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15 MYTHS REGARDING MEDICAID NURSING HOME BENEFITS IN MAINE
No one chooses to live in a
nursing home. But some older Mainers eventually need care in a
nursing home setting. For many, this means not only the loss of
personal autonomy but also the depletion of all assets. That is
because nursing home care can cost $80,000 per year or more.
According to the Cost of Care Survey for 2008 conducted by
Genworth Financial, the average rate in Maine was $208
(semi-private) and $233 (private) per day.
Elder law attorneys provide
advice to individuals who want to preserve assets from long-term
care costs. They offer legitimate strategies for hastening
eligibility for Medicaid benefits to pay for care in nursing
homes, in assisted living facilities, and at home. But Medicaid
law is complex and became more complicated with the adoption of
the Deficit Reduction Act on February 8, 2006. This article
highlights some of those changes and dispels certain myths about
the Medicaid program.
Myth: Medicare will cover my
nursing home bill.
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
2009 is $133.50 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: Certain assets are non-countable or exempt and
are typically not considered when an individual applies for
MaineCare benefits, including: the primary residence located in
Maine with a value of $750,000 or less; a motor vehicle
(sometimes of limited value); 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 does not take a home or even file 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.
Myth: I have to wait 3 years after giving anything away to
get Medicaid.
The Truth: Effective for all transfers on or after February
8, 2006, there is now a 5-year lookback. 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
when an application for MaineCare long-term care benefits is
filed. The "penalty" is a period of time that the individual is
ineligible for those 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 $7,258, as of January 1,
2009.
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 only after the MaineCare
application is filed and the applicant is determined to
otherwise be entitled to receive Medicaid but for the penalty.
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
$109,540 as of January 1, 2009. 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 annual exclusion gifts of $13,000 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 the 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 $13,000 for 2009. This concept is
important in planning to minimize estate and gift taxes, but it
has no relevance in planning for Medicaid eligibility. In 2009,
Maine estate tax law only applies to decedents whose taxable
estates total more than $1 million in assets; the federal estate
tax threshold is $3.5 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 five years or to February 8, 2006 (whichever is shorter)
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 an 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. 03/09
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