How to Avoid Committing Medicaid Fraud
When it comes to long term care planning, the earlier the better. One of the primary reasons is the Medicaid 5 year look back. Medicaid will look back through 5 years of your financial records to determine if you have done anything with your money that would cause you to be ineligible for benefits. Now, you might ask, “how am I supposed to know if I violate a Medicaid rule when I don’t even know what the rules are?” And that is precisely why planning well in advance is so important. Trying to go back and change what you did after the fact can get you in some real hot water. Allow me to explain.
When we meet with clients who are well on their way to needing nursing home care or are already in a nursing facility Medicaid is starting to really come into focus for these folks. When we then look through their finances we so often find transactions that, if carried out with an understanding of the Medicaid rules, would have put them in a much better position.
For example, I have written in this blog about the right way and the wrong way to pay for aides. In the case of family members serving as home aides, typically there is no written agreement as to the amount of compensation or the scope of the work. Without that agreement Medicaid views the transfers as gifts subject to a Medicaid penalty. In some cases real estate or bank accounts have been transferred, or so the family thought. Without a proper understanding of the Medicaid rules those transfers of assets out of the senior’s name actually are not transfers and, to the dismay of the family, are still subject to be spent down.
When I tell clients this sometimes their response is, “can we create a written agreement memorializing all the care I provided to Mom for all these years?” This typically involves “backdating” documents. My answer is always an unequivocal “no”. Back dating documents involves creating a document, such as a deed or a caregiver contract, and then making it appear that it was written and/or signed on an earlier date.
Not only is it dishonest, it is also a federal criminal offense to falsify an application or documents in order to obtain Medicaid benefits. This is known as Medicaid fraud and it caused an Ohio attorney to lose her license and be brought up on felony charges. In her case, she back dated a deed 3 years to start the clock running on the Medicaid penalty.
That’s why it is so critical to understand the rules before you take a course of action. And the only way to do that is to engage in planning with a qualified professional who understands the rules and can guide you accordingly.