The Truth: Medicare pays for only a small amount of the nursing home care provided in the United States. In general, Medicare covers the full cost of the first 20 days in a skilled nursing facility if the individual is admitted following at least a 3-day hospital stay and is receiving skilled care as opposed to custodial care. Medicare will cover a portion of the cost of the facility for up to 80 more days; the deductible for 2007 is $124 per day which is sometimes covered by Medigap insurance. When the Medicare coverage ceases, the patient must pay out-of-pocket unless he or she has private long-term care insurance or qualifies for government benefits under the Medicaid program. In Maine, the Medicaid program is called MaineCare, and it is administered by the Department of Health and Human Services (DHHS).

Myth: I have to give away everything I own to get Medicaid.

The Truth: An individual is permitted to own certain assets - called non-countable or exempt assets - and still be financially eligible for Medicaid. The following assets are typically not counted when an individual applies for MaineCare nursing home benefits: the primary residence located in Maine with a value of less than $750,000; a motor vehicle; personal belongings and household furnishings; mortuary trusts; $2,000 and an additional $8,000 in an interest bearing account. There are other, less common categories of exempt assets, and an elder law attorney can determine if these allow for the legitimate protection of certain assets from spend-down on long-term care expenses.

Myth: The State will take my house.

The Truth: Federal law requires each state to seek reimbursement of medical assistance paid through the Medicaid program. In Maine, repayment is pursued after the death of the MaineCare recipient through a claim against the decedent’s estate. Maine’s DHHS never takes a home or even files a lien against a home while a MaineCare recipient is living, although often the individual in the nursing home is forced to sell the home when there is no longer adequate income to maintain it. Estate recovery is delayed until the death of any surviving spouse or disabled child.

Myth: I have to wait 3 years after giving anything away to get Medicaid.

The Truth: There is now a 5-year lookback for all transfers made on or after February 8, 2006, for which the individual did not receive fair market value in return. Certain transfers are exempt from the transfer penalty, including transfers to spouses and children with disabilities. For all other transfers made within the lookback, a transfer penalty calculation is applied. The "penalty" is a period of time that the individual is ineligible for MaineCare long-term care benefits. The value of what was transferred is divided by the "transfer penalty divisor"; the quotient is the number of months that the individual is ineligible for benefits. Currently, the divisor is $6,255.

The most significant change in Medicaid law since February 8, 2006, is the start date for the ineligibility period caused by a transfer. For transfers that pre-date the change in the law, the penalty period started running in the month the transfer was made. The penalty period now starts to run on the date of the transfer or the date the applicant would otherwise be entitled to receive Medicaid but for the penalty, whichever is later.

Myth: I can keep all our marital property and my inherited property when my spouse gets Medicaid.

The Truth: When a married person applies for MaineCare nursing home benefits, assets in the name of either spouse or in the joint names of both spouses (his, hers or theirs) are considered by DHHS. As explained above, some assets are exempt. In addition to the exempt assets, a spouse who remains at home can keep the Community Spouse Resource Allowance which is $101,640 as of January 1, 2007. In certain cases, the allowance for the community spouse can be increased.

Myth: If I put my property in my spouse's name, I will be eligible for Medicaid.

The Truth: This is not true when the application is for nursing home benefits. In that case, all of the couple’s countable assets are considered, regardless of how they are titled. The community spouse has 12 months to re-title assets from the name of the spouse in the nursing home (“the institutionalized spouse"), although in many cases it is best to transfer assets to the community spouse before the application is filed.

Myth: If I enter a nursing home as a private pay resident, I must spend all my assets on my medical care and my nursing home bills before I can get Medicaid.

The Truth: It is true that MaineCare nursing home benefits are only available to applicants who are financially eligible. But there are legitimate strategies for preserving assets, particularly for the community spouse and even after an individual has entered a nursing home.

Myth: My spouse or my agent under my Power of Attorney has the power to take property out of my name if I ever need Medicaid.

The Truth: The best tool for planning for future MaineCare eligibility is a general, durable power of attorney for finances that includes gifting authority. Just being married does not mean one spouse is able to legally remove the name of an incapacitated spouse from real estate and bank accounts. And unless a power of attorney explicitly authorizes the agent to make gifts of the principal's property, the agent cannot re-title assets.

Many powers of attorney do not contain gifting authority or, if they do, the power is inadequate. For instance, many documents have a gifting provision that limits the agent to making transfers of $10,000 or $11,000 per year per person. This figure is too limited for and irrelevant to effective Medicaid planning.

Keep in mind that there are risks to giving authority to someone to make gifts of your assets. Your agent must be trustworthy and willing to become knowledgeable, if necessary, about you, your circumstances, and MaineCare rules. You may want to require that the agent make gifts consistent with your estate plan or that he or she consult an elder law attorney before making any asset transfers.

Myth: I can only give away $10,000 per year under Medicaid rules.

The Truth: This figure was the "annual exclusion amount," and it has increased to $12,000. This concept is important in planning to minimize estate and gift taxes, but it has no relevance in planning for Medicaid eligibility. In 2007, Maine estate tax law only applies to decedents whose taxable estates total more than $1 million in assets; the federal estate tax threshold is $2 million. People who are concerned about estate and gift tax law rarely need to do Medicaid planning.

Myth: My income has to be used to pay my spouse's nursing home bill.

The Truth: This is not true in Maine.

Myth: All of my spouse's income must be used to pay the bill if my spouse is on Medicaid in a nursing home.

The Truth: The law allows the community spouse to keep some of the institutionalized spouse's income if the community spouse's income is below certain limits. In addition, the community spouse may be entitled to a greater allowance if her own income is insufficient to maintain the home.

Myth: I can hide my assets and get eligible for Medicaid.

The Truth: Intentional misrepresentation in a Medicaid application is a crime. Generally, financial information dating back at least 36 months must be produced with any application for MaineCare benefits, and those records are carefully scrutinized.

Myth: Medicaid rules that applied to my neighbor when he went into a nursing home will also apply to me.

The Truth: Medicaid law and MaineCare rules change, so do not expect that the same laws and rules that governed your neighbor's application are still in effect today.

Myth: I can research Medicaid strategies on the Internet.

The Truth: This is only true to a very limited extent. Medicaid is a highly complex benefits program that is jointly funded by federal and state taxes but separately administered by each state. Each state creates its own rules, so the eligibility rules can - and do - vary significantly from one state to another. A strategy that works in one state could be disastrous for an individual in another state.

Myth: I should transfer my assets now to get Medicaid benefits in the future.

The Truth: Most elder law attorneys discourage their clients from making premature transfers of money and property. While the elder is healthy and living independently, retained assets represent freedom of choice for the elder. And transfers to even the most trusted child expose the transferred assets to problems the child might encounter like lawsuits and divorce. Most important, Medicaid law and the MaineCare rules are constantly changing. A transfer made today may be scrutinized under very different rules in the future, rules that could leave the then-impoverished elder ineligible for government benefits for necessary care.


This article is intended to provide information of a general nature only and does not replace or provide professional legal advice. Consult an attorney for advice regarding your specific circumstances.

Rev. 12/06