// BLOG
Can I Give a Gift of $10,000 Per Person Without Jeopardizing Medicaid Eligibility?
February 20, 2012
A common question I get probably as much as anything about Medicaid. The answer may surprise you.
Click on http://www.youtube.com/HauptmanLaw to see my answer.
Why You Shouldn’t Walk into the Medicaid Office Alone
February 13, 2012
Last year I wrote about the dangers of filing a Medicaid application yourself, without any idea of how the Medicaid rules work. But, in the past month we have had a rash of calls from folks who did just that and ended up with Medicaid penalties – months of Medicaid ineligibility and no way to pay for care.
It’s a disturbing trend but it can’t be ignored. The state is taking longer to decide Medicaid applications and is scrutinizing them more than ever. Why? Because it just doesn’t have the money to pay for care. If it can find transfers and impose penalties – waiting periods -that means it doesn’t have to pay for care during those months.
So often, when I explain how the Medicaid penalty works the response I get is, “no problem, Mom didn’t gift any money” or “Mom never really had much money so it won’t be an issue”. But, there is a certain innocence in that answer, a lack of understanding of the Medicaid regulations and of the economic recession that is affecting our government as well as average Americans.
For example, several times in the past month we have received calls from people who have been questioned by Medicaid about transfers that have been made by the applicant 3 and 4 years ago. It typically starts with a letter from the Medicaid caseworker asking for documentation concerning a particular transaction on “such and such date” or a request for copies of all checks over $1000”.
So, here’s the problem. Before you filed the Medicaid application did you ever review those checks, or is now the first time? What happens if the checks are payable to family members – or to any individuals for that matter – but not to businesses? Well, Medicaid will ask you what those checks were written for. Your explanation must be backed up by documentation. So if Mom wrote you a check to reimburse you for something, but you don’t remember what, or you can’t produce the paperwork to support that, it is subject to a Medicaid penalty.
Do you remember what you did 4 years ago? Do you have paper records to back up what you say you did with your money if someone asked? Oh, and keep in mind that you aren’t being asked about your own finances but rather someone else’s. If you haven’t been managing Mom’s accounts you don’t know what you’ll find. Now add a deadline to the mix. The letter you received from Medicaid says you’ve got 10 days to provide the documentation or the application could be dismissed. But Mom didn’t keep her old statements so you’ll have to contact the bank to get replacements. Good luck getting that in 10 days.
In this type of environment it becomes very easy to see how well intentioned families end up with disastrous consequences. Mom has no money left and Medicaid won’t pick up the cost of care when they thought it would, leaving a gap of months (the more uncompensated or unexplained transfers the longer the gap). The nursing home needs to pay its bills and is looking to the family to pay the $10,000 or $20,000 (or more) balance. The finger pointing starts as does the talk of lawsuits.
That’s why it bears repeating. You can’t walk into the Medicaid office, innocently hand them all your documents and say “please give me Medicaid”. You’ve got to be prepared. You’ve got to know what’s in those documents and how you are going to respond to the inevitable questions. It’s like an IRS tax audit. You’d be crazy to walk into the auditor’s office without a professional. Same thing with Medicaid. The stakes are just too high.
Is Paying Cash a Problem When Filing a Medicaid Application?
February 6, 2012
This week I am pleased to introduce a new feature to my blog called “Elder Law in a Minute”. This is a short video in which people have an opportunity to ask some of their most pressing elder law questions, ones that may be on your mind too. We’ll mix these videos in with my usual written posts to add a little variety.
The first question “Is paying cash a problem when it comes time to file for Medicaid?” I’d love to hear feedback from our subscribers if you enjoy this new addition.
Click on http://www.youtube.com/HauptmanLaw Elder Law Minute Season 1 Episode 1 to see my answer.
A Family Owned Business Long Term Care Nightmare (Part 2)
January 30, 2012
Last week we were talking about George’s tragic stroke and need for nursing home care. He still owns the manufacturing business he built and the warehouse which houses it. His son, John, asked me whether those assets are protected from being spent down towards care before Medicaid qualification. Like so many other questions about Medicaid , the answer is complicated. But, I told John that there were steps that they absolutely need to take now.
Let’s first review the Medicaid basics. As the healthy spouse, George’s wife, Claire, can keep the home and just under $110,000 in assets. The rest of their $800,000 in liquid investments must be spent down or converted to non-countable assets. The building and business are also countable – well maybe. Medicaid rules allow for inaccessible assets to be treated as “excludible”, in essence not countable towards the $110,000 limit.
It may be possible to treat them as inaccessible, if they can’t be sold easily. Remember that this is a family business and the real estate is an industrial building that houses the business. Neither is easy to sell on the open market. John then reminded me that he and his brother, James, run the business and want to keep it. “It was always Dad’s plan to give it to us,” he told me.
Unfortunately, his failure to put that succession plan in place makes it much more complicated to do now. “If he gives you the business and building now,” I told John, “it is a transfer subject to a Medicaid penalty and he must provide for his nursing home care for the next 5 years before he can qualify for Medicaid. That would be roughly $500,000, leaving your mom with $300,000 and the house.”
There was a long pause and then John said “that’s not a whole lot for Mom to live on and she could live another 10 or 15 years or more. Are there other options? I then explained that he and James could buy both assets themselves. “But we don’t have $1,000,000 to buy both,” John exclaimed. Well, then, they could buy the business and we could treat the building as inaccessible. Claire could also possibly buy a bigger home, with some of the countable assets, which would still be exempt. This would mean they could preserve more than the $110,000 for Claire.
It all was very confusing to John, which I certainly can understand. And not the best time for his family to have to make such important decisions, in what we call “crisis mode”. I told John that we could definitely help him but there is a lot to do and no time to waste. John scheduled an appointment for his family to meet with me. Before he hung up the phone he said that the fact his dad had never completed a succession plan or purchased long term care insurance was always in the back of his mind but he now realizes, for the first time, how devastating those oversights turned out to be for his whole family. I couldn’t agree more.
A Family Owned Business Long Term Care Nightmare (Part 1)
January 23, 2012
George built his manufacturing business from scratch. He and his wife, Claire, had raised a family of 2 boys and a girl, but George treated the business like another child, nurturing it from infancy to maturity. It had allowed him to provide for his family, putting all 3 children through college, and it now also supported his boys, John and James, who both joined the business and are raising families of their own. At 70, George still worked full time. He loved it and couldn’t see retiring. But then tragedy struck when George suffered a stroke.
At first, it looked like George would make a complete recovery, but then he suffered a setback, a second stroke resulting in permanent paralysis. It became clear that he would need long term care. Claire didn’t want to place him in a nursing home, thinking she would be able to care for him at home. Very quickly, however, the family realized that they would need home health aides. Providing care is exhausting, physically and emotionally, and Claire, at 70, just couldn’t provide the round the clock care that was needed.
For the first time, George’s family faced the reality of the long term care system and they were shocked. George and Claire never did buy long term care insurance. The health insurance plan that they had for years through the business, they soon learned, didn’t cover the type of custodial care George needed. They were facing $100,000 a year in expenses and no insurance coverage for it.
That’s when John called us, hoping we could help. I went over the financial numbers. George and Claire owned a house and about $800,000 in investments. George also owned the business and the building which houses the business, John estimated the combined value at over $1,000,000 but he wasn’t confident in those numbers since they had never before valued either. Then John asked the $64,000 question. Could they get any help, meaning government benefits?
I explained how Medicaid works, that it’s a needs based program. Claire, as the healthy spouse, could keep the house and just under $110,000 before Medicaid would cover George’s care. “Does that include the business and the building?”, John asked. “Dad always talked about a succession plan to transfer ownership to James and I, but he just never got around to doing it.” Next week I’ll tell you what I told John.
