Medicaid is a combination federal/state program that provides financial assistance for long-term skilled nursing care to qualified individuals. Most people who require long-term skilled nursing care will ultimately need to apply for long-term care Medicaid assistance. Once obtained, Medicaid pays the difference between your income and the cost of nursing home care.
There are numerous common misunderstandings about long-term care Medicaid. Many people believe that they are unable to qualify, that the State will take everything they own, or that if receiving Medicaid, they will be placed in a state-run institution.
Myth #1: I have too many assets so Medicaid is not an option.
In North Carolina, the Medicaid applicant is only allowed to have $2000 in “countable” assets. If an asset in not “countable” its value is not included in the $2000 limit. In general, “countable” assets include cash, stocks, real estate, CDs, boats, and most IRAs.
If the applicant is married, the spouse (referred to as the community spouse) is allowed to keep up to half of the couple’s combined assets, up to a maximum of $119,220 (2016 limit). NC Medicaid law dictates the date upon which the asset value is determined, which, in some cases, is years before the Medicaid application. Therefore, it is important not to transfer assets or pay off debts in anticipation of Medicaid qualification before speaking with an elder law attorney.
Although most people initially have excess assets, there are numerous strategies that can be employed to become Medicaid eligible without first spending everything on long-term care costs.
Myth #2: I make too much money because I’m over the poverty limit.
When determining Medicaid eligibility, only the applicant’s income is considered. His or her monthly income must be less than the monthly cost of care at the facility. As long-term care nursing facilities generally cost $6000-$8000 a month, income is rarely an issue. Once approved, the Medicaid applicant will generally use most of his or her income to pay the facility and Medicaid will pay the difference, based on the Medicaid rate.
Myth #3: My spouse makes too much.
The Medicaid applicant’s spouse may have any amount of income and it will have no bearing on the applicant’s eligibility. In some cases, the Medicaid applicant’s spouse is even allowed to keep some of the Medicaid applicant’s income.
Myth #4: Medicaid will make me sell my house.
In most cases, the Medicaid applicant’s home is not a countable asset. In North Carolina, the applicant’s intention to return home makes the home non-countable. Even if it is unlikely that the applicant will be able to return home, the mere intent is enough to protect the asset. Even if there is no intention of returning home, it is not countable if his or her spouse or dependent lives there. There are also additional ways of protecting the home during the Medicaid applicant’s lifetime, and even preventing estate recovery after the Medicaid recipient’s death.
Myth #6: I have to spend everything I have before applying for Medicaid.
One way to qualify for Medicaid is to first spend down to less than $2000 in assets and then apply. However, there is another option. Medicaid asset protection is the process of evaluating income and assets and devising strategies within the Medicaid rules, to secure as much of your property as allowed, so that it is not countable for Medicaid purposes. Some of those strategies include establishing trusts, making gifts or loans, purchasing annuities, using countable assets to purchase non-countable items, obtaining long-term care insurance, making home repairs, etc.
Myth #7: Only state-run, derelict facilities accept Medicaid.
Although some facilities are strictly private-pay, most long-term care facilities actually do accept Medicaid patients. Many are top-level, attractive facilities whose private-pay residents are paying $7000-$10,000 a month.
For most people, it is possible to protect and preserve a majority of assets and still qualify for Medicaid. The qualification requirements for Medicaid are complicated, confusing, and vary greatly by state. Many people make disastrous financial transactions prior to seeking legal counsel and applying for Medicaid. In many cases, these mistakes can cost thousands of dollars and/or several years’ delay in qualifying. So it is crucial to seek guidance from an elder law attorney before beginning this process.