As you become older, you may incur significant medical expenses, even when you are covered by Medicare. Medicare, the insurance designed to cover all elderly Americans, provides some coverage but requires you to pay a percentage of expenses and may not offer full payment for things like assisted living or nursing home care. Fact is it pays very little of long-term care costs. The costs of medical treatment and long-term care can become especially expensive if you need to go into a long-term care facility.
If you are coping with high medical bills and costs and/or if you need to go into a nursing home or other care facility, you may be concerned about your nest egg and about depleting retirement money, savings and assets. As a result, you may become interested in qualifying for Medicaid, which is a needs-based program that more broadly covers medical expenses and long-term care costs.
Medicaid is a needs-based program and has income and asset limits for eligibility. Each state has different laws. If you have a significant amount of assets, you will not qualify for Medicaid unless you plan properly. You may be told to ‘spend-down’ your assets and cover some of your own costs before you are eligible for Medicaid. There are alternatives to become eligible. To protect your money and the things you have worked for your whole life, you may wonder whether it is possible to give away your assets in order to qualify for Medicaid. Usually gifting of assets to someone other than your spouse causes ineligibility not eligibility and can become a significant problem.
Can You Give Away Assets to Cover for Medicaid Benefits?
Under the federal law, you may NOT just give away your assets to someone other than your spouse in order to qualify for Medicaid benefits and have the government pay your bills. There are specific Medicaid transfer rules that were put into place by various acts of law including the Deficit Reduction Act of 2005 (DRA).
Under the Medicaid transfer rules in the DRA, if you need care in a long-term setting you can be disqualified from Medicaid benefits if you have given away assets to someone other than your spouse within five years of the time when you apply for Medicaid benefits. This period begins at the time when you apply for Medicaid and when you might otherwise have qualified for benefits had you not made the gift.
For example, if you apply for Medicaid today but you gave away an asset (money or other asset) four years ago, you would not be eligible for Medicaid and your period of ineligibility would start from this time, not the date of the gift. The amount of time that you are ineligible is called a “penalty” period and the length of time that the penalty period is in effect depends upon the monetary value of the gift or asset that you transferred as well as the cost of nursing home care in your area.
An experienced elder law attorney can help you to better understand the Medicaid eligibility rules and can help you to consider ways to protect your assets while still ensuring you are eligible for Medicaid when you need it.
category: Medicaid Planning & Veterans Benefits