Five Myths About Medicaid’s Long-Term Health Care
While the government’s Medicare program gets most of the news coverage, Medicaid in Texas still remains somewhat of a mystery to many folks.
Many elderly looking at Medicaid think that nothing that can be done to protect assets from the hugely high nursing home costs in Texas.
This belief is for the most part false or misinterpreted. As an example, it is not always necessary to wait five years after gifting certain assets to become perfectly eligible for Medicaid. The answers depend mostly on the specific facts in your situation. Assisted by an experienced Medicaid Planning lawyer, many of the assets you have spent a lifetime saving for can easily be protected from climbing nursing home expenses.
Fact is that Texas Medicaid is the largest source for the funding of nursing home long-term care. However, there are many common myths about exactly who will qualify for it and what coverage Medicaid provides.
The chance that you will need a nursing home, long term care or some other form of elder care should be a significant worry as you get older. In fact, many people with significant savings often can not afford a quality nursinghome over a period of years. If you have to go into a nursing home when you are 70 – and you live until you are 85 – that’s 15 years at the average of $36,000/year = $540,000. If you have that an more – great. If not – not so great.
Here are 5 myths followed by the real scoop:
1. Medicare covers my nursing home expenses.
Medicare’s coverage of long-term nursing home care is limited. Medicare covers only up to 100 days of “skilled nursing care” per illness. To qualify, you must enter a Medicare approved “skilled nursing facility” or nursing home within 30 days of a hospital stay that lasted at least three days. The care in the nursing home must be for the same condition as the hospital stay.
2. You need to be broke to qualify for Medicaid in TX.
The Medicaid program helps needy individuals pay for long term care, but you do not need to be completely broke to qualify. While in general, a Medicaid applicant can have no more than $2,000 in assets to in order to qualify for coverage – this figure is higher in some states and there are many assets that don’t count toward this limit.
As an example, your home will not be considered a countable asset for medicaid eligibility purposes to the extent the equity in the home is less than $536,000. In Texas, the house may be kept with no equity limit if the Medicaid applicant’s spouse or another dependent relative lives there. In addition the spouse of a nursing home resident may keep one half of the joint assets up to $115,920 (in 2013).
3. To qualify for Medicaid, you should transfer your money to your children.
Medicaid law in Texas imposes a penalty on people who transfer assets without receiving fair value in return. This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid, and the length of the penalty period is determined, in part, by the amount of money transferred.
The state of Texas will look at all transfers made within five years before the application date for Medicaid. This certainly doesn’t mean that you can’t transfer assets at all – there are exceptions. You can transfer money to your spouses without any penalties. However, before transferring any assets, you should talk to a Medicaid attorney.
4. A prenuptial agreement will protect my assets from being counted if my spouse needs Medicaid.
A prenuptial agreement only works to keep property separate in the event of death or divorce. It does not keep your property separate for purposes of Medicaid eligibility.
5. I can give away up to $14,000 a year under Texas Medicaid rules.
Yes, you can give away up to $14,000 a year without incurring a gift tax. Under Medicaid law, a gift of $14,000 or any other significant amount could trigger a penalty period if it was made within the 5 year look back period.
Consult with a Medicaid lawyer if you have any questions.