By: Jessica L. Estes, Esq.
Medicaid* can be a scary topic. Not only are there are a lot of myths about Medicaid, but if you are considering applying for it, a crisis has occurred. Add to your emotional distress Medicaid’s requirement that you provide five years’ worth of bank statements, tax returns, and proof of expenditures, and likely, you are pulling your hair out. Do not despair!
Myth #1: Medicaid will take my house. FALSE! Medicaid will not take your house. If you are married, have a disabled child, or own the home jointly with another, the house will not count as an asset. Further, if you are married, Medicaid will require you to transfer ownership of the house to your spouse to preserve it for him/her. Similarly, if you have a disabled child, Medicaid will allow you to transfer, without penalty, the home to a trust for their benefit. In both cases, the home will be out of your name and protected for your spouse or disabled child, so when you pass away, Medicaid will not have a right to recover against it.
If you are single and own a home, Medicaid will not count it as an asset if you intend to return home. The intent to return home is a subjective one, meaning, that regardless of whether you realistically can or do return home, it is your own intent that is determinative. Although Medicaid may lien the property, if you return home prior to your death, that lien will extinguish. And, even though Medicaid will have a claim against your estate after you pass, it will only be valid if Medicaid files their claim within specified time limits, which it often misses.
Myth #2: If you transfer assets, you must wait 60 months to qualify. FALSE! If you transfer assets for less than their fair market value (i.e. you give them away), then Medicaid will impose a penalty. The penalty is not a monetary penalty, but rather, a period during which Medicaid will not pay benefits on your behalf. Contrary to popular opinion, Medicaid does not require the person who received the gift to give it back.
Moreover, the penalty is calculated based on the total value of all “gifts” made during the five-year period immediately preceding the application date. So, if you gave away $86,840 during the five-year look-back period, then that would result in a 10-month penalty. Certainly, you would not wait 60 months to apply when you could start receiving benefits in 11 months.
Myth #3: You must give your assets away to protect them. FALSE! If you give your assets away, you lose control of them. Once you give them away, they are no longer yours and will be subject to the creditors, predators, and lawsuits of the people to whom you gave your stuff. And, if that person files bankruptcy, gets divorced, or dies, there go your assets and not to the people who you wanted them to go. Instead, there are ways to protect your assets and still retain control so if you need to access them, or when you die, you decide how and to whom they are distributed.
Call ERA Law Group, LLC today at (410) 919-1790 to make an appointment with Jessica L. Estes, Esq.!
*This article refers only to Long-Term Care Medicaid when one is in a nursing home.