What Can Be Done To Protect My Assets
You cannot simply give your assets away to qualify a spouse for Medicaid. This can put you in violation of Medicaids 5-year Look Back Period and result in a period of Medicaid ineligibility. However, there are ways for you to protect your assets. You can put money into non-exempt assets, such as paying for home modifications / renovations, vehicle modifications, or purchasing an irrevocable funeral trust. You can also pay off debt, such as your mortgage loan or credit cards. In addition, you could purchase an annuity. This takes countable assets and transforms them into non-countable income. Some of these approaches are straightforward and others are complicated. It is best to consult with a Medicaid eligibility expert before taking any action to ensure you are not in violation of Medicaids complicated rules.
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What To Consider If Youre Offered A Home Visit
If you or someone you know is offered a home visit from a Medicare Advantage plan, keep the following in mind:
- If you have a serious health condition, the extra care might help you avoid a hospital stay.
- The care they provide isnt ongoing. This is the only time you will see the clinician who examines you. The results of the exam and tests will be forwarded to your regular clinician for follow-up.
- If you are healthy and the visit results in an increased risk score, you wont have to pay more for your care. But the higher Medicare reimbursement your insurer receives may contribute to the nations rising health care costs.
- You are not obligated to have a home visit theyre completely optional.
Does Medicare Pay For Medicare Provider House Calls
Outside of the Independence at Home program, Medicare may pay a portion of Medicare provider house call services that is, home health care under certain circumstances. This may be the case whether you have Medicare Part A and Part B or you are enrolled in a Medicare Advantage plan. Typically you must receive home care from a Medicare provider . You must also meet Medicare criteria to qualify for home care.
Under Medicare Part A, you have coverage for home-based hospice care. In addition, Medicare Part A and Part B provide benefits for a wide range of intermittent skilled nursing services, therapy, medical supplies, medical social services, and even health aide services to assist you with daily living activities such as dressing or bathing in your own home. Usually these services are provided by Medicare-approved home health agencies for periods of up to 60 days. Whether you are enrolled in Medicare Part A and Part B or a Medicare Advantage plan, you must qualify for home health services.
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The Role Of Medicaid In Nursing Care
Medicaid is a federal and state program that helps those with limited income and resources with paying for medical costs. It also serves as a supplement to Medicare to cover additional costs that Medicare might not typically cover, like nursing homes. Over time, Institutional Medicaid has become the primary payer for this kind of long-term care. This is a type of Medicaid that covers general nursing home expenses like room and board, personal care, and therapy.
What Is A Nursing Home
A nursing home is a place where a person can receive extra care services from nurses or nurses aides.
Many of these facilities may be homes or apartments for people who need extra care for their daily activities or who no longer desire to live alone. Some resemble hospitals or hotels with rooms with beds and baths and common spaces for classes, recreation, eating, and relaxing.
Most nursing homes provide around-the-clock care. Services can vary, but may include help to go to the bathroom, assistance getting medications, and meal services.
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You No Longer Have A Qualifying Disability
If you are under 65 years old and qualified for Medicare because of a disability, you might lose your coverage if you recover from your disability that qualified you for Medicare. If this happens, you will need to consider other forms of health insurance coverage.
If you receive disability benefits from the Social Security Administration and are under age 65, your Medicare benefits might continue even if you return to work, as long as you have not recovered from your initial qualifying disability.
Contact your local SSA office to find out more information regarding your personal situation by calling 1-800-772-1213, TTY users can call 1-800-325-0778, Monday through Friday, 7 a.m. to 7 p.m.
How Can I Pay For Nursing Home Care
Medicare generally doesn’t cover
stays in a nursing home. Even if Medicare doesnt cover your nursing home care, youll still need Medicare for hospital care, doctor services, and medical supplies while youre in the nursing home. Find out what nursing home care Medicare does cover, and how Medicare prescription drug coverage works if you live in a nursing home or other institution.
Most people who enter nursing homes start by paying for their care out-of-pocket.
There are several other ways you can pay for nursing home care:
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Trusts Can Protect Your Home And Your Money
Trusts shield your home and property.
A trust is a legal structure that allows you to preserve income and assets that would otherwise be lost under Medicaid regulations. Trusts are among the main workhorses of Elder Law planning, and some of its most powerful tools. Heres how they function to protect your home or any other property you hold.
Lets say you own a house, condominium or cooperative apartment worth $500,000 in todays market. You bought it 40 years ago for $35,000, and your loan is paid off Now you need long-term care. The problem is that while your home is an exempt asset for eligibility purposes, Medicaid may eventually require that the equity be used to reimburse the cost of your care. Theyll do that by enforcing a lien against your property when you move out permanently or die. The lien will be equal to the amount of benefits paid.
Costs for long-term care are exorbitant. That means after just a short time, the equity in your home could be exhausted by the amount of the lien Medicaid may eventually be able to enforce. In effect, youll be leaving your home to the government to repay Medicaid, instead of to your children or other family members.
A trust strategy eliminates the entire problem. By transferring your home to an asset protection trust, you are no longer the owner. The house legally belongs to the trust. And your property is safe from being subject to a Medicaid lien.
Recovering From The Estate
The first method states use is to seek repayment from the estate of a deceased Medicaid beneficiary. Each state defines the term “estate” — meaning what type of property Medicaid will go after — differently. Some states are fairly conservative about what they will try to take — they have the right to recover costs from real estate, personal property, and other assets only if they are included within the deceased person’s “probate estate.” A probate estate includes only assets that were owned solely by the individual at the time of death, where there is no beneficiary or joint owner designated. Joint accounts, payable on death accounts, and contracts that have designated a beneficiary are not included in the probate estate.
Other states use a broader definition of the term estate that includes any assets an individual had legal title to or interest in at the time of death, including property that . In these states, the estate includes assets that the individual attempted to convey to a survivor, heir, or assign through an arrangement such as a joint tenancy, tenancy in common, survivorship, life estate, or living trust.
To recover expenses paid under the probate definition of estate, the state files a claim in the probate estate of the decedent just as would any creditor. Under the more expansive definition of estate, the state must enforce its rights by notifying heirs of its rights under state law.
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How Can A Professional Medicaid Planner Help
Professional Medicaid planners provide a wide variety of assistance, from helping with the Medicaid application paperwork to restructuring finances to ensure eligibility. The rules of Medicaid eligibility are complex, state-specific and ever-changing. And the eligibility requirements differ for a single individual versus a married couple. The application process can be exceptionally complex when only one spouse of a married couple is applying for long-term Medicaid. Applications can be further complicated when one spouse is receiving veterans benefits. Professional Medicaid planners are extremely knowledgeable in the complexities of Medicaid, as well as have experience in situations, such as yours, where one spouse will be entering a Medicaid-funded nursing home. Working with a professional is particularly beneficial if you and your spouse are over the income and / or asset limit. Because being over the limits doesnt necessarily equate to denial of Medicaid services. To learn more about professional Medicaid planners, .
Why Would Medicare Providers Make House Calls
If Medicare providers made house calls to people with chronic conditions, patients might get better care and have better outcomes, CMS reported. CMS will use this pilot project to see if house calls can help patients avoid hospitals and emergency rooms. Medicare provider house calls might boost satisfaction for both patients and caregivers. CMS also wants to see if the program saves money for the Medicare program .
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How Does The State Define Undue Hardship
The state may consider it a hardship when:
- The estate property was a family business, farm, or ranch for at least 12 months before the person on Medicaid dies, and is the main source of income for the heirs.
- The heirs would need financial help from the government if the state filed a MERP claim to get money back.
- The heirs could stop getting financial help from the government if the state did not file a MERP claim.
- The person who died received services because he or she was a crime victim.
- There are other circumstances that may create a hardship.
One type of hardship applies just to the home. If the value of the homestead is under $100,000, and if one or more of the heirs have family income under a certain amount, the state may not ask for money back. In 2019, this income limit for one person is $37,470. For a family of two, it is $50,730. These figures are adjusted each year.
The state will not grant a hardship request unless the person’s heirs ask for it and provide the requested proof of the hardship.
If the estate has debts, such as funeral costs, legal costs, or a home mortgage, those costs are paid before a MERP claim is paid.
Promissory Note For Medicaid Recovery
The home could be sold on a promissory note and this effectively changes it from an asset to a loan and it is no longer considered an impediment to Medicaid qualification. Payments from the loan must be used to offset the care cost of the Medicaid beneficiary. This strategy used to be a very common one prior to the Deficit Reduction Act. The new rules pertaining to promissory notes make this strategy much more limited.
The term of the loan cannot exceed the life expectancy of the Medicaid beneficiary. For example, for a 90-year-old this might only be five years. This would make the payments very large and potentially unattractive for the family who is buying the property. All payments through the life of the loan must be equal. In addition, the loan cannot be canceled at death but payments must continue throughout the term of the loan into the estate of the deceased beneficiary which would make them subject to recovery. In those states that use probate for recovery, Medicaid could be bypassed by naming a beneficiary of the loan payments other than the state. The loan must be non-assignable meaning it cannot be used as collateral for another loan or purchased outright for cash.
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Preserving Tax Breaks For Home Ownership If Title To The Property Is Changed
Gifting a personal residence prior to death or to sale by an owner who has resided in the home for at least two of the last five years results in a loss of significant tax breaks. If the personal residence is sold while the owners are alive, a lifetime capital gains exclusion of $250,000 for a single individual or $500,000 for a couple applies to the sale. Thus, if a portion of the exclusion has not been used previously, either $250,000 worth of equity or $500,000 is excluded from capital gains taxes of 15%. As an example suppose that a couple has established a basis in their home of $50,000 based on their original purchase price plus improvements and adjustment of any depreciation claimed for business use. Suppose that the home sells for $400,000. Without the capital gains exclusion, the couple would have to pay a capital gains tax of 15% of the difference between their basis and the selling price — $350,000. This amounts to $52,500 in taxes. With the couples’ exclusion there is no tax.
There is also tax relief if the children inherit the property at death. Instead of inheriting the basis in the property, the children will inherit the sale value of the property at the time of death. This is called the step up in basis and depending on when the property is sold, there is little if any capital gains tax due.
Can You Protect Your House From Medicaid By Giving It To Your Kids
The cost of care in a nursing home or other long-term care facility is high and continues to rise. If you ever need nursing home care, the Medicaid program will help you pay for itafter you “spend down” your assets to the point where you qualify for benefits. You likely won’t have to sell your home in order to qualify for Medicaid, but Medicaid can make a claim against your estate after your death to recover funds it expended on your behalf. This process, called estate recovery, may result in a claim against your house. Can you protect your house from Medicaid by giving it to your adult children?
The answer is a definite maybe. There are some circumstances in which you can transfer your home to an adult child to keep it out of the clutches of Medicaid. However, there are better ways to protect this cherished asset, and at least a few very good reasons you may not want to transfer it to your children.
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Medicaid Estate Recovery And Home Ownership
Upon the death of a Medicaid recipient, the state may seek repayment of its outlays for the seniors long-term care. This has become increasingly common as more seniors require long-term care but do not have the personal funds to pay for it. The Medicaid Estate Recovery Program recoups this money by filing claims against any assets a Medicaid recipient held an interest in at the time of their death, such as a home. However, if a senior died without any assets , then there is no way for the state to be repaid.
As a very basic example, say Mom was in a Medicaid-certified nursing home for two years and the state paid the nursing home $4,000 each month for her care. Once Mom passes away, MERP will file a claim against her estate in the amount of $96,000 . If Moms house was still in her name at the time of her death, then to repay the state the $96,000, the house will have to be sold. Any amount of proceeds exceeding the $96,000 can then be distributed in accordance with Mom’s will.
In summary, the general rule is that, while a senior is alive, their home will not be taken or required to be sold to pay the nursing home or the state government. However, their home may need to be sold to repay the state after their death.
What Are Medicaid Liens On A Property
State Medicaid programs under Medicare can protect their right to take your house through liens. A lien is a document that allows people or companies to keep possession of property belonging to another person until a debt owed by that person is paid. Liens can prevent owners from giving away or selling their home in a way that would compromise the equity of their property. Overall, liens are a protective measure favoring Medicaid.
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Medicaid Recovery Where The Community Spouse Outlives The Nursing Home Spouse
In many states, if the community spouse is alive after the Medicaid beneficiary dies, the state will not attempt recovery even after the death of the community spouse. The home is always protected from recovery as long as the community spouse is alive whether he or she lives in the home or not.
In those states that attempt recovery, the community spouse, if healthy, can employ a number of gifting strategies. This is because Medicaid in these particular states cannot apply a lien against the house while the community spouse is alive and living in the home. This does not mean that if the state is entitled to recovery, it cannot pursue civil action. Whether this happens on a regular basis we don’t know.