Five Myths About Medicaid’s Long-Term Care Coverage

While Medicare gets most of the news coverage, Medicaid
still remains a bit of mystery to many people. The fact is that Medicaid is the
largest source for funding nursing home care, but there are many myths about
exactly who qualifies for it and what coverage it provides.  Here are five
myths followed by the real story.

1. Medicare
   will cover my nursing home expenses. Medicare's coverage of nursing
   home care is quite limited. Medicare covers only up to 100 days of
   "skilled nursing care" per illness. To qualify, you must enter a
   Medicare-approved "skilled nursing facility" or nursing home
   within 30 days of a hospital stay that lasted at least three days. The
   care in the nursing home must be for the same condition as the hospital
   stay.
2. You
   need to be broke to qualify for Medicaid. Medicaid helps needy
   individuals pay for long-term care, but you do not need to be completely
   destitute to qualify. While in general a Medicaid applicant can have no
   more than $2,500 in assets to in order to qualify, this figure is higher in
   some states and there are many assets that don't count toward this limit.
   For example, the applicant's home will not be considered a countable asset
   for eligibility purposes to the extent the equity in the home is less than
   $536,000, with the states having the option of raising this limit to
   $802,000. In all states, the house may be kept with no equity limit if the
   Medicaid applicant's spouse or another dependent relative lives there. In
   addition the spouse of a nursing home resident may keep one half of the
   couple's joint assets up to $115,920.
3. To
   qualify for Medicaid, you should transfer your money to your children.
   Medicaid law imposes a penalty on people who transfer assets without
   receiving fair value in return. This penalty is a period of time during
   which the person transferring the assets will be ineligible for Medicaid,
   and the length of the penalty period is determined, in part, by the amount
   of money transferred. The state will look at all transfers made within
   five years before the application for Medicaid. That doesn't mean that you
   can't transfer assets at all — there are exceptions (for example,
   applicants can transfer money to their spouses without incurring a
   penalty). However, before transferring any assets, you should talk to an
   elder law attorney.
4. A
   prenuptial agreement will protect my assets from being counted if my
   spouse needs Medicaid. A prenuptial agreement only works to keep
   property separate in the event of death or divorce. It does not keep your
   property separate for purposes of Medicaid eligibility. 
5. I
   can give away up to $10,000 a year under Medicaid rules. You can give
   away up to $14,000 a year without incurring a gift tax. Under Medicaid
   law, a gift of $14,000 or any other significant amount could trigger a
   penalty period if it was made within the five-year look-back period.