Last week I was telling you about the call I received from Shelly. Her mom was sued by the nursing home where her husband resided for the last 4 months of his life. She failed to file a Medicaid application which would have covered the cost of that care. The nursing home obtained a judgment of $40,000 against her and is now trying to collect the money.
I asked Shelly about her mother’s assets. “She owns a home which has a mortgage, has a minimal amount of money in the bank and $50,000 she is receiving from a life insurance policy on Dad’s life”, Shelly told me. “The home is worth $250,000 but the balance on the mortgage is $150,000.”
I explained to Shelly that the life insurance proceeds could be attached by the home to satisfy the judgment. When her dad entered the home her mom signed an agreement that provided that she would do everything necessary to process a Medicaid application if and when that became necessary. Failing to do so would cause her to be responsible to pay for any services received that are not be covered by Medicaid.
While some nursing facilities will assist in the filing of a Medicaid application it is ultimately the responsibility of the resident and his representative – in this case Shelly’s mom – to make sure the application is filed and all documentation and information is supplied to the Medicaid caseworker in a timely manner.
Shelly told me her mom really needs that money to live on. I said it might be possible to negotiate a resolution with the nursing facility whereby they take back a mortgage on the home. This would be a second mortgage so that the judgment would be paid when her mom sells the home. However, the first mortgage balance of $150,000 would be paid first so the facility would have to be comfortable that there would be enough money from the sale to pay them back as well.
I also explained to Shelly that the facility does not have to agree to do this and would be entitled to interest on the $40,000. She would have been in a better position to negotiate this type of resolution before the facility hired an attorney, filed the lawsuit and obtained the judgment.
Shelly asked me one more question. “Can we file for Medicaid now and try to get the bill covered that way”, she asked. Unfortunately, there is already a judgment of $40,000 and it’s too late to vacate it. Additionally, it is too late to file a Medicaid application. There is an ability to obtain retroactive benefits but we can only go back 3 months from the date of the application. Too much time has elapsed at this point.
I didn’t have any great solution for Shelly. However, her story is a cautionary tale for anyone in a similar situation. You can’t simply ignore the financing part of long term care. If your loved one is receiving care and you don’t have the funds to pay privately you’ve got to address it immediately. Put it on the front burner because if you don’t you’ll end up with a large bill and the problem simply will not go away. It’s best to contact an elder law attorney who is familiar with Medicaid to be sure you are taking every step you should. Otherwise you could end up like Shelly’s mom.