Presented to the Rhode Island chapter of the Alzheimer's Association on Oct. 3, 2013. This talk was Part 4 of the "Getting Started Education Series", given at The Highlands on the East Side, in Providence, RI.

1. The 9 most common myths ofThe 9 most common myths of
Medicaid & Medicaid PlanningMedicaid & Medicaid Planning
Mark B. Heffner, Esq.Mark B. Heffner, Esq.
Heffner & AssociatesHeffner & Associates
615 Jefferson Boulevard615 Jefferson Boulevard
Warwick, Rhode IslandWarwick, Rhode Island
www.hefflaw.comwww.hefflaw.com
401-737-1600401-737-1600

2. DISCLAIMERDISCLAIMER
• Presentation based on CURRENT RHODE ISLAND
Regulations and Policy, which are subject to change at
any time.
• Medicaid eligibility is STATE-SPECIFIC. Even
variations within State depending on regional office
• General presentation for educational purposes only. No
substitute for individual consultation with
COMPETENT Medicaid lawyer in particular State.

3. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #1
“MEDICARE AND BLUE CROSS
WILL COVER IT”
• Medicare & Medigap supplements such
as Blue Cross Plan 65 and Blue Chip
only small fraction of nursing homes
residents at any given time.
• Many residents never receive Medicare
coverage.
• For those who do, most people are NOT
covered for the full 100 days and many
have substantial co-pays during the
period they receive skilled benefits.

4. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #2
“IT’S TOO LATE—WE SHOULD
HAVE DONE THIS 5 YEARS AGO”
• It is not too late to pursue effective asset
protection planning, even after someone
enters a nursing home.
• Plan may include purchase of “exempt”
assets (“spenddown”), transfers which
do not create ineligibility, calculated
transfers.
Text

5. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #2
“IT’S TOO LATE—WE SHOULD
HAVE DONE THIS 5 YEARS AGO”
• Examples for single people:
• Plan may include purchase of “exempt”
assets (“spenddown”), transfers which
do not create ineligibility, calculated
transfers (e.g. “reverse half a loaf”)

6. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #2
“IT’S TOO LATE—WE SHOULD
HAVE DONE THIS 5 YEARS AGO”
• Significant opportunities for married
couples—e.g., purchase of Medicaid-
qualifying annuities, revisions to
community spouse estate plan.

7. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #3
“I CAN GIVE AWAY $10K PER
YEAR TO ANYONE AND IT’S OK”
• Annual exclusion gifts--now $14/year--
are NOT exempted transfers for
Medicaid eligibility
• Rather, generally will create a period of
ineligibility.

8. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #4
“THE STATE WILL MAKE ME SELL
MY HOUSE TO QUALIFY FOR
MEDICAID”
• You can own a principal residence (with
equity of less than $525K) and still
qualify for Medicaid, provided you
declare an intention to return home.
• No recovery until after death, and then
only against recipient’s probate estate.
• However, though permitted to retain
principal residence, no income may be
retained (other than portion of rental
income) to pay house expenses.

9. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #5
“MY KID’S NAME IS ON ALL OF
MY ACCOUNTS, SO 1/2 IS SAFE”
• Except in the case where the money truly
belongs to the child or other co-owner,
100% of the bank account will be
exposed for spend-down.
• There are some exceptions for brokerage
accounts, stock and real estate provided
the penalty period has passed for adding
the name.

10. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #6
“THE STATE WON’T MAKE ME
SELL MY BEACH HOUSE/REDEEM
MY CD/ANNUITY …TO QUALIFY”
• Except for a limited number of “exempt”
resources (e.g., principal residence
(equity less than $525K), irrevocable
burial contract), all other assets are
deemed “available” for spenddown
regardless of whether there is a penalty
to redeem the asset or the asset cannot be
immediately liquidated.
• AT BEST, may be given time to liquidate
non-cash or cash-equivalent resources.

11. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #7
“AS A SPOUSE, I GET TO KEEP
ANYTHING IN MY NAME ALONE”
• The spousal allowance is calculated by
totaling all of the available marital assets
(regardless of which spouse’s name is on
the asset) and dividing by two.
• The Community Spouse is allowed to
keep one-half of the total joint resources
up to a maximum of $115,920.

12. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #8
“MY ANNUITY IS PROTECTED
FROM NURSING HOME COSTS”
• An annuity must be specifically designed
in order to be Medicaid qualifying.
• Elements: irrevocable cannot be
surrendered, transferred, collaterally
assigned, or returned for a return of the
premium paid, name State as beneficiary.

13. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #8
“MY ANNUITY IS PROTECTED
FROM NURSING HOME COSTS”
• Very unlikely that annuity purchased
prior to individual’s nursing home
placement will pass muster.

14. HEFFNER &
ASSOCIATES
ELDER LAW
MYTH #9
“IF I QUITCLAIM MY HOUSE TO MY
KIDS, IT’S PROTECTED”
• Unless SPECIFCALLY exempted, the
transfer of ANY asset is subject to a 5
year look-back period.
• In addition, outright transfer of interest
in home produces negative tax
consequences, exposure of home to
claims of kids’ creditors, loss of control
by parent in most important asset.

15. HEFFNER &
ASSOCIATES
ELDER LAW
*Copyright 2013, Mark B. Heffner, Esq.
Heffner &Associates
615 Jefferson Blvd
Warwick, RI 02886
401-737-1600
mheffner@hefflaw.com
www.hefflaw.com