Articles

What About the 3 Year Rule for Medicaid?

The level of confusion surrounding various governmental benefit programs probably reached its peak with Medicaid. It was bad enough that Medicaid and Medicare were so unfortunately named with strong similarity, especially so since they are significantly different programs. But the big problems just begin when a person gains sufficient appreciation to understand that the only such program that will help them pay for custodial nursing home expense is Medicaid, which is state administered and regulated (substantially) according to federal rules. If you have private long term care insurance, you probably don't have to worry. But if you don't have this kind of insurance because you couldn't afford it or you didn't qualify medically, and you don't have large amounts of money, you likely have only one choice in paying for your nursing home stay, and that is Medicaid.

The first roadblock that most people encounter is the "knowledge" that they must give away everything they own three years prior to getting Medicaid nursing home benefits. Not true. In fact, the period during which they are disqualified for Medicaid may be much longer or much shorter, and there may be no disqualification period at all. As with most legal matters, the outcome depends on the facts of the individual situation. Some asset transfers are not penalized under the Medicaid rules. A lot depends on what is given away, to whom, and when. It's complicated. Consult with a lawyer who knows this very involved area of the law.

Some think that what is in the spouse's name does not count against them for Medicaid eligibility. Wrong. Assets are counted regardless of which spouse's name they are in. However, there are certain Medicaid rules that allow the retitling of some assets in the name of the at-home spouse to prevent the impoverishment of the spouse who is not in the nursing home. But these rules are very specific and limited.

Some think that if they enter a nursing home as a private (self) pay resident, then they must use up all their assets before they can get Medicaid assistance. The truth is that you are not required to use up all your assets to private pay for the nursing home. However, some nursing homes may lead you to believe such is the case, because they are paid less under the Medicaid program than they will collect from the same resident as a private pay patient. Many people seek advice from an elder law attorney to find out how they can become Medicaid eligible before they have spent a significant part of their assets on the private pay rate. This can be accomplished even after the person has gone into the nursing home to reside.

Some think that they can keep all the "marital property" and any inherited property even when the spouse gets Medicaid. Again, not true. When a married person applies for Medicaid, assets in either or both names are considered by the Medicaid agency.

Some believe that they can only spend-down their assets on medical or nursing home bills. Not true. There are many other legitimate ways of spending down the assets of a Medicaid applicant to meet the qualification requirements, but this should be a part of a carefully structured Medicaid plan, and accomplished prior to filing the Medicaid application.

Please do not assume that what your cousin did for his mother in another state will work for you in Mississippi. Each state makes its own administrative regulations, and they are surprisingly different from state to state. Just because you think that your mother's situation is the same, there may be differences that are not at all clear to someone who does not do this kind of planning on a regular basis. Get some good advice.

Some assets are not "countable" when assessing Medicaid eligibility and others may be retained by you in some circumstances as an asset allowance if your spouse enters a nursing home. For example, for a married couple the marital home that is occupied by the healthy spouse is not counted. Whether married or not, certain types of prepaid burial contracts are not counted. There are many other types of "non-countable property". The bottom line is that, if you do some planning, you do not need to be completely without assets to be eligible for Medicaid nursing home benefits.

William B. Howell is a member of the National Academy of Elder Law Attorneys and has his offices in Ridgeland, Mississippi.