Q. My Mother just inherited $60,000. She owns her own home and has a modest income. She has few other assets. She had a stroke and now requires help to oversee her medicine, prepare meals and she no longer drives. Will she qualify for Medicaid?
A. Medicaid is a federal program with some state variables. It has medical, income and asset qualifications. Likely your Mother will qualify with some careful planning, but not at present. It’s not even clear if she meets the level of care requirements. Facts and figures drive all Medicaid application situations. I can’t give you specific advice even in my office without knowing the details and your Mother’s goals and preferences.
The attorney will both know the law, options available and focus on your mother’s best interests. Professional long-term care planning tools include: personal dependency, medical deductions, home transfers after accounting for basis and capital gain issues, annuities, converting interest income, domestic help, sale of property, sale of the home, owner financing, purchasing a new home or condo, commercial and family held reverse mortgages, owner occupancy rules and using a Medicaid waiver on the back side, partial sales, gift tax rules, life estates, private pay using long-term care insurance and other options, Medicare, Veterans Benefits, Medicaid, dozens of spend-down strategies, promissory notes, life insurance loans and cash ins, legal separations and divorce, QDROs, bankruptcy, income trusts, special needs trusts, housekeeping and caregiving contracts, and various asset transfer options including special consideration for IRAs, 401K, deferred pension plans and other retirement plans. One plan does not fit all situations.
I can tell you, do not listen to the common knowledge on the street from friends and family or even nursing home staff, if you are looking at placement. Get competent legal advice from someone that focuses on Medicaid, Veterans Affairs benefits and long-term care planning. This is money well spent as just one month of private pay nursing home care in South Carolina averages $6,500. The national average is $8,000 plus.
Consider just these five common myths.
1. There is a five-year look-back period. If you have given away anything in the five years preceding an application for nursing home Medicaid you will be denied. Yes, there is a five-year look-back period but it is not the same as a penalty period. A person could be disqualified for 60 months or one month. Don’t you want to know if it’s one month or sixty?
2. One has to get rid of all assets to qualify to receive Medicaid. No. A single person can have $2,000 in countable assets, but every asset is not counted toward eligibility. There are different rules for married couples, who are able to protect more assets. Provide the details and ask an expert.
3. If I qualify everything I own is safe from a Medicaid lien when I die. No, there is another set of rules when the receptant dies. You need to know present and future consequences of any financial actions you opt to take.
4. Planning isn’t possible once the crisis hits and someone is already in a nursing home. Not true. Options might be limited, but we frequently can save a family money even after admission.
5. I am over the income limit so I will never qualify. Not true. Income over the limit can be allocated into an irrevocable Medicaid Income Trust. Any monies remaining after the person dies become the property of the State. Typically these accounts are set up with just a few hundred dollars with pension, RMDs and possibly Social Security being directly deposited each month.
These strategies are legal.
Not all attorneys that advertise elder law offer Medicaid asset preservation or applicant processing services. Some firms focus more on nursing home abuse litigation and traditional estate planning.
Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column. 1/2021