Medicaid Myths and Planning Success Stories
Serving Families and Individuals in the Anniston, Gadsden, and Talladega, AL Areas
Medicare and Medicaid are two government programs that pay for medical expenses. However, they are completely different. There is a lot of misinformation out there about medicare/Medicaid, etc. Medicare does not pay for long term nursing home care; medicaid is the program that pays for long term nursing care. Some of the most common myths you may have heard about Alabama Medicaid as it relates to nursing homes are:
- Medicaid will take my house
- I have to give all of my assets away in order to qualify for Medicaid
- If I give assets away, I have to wait 60 months before I can qualify for Medicaid
Unless you do proper estate planning, each one of these myths could cost you thousands of dollars. Alabama Medicaid does not take your home if you apply if your spouse is still living in the home. If you are single or widowed, you can qualify for Alabama Medicaid if you sign an intent to return home document or have your house listed for sale. However, Medicaid will put a lien on it for the value of the services they provide while you are in the nursing home. Many people make the mistake of selling the home before they apply for Alabama Medicaid. The proceeds of that sale are not “exempt” and would have to be spent down. Selling the home is almost always a mistake. Proper planning with the house is a critical part of the estate planning process in Alabama. As asset protection attorneys we can help guide you through the process.
Transferring assets is a good strategy if it is part of an overall elder law plan. Putting those assets in an irrevocable trust can provide asset protection. However, giving your assets to loved ones outright can be a huge mistake with devastating consequences. If they spend the money or lose it to bankruptcy, divorce, etc. and you then need care, the money will be gone and you will have no way to get the care you need. We never advise giving anything away outright to your loved ones.
The biggest mistake that people make when doing nursing home planning with Medicaid is that they fail to get the penalty period started. Medicaid does have a 60 month look back period to see if you have transferred assets, but the waiting period depends on how much you gave away and is not likely 60 months.
For more information on medicaid qualification in Alabama, click to register for one of our free estate planning/elder law workshops or call us at 256-792-3193 to schedule a consultation.
Asset protection planning is important and there are proper ways to do so. The following two examples show how proper asset protection planning can protect your life savings and still allow Medicaid to pay for the care you need. One is a crisis plan and the other is an advance plan.
Crisis Plan Example - Patricia
Patricia called my office because her father was already in a nursing home with advanced dementia. She and her sister were paying the nursing home $6,000 a month from their father’s account and had been doing so for about 18 months. Her father had about $310,000 left in his bank accounts. She had been told by her family attorney that it was too late to plan and that they would have to use the money it to pay for his care.
Patricia eventually called me because her financial planner insisted that she talk to a medicaid attorney who handles asset protection cases regularly. When we met with Patricia, she told us that they had sold their father’s home and that all he had left was the $310,000. We reviewed her father’s power of attorney and it gave her the authority to do trust planning which most “standard” powers of attorney do not.
After running the numbers, I advised Patricia that we could put a plan into place that allowed her father to qualify for Medicaid in 34 months (not 60) and that we could protect $198,000 of the $310,000! When we told Patricia we could do that for her, she was in tears. Using our knowledge of the Medicaid rules we were able to get Patricia's father qualified in 34 months and protect 64% of what was left of her father's money. He had sacrificed and saved his entire life to leave an inheritance to Patricia and her sister and he was heartbroken when he had to go into the nursing home because he feared losing it all.
Advanced Planning Example - John and Sara
John and Sara came in when they were both 75 years old and wanted to protect their assets in case they had to go into a nursing home. They heard that it took 60 months for them to qualify. They had a total of $577,000 in assets including their home, savings, and investment accounts. We ran the numbers and came up with an asset protection plan where we immediately protected $449,000, and left only $128,000 at risk. The $128,000 was not at risk forever, it was only at risk for 37 months. If they stayed healthy for 37 months, we could begin protecting an additional $3,459 a month until month 60 where everything will be safe! They were pleasantly surprised and put the plan in place immediately. Without the asset protection planning, all of their life savings was at risk.
Everyone has their own set of numbers when it comes to how long until they qualify for Medicaid and how much money can be protected. Do not ever assume that going broke is just your fate when facing a serious illness or disability. Medicaid planning is complicated and should be handled by an elder law attorney who regularly handles medicaid cases. Going this route is so very worth it for families who wish to protect everything they have worked so hard for without jeopardizing access to the highest level of care through every stage of their illness.
For more information on medicaid qualification in Alabama, click here to register for one of our free estate planning/elder law workshops or call us at 256-792-3193 to schedule a consultation.
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