Medicaid-Traps for the Unwary
In Hawaii
(Updated for 2006)
Judith Sterling and Michelle Tucker, Attorneys at LawAre you aware that nursing homes cost as much as $88,000 a year and even more in Hawaii today?
Most thoughtful people who see themselves or their parents aging are concerned about how such a large expense can be handled if a loved one needs nursing home care. Are you aware that there is a public assistance program that helps people with the cost of nursing home care?
This program is a federally and state funded program and it is called the Medicaid program. In Hawaii the Medicaid program is called MEDQuest.
People want to know how to get the Medicaid program to help pay for nursing home expenses. They frequently ask others who do not really know the ins and outs of the program about how to qualify for Medicaid. There is a lot of misinformation floating around about the Medicaid program. Even attorneys often do not know the Medicaid law.
You need accurate information, or you can fall into traps that will prevent you or your loved ones from getting help with nursing home bills. Here are some of the traps for the unwary:
“My Kaiser plan will cover my nursing home bill.” Not true.
Kaiser is an HMO (Health maintenance organization). HMO plans, like health insurance plans are not designed to cover much, if any custodial care. They are designed to cover acute care. Check the terms of your plan.
“Medicare will cover my nursing home bill.” Not true.
Medicare only covers about 2% of the nursing home care provided in the U.S. Medicare will cover 20 days completely if you enter a nursing home within 30 days of a 3-day hospital stay. An additional 80 days is partially covered and that is it. After that, you need to pay with your own money unless you qualify for Medicaid. Even worse, unless skilled nursing or particular kinds of therapy are needed, the care can be downgraded to custodial and Medicare benefits cease even if the 100 days have not been used up.
“I am a veteran and the Veteran’s Administration will take care of all of my long term care needs.” Not true.
The long term care available through the Veteran’s Administration is extremely limited and priority goes to
Veterans with service-related
disabilities and impoverished veterans. Nursing home placement is not guaranteed
to any veteran.
“I have long term care insurance so I don’t need to think about Medicaid.” Not true.
If you have long term care insurance, you should review the terms of your policy carefully to see if you have sufficient coverage in case of severe and/or lengthy disability.
Since long term care insurance can be expensive, people frequently purchase coverage for a short period of time and for amounts less than the actual cost of nursing home care.
“My income will have to be used to pay my spouse’s nursing home costs.” Not true.
In Hawaii, the healthy spouse can keep all of the healthy spouse’s
income.
If my spouse and I have a prenuptial agreement, I can keep all of my assets
and my spouse can get Medicaid.”
Not true.
A prenuptial agreement is an agreement between the two spouses and not with the Medicaid program. It does not change the rule of the Medicaid program that all assets of both spouses are to be considered in determining eligibility for Medicaid.
“If I put all my assets in my spouse’s name, I will qualify for Medicaid.” Not true.
For Medicaid purposes all the assets of either spouse are counted. In Hawaii, the unhealthy spouse is able to transfer assets to the healthy spouse so that the unhealthy spouse has no more than $2000 in countable assets and the healthy spouse no more than $99,340 in countable assets in the year 2006. The transfers can be made even after the unhealthy spouse has applied for Medicaid.
“I can keep my residence and qualify for Medicaid and my heirs can inherit my house without any problems.” Not true.
In Hawaii, you can keep your residence if you intend to return to the residence. However, if you do not meet certain limited exemptions, the state will lien your residence and will recover from the money paid by the Medicaid program for your nursing home care. Also, if your equity in your residence is more than $500,000, you may be ineligible for Medicaid.
“If I qualify for Medicaid, I can transfer my house to my spouse and not have to worry about a Medicaid lien being placed on my residence.” Not true.
You still need to worry about the possibility of a lien on your residence in case your spouse needs Medicaid. If the residence is in your spouse’s name and he is institutionalized, or you die, the state will lien the residence to collect the funds expended for your spouse’s Medicaid.
“I have a friend member who qualified for Medicaid. I can just do what he did and I will qualify.” Not true.
Each person’s situation is different and the Medicaid law is always changing. You cannot assume that your situation exactly matches your friend’s situation. You cannot assume that the law that applied to your friend will apply to you when you need to apply for Medicaid.
“If I qualify for nursing home Medicaid, I will need to be placed in a nursing home to get Medicaid assistance.” Not true.
In Hawaii, there are certain waiver programs that allow Medicaid funds to
be used for care other than in a nursing home. It is possible to receive care
in an assisted living or adult foster home, day care, or even receive assistance
in your own home.
Funds for these waiver programs are limited and availability varies from time
to time They are worth looking into as an alternative to a nursing home placement.
Because of the criteria for these waiver programs they may suit a single individual
better than a married person.
“If I am getting Medicaid assistance in another state, and I move to Hawaii, I will immediately qualify for Medicaid in Hawaii.” Not true.
A person on Medicaid in another state needs to qualify in Hawaii, even thought he was qualified in another state. Every state has different rules for qualifying for Medicaid and just because a person qualified for Medicaid in another state does not mean she will qualify under Hawaii Medicaid rules. Even if the person will qualify, a complete application for Medicaid in Hawaii will need to be filed.
Understanding and applying the laws of the Medicaid program is complicated and full of traps for the unwary. Consult an elder law attorney versed in the Medicaid law when planning for your long term care.
All of my spouse’s income will have to be used for my spouse’s nursing home costs.” Not true.
The healthy spouse can get some or all of the institutionalized spouse’s income, so that the total monthly income of the healthy spouse is brought up as close as possible to a fixed minimum amount. In Hawaii, this amount is $2488.50 per month for the year 2006.
“I can’t give away anything and expect to get Medicaid.” Not true.
Under the Medicaid rules, some assets can be given away and you can still qualify for Medicaid. It all depends on who the assets are transferred to, when the assets are transferred and the amounts that are transferred.
“I have to give away everything I own to qualify for Medicaid.” Not true.
You can qualify for Medicaid and still retain some assets. Assets are divided into countable and exempt assets. You can keep the exempt assets, and $2000.00 of countable assets, and if you are married, your spouse who is not qualifying for Medicaid can keep $99,540 in countable assets in 2006. You may need help to get all of this figured out.
“I have to use up all my assets on nursing home care before I can qualify for Medicaid.’ Not true.
You can qualify for Medicaid after you have gifted away assets provided you
follow specific rules, and you use the assets to pay for anything for which
you get fair value. For example, you can pay for home improvements, or you
can pay off your mortgage. Don’t let the nursing home personnel convince
you that you have to private pay until you have used all your assets.
“I have to wait 3 years after making any gifts in order to qualify for Medicaid.” Not true.
There is a 3-year and sometimes a 5-year “look back” period when you make transfers of assets. You will need to explain any transfers made in the look back period when you apply for Medicaid. However, the actual disqualification period called the “penalty period” may be more or less than the look back period. Sometimes transfers do not cause any penalty period to apply. Be very careful with large transfers. If you apply for Medicaid during the look back period, and you have made a very large transfer in the look back period, a penalty period much longer than the look back period may apply.
“I can only give away $10,000 per year under the Medicaid rules.” Not true.
The rule about gifting $10,000 per year (now actually $11,000 per year) is a rule for the Federal estate and gift tax, and is not a Medicaid rule. This rule is of concern to people with over $! Million in assets. Don’t let confusing tax law and the Medicaid law keep you from doing long term planning.
“I can hide my assets and get Medicaid.” Not true.
The Medicaid application requires you to list your assets. Hiding your assets, and then completing a fraudulent Medicaid application is a criminal offense. You or whoever applied fro you knowingly misrepresenting your assets can be prosecuted for Medicaid fraud.
“I can keep all my inherited property, and property in my own name and my spouse can get Medicaid.” Not true.
For Medicaid purposes all the assets in either name, or in both spouses’
names are considered. The assets are divided into exempt assets and countable
assets. In Hawaii, the spouses can keep the exempt assets, and the spouse
entering the nursing home can have $2000.00 in countable assets. The spouse
in the community can have $98,540.00 for the year 2006.
Legal Disclaimer
This information has been provided for informational purposes only. It does
not constitute legal advice. The receipt of this information does not establish
an attorney-client privilege. Proper legal advice can only be given upon consideration
of all the relevant facts and laws. Therefore you should not act upon any
of the information contained herein without seeking appropriate legal counsel.
Attorneys Judith Sterling and Michelle Tucker are both CPAs and licensed attorneys. They are the first two attorneys in Hawaii to be certified by the American Bar Association(ABA) accredited Estate Law Specialist Board, Inc., as Estate Planning Law Specialists, and are so certified by the Supreme Court of Hawaii. The Supreme Court of Hawaii grants Hawaii certification only to lawyers in good standing who have successfully completed a specialty program accredited by the ABA.
For a free copy of “10 Questions to Ask Before you Engage an Attorney to help you in Planning for Medicaid / Long Term Care” call (808) 531-5391 Ext 0.
Return to the Medicaid Planning Center
Legal Disclaimer
This information has been provided for informational purposes only. It does
not constitute legal advice. The receipt of this information does not establish
an attorney-client privilege. Proper legal advice can only be given upon consideration
of all the relevant facts and laws. Therefore you should not act upon any
of the information contained herein without seeking appropriate legal counsel.
Attorneys Judith Sterling and Michelle Tucker are both CPAs and licensed attorneys. They are the first two attorneys in Hawaii to be certified by the American Bar Association (ABA) accredited Estate Law Specialist Board, Inc., as Estate Planning Law Specialists, and are so certified by the Supreme Court of Hawaii. The Supreme Court of Hawaii grants Hawaii certification only to lawyers in good standing who have successfully completed a specialty program accredited by the ABA.
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Haseko Center Serving Maui and the Big Island by appointment 1-(800) 807-3820 |
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