Four Myths of Paying for Long Term Care
A Light, Thanksgiving Dinner Topic of Conversation
It is hard to believe that we are now staring down the business-end of the holidays. In a few short days, we will be sitting around the table, hopefully with family and friends, discussing the talk of the day. And for anyone who is in need of a topic of conversation that is slightly more interesting than the weather, but slightly less lively than politics and religion, well…who doesn’t want to discuss some common misunderstandings concerning paying for long-term care? I know, I know. You’re welcome. Here goes:
MYTH #1: Medicare pays for long-term care.
This is mostly false. Medicare pays for short stints of rehabilitative care in a rehabilitation facility (which is also usually a nursing home), and hospice (which is really hard to qualify for). All of Medicare coverage for rehabilitative care is temporary, and usually much shorter than people expect.
The only government benefits program that is guaranteed to pay for a person’s costs of care in a nursing home is the Medicaid long term care program.
MYTH #2: Adding your kids to the title of your bank account will help you qualify for Medicaid.
I hear this a lot from clients. Most people will add a son or daughter’s name to the title of their account with the expectation that only a portion of the account will be considered to belong to the parent if the parent has to apply for Medicaid. However, since a joint owner of an account can withdraw funds without the permission of any other owner, the whole account is considered to belong to the person applying for Medicaid.
MYTH #3: Putting your kids’ names on the title of your house will help you qualify for Medicaid.
Be aware that there is a five year “lookback” period under current Medicaid rules. With very few exceptions (but…there are exceptions), if large gifts are made within five years of an application for Medicaid, those gifts will seriously complicate or maybe even prevent a person from qualifying financially for Medicaid. Adding children to the title, without some planning beforehand, could create more problems than it solves.
MYTH #4: If a person is married and one spouse is in a nursing home, you have to spend half of the assets and then the spouse in the nursing home will qualify for Medicaid.
So, a confession: it drives me crazy when nursing homes tell people this. We have something available to us called the spousal impoverishment laws. With proper planning it is possible to preserve almost all or at least most of the couples’ assets for the spouse living at home.
And there you have it—a summary of the four myths I have to correct most often when I’m meeting with clients to discuss Medicaid planning and asset preservation planning. I can’t promise this will be the most interesting thing you talk about at the holidays this year, but hopefully useful information, nonetheless!
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