Medicaid is generally the only source of coverage available to most people who require long term care in their home or in an institutional setting, because most people need something called custodial care. Custodial care, or routine help with activities of daily living, isn’t covered by Medicare or most private insurance policies or Medicare supplementary policies. Long term care insurance often isn’t comprehensive enough in its coverage of custodial care, and is unaffordable anyway. This leaves Medicaid or paying out of pocket. The problem comes because paying out of pocket is very expensive, but Medicaid is means-tested so you cannot get covered if you have too many assets.
Many people who are faced with large nursing home bills don’t want to pay them privately because they realize it will deplete their nest egg quickly and leave them with no ability to leave a legacy. One common response to this is to give away your wealth to loved ones. Unfortunately, this could actually be a big problem for you. You need to make smart and informed choices about protecting your money and property while making sure you can get covered by Medicaid, so you should talk with a Medicaid planning attorney at Zimmer Law Firm rather than trying to get covered on your own and potentially putting your benefits eligibility at risk.
You Cannot Just Give Away Wealth to Get Medicaid
Although it may be tempting to just give away assets so you no longer have too much wealth to qualify for Medicaid coverage, the issue is that this can result in a period of disqualification from getting Medicaid to pay for you.
Medicaid wants to discourage wealth transfers for purposes of qualifying for benefits, so a five-year look back rule has been put into place. Basically, this five-year look back rule means that when you want to get Medicaid to cover the costs of your nursing home care, you’ll have to provide financial information. Medicaid will review transactions made during the prior five years from the time that you are trying to qualify for benefits. If Medicaid discovers that you made a transfer of wealth during that five year period of time, this will trigger a disqualification period.
Medicaid not only disqualifies you from coverage for outright gifts, but you can also be disqualified if you sold assets at less than fair market value. If you transferred something worth thousands of dollars to your children in exchange for a $1 payment, for example, this would raise red flags with Medicaid and likely lead to a period of disqualification.
The amount of time you will be disqualified from Medicaid as a result of transferring assets is going to vary depending upon the specific value of the assets transferred. There is a formula Medicaid uses to determine the number of months of disqualification. Medicaid will compare the value of the transferred assets to what you’d pay for a nursing home in your specific area. Medicaid divides the asset value by the monthly cost of care to arrive at the months of disqualification. For example, if you gave away $10,000 in assets and it cost $5,000 monthly to pay for a nursing home where you live, you’d be disqualified for $10,000/$5,000 or two months time.
Getting Help from A Medicaid Planning Attorney
Transferring assets to loved ones by selling them for less than they are worth or by giving them away is obviously not going to be the best approach to trying to get Medicaid to cover you. Ideally, you should work with a Medicaid planning attorney at least five years before the time when you need Medicaid to cover your nursing home care so your attorney can help you to come up with the right plan to keep your wealth safe while you still have a full array of options to you.
If you need nursing home care imminently, there are still things that you can do in order to protect at least some of your assets while getting Medicaid to pay the bills for your nursing home. You should join us for a free seminar to find out more about different Medicaid planning techniques that could potentially work for you. You should also give us a call at 513.721.1513 to talk with a member of our legal team and get personalized advice about getting Medicaid while keeping your money and property safe to serve as your legacy.