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Horizon Elder Law & Estate Planning Blog

Wednesday, January 24, 2018

Seven Medicaid Myths Debunked

When it comes to long term care planning, it’s easy to become overwhelmed by so much information coming to you from many different sources. Sometimes you discover that your assumptions about something are way out in left field. It can be like that with Medicaid. Whether you receive Medicaid or not, you might be surprised by some of these common misconceptions about the program. Here are seven Medicaid Myths Debunked.

FAccording to the AARP, people have a lot of misinformation about Medicaid and people who receive its benefits. Before we deal with the seven Medicaid myths, let’s lay some groundwork with a few statistics about the program. Medicaid covers more Americans (one in six) with health insurance than any other company, agency or entity. More than one-third of births and one-fourth of all children benefit from Medicaid. Twenty percent of the disabled people under the age of 65 and all but one-third of the people who live in nursing homes rely on Medicaid. Now, on to the myth-busting.

  1. FACT: You cannot receive Medicaid just because you are poor. You have to fall within an eligible category, regardless of your poverty level. You may be eligible for Medicaid if you are a low-income adult who is:
    •  Pregnant,
    • Taking care of a dependent child,
    • Age 65 or older, or
    • Suffering from a qualifying disability.
  2. FACT: Most people on Medicaid get only health insurance and no cash welfare payments. Through Medicaid, the working poor and the children get health insurance they could not afford on their own.

  3. FACT: Most people who get Medicaid benefits have at least one employed person in the household. Many people incorrectly think the government spends Medicaid dollars primarily on people who do not work.

  4. FACT: Even people who work hard all their lives and put money away for retirement may still need Medicaid benefits. If you have to go into the nursing home, your life savings can evaporate in a year or two. The only way most people can afford to stay in a nursing home is to spend down their assets and qualify for Medicaid long-term care assistance.

  5. FACT: Medicaid does not pay for all your nursing home costs and leave you to spend your income however you like. You will have to sign over all of your income to the government, except for a “personal needs allowance,” which is only around $30 to $50 a month, depending on your state.

  6. FACT: Undocumented immigrants only receive emergency treatment and no other services from Medicaid or the State Children’s Health Insurance Program. Hospitals have to provide emergency care to everyone under federal law. Whenever anyone applies for Medicaid, the state must document the person’s citizenship before they can receive care. So, the notion that undocumented immigrants are causing financial problems for the Medicaid system is false.

  7. FACT: People are severely penalized if they try to hide their assets to qualify for Medicaid nursing home assistance, so wealthy people can’t get away with transferring their assets to get a free ride on Medicaid. The penalty, in a nutshell, is that Medicaid will determine the monthly cost of nursing home care in that state, and deny assistance to the senior for the number of months that equal the value of what they transferred improperly during the five years before applying for Medicaid.  

    For example, let’s say a wealthy person gave away $200,000 of assets to family members rather than use it to pay her nursing home costs. If the average monthly cost for a nursing home in that state is $7,500 a month, she will be ineligible for Medicaid nursing home assistance for about 27 months.

Because Medicaid is a joint federal and state program, the rules and benefits vary by state. You should request a consult with the professional Medi-Cal planning attorneys at Horizonlaw today to learn about the benefits for which you may qualify.


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