Myth #1 – “All the information I need on Medicaid is available from my state Medicaid office.”
Fact: That is like saying everything you need to know about taxes is available from the IRS! Sure your state offices can provide you with general knowledge about Medicaid program requirements, but what you need to know is usually not available from the people employed by the state to process applications. They are not in a position to be your advisor or advocate. They are paid to gather information and not give it out. Trust a professional advisor to help address your specific Medicaid and long-term care needs and minimize the financial drain on your savings.
Myth #2 – “My attorney/CPA/financial advisor will be able to help me with my Medicaid eligibility.”
Fact: Medicaid eligibility is a very complex area that requires specific knowledge of federal and state program requirements and guidelines. You need to trust someone with training in Medicaid eligibility, estate preservation, and management. Please seek out a professional who specializes in this area.
Myth #3 – “Medicaid is like welfare, isn’t it?”
Fact: Medicaid was created by Title XIX of Social Security Act and is the healthcare safety net for all senior Americans. Almost three quarters of the people receiving long-term care in nursing facilities in the state of Texas are Medicaid residents. Many of these people paid for their own care until every penny they had saved was gone (usually spending far more money than necessary) and then qualified for benefits. For families and individuals who cannot afford long-term care, Medicaid is often the only choice for financial assistance.
Myth #4 – “We have too much money to qualify for Medicaid.”
Fact: It’s a total myth that a person with more than $2,000 in assets can never qualify for Medicaid benefits. Many assets, such as your home or personal belongings, are not even considered by the state Medicaid agency and are exempt from counting toward the $2,000 resource limitation. The value of some of these assets can sometimes be without limit. For married couples, $2,000 is the limit only for assets in the name of the Medicaid applicant - not the applicant's spouse. Medicaid will currently allow $117,240 to be protected for the healthy spouse still living at home.
Myth #5 – “I can just gift my way to Medicaid eligibility.”
Fact: Federal legislation in 1997 made it a criminal act to make transfers and gifts within a three- to five-year period. This law has since been modified, but gifting is still dangerous unless you know what you're doing. Fortunately, there are still methods of planned gifting (that should be carefully designed) that are allowed.
Myth #6 – “My income is too high to ever qualify for Medicaid.”
Fact: Until early in 1994, many people could honestly make that statement, but not anymore. The Omnibus Budget Reconciliation Act of 1993 (OBRA '93) brought about many changes in the eligibility guidelines developed by the Health Care Finance Administration (HCFA). One area that OBRA '93 addressed is hardship cases where an individual's income exceeds the state's income maximum, but is still insufficient to pay privately for nursing home care. The Qualified Income Trust (Miller Trust) is the tool created to help people with high income qualify for Medicaid. Keep in mind that this specialized income trust is only to solve the problem of too much income - it does not help if you still have too many resources.
Myth #7 – “I can lose my home to claims by the state once I am the recipient of Medicaid assistance.”
Fact: The Estate Recovery Law passed in Texas in March of 2005 does allow the state of Texas to file a claim on the home of a deceased Medicaid recipient. However, there are several exemptions as well as legal remedies that would allow the recipient to protect their home from claims by the state.
Myth # 8 – “I just can’t afford to have my spouse in a nursing facility.”
Fact: There are many provisions that protect the financial condition of a healthy spouse. The Medicare Catastrophic Care Act of 1988 mandated that spouses of institutionalized individuals should have a protected spousal share of savings (or resources) and income.
Myth #9 – “I don’t have enough money to need a professional advisor.”
Fact: It is important for just about anyone with any money or property to have someone with specialized knowledge and experience help them with important financial or estate planning decisions. A good financial advisor can help you, no matter how much savings or how many assets you have.
Myth #10 – “Carrying the note on real estate can be a great source of income in my retirement years.”
Fact: Homes that have been seller-financed can provide a source of monthly income, but can also cause problems with qualifying for Medicaid benefits. Remember that the financial qualifications for eligibility involve an assessment of both the income and the assets of the applicant. Unfortunately, the note you hold in that sort of real estate arrangement will be more than likely considered as both an income and as an asset. Even though you have sold the home, the note itself could be resold to someone else - making it a source of available cash to you or your spouse.