To receive Medicaid assistance for long term care, a senior must show financial need. In some cases, significant financial decisions must be made to qualify for Medicaid. Unfortunately, due to misinformation or misunderstanding, some make decisions thinking their choice will help them qualify for Medicaid assistance and/or protect their assets when, in fact, that choice may have the opposite effect.
I recall talking with a couple who told me they divorced years earlier, just in case one of them needed Medicaid. They thought divorce was the only way they could protect their assets, even for the spouse who might not ever need Medicaid assistance. As repugnant as this is, it is possible in Idaho that divorce can be a strategy to qualify for Medicaid to protect at least some of the assets. However, even that strategy does not require divorce while both spouses are still healthy.
Let me give an example of the effect of choices made based on incorrect information. Several years ago, I met a man who had been diagnosed with early onset dementia. He was in a relationship at the time. He was not wealthy but had a sizable amount of equity in a nice home.
He told me that, due to the suggestion of another professional advisor, he transferred his home to his companion. His purpose was simple. If he needed long term care, he wanted Medicaid to pay for it. Therefore, he wanted to transfer assets out of his name so that he could claim that he was poor enough to qualify for Medicaid assistance.
Things did not turn out as planned. Within a few weeks, his companion had him declared mentally incompetent, a claim he emphatically denied. This development not only left him without any control over his most substantial asset; he also lost the ability to pass on that asset to his children.
To make matters worse, gifting that asset to someone else actually jeopardized his ability to receive Medicaid assistance, should that have become necessary. Ironically, owning his home would not have prevented him from receiving Medicaid assistance. In the following columns, I will explain why.