Medicaid planning remains one of the most misunderstood areas of elder law. At Duncan Legal, PC, we regularly meet with families who have done their research, talked with friends, or read advice online, only to discover that much of what they believed about Medicaid is incomplete, outdated, or simply incorrect.
As a new year begins, it’s an ideal time to clear up some of the most persistent myths surrounding Medicaid planning. These misunderstandings are not harmless. Left unaddressed, they can lead to costly mistakes, delayed access to care, and unnecessary loss of assets at a time when families are already under stress.
Myth #1: “Medicaid Is Only for People With No Assets”
This is one of the most common misconceptions we hear at Duncan Legal, PC, and one of the most damaging.
Medicaid is income- and asset-tested, but it is not limited to people with no assets. Many middle-income families ultimately qualify for Medicaid long-term care benefits, but only after careful and strategic planning. In fact, Medicaid’s rules are designed specifically for individuals who do have assets, such as a home, retirement accounts, or modest savings.
The real issue is not whether you own assets, but how those assets are titled, spent, or protected under Medicaid rules. Without guidance from an experienced Medicaid planning attorney, families often make decisions that unintentionally disqualify them just when care is needed most.
Myth #2: “The Nursing Home Takes the House”
Nursing homes do not take houses, and Medicaid does not automatically seize a home. However, this myth persists because the rules surrounding homes and Medicaid are complex and frequently misunderstood.
In many situations:
- A home may be exempt during a person’s lifetime, depending on whether they are married or single, or whether a qualifying exemption applies, such as a caregiver child, a disabled child, or a sibling with an equity interest
- The home may still be subject to Medicaid estate recovery after death, depending on state-specific rules
- Transfers made at the wrong time can trigger Medicaid penalty periods related to the home
Without proper planning, families often discover too late that the home must be sold to repay Medicaid benefits. With proactive planning through Duncan Legal, PC, very different outcomes may be possible, including strategies that preserve the home or minimize unnecessary loss.
Myth #3: “I’ll Just Give Everything to My Kids”
Gifting assets without understanding Medicaid’s five-year lookback period is one of the most costly mistakes families make.
Unplanned transfers, especially of a home, can result in months or even years of Medicaid ineligibility. These penalty periods often occur at the exact moment long-term care is needed, forcing families to privately pay for care at significant expense.
In addition to Medicaid penalties, transferring assets to children without proper planning can lead to other unintended consequences, including:
- Capital gains tax exposure due to loss of stepped-up basis
- Gift tax reporting issues
- Loss of asset protection if a child faces divorce, lawsuits, or creditor claims
At Duncan Legal, PC, effective Medicaid planning rarely involves impulsive gifting. Instead, it often includes carefully structured trusts, strategic spend-down approaches, and thoughtful timing decisions that align with both Medicaid rules and your long-term estate planning goals.
Replacing Myths With Clarity
Medicaid planning is not about “beating the system.” It is about understanding and navigating a complex set of rules designed to balance access to care with personal financial responsibility.
The families who fare best are those who plan earlier rather than later, using accurate information and guidance tailored to their state’s Medicaid rules. Relying on outdated assumptions or something you “heard once” can be an expensive mistake.
While a new year does not change Medicaid law, it is an excellent time to replace myths with clarity and ensure your long-term care plan is built on sound legal guidance.
Plan With Confidence at Duncan Legal, PC
If your Medicaid or long-term care plan is based on assumptions, now is the time to verify them. In Medicaid planning, what you do not know truly can hurt you.
Visit Us: 6436 S Racine Cir, Ste 227, Centennial, CO 80111
Call: (720) 506-2536
Learn More: www.duncanlegal.com
Protect your assets, your care options, and your peace of mind by planning ahead with Duncan Legal, PC so you and your family can move forward with clarity and confidence.
