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| MEDICAID MYTHS |
| Here are some of the more common “Medicaid myths” that make the process so baffling (thanks to Professor Kate Mewhinney of Wake Forest University Law School, Elder Law Clinic, for permission to adapt and reprint this list): |
| 1. I have to give away everything I own to get Medicaid. |
| In fact, you don’t have to be completely destitute to get Medicaid. If your spouse or dependent children, for example, live in your home, you don’t have to sell the home. Your spouse can keep $99,540 of your total assets. You can also keep personal items, a car and some life insurance. |
| 2. If I give away assets to family or friends, I won’t qualify for Medicaid. |
| It is true that some transfers of assets disqualify you from getting Medicaid for some period of time. The value of the assets determines how long you will be disqualified. However, certain transfers will not disqualify you. Sometimes it depends on who receives the assets; other times, it depends on the type of property you’re transferring. For instance, you typically won’t be penalized for transferring property to your spouse. If you’re single, you can even transfer your house to your child if that child has cared for you in that home for two years or more. The point is, not all transfers cause problems with getting Medicaid — ask your lawyer what applies in your situation. |
| 3. I have to wait three years after giving anything away to get Medicaid. |
| Medicaid rules do penalize
some transfers of property, and the Colorado Department of Human Services
will examine financial records three years back (five years back
for gifts made after Feb. 7, 2006) to see if asset transfers are made. The
government doesn’t want people “planning to be poor.” But the length of
time you have to wait isn’t always three (or five) years. It depends on
three things: |
| 4. I can keep all our marital property and my inherited property when my spouse gets Medicaid. |
| Medicaid rules generally consider all the assets in either spouse’s name when one spouse enters a nursing home. However, there are certain property protections for the at-home spouse. Those protections vary by state; in Colorado the at-home spouse may keep the first $99,540 (as of of 1/1/06) of the couple’s “countable assets,” which generally consist of savings and investments, real estate other than the home and things like excess life insurance. It is important to remember that the amount an at-home spouse can keep can almost always be increased with expert legal advice, so don’t despair as you read what follows. |
| 5. If I put my property in my spouse’s name, I will be eligible for Medicaid. |
| No. See above. |
| 6. Medicaid rules that applied to my neighbor when he went into a nursing home will also apply to me. |
| This area of the law has changed quite a bit in the last few years, so don’t assume the rules that applied to your neighbor are still in effect. For example, under federal Medicaid law, there’s no longer a three-year “cap” on the length of a transfer penalty. So now, disqualifications resulting from large asset transfers can exceed three years. As mentioned above, there's a five-year lookback period for transfers made after Feb. 7, 2006. Also, people often confuse rest homes with nursing homes; the Medicaid rules that apply to one won’t necessarily apply to the other. |
| 7. If I enter a nursing home as a private pay resident, I must use up my assets before I can get Medicaid. I can only “spend down” my assets on medical or nursing home bills. |
| This is wrong for several reasons. First, you are allowed to keep certain limited property, as we discussed earlier. Second, you may be able to protect some of your assets — by buying certain non-countable assets or by making certain transfers to family members, for example. Federal law prohibits nursing homes from selling you this myth if the facility is Medicaid certified. Unfortunately, some nursing homes try to force people to stay as private pay, since the private pay rate is usually higher than Medicaid reimbursement rates. |
| 8. My power-of-attorney automatically has the power to take property out of my name, if I ever need Medicaid. |
| Most state laws—including those of Colorado—require that you explicitly include a “gifting power” for your agent under the power of attorney to be able to retitle your property. If you want your agent to be able to transfer assets to provide more for your spouse and/or children, in particular, you should say so in your power of attorney. |
| 9. I can only give away $10,000 per year under Medicaid rules. |
| This refers to a federal gift tax rule (it’s actually up to $12,000, now) that has nothing to do with Medicaid law. We’re talking apples and oranges here! A gift of $10,000 per year will probably trigger a Medicaid penalty, however short-lived. |
| Remember, these are all myths. And keep in mind that the answers given above are general rules that apply in most situations. Consult an experienced attorney to determine how the Medicaid rules apply to your situation. |
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Boulder ElderLaw
Law Office of K. Gabriel Heiser 4845 Pearl East Circle, Suite 101 Boulder, CO 80301 Ph:(303) 447-6855 fax: (888) 301-9466 
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