No one plans on going into a nursing home. Instead people say they will live with their kids and have their family take care of them. Or they say they’ll give Dr. Kevorkian a call. Really, people’s lists are endless because they just don’t see themselves going into a nursing home – it is always going to be someone else. Unfortunately, few of us have actually tried to plan on how we will take care of themselves. Because it costs so much to pay for long term care, many of us are left with only one choice to pay for our nursing home expenses after our own assets have all been exhausted. That choice is Medicaid. Most people think of Medicaid as a welfare program. The truth is, it is and it isn’t. Medicaid, like Medicare, originates from the Government, but where Medicare allows you to receive benefits when you reach a certain age, Medicaid requires you to meet certain tests (income, asset, and health tests) in order to qualify. Generally, Medicaid requires that you become “impoverished,” in order to qualify, hence the welfare aspect.
Another difference is that Medicare is totally run by the federal government, while Medicaid is a joint federal / state program. Texas operates its own Medicaid system, but must follow federal guidelines in order to receive federal subsidies for the program. There were significant changes to the Medicaid program in February 2006 when Congress passes the Deficit Reduction Act of 2005 (only Congress could pass a law in 2006 and give it the name of the year before). While there were several changes that took place, the most important had to do with the transfer of assets. Where before there was a three or five year “look back” depending on where the asset was transferred to, there is now a five year look-back regardless. Meaning, if you are in a nursing home and apply for Medicaid, Medicaid will look at the previous five years to see if you gave away any assets. If you have, Medicaid will assume you did it to qualify for Medicaid and penalize you a certain amount of time depending on how large the transfer where Medicaid will not pay for your long term care – even if you otherwise qualify for it. A second major change is that where before the penalty period would start to run as soon as you made the transfer, it now does not begin until after you are in a nursing home and apply for Medicaid. There are, of course, other changes, and this is an over-simplification of these rule changes, so before you act on any of these, get the right advice from an elder law attorney.
But wouldn’t it be nice if we knew five years before we would be going into a nursing home? Unfortunately, that is something we just don’t know. So when is the best time to start planning? Whether you are faced with a crisis (if you or your loved ones are or about to be in a nursing home) or if you have a little time, the best time to start planning is right now. Invest an hour or two with an elder law attorney to find out how you can use the Medicaid laws to your advantage to protect you from becoming impoverished.
Medicaid Planning for Long Term Care
