Medicaid Planning for Government Relief

A federal program funded by taxes and administered by the state, Medicaid is one of the foundations of the U.S. healthcare system—covering 1 in 5 Americans and paying for roughly 80% of all long-term care costs. While the program provides security and peace of mind for millions of senior citizens and their families, it is often the source of confusion and frustration due to complicated rules and mazes of fine print.

Here are five common misconceptions about Medicaid:

Myth #1: Going on Medicaid means you and your spouse will lose everything you have.

 Truth: While there are certain financial thresholds for Medicaid eligibility, you are permitted to retain ownership of things such as your home, car, personal items, and other assets. The government will not require you to “be poor” to qualify for Medicaid, but at the same time, it is important to understand what will be categorized as “countable” and “non-countable” when it comes to gaining access to government benefits.

Myth #2: Before going on Medicaid, you should give all your money away to your kids or family, so the government doesn’t get it.

 Truth:  As we will explain more in the next paragraph, trying to protect assets by giving them away can result in a penalty if transactions are made without fair-value return during the 5 year “look-back period” when applying for Medicaid. Another thing to consider is that transferring all your money to your family does not guarantee that it will be protected—the reality is that money given away is simply no longer yours.

Myth #3: You must wait 5 years after giving away anything to qualify for Medicaid.

 Truth: There is no hard-and-fast rule that you must wait 5 years to qualify for Medicaid after giving anything away. At the same time, Medicaid eligibility can be delayed if certain transactions are made without fair-value return during the 60-month “look-back period.” For example, if you transfer assets—such as a property, or a sum of money—to a family member a year before applying for Medicaid, you can be hit with a penalty that delays your eligibility for Medicaid based on the amount transferred. So, there are rules that have to be followed, but they are extremely complex since there are exceptions that impact every case. Our Elder Life Group advisors can help you navigate this complexity.

Myth #4: Your revocable living trust will protect your assets from a nursing home.

 Truth: Revocable trusts, which are often used to avoid probate court, will not protect your assets from a nursing home. As the name implies, revocable trusts are reversible, and assets can be moved in and out. In other words, the assets in the trust are still under your control and are countable when Medicaid eligibility is being determined.

Myth #5: Medicaid is only for lower income or impoverished individuals.

 Truth: While Medicaid was established in 1965 to provide healthcare access and financial protection to the sick and poor of society—those without health insurance—the federally-funded program currently aids over 70 million people nationwide. The truth is, seven in 10 Americans will spend an average of two to three years in a nursing home or assisted-living facility. And while there are certain financial and medical requirements to qualify, many middle-class families can benefit from Medicaid relief.

 Know Your Options and Take Control of Your Future

Because of the many and widely perpetuated myths about Medicaid, it’s important to not only understand the basic facts, but also have a firm understanding of your options. Even retirees that are healthy today will most likely need long-term care in the future, and by carefully assessing your options, you can find peace of mind for your family and protect your hard-earned assets.

At Elder Life Group, we provide specialized guidance on Medicaid and help you secure the benefits you need on your terms. Starting with a free consultation, we take care of the frustrating ins-and-outs of government policy so that you can be in a position of strength when it’s time to claim your benefits.

To speak with an Elder Life advisor about Medicaid Planning, contact us today.

Spousal impoverishment occurs when the high costs of aging start to negatively impact the healthy spouse’s financial situation. Couples are facing the reality of one spouse requiring long-term nursing care and their assets being drained by the cost for that care. This can result with the spousal impoverishment of the “community spouse,” the one who remains at home.

This occurs because in order for Medicaid to kick in, almost all of a couple’s assets must be spent or disposed of, which leaves very little for the community spouse. Fortunately, in 1988, Congress enacted provisions to Medicaid that help prevent spousal impoverishment. These provisions help ensure that community spouses are able to live out their lives with independence and dignity. Under the Medicaid spousal impoverishment provisions, a certain amount of the couple’s combined resources is protected for the spouse living in the community. Depending on how much of his or her own income the community spouse actually has, a certain amount of income belonging to the spouse in the institution can also be set aside for the community spouse’s use.

Community Spouse Resource Allowance

With the Community Spouse Resource Allowance, the spouse who does not require long-term care can keep an additional percentage of the couple’s assets beyond those a couple can own and still qualify for Medicaid. Each state has a different dollar figure for this allowance, but it must be equal to or lower than the maximum amount established by federal law.

The maximum amount of these assets is determined by Congress and does increase annually to reflect rising costs of living. Allowances may also be made for dependents who are living with the community spouse.

Monthly Maintenance Needs Allowance

The Minimum Monthly Maintenance Needs Allowance (MMMNA) is a spousal impoverishment rule that allows a married Medicaid nursing home applicant or HCBS Medicaid Waiver applicant to transfer a portion, or in some cases, all of their monthly income, to their non-applicant spouse. It intended for non-applicant spouses who have little to no monthly income. However, in order to receive this spousal income allowance, the community spouse’s monthly income must fall under a specified level.

Navigating Medicaid and the high costs of aging is a complex process. Let us help you make sure that you are optimizing your income and assets protection, and protecting your family. Contact us today!

Resources

• Medicaid.gov
• Wisconsin Department of Health