Note: This is a long post.Many people have misconceptions about nursing homes and Medicaid. Believe me, I got an education since Mom and my late stepdad became ill. I had already been interested in the topic both because I knew my loved ones were starting to have serious health issues, and because of the news about people managing to game the system. Gaming it is basically over, because Congress and the Clinton and present Bush administrations have steadily tightened the Medicaid rules.
Here's the reality. By the way, I'm not a lawyer, nor am I engaged in legal advice. I'm simply passing along information I've learned over the past several years. See a lawyer if you need legal help, and your mileage may vary. Etc.
You can't just take an elderly person to a nursing home, push her out the car door, and keep going. It never works even remotely like that.
Nursing homes are not obligated to accept anybody. Most simply don't have that many available beds, and some facilities have waiting lists. The guideline is that the resident must need constant
skilled nursing care. Only in the later stages of Alzheimer's does the patient/would-be resident meet that requirement, for example.
Medicaid will not pay if the skilled nursing care requirement isn't met. You hear about some people supposedly putting their parents in a nursing home just so they can try to get their parents' assets. If the parents are able to care for themselves adequately, no bona fide nursing home will accept them. And the children face some unpleasant surprises even if they succeed.
If the elder simply needs help with everyday activities and
not skilled nursing care, then they may go into
assisted living facilities, which are not nursing homes. Medicaid in most states will
not pay anything toward assisted living. Nothing. The elder or the family must pay, and this can run $4K a month or more.
Depending on state rules, nursing homes must have a few "Medicaid beds" for new patients who must use Medicaid right away. Otherwise, most homes want residents to be able to pay their own way for at least a year before going on Medicaid. Now this is typically $5K+ per month.
Since the mid-1990s Medicaid rules have become ever tighter.
Now the look-back period is a full five years for title and asset transfers to family members. This is one key area where a lot of misinformation still is spread, as in KidlessKim's post above:
"Depending on the state, it's also important that if a nursing home stay is impending, it's IMPERATIVE that as many assets as possible are taken or transferred out of their names. This includes their home, bank accounts, insurance policies with cash value, ANYTHING of value, and that the contents of the home and other personal possessions such as vehicles, are divided among family members. Otherwise, the nursing home can legally seize all assets and hold an estate auction."Everything in that statement is, today,
broadly incorrect. You transfer Dad's house into your name to try to make him eligible for Medicaid just before he applies for it, and you just committed Medicaid fraud. Ditto with any significant money, bank accounts, precious metals, etc. If Dad needs to go into the nursing home now, it's actually five years too late to transfer titles and assets. Try to do that now, and he can be ruled
permanently ineligible for Medicaid along with facing criminal penalties. Regardless, the state will go after those assets no matter in whose name they are. You got $10,000 from Mom's savings account last week and she applies for Medicaid this week, the state is coming after
you for that ten grand after examining her bank statements.
Of course, usually it's the adult children who want the goodies and are driving the transfers, not the elder. By the time all of this is happening, he/she is probably in bad enough shape to be unaware of what's going on. But they can still face punishment, such as being ruled forever ineligible to receive Medicaid as mentioned.
The state—not the nursing home—is technically the one with the claim on the elder's property. In the wake of a US government to Congress about the extent of illicit asset transfers to make elders poor on paper to qualify for Medicaid, Congress passed a provision in the OBRA law of 1993 mandating that states go after the houses of Medicaid recipients if they weren't doing so already. Some states had been choosing not to. Now they have no choice, though some were slow to change their applicable state laws. Once the last spouse dies or goes into a nursing home, the state is supposed to seize the house to repay Medicaid.
By the way, the feds pay only about half of Medicaid costs. The state must pay the other half, so they have every incentive to ensure that no one cheats. Some states were already going after more and more assets even before Congress acted, so they're well aware of all the tricks. California was the first state to start going after trusts, insurance proceeds, and other nonprobatable assets, and the feds gave the okay to that. Back as far as the late 1980s, Oregon sent social workers to the homes of elderly people applying for Medicaid to do physical searches for hidden cash and assets. This would even include women's purses, dresser drawers, clothes in closets, etc. As one social worker was quoted as telling one woman who got this treatment, "You old people always hide money." My home state (eastern US) has always been tight as well, though not to the extent of searching homes.
Medi
care, the general health insurance for the elderly, generally does not pay for nursing home care. There is a limited 100-day exception for skilled nursing care related to hospital stays and that's it. Do not confuse Medicare with Medicaid.
New rules passed a couple of years ago now mandate that the state be made the beneficiary of any trust set up to preserve assets for Medicaid. It's getting ever harder to hide or transfer anything legally, which in my book is a good thing. This program was intended for the poor with no significant assets, not for wealthier people who make themselves
look poor on paper by playing games with their property and money. That is unethical and endangers the future of the program. You and I might need it one day.
The next steps being discussed are—
(1) to increase the look-back period to as much as
10 years because of slowly progressing conditions such as Alzheimer's that still allow families to transfer assets five years before Medicaid application; and
(2) to require that all home equity be used for the elder's care before Medicaid kicks in. That would mean that the state or a lender
already owns the elder's house before receiving aid, and would completely stop gaming the system. With this change, there would be nothing to transfer to family members.
That's it, in not-quite-a-nutshell. Please forgive me for the long post, but so much misinformation is out there (such as the bit about transferring titles) that it needed correction.