Medicaid Myths

Is it true  you can give $10,000 to each child without penalty? Can’t you just put your kids’ names on your accounts? Is it true there’s an annuity that allows you to “flip the switch” and solve all your payment problems?

The answers? NO! NO! NO! The $10,000 is now $13,000… and it’s an IRS rule, not a Medicaid rule. Putting your children’s names on your accounts protects none of the money. Annuities? The laws have changed – and there is no magic switch.

Often, out of sheer frustration, retirees tell me they’re going to solve the problem of qualifying for Medicaid just by giving it all to their kids. But that opens up the possibility of your kids’ problems – with their spouses, for example – impacting your money. My golden rule has always been, don’t give to your son or daughter what you wouldn’t give to your son – or daughter-in-law.

In addition, most retirees have no idea about the tax implications. For instance, transferring a house to a child changes the property tax classification to non-owner-occupied – and property taxes will go up.

To qualify for Medicaid, you do have to spend down. Each state has different rules; but, generally, you’re allowed to keep around $2,000.

The only exempt assets are:

  • Home (equity up to $500,000) if “intent to return” is established
  • Personal belongings, household goods
  • One car or truck
  • Burial spaces and certain related items for applicant and spouse
  • Irrevocable pre-paid funeral contract
  • Up to $1,500 of face value life insurance; if the face value exceeds $1,500, the cash value is considered a means of payment

All other assets are generally non-exempt – any item that can be turned into cash is a countable asset.

Non-exempt items would include:

  • Cash, savings and checking accounts
  • Credit union share and draft accounts
  • Certificates of deposit
  • U.S. Savings Bonds
  • IRAs, 401(k), Keogh plans, 403(b) and all other defined compensation plans
  • Pre-paid funeral contracts that can be canceled
  • Trusts (depending on the terms and conditions of the trust)
  • Real estate (other than primary residence)
  • More than one car
  • Boat or recreational vehicles
  • Stocks, bonds and mutual funds
  • Land contracts or mortgages held on real estate sold

Sound confusing? Well, it is!

The Elder Law Journey can be a very complex one – especially Medicaid. And no one should try to navigate this road alone. It’s too easy to crash and burn.

We can help. At The Law Offices of Alice Reiter Feld & Associates, we practice  Elder Law – and only Elder Law. We’ve been doing it for 33 years. And we’ve walked thousands of South Florida families through the Medicaid Maze… along with providing them with comprehensive estate planning, wills, trusts, powers of attorney, long-term care planning, asset protection programs, and assistance with the VA.

We know the way. And we’ll get you through.

We’re just a phone call away.

Medicaid Myths

Posted in aging, Alice Reiter Feld, Alice Reiter Feld Florida Elder Law Monday Memos, broward, elder law, elder law attorney, elder lw, elderly, medicaid, resources, senior care, support
One comment on “Medicaid Myths
  1. Voss says:

    Somehow I ran across you today and you may be elctaxy the assistance I’m looking for! I’m dealing with a retired military officer who had a stroke in 2007 and has been dealing with dementia ever since. He’s also a recent amputee (Peripheral Artery Disease, Sept. 2011) and more recently a cancer diagnosis. He’s decided he’d rather die than undergo radiation so, for the past month, we’ve been dealing with home hospice care! His exact condition is unknown at this time. The progression of the cancer is unknown at this time. He won’t co-operate with feedings via peg tube, won’t take his medications (except pain) and we’re just trying to keep him comfortable. There’s a lot to this story! Contact me if you think you can be of assistance!

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