Medicaid Myths You Need To Know

When it comes to Medicaid and planning, a little learning is a very dangerous thing. I have seen families lose hundreds of thousands of dollars or be rejected for admission to a preferred placement because they thought they knew Medicaid from some connection with a relative or friend in the past.

Here are some of the major myths.

  • I’ll never get sick but if I do, my family will take care of me as long as I live. This explanation is supported by the idea that everyone can be cared for at home. Sometimes people do stay home for long periods. Adult children may move in. Spouses may have husbands or wives physically and mentally able to care for them. Some go directly from healthy to hospice which is covered by Medicare. Still there are limitations. Eventually the level of care may become too much. This is when I usually see families, that is after all at-home possibilities have been tried and they are not enough. This is not the best time. Unfortunately, often by then actions have been taken that interfere with getting proper care or that have unnecessarily impoverished spouses or depleted the family’s savings.
  • People will come in to the house. It will be less expensive. At-home care is less expensive than nursing care if there is less at-home care. A few hours a day for a few days a week can work. If you need 24/7 care at home it can be more expensive than nursing home care.
  • I’ll pay “under the table.” “Hiring” someone to come in for care without reporting their income can be dangerous. Even if you do not run into problems with the IRS, if you later need nursing home care, the money paid “under the table” can be regarded as a gift and can disqualify you for Medicaid benefits for months or years.
  • I have too much money to think about Medicaid. The average cost of nursing care in the Chester County area is $10,000-$11,000 a month. The idea that “I will only think about Medicaid if I am broke” is a mistake. When you are broke it often is too late to plan effectively. This is true even if you never expect any sophisticated planning. If you gave money to your son or daughter during the past five years when they were out of work, you could be penalized later. If you do not plan for your burial expenses in advance with an irrevocable burial reserve, your family could be paying for a funeral with their own funds unnecessarily. You need to know what bills you should pay and when. Also there are exemptions you would not know.
  • Nursing homes that take Medicaid are inferior or government run. Some of the best facilities in the area are Medicaid certified. Each facility has to be considered on its own and there is nothing about a Medicaid certified facility in itself that makes it less qualified to care for residents. You may also need help to locate a proper placement.
  • I can stay in assisted living/ personal care indefinitely no matter what my condition. Personal care/assisted living facilities can be attractive but are an intermediate level of care. Personal care can be built into your plan but you may start there and need to move later.
  • I do not need to consider Medicaid. I have long term care insurance. When I ask people who have long term care insurance the length of their elimination period, their daily benefit, the maximum payout, and whether the elimination period depends on calendar days or days of service, they generally do not know. We have had clients on Medicaid who also are receiving long term care insurance. It could depend on how much and the terms of the policy.
  • I think I should transfer everything I have to my children and wait five years because of the “lookback” rules. For the vast majority of clients, the “transfer everything to the children” first notion is a terrible idea. I ask clients do they really want to ask their children for money. There are rules about Medicaid that can, in particular, protect spouses and disabled children and help families. The rules are complicated. Get help from a professional who specifically knows Medicaid and deals with actual placements.

 

About the Author Janet Colliton

Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.

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