February, 2004

Medicaid 101

This past year has seen some radical changes to our Medicaid system as it relates to nursing home care.  Gov. Romney has shut some big doors and closed some serious loopholes when it comes to protecting your assets from the "Nursing Home Pinch."  If your estate plans tried to do just that, then you need to have them reviewed by an attorney.  They are out-of-date and most likely no longer valid. 

I'm going to talk about these changes, and Medicaid in general, over the next few months.  Before I get into that though, let's look at how Medicaid works from a theoretical point of view.  The common (misguided) perception is that the State swoops in and takes away all your possessions when you enter a nursing home.  That it has robbed you of your hard earned property which you wanted to leave to your poor defenseless children. 

I prefer to explain it in these (oversimplified) terms:

Nursing homes are private facilities that charge you $6,000 a month to live there.  You don't want to pay $6,000 a month to live anywhere, so you ask the Commonwealth (which is the rest of us taxpayers) to pick up the bill.  Our reply to you is: "We really can't afford it either, but we will pay for it if you truly have no resources to pay for it yourself."

So don't think of it as the State coming in and taking away your property when you go into a nursing home.  Rather, it's just that the State won't pay your nursing home bill if you have certain assets or income available to pay the bill yourself.  Which is what the taxpayers want.  They don't want to foot your nursing home bill so that when you die you can leave your worldly goods to the same kids who put you in the home in the first place.

And what if you try to hide your assets by dumping them right before you apply for Medicaid?  Your conversation with Gov. Romney goes something like this.

You:Um, I qualify for Medicaid because it just so happens I

don't have any assets.

Mitt:Why not?

You:I gave all my stuff to my kids when I found out I had to

go into a nursing home.

Mitt:Hmmm.  You better hope you can get it back.

NEXT MONTH:  What'd'ya get to keep?