Dear Angel,
I have heard several things about Medicaid, and I wanted to see if they are true. One thing that I’ve been told is that Medicare will cover my health care costs, including long-term care. Another is that you need to be broke to qualify. Lastly, my understanding is that I could give up to a $15,000 gift every year under Medicaid rules. Are these things true?
Thanks for your help,
Metta Cade-Miths
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Dear Metta,
Medicaid is an assistance program that provides health insurance to low-income people of every age and provides long-term care coverage to people of all income levels, including the middle class and even upper middle class. The rules for health insurance Medicaid are completely different from the rules that govern long-term care Medicaid, and this causes much confusion among the general public. You seem to be asking about long-term care Medicaid, so my answer will focus on this type of Medicaid, which helps pay for nursing home care for people who qualify.
There’s a lot of confusion about how long-term care Medicaid works. Commonly repeated myths and misconceptions can lead to costly mistakes and disqualification for older adults.
Below are common myths about long-term care Medicaid, including those you referred to in your question, and the truth about them:
1. Myth: Medicare will cover my health care costs, including long-term care.
Truth: Medicare, like all health insurance, does cover health care, but as a general rule it does not cover any type of long-term care, whether in nursing homes, assisted living facilities, or people’s own homes. Medicare does, however, provide coverage for short-term rehabilitation in skilled nursing facilities (also called nursing homes). If you qualify for short-term rehab in a skilled nursing facility, Medicare pays 100 percent of the cost for the first 20 days. For days 21 through 100, you pay a daily co-pay ($170.50 in 2019). This does not mean that everyone needing rehab will qualify for the full 100 days that Medicare helps to pay for. On the contrary, Medicare will only pay for rehab as long as someone is continuing to improve or still needs skilled nursing services.
2. Myth: You need to be broke to qualify for Medicaid.
Medicaid does have limits on how much a person or a married couple can have in the way of countable assets, but there are dozens of legal and ethical strategies to shelter assets so that they are not “countable” in connection with long-term care Medicaid eligibility. Because of these strategies, which are available for the benefit of all Americans who are smart enough to hire an experienced Elder Law Attorney, Medicaid can be used to cover the catastrophic costs of nursing-home care so families don’t have to go broke by depleting the assets it took them a lifetime to earn. Please read our blog post, “Medicaid is NOT just for Poor People” for more details.
3. Myth: I could give up to a $15,000 gift every year under Medicaid rules.
Truth: This $15,000 per person per year figure is the current amount that can be gifted without having to file a gift tax return. This rule relates to gift and estate tax planning for the super-wealthy, and not Medicaid planning. This common misconception can cause people to make gifts that cause a period of ineligibility for Medicaid coverage.
And here are two more common myths that you didn’t mention, but that I thought I should share:
4. Myth: I have too much income to ever get Medicaid.
Truth: As mentioned above, long-term care Medicaid is not a program for low-income people. On the contrary, the general rule is that an applicant’s income simply needs to be lower than the cost of their care. Given that nursing homes in Northern Virginia and the rest of the Washington DC metro area cost $10,000 – $14,000 a month (and $8,000 to $10,000 a month in the Fredericksburg, Virginia area), very few people have too much income to qualify for long-term care Medicaid.
5. Myth: The rules that applied to my friend will also apply to me.
Truth: Medicaid rules change frequently; the rules vary from state to state, and the rules are vastly different for married couples versus unmarried individuals. There may also be facts about your friend’s situation that you don’t know, and these facts may result in implementing completely different strategies than those that apply to your friend’s situation.
Medicaid Asset Protection
The laws (including regulations, rules, and policy) surrounding Medicaid are the most complex laws in our country. This is why it is crucial to work with an experienced elder law attorney such as Evan Farr to help your family legally and ethically protect assets and obtain Medicaid benefits, should the need for nursing home care arise.
How Much Can Be Protected Through Proper Medicaid Planning?
The bottom line is that for a married couple, our firm can protect 90 percent to 100 percent of the couple’s assets and obtain Medicaid for the nursing home spouse. For an unmarried individual, our firm can protect 40 percent to 100 percent of the person’s assets and obtain Medicaid. And this type of planning is not something reserved for the wealthy. This type of planning is done by people of all financial means –– smart people do not want to be “taken” by the unfair health insurance system that discriminates against people who have illnesses or diseases that require long-term care versus traditional health care.
Hope this helps,
Angel
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