MIR Blog

Dispelling the Myths About ICP Medicaid

Myth: “Doesn’t Medicaid pay ALL nursing facility costs?”
Reality: Actually, the applicant must pay a share of cost based on the applicant’s gross income. This amount is referred to as the “Patient Responsibility.” Medicaid only pays the facility the Medicaid rate less the Patient Responsibility paid by the applicant.

Myth: “Income of both spouses must be used to pay nursing home costs.”
Reality: Not true; only the applicant’s income is used to pay the nursing home each month. The spouse’s income is reported only for the purpose of determining if he/she can keep a portion of the applicant’s monthly income. Only if both spouses apply for Medicaid will each of their incomes be paid to the nursing home each month.

Myth: “If we admit dad to the nursing facility mom will not have enough money to live on.”
Reality: Fortunately, the Medicaid program allows the spouse living at home (or ALF) to have a minimum of $1,750 per month to live on. If the spouse at home has gross income of less than $1,750 per month (2008), some of the Medicaid applicant’s income will be “diverted” to the spouse at home. This is referred to as “Spousal Income Diversion”. If the spouse living at home has a mortgage, rent or other housing costs, Medicaid may permit them to have more than $1,750 of monthly income.

Myth: “Medicaid will always approve an application going back three months.”
Reality: Medicaid will only provide retroactive coverage if the applicant met all qualifying requirements for each prior month (up to three prior months). In applying for a prior month, if the applicant’s gross monthly income exceeded $2,022, an income trust must have been established and funded for the month(s) requested. If the income trust had not yet been established, no retroactive approval is possible.

Myth: “If you don’t tell them about the asset they will not find out.”
Reality: This is wishful thinking. In submitting an application, the family signs a Financial Information Release. This form permits The Department of Children and Families to check all public and private records to verify income and assets. Most importantly, if information is intentionally withheld, this could be considered fraud.

Myth: “A single applicant (widow/widower) must spend down to $2,000 of assets to qualify for Medicaid.”
Reality: While it’s true that an applicant cannot have more than $2,000 of assets, it’s possible to avoid spending down the excess assets in order to qualify. If a single applicant has more than $2,000 of assets, there are ways to preserve their assets and still make them immediately eligible for Medicaid benefits.

Myth: “If Mom gave us gifts in the past three years she cannot qualify for Medicaid.”
Reality: This is not true under the current policy. The applicant is NOT immediately disqualified because of prior gifts of money or assets. If cash, vehicles, real property or other assets were gifted within the past three years, it must be reported on the application. Medicaid will evaluate all gifts to determine if a period of ineligibility still exists. However, even if a period of ineligibility exists, there are options to overcome the problem.

Note: In February 2006, federal law changed the Medicaid look-back period to 5 years. The state of Florida has not yet adopted this change. As soon as the State of Florida adopts the federal changes we will provide an updated newsletter explaining the implications of the changes.

Myth: “I can’t change my account to my spouse because of the three year look-back rule.”
Reality: An applicant can transfer any asset to their spouse and it will not cause a Medicaid penalty.

Myth: “I can gift $12,000 each year, can’t I?”
Reality: Each calendar year, an individual may gift $12,000 to anyone without having to pay federal gift taxes. The IRS refers to this as an Annual Exclusion Gift Allowance. However, the Medicaid rules do not permit such gifts. As such, Medicaid will review all asset transfers, including Annual Exclusion Gifts, to calculate the period of ineligibility.

Myth: “Give your house to a family member; if you don’t Medicaid will take it when you die.”
Reality: In general, the Florida home is a protected asset by the Florida constitution. It’s not advisable to “Quit-Claim Deed” the applicant’s home to family members because this can cause a period of ineligibility. There are inexpensive ways to pass the home to heirs free of Medicaid Estate Recovery and at the same time, avoid probate. One such tool is a Lady Bird Deed (see prior blog entries).

Myth: “If you put an account in your son or daughter’s name it won’t count as your asset.”
Reality: Gifts from the applicant are considered Uncompensated Transfers which cause a period of ineligibility for Medicaid benefits. Remember, there are options for overcoming periods of ineligibility
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Myth: “My name is on my mom’s account so I’m 50% owner, right?”
Reality: No. If the applicant has unrestricted access to the funds, all of the funds are countable to the applicant. This is true unless a joint account owner can prove he or she deposited their personal funds into the joint account.