Updated: Sep 25
The word on the street is that Long-Term Care Medicaid is a government benefit for the poor.
• “People who have worked their entire life and saved money for retirement cannot qualify for Medicaid.”
• “A person must spend all of their savings before applying for Medicaid.”
These are harmful myths.
The truth is that Long-Term Care Medicaid is a government benefit for disabled people, not the indigent. In this context, “disabled” is defined as the applicant who requires assistance with at least one activity of daily living (ADL), the cost of which will exceed their income. This medical requirement for assistance is a mandatory prerequisite for Long-Term Care Medicaid qualification. This is why the benefit is for the disabled.
If the medical requirement is in place, there are limitations on assets and income to qualify financially. The general financial qualification rule anticipates that an applicant with excess assets will spend them down on goods and services to the set limitations and then apply for Medicaid.
There are exceptions to the general rule that allows an applicant to strategically move assets into the possession of another person and have the transfer treated as having spent those assets. The amount of transferred assets becomes protected in the sense that the person in possession of the assets can choose to use them for the future benefit of the applicant.
The fact that the Long-Term Care Medicaid rules permit asset protection determines when to file the application for benefits. The time to file is when the applicant meets the medical need for care. This is the point in time when they still have all of their assets. The applicant should not delay the application until they have spent the majority of their assets.