There are many myths and misconceptions when it comes to Medicaid. I recently wrote a book titled,” Medicaid and Other Benefits You Don’t Know You Have” in which I discuss 22 of the most common myths and misconceptions. You can purchase a copy of the book online from either Amazon or Barnes & Noble.
Of those myths and misconceptions, there are two which are much more prevalent than the others. First, most people believe you cannot do any planning or make any transfers within five years before filing a Medicaid application. This understanding is completely false. This myth will be discussed in greater detail in a later article. Second, most people believe you cannot qualify for Medicaid benefits if you own more than $2,000 in assets. Again, this is completely false.
Most people incorrectly believe the Medicaid rule says an individual applying for Medicaid cannot own more than $2,000. However, the federal rule containing this famous $2,000 limitation does not have a period after $2,000. Instead, the rule says an individual applying for Medicaid benefits cannot own more than $2,000 of countable resources. When learning of the actual language of the rule, the first question most people ask is, “What is meant by countable resources?"
Before discussing countable resources, we must understand the reason for this myth and why it gets perpetuated so easily. The reason for the $2,000 myth is simple. We, as human beings, recognize and remember numbers more easily than the words surrounding those numbers. After recognizing numbers, we often fail to give the words surrounding those numbers any meaning. From this habit, the $2,000 myth was born and continues to live on in the gossip surrounding Medicaid.
The $2,000 limitation applies to countable resources but not assets. There is no limitation on the amount of assets you can own and qualify for Medicaid. A big difference exists between countable resources and assets. All countable resources are asset, but not all assets are countable resources. Therefore, countable resources are a subset of your overall assets. This means you may own and keep an unlimited amount of assets while qualifying for Medicaid as long as they are not considered countable resources.
The accounting definition of assets are probable future economic benefits owned by a person. In other words, everything a person owns are assets. However, for assets to be countable resources they must meet a very specific definition promulgated under the federal regulations governing Medicaid, specifically 42 C.F.R. §416.1201, and numerous federal court decisions. In summary, a countable resource is an asset you own and can convert to cash to be used for your support and maintenance. You must have the unilateral authority or power to liquidate the asset, and must be able to do so within a 20-day period. Any asset not meeting this definition is not a countable asset.
Assets which are not countable resources are also not exempt assets. The Medicaid rules and regulations provide certain exemptions to protect assets from being spent during the Medicaid process. Exempt assets are ones which are countable resources but will be disregarded due to their exempt status. It is important not to confuse non-countable assets with exempt assets because most exemptions have limitations very much like countable resources. Non-countable assets do not have any limitations.
Based upon this understanding of assets and countable resources, people are always curious as to the net worth of people qualifying for Medicaid benefits. Although most individuals I have qualified for Medicaid have net worths from $100,000 to $1.5 million, I have successfully qualified individuals for Medicaid having net worths as high as $7 million. In doing so, I have simply helped them convert countable resources into non-countable assets.
For more information about Medicaid, Medicare, VA benefits, Social Security disability, estate planning and asset planning, visit the website of Senior Resource & Benefits, LLC (“SRB”) at www.srbllc.com call toll-free 1-800-407-9302. All legal services for SRB are provided by the law firm of Riffel, Riffel & Benham, PLLC having a website of www.westoklaw.com and telephone number of 580-234-8447.
