified persons are living there, then Medicaid will ask you to sign an agreement to list your house for sale or rent. Even if it sells, Medicaid does not normally have a claim against the proceeds, unless a lien has been filed. Instead, you may have to go off Medicaid until your countable assets fall within allowed levels. Medicaid cannot tell you how to spend the proceeds, although there are rules about giving money or property away. |
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Medicaid does have a preferred claim against your estate for care provided from age 55 on. If your house is part of your estate when you die, and if certain persons don't reside there, then it could be sold to reimburse Medicaid for your medical expenses. With careful planning, you may be able to prevent this. |
| Myth: If I am in a nursing home, Medicaid will let my spouse keep only half of my countable assets. |
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Medicaid normally allots half the couple's countable assets to the spouse at home. However, there are many circumstances where this spouse may keep more than half. Excess assets can be used to buy things Medicaid does not count. The spouse at home can ask for a fair hearing to keep more or all of the assets to generate income. The Medicaid caseworker cannot advise you of all your options. |
| Myth: Medicaid won't help me if I gave away anything within the past 5 years. |
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There are penalties under certain circumstances for giving away money or property in order to make yourself eligible for Medicaid. Medicaid looks back 5 years only for transfers into certain trusts. The look-back period for most transfers is 3 years. Depending on the value of what you transferred, you may not need to wait the entire 3 years before applying for Medicaid. These rules are changing, however, and all transfers on or after February 8, 2006, may be subject to a 5-year look-back period. |
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If you transferred something of value for reasons having nothing to do with Medicaid eligibility, there may be no penalty. When there is a penalty, Medicaid won't pay for nursing home care and certain special community-based long-term care programs for a certain period of time. If you are otherwise eligible, Medicaid will still pay for other medical care. The penalty period starts with the month the transfer occurred. Its duration depends on the value of the property given away. In the future, the penalty will not start running until the individual is otherwise eligible for Medicaid and needs nursing home care. |
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With the presidential signing of the Deficit Reduction Act of 2005 on February 8, 2006, severe restrictions will be placed on asset transfers, including a phase in of a 5-year lookback period and delaying imposition of any penalties until the person needs nursing home care and becomes eligible for Medicaid. Indiana is likely to implement the new rules in early 2009. |
| Myth: I can give my children each $12,000 a year without risking a penalty from Medicaid. |
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Sadly, this is a common misperception that often leads to ineligibility for Medicaid to pay for nursing home care. The $12,000 figure is an exemption from the federal gift tax. It used to be $10,000. Medicaid assumes all gifts made within the lookback period were done to hasten Medicaid eligibility. The fact that a gift was exempt from the federal gift tax will not normally change this. |
| Myth: Medicaid spending is a drain on the state economy. |
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Actually, Medicaid spending increases economic activity, jobs, and wages. In Indiana, a million dollar cut in Medicaid spending would lead to a loss of $3,720,000 in business activity, 40 jobs, and $1,340,000 in wages and salaries, according to a study cited by Families USA. Economists call this the multiplier effect. It is in part because state spending brings a match of federal dollars to the state. |
| Fact: Medicaid rules are complicated and change frequently. |
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Unfortunately, this is not a myth. Medicaid is one of the largest components of the state budget, and when the economy falters, budget cutters look for ways to change the rules to limit eligibility and provider reimbursement. At the same time, it is the only tool the federal government has to deliver health care to the uninsured. It has been added to many times over the years adding great complexity. On top of all that, it is a joint federal-state program leading to much variation in rules betIen states. To provide competent representation in Medicaid, an advocate must constantly monitor changes in the law. |