Another Reason People Fail to Plan
In this blog over the years I have written often about how the lack of planning makes things more complicated and the outcomes worse when a crisis hits than when there is a plan in place. In many instances lack of planning stems from the lack of urgency and the belief that “I’ll take care of it when the time comes and I need to”. In some cases, culture plays a role. Our country has always been a melting pot of people from all around the world. Consequently, we have seen clients from all manner of backgrounds and cultures. Sometimes, especially in the case of first generation Americans, their beliefs provide an explanation for why they have no estate or long term care plan in place. When asked, a typical response is “we don’t do it that way where I come from”. That may, in fact, be true - that things are done differently in a client’s country of origin. But I then explain that the laws of this country and the systems in place here are what we have to work with. Failure to take that into account can result in terrible outcomes. Next week I’ll give you some examples.
A Six Figure Medicaid Mistake (Part 5)
In my blog post this week I continue with the story of the family that tried to get Medicaid for Dad but failed. In the past several weeks I have explained that while Dad’s assets need to be under a $2000 to achieve eligibility, Mom also has an asset limit, which includes accounts and assets that many people would not even consider to be assets but which count under Medicaid rules. In Mom’s case she had a number of life insurance policies insuring not only herself and her husband but also children and grandchildren. While the death benefit - the amount paid out when the insured dies - is not countable, some policies have cash value. That cash value is countable if Mom or Dad is the owner of the policy. Once we obtained the policy documents we were able to determine that some of the policies were what are called “term” policies. They have no cash value but only pay a death benefit so no problem there. Others, however, did have cash value and Mom was the owner of some of those policies so the cash value counted as part of her limit - what Medicaid calls the community spouse resource allowance (CSRA). Mom also had a
A Six Figure Medicaid Mistake (Part 4)
In this week’s blog post, I continue to tell you about a call I received from a family who tried and failed to get Medicaid for Dad. As I explained last week, the nursing facility employee misunderstood how Medicaid works in the case of a married couple where only one spouse is applying for Medicaid. The healthy spouse - in Medicaid language known as the “community spouse” - must spend down under a certain asset limit which is calculated using a snapshot date. Last week I explained the formula. In our case, Dad had entered the hospital and then the nursing facility 16 months ago so we had to go back to the value of assets at that time. But, what counts as an asset is more than what one might assume. Bank accounts, investment accounts, stocks, bonds, mutual funds, CDs and annuities are obvious assets. There are, however, less obvious assets such as life insurance with cash value and accounts opened for other family members such as children and grandchildren. For example, if the Medicaid applicant or spouse opened an account for a grandchild but it is actually co-owned with that other person, then the account will be considered an asset of the applicant or spouse unless
A Six Figure Medicaid Mistake (Part 3)
In this week’s post I continue with the story about a recent call we received in our office from a family concerning a Medicaid denial. The nursing home employee processing Dad’s Medicaid application misunderstood the rules with respect to married couples. As I explained last week, Mom was told she did not need to provide statements for assets in her name, just ones for assets owned by her husband, the Medicaid applicant. This was incorrect. But, what was also missed by the facility’s employee was the fact that the non-Medicaid spouse has an asset limit to meet in addition to the $2000 limit for the Medicaid spouse. That limit is 1/2 of the combined assets owned by either or both spouses but only up to a limit of $157,920. (There is a common misconception that this is actually the amount the spouse can automatically keep but it’s just the maximum amount. You still have to do the math which can result in a lower number.) So we needed to do 2 things - determine what that number is and then spend down below that number. Every month this doesn’t happen means that Mom must spend another $12,000 towards Dad’s care because he is not yet Medicaid eligible. But what
A Six Figure Medicaid Mistake (Part 2)
In my blog post last week I began to tell you about a recent call we received. A family called seeking help with a Medicaid application for Dad. The nursing home had filed the application on Dad’s behalf but it had been denied. I asked if they had provided Medicaid with 5 years of records for all assets owned by both Dad and Mom. They told me the nursing home employee said they only needed to provided statements for Dad’s assets. They were told that providing Mom’s statements was not necessary and “would only complicate things”. That was wrong and here’s why. Medicaid imposes an asset limit. A Medicaid applicant must be spent down to less than $2000 in assets as of the last day of the month before the first month for which the applicant wants Medicaid benefits. Additionally, the applicant must remain under $2000 in assets on the last day of each month thereafter in order to maintain Medicaid eligibility. The family said that Dad met that requirement and that they provided Medicaid with 5 years of statements for the one account that he owned as had been requested by the nursing home employee. I explained, however, that in the case of a married applicant Medicaid also imposes an
A Six Figure Medicaid Mistake (Part 1)
We received a recent call from a child about her parents. Dad has been in a nursing home for more than a year. A Medicaid application was first filed by the facility on behalf of Dad 16 months ago. The reason for the call is that the application was denied. As far as I could tell, it appeared that they tried more than once. Now the outstanding bill was more than $150,000 and the facility had been sold to a new owner. The meter was continuing to run. Each month that went by without Medicaid resulted in the bill going up by approximately $12,000, the private pay rate for care. The new owner wanted to refile the Medicaid application and the family was understandably skeptical. That’s why they called our office. I told them I first needed to determine the reasons why the previous applications had failed. I asked for copies of all the communications from Medicaid and I asked some questions. Because they didn’t deal directly with the Medicaid caseworkers (because the facility did), the family only had a few documents and could only tell me what the facility employee told them that Medicaid had said. Very quickly, however, it became clear what had happened. Mom and Dad had numerous accounts but almost all