There are many misconceptions about Medicaid. Let’s look at what Medicaid is and is not and consider some common misunderstandings.
1. Medicaid is not the same as Medicare.
Medicaid and Medicare are two separate programs run, at least in part, by the federal government. Even if you have Medicare, you may still need Medicaid. You generally qualify for Medicare just by reaching the appropriate age. Medicare is federal health insurance for those who are age 65 or over, or for those with certain disabilities. Medicare pays for hospitalization. Medicaid is a program run by both federal and state government, providing healthcare coverage, including long-term care coverage, for those who meet certain medical and financial qualifications. Medicaid is the program that would pay for nursing home care if you meet the qualifications.
2. Qualifying for Medicaid is not as simple as giving away your assets.
Medicaid is a needs-based program. Along with meeting medical criteria, you must also meet financial qualifications to receive Medicaid benefits. But qualifying finically for Medicaid is not as simple as giving away your assets. Medicaid does require that you declare all assets that you have some ownership interest in, verify how those assets are titled (in your sole name, jointly with another, or in a trust or other entity), and verify the value of those assets. But Medicaid says some assets are exempt, or not counted. Your principal residence, one automobile, and a few other miscellaneous assets such as an irrevocable funeral contract are typically exempt. If the Medicaid applicant has a spouse still in the community who is not receiving Medicaid benefits, that spouse may automatically protect a portion of the countable assets. But giving away the countable excess assets is not enough to qualify for Medicaid. Further, some gifting of assets triggers penalties and delays qualification for benefits.
3. Medicaid will not take your house.
Folks often tell me that they have heard that if you apply for Medicaid, you will lose your house to the Medicaid agency (or to the nursing home.) Qualifying for Medicaid does not require getting rid of your house. Rather, the principal residence is an exempt asset and not part of the financial qualification. In Michigan, your house remains a protected exempt asset even if no one is living in the house after you enter the nursing home. If you have more assets than allowed when you first start pursuing Medicaid benefits, the state does not take your excess assets, as many have been told. Instead, you would not qualify for benefits until you spend down your assets or arrange them in a way that allows you to qualify. Another concern is that all states have some form of estate recovery, where after the death of a Medicaid recipient, the state seeks to recover assets from the estate. In Michigan, the state can only recover assets that are part of a probate estate. So, with good planning, no probate is required and no assets can be recovered.
4. Medicaid does not require your spouse to be impoverished.
Medicaid does initially consider a married couple as an economic unit. Assets available to one spouse are considered to be available to the other. But both spouses are not required to reduce their assets to near zero to qualify. While the nursing home spouse is required to have minimal assets in his or her name at the time of qualifying, the non-nursing home spouse is automatically entitled to protect a portion of their assets. Further, Medicaid allows the use of certain planning techniques that result in protecting even more assets for the non-nursing home spouse.
We Can Help
You should get qualified professional help if you are seeking Medicaid benefits. Please contact us to learn more about Medicaid and what can be done to protect assets while pursuing those benefits.