What is Medicaid?
Medicaid is a government funded program that offers free or low-cost health insurance coverage to low-income families and individuals. Medicaid guidelines are usually created by the federal government. However, state can alter these guidelines for the benefits of its residence. This simply means that eligibility for Medicaid, Including its benefits, can differ significantly from state to state. The Medicaid program is funded by the federal government and the state government.
What does Medicaid cover?
The federal government creates quality requirements and the rest is up to various states. At a baseline, Medicaid must come with coverage for inpatient and outpatient hospital services physical services, laboratory and X-ray services, home health services, etc. Some optional benefits that state Medicaid program can cover are prescription drugs (currently all states do), case management, physical therapy, including occupational therapy.
Who is Medicaid for?
The Medicaid program is designed for specific groups of people. These people include:
- Pregnant women with inadequate income
- Children of low-income families
- Children in foster care
- Individuals plagued with all sorts of disabilities
- Seniors with low income
- Parents or caregivers with inadequate income
States may decide to expand eligibility to other groups of individuals, such as individuals with low income who may or may not have children.
How to protect your assets prior your applying for Medicaid
Of course, there are a few ways in which you can protect your assets before applying for the most common health care program in the United States. One of the few methods is by gifting a part of your assets to people. Another effective way, more effective than the former, is by placing your assets in a trust. However, to make sure that you are still eligible for Medicaid, you will have to ensure that you place the assets in the trust five years before applying for Medicaid.
Can making a gift before applying for Medicaid save assets?
Gifts attracts penalties which will lead to the individual not being eligible for Medicaid care benefits. To prevent this, gifts will have to be offered five years before entering a nursing home to prevent sanctions or penalties.
Gifts that were made before one is being admitted into a nursing home can be penalized and they are subject to a five-year look back penalty period. A gift that a person made within five years before applying for Medicaid will attract a penalty period where the amount that was gifted will determine the appropriate penalty.
For example, the gift will be sanctioned if the nursing home cost $15,000 per month and the individual had made a gift of $15,000 in the previous months. If the gift was worth just $15,000, then there will be a one-month penalty where the individual doesn’t qualify for Medicaid so they will have to embrace private pay for a minimum of that one month before they are eligible for Medicaid again.
The federal government will not pay the tab for the nursing home. Thus, the family members have to pay for that month. This would simply apply to any gift that was worth over $1,000.
If the gift was worth less than the benchmark, $15,000, there is a mild penalty of less than a month if the average cost of the nursing home was 415,000, and glaringly the penalty timeframe would be raised if the gift were bigger than that. There exist a two month penalty if the gift was worth $30,000 and so on and so forth.
So, in a nutshell making a gift before applying for Medicaid can save your assets but can also jeopardize your Medicaid eligibility. To prevent that, you have to ensure that your timing is right. Don’t make a gift if you are certain that you’ll apply for Medicaid the following year or three years later. Call our office for more information.
Need an Elder Law Attorney?
Contact us if you need to know more about the look back penalty period or if you need the help of a Medicaid attorney.
