Many are under the impression they can hand their assets over to family, friends, or charity in order to qualify for a Medicaid bed in a nursing home. Unfortunately that is far from the truth. There are significant requirements related to the transfer of assets when it comes to qualifying for Medicaid, regardless of the reason for the need of Medicaid.
To qualify for Medicaid the beneficiary must have less than a couple thousand in liquid assets (actual amount varies by state) although they can have a house, car, and personal property in their house. Retirement accounts, investment accounts owned businesses etc…are all not permissible unless the sum of them is under a couple thousand dollars. (The exact amount may vary by state so I will stick with general figures that apply to more than just folks in one state.)
The other myth so many fail to understand is that just having Medicaid will guarantee you a Nursing Home room. Unfortunately that is far from the truth. Medicaid beds in nursing homes are fairly scarce. One reason is the low payment level for them from Medicaid. Of course all of the requirements set forth by Medicaid do not help encourage the facilities to offer too many beds. Those facilities that offer more beds are often less desirable facilities due to an overall lower income per bed than those facilities catering to mostly private paying residents.
So let’s get back to how to pay for long term care. As mentioned earlier if you have assets you need to pony up cash or use a long term care insurance plan to pay for the care. Those who have lots of assets and want to make sure to pass them to family and want Medicaid to cover their nursing care, which also described above usually is not the best way to get care, would have to plan the disposition of their assets well in advance of qualifying for Medicaid.
Several years ago new laws were put in place requiring a five year look back period when determining eligibility for Medicaid, at least as far as asset transfers go. What this means is that if you gave away the assets they are counted as still being held until the end of the five year look back period. Thus those assets will be required used to help pay for the cost of the care. Thus if the money was not held by the persons given the money, someone has to come up with money to pay for the care.
You can have your home and Medicaid will attach a first right for money from its sale to help cover costs of the care received. That is one asset hard to give away (legally). Ultimately Medicaid will seek to recoup cost of care from assets where possible. This allows folks to transition smoothly from home to a Medicaid bed in a nursing home. Medicaid in these cases is essentially loaning the payments to cover the cost of care.
With the advent of the five year look back period it is much more difficult to give away assets to family and friends to avoid using them to pay for care. This is part of the government plan to ensure folks pay care they can afford before using the Medicaid Program to cover the cost of their care. So if you plan to give your money away it is likely a good idea to think again. Consider instead a long term care policy with a return of premium feature. Call us for professional advice about long term care insurance in Texas.
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