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MEDICAID & LONG-TERM CARE PLANNING

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What is Medicaid?

Medicaid is a federal program that provides health coverage for people with limited assets and income. It covers the cost of nursing home care for those who meet the program's eligibility requirements. Although it is a federal program, Medicaid is administered by the states. Federal law empowers each state to enforce Medicaid eligibility rules according to its own interpretation. This means that application of these rules can vary significantly from state to state and, in some states including New York, from county to county.

People who have excess assets and income often wish to start the process of protecting their assets so that if and when the time comes that they require nursing home care, they will be eligible to receive Medicaid benefits Medicaid planning can also be done even if your loved one is already in or is about to enter a skilled nursing facility. However, the earlier you begin your planning, the more options you will have to protect your assets and your loved ones.

Things to remember

YOU CAN KEEP YOUR HOME
If you are married, your home is exempt and cannot be counted as a resource when applying for Medicaid. If you are single or widowed, your home is exempt up to $750,000. If you transfer your home to your children, not only will it result in immediate ineligibility for Medicaid, but it could also trigger a gift tax, result in the loss of your STAR exemption and result in your child's spouse (the "in-laws") inheriting your home.

DON'T GIVE AWAY THE STORE
Giving your assets away means losing control. Even if you trust the person to whom you give your assets, that person may get divorced, go bankrupt or be sued, placing your assets at risk. Since major changes to the Medicaid laws in 2006, "gifting" away your assets can result in ineligibility for years. Far from protecting yourself, you will be undermining your own security and ability to finance your long-term care should you need it.

USE THE RIGHT TRUST
Assets in a Revocable Living Trust are not protected and must be used to pay for the costs of long-term care. There are asset protection trusts that permit you to keep total control of your assets.

CHOOSING THE RIGHT TIME TO APPLY IS CRITICAL
Applying for Medicaid too early can result in being disqualified longer than necessary, while applying too late can mean having to privately pay for additional months of costly skilled nursing home care.

GET THE RIGHT HELP
A nursing home or hospital that offers to file a Medicaid application for you has no obligation, and often can't, advise you on how to protect your assets. Only a qualified Medicaid planning attorney will be looking out for your interests. Since Medicaid planning is a complex matter, be sure to retain an attorney who concentrates in Medicaid planning and qualification.