Medicaid Misinformation – Clearing up eligibility myths
A fair amount of my work with clients and even other professionals involves clearing up misconceptions they have about how Medicaid works. It is a simple thing for me to do, and the misinformation usually revolves around a few common themes. Even though it does not take much to clear up these misconceptions, I would rather spend my clients’ time working on plans that will help them. So the next few editions of this blog will clear up some of the biggest myths.
Medicaid has three main areas that cause confusion. (Well, there are a lot more than three confusing areas about Medicaid. I am just trying to simplify.) These are:
Financial Eligibility Requirements: Federal Medicaid eligibility law is at 42 USC 1396; State Medicaid eligibility law is at Wis. Stat.§ 49.43-473. The most common question is “If I go into the nursing home can they make me sell my home in order to get on Medicaid?”
Divestment: Divestment is the concept of giving away assets in order to qualify for Medicaid. Federal law regarding divestment is 42 USC 1396p(c); State law is Wis. Stat.§ 49.453. The common misinformation refrain here is “I heard you could give away $14,000 a year and still get Medicaid”
Estate Recovery: Estate recovery is the concept that when you have been receiving certain types of Medicaid benefits, the state can recoup the costs it paid out after you die. The federal law on estate recovery is at 42 USC 1396p(b), and state law is Wis. Stat. §§ 49.496, 49.849. The most common estate recovery myth clients tell me is “I heard the state will come and get my house and all the furniture if I apply for Medicaid.” This sounds a lot like the misinformation in #1, but it actually has a different focus: the fear that the state will take things away as soon as a person gets Medicaid.
In this blog, I will cover the misinformation in #1, financial eligibility. I will write about the others in posts to come.
Medicaid Financial Eligibility:
Sadly, the worst culprits as far as people who are spreading misinformation about financial eligibility are nursing home social workers/financial staff, and county Medicaid caseworkers. I wish I had five bucks for every time a social worker gave incorrect information to a client of mine. (Ok, I guess I DO have five bucks for every time a social worker gave misinformation to a client of mine since those people had the good sense to come and see me for a second opinion before acting, or at least before too much damage had been done. And usually, what they pay me for advice is significantly less than what they would have needlessly spent or lost if they had followed the social worker’s advice.) I do not think most of these nursing home staff or county workers are deliberately trying to mislead my clients. They just don’t know all of the laws.
As far as basic eligibility rules, I have covered these in other posts. I will skip those here and go right to the issues.
Eligibility Myth #1: “You are going to have to sell your house before you can go on Medicaid.”
Truth: In most cases, the home does not count as an asset as long as the person who needs Medicaid intends to return home. This exclusion also applies if the person’s spouse or dependent relative lives in the house. If the person cannot express his or her intent, an agent or guardian can do that for him/her. The concept of intent is subjective, which means that – for eligibility purposes- it does not have to be realistically possible for the person to return home. As long as the person has the intent, the test is met. “Home is where the heart is.”
Most people, if asked, would like to be in their homes, Therefore, it is truly rare that the house would be a countable asset, as long as people correctly state their intent to return home. Most often, they can keep their home and get Medicaid. Sadly, if they follow the social worker’s advice and sell the home, they have just converted their exempt resource into a sum of cash from the sale, and this cash must now be spent.
Some practical considerations can arise after the person is on Medicaid because only a very limited amount is allowed to maintain the home, pay taxes, insurance, etc. And for the purpose of any home maintenance allowance, it must be objectively reasonable that the person will return home. So, it may be that the Medicaid recipient cannot afford to maintain the property for any length of time. There are ways to take care of this problem.
Eligibility Myth #2: “You are going to have to pay the nursing home with all those extra assets that you have.”
Truth: You do NOT have to spend all of your excess assets paying for your care. You may purchase other things that don’t count for Medicaid eligibility, such as prepaying for your funeral expenses. The way to “spend down” is something that depends on individual circumstances. But rest assured that, while paying for the nursing home is a good way to spend your excess resources, it is not the only way.
Eligibility Myth #3: “Married couples have to spend down to $50,000 before one spouse can get Medicaid.”
Truth: Well, to be honest, this is a myth quite a bit of the time, but sometimes it is true. The problem is, many couples are uniformly told to spend down to $50,000 because this is what the social worker tells everyone, not because it is a conclusion based on the specific situation. For Married couples, the standard eligibility range is somewhere between $50,000 and $115,920. The spouse in the nursing home can also keep $2000. Where a couple falls in this range depends on how much they had when the nursing spouse first became institutionalized. In some cases, the couple can keep even more than the standard range. I have handled cases where we have successfully obtained an asset allowance of more than $200,000. In most of these cases, clients were given the standard “You will have to spend down to $50,000” information by nursing home staff or county caseworkers. Most often, it is well worth the investment to consult with an elder law attorney about what asset level would apply in your case.
Well there you have it, a set of Medicaid eligibility myths debunked. These are not the only tall tales that I’ve heard from clients, but they are the most popular ones.
One final tip on financial eligibility. I frequently hear from clients that the county intake worker they called, to begin with, told them not to apply for benefits because they were not eligible. This should never happen. By law, any individual who shows an interest in applying must be given an opportunity to do so. If the intake workers were right all the time, this would not be so much of an issue. But given that caseworkers often come to an initial conclusion that is incorrect, telling someone not to apply can mean an unnecessary loss of benefits. If you are told not to apply, get a second opinion from an elder law attorney.
The next misconceptions I will tackle are the ones involving divestment.
