Medicaid is the government program that will pay for long term nursing home care. It is different than Medicare, which is a health insurance program for the elderly.
Medicare will pay for short term nursing home care for the purpose of rehabilitation. Almost everyone is eligible for Medicare as a result of having paid payroll taxes throughout their working life.
By contrast, eligibility for Medicaid is based on income and resources(assets). Each state has its own guidelines, but must meet minimum federal laws. The federal law changed in 2005, resulting is massive changes to the Medicaid Program.
The present income limit is $2,022 per month. If your income exceeds this amount, then it may still be possible to qualify by creation of a Qualified Income Trust, also known as a Miller Trust.
The limitation on “countable” resources – or those resources that count against you in qualifying for Medicaid – is equally restrictive. However there are some things that are not counted as resources for the purpose of Medicaid qualification. Among these are a home to which you intend to return, an automobile, an irrevocable prepaid funeral plan, and a Medicaid qualifying annuity.
An important part of Medicaid planning is converting resources from a form that counts as a resource to one that doesn’t. For example, selling a house is usually a bad idea because it takes a resource (a home) that does not count against you and turns it into cash, which does count against you.
Transferring assets in order to qualify can be a very tricky business. Changes in the law in 2005 provide for a disqualification from Medicaid for certain periods of time for transfers made within the last five years. There are exceptions to this rule that you should discuss with your attorney before taking any action.
Even after you have qualified for Medicaid the program may seek to recover payment from your estate after your death. Part of Medicaid planning is planning to avoid estate recovery so that to the extent possible you may pass your property to your intended beneficiaries. Among the tools for doing so is an Enhanced Life Estate Deed, also called a Lady Bird Deed.
There are a few steps not to take. Do not file an application without knowing the rules, because the potential penalties are enormous. Do not hide assets or lie on your application. Do not “gift” all of your property away, with the expectation that you will get it back someday. Do not get talked into buying an annuity contract, a family limited partnership or an insurance policy unless you fully understand the interplay with Medicaid.
Medicaid planning is too complicated to do on your own. You need an attorney experienced in Elder Law. Call Hammerle Finley – we can help.