9 - A Deeper Look at Medicaid

Posted on

Mar 22, 2023


Pennsylvania - South Central PA

Share This

Medicaid was mentioned previously on the show, but this time we take an in-depth look at Medicaid as it relates to estate planning and elder law. This episode runs through the difference between Medicare and Medicaid, common misconceptions, how Medicaid is applied, how to qualify for Medicaid, how to protect assets while not losing Medicaid benefits, the concept of gifts and more. Hopefully this episode will give you a better understanding of Medicaid and its role in estate planning and elder law. Stay tuned for a lot more educational content that is to come! 

Key Takeaways 

Takeaway 1: The Medicare Myth


  • We always hear, “Don’t worry, I have really good health insurance and the insurance is going to take care of everything.”

    • That’s a myth. When you’re dealing with health insurance and it comes to long-term care, the health insurance is not going to pay for it. 

    • The best thing we have is Medicare. If you are admitted to a hospital for 3 consecutive midnights and then have to go to a long-term care facility for rehabilitation. 

    • Medicare will pay for up to 100 days. 100 days will only be covered if you are rehabbing well and progressing.

    • If you don’t progress and have to stay in a long-term care facility, you’ll have to be a private pay individual and pay $12-13 thousand per year. Don’t just count on Medicare.

Takeaway 2: Medicaid in nursing homes


  • There are varying opinions surrounding Medicaid. A lot of people have a bad perception of county homes. There’s only one county home in York County, where the quality depends on who is staffing it. York’s county home has received high ratings in recent years, but there are many options to avoid the county home.

    • There are around 17 nursing homes in York County, and all of them accept Medicaid except for Dallastown Nursing and Rehab. This doesn’t necessarily mean that the facility is any better or any worse than the others, they just made a business decision. They didn’t want to deal with the hassle. 

    • Medicaid is just an opportunity to have payment for or to be paid by the nursing homes, and there are plenty of opportunities and options in York.

Takeaway 3: It’s not too late


  • We always hear it’s too late to get aid once somebody is in the nursing home, but that is wrong. 

  • Planning 5 years ahead of time is great, pre-planning is very helpful because it plans trusts and protects assets ahead of time, but we’re not in a perfect world. Not everyone will pre-plan, so we’re prepared to help people who didn’t do that.

  • For a married couple, we can still protect 100% of their assets, and for a single individual we can protect up to 50% of their assets. Yes, this is still possible if a person is already in a nursing home receiving care and had done no prior planning. 

Takeaway 4: The 3-prong test


  • Medicaid is a 3-prong test:

    • 1. The person receiving the care has to be medically eligible, they need to receive skill-level care.

    • 2. They need to be financially eligible. 

    • 3. They need 5 years of statements in order to meet the requirements of the 5-year lookback period.

  • Where we come in is assisting you in getting 5 years of statements of bank accounts, every asset, everything that you have to be able to put it all together in a box.

  • The lookback period is the 60 months prior to the day we file a Medicaid application.

  • Every statement of every account that a person or family has had for the past 5 years goes into the box, whether it be checking accounts, savings accounts, money market accounts, retirement accounts, etc. 

  • We want to know what happened to those assets in the past 5 years and we’re going to look specifically for gifts. We’re looking to see if a family is giving away a ton of money trying to qualify for Medicaid.

Takeaway 5: Gifts


  • If we find that gifts were given, that creates a penalty. In Pennsylvania currently, the rate for the penalty is $482.50 daily. If we have a $10,000 gift, we divide it by $482.50 to determine how many days we are penalized. 

  • Penalization just means that Medicaid is not going to pick up our bill during that period.

    • Notice that it is not a 60-month waiting period, there is no such thing as a 60-month penalty. There is only a 60 month lookback period.

  • What is a gift? - It is you giving money away and not receiving fair market value or full compensation in return.

  • How do you determine fair market value? - The going rate for the services in the area.

    • If it turns out that you paid your grandson to paint your house for $20,000 and the fair market value is $5,000, that’s a $15,000 gift.

  • Another fallacy is, “I’m allowed to give away $16,000 per year”. That is called an annual exclusion gift and that’s a tax concept.

    • In Tax Land, you are allowed to give away $16,000 per year to anyone for any reason, but if you end up in a  nursing home within that 5-year lookback period and if in a single month you give away more than $500, you will be penalized.

      • That’s why we made the “Three Lands to Your Family’s Security”. Remember that the goal of these teachings is to remain in control.

  • To take advantage of a tax gift or annual exclusion gift, you have to give it away indefinitely. It is not able to be taken back.

  • Gifting can be our Achilles’ heel. There are too many people who turn to online advice from people who are not professionals specialized in Medicaid, asset protection or elder law. There are no warnings about the 5-year lookback period and the consequences if you go into long-term care.

Takeaway 6: Being financially eligible 


  • For an individual to qualify, they need to have under $8,000 or under $2,400 in assets. They look at the income of the individual to see if it’s greater than or less than $2523. If it’s greater than that, then the individual will only be able to keep $2400 in assets, and if it’s less than that, the individual will be able to keep $8,000 in assets. 

  • You can exempt a home, but the problem is when you exempt a home with the intent to return home, when you die it’s still in your name alone. The state of Pennsylvania will have the right to estate recovery. 

  • When we do a plan, we’re looking to protect as much as we can and do it in a way that there will not be any sort of recovery. For a single individual, we would probably sell the house, take the money and protect 50% of it.

  • We can go ahead and make a gift to a family member, taking the penalty for it. We get a slap on the wrist and simultaneously take the other half of the money in our other hand to pay for the penalty and then create an income stream under the rules of the federal Medicaid law to make sure that the nursing home gets paid their private pay rate during the penalty period.

    • The nursing home is paid the full private pay rate and when the penalty ends, the person is on Medicaid.

  • When we’re dealing with a married couple, it is completely different. The individuals themselves still need to be under these thresholds. The community spouse can keep a house, a car and the community spouse retirement account.

    • Put everything else into a pot and the community spouse can keep half of the pot as long as half is not greater than $137,400 and not less than $27,480. 

    • Anything over the $137,400 limit can be placed into an income stream and be given back to the community spouse that way. We want to do it as quickly as possible because we have to name the state of Pennsylvania as a beneficiary in order for it to be qualified and not count against us.

    • If the community spouse dies or ends up in a nursing home, that money can then be taken to the state. If we can get it back to the community spouse as soon as possible, we can avoid that happening.

  • You need to seek counsel on this matter. Go to a certified elder law attorney in your area who can help you figure out exactly what you need. We would love to help you if you’re nearby and in need of asset protection. Don’t be afraid to reach out. 

Links and Resources Mentioned

Bellomo & Associates workshops including Medicaid: https://bellomoassociates.com/workshops/ 

For more information, call us at (717) 845-5390   

Connect with Bellomo & Associates on Social Media

Twitter: https://twitter.com/bellomoassoc 

YouTube:  https://www.youtube.com/user/BellomoAssociates 

Facebook: https://www.facebook.com/bellomoassociates 

Instagram: https://www.instagram.com/bellomoassociates/  

LinkedIn: https://www.linkedin.com/in/bellomoandassociates

Ways to work with Jeff Bellomo

Contact Us: https://bellomoassociates.com/contact/ 

Practice areas: https://bellomoassociates.com/practice-areas/

Other Videos You May Like

Episode 28. Understanding Property Ownership Types and Deeds

Episode 28. Understanding Property Ownership Types and DeedsJeff addresses listeners questions about property ownership and deeds. He explains different types of ownership arrangements, some of which are implied on the deed while others must be specifically listed. With this understanding, it becomes clear that your deed should explicitly name the type of ownership arrangement that best suits your needs.  Jeffrey R. Bellomo, the founder of Bellomo & Associates, is a licensed and certified elder law attorney with a masters degree in taxation and a certificate in estate planning. He explains complex legal and financial topics in easy-to-understand language.Don't forget to Follow, Like, and Subscribe for upcoming podcast episodes: Apple: https://podcasts.apple.com/us/podcast/understanding-property-ownership-types-and-deeds/id1634278675?i=1000597660690 YouTube: https://youtu.be/aUHrxgXKY_E Spotify: https://open.spotify.com/episode/5kVb2f3sida1Pff3WSO9pE?si=XJ0fGweMTm6dfozyqcmZAg

Episode 27 - New 2023 Numbers for Tax and Medicaid Planning

Episode Summary The start of the new year brings new numbers that affect financial decisions and health care. Jeff provides an update on the 2023 numbers you should know for tax planning and Medicaid qualification.Jeffrey R. Bellomo, the founder of Bellomo & Associates, is a licensed and certified elder law attorney with a masters degree in taxation and a certificate in estate planning. He explains complex legal and financial topics in easy-to-understand language.Key Takeaways 01:45 Tax PlanningThe annual exclusion gift amount is $17,000/person for 2023Most people will not be subject to federal estate tax due to the high dollar amount that triggers the taxPennsylvania (PA) does have an inheritance taxActions in one area of planning (e.g., taxes) can affect other areas of planning (e.g., estate planning)09:00 Medicaid PlanningCase workers use PAs Long-Term Care HandbookIf a persons income is more than $2,742/month, PA could recover assets if the person has more than $2,400 in assets in their name alone at time of deathIf a persons income is less than $2,742/month, PA could recover assets if the person has more than $8,000 in assets in their name alone at time of deathPA can pursue asset recovery from probate estate onlyNon-probate assets are jointly owned or tied to a beneficiarySound estate planning can avoid asset recovery by the state12:25 The Waiver ProgramA PA program that can be thought of as Medicaid in the homeThe income cap limit to qualify is $2,742/monthPA might allow a person to qualify even with an additional $500/month in income if the $500 is funneled to an Excess Income Trust 14:32 Married Couple Assets Different rules apply for institutionalized spouses and community spouse The community spouse can keep the house, the car, and their own retirement accountall remaining assets go into a pot When the pot is less than $29,724, the community spouse can keep the entire potWhen the pot is between $29,724 and $148,620, the community spouse can keep one half of the pot 17:21 Married Couple IncomeIf the community spouses monthly income is between $2,288.75 and $3,715.50, then they can keep itIf the community spouses monthly income is less than $2,288.75, then they can get a portion of the institutionalized spouses incomeThe minimum excess home equity limit for 2023 is $688,000Links and Resources MentionedPennsylvania Long-Term Care Handbookhttp://services.dpw.state.pa.us/oimpolicymanuals/ltc/Long-Term_Care_Handbook.htmBellomo & Associates workshops, including Medicaidhttps://bellomoassociates.com/workshops/For more information, call us at (717) 845-5390. Connect with Bellomo & Associates on Social MediaTwitter: https://twitter.com/bellomoassoc YouTube: https://www.youtube.com/user/BellomoAssociates Facebook: https://www.facebook.com/bellomoassociates Instagram: https://www.instagram.com/bellomoassociates/LinkedIn: https://www.linkedin.com/in/bellomoandassociates

Episode 23 - Benefits of Putting Your House in a Trust

23. Benefits of Putting Your House in a Trust A persons house is often their biggest asset and deserves protection, but in most cases transferring ownership is not enough. Putting your house in a trust is the best way to maintain control of the asset, get the step-up in basis for favorable tax implications, and protect the asset from others. But perhaps the most important benefit is the peace of mind that comes with knowing your home is safe. Jeffrey R. Bellomo, the founder of Bellomo & Associates, is a licensed and certified elder law attorney with a masters degree in taxation and a certificate in estate planning. He is skilled at explaining complex legal and financial topics in easy-to-understand language.