On a regular basis we meet with families facing long term care issues who make decisions based
upon an incomplete understanding of the laws and rules concerning Medicaid. Sometimes the
information is obtained from friends and relatives who have navigated the Medicaid system in
another state. While Medicaid has Federal implications, it is administered on a state level and
state laws impact this administration. Also, different rules apply for single and married persons
so sometimes we hear that a family is making decisions based upon the rules as they would relate
to a person of a different marital status. I have listed below a number of the common
misconceptions that I hear:
1. I have to spend all of my assets in order to get Medicaid. Certain assets (including a home, a
vehicle, certain burial plans, and a small amount of life insurance) are not countable assets when
applying for Medicaid. Additionally, a married applicant's spouse can keep a significant amount
as the community spouse resource allowance. IRAs may also be exempt if an appropriate amount
of income is withdrawn (however that amount is not necessarily RMD). In addition to these basic
exemptions, extensive planning opportunities are available that allow applicants to keep
substantially more assets.
2. I can only spend down my assets on nursing home expenses. If long term nursing home care is
required and Medicare and insurance benefits have been exhausted, you will need to pay all of
the nursing home bill until you qualify for Medicaid benefits. However, you can spend money on
a number of items that benefit you or your spouse. Many options are available under the
Medicaid laws to speed up Medicaid qualification process and protect assets.
3. I can hide my money and then apply for Medicaid.
Intentionally providing false information on a Medicaid application is fraud, for which there are
civil and criminal penalties. Our legal services include handling the Medicaid applications for
our clients. We insulate our client from having to deal with the government; our clients find that
this provides peace of mind. But whenever we file an application with the Department of
Children and Families we fully disclose the facts. None of the legal planning involves hiding
anything from the government. Full and honest disclosure is critical. Due to technological
advances it is quite easy (and legal) for the IRS, Social Security and the Department of Children
and Families and other government agencies to share information about your property and assets.
Furthermore, you must sign a release allowing the Department of Children and Families to
obtain financial information from financial institutions when you apply. One should never go
into the asset protection planning process thinking that it will be possible to hide money or
transactions.
4. I can give away $15,000 per year. This misconception is actually a federal gift tax law that has
nothing to do with Medicaid. In Florida a person is disqualified from Medicaid eligibility for
giving gifts of this kind. The penalty period does not begin to run until after the applicant is
otherwise eligible for benefits (already needing medical care and financially eligible for
Medicaid). Therefore a $15,000 gift made within the lookback period will cause a two month
period of ineligibility for the Medicaid applicant. It does not matter that the IRS will not impose
a gift tax on this gift.
5. What happened with my mom’s Medicaid application in Illinois will happen in Florida. As I
said above, each state has its own way of interpreting the Medicaid rules. Each state sets out its
own exemptions. There are planning opportunities no matter which state you need to file in.
You just need competent help to find and apply the right rules.
Medicaid planning is a complex field. You should bring any questions to a qualified law firm in order to make the best plan for your situation. Feel free to reach out to Burzynski Elder Law at
239-434-8557 if you have questions.