The myth of giving all your assets away so you can qualify for Medicaid is WRONG.
The myths and realities of Medicaid are truly amazing. I have been told, on numerous occasions, that to avoid giving all of their assets, consisting of the home, checking and savings accounts, and other liquid assets, to the nursing home, they have gifted everything to their children. Therefore, they have no assets. Consequently, Medicaid will pay for the nursing home.
Unfortunately, this is not the case. The myth of giving all your assets away so you can qualify is WRONG. However, I have had people argue with me, and they assure me, that I am wrong, because their family, friends and acquaintances have told them that this is correct.
Whether you qualify for Medicaid, to pay for nursing home, depends on a number of factors, your assets, income and your health. Additionally, the Deficit Reduction Act, which states if you gift any assets away to your children, family or others, within five years, of entering and qualifying for Medicaid, you will be penalized. Therefore, if you gifted assets away, you will not receive Medicaid, for a period of time, depending on how much you gifted.
For example, you gifted $68,000 to your children, within the five year look back period. You now have total assets of $1,000, and you receive social security of $1,250 per month. Therefore, your assets are below $2,500 (Maryland eligibility figure), your income is less than the nursing home cost of $8,000 per month, and you need skilled care or you cannot perform activities of daily living. Consequently, you qualify for Medicaid, except for the gifting of the $68,000. The State of Maryland will divide the $68,000 by $6,800 (the average cost of a nursing home in Maryland). Therefore, you are ineligible for Medicaid for 10 months. Now, you only have a $1,000, how are you going to pay for the nursing home?
Sometimes, it goes from bad to worse. The family state “How will they know, as we will not tell the nursing home.” However, in Maryland, Medicaid asks for a comprehensive financial history. You are required to provide all bank statements, IRA, mutual funds, CD records, etc. for their review and intense investigation. If they find that you have tried to defraud Medicaid, they can press criminal charges i.e. jail. Who will visit Mom in the nursing home, actually Mom may be visiting you?
When you fail to plan for Medicaid by asset protection, and you enter a nursing home, you are now in “Crisis Mode” – this is when trouble arises. You are told, gift everything away, the nursing home will not find out; no look back period applies; I’ve put my child’s name on the home and accounts, therefore the nursing home can’t get them.
Sometimes, by the time you seek an elder law attorney, it may be too late for you to do anything and you will be disqualified from receiving Medicaid benefits for a period of time.
Therefore, to avoid the CRISIS consult with an elder lawyer who practices Medicaid, Asset and Life Care Planning.
To learn more, visit our website at www.seniorlcp.com.
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