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How to Lose Medicaid

The long term care system is a maze and Medicaid in particular is quite complicated.  A recent call to our office illustrates that even after receiving Medicaid there are pitfalls to avoid that can cause one to lose Medicaid. 

Mary (names have been changed) called us because she had been sued for $80,000 by the nursing home caring for her mother, Jane.  Jane had entered Nursing Home on private pay and after spending down her assets qualified for Medicaid.  Under Medicaid rules Janeâs Social Security check went to Nursing Home and Medicaid paid the rest of the bill.  Mary and Nursing Home arranged for the check to go directly to Nursing Home and everything was fine for 8 years or so.

Mary then moved out of state.  Apparently, Social Security assumed that Jane moved too and started sending her checks to her bank account.  Mary did not take notice of this and neither, at least for several months, did Nursing Home.  After 8 years, Jane lost her Medicaid eligibility.

How could this happen?  While Mary does not yet have all the facts (sheâll find out more as the lawsuit winds through the court system), hereâs what probably occurred. Because Janeâs income was accumulating in her account, once the balance exceeded $2000 she lost Medicaid eligibility.  Janeâs Social Security is treated as income in the month received but if still in her possession the next month then it is treated as an asset. And each month her balance remained over $2000 she was Medicaid ineligible â and those lost months can never be recovered.  So every month Jane was running up a bill at the nursing homeâs private pay rate.

It is not clear why Nursing Home didnât notice the change or why it took them several months to write to Mary.  They did send Mary a new Medicaid application to complete and file but she either didnât receive it or didnât act on it.  It appears that nobody on either side was following up on it so Medicaid was never reinstated for the last year of Janeâs life. Now Nursing Home is looking to recoup a yearâs worth of lost payments and Mary is trying to avoid a judgment that she canât afford to pay.

The sad thing is that this all could have been avoided.  Medicaid rules are quite complex.  Janeâs family and the nursing home needed to keep in contact and stay on top of any changes that could affect Medicaid eligibility.  It is easy to miss something that can very quickly result in the loss of benefits. 

What you would think is the most insignificant change can cause a chain of events that will lead to losing benefits.  You canât just go on autopilot.  Thatâs when things fall through the cracks.  That is exactly what happened here.  And now both sides are pointing fingers at each other.  Had Mary retained an elder law attorney to file the Medicaid application, both resident and nursing home would have benefited and perhaps this unfortunate result could have been avoided.  An important lesson to be learned.