Dangerous Myths About Medicaid

Anticipating health setbacks is an essential part of preparing for retirement and advancing age. Even more crucial is having a plan if a crisis arises. The common misconception that estate planning only concerns financial matters often leads these concerns to be neglected. Misunderstandings concerning Medicaid compound the problem by turning even more people away from planning for their future well-being.

1. Medicaid is only for low-income adults. This myth is wrong twice. First, almost half of the 72 million people in America currently receiving Medicaid are children. Second, while some people are simply too wealthy to ever qualify for Medicaid, the number is far smaller than most people realize. There are well-established estate planning strategies to help people qualify for Medicaid.
2. Medicaid planning is illegal or unethical. Some asset protection planning strategies involve moving assets into a Medicaid asset protection trust. The doubts and criticism of those who believe the need to move certain assets out of your name to qualify for Medicaid are misplaced. Instead of taking issue with Medicaid planning, they should take issue with a national health care system that forces people to liquidate all assets to pay for time in an ever more expensive nursing home. Medicaid planning is not illegally avoiding creditors and does not involve hiding assets. In fact, most of the steps you take to complete Medicaid planning are reported directly to DHS when you apply. An honest, experienced attorney can walk you through planning approaches to both preserve your assets and income and remain well within the bounds of the law.
3. I can’t keep my income if my spouse receives Medicaid for nursing home costs. It is true that both spouse’s assets are considered when one spouse is applying for Medicaid, but income is treated separately. Oklahoma goes by a “name on the check” rule, which means they only count the Medicaid applicant’s income toward eligibility. If the spouse who lives at home has insufficient income, then some of the spouse’s income who lives in the nursing home can be redirected to the spouse who is living independently.
4. I must get rid of all my assets to receive Medicaid. In Oklahoma, an individual is allowed only $2,000 in countable assets to receive Medicaid. However, not everything you own is counted toward eligibility. Medicaid has exemptions for certain assets that you can keep and still qualify. For example, if you plan to return home or your spouse lives at home – or, in some cases, an adult child acting as a caregiver – your home is exempt. You can also retain a vehicle, household furnishings and personal property, pre-paid funeral plans, burial spaces and assets that cannot be converted to cash, like certain single premium annuities. A spouse is also entitled to keep up to $130,380 – under current law – in countable resources.
5. It is too late to get started. The mechanisms by which a person may apply for Medicaid vary from individual to individual. It is true that the earlier you plan, the more options you have. Medicaid will look back five years when investigating your finances, so starting to plan while you are still healthy provides many more options for asset preservation. This is true even if you are already of advanced age. No matter how old you are or what your current situation is, it is never too late to begin planning for your health and well-being. You can begin building a health care plan at any stage in life.

 
Brittany Littleton owns and operates Littleton Legal. Her practice focuses on business law, estate planning, elder law, trust administration and probate. She is a firm believer that clients are best served when their legal, financial and accounting advisors are working collaboratively to strategize and advocate on their behalf.
 
A Signature Partner with BA Seniors, Littleton will write a column each month. If you have a question that you would like answered or a topic you would like to see covered, send your thoughts to Sean Simpson at [email protected].