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| Common Medicaid misconceptions |
Medicaid will take my home
A home is always an exempt asset while the person receiving Medicaid is living there. A spouse can keep the home for as long as he or she resides there. There is also a provision for an adult child or sibling of a Medicaid recipient to keep the house if it has also been their primary residence and they have provided care for the Medicaid recipient for a determined length of time.
Medicaid will take my home when I go into a nursing home
In Michigan, if you live alone when you go into a nursing home, your home will still remain an exempt asset. Medicaid does not provide money, however, for the taxes, mortgage and upkeep on that home.
My tax advisor/accountant/attorney/friend etc. told me I can give away $10,000
Yes, you can give away $10,000 a year per individual recipient and avoid gift taxes. But be careful not to confuse tax laws, probate laws and Medicaid laws. What is legal for one may not be legal for the other. If you give away any money, Medicaid law consideres it a divestment and it will affect your Medicaid eligibility for Medicaid in a nursing home or waiver program.
I’m going to put the name of my son/daughter etc. on the house to avoid probate
This may be an option under probate law. Under Medicaid law it is considered divestment and subject to penalties.
I’m going to put my assets into a trust so Medicaid won’t take them
A trust may be a sound decision for probate law, but trusts in Medicaid law may make an otherwise expempt asset (like a homestead) countable and will generally not protect otherwise countable assets. Additionally, the lookback period for trusts when figuring divestment and penalties is generally 5 years.
I’m going to protect my assets from Medicaid by buying an annuity
An annuity is a countable asset. No protection will occur. If the annuity has been annuitized , meaning payments are being drawn, then the proceeds are counted as income. If someone other than the Medicaid recipient or their spouse is the recipient of those payments, or the length of the expected payments is longer than the expected life span of the Medicaid recipient (as determined by Medicaid actuarial tables), then it can be considered divestment.
I heard I can only keep $2,000
In Michigan, $2,000 is the amount of countable assets that a single Medicaid recipient can keep. Married couples have different guidelines as determined by spousal impoverishment guidelines. This amount can vary by state.
I get Social Security so I get Medicaid
Medicaid is not connected to receiving Social Security. Medicare is.
I have a will so my estate is protected
A will does not protect your assets from Medicaid or probate. Assets are still classified as countable or exempt - whether you have a will or not - as long as you are alive. Upon your death, Michigan Medicaid will not place a claim against your estate. Most other states have a provision to recover some of the Medicaid payments from an estate. A will will direct the court as to how you want your estate to be distributed but will not avoid the estate from being probated.
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