NOTICE: The State of Illinoisis about to radically change its rules for Medicaid qualification. Most of the article below is still relevant but stay tuned for revisions that will come when the new proposed regulations as filed with the State.
The 4 Myths of Medicaid Qualification
Basically there are two objectives in Medicaid planning.
- Take care of the lifestyle of the Medicaid applicant and the spouse of the Medicaid applicant; and,
- Enable the Medicaid applicant to leave a legacy asset to the children.
There are only four Myths you need to know about Medicaid planning and one CAUTION below. The rest can wait for one on one conversation. This is because Medicaid is a tangled web of government regulation. Too many people are discouraged about inquiring about their eligibility for Medicaid before they begin. This is because they have fallen victim to one or more of the following myths about Medicaid qualification.
Myth No. 1 you have to wait three years (or five years) before you can qualify. The period of time which is being referred to here is the look back period. First of all, notice it is a look back period not a look forward period. It is not a waiting period. The look back period simply defines the period during which the government can look at your financial records in deciding whether or not you qualify for Medicaid.
Myth No. 2 It’s too late to apply for Medicaid if you are already in the nursing home or about to go in. This is blatantly false. Qualifying someone for Medicaid when they are already in the nursing home is called “crisis planning” and we do it all the time. It is necessary to arrange the affairs of the nursing home applicant so that they can qualify for Medicaid as soon as possible without having to spend down their entire estate. This is what the planning is all about. However, it is not necessary to do Medicaid planning in advance of going into a nursing home. People who are already in a nursing home can qualify.
Myth No. 3 If I apply for Medicaid I will lose my home. This is another myth. For married couples the home is an exempt asset. For singles the home is also exempt, but further planning is required to protect it from being taken by Medicaid after your death.
Myth No. 4 I must be broke before I can qualify for Medicaid. This is also incorrect. The whole point of Medicaid planning is to get you qualified without having to lose everything in the process.
CAUTION!
Whatever you do please do not make any transfers on your own. If you make a transfer and you have to apply for nursing home care within the look back period then you may have needlessly created a penalty period. Penalty periods are periods of time in which you are not qualified for Medicaid going forward. It is the job of an estate planning attorney specially trained in Medicaid planning to figure out how to gift and what assets to gift in order to enable you to qualify for Medicaid as soon as possible without having to spend down all of your assets.
