In this Elder Law Minute, Paige Fox debunks common Medicaid myths and explains how thoughtful planning can protect your assets and eligibility.
Video Transcript:
Hi. My name is Paige Fox. I’m a Senior Associate attorney here at Dent Coulson Elder Law. And I understand these topics are very complex, so I’m hoping these Elder Law Minutes can bring some insight and some more understanding to both potential clients and current clients. Thank you.
Today we are here to discuss Medicaid planning, and specifically, Medicaid misconceptions.
The first misconception is that Medicaid is not the same as Medicare. Medicare is a right that you are entitled to after you hit a certain age, and it basically acts as a form of health insurance. Whereas Medicaid is a needs-based program that offers assistance to individuals who hit certain asset limits and who are in a long-term care facility, and the payments are offered to cover the cost of long-term care.
The second misconception is that the state of Illinois is going to take all of your money and that is the only way to apply for Medicaid. That, in fact, is not true. It is true, however, that a nursing home or a skilled care facility or any other long-term care facility can take all of your assets. However, if you do Medicaid planning, there are certain ways to preserve assets for either you or your loved ones, or even a community spouse.
The third Medicaid misconception is that there is an income limit. And while there are requirements and rules associated with income, there is not necessarily an income limit. The income limit comes in terms of how much you are paying per month to the facility.
So basically, the way that Medicaid works is if your income is $3,000 per month and you pay $250 per month for health insurance, you basically subtract all of your monthly expenses, which includes the supplemental insurance, Rx insurance if you have it, and then $60 of “fun money.” The difference in that amount is what you would pay to the facility each month. And then Medicaid has a deal with the different facilities for a Medicaid rate, and then Medicaid will pay the difference between your income and their Medicaid rate.
So the only income restriction is basically the higher your income is, the more that you’re going to have to pay to the facility, and the less that the state of Illinois will have to pay for the facility.
The fourth misconception for Medicaid is that you have to spend all of your money in order to apply. And again, that is not necessarily true. For an individual, the limit right now is $17,500. So if you’re an individual who is in need of long-term care and is currently in a facility, then you are entitled to have up to $17,500 and still be eligible for Medicaid to cover your long-term care.
In Illinois, we have what’s called a Community Spouse Resource Allowance, and that is the asset limit for a community spouse in the event that one person needs to go into a long-term care facility, but the other spouse remains out in the community. If that is the situation, then the community spouse is entitled to $135,648, which is the 2025 Community Spouse Resource limit or amount. And once you get below that level, you become eligible for Medicaid.
The last misconception about Medicaid is that you cannot do any planning or gifting and also be eligible for Medicaid. While there are a lot of requirements and specifics that need to be taken, and a lot of caution that needs to be taken when doing Medicaid planning, it is for sure not the case that you have to spend all of your money first on the facility before you can apply for Medicaid.
If you do the planning correctly, there are ways that we can preserve plenty of assets—not only for the community spouse, but also for the individual who is in a long-term care facility—while also getting them to be eligible for Medicaid.
Thanks.
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Thank you for watching our Elder Law Minute. If you need help with powers of attorney or any other estate planning needs, please call Dent Coulson Elder Law.
Also looking for information about Medicaid and Asset Preservation? Visit these articles:
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Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 (IL) or (314) 567-9292 (MO), or Contact Us and we will get in touch as soon as possible.
