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NURSING HOME ASSET PLANNING
DISPELLING THE MYTHS
BY GREG R. LORD JD, MBA,MLT
According to today’s statistics almost 25% of our population will require nursing home care in excess of one (1) year and 10% will require nursing home care in excess of five (5) years. Therefore, nursing home asset planning has become part of many families lives. Below I have listed ten common myths about nursing home asset planning followed by a proper explanation of each of those myths.
MYTH 1. It’s too late to plan, they’re already in the nursing home.
NO. The fact is, it is never to late to plan unless you have already spent all of the family’s assets on nursing home care. An elder law attorney should be consulted to assist you in asset transfer planning.
MYTH 2. A family has to spend all of their money before Medicaid will pay for nursing home care.
NO. The government has passed laws allowing families to set aside a certain amount of money for the community spouse both in assets and in income. Also certain assets are exempt such as house, car and personal furnishings and pre-need and burial funeral needs.
MYTH 3. Once the DHHR has determined how much money is allocated to the nursing home spouse all of that must be spent on nursing home care.
This is not true. The nursing home spouse can assist in paying for bills to keep their house, pay for utilities and purchase non-exempt assets such as a car and other personal furnishings. In addition, the nursing home spouse can also pay for a pre-need burial and also make gifts of their assets in accordance with federally established rules.(see answer to Myth 1 above).
MYTH 4. The government will make us sell our house before Medicaid will pay for nursing home care.
NO. The government may not force anyone to sell their house while they are alive. There are times where the government can put liens on the house which is discussed in Myth 5 below. In addition, transfers of houses are allowed (see answer to Myth 7 below).
MYTH 5. The government will put a lien on our house if Medicaid pays for nursing home care.
NO. The Medicaid recovery lien can only be placed on the house of a nursing home patient once Medicaid begins paying for that patient and the community spouse is no longer alive. In addition, the lien can only be placed on the home that is owned by the nursing home patient. (see answer to Myth 9 below).
MYTH 6. If I transfer assets for less than fair market value I will be ineligible for Medicaid for three (3) years.
MAYBE, MAYBE NOT. The government determines a period of ineligibility by dividing the transfer by the average costs of a semi-private room in West Virginia. However, there are methods of transferring assets which can cause shorter periods of ineligibility and an elder law specializing in this area should be consulted to assist families on a case by case basis
MYTH 7. All transfers for less than fair market value result in ineligibility.
NO. Certain transfers for less than fair market value do not incur a period of ineligibility. For example, transfers to spouses, disabled children, children under the age of 21 and siblings and children who reside in the home of the nursing home patient for a certain number of years are all transfers for less than fair market value which do not result in periods of ineligibility.
MYTH 8. If a transfer for less than fair market value causes a period of ineligibility you are stuck with that number of months of ineligibility.
NO. The government allows you to cure an ineligible transfer by re-transferring the assets back to the nursing home patient. Then a proper gifting plan can be set in place which will result in a period of ineligibility much less than that which is initially imposed by the government.
MYTH 9. The government will take everything at a Medicaid recipient’s death.
NO. The only recovery the government has for nursing home care paid by Medicaid, are assets in the estate of the decedent. Any bequests to a disabled child, no matter what age the child is, are also free of the government’s claim.
MYTH 10. It is illegal to transfer assets to qualify a person for nursing home Medicaid care.
NO. Years ago congress passed a "granny bill" which stated that any transferred assets to qualify for Medicaid care was criminal. According to the U.S. Attorney General’s Office, this bill has not been pursued and it is unlikely that any transfer of assets made in accordance with the government’s rules and regulations could be considered criminal in nature.
MYTH 11. I can rely on the Department of Health and Human Resources to assist me in determining what I have to spend on nursing home care.
NO. I recently went with my client’s to a nursing home determination hearing where a certain county’s DHHR worker informed us that my client would be ineligible for an additional five (5) months and would have to private pay an additional $25,000.00 for nursing home care. After showing the case worker their own procedures and operations manual and forcing them to call the State office on Medicaid qualifications the case worker realized that county’s department had been calculating the period of ineligibility incorrectly and that my client was in fact eligible for nursing home care. Therefore, you should enlist the services of a qualified elder law attorney in assisting you in planning and applying for Medicaid at the DHHR office.
Greg R. Lord is an attorney practicing with The Lord Law Firm, PLLC in Charleston, West Virginia and concentrates in the area of elder law and nursing home asset planning. Mr. Lord is a member of the West Virginia Trial Lawyers Association and the National Academy of Elder Law attorneys. He has spoken extensively on nursing home asset planning as well as estate planning and other issues regarding settlements for personal injury victims
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