Ruth-Ann E. Toups
Top Five Medicaid Myths
There is a lot of misinformation about Medicaid out there. Medicaid rules are different from state to state and change frequently. Too often, I hear the phrase “well my neighbor said I could just …”. Here are the top five Medicaid myths I hear, and the truth behind the myth:
1. Medicaid can take your house.
In Texas, Medicaid cannot take your house. As long as a certain condition is met, your house does not count against you when applying for Medicaid. Texas will not come and take your home in order for you to qualify for Medicaid. There is a program called the Medicaid Estate Recovery Program (MERP) that recovers funds from estates of people who were on Medicaid and died. MERP can make a claim against your estate. It’s important to note that they still do not have the right to file a lien against your home. With proper planning, MERP can be avoided.
2. You have to give everything away to qualify.
You don’t have to give everything away. It’s true that Medicaid eligibility is based on what you own. For a single person especially, those are requirements do not allow for the person applying to have a lot. However, for married couples there are spousal impoverishment rules that allow us to keep certain things. It’s very important to know that Medicaid qualification is different for everyone. Most of my clients are shocked to find out what the rules really are, what they can really keep, and how they are permitted to spend money.
3. After you give everything away you still have to wait five years to qualify.
Medicaid does have a five-year look back period, but it is often misunderstood. If you sold a house last year for fair market value, you are not penalized for that. If you gave it away that could be a different story. It’s important to again get the right information for your situation.
4. A well spouse must divorce a sick spouse to protect their assets.
Those spousal impoverishment rules we mentioned in the second myth protect spouses when one spouse needs care and the other needs funds to stay in the home. Being married is one of the best ways to keep more stuff and qualify for Medicaid.
5. A Miller Trust will protect all my assets.
A Miller Trust (or a Qualified Income Trust) is not for your assets, it’s for your income. In other words, if you have $100 and you want to protect it and you put it in a Miller Trust you have not protected it from Medicaid, or anyone else for that matter. A Miller Trust is a tool we use when an applicant’s income exceeds the income cap.
The important thing to remember if you hear these myths is you need to find out the truth as it applies to you. Medicaid is different for each unique situation, and it’s important to seek the advice of a professional.