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Great misunderstanding engulfs the system. Many people believe that only if the government can find the assets they have hidden will the Medicaid constabulary snatch them away to help pay their nursing home costs.
Not true. The government does not snatch anything.
Instead, every person applying for Medicaid assistance in paying long-term care costs undergoes a complete financial investigation. If assets are found that exceed near-pauperism, or that in recent years the applicant finagled a few deals to lower his/her worth and defraud the government into paying for their long-term care, the applicant still gets to keep everything he/she owns. Nothing changes. He just doesn’t get any money from the state to pay for his/her board and keep at a nursing home!
The state simply tells the applicant: “Hey, Medicaid is for the impoverished. You want to go to a nursing home? You’ve got the money to pay for it yourself. When your money is nearly gone, come back and see us and we will take another look. The fact that the applicant was going to use his savings to buy a second home in sunny Arizona or pay his grandchildren’s way through college does not sway them one bit.
Most troublesome is the fact that the Medicaid laws, rulings and interpretations change each time you cross a state line. You can ask three different experts to recite the rules to you and get three different answers. It is that complex! Medicaid officials themselves from one county to the next often disagree. And just about the time you think you have the rules straight, the government tightens the rules again.
In general, to qualify for Medicaid and a monthly pittance to buy shaving cream, shampoo, and a newspaper, the present system allows a single person to keep his/her home and furnishings, auto (if worth less than $4,500), and approximately $3,000 in liquid assets. In the case of a married couple with one spouse living at home and the other requiring long-term care, the liquid asset allowance shoots up to approximately $75,000.
There is a “look back” period of three years (five years for those that have trusts) to determine if the applicant has made unusually large gifts or sold assets at well below their fair market value to artificially lower their net worth.
But here is the kicker. Laws have been recently passed that allows an unlimited look back if the government suspects that assets have been disposed of for the purpose of qualifying for Medicaid. Thus far, those laws have not been enforced (perhaps because the government may believe them to be unconstitutional).
However, it is easy to see where this is leading and it is apparent to most that this will be the next great tightening of the screws.
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