Top 5 Medicaid Myths

When families are suddenly faced with the need for a nursing home and Title 19 (Medicaid), they get on the phone and call our office with urgent questions about eligibility. That is not surprising, because in Connecticut the monthly cost can easily be between $11,000 and $13,000. Those are scary numbers, and most families simply cannot afford to pay privately.

These families are terrified of the potential costs. They call relatives and friends about the crises, especially if they hear someone else has previously needed a nursing home. And the answers they get are often filled with incorrect or outdated information, which leads to further distress and confusion. Listed below are the top 5 Medicaid Myths we hear when there is a married couple, and one of them needs Medicaid.

1. "The State is going to take our house." This is flat out false. The family home is an exempt asset as long as the healthy spouse lives there. And the State does not place a lien against the house. So the healthy spouse can continue to live there without fear of it being taken. And if that healthy spouse decides to sell the house after Title 19 is granted, she can do so and keep the proceeds of the sale.

2. "We are going to have to spend all our money on the nursing home." False. Although it is true that the sick spouse must spend down assets below $1,600, there are rules which allow the healthy spouse to keep the family house, a car, prepaid funeral contracts for each, her own IRA's, plus one half of the remaining assets, up to $109,560. There are also other special rules which may allow more assets to be kept. For example, if the family has a disabled child, assets can be transferred to that child without a penalty.

3. "We can give away $13,000 per year to each of our kids, can't we?" No. That is an Internal Revenue Service rule based on Federal gift tax law, and has nothing to do with Medicaid eligibility. If any money is given to a child within 5 years of applying for Title 19, that will be considered a gift transfer, and will result in a penalty.

4. "Only half of my bank accounts will be counted because my children have been

co-owners of those accounts for many years." False again. The State considers such accounts totally available to the elder couple if they have the power, right and authority to withdraw funds from the accounts. A joint owner certainly has the ability to withdraw funds, so they are considered to belong to the parent 100 percent. There is an exception if the child can prove that the funds were always the child's money. In such a case, the child will have to provide proof that all money in the account truly came from the child, and not the parent.

5. " There is nothing we can do, because it is too late." Nothing could be further from the truth. In most cases, there are many rules and regulations that permit families to protect some or all of their assets, even at the last minute, after dad or mom has already been admitted to a nursing home. These rules are designed to protect the healthy spouse from being totally impoverished, and there is no time requirement on such rules. Often, dealing with the rules can be confusing and tricky, so it is vital to get thorough and competent advice. Following such advice can mean the difference between early eligibility for Medicaid and saving as many assets as allowed, or lack of eligibility, and losing significant assets.

These 5 myths only scratch the surface of the stories we hear passed about as common wisdom. Remember the circle you made as kids to pass a statement by whispering from one to the next? How did that turn out? Don't rely on what your second cousin's husband's friend supposedly said. Get accurate and timely advice you need without the myths that pass from ear to ear.