Medicaid Myths

Farmington Hills Medicaid Lawyers

A growing number of people are concerned about the high costs of medical and long-term care which can be one of the greatest expenses a person faces in life. Sometimes people need to consider Medicaid as a source of payment for these services. However, Medicaid coverage qualifications can be confusing.

We have prepared this brochure because so many people receive misinformation about Medicaid, qualification, coverage and the application process. Hopefully, this brochure will help dispel some of the common myths that people often have regarding this complex area of the law.

Mall Malisow & Cooney's holistic care management staff and ElderCare attorneys provide our clients with personalized attention focused on each individual's unique needs. Our services include ElderCare Planning and Advocacy, Wills, Trusts, Estate Planning, Special Needs Trusts, Probate, Guardianship, Conservatorship, Discharge Planning Assistance, and Medicare/Medicaid Beneficiary Rights Advocacy.

For further information or to schedule an initial consultation, call Mall Malisow & Cooney, P.C. - Toll Free at (866) 699-1800.

1. Myth: "Medicare will cover my nursing home bill."

The Truth: Many people are surprised to learn that Traditional Medicare and Medicare Advantage plans only cover a small portion of the nursing home care costs. Traditional Medicare pays up to 20 days of full coverage if you go into a nursing home after at least three nights in a hospital and you need skilled care or rehabilitation (not basic or intermediate care). Then, if you still need skilled care, you can get up to 80 days of partial coverage from Medicare. After that, unless you have long-term care insurance, you must either pay out of your own funds or get Medicaid. The rules for Medicare Advantage plans may be different and you will need to review your specific plan benefits.

2. Myth: "I have to give away everything I own to get Medicaid."

The Truth: You are permitted to own some property and still be eligible for Medicaid. The trick comes in knowing what is "countable" and what is "non-countable" under the Medicaid rules. For example, your house is not a countable asset during your lifetime. Other non-countable assets include certain prepaid burial or funeral contracts. There are many other types of "non-countable property." The bottom line is, you don't need to be completely without assets to be Medicaid eligible.

3. Myth: "I can't give anything away and get Medicaid."

The Truth: Medicaid rules penalize some types of gifting. The penalty is Medicaid disqualification. But not all gifts create penalties. It depends on what is given away, to whom, and when. Because the Medicaid rules are complicated, you have to be careful not to create penalties. If you wish to gift assets, it is best to first consult with an ElderCare lawyer who knows the law.

4. Myth: "I have to wait 5 years after giving anything away, to get Medicaid."

The Truth: The Medicaid "look-back" is not always 5 years, and sometimes there is no disqualification penalty. The "look-back" rule applies to some asset transfers (gifts). This means that the Medicaid agency will review all gifts of property, including sales "for less than market value."

5. Myth: "I can keep all marital property and my inherited property when my spouse gets Medicaid."

The Truth: When a married person applies for Medicaid, most assets in either or both spouse's name are considered countable by the Medicaid agency. However, some assets may not be "countable," and you may keep some as part of the asset allowances. You should also be able to use special planning rules to allow you to protect more of your assets.

6. Myth: "If I put my property into my spouse's name, I will be eligible for Medicaid."

The Truth: Assets in either spouse's name will be considered by the Medicaid agency. To protect the maximum assets for the healthy spouse, the assets need to be titled in the healthy spouse's name within 1 year of the other spouse receiving Medicaid.

7. Myth: "If I privately pay for a nursing home, I must spend-down all of my assets before I can get Medicaid."

The Truth: You are not required spend-down all of your assets for nursing home care before applying for Medicaid. However, nursing homes may make you believe that you do. Nursing homes prefer private pay because they are paid less money from Medicaid.

An experienced ElderCare attorney can help you develop a plan for Medicaid eligibility and asset preservation. Protected assets can then be available to help assure best placement, quality of life and quality of care.

8. Myth: "A Power of Attorney gives my Agent power to take property out of my name if I ever need Medicaid."

The Truth: Most Durable Power of Attorney (DPOA) documents do not include critical legal authority and planning provisions. For example, many DPOAs contain a "gifting" provision that is usually limited to the IRS annual gift exclusion ($13,000 per year for 2012). However, such a limitation generally will not work for government benefits asset protection planning.

A properly drafted ElderCare Durable Power of Attorney can be the single best legal planning tool to protect you and your loved ones. For ElderCare planning purposes, the DPOA should contain special provisions regarding gifting, asset transfers, and Medicaid benefits planning.

Without an effective DPOA for legal and financial matters, legal authority can be obtained only through the Probate Court. Probate Court procedures can be expensive, time-consuming, frustrating, and may not allow the type of asset protection that most people want.

You should also require your Agent to consult an experienced ElderCare attorney for guidance with government benefits planning, asset transfers, and care advocacy.

If you have a DPOA, you should have it reviewed to make sure it will work if and when needed. If you do not have a DPOA, seek the advice of a qualified ElderCare attorney who can help you create one to protect you and your loved ones.

9. Myth: "I can only give away $10,000 per year under Medicaid rules."

The Truth: This is an IRS rule, not a Medicaid rule. Under federal estate and gift tax law, the annual gift exclusion for 2012 is $13,000. Generally, people whose estates are large enough to be taxed under federal estate tax laws should not be concerned with Medicaid.

Michigan Medicaid law disqualifies a person from Medicaid in most circumstances if they give money away. Under federal law, gifts made within the 5-year look-back period are added together. There are ways to successfully include gifting as part of an overall Medicaid eligibility/asset preservation plan. Because the Medicaid and government benefits rules are complicated, you should seek the advice of a competent ElderCare attorney for guidance.

10. Myth: "My income may have to be used to pay my spouse's nursing home bill."

The Truth: This is not generally true in Michigan or in the majority of states. In fact, you may be able to keep a portion of your spouse's income to help pay your monthly living expenses. In 2012, Michigan law allows the community spouse to retain a minimum of $1,838.00 per month of the couple's joint income.

However, the monthly income allowance can be increased to a maximum of $2,8410.00 or higher with Court approval. An experienced ElderCare attorney will help you determine how much income you can keep and how much has to be used to pay for care.

11. Myth: "If I hide my assets I will be eligible for Medicaid."

The Truth: Intentional misrepresentation on a Medicaid application is a crime and can be costly. The IRS shares any information concerning income or assets you have with the Medicaid agency (Department of Human Services). You or whoever applied may also have to pay Medicaid back to avoid prosecution. However, with proper planning, assets can be protected.

12. Myth: "The same Medicaid rules that applied to my neighbor when he went in a nursing home will also apply to me."

The Truth: Medicaid policy has changed dramatically since January 1, 2008. So, do not rely on what worked for your neighbor or friend. Also, there may have been facts about your neighbor's situation that you just don't know. It is best to have your situation analyzed by a competent ElderCare attorney.

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