Medicaid 101


Q: My mother’s companion has lung cancer and is in a nursing home, which his private insurance covers only for the first 100 days. We have started an application for Medicaid to cover the rest of his stay, but we’ve heard that he might lose his house in the process. How does that work?

A: For the past several years states have been getting much more aggressive about going after the homes and other assets of deceased Medicaid recipients. On first glance, this sounds like a pretty cold-hearted enterprise. After all, to be eligible for Medicaid’s help with your nursing-home bills you can’t have much. But states, which share the cost of Medicaid with the federal government, are watching their spending on this medical program for the poor skyrocket as more middle-class people use Medicaid as nursing-home insurance. Since our country has not dealt with the issue of paying for long-term care, other than recommending and offering tax incentives to encourage people to purchase long-term care insurance for themselves, Medicaid is then often the only place middle-class and low-income Americans can go for help with expensive nursing-home bills. The Medicaid program paid 47 percent of the nation’s nursing-home bills in 1997, and it’s only going to get worse as the number of elderly people in this country rises.

      So now you know why government bureaucrats may be interested in taking your friend's home if he dies after being cared for by Medicaid. That doesn't mean, however, that there's nothing you can do to preserve some of his estate for any relatives who might like to live in his family home.
      Unfortunately, giving precise advice is tricky, since each state handles this issue differently. Some, such as Oregon and Wisconsin, have extensive dragnets to ensure they get the highest reimbursement from a Medicaid patient's estate — even for regular medical care, not just nursing-home stays. Others, such as West Virginia, have chosen to be abit  more liberal and let families keep some assets.

      Still, there are some basics that everyone should know about this rather hidden area of bureaucracy:

bulletEach state is required to seek reimbursement for nursing-home care, federal law says.
bulletThe state has to provide an exception for hardship cases, but each state can define what that means.
bulletThe state can go after property only upon the Medicaid recipient's death.
bulletThe state can't force the sale of a house if it's still occupied by a surviving spouse, a child under age 21 or an adult, disabled child.
bulletTo even qualify for Medicaid's help, you can have up to $2,000 in the bank, plus own a home and a car.
bulletRemember that Medicare is a separate program — it covers health care for the elderly and disabled — and offers only limited long-term care benefits. That's probably the insurance plan along with a medicare supplement policy that's paying for 100 days of your friend's stay at the nursing home.

You should try to understand how your state's Medicaid program works before you start filling out the forms, because there might be some strategy you can use to make sure the family home doesn't end up on the auction block. You may want to consult with an elder-law attorney who is familiar with Medicaid, advises Herbert Semmel, an attorney in Los Angeles with the National Senior Citizens Law Center. But don't get just any old estate-planning attorney, Semmel says — many of them are used to working with clients with estates over $1 million, and strategies for that type of estate could backfire for someone navigating the intricacies of Medicaid. Be sure the attorney knows elder law and knows Medicaid in your state. Try the National Academy of Elder Law Attorneys for a referral.

If you've heard about the government's crackdown on creative ways of hiding assets to become eligible for Medicaid, the feds did pass a law "criminalizing" such asset hiding or advising someone how to do so.
      You need to be very careful about transferring assets to family members other than spouses, because there can be implications both for Medicaid eligibility and for taxes. Setting up trusts and other complicated matters are definitely best handled with a lawyer's help.
      Medicaid caseworkers can help you figure out your eligibility, but don't depend on one to help plan your estate or hide assets from the government.

For more information, try:

bulletThe Medicaid program's Web site. See this for the driest, most bureaucratic but accurate treatment of the subject available.
bulletThe Eldercare Locator. This is a national resource for finding local information on health-care issues for the elderly. Call (800) 677-1116.



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