The Myths and Facts of Medicaid Planning

AN INTRODUCTION TO MEDICAID PLANNING

Elder Law Planning ensures that family assets are used to supplement state and federal benefits by providing planning techniques that won't jeopardize government benefits or entitlements.

Medicaid planning is very complex, with complicated laws and exceptions, difficult calculations, and the potential for substantial change in the law, especially in Illinois. You need expert assistance to protect your assets and get you qualified for Medicaid benefits as soon as possible. An attorney with proven experience in Medicaid law can be of a great value to you and your loved ones. You must be careful to not apply for Medicaid with out knowing whether you qualify because you may delay qualification. A qualified Medicaid attorney can identify when you qualify and determine the best time to submit the application to receive the greatest amount of asset protection and the Medicaid benefits.

A qualified Medicaid lawyer can help you with Medicaid Preplanning while you and your loved ones are healthy to protect you and your loved ones in the event of disability. An expert in Medicaid law will be able to ensure that your estate plan takes into account the possibility that you or your loved one may need to apply for Medicaid benefits in the future.

If you do not have a plan in place and you or your loved one is currently facing the difficulties of dealing with disability or long-term care, a qualified Medicaid lawyer can still be a great help you and your family. It is never too late to begin Medicaid planning! Even if you or your loved one is already in a nursing home or about to enter one, you can still act to save assets and qualify for Medicaid. A skilled Medicaid attorney can provide you with crisis planning and support in these circumstances.

THE MYTHS OF MEDICAID PLANNING

MYTH: Medicaid Can Take Your Home
Medicaid cannot take your home and would not want to either. If you're married and you or your spouse needs to go into a nursing home, your home is exempt and cannot be taken when applying for Medicaid. Married people need to be careful in their planning, though, because if one spouse dies, the home may become available to Medicaid if proper planning was not put in place. If you are unmarried or widowed and go into a nursing home, your house may be exempt if you can establish an "intent to return home."

Like much of Medicaid law, rules regarding the home can be complex, so it is a good idea to contact a qualified Medicaid attorney to help you protect your home. For example, transferring the home to the children will result in immediate ineligibility for Medicaid and it could also trigger a gift tax and result in your child's spouse (the in-laws) inheriting your home. A Medicaid attorney will carefully protect the value of your assets as well as ensure that they go to the people you love.

MYTH: You Must Give Away Your Assets to Protect Them You don't have to give away your assets to protect them. Medicaid law provides specific rules for determining the amount (if any) you may be asked to contribute to the cost of nursing home care for your spouse. While it may be necessary to legally protect some portion of your assets, there is no reason to give them away. Giving away your assets means losing control. It's not safe even if you trust who you give it to. If that person divorces, goes bankrupt or is sued, all of the money you transferred is at risk. Also, giving away your assets can create unforeseen penalties under Medicaid laws for years. Assets in a revocable living trust are not protected from Medicaid. There are asset protection trusts that permit you to keep 100% control of your assets without the risk of losing them if long-term care is needed. A qualified Medicaid planning attorney can help you retain control over your assets, now and in the future, without them being at risk to Medicaid.

MYTH: If You Give Assets Away, You Must Wait 36 (or 60) Months to Qualify for Medicaid This is a common misunderstanding that confuses Medicaid's look back period with the transfer penalty period. When you apply for Medicaid, you need to show every financial transaction you have made for the pervious 36 months. In the case of transfers to or from trusts, you need to show every transaction for the previous 60 months. This is merely the time period that Medicaid will look at it. Certain transfers within that time period may result in a transfer penalty period, but depending on the transfer, you may still immediately qualify for Medicaid. Be careful because applying for Medicaid prior to qualification could result in being disqualified for a longer period of time than you otherwise would have been. A qualified Medicaid planning attorney can determine the best time for you to apply for Medicaid.

THE FACTS OF MEDICARE AND MEDICAID

Eligibility

Medicare is a health-care benefit provided by the federal government to individuals over age 65, or under age 65 and disabled. Medicare covers doctor visits, test, and care provided in a hospital and limited benefits in a nursing home. Medicare will only pay for 20 days in a nursing home (in limited circumstances, it can pay partial cost of 80 additional days).

Medicaid is health insurance for the poor. To qualify, you must not exceed certain income and asset limits. If your income or assets exceed the qualifying limits, you will not be eligible. Proper planning can ensure that you qualify while still protecting a significant portion of your assets.

Qualification

To qualify for Medicare, you must be over 65, and eligible for Social Security benefits. You may also qualify if you are under age 65 and disabled for two years. An application at the Social Security office will get your benefits started.

To qualify for Medicaid, you must submit a multiple page application and provide detailed proof of all your financial transactions (banking, CD's, stocks, bonds, income, expenses, annuities, etc.) for the previous 36 months. A qualified Medicaid attorney will help guide you through the preparation of your financial transactions for submission to Medicaid and communicate on your behalf to clarify any transactions. A clear presentation of financial transactions is important to qualify for Medicaid benefits.

Nursing Home Costs

Medicare will only pay for 20 days in a nursing home (in limited circumstances, it can pay partial cost of 80 additional days) while Medicaid will pay the entire cost of a nursing home.

The laws around Medicaid qualification are extensive and there are many exceptions and traps for the unwary. Often, hospitals and nursing homes will offer to do this for you at no cost. Be careful, though, because they do not represent you, but the institution for which they work. Even with the best intentions, they often do not have the legal knowledge necessary to determine whether or not your qualification is accurate. This is where a legal professional can really be of value and often times, be able to get you benefits much sooner and save a larger portion of your assets.

Nursing home costs are around $5,000 to $10,000 per month, depending on the level of care needed. This monthly cost can deplete your assets quickly. It is never too late to protect your assets even if you are already in a nursing home. In fact, you can qualify for Medicaid sooner if you are already in a nursing home, than if you aren't. A qualified Medicaid attorney can also help you save your remaining assets.

Consider long-term care insurance. An annual premium for a couple is usually less expensive than one month of nursing home care and with proper planning, it may also enable you to stay home if you become ill.

The laws surrounding Medicaid are complex with many exceptions. Medicaid is a federal program that is administered under state rules. There is always a potential for change in the Medicaid laws, especially in Illinois which still operates under a set of rules that predates the passing of the federal Deficit Reduction Act of 2005. This Act included the most sweeping overhaul to Medicaid laws ever. Each state must adopt rules to comply with the new law, but the State of Illinois has yet to do this. The possibility of changes in Medicaid rules in Illinois makes already complex planning even more difficult. An attorney's expertise in Medicaid law is essential to getting good results for you and your loved ones.