Everyone should be familiar with Medicaid, but many people are not, or they misunderstand it. While it does cover medical costs for people with very low income, Medicaid also is a common way for seniors with limited resources to cover long-term health care costs that Medicare does not cover, such as nursing home expenses. If you receive or may require long-term care or have a family member who does, you should understand the basics of Medicaid. It may save you and your family from using life savings to pay for needed long-term medical care.
Medicaid Is Governed by Complicated Federal and State Laws and Rules
What is Medicaid? In short, Medicaid is a program operated jointly by federal and state governments that provides financial assistance for health care expenses for specific groups of people with limited assets and income. Medicaid laws and rules are very complex and full of pitfalls, and they change frequently. Each state has its own Medicaid plan. Benefits and rules vary, depending on the individual state plan, but some rules are imposed by federal law and are the same in all states.
For example, in Michigan and all other states, Medicaid has a five-year “look-back” period for reviewing asset transfers and gifts to determine if an applicant attempted to divest resources in order to qualify for Medicaid. Penalties are imposed if such transfers are made. You can read our article on Medicaid Myths to learn more about the five-year limitation and other Medicaid rules. Near the end of this article, we also talk about how the five-year “look back” includes gifts made under IRS gift exclusion rules.
If you have questions, The Center for Elder Law is a special-focus division within Barron, Rosenberg, Mayoras & Mayoras created specifically to help you understand Medicaid and discuss other concerns you face as you and your loved ones grow older. Our experienced Troy, Michigan elder law attorneys have provided legal advice to the people in southeastern Michigan since 1970. You can begin by reading our answers to some frequently asked questions about elder law or continue on to learn more about Medicaid.
For Eligible Seniors, Michigan Medicaid Can Help Pay for Long-term Nursing Home and Home Health Care Costs
Generally, the Michigan Medicaid Health Care Program serves:
- People aged 65 and over;
- Blind or permanently disabled persons;
- Members of families with dependent children;
- Children in foster care homes;
- Pregnant women;
- People under age 21 who are in psychiatric hospitals.
To qualify, people in those groups must meet specific eligibility criteria. The financial restrictions include income limits and restrictions on the amount of a person’s assets, such as money and property.
Seniors needing long-term nursing home or home health care services can be eligible for Medicaid assistance even if they have some assets and income. Asset limitations do not count certain property, such as a residence, car, and personal property, although there are some conditions that apply. Each person’s unique individual circumstances will determine eligibility and coverage. Consulting an elder law attorney before paying out of pocket for such services is always advisable if the person who needs care has limited resources and income.
Our long-term care planning attorneys have the skill and knowledge to ensure that available Medicaid benefits are received, while protecting assets to the maximum extent possible. The initial consultation with us is free, so there’s no excuse for waiting to contact us.
Medicaid Rules for Married Couples Are Particularly Complex
When a married person applies for Medicaid to assist with long-term care expenses, assets that belong to either or both spouses are considered in the asset review. Some assets may be entirely excluded in making the eligibility determination. There also may be allowances for the healthy spouse.
Special techniques are available to a healthy spouse that can protect some or all of a married couple’s assets. There are time limits on protecting assets for a healthy spouse, so it is very important to seek sound legal advice before a married person applies for Medicaid benefits.
But Doesn’t Medicare Cover Long-term Care Costs for Seniors? Isn’t Medicaid Part of Medicare?
The answer to both questions is “no.” Medicare and Medicaid are completely different and separate programs. While Medicare covers some short-term health care costs, it does not cover the largest part of costs for long-term care. Eligible seniors must submit a separate application to Medicaid to receive coverage for specific long-term care services, including nursing home care and home health care. Being enrolled in Medicare does not mean that you or your loved one automatically will receive or be eligible for Medicaid.
The Federal IRS Gift Tax Exclusion Does Not Extend to Medicaid Eligibility Determinations
Many people are familiar with the federal Internal Revenue Service (IRS) gift tax exclusion. The IRS rule provides that a gift to an individual up to a certain amount ($14,000 in 2016 and 2017) is exempt from tax and does not have to be reported to the IRS. Those gifts are NOT exempt from Medicaid’s five-year “look-back” period for asset transfers.
The 5-year “look-back” period is triggered when a person applies for Medicaid. A gift made within five years before someone applies for Medicaid can affect the eligibility determination or coverage. Because of that rule, if you or a loved one may need Medicaid coverage for long-term health care in the foreseeable future, you should consult an attorney before any gifts are made on an individual basis or as part of an overall gifting plan.
The rules relating to gifts are a good example of how planning ahead can pay off (literally) for someone approaching or in their senior years. It’s never too early to seek legal advice on planning a Medicaid strategy if there is a possibility that you or a loved one will need long-term health care. We will help you plan for the future to protect and enjoy your assets while preparing for contingencies that may occur. Find out more about how our Michigan elder law attorneys can help you.
Schedule a Free Consultation with One of Our Michigan Medicaid Attorneys
Our attorneys in The Center for Elder Law are ready to assist with all of your and your loved one’s needs relating to Medicaid and the wide range of other concerns and legal issues that seniors face. We will gently guide you through the intricacies of Medicaid and elder law, explain your rights, and help you find the best way to plan your and your family’s future. Our experience and expertise set us apart. Don’t just take our word for it—read what our clients say about us.
Call us at 248.641.7070 or complete our online form to set up your free consultation.