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Guiding Clients Through the Long-Term Care Maze

Commonly Asked Questions About Medicaid

Is a married couple always required to spend down one-half or more of their assets before qualifying for Medicaid?

Answer: It’s frequently possible to qualify someone for Medicaid and protect the assets for the at-home spouse. Sometimes, this can actually be done without any spend down whatsoever. Other times, even if there are substantial assets, the amount which would have to be spent down may be turned into an income stream to protect those assets.

Medicaid planning is like tax planning. Congress has provided legal safe harbors that can save applicants and their families from the burden of having to spend everything on care.

Is it true that under current Medicaid laws, a single parent cannot make financial gifts to their children and still qualify for Medicaid?

Answer: No. In fact, a proper gifting program is a great Medicaid planning technique. At the time an applicant applies for Medicaid, the state will “look back” five years to see if any gifts have been made. Then any financial gifts or transfers for less than fair market value may cause a delay in an applicant’s eligibility. While the process is a complicated one, an elder law attorney can often help structure a program to protect assets through the use of proper gifting, transfers to caretaker children, transfers to a disabled child, and so on.

Is $17,000 per year the maximum an individual can give away if they are going to apply for Medicaid?

Answer: No. The $17,000 per year gift limit people ask about when discussing Medicaid Planning is a tax law reporting figure and not relevant with respect to Medicaid asset transfer rules. The monetary figure Medicaid applicants need to concern themselves with is the “penalty divisor” for their state. The penalty divisor is the state assessed average cost for nursing care for which the state assesses Medicaid penalties. The current divisor for Colorado is $9,186 per month.

A Medicaid applicant’s house is considered “exempt” under the Medicaid laws. Can an applicant give their house away without incurring penalties?

Answer: Usually not. Any assets which are given away are considered gifts except when made to a spouse. If an applicant gives their house away to anyone other than a spouse, with minor exceptions, (such as qualified transfers to a caretaker child or disabled child) the state will assess a penalty based on the fair market value of the house at the time it was transferred.

There are a number of steps a Medicaid applicant can take to preserve their assets including the house, ranging from gifting strategies involving title to personal care contracts to the use of qualified annuities to protect funds which need to be spent down by a married couple.

Please understand that the laws are constantly changing and the planning your neighbor did for their mother six months ago may not be proper for your mother today.

Consult a knowledgeable elder law attorney for advice.

Will Medicaid Pay for In-Home Care?

If financially qualified, an individual can receive in-home assistance under the Home and Community Based Services (“HCBS”) Medicaid program while still retaining up to $2,742 of the applicant’s monthly income. The HCBS program is designed to serve as an alternative to nursing home placement, enable recipients to maintain their independence and provide respite to caregivers. Services provided under the program include personal care, respite for caregivers, nonmedical transportation, home modification, electronic monitoring, case management, homemaker services and adult day care, as well as alternative care services.

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