Despite what many people think, the government health care program for the elderly, Medicare, covers very few nursing home costs. Medicaid is the largest source of government funding for nursing home care. But getting Medicaid benefits isn't always easy because the rules can be complicated. So, there are all kinds of myths out there about who qualifies for assistance.
Knowing the truth about these myths is the key to getting the assistance you or a loved one may need. Here are some of the common myths you may hear about.
1. I have to give away everything I own to get Medicaid.
In fact, you don't have to be completely destitute to get Medicaid. If your spouse or dependent children, for example, live in your home, you don't have to sell the home. You can also keep personal items, a car and some life insurance.
2. If I give away assets to family or friends, I won't qualify for Medicaid.
It's true that some transfers of property or assets disqualify you from getting Medicaid. The value of the assets determines how long you'll be disqualified. However, certain transfers won't disqualify you. Sometimes it depends on who receives the assets; other times, it depends on the type of property you're transferring.
For instance, you typically won't be penalized for transferring property to your spouse. You can even transfer your house to your child who's under 21 years old or who cared for you in that home for two years or more. The point is, not all transfers cause problems with getting Medicaid - ask your lawyer what applies in your state.
3. I have to wait five years after giving anything away to get Medicaid.
Yes, Medicaid rules do penalize some transfers of property, and your state's Medicaid agency will examine your financial records for the five years just before you applied for benefits. However, you may not have to wait five years before qualifying for assistance.
How long you have to wait is based on the value of the property and the average monthly cost of nursing home care in your area. For example, if you transfer $75,000 and the average cost of nursing care in your area is $3,000 per month, your ineligibility period is 25 months ($75,000 / $3,000 per month = 25). The waiting period begins to run on the date you apply for Medicaid.
4. I can keep all our marital property and my inherited property when my spouse gets Medicaid.
You may be able to keep some of these assets. It depends on how your state's Medicaid agency "counts" your and your spouse's assets. There are some protections for at-home spouses like you, and it can be very complicated. It's important to talk to your attorney about this when planning for your spouse's Medicaid needs.
5. If I put my property in my spouse's name, I won't be eligible for Medicaid.
No. As a general rule, you can transfer assets and property to your spouse without jeopardizing your eligibility for Medicaid.
Next: 4 more myths that could cost you money