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.