Medicaid Mistake No. 1

Relying on uneducated advice

It is amazing to us how many people will rely on the advice of their friends, neighbors, or in-laws when it comes to Medicaid. The same people who would never consider making an investment decision without consulting their financial advisor are more than willing to risk losing tens or even hundreds of thousands of dollars on decisions based on hearsay and guesswork. By the same token, Medicaid workers are not qualified to either interpret the laws pertaining to Medicaid or give legal advice pertaining to Medicaid. Often times, the statements made by Medicaid workers are blatantly false. Unfortunately, we have found that those who work in the field of senior services, no matter how good their intentions are, are just as susceptible to misinformation as the general public. Be very careful to avoid making decisions based on uneducated advice.

Medicaid Mistake No. 2

Consulting the wrong kind of attorney

The practice of law has become very compartmentalized. As is the case with many types of professionals, attorneys tend to specialize. The general practitioner, who must try to stay current on changes in the law in a number of areas simultaneously, is hard-pressed to become an expert in any one area. There are probably not ten attorneys in 100 who really understand Medicaid to any appreciable degree and no more than two out of that 100 who can rightfully be called experts. And getting the wrong legal advice can be very costly.

Medicaid Mistake No. 3

Thinking it's too late to plan

It’s almost never too late to take planning steps, even after a retiree has moved to a nursing home. In many cases, a substantial portion of the patient’s estate can still be saved. However, the longer you wait, the more will be lost.

Medicaid Mistake No. 4

Submitting a Medicaid application before consulting with an elder law attorney

We’ve said how important it is to consult with the right attorney, one who specializes in elder law and routinely guides clients through this process. It is absolutely imperative that you not submit a Medicaid application before you do so. This is because, once you submit the Medicaid application, you will lose the opportunity to protect your assets and be forced to spend them down. For this reason, never submit a Medicaid application “just to see if you qualify”.

Medicaid Mistake No. 5

Submitting a Medicaid application either too early or too late

Applying for Medicaid too early can result in a longer ineligibility period in some instances. In fact, there are instances in which the simple act of applying one day too soon can lead to years of ineligibility. On the other hand, applying for Medicaid too late can lead to the loss of many months of eligibility and the unnecessary loss of much of an estate. The proper timing of an application for Medicaid is crucial. Let us calculate the exact date that the Medicaid application should be submitted. We normally submit the Medicaid application 60 days prior to the date that we believe the applicant will be eligible for benefits.

Medicaid Mistake No. 6

Assuming that your living trust will protect your assets from Medicaid

Although a properly drawn and funded living trust provides many benefits, protection from Medicaid is typically not one of them. Assets in a revocable living trust are still available to the patient and, therefore, still considered countable resources. There are certain conditions in which a living trust could cause the patient to lose up to 65% more of his/her assets than otherwise would have been necessary. Have your living trust documents ready to be reviewed, and possibly amended by, your elder law attorney.

Medicaid Mistake No. 7

Assuming that your existing annuity will protect your assets from Medicaid

Under the new Deficit Reduction Act, which was passed in 2006, the great majority of annuities that might have provided some protection in the past no longer do. Only a very few of those available for purchase today meet the specific requirements detailed in the DRA.

Medicaid Mistake No. 8

Attempting to hide assets

Sometimes families will attempt to hide assets or conveniently “forget” about them. Failure to disclose assets in order to obtain Medicaid benefits is a crime (Medicaid fraud) that could result in prosecution as well as legal action to recover the cost of benefits obtained fraudulently.

Medicaid Mistake No. 9

Giving away assets too early or giving away assets without a plan

First, it’s your money (or your house, or both). Make sure you take care of yourself first. Don’t put your security at risk by putting it in the hands of your children. Secondly, while making gifts can be an important part of an effective estate plan, precipitous transfers can cause tax and Medicaid problems that are difficult to solve. Never transfer assets without understanding the full consequences of your actions. Consult with an elder law attorney to determine the proper method and timing of any transfers.

Medicaid Mistake No. 10

Ignoring the safe harbors created by Congress

Certain transfers are allowable without jeopardizing Medicaid eligibility. These include: transfers to disabled children, caretaker children, certain siblings and into trust for anyone who is disabled and under age 65; a transfer to a “pay-back” trust if under age 65; and a transfer to a pooled disability trust at any age.

Medicaid Mistake No. 11

Failing to take advantage of protections for the spouse of a nursing home resident

Congress wants to protect the spouses of nursing home residents. These protections include the purchase of an immediate annuity, petitioning for an increased community spouse resource allowance, and, in some instances, petitioning for an increased income allowance or refusing to cooperate with the nursing home spouse’s Medicaid application.

Medicaid Mistake No. 12

Failing to properly prepare for estate recovery.

The estate recovery program can mean the loss of a home or inheritance. One example of failing to properly prepare for estate recovery would be in retaining a Life Estate. A Life Estate is a deeded right that a person may choose to retain when a home is sold or transferred. It includes the right of that individual to reside in that home for life, even though that individual technically no longer owns the property. In recent years, a growing number of states are red-flagging Life Estates and considering them a potential way for their Estate Recovery Units to make a claim to recover the cost of benefits.

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