Many people want to know when Medicaid will cover nursing home costs, which can cost over $70,000 a year or more for skilled care. Medicare only covers a small amount of the cost of nursing home care in limited circumstances. Below are some common "myths" about Medicaid eligibility.
Myth: You have to give away everything you own in order to qualify for Medicaid.
Truth: If you need nursing home care for other than a short-term rehabilitative stay, you will be expected to pay the private pay rate unless your assets are below a certain threshold as follows:
- A single applicant must have under $2,000 plus exempt assets;
- A married couple who both need care must have under $3,000 plus exempt assets;
- A married couple with one spouse who needs care and one spouse living at home can keep between $50,000 and $113,640.
Exempt assets include a vehicle, personal property, a funeral trust, and life insurance if the death benefit is less than $1,500. If an applicant for Medical Assistance is married, the residence is not a countable asset as long as the spouse is living in it, and the retirement assets of the spouse in the community are also exempt.
Myth: You must wait five years after giving anything away to qualify for Medicaid.
Truth: If you give money or property to your children, or to anyone else, you will be temporarily disqualified from Medicaid eligibility if the gift was made within five years of applying for Medicaid. The recipient of the gift is not required to return the money or property, nor are they otherwise liable for your care costs. The gift is called 'divestment' under the Medicaid rules.
• "Divestment" is the disposing of assets for less than fair market value. If an applicant for Medicaid has divested assets within five (5) years of applying for Medicaid, a disqualification period may result, which means that the institutionalized person will be ineligible for Medicaid for a period of time. The penalty period is calculated by dividing the total divested amount by the statewide average nursing home cost of care (currently $6,554; increases annually) in effect at the time of the Medical Assistance application. This number is the number of months of disqualification.
• The start date for the period of ineligibility will be (in most cases) "the date on which the individual is eligible for Medical Assistance under the State plan and would otherwise be receiving institutional level care . . . but for the application of the penalty period." 42 U.S.C. §1396p(c)(1)(D).
Myth: You may give $13,000 to each of your children as a way to protect it from the nursing home and it will not be "divestment."
False. Divestment includes transfer of any assets without any dollar limit. Assets are defined as "all income and resources of the individual or the individual's spouse, including any income or resources which the individual or such individual's spouse is entitled to but does not receive . . ." 42 U.S.C. § 1396p(e)(1).
Myth: A revocable trust will protect your assets from the nursing home.
False. If income and principal are available to the Grantor, the assets in the trust are available to pay for nursing home care and are not protected. A special needs trust can be used to protect the assets of a disabled individual who is now receiving public benefits, or who may become eligible for benefits in the future.
Myth: If you are married and your spouse is in a nursing home, he or she can qualify for Medicaid if you put all of your joint assets in your name.
Truth: Assets are counted, regardless of which name they are in. Furthermore, Marital Property Agreements are disregarded for Medicaid purposes.
For answers to more Medicaid questions and concerns, consult with an attorney who practices in elder law and disability planning.