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Important Facts About Medicaid Planning

Important Facts About Medicaid: Introduction

Medicaid (called “Medi-Cal” in California and “MassHealth” in Massachusetts) is a joint federal-state program that provides health insurance coverage to low-income children, seniors and people with disabilities. In addition, it covers care in a nursing home for those who qualify. In the absence of any other public program covering long-term care, Medicaid has become the default nursing home insurance of the middle class. As for home care, Medicaid offers very little except in New York State, which provides home care to all Medicaid recipients who need it. Recognizing that home care costs far less than nursing home care, a few other states—notably Hawaii, Oregon and Wisconsin—are pioneering efforts to provide Medicaid-covered services to those who remain in their homes.

While Congress and the federal Health Care Financing Administration set out the main rules under which Medicaid operates, each state runs its own program. As a result, the rules are somewhat different in every state, although the framework is the same throughout the country. The following describes those basic rules, but check your state for the specific application where you live.

Giving away assets too early.

First, it’s your money (or your house, or both). Make sure you take care of yourself first. Don’t put your security at risk by putting it in the hands of your children. Precipitous transfers can cause difficult tax and Medicaid problems as well.

Ignoring important safe harbors created by Congress.

Certain transfers are allowable without jeopardizing Medicaid eligibility. These include: transfers to disabled children, caretaker children, certain siblings and into trust for anyone who is disabled and under age 65; a transfer to a “pay-back” trust if under age 65; and a transfer to a pooled disability trust at any age.

Failing to take advantage of protections for the spouse of a nursing home resident.

These protections include the purchase of an immediate annuity, petitioning for an increased community spouse resource allowance, and in some instances petitioning for an increased income allowance or refusing to cooperate with the nursing home spouse’s Medicaid application.

Applying for Medicaid too early.

This can result in a longer ineligibility period in some instances.

Applying for Medicaid too late.

This can mean the loss of many months of eligibility.

Not getting expert help.

This is a complicated field that most people deal with only once in their lives. Tens of thousands of dollars are at stake. It’s penny wise and pound foolish not to consult with people who make their living guiding clients through the process.

Confusion about the difference between lifetime liens on property and estate recovery.

There are a number of exceptions to lifetime liens on property, but for estate recovery there is only a deferral for a surviving spouse and a hardship waiver.