Nursing Home Resident with Personal Injury Claim (Part 2) #Medicaid
Last week I was telling you about Mary who received a personal injury settlement while on Medicaid. Because she is over age 65 she can’t protect the money by placing it in a special needs trust #SpecialNeedsTrust for her own benefit. What other option does she have?
What we examine first is whether any other Medicaid exception might apply. Medicaid regulations provide that a transfer to a disabled individual is exempt from the transfer penalty rules. The person must either be deemed disabled by the State of New Jersey or by federal guidelines under the Social Security disability program.
I asked Melissa if Mary has a disabled child or grandchild. She does not. That left us with two alternatives. Mary can come off of Medicaid, spend down the proceeds and when her assets fall below $2000 she can reapply. Her other choice is to give all the money to the State and remain on Medicaid uninterrupted.
Mary and her family were not happy with my answer. “You mean give it all to the State or the nursing home? Why did I pursue the case at all if I can’t keep the money”, she asked.
I couldn’t answer the second question but I told them that coming off of Medicaid and spending down is the best option here. That’s because, while some of the proceeds must go to the nursing home, with my guidance Mary could spend down in other ways that would be more beneficial to her. We must, however, be very careful not to violate Medicaid’s maze of laws and regulations.
I learned that Mary had never set aside money for her burial so that was one item she could pay for if set up in an irrevocable burial account. We discussed a lap top, television, cell phone and iPad, all permissible expenses. We also discussed medical equipment such as a special bed and wheelchair. The problem there was that these items were not in compliance with the nursing home’s safety and compliance rules.
The items Mary was able to purchase did not total $100,000. She hired us to guide her on the spend down and reapplication but the remaining amount did have to go to the nursing home to pay for care. Ultimately, she paid four months at their private pay rate, which dropped her bank account to just under $2000. We then reapplied for Medicaid.
Melissa’s experience is a cautionary tale for attorneys and their clients. She should have checked with a knowledgeable elder and disability attorney to confirm the rules on Medicaid and special needs trusts.
For example, if Mary was 64 when Melissa took the case the worth of that case to Mary dramatically drops after she turns 65. Knowing this piece of information might cause Melissa to push hard to settle the case before Mary’s birthday so as to fund the SNT.
On the other hand, if the value of the case is high enough, then the age 65 limitation is less important If the case settles in the high six figure or seven figure range there are other options available to protect some of the funds. But I’ll save that explanation for another day.