A Medicaid Story That Starts Out Bad But Turns Out Just Fine
Last week I wrote about Dad who gifted a large sum to his children and within 6 months needed long term care. Because the money had been spent and could not be returned I had to explain to the daughter that Dad would not be eligible for Medicaid for 4 and Â years. A complete disaster. But this week letâs take a look at a success story, one in which we were able to work to fix the mistakes that were made, long before long term care and Medicaid were needed.
Two years ago Mary contacted me concerning her mom who was living in an assisted living facility with an aide that she and her sisters were paying cash. Mom had transferred her assets to her 3 daughters. They had begun to spend some of the money on Momâs care but had also opened and closed accounts, moving, combining and commingling assets. Over time it would have been very difficult to follow the paper trail and establish with Medicaid that Momâs money had been spent for her care, and not gifted to the children. Unlike last weekâs family, however, Mary reached out to me within a few months after the initial transfers and, as it turns out, almost 2 years before we applied for Medicaid.
We quickly counseled Mary that the assets had to be returned, and, thankfully, although some had been spent on Momâs care, she and her sisters still had possession of the balance. We then guided Mary on the records that she needed to obtain in preparation for the anticipated Medicaid application. While she still employed the aides we were able to prepare invoices and documentation showing that the cash withdrawals were not gifts, but payment for services, including a statement from the facility. Mary had been paying the facility bill on her credit card and then taking money from Momâs account (which was titled in Maryâs name). We had her go back through her records and copy the credit card bills with those charges and match up payments back to her from âMomâs accountâ. We also counseled her on a better way to make those payments.
Finally, Mary and her sisters had moved money from one account to another, for convenience, a better interest rate or to keep FDIC insurance coverage. Without recognizing it, however, they were muddying the paper trail. You see, Medicaid requires as many as 5 years of financial records to show how money has been spent. Mary and her sisters didnât realize the problems they were creating. We painstakingly had to document all the transfers from one account to another and transfers in and out of each account.
As I said, this was a success story. 2 months ago we applied for Medicaid. We provided Medicaid with details of each transaction, backed by supporting documentation. Last week the family received Medicaid approval without a hitch. Every dollar had been accounted for and we achieved a smooth transition to Medicaid with no ineligibility period. Financially, the family can rest easy that Momâs care is paid for and the nursing facility, which receives those Medicaid benefits, is happy that their resident went from private pay to Medicaid without interruption of payment. An example of the way things can work if you have someone with knowledge guiding you through the process.